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Baked Fish Holdings, L.L.C. v. Chaft

A-5897-03T3 (N.J. Super. App. Div. 2005) (Unpublished)

TAX SALES; REDEMPTION—Where there is a large disparity between the value of a property and the amount of a tax lien and where a property owner shows good cause and timely asks for vacation of a foreclosure judgment, a court should exercise its discretion with great liberality and should act with indulgence so that a just end can be reached.

A tax sale certificate was purchased on an otherwise mortgage-free property. Four years later, the investor filed a foreclosure complaint. The owners were served with process five months later. Two months later, a default was entered against the property owner. Shortly thereafter, a November 12 date was set for redemption of the tax sale lien. The order setting the date, time, place, and amount of redemption was served on the property owner on September 29. A second tax lien was sold to another investor on December 8. Final judgment of foreclosure was entered on December 24, and served on the property owners about two weeks later. Two months and ten days after being served with the judgment (and within three months after the judgment itself was entered), the property owners filed a motion to vacate the default judgment. The lower court denied the relief. On appeal, the property owners repeated their arguments, “essentially that they were experiencing turmoil in their personal lives, he was taking care of his elderly mother in Florida and was experiencing health problems of his own while his wife was left caring for their school-aged children by herself.” The property owner claimed that “although they received all of the notices, they did not understand it to mean that they no longer owned the property.” They claimed they had sufficient money on hand to redeem the tax sale certificate. The Appellate Division was sympathetic even though it “recognized that [the property owners’] assertion about having funds available to pay the taxes [was] on its face something less than an actual proffer to pay those funds when the motion was heard in the Chancery Division.” Nonetheless, it believed that the lower court “was called upon to apply equitable considerations.” Here, the property owner was seeking relief under a court rule “which permits relief for the party’s own mistake, inadvertence, surprise or excusable neglect. An application under the rule “should be viewed with great liberality” and every reasonable ground for indulgence tolerated to the end that a just result is reached.” The property owner had filed its motion to vacate the default judgment well within the one year time period permitted under the court rule and the application was “within the three-month statutory period for reopening foreclosure judgments.” Here, especially where there was a “large disparity between the value of the foreclosed property and the amount of the tax lien,” the Court concluded that the lower court had mistakenly exercised its discretion “in denying the vacation of the foreclosure sale.” In order that the redemption funds be posted with the Court and that the property owner pay “appropriate interest, as well as the reasonable costs and expenses to reimburse [the investor] for maintaining the property,” it remanded the matter to the lower court to decide whether the property owners actually met the requirements of the court rule such that the default judgment of foreclosure should be vacated.

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