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Bergen-Eastern Pension Trust v. Sorensen

A-2469-05T3 (N.J. Super. App. Div. 2007) (Unpublished)

TAX SALES — Although intermeddlers in a tax sale redemption constitute a non-favored class, where one of the redeeming parties has an interest in the property before the tax sale foreclosure and it isn’t clear whether the other redeeming parties acquired their interests before or after the foreclosure suit, a court will not set aside the redemption, and especially not after the six year statute of limitations has passed.

An investor purchased two tax sale certificates. Three years after the purchase of the second certificate, the investor sued to foreclose on its tax sale certificates naming an individual who responded by his attorney. Subsequently, the investor assigned the tax sale certificates to the attorney as trustee, and the investor was paid the full amount due on the tax sale certificates. The assignments were recorded. The assignments contained no restriction on the attorney’s use or disposal of the tax sale certificates. No further discussion ensued.

Approximately ten years after the recording of the assignments, the investor discovered that the attorney later assigned the certificates to another individual, and that both that individual and the attorney’s original client collaborated to acquire title to the property and then resell it for a profit. Deeds, subject to the tax sale certificates, were recorded two years after assignment.

The investor sued the ultimate sellers (including the original property owner) eight years after the last deed was recorded. The investor asserted that the sellers were intermeddlers, a disfavored class of persons under public policy. The lower court disagreed with the characterization, as it noted that the class of intermeddlers relegated to non-favored status consists of those who have obtained an interest in property after the commencement of a tax sale certificate holder’s foreclosure suit. In this instance, one individual’s ownership interest pre-existed the foreclosure suit and the investor had not clearly told the lower court of the date the other individual acquired his interest in the property. Alternatively, the Court found that even if a viable cause of action existed, the matter would have been time-barred by the applicable six year statute of limitations which began to toll when the last deed was recorded. No equitable discovery rule applied because the individuals being sued did not attempt to conceal their actions after the attorney obtained the assignments; instead, deeds were recorded in the county clerk’s office and were available for public viewing. In fact, the lower court noted that the investor regularly searched such public records so as to invest in tax sale certificates for profit and therefore could not take advantage of the equitable discovery rule. The lower court’s ruling that the matter was time-barred was affirmed by the Appellate Division.

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