Fairness Over Finality: Day‑of‑Sale Loan Reinstatement Is “Unfairness” Justifying Vacatur of a Sheriff’s Sale Without an Evidentiary Hearing

Introduction

In EN Properties, LLC v. Freedom Mortgage Corporation and Dilks, the Delaware Supreme Court affirmed the Superior Court’s decision to set aside a sheriff’s sale of the borrowers’ primary residence after the borrowers’ loan was reinstated on the very day of the sale. The case squarely presented two issues pressed by the successful third‑party bidder, EN Properties:

Whether the bidder was entitled to an evidentiary hearing before the sale could be vacated; and
Whether setting aside the sale required the court to find fraud, mistake, or irregularity, rather than mere “unfairness.”

Against a backdrop of Delaware’s long‑standing policy to prioritize the rights of defaulting mortgagors, the Court held that (1) no evidentiary hearing was required where the additional facts sought would be immaterial to the decisive fairness analysis, and (2) the day‑of‑sale reinstatement constituted sufficient “unfairness” to justify relief under Superior Court Civil Rule 60(b)(6), even absent fraud, mistake, or procedural irregularity. The Court also affirmed the denial of EN Properties’ motion to intervene.

The decision reaffirms and sharpens core principles of Delaware foreclosure law: confirmation of a sheriff’s sale is an exercise of equitable discretion; “unfairness” to interested parties—especially mortgagors—can justify setting aside the sale; and bidders’ interests remain contingent until confirmation and may yield to mortgagor‑protective equities without the need for an evidentiary hearing when further factual development would not change the equitable outcome.

Summary of the Opinion

Procedural posture: Freedom Mortgage filed foreclosure in June 2024. The sheriff’s sale proceeded on December 17, 2024, and EN Properties was the high bidder at $225,000. That same afternoon, Freedom Mortgage received wire funds reinstating the borrowers’ loan. Freedom promptly moved to set aside the sale; the Superior Court granted the motion and ordered return of EN’s deposit. EN then moved to intervene and to vacate the set‑aside order; the court denied intervention and dismissed the action. EN appealed.
Holdings:
- No evidentiary hearing required: The trial court acted within its discretion to resolve EN’s challenge without an evidentiary hearing because the additional facts EN sought (e.g., identity of the caller, internal protocols, precise wire timing) were collateral and immaterial to the dispositive fairness determination.
- “Unfairness” suffices under Rule 60(b)(6): The trial court did not abuse its discretion in setting aside the sale based on the unfairness that would have resulted to the borrowers, who had successfully reinstated their loan on the day of sale. A separate finding of fraud, mistake, or irregularity was unnecessary.
- Affirmance of orders: The Supreme Court affirmed the December 27, 2024 order setting aside the sale and the January 13, 2025 order denying EN Properties’ motion to intervene.
Standard of review: Abuse of discretion—requiring a showing that the trial court acted arbitrarily or capriciously.
Controlling principles: The Superior Court has broad discretion in confirming or setting aside sheriff’s sales; the rights of defaulting mortgagors are of “paramount importance”; and Rule 60(b)(6) allows relief from judgment for “any other reason” justifying relief, including unfairness.

Detailed Analysis

Factual and Procedural Timeline

June 11, 2024: Freedom Mortgage files foreclosure against Bethany and William Dilks, seeking to foreclose their primary residence.
September 2024: Freedom moves for default judgment and notices lienholders of a December sale date.
December 17, 2024 (morning): Freedom receives a call from a third party seeking to confirm wire instructions to reinstate; the caller indicates an attempted wire the prior day had an address error.
December 17, 2024 (sale proceeds): EN Properties is high bidder at $225,000 and pays the deposit.
December 17, 2024 (afternoon): Freedom receives the reinstatement wire; the loan is reinstated.
December 19, 2024: Freedom moves to set aside the sale.
December 27, 2024: Superior Court grants the motion, sets aside the sale, and orders the deposit returned.
January 10, 2025: Freedom seeks to vacate the judgment and dismiss; later that day, EN moves to intervene and vacate the set‑aside order.
January 13, 2025: The court denies EN’s motion and dismisses the case.
January 27, 2025: Motion for reargument denied. Appeal follows.

