NJ Appeals Court Slams Shut 'Loophole' Allowing Judgment Creditors To Obtain 'Double Recoveries' When Enforcing Liens Thru Forced Property Sales

Lexology reports:

• On August 4, 2010, the New Jersey Superior Court, Appellate Division extended equitable principles previously applied in mortgage foreclosure cases to how far an unsecured judgment creditor could go to satisfy its lien against a debtor, deciding to follow a line of cases standing for the principal that “even in the absence of express statutory authorization, a court has inherent equitable authority to allow a fair market value credit in order to prevent a double recovery by a creditor against a debtor.”

• Moreover, in the case, MMU of New York, Inc. v. Grieser, the Appellate Division even went so far as to hold that if the unsecured judgment creditor has been compensated beyond the value of its lien, it could owe a money judgment to the debtor, in order to prevent a windfall to the creditor.

For more, see How far is too far - judgment creditors that sell a debtor’s real estate told to account for the fair market value of that property and must reimburse the debtor if they go too far (requires subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the ruling, see MMU of New York, Inc. v. Grieser, No. A-2484-08T3, 2010 BL 180436 (N.J. Super. Ct. App. Div. Aug. 04, 2010).