The United States District Court for the Eastern District of New York recently held that a debtor whose property was sold at a foreclosure sale lost his right of redemption despite satisfying the judgment before the property could be conveyed.  See United States v. Chesir, 2016 WL 1178989 (E.D.N.Y. Mar. 22, 2016).  In the case, the United States obtained a default judgment against the defendant for unpaid tax liabilities.  After the court denied the defendant’s motion to vacate the default judgment, the court entered an order approving the foreclosure sale and the receiver entered into a contract with the purchaser.  After an unsuccessful appeal and other “dilatory filings,” the court ordered the conveyance of a deed to the purchaser and that the defendant vacate the premises.  The defendant then declared bankruptcy and, during the stay, was able to satisfy his tax liabilities with the United States.  He then requested that the court’s previous order regarding the conveyance of the deed be vacated.  The purchaser moved to intervene and opposed the request.  The defendant, citing an 1898 Court of Appeals decision, argued that he retained the right of redemption until “the sale is made, confirmed and conveyance delivered.”  Nutt v. Cuming, 155 N.Y. 309 (1898).  The court, however, cited more recent case law for the holding that the foreclosure sale cuts off the redemption right, and held that the property must be conveyed to the purchaser.  The court did find, however, that because the United States’ judgment had been satisfied, the defendant would keep the proceeds of the sale.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com.