Precedents and Authorities Cited

Burge v. Fidelity Bond & Mortgage Co., 648 A.2d 414 (Del. 1994):
- Seminal Delaware authority on setting aside sheriff’s sales.
- Confirms the Superior Court’s “broad discretion” to confirm or vacate a sale.
- Provides two pathways to vacatur: (a) “irregularities in the sale proceedings” or (b) “fraud, unfairness, or other extraneous matters demonstrating unfairness” to an interested party.
- Declares the rights of defaulting mortgagors to be “of paramount importance.”
Deutsche Bank Nat’l Trust Co. v. Goldfeder, 86 A.3d 1118, 2014 WL 644442 (Del. Feb. 14, 2014) (Table):
- Reiterates the abuse‑of‑discretion standard; trial court action must be “arbitrary and capricious” to warrant reversal.
Girard Trust Bank v. Castle Apartments, Inc., 379 A.2d 1144 (Del. Super. 1977):
- Articulates the equitable purpose of judicial scrutiny of sheriff’s sales: not to delay execution, but to ensure “just treatment” of the defaulting obligor.
Super. Ct. Civ. R. 60(b)(6):
- Permits relief from a judgment for “any other reason justifying relief.”
- Delaware courts use this provision to address equitable unfairness in sheriff’s sale contexts, particularly in favor of mortgagors.
Scottoline v. Women First, LLC, 2025 WL 1707364 (Del. June 18, 2025):
- Confirms trial courts’ broad “gatekeeping” discretion over whether to hold evidentiary hearings, especially where the record suffices and proposed testimony would not aid the determination.
Abtrax Pharmaceuticals v. Elkins‑Sinn, 655 A.2d 1368 (N.J. 1995) (persuasive):
- New Jersey practice: evidentiary hearings are generally needed only when the record is inadequate to permit a fully‑informed decision or when a hearing would be helpful to resolve the issue.
Solomon v. Duggan, 2004 WL 692903 (Del. Super. Mar. 11, 2004):
- Distinguished; that case involved staying a sale to further develop the record, not an already‑completed sale vacated to prevent unfairness to mortgagors.
Gunn v. U.S. Bank Nat’l Ass’n, 2009 Del. LEXIS 661 (Del. Dec. 1, 2009):
- Distinguished on unique procedural posture (intervention denied earlier, later discovery estoppel issue); remand ordered to remedy the court’s prior error preventing discovery. Not analogous to this case, which involved a prompt set‑aside grounded in fairness.

Legal Reasoning

1) No entitlement to an evidentiary hearing where additional facts are immaterial

EN Properties contended it was entitled to an evidentiary hearing to explore facts such as: the identity of the caller who sought to confirm wire instructions the morning of sale; Freedom Mortgage’s internal protocol for staying a sale; and the precise timing of the wire initiation and receipt.

The Supreme Court rejected that contention. It emphasized the Superior Court’s discretion not to convene a hearing where the proposed factual development would only elicit testimony on collateral matters “immaterial to the trial court’s decision.” Here, even if all disputed factual questions were resolved in EN’s favor, the core equitable conclusion would not change: confirming the sale would be unfair to the Dilkses because the loan was reinstated on the day of the sale. Under Scottoline and the general principle drawn from Abtrax, a hearing is unnecessary where the record is adequate and further evidence would not materially aid the decisional analysis.

2) “Unfairness” alone can justify setting aside a sale under Rule 60(b)(6)

EN Properties argued that vacating a sheriff’s sale requires a finding of fraud, mistake, or irregularity. The Court reaffirmed Burge: “unfairness to one of the interested parties” is independently sufficient to set aside a sale, and the rights of defaulting mortgagors are of “paramount importance.” Applying these principles, the Superior Court acted well within its discretion to set aside the sale because, after the borrowers had successfully reinstated the loan on the day of the sale, confirming the sale would have displaced them from their home despite having cured the default.

The Court grounded this result in Rule 60(b)(6)’s “catch‑all” provision—authorizing relief for “any other reason justifying relief”—and Delaware’s longstanding policy favoring protection of mortgagor rights over the interest of a non‑confirmed high bidder. The decision makes clear that a judicial sale, prior to confirmation, remains subject to the court’s equitable supervision, and a bidder’s status as a third‑party purchaser does not trump the court’s obligation to prevent unfairness to the mortgagor.

3) The bidder’s intervention and “bona fide purchaser” arguments

EN Properties styled itself a bona fide third‑party purchaser with an equitable interest and argued the set‑aside impinged on that interest without due process. The Supreme Court affirmed the denial of intervention and the set‑aside order. While the Court did not separately analyze Rule 24 intervention standards, its reasoning signals two key points:

Before confirmation, a bidder’s interest is contingent and subject to the court’s equitable oversight of the sale; and
Where the dispositive issue is fairness to the mortgagor under Rule 60(b)(6), and the bidder identifies only collateral factual disputes that would not alter that fairness analysis, a trial court may resolve the set‑aside motion without an evidentiary hearing and without granting intervention.

