Pennsylvania Court Rules Sheriff’s Sale Must Stand Despite Later Offer

A three-judge panel on the Pennsylvania Superior Court ruled recently that a sheriff's sale of real estate could not be set aside after a latecomer offered more than double the purchase price.

The case arose from the sheriff's sale of a home in Middlesex Township, Pennsylvania. The property, which had been foreclosed upon, had an outstanding mortgage of about $204,000 when it was put up for sheriff's sale in September 2010. The winning bid at the sale was $255,800.

About a month after the sheriff's sale, the seller of the property filed a petition to have the sale set aside, claiming that the purchase price was grossly inadequate. The seller argued that a comparative market analysis showed the home to be worth $562,000 - more than double what the buyer at the sheriff's sale paid - and that the owner of a neighboring lot was prepared to offer $580,000 for the property. The neighbor reportedly wanted to purchase the home as a "buffer" for his own land, but it is unclear why he did not make an offer on the property during the sheriff's sale.

It is not unheard of for Pennsylvania courts to set aside the sale of real estate when the purchase price is deemed grossly inadequate, but this is generally limited to cases in which the buyer pays only a small fraction of the established market value - roughly 10 percent, according to one judge involved in the case. The court ruled that, at 44 percent of the neighbor's belated offer, the purchase price in the sheriff's sale was not grossly inadequate. Also relevant in the decision was the fact that the purchase price was more than $50,000 above the outstanding mortgage on the property.

To minimize the risk of potentially costly legal disputes when buying or selling real estate in Pennsylvania, discuss your plans with an experienced real estate lawyer in your area.