Capital One N.A. v. Hutchins-Orsi a/k/a Hutchins
A court can approve a foreclosure by sale, even if the highest bid was only 65 percent of the property's appraised value. In 2010, the plaintiff bank brought a foreclosure suit. Real estate appraisers opined that the property's fair market value was $2.6 million. At a foreclosure sale in July 2012, Sara and Robert Savage bid $1.7 million. The Savages' bid was the highest bid. The defendants objected to a motion to approve the sale and argued that the highest bid of $1.7 million was too low, and equity required that the court reject the sale. The Savages claimed that their bid resulted in a fair price. "In approving the committee sale, [the] court must exercise its discretion and equitable powers with fairness not only to the foreclosing mortgagee, but also to subsequent encumbrancers and the owners," pursuant to the Connecticut Appellate Court's 2009 decision, First Connecticut Capital LLC v. Homes of Westport LLC. A judicial sale is not absolute until confirmed by the court, pursuant to Hartford Federal Savings & Loan Assn. v. Tucker, a decision of the Connecticut Appellate Court. The Superior Court found that although the highest bid was only 65 percent of appraised value, it was "fair and reasonable." It is unlikely that a second sale would result in a substantially higher bid. The court rejected the defendants' argument that the court should not approve the sale, because the bid was too low, considering the appraised value. The defendants also argued that in January 2009 they obtained a partial release of the subject mortgage and that the foreclosure order for sale, which did not include the partial release, did not correctly identify the property. The Savages claimed that they are bona fide purchasers who obtained title to the entire property when they bid at the foreclosure sale. The court found that the Savages are not bona fide purchasers, because the court has not yet approved the sale. Although the partial release of mortgage was not recorded and should have been brought to the court's attention earlier, the court elected to schedule a hearing on its validity.