Aaron J. Walayat, Esq., awalayat@tuckerlaw.com, (412) 594-3935

In a February 11, 2022 Order, the Court of Common Pleas of Washington County granted a Petition to Compel Satisfaction of Liens under the Deficiency Judgment Act (“DJA”) filed by a junior judgment holder represented by Tucker Arensberg in PNC v. Semanderes, et al., No. 2015-2193 (C.C.P. Washington County 2022).

Judgment Creditors Who Purchase Real Estate in Execution of Their Judgment are Required to File A Petition to Fix Fair Market Value Within Six-Months

When an executing creditor purchases a judgment debtor’s real property at a Sheriff’s Sale, the DJA, 42 Pa.C.S. § 8103, requires the judgment creditor to file a petition to fix fair market value within six months of recording the deed. See Reliable Savings and Loan v. Joyce, 561 A.2 804 (1989). If the judgment creditor does not file a petition to fix fair market value within this six-month window, there is a “conclusive presumption” that the judgment is satisfied. See First Federal Sav. & Loan v. Keisling, 746 A.2d 1150 (Pa. Super. 2000).  The Petition must be filed even if the executing creditor and judgment debtor agree on the amount of the deficiency.

The DJA Allows Certain Parties to File a Petition to Have a Judgment Deemed Satisfied If No Petition to Fix Fair Market Value Has Been Filed

The DJA therefore permits “the debtor, obligor, guarantor or any other person liable directly or indirectly to the judgment creditor for the payment of the debt, or any person interested in any real estate which would … be bound by the judgment” to file a petition indicating that the sale has occurred, that no petition to fix fair market value has been filed within the six-month window, and that the judgment should, therefore, be deemed satisfied. 42 Pa.C.S. § 8103(d).

In this matter, the senior creditors executed on its judgment against debtors, purchasing the debtor’s real estate at a sheriff sale. The senior creditor, however, did not file a petition to fix fair market value within the six-month window. The junior judgment holder, represented by Tucker Attorneys Michael Shiner and Aaron Walayat, filed a Petition to compel the satisfaction of the senior creditor’s liens over the debtor’s property.

In its Memorandum Opinion, the Court of Common Pleas of Washington County determined that junior creditors had standing to file a Petition to Compel the Satisfaction of Liens as the junior creditors were “any person interested in any real estate which would … be bound by the judgment.” Recognizing that senior creditor recorded the deed but failed to file a petition to fix fair market value, the Court granted the junior creditor’s Petition to Compel Satisfaction of Liens.

Settlement Agreements Which Attempt to Release a Judgment Creditor From Filing a Petition to Fix Fair Market Value When a Sale Has Occurred Are Void

Junior Creditor attempted to argue that it had agreed to the amount of the deficiency with the debtors in a Settlement Agreement, and that this agreement excused compliance with the DJA. The Court rejected this argument, noting that the DJA specifically voids any agreement between the senior creditor and the debtor that either waives the debtor’s benefits under the DJA or releases the senior creditor from strict compliance with the DJA. See 42 Pa.C.S. § 8103(e). The Settlement Agreement could not release the senior creditor from filing a petition to fix fair market value. Assignee’s failure to file allowed junior creditors to enforce the DJA.

For more information on this, contact Michael Shiner at mshiner@tuckerlaw.com or Aaron Walayat at awalayat@tuckerlaw.com.