Judgment Creditor Must File Petition to Fix Fair Market Value to Preserve Deficiency

It is extremely important for judgment creditors to file a petition to fix fair market value in order to preserve its right to pursue a deficiency judgment.

 

In an opinion filed on November 21, 2011, the Bucks County Court of Common Pleas decided the case of Atlantic Nat’l Trust v. Fonthill Corp. et al., No. 2004-01944. 

 

The case has a long and complex factual history, but the basic facts are that a mortgage note holder filed a Complaint in Mortgage Foreclosure after the borrower defaulted on the loan. After the mortgage note holder obtained a judgment against the borrower, the property was sold at sheriff sale and the judgment holder filed a Petition to Fix Fair Market Value in the mortgage foreclosure action. The Court then issued an Order fixing the fair market value as set forth in the judgment holder’s Petition. 

 

The borrower entity appealed the Order fixing the fair market value to the Pennsylvania Superior Court, arguing that there had been no “in personam” judgment obtained and, therefore, the Court should not have fixed the fair market value. In response to the appeal, the Court of Common Pleas issued this decision. 

 

In its decision, the lower court thoroughly reviewed the historical case law on the matter and noted that prior law directed that it was necessary for a judgment creditor to obtain a personal judgment against the judgment debtor prior to petitioning to fix the fair market value. However, the requirement for “in personam” judgment was recently superseded by the Pennsylvania Superior Court last year in the case of Home Savings & Loan Corp. v. Irongate Ventures, LLC, 19 A.3d 1074 (Pa. Super. 2011). In that case, the Superior Court affirmed that, under the Deficiency Judgment Act, where a judgment creditor fails to file a Petition to Fix Fair Market Value in the foreclosure action within six (6) months of the foreclosure judgment, the debtor is permitted to have the judgment marked satisfied, released and discharged.

 

In Home Savings & Loan, the judgment creditor filed its petition to fix fair market value in the separate confession of judgment action, not the mortgage foreclosure action, well after the six (6) month statutory period. This, the Superior Court held, did not preserve the judgment creditor’s right to seek a deficiency judgment.

 

Based on the Home Savings & Loan case, the Court of Common Pleas held that it was proper for the judgment creditor to file its Petition to Fix Fair Market Value in the mortgage foreclosure action even though a separate “in personam” judgment had not been previously pursued. 

If your property is condemned, you may be entitled to Delay Damages

Did you know that if your property has been taken by the government, whether it be a total taking of your entire property in fee, or whether it be for an easement, you are entitled to just compensation and, possibly, delay compensation? 

Just compensation is the difference between the fair market value of the condemnee’s entire property interest immediately before the condemnation and and the fair market value of the property interest remaining immediately after the condemnation and as affected by the condemnation.  Fair market value is the price which would be agreed to by a willing and informed seller and buyer, considering the following factors: 

  • present use of the property and its value for that use; 
  • highest and best reasonably available use of the property and its value for that use;
  • machinery, equipment and fixtures forming part of the real estate taken; and
  • any other factors as to which evidence may be offered. 

Once the condemning authority provides an offer of just compensation to the condemnee, the condemnee may accept that offer without jeopardizing its right to file a petition for a board of view to determine whether the just compensation paid was sufficient. 

A condemnee has five (5) years from the filing of the Declaration of Taking to decide whether to file a petition for a board of view to determine just compensation.  If your property was taken by a governmental agency, it may not be too late to determine whether just compensation was received.

Once a board of view makes its decision, a condemnee is free to appeal that decision to the Court of Common Pleas, in which event a new trial will be held before the Court without regard to the decision of the board of view. 

In the event the condemnee is successful either before the board of view or in Court, the Eminent Domain Code provides for delay damages to compensate the condemnee for the delay in payment. Delay damages are paid at an annual rate equal to the prime rate as listed in the first edition of the Wall Street Journal published in the year, plus 1%, not compounded, from: (1) the date of relinquishment of possession of the condemned property by the condemnee; or (2) if possession is not required to effectuate condemnation, the date of condemnation.

