In a Foreclosure Auction Sale, a Sheriff May Place the Burden of Sheriff’s Fees on the Bidder; however, s/he Must Make That Fact Clear Both in his Advertising and in the Conditions of Sale

The Superior Court of New Jersey in Howard Sav. Bank v. Sutton, 246 N.J. Super. 482 (Ch.Div. 1990) held that, a sheriff involved in a foreclosure related auction sale may ask the bidder to pay the sheriff’s fee.  But if s/he intends to charge fees from the bidder, s/he should make that fact clear in the advertisement and the conditions of sale.  

This case involved an execution sale in which the Sheriff was directed to sell a residential condominium unit owned by defendants Sutton to satisfy $85,101.68, together with interest and taxed costs, due to the Howard Savings Bank (“Bank”) as determined in the final judgment in foreclosure.   David Goldstein (“Bidder”) was the highest successful bidder and the sheriff sold the property to the Bidder.  However, the sheriff refused to turn over the deed until he received his fees.  The Bidder paid that amount under protest and then brought this motion to recover that payment. 

The Bidder agreed that the sheriff is entitled to fees for his services. Id. at 485.  But he contended that the fees should be deducted from the bid amount of $100,000, and only the remaining amount should be transferred to the Bank. Id. 

The Court observed that the seller and auctioneer share a contractual relationship as to the calculation of fees and charges as well as manner of their payment. Ordinarily, the auctioneer looks to the seller for his compensation. Id.   Nevertheless, the seller can ask the auctioneer to charge his fees to the buyer. Id.  And if the auctioneer agrees, s/he has to ensure that this fact is clear to the bidders when he announces or advertises the conditions of sale. Id.  (citing Johnson v. Miller & Buck, 35 N.J.L. 338 (Sup.Ct.1872)).  Such arrangement is out-of-the-ordinary. Id.

The Court stated that the sheriff is a public auctioneer whose fees and charges are fixed by statute. Id.   The majority custom seems to deduct the sheriff’s fees from the gross amount bid. Id.  However, the sheriff is free to place the burden of fees on the bidder if he thinks that to be fair and proper. Id.  But if he does so, he has to ensure he communicates this to the bidders both in his advertisement and in the conditions of sale. Id. 

The Court found that the advertisement or the conditions of sale did not communicate to the Bidder that he will have to pay more than his bid amount. Id.  at 486.  The Court stated that, although the sentence "All sales are subject to Sheriff's fees" in the conditions of sale states the fact that a fee would be charged, it does not make it clear who would pay it. Id.   The Bidder had no clue that he would have to pay $102,946.10 for the property, when he bid the property for $100,000. Id.   The Court concluded that, in light of the above circumstances, the sheriff did not have legal right to charge his fees to the bidder. Id.

The court ordered the Bidder’s Counsel to submit an order directing the sheriff to reimburse his fees within 15 days after the order is entered. Id.