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American Tax Funding, LLC v. Golaszewski

A-0668-07T2 (N.J. Super. App. Div. 2008) (Unpublished)

FORECLOSURE; TAX SALES — A mortgagee is also permitted to be a tax sale certificate holder and may intervene in tax foreclosure proceedings brought by other tax sale certificate holders.

A property that was subject to a mortgage was also encumbered by two tax liens. The lien certificate holders commenced foreclosure proceedings. An investor received permission to intervene in one of the foreclosure proceedings and also purchased the mortgage for an amount which, according to the lower court, exceeded nominal consideration. The investor then took assignment of one of the tax sale certificates and substituted its name for the holder in the foreclosure proceedings. It then obtained a final judgment of foreclosure. Finally, the investor successfully moved to intervene in the second tax certificate buyer’s foreclosure proceeding and to redeem that tax lien.

On appeal, the Appellate Division agreed with the lower court that the investor’s intervention was timely and that its purchase of the mortgage and the first tax certificate was for more than nominal consideration. It added that it was not the purpose of the foreclosure statutes to prevent third parties from intervening, but only to prevent investors from offering only nominal consideration to property owners facing foreclosure. The second certificate holder’s argument that the investor could not both own a mortgage and purchase a tax lien on the same property was rejected. The Court noted that the investor still would have held a viable mortgage interest even if it merged the mortgage with the first tax lien and that foreclosing the second tax lien instead of foreclosing the mortgage was proper. Based on its findings and conclusions, the Court affirmed the lower court’s decision to allow the investor to intervene in the tax foreclosure proceeding brought by the second tax certificate holder.

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