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Post Foreclosure - Quiet Title Suits Suser v. Wachovia Mortgage
It is well-settled that in a mortgage foreclosure sale, if the lien being foreclosed is in a junior position, the sheriff’s deed will convey title subject to prior liens. But when a junior lien is foreclosed, how may the purchaser at the sale later clear title? In Suser v. Wachovia Mortgage, 433 N.J. Super. 317 (App. Div. 2013), plaintiff Suser was the holder of a junior mortgage encumbering a condominium unit in West New York. He successfully foreclosed, and received a sheriff’s deed which conveyed title subject to two prior mortgages, held by Wells Fargo [“WF”] and  Deutsche Bank [“DB”], respectively. Suser thereafter filed a suit to quiet title in the Chancery Division, alleging that the prior mortgages did not constitute valid liens against the realty. In essence, plaintiff argued that the mortgages were unenforceable because the holders lacked standing to foreclose them.
The remedy of quiet title is one which has long recognized by courts of equity. In New Jersey it has been statutorily codified at N.J.S.A. 2A: 62-1 et seq. A party seeking to commence a quiet title suit must allege that (a) he is in "peaceable possession" of the land; (b) defendant denies or disputes plaintiff's title; and (c) no action is pending to enforce defendant's claim of title. As in most equitable actions, plaintiff must also demonstrate that he has no adequate remedy at law.

            Plaintiff and defendants cross-moved for summary judgment, and the trial court granted defendants’ motions and denied plaintiff’s. On appeal the Appellate Division affirmed in part, vacated in part, reversed in part, and remanded. With respect to WF, Suser argued that it lacked standing to foreclose its mortgage. But the panel held that WF could demonstrate that it was the holder of the mortgage. Suser also argued that WF was estopped by its prior conduct, but the court rejected this argument as well. 433 N.J. Super. at 321-322.

            Turning to the DB mortgage, the court agreed with plaintiff that the absence of a recorded assignment and other “confusing and unexplained allegations” in a prior foreclosure action commenced by DB “cast a shadow over [DB’s] claim of standing”. 433 N.J. Super. at 323-324.The panel also agreed with Suser that the trial court had mistakenly precluded discovery into the circumstances surrounding DB’s standing to enforce its lien. Id. at 326. Thus, the Appellate Division reversed the Chancery Division’s grant of summary judgment as to DB, and remanded the cause for additional proceedings. The case demonstrates that a quiet title suit may be a viable remedy where a foreclosure sale purchaser seeks to clear title to the property acquired at the sheriff’s sale.


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