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When a foreclosure sale can be vacated under Florida law

By Kerry McInerney • Wednesday, September 5, 2012

The District Court of Appeal of Florida, Fifth District, interpreted Florida case law in determining when a foreclosure sale may be vacated. In Josecite v. Wachovia Mortgage, the borrower entered into a written forbearance agreement and complied with its terms.  The agreement required the servicer to place the foreclosure “on hold.”  The foreclosure sale was not cancelled, and the property was sold to a third party.  The court interpreted the agreement to place the sale “on hold” as requiring the lender to cancel the sale, which it failed to do.  The trial court determined that the applicable rule was set forth in the Florida Supreme Court Case of Arlt v. Buchanan, (Fla. 1966), which required the borrower to establish a (1) grossly inadequate sales price as a result from, (2) any mistake, accident, surprise, fraud, misconduct, or irregularity upon the part of either the purchaser or the other person connected with the sale.

The Fifth District disagreed reversing the trial court on the grounds that Moran‐Alleen Co. v. Brown (Fla.1929) was controlling.  Based on Moran‐Alleen, the court ruled that a sale can be vacated for any of the following grounds:  gross inadequacy of consideration, surprise, accident, or mistake, or irregularity in the sale.  After applying the Moran‐Alleen test, the court concluded the sale should be vacated and reversed the trial court's order.

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