Importantly, the court ordered return of EN’s deposit, mitigating the bidder’s reliance interests. The decision does not foreclose intervention or a hearing in other cases where a bidder can show material irregularities or where factual development could alter the equitable balance; it holds only that neither was required on this record.

Impact and Implications

A clarified rule of decision

Day‑of‑sale reinstatement is enough: When a borrower’s loan is reinstated on the day of the sheriff’s sale—even if the wire posts after the auction—the Superior Court may set aside the sale under Rule 60(b)(6) based solely on the resulting unfairness to the mortgagor.
No per se evidentiary hearing right for bidders: A high bidder is not entitled to an evidentiary hearing simply because it identifies factual questions; the trial court may deny a hearing where the proposed facts are immaterial to the equitable question that controls the outcome.
No need to prove fraud, mistake, or irregularity: Delaware courts can set aside a sale based on “unfairness” alone; the Burge categories are alternatives, not cumulative prerequisites.

Effects on stakeholders

Borrowers (mortgagors): The ruling reinforces that timely reinstatement—even at the eleventh hour—can preserve homeownership. Courts will prioritize mortgagor rights where confirmation would produce inequitable forfeiture after a cure.
Lenders and servicers: The decision validates moving swiftly to set aside a sale when reinstatement funds arrive on the sale date. It also underscores the importance of internal protocols to identify last‑minute payments and to promptly notify the sheriff and the court.
Third‑party bidders: Bids at sheriff’s sales remain conditional until confirmation. This decision highlights a non‑trivial risk: where a borrower cures on sale day, the sale may be vacated and the deposit returned. Sophisticated bidders should price in this risk and consider same‑day diligence—including confirming with the foreclosing lender or counsel shortly before the auction whether a cure or reinstatement is pending.
Court administration: The ruling supports efficient resolution of set‑aside motions without evidentiary hearings when the outcome turns on clearly dispositive equitable considerations not dependent on disputed collateral facts.

Market dynamics and open questions

Chilling effect on bids: Some bidders may discount prices to absorb the risk of post‑auction vacatur when last‑minute cures occur. Delaware’s policy choice—placing mortgagor protection above bidder finality pre‑confirmation—accepts this tradeoff.
Outer boundary of “unfairness”: The case involves a same‑day cure. Future litigation may address how near in time a cure must be to constitute “unfairness” sufficient to vacate a sale (e.g., funds initiated the day before, bank processing delays, or partial payments).
Bidder remedies: Here, the deposit was returned. Whether bidders may ever recover incidental costs or reliance damages when a sale is vacated for fairness, and under what circumstances, remains a potential area for development not addressed in this order.

Complex Concepts Simplified

Sheriff’s sale: A public auction of property ordered by the court to satisfy a judgment, commonly used in mortgage foreclosures. The sale is not final until the court “confirms” it.
Confirmation: Judicial approval that finalizes the sheriff’s sale. Before confirmation, the court may set aside the sale for equitable reasons.
Reinstatement: A borrower’s curing of the mortgage default—usually by paying past‑due amounts and fees—so that the loan is restored to good standing.
Bona fide purchaser (BFP): A purchaser who buys property for value without notice of competing claims. At sheriff’s sales, pre‑confirmation BFP expectations are subject to the court’s equitable power to set aside the sale.
Rule 60(b)(6): A procedural rule allowing courts to grant relief from a final judgment for “any other reason” that justifies relief—used here to vacate a sale on fairness grounds.
Abuse of discretion: A deferential appellate standard. A decision will be reversed only if the trial court acted “arbitrarily and capriciously,” or outside the bounds of reason and law.
Fraud, mistake, irregularity, and unfairness: Grounds to invalidate a sheriff’s sale. In Delaware, “unfairness” alone—especially to the mortgagor—can justify vacatur without proving the others.

Conclusion

EN Properties underscores Delaware’s enduring commitment to equitable oversight of sheriff’s sales with the mortgagor’s rights at its center. The Supreme Court’s order makes three consequential points:

A day‑of‑sale loan reinstatement renders confirmation of the sheriff’s sale unfair to the mortgagor and fully supports vacatur under Rule 60(b)(6).
An evidentiary hearing is not required when additional facts are collateral and would not change the dispositive fairness analysis.
A bidder’s pre‑confirmation interest—even as a bona fide third party—does not supersede the court’s obligation to prevent unfairness to the mortgagor, and intervention may be denied where participation would not affect the outcome.

While the decision may inject some uncertainty for third‑party bidders and modestly chill auction prices, it clarifies the governing framework: equity will not permit a home to be lost where the borrower has cured the default in time, and trial courts need not hold evidentiary hearings to confirm what equity already makes clear. In this balance between finality and fairness, Delaware continues to place paramount weight on the just treatment of defaulting homeowners.