WHEN IS A FORECLOSURE SALE FINAL IN NORTH CAROLINA?

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1 WHEN IS A FORECLOSURE SALE FINAL IN NORTH CAROLINA? Can a borrower invoke Rule 60(b) to unwind a completed foreclosure sale after the property changes hands? The surprising answer is maybe, under the right conditions. Neale T. Johnson Smith Moore Leatherwood LLP 300 N. Greene Street, Suite 1400 Greensboro, North Carolina (w) (f) neale.johnson@smithmoorelaw.com

2 WHEN IS A FORECLOSURE SALE FINAL IN NORTH CAROLINA? Can a borrower invoke Rule 60(b) to unwind a completed foreclosure sale after the property changes hands? The surprising answer is maybe, under the right conditions. Whether a foreclosure sale creates a title in the purchaser that the borrower cannot unwind after the purchase is a critical issue for lenders and title insurers both. A recent, unresolved appeal challenged the conventional wisdom in North Carolina that once the sale confirms by operation of law, the rights of the buyer are fixed regardless of further action by the borrower. A borrower filed a Rule 60(b) motion seeking both to vacate the order of sale and to set aside the substitute trustee s deed to the lender long after the completion of the foreclosure. The trial court denied the motion as moot, and the borrower appealed. In re Gethsemane Baptist Church, N.C. App. No. COA (2014), presented this question to the North Carolina Court of Appeals in early Unfortunately, the Court of Appeals dismissed the appeal on procedural grounds after briefing 1 without resolving the question. This leaves participants in the foreclosure process to wonder about the circumstances under which a trial court can unwind a foreclosure sale. I. Factual and Procedural History While the facts of the underlying appeal were complicated, those necessary to understand the Rule 60(b) issue were not. Gethsemane Baptist Church (the Church ) owned a church building and other improvements on land located in Charlotte, North Carolina. In 2007, Foundation Capital Resources, Inc. (the Lender ) closed a loan with the Church to finance construction of a community center and recreation area for the congregation on the Church s property. Construction commenced thereafter, but the Church encountered difficulties with its contractor and had to replace the contractor during the job. The Church asked the Lender to loan more money to finish the project, but the Lender declined. The Church lacked sufficient capital reserves to complete the project and faced liens and lawsuits from trade contractors that 1 The lender/appellee filed a motion to dismiss for lack of subject matter jurisdiction simultaneously with the filing of the lender s brief. The motion to dismiss tied into the argument made in the lender s brief that the court lacked subject matter jurisdiction, and was filed primarily to give the Court of Appeals an alternate procedural mechanism to dispose of the appeal on the merits. The lender filed its motion to dismiss contemporaneously with its appellee s brief. The borrower/appellant filed a reply brief, but did not respond directly to the motion to dismiss. The Court of Appeals dismissed the appeal, apparently because the motion was unopposed rather than on the merits. 2

3 the general contractor had not paid when it was terminated. The Church entered into a forbearance agreement with the Lender in May 2009, but failed to make required payments. Before it could foreclose, however, the Lender discovered several title problems with the deed of trust. In November 2009, the Lender filed a civil action to reform the deed of trust and to cure the title defects. The Church cooperated with the Lender s efforts to cure the defects in the deed of trust. In December 2010, the Lender obtained summary judgment in the reformation action. When the Church failed to cure the default after further demand, the Lender initiated a foreclosure proceeding in April On 2 May 2011, the clerk held a hearing in the foreclosure proceeding. The Church did not appear at the hearing, but did not later deny that it had notice. At the conclusion of the hearing, the clerk entered an order of sale. The same day, the substitute trustee scheduled and noticed the sale. The substitute trustee sold the property on 15 June 2011 (as noticed), and the Lender was the high bidder at the sale. The clerk received no upset bids, and the sale confirmed by operation of law on Monday 27 June The substitute trustee conveyed the property to the Lender, and the substitute trustee s deed was recorded on 20 July On 25 July 2011, the substitute trustee filed his final report. Thereafter, the Lender asked the Church to vacate the property. When the Church failed to do so, the Lender obtained an order of possession on 4 November The sheriff executed the writ on 14 November 2011, and the Lender took possession of the property. The Church did not appeal the order of sale, file a civil action to enjoin the sale before the end of the upset bid period, or take any other judicial action to prevent its eviction from the property. On 28 June 2012, more than thirteen months after entry of the order of sale and more than a year after the rights of the parties became fixed, the Church filed a verified Rule 60(b) motion before the clerk requesting that the order of sale and the substitute trustee s deed be set aside on the grounds that the Lender had committed fraud in connection with the 2007 lending process and that it had tricked the Church into failing to contest the foreclosure with promises that the Lender would lease the property back to the Church. The clerk declined to hear the motion and referred it superior court. On 19 December 2012, the superior court denied the Rule 60(b) motion as moot because the rights of the parties had been fixed by operation of the foreclosure statute. The Church thereafter appealed. 3

