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208 Community, LLC v. DiMaio

A-2434-06T2 and A-2435-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

TAX SALES; REDEMPTION — The right of redemption in a tax sale is available only to property owners and those properly intervening in a foreclosure, but not to those just providing funding to the property’s owner.

An assignee of a tax sale certificate sold by a municipality for unpaid taxes on a residential property began a tax foreclosure action. An order was entered fixing the amount of redemption. The owners of the home and a proposed investor entered into an agreement whereby the house would be sold to the investor and the proceeds would pay the tax judgment and be used to redeem the property. The certificate holder claimed that this was a sham transaction in which the third party investor, not a party to the action, actually provided funds necessary for the redemption and the owners were allowed to stay at the property. The holder filed a motion to bar redemption. The Court granted the requested relief, finding that the funds actually came from a third party investor not a party to the action.

The Appellate Division held that the right of redemption is available only to property owners and those properly intervening in a foreclosure, but not to those just providing funding to the property’s owner. The Court held that, while a landowner may finance its redemption of its property and sell its interest, the purpose of requiring investors to intervene in a foreclosure action is to ensure that the Court has a chance to supervise the transaction and to make sure that more than nominal consideration is given for the property. As such, the Court affirmed the lower court’s denial of redemption, but remanded the matter to determine whether the contract was indeed for more than nominal consideration and whether the contract’s related documents raised questions about the legitimacy of the transaction.


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