There is often great debate between condemnee and condemnor as to the date from which delay compensation commences. Pennsylvania case law provides that a condemnee has a prima facie entitlement to delay compensation from the date of taking. Therefore, the burden is on the condemnor to overcome this presumption that the condemnee is entitled to delay compensation from the date of taking. If the condemnee is to be denied delay compensation from the date of taking, the condemnor must prove continued possession by the condemnee. 

If your property was condemned within the last five years, it may not be too late to take a second look at whether you were justly compensated and whether there may be some future entitlement to delay damages if you were not justly compensated. 

Significant Benefit to Developers and Landowners: PA Governor Signs Further Approval/Permit Suspension Legislation

Back on July 6, 2010, Governor Rendell signed the Fiscal Code Bill (Senate Bill 1042), providing, in part, for the automatic suspension, during the “extension period” (which begins after December 31, 2008 and ends before July 2, 2013), of approvals granted by a government agency for or in effect during the extension period, whether obtained before or after the beginning of the extension period. This meant that certain permits and approvals that may have expired since December 31, 2008, were suspended through July 2, 2013. 

On July 2, 2012, Governor Corbett signed the Fiscal Code Bill (Senate Bill 1263), which amended Act by redefining the “extension period”, which now begins after December 31, 2008 and ends before July 2, 2016. This new legislation is a welcome relief, and significant benefit, to Pennsylvania developers and landowners who have been hurt by the recession. Significantly, certain permits and approvals that may have expired since December 31, 2008 have now been suspended through July 2, 2016, thereby buying a developer or landowner significant additional time. 

 

The term “approval” has not changed and is still defined broadly to include any government agency approval, agreement, permit, including a building permit or extension permit, or other authorization or decision allowing a development or construction project to proceed or relating to or affecting development granted pursuant to a statute, regulation or ordinance adopted by a municipality (including, but not limited to the Planned Communities Act, the Condominium Act, the Clean Steams Law, the Municipalities Planning Code, the State Highway Law as it relates to the issuance of Highway Occupancy Permits, the Sewage Facilities Act, the Flood Plain Management Act, the Storm Water Management Act, the Construction Code, and the portion of the Pennsylvania Code relating to Erosion and Sediment Control as to Soil Erosion and Sediment Control Plans approved by Local Soil Conservation Districts). In addition, the term “approval” includes creating additional units and common elements out of convertible real estate in a condominium or planned community. During the extension period, however, a government agency shall retain the authority to suspend or revoke an approval for noncompliance with a written condition and to enforce conditions of approvals granted prior to the extension period. 

 

In Philadelphia, however, the suspension is not automatic. The approval is suspended only after the holder of the approval (i) provides notice to the issuing government agency of the holder’s intent to exercise their rights under the legislation to suspend the expiration date of the approval and (ii) pays a fee equal to fifty percent (50%) of the original application fee, but not to exceed $5,000. 

 

There are other exceptions to the automatic suspension that are notable. First, with regard to Highway Occupancy Permits, such permits shall only be extended by the Department of Transportation upon the submission of a complete and accurate application throughout the extension period for one year intervals. Second, any approval issued by the Department of Environmental Protection for a discharge into exceptional value or high quality waters is not subject to the automatic suspension. Third, approvals issued for compliance with federal law are not deemed suspended. Finally, with regard to an approval to connect to a public sewer system, the automatic suspension during the extension period is contingent on the availability of capacity for the extended approval. 

 

Any holder or recipient of an approval may seek written verification from the issuing government agency for any of the following: (i) the existence of a valid approval; and/or (ii) the expiration date of the approval under the new legislation. The request must state the approval in question and provide the anticipated expiration date in light of the extension period. Upon receipt of a request, the government agency shall have thirty (30) days within which to affirm or deny the existence of the approval, its expiration date, and any issues associated with its validity. If the agency fails to respond within thirty (30) days, the approval that was the subject of the request, as well as the anticipated expiration date, shall be deemed affirmed. The agency may charge a fee of not more than $100 for a residential approval request and $500 for a commercial approval request.