4 II. The Church s Argument on Appeal The Church argued, in substance, the following: 1. The Rules of Civil Procedure apply to foreclosure proceedings just as they apply to civil actions, see N.C. Gen. Stat & 7A A motion under Rule 60(b) to set aside or vacate a judgment was the appropriate procedure for the Church to challenge the foreclosure. 3. Rule 60(c) and North Carolina General Statutes Section 7A-103(9) specifically authorized the clerk and the trial court to vacate the order of sale. 4. North Carolina General Statutes Section specifically authorized the clerk and the superior court to set aside the substitute trustee s deed after the rights of the parties were fixed if necessary to unwind the enforcement of an order of sale under Rule 60(b). 5. The trial court abused its discretion when it exercised discretion under an erroneous understanding of the law. When it denied the Church s Rule 60(b) motion as moot because the rights of the parties had become fixed by operation of the foreclosure statute, it erred because it misunderstood its authority to grant relief. If this argument holds, then a borrower can void a substitute trustee s deed after the deed is recorded if the borrower can convince the court to do so. Rule 60(b) states: On motion and upon such terms as are just, the court may relieve a party... from a final judgment, order or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect; (2) Newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) Fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) The judgment is void; (5) The judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or 4

5 (6) Any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the judgment, order, or proceeding was entered or taken. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court. The procedure for obtaining any relief from a judgment, order, or proceeding shall be by motion as prescribed in these rules or by an independent action. Rule 60(c) specifically addresses judgments rendered by the clerk (such as an order of sale in a foreclosure proceeding): The clerk may, in respect of judgments rendered by himself, exercise the same powers authorized in sections (a) and (b). Moreover, the judge has like powers in respect of such judgments and a party may appeal the clerk s decision on a Rule 60(b) motion to superior court just as for other judgments by the clerk. N.C.R. Civ. P. 60(c). Section 7A-103(9) of the North Carolina General Statutes authorize[s] the clerk of superior court to [o]pen, vacate, modify, set aside, or enter as of a former time, decrees or orders of his court. In short, the clerk and the trial court have the authority to vacate or set aside an order of sale in a foreclosure proceeding after the fact. North Carolina General Statutes Section provides: If a judgment is set aside pursuant to Rule 60(b) or (c) of the Rules of Civil Procedure and the judgment or any part thereof has been collected or otherwise enforced, such restitution may be compelled as the court directs. Title to property sold under such judgment to a purchaser in good faith is not thereby affected.... Contrary to the apparent plain meaning of the last sentence, however, this provision does not limit the trial court s discretion to unwind a transfer resulting from the enforcement of a judgment when it is in the interest of justice. Town of Cary v. Stallings, 97 N.C. App. 484, 487, 389 S.E.2d 143, 145 (1990) ( Our reading of this statute provides that the conveyance of title to such property, as acquired in good faith, is not automatically affected, but, title to such property may in fact be affected if the court deems it necessary in the interest of justice. ). Although the Church cited numerous cases, only one recent, unpublished case involved the power of sale foreclosure statute. In Weddington Ridge Homeowners Ass n, Inc. v. Charlotte Prop. Invs., LLC, No. COA12-942,739 S.E.2d 627, 2013 WL (N.C. Ct. App. March 19, 5

