B & B Capital, LLC, v. Kenneth L. Kreitz, Jr.

B & B Capital, LLC, v. Kenneth L. Kreitz, Jr.,

Civil Action-Property Law-Mortgage Foreclosure-Real Estate Taxes-In Rem Judgment-Sheriff Upset Sale-Surplus Proceeds-Distribution-Real Estate Tax Sale Law-Principles of Equity

The Lebanon County Sheriff’s Department filed a Motion seeking disposition of funds resulting from a Sheriff sale that exceeded the amount of the mortgage and real estate tax delinquency amounts owed upon property.  Mountain View Trust, the upset purchaser of the property at the Sheriff sale, asserts that it is entitled to the funds on the basis that it acquired full title to the property subject to the remaining balance owed to B & B Capital, LLC, the successor in interest to a company that afforded a mortgage upon the property to Kenneth L. Kreitz, Jr. (“Kreitz”), the owner of the property who defaulted upon mortgage and real estate taxes.  Kreitz asserts that he is entitled to any balance of funds that remained after satisfaction of the mortgage and tax judgments.

1. The Real Estate Tax Sale Law (“RETSL”), 72 P.S. § 5860.101 et seq., governs all real state upset sales.

2. Under the RETSL, a mortgage holder is authorized to initiate an in rem proceeding against an encumbered property when the owner’s payment obligation reaches delinquent status.

3. A mortgage holder which successfully procures an in rem judgment is entitled to force a Sheriff sale.

4. The mortgage holder is entitled to receive proceeds from the foreclosure sale equal to the balance owed regarding the mortgage plus costs and expenses.

5. To the extent that any surplus remains after the mortgage holder has been paid, the balance typically is paid to the mortgagor.

6. If any doubt exists regarding surplus proceeds, the sheriff is authorized to apply to the court for a determination regarding division of proceeds.

7. The relative rights of parties to share in any surplus from a foreclosure sale are determined based upon equitable principles.

8. Principles of equity warrant distribution of $65,000.00 in proceeds to Mountain View Trust to satisfy the amount expended to satisfy the mortgage and real estate tax delinquencies, $1,000.00 to the Lebanon County Sheriff’s Department for counsel fees and expenses relating to the Motion filed and the remaining balance to be divided equally between Kreitz and Mountain View Trust.

L.C.C.C.P. No. 2021-00166, Opinion by Bradford H. Charles, Judge, July 15, 2022.