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Carabellese v. On Ping Trust Fund

A-4299-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

TAX SALES; VACATION—A tax sale foreclosure judgment for vacant land cannot be reopened on the grounds that the property is worth significantly more than the taxes owed and the certificate holder thus received a windfall.

A property owner moved to vacate a final tax foreclosure judgment several months after it was entered. The property owner was served with a copy of the summons and complaint, but failed to answer it. It was notified of the deadline for redemption, but failed to respond. The lower court found that there were insufficient grounds to set aside the judgment and the property owner appealed unsuccessfully. Even though there is a three month window in which to open a foreclosure judgment, a court’s right to vacate is limited to the grounds of lack of jurisdiction or fraud. The property owner conceded that it had no jurisdictional defense. There was no evidence in the record to indicate fraud. The Court conceded that a court should also apply the general standard for vacating a judgment. However, the Court noted that, under the general test, the property owner would have to demonstrate that there was excusable neglect and that it had a meritorious defense to the action. In addition, the property owner needed to demonstrate that enforcing the judgment would lead to an unjust, oppressive or inequitable result. The property owner argued that because the taxes owed were far less than the value of the property, allowing a foreclosure would result in a windfall to the tax sale certificate holder. The Court rejected that argument. It noted that, while there was an earlier case holding that a windfall to be inequitable, the property in that case was a personal residence and that may have tipped the balance of equities in the homeowner’s favor. In this case, however, the foreclosed property was vacant land.

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