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Arianna Holding Company, LLC v. Karim

A-5474-03T1 (N.J. Super. App. Div. 2005) (Unpublished)

FORECLOSURE; SERVICE OF PROCESS — A party seeking to serve notice of a foreclosure action upon a property owner has a duty to take all reasonable steps to locate where the property owner lives.

A man who lived in Bangladesh purchased a condominium unit in New Jersey and rented it to tenants. In addition to the monthly rent, the tenants were responsible for paying the real estate taxes on the property to the owner’s brother-in-law, who was responsible for the management of the property. The taxes went unpaid for an extended period of time and as a result, the municipality placed a tax lien on the property. The tax lien was eventually sold to an investor, which paid the taxes on the property as they became due. The investor sent a pre-action letter to the owner informing him of the amount needed to redeem the property and that a complaint in foreclosure would be filed. Instead of sending the letter to Bangladesh, the letter was addressed to the property. The investor was notified that this was the incorrect address and once again unsuccessfully tried to serve the owner by mail. A complaint in foreclosure was then filed. The investor was unable to serve notice of the action by mail to the owner. As a result, it published a notice of the foreclosure action in the local newspaper. When the investor filed a request for entry of default, it asserted that it had unsuccessfully tried to serve the owner with notice of the action several times in New Jersey. The lower court entered an order setting forth the time and place for redemption. It also ordered the owner to be served at his known address and if not known, the investor would have to publish notice of the action in the newspaper. The investor published the notice in the newspaper but the owner did not respond. The lower court then entered a final judgment of foreclosure. The owner then filed an order to show cause to vacate the default judgment and redeem the tax sale certificate. Even though he submitted evidence which revealed that the investor had been told by its former attorney that the owner lived in Bangladesh, but still continued to serve him notice of the action in New Jersey. The lower court vacated the default judgment, holding that it was void for lack of good service. The investor appealed.

The Appellate Division affirmed the lower court’s ruling. It held that the investor knowingly attempted to serve the owner in New Jersey, despite its knowledge that the owner resided in Bangladesh. It found that the investor had a duty to take reasonable steps to find out where the owner actually lived, and the investor violated the owner’s due process rights by failing to take such steps. As a result, the Court affirmed the lower court’s vacation of the judgment for lack of good service.

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