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ATFH Real Property, LLC v. Kim

A-6064-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

FORECLOSURE; TAX SALES; NOTICE—A failure to give proper notice prevents a property owner from exercising his or her redemption rights; therefore, title transferred in a tax foreclosure sale must be vacated and the property owner must be given an opportunity to redeem the tax certificate.

A father and daughter owned commercial property. They failed to pay property taxes and sewer usage charges. As a result, a holder of tax sale certificates moved to foreclose on the property. A Notice of Intent to Foreclose was sent to the owners’ address as listed with the local tax collector’s office. The owners were advised that foreclosure proceedings would be instituted unless they redeemed the lien within thirty days from the date of the letter. The owners did not respond. The holder then filed a complaint seeking to foreclose. Service of the summons and complaint was then made on a granddaughter at the same address as the original Notice of Intent. There was no response. The holder then applied for a default judgment and an order setting the time, place and manner of redemption (OST). The OST and default papers were sent by regular mail to the owners at the same address. The owners claimed they never received them. Since the owners failed to redeem the property by the deadline, a final judgment of foreclosure was entered in favor of the holder.

The holder then sold the property. A day after the closing, the owners filed a motion to vacate the default, the OST, and the final judgment of tax foreclosure based on lack of personal jurisdiction due to improper service. The lower court held that father had not been properly served because he did not live with his daughter at the address to which everything had been sent. However, it concluded that the buyer was an innocent purchaser, and allowed it to keep the property. It required the certificate holder to turn over the proceeds of the sale to the owners, less the amount that would have been required to redeem the tax lien as of the date of the closing.

On appeal, the Appellate Division agreed that the lower court’s finding of improper service on the father was supported by sufficient credible evidence. However, the Court disagreed with the remedy proposed by the lower court. A lack of proper notice prevented the father from exercising his redemption rights. As a result, the buyer could not obtain a valid ownership interest in the property. The Court held that the father deserved a right of redemption and therefore vacated the transfer of title and remanded the matter to permit the owners to redeem the certificate.


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