6 2013) (unpublished), the Court of Appeals affirmed a trial court s order voiding an order of sale under Rule 60(b) and voiding the deed resulting from the sale under Section even though the buyer was an innocent third party. On the surface, Weddington seems to recognize Rule 60(b) and Section as express authority for the trial court to vacate the Lender s order of sale and to void the substitute trustee s deed after the sale was completed. III. The Lender s Response The Lender made numerous arguments in its appellee s brief, several of which were unique to the facts and procedural posture of the case. With respect to the key legal issues, however, the Lender argued in substance the following: 1. The Church s Rule 60(b) motion (which relied on alleged Lender fraud or misconduct) was not filed within a reasonable time because the Church did not file the motion until more than a year after the clerk entered the order of sale and more than a year after the rights of the parties became fixed. 2. The clerk and the trial court lacked subject matter jurisdiction within the foreclosure proceeding to determine more than the six findings of fact permitted/required by the foreclosure statute, and that the only way for it to find and act on alleged fraud was in a civil action in which the trial court had access to its full equitable jurisdiction. 3. Weddington was distinguishable because the Weddington court had subject matter jurisdiction (to determine adequacy of notice) and because the absence of notice violated the U.S. Constitution. Under those circumstances, Rule 60(b) and Section were an appropriate exercise of the court s powers within the Weddington foreclosure, but not for the Church because fraud or misconduct were equitable matters outside of the six elements over which the trial court hearing foreclosure proceeding has subject matter jurisdiction. The first argument is straightforward and unique to the facts of each case. Rule 60(b) requires the moving party to file a motion premised on fraud or misconduct within a year, and the party cannot avoid the time limit by recharacterizing alleged fraud or misconduct as something else under Rule 60(b)(6) ( Any other reason justifying relief from the operation of the judgment ). See Bruton v. Sea Captain Props., Inc., 96 N.C. App. 485, , 386 S.E.2d 58, (1989); Akzona, Inc. v. Am. Credit Indem. Co., 71 N.C. App. 498, 505, 322 S.E.2d 623, 629 (1984). 6

7 The second argument, however, presents a more difficult problem. The subject matter jurisdiction of the clerk (or judge) hearing in a foreclosure proceeding is limited to the six findings permitted by statute and entry of the order of sale. A Rule 60(b) motion is similar to an appeal of an order of sale, in the sense that it arises in the context of the special proceeding. Nothing about Rule 60(b) or Section expands the subject matter jurisdiction of the court to equitable matters, nor does it seem appropriate to treat a party better under Rule 60(b) than if that party had complied with the statute (i.e., filed a timely appeal or a timely civil action to enjoin the sale). Weddington, however, affirmed a trial court s decision to vacate an order of sale under Rule 60(b) and to set aside a deed to an innocent third party under Section 1-108, both long after the rights of the parties were fixed. A superior court judge hearing a civil action to enjoin a foreclosure sale has general subject matter jurisdiction (including all of the court s equitable powers), but a superior court judge hearing an appeal of a foreclosure proceeding has only the subject matter jurisdiction given to the clerk under the foreclosure statute. See In re Watts, 38 N.C. App. 90, 94, 247 S.E.2d 427, 429 (1978); In re Cornblum, N.C. App.,, 727 S.E.2d 338, 341, disc. review denied, 366 N.C. 404, 734 S.E.2d 864, cert. & supersedeas denied, 366 N.C. 404, 734 S.E.2d 865, disc. review dismissed, 366 N.C. 404, 734 S.E.2d 865 (2012); see also In re Carter, N.C. App.,, 725 S.E.2d 22, (2012); In re David A. Simpson, P.C., 211 N.C. App. 483, 488, 711 S.E.2d 165, (2011); Mosler ex rel. Simon v. Druid Hills Land Co., Inc. 199 N.C. App. 293, , 681 S.E.2d 456, 458 (2009); Espinosa v. Martin, 135 N.C. App. 305, 308, 520 S.E.2d 108, 111 (1999); In re Matter of Foreclosure of Deed of Trust Executed by Godwin, 121 N.C. App. 703, , 468 S.E.2d 811, (1996); N.C. Gen. Stat (d). Rule 60(b) does not alter the nature of the action or proceeding in which it arises, and should not, therefore, expand the subject matter jurisdiction of the clerk (or judge) in a foreclosure proceeding. Equitable relief for alleged fraud or misconduct is outside of the six elements which the clerk has authority to determine under the foreclosure statute. See In re Stonecrest Partners, LLC, No. COA 11-34, 716 S.E.2d 440, 2011 WL , *5 (N.C. Ct. App. Oct. 4, 2011) (unpublished) (addendum) ( As evidence of fraud, misrepresentation, and mutual mistake do not tend to rebut the findings of fact required by N.C. Gen. Stat , [the debtor s] claims are equitable in nature and should have been raised in a proceeding to enjoin the foreclosure sale. ); see also, e.g., Mosler, 199 N.C. App. at , 681 S.E.2d at (merger); Espinosa, 135 7

