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CCTS Tax Liens I, L.L.C. v. Gilbert

A-1900-08T3 (N.J. Super. App. Div. 2009) (Unpublished)

FORECLOSURES —Absent a court ruling permitting a third-party to intervene, a tax collector should only look to the foreclosure complaint for the names of the persons with an interest in the property when determining whether to accept a redemption payment.

A municipality rehabilitated a house that had been damaged by fire. It then assessed the property for the repairs. A tax sale certificate was sold reflecting the unpaid assessment. The holder of the certificate sought to foreclose. After the suit was filed, the municipality declared the property “abandoned.” In an attempt to provide the property owner with the funds she needed to redeem the outstanding certificate, her attorney arranged for a third-party to give the owner a loan for the redemption amount. The owner gave the lender a note and mortgage to secure the loan. The tax collector refused to accept the lender’s check for the redemption amount because the remitter listed on the check was the lender and not the owner. The owner and the lender filed a motion seeking an order requiring the tax collector to accept the borrowed funds and permitting the lender to intervene, “if required.” The motion was faxed to the attorney representing the certificate holder and mailed to his address on the redemption date. Claiming that he was not aware of the motion, the attorney for the certificate holder hand carried a final judgment to the court and a final judgment was entered. The owner filed an amