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Barnes v. Molendyk

A-3123-08T1 (N.J. Super. App. Div. 2009) (Unpublished)

FORECLOSURES; TAX SALES; INTERVENORS — Once a court-ordered deadline for making a timely application for intervention or relief has passed, an intervenor’s application must be rejected.

A tax sale certificate was purchased for unpaid taxes and interest on a residential property. After the certificate holder filed a foreclosure complaint, the Chancery Division entered an order setting a deadline for its redemption. Prior to the redemption deadline, a third-party investor entered into a purchase contract with the property owner. As a result of an application to the Court made by the investor, an order was issued directing that final judgment not be entered until the matter relating to the investor’s purchase of the property was resolved. Although the investor’s application was sent on the redemption date, the foreclosure unit, apparently unaware that the case was no longer uncontested, did not receive the letter until the next day and entered a foreclosure judgment. The Court permitted the investor to intervene and set a deadline for the property’s redemption providing that, if redemption was not tendered by that date, the tax certificate holder would be permitted to move for entry of final judgment. The tax certificate holder appealed but later reached a settlement agreement with the investor. The settlement, which was memorialized in a consent order, permitted the investor to purchase the property within forty-five days. Under the order, if the investor failed to purchase the property within the agreed-upon redemption period, it would lose its right to redeem and the final judgment previously entered would remain in full force and effect. The investor decided not to purchase the property. After the redemption deadline passed, the owners then signed a contract to sell the property to another purchaser who filed an application to intervene in the foreclosure action and to redeem the tax sale certificate. Again, the Court directed that final judgment not be entered until the new purchaser’s application was resolved. The Court thereafter denied the new purchaser’s intervention application holding that, if the intervenor had wished to assign its interest to another party, it should have put such a provision in the consent order. Since the intervenor did not do so, it ruled that the forty-five day redemption period had passed. The new purchaser appealed.

The Appellate Division affirmed, holding that whether there had been an assignment was not the dispositive issue. Rather, it ruled that the issue was whether a final foreclosure judgment was in effect when the new purchaser attempted to intervene. It noted that the language contained in the several orders created uncertainty about the status of a final judgment. When the lower court first directed that no final judgment be entered after the first investor made its application to intervene, the lower court did not expressly direct that the judgment entered by the foreclosure unit be vacated. The next order by the lower court, which gave the intervenor forty-five days to redeem, implied that the judgment had been vacated when it provided that, if the intervenor failed to redeem, the tax certificate holder would be permitted to move for entry of final judgment. The consent order, however, again reverted to an assumption that the judgment entered by the foreclosure unit had not been vacated. Nevertheless, the order by the lower court with respect to the second investor’s intervention action again directed that a final judgment not be entered. When the lower court denied the second purchaser’s intervention application, it referred back to its role in executing the consent order as its “imprimatur” on the transaction among the intervenor, the tax certificate holder, and the property owner. The Court held that this reference implied that the lower court viewed the earlier consent order, in which the lower court reinstated the foreclosure judgment upon the expiration of the redemption period, as the final resolution of the foreclosure action. On that basis, the Court rejected the second purchaser’s argument that a final judgment could not be reinstated by the agreement of only two parties to the action – the tax certificate holder and the first investor. It argued that the owner needed to be notified of the consent order and consent to the reinstatement of the final judgment. According to the Court, the owner did not object to the entry of the consent order and the second investor did not have standing to argue on the owner’s behalf. It held that to intervene in an action, a party must make timely application. Here, the second purchaser filed after the deadline set in the consent order. Consequently, the Court held that the lower court correctly ruled that the second purchaser’s application was untimely.

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