8 N.C. App. at 311, 520 S.E.2d at 112 (ratification); In re Young, N.C. App.,, 744 S.E.2d 476, 480 (2013) (estoppel); In re Raynor, N.C. App.,, 748 S.E.2d 579, 584 & n.2 (2013) (cataloging acceptable claims for consideration in foreclosure proceeding). Under North Carolina s foreclosure statute, when a debtor defaults on a loan secured by a deed of trust, the lender either directs the trustee of the deed of trust to foreclose the deed of trust or substitutes a new trustee to carry out the foreclosure. N.C. Gen. Stat (a). The trustee initiates a special proceeding before the clerk by sending parties entitled to notice a notice of hearing meeting statutory requirements. N.C. Gen. Stat (a)-(c). The clerk of court holds an evidentiary hearing to determine (as a judicial act ) six required elements: (i) a valid debt, (ii) default, (iii) a right to foreclose under the deed of trust, (iv) notice, and two other less common elements. N.C. Gen. Stat (d)-(d1). If the clerk finds the six elements, then the clerk must issue an order authorizing the trustee to sell the property; if not, then the trustee cannot sell the property. N.C. Gen. Stat (d). Either party disputing the clerk s determination may appeal to the trial court for a rehearing de novo, provided that the party appeals within ten days of the entry of the order and posts a bond to stay the foreclosure pending appeal. N.C. Gen. Stat (d1). Once a sale is ordered, the trustee advertises and publically auctions the property, typically with a credit bid by the lender as the minimum price. Others are free to bid at the auction, and at the end of the auction, the trustee files a preliminary report of sale with the clerk identifying (among other things) the high bidder and the amount of the bid. N.C. Gen. Stat For ten days thereafter, any party may file an upset bid with the clerk increasing the sales price by 5% (but not less than $750) and depositing 5% of the upset bid amount with the clerk. N.C. Gen. Stat Each upset bid starts a new ten period for anyone to file an additional upset bid. Id. After ten days without an upset bid, the sale confirms by operation of law and the rights of the parties to the sale... become fixed. N.C. Gen. Stat (a). The substitute trustee then closes the transaction with the buyer, issues a deed to the buyer, files a final report of sale with the clerk, and distributes the proceeds of the sale. See N.C. Gen. Stat The statute also provides that a person may challenge a foreclosure on equitable grounds by filing a separate civil action to enjoin the sale, which action must be filed before the rights of the parties become fixed. N.C. Gen. Stat In 2010, the North Carolina Court of Appeals held that a temporary injunction sought in a civil action filed under Section to enjoin a foreclosure sale was moot unless filed, 8

9 heard, and decided in favor of the property owner before the rights of the parties become fixed under Section A. Goad v. Chase Home Finance, LLC, 208 N.C. App. 259, 262, 704 S.E.2d 1, 3 (2010). In Goad, the debtor filed the action to enjoin the sale and moved for a preliminary injunction on the tenth day of the upset bid period. The motion hearing, however, was not scheduled or decided until ten days after the end of the upset bid period. Id. at 260, 704 S.E.2d at 2. The trial court denied the motion for preliminary injunction because it was moot. Id. The Court of Appeals affirmed, holding that the motion for preliminary injunction was moot because it had not been heard and decided before the rights of the parties were fixed. Id. at , 704 S.E.2d at 4-6. In 2011, the Court of Appeals dismissed a debtor s direct appeal of a foreclosure proceeding as moot because the debtor failed to stop the foreclosure sale before the rights of the parties became fixed. In re Foreclosure of Hackley, 212 N.C. App. 596, 713 S.E.2d 119 (2011). The debtor timely appealed an order of sale, but did not post a bond as required by Section (d1) nor did he file an action to enjoin the sale under Section before the rights of the parties became fixed under Section A. Id. at , 713 S.E.2d at The Court of Appeals dismissed the appeal because the secured creditor s rights in the subject real property [were] fixed and the [debtor s] appeal [was] moot. Id. at , 713 S.E.2d at 125. Finally, in 2012, the Court of Appeals held that the debtors direct appeal was moot because the debtors had not posted the required bond to stay the foreclosure sale and the rights of the parties became fixed before the appeal was heard. In Cornblum, the secured creditor initiated twelve special proceedings to foreclose various deeds of trust. Id., N.C. App. at. 727 S.E.2d at 339. Based on arbitration provisions in the deeds of trust, the debtors moved to compel arbitration in the special proceedings. The clerk denied the motions to compel arbitration and entered orders of sale. The debtors appealed and the presiding judge ordered the parties to arbitration at the debtors insistence. The arbitrator considered numerous equitable and other claims between the parties, rejected the debtors defenses, ordered the foreclosure sales to proceed, and awarded the creditors all of the principal and interest they requested. The secured creditors moved to confirm the award. The debtors then changed positions and argued that the superior court lacked subject matter jurisdiction to order the foreclosure proceedings to arbitration. The superior court confirmed the award anyway, and the foreclosure sales went forward. Id. at, 727 S.E.2d at The debtors appealed, but failed to post a bond to stay 9

10 the sales. The sales were completed during the appeal. The Court of Appeals agreed with the debtors and reversed the decision to confirm the award for lack of subject matter jurisdiction to order a foreclosure proceeding into arbitration in the first place (i.e., the judgment confirming the award was void for lack of subject matter jurisdiction). Id. at, 727 S.E.2d at Nonetheless, even though the order of sale was void for lack of subject matter jurisdiction, the fact that the foreclosure sales had concluded without the debtors posting a bond to stay the sale pending appeal or filing a civil action to enjoin it meant that the appeal of the sales (as opposed to other issues arbitrated) was moot. Id. at, 727 S.E.2d at Thus, when the trustee s deed has been recorded after a foreclosure sale, and the sale was not stayed, the parties[ ] rights to the real property become fixed, and any attempt to disturb the foreclosure sale is moot. That rule is binding on this panel. In re Cornblum, N.C. App. at, 727 S.E.2d at 342 (emphasis added). This is a remarkable ruling because it reversed for lack of subject matter jurisdiction, but left intact the principal consequence of the erroneous ruling (the foreclosure sales). IV. Weddington Revisited On the surface, the unpublished Weddington decision (2013) seems flatly inconsistent with Goad (2010), Hackley (2011), and Cornblum (2012) (all published decisions). Weddington is distinguishable on several facts, but none alone is particularly satisfying. First, Weddington was not a foreclosure proceeding: it was a homeowners association s enforcement of a claim of lien for nonpayment of dues by the property owner. The statute authorizing homeowners associations to enforce claims of lien, however, requires them to use the power of sale foreclosure statute. As such, this is a distinction without a difference. Second, Weddington arose in the Rule 60(b) context, and the powers authorized in Section specifically flow from a decision under Rule 60(b) or (c). Section does not apply to appeals, and so on this narrow, technical point, Cornblum is not inconsistent with Weddington because Cornblum decided a direct appeal to which Section does not apply. In other words, the appeal was moot because reversing the order of sale would not give the trial court the authority to set aside the sale; but a successful Rule 60(b) motion would give the trial court the authority to set aside the sale because Section says so. No principled reason exists, however, to treat a party asserting Rule 60(b) after the rights of the parties are fixed better than a party which correctly and timely appeals or files a civil action to enjoin a 10

11 foreclosure sale. Allowing better treatment to parties moving under Rule 60(b) after the rights of the parties are fixed would seem to harm to the foreclosure process because prospective buyers could never be certain that the prior owner could not successfully challenge the buyer s title under Rule 60(b) even if that same buyer s right to appeal or sue had expired when rights of the parties were fixed by statute. That leaves only one final distinction on which to differentiate Weddington from the Church s argument: the trial court in Weddington voided the order of sale and set aside the deed for lack of notice to the property owners, whereas the Church sought to vacate the order of sale and to set aside the deed due to the Lender s alleged fraud or misconduct. The order of sale in Cornblum was also void, but for lack of subject matter jurisdiction. The Weddington court did not explain why it treated an order void for lack of notice differently from an order void for lack of subject matter jurisdiction. In the context of foreclosure proceedings in North Carolina, however, notice is different. This difference provides a basis for future appellate panels to limit Weddington s application to situations involving a lack of notice to the property owner(s). A foreclosure sale without notice to the owner and an opportunity to be heard violates the due process clause of the Fourteenth Amendment to the U.S. Constitution. Turner v. Blackburn, 389 F. Supp. 1250, (W.D.N.C. 1975) (declaring the then-existing foreclosure statute unconstitutional as applied to an owner who did not receive notice and entering an injunction under 42 U.S.C requiring the purchaser to convey the property back to the owner). Immediately after Turner was decided, the General Assembly amended the power of sale statute to require notice. See 1975 N.C. Sess. Laws Ch. 492 (enacting N.C. Gen. Stat to correct the constitutional defect in the statute by ensuring that the owner receives notice and a hearing, the elements of due process). Section (d)(iv) specifically requires notice to those entitled to such as a requirement for an order of sale to issue. A Rule 60(b)(4) motion asking that the order of sale be set aside because the order of sale was void for lack of constitutionally and statutorily required notice is precisely within the subject matter jurisdiction of the trial court in a foreclosure proceeding because it is one of the elements which the clerk or trial court must find. Weddington, therefore, is the paradigmatic example of when relief under Rule 60(b) is appropriate in a foreclosure proceeding. The trial court in Weddington had subject matter jurisdiction to consider notice (one of the six elements), and therefore jurisdiction to set aside the order under Rule 60(b). Because the trial court did not have subject matter jurisdiction 11

12 to decide the equitable arguments raised in Church s Rule 60(b) motion, it correctly denied the motion. This distinction is not without difficulties, however. If notice is within the subject matter jurisdiction of the court, so is the existence of other elements required for foreclosure (valid debt, default, right to foreclose under the deed of trust, etc.). Thus, the trial court would have jurisdiction to set aside an order of sale under Rule 60(b) if one of the other elements were challenged after completion of the sale, and then to set aside the resulting deed as authorized by Section This would appear to allow an end-run around Hackley (absence of a bond to stay foreclosure pending appeal mooted the appeal), because a Rule 60(b) motion does not require a bond. The best answer lies within Rule 60(b) itself: [t]he motion shall be made within a reasonable time.... What constitutes a reasonable time depends on the facts, but for a party with notice of the hearing, a reasonable time should end when the rights of the parties are fixed. For parties without notice of the hearing, a reasonable time should mean a reasonable time after they discovered or should have discovered foreclosure proceeding or sale (e.g., Weddington). This leaves the trial court able to correct sales carried out without constitutional due process, narrows the risks to potential buyers, and maintains the procedural structure created by Rule 60(b) and Section without creating odd exceptions that are inconsistent with the existing body of law interpreting Rule 60(b) and Section CONCLUSION The Church s appeal raised a significant issue about the application of Rule 60(b) to completed foreclosure proceedings and the ability of a trial court to set aside the substitute trustee s deed after the rights of the parties to the foreclosure sale were fixed by statute. The Weddington decision confirms that a trial court may, in an appropriate case, vacate an order of sale under Rule 60(b) and then set aside the resulting substitute trustee s deed under Section The question of when and subject to what limits, however, remains unresolved. The best resolution would not impair the Rules of Civil Procedure with inconsistent exceptions. It would also minimize the damage that increasing the uncertainty of post-completion challenges to foreclosure sales would do to the foreclosure process. The simplest solution is to interpret the timing language in Rule 60(b) the motion shall be made within a reasonable time to mean 12

13 before the rights of the parties become fixed by statute, except when the foreclosure is completed without constitutionally required notice, in which case a reasonable time would mean a reasonable time after the property owner discovered (or should have discovered) the existence of the foreclosure proceeding or sale. Neale T. Johnson, All rights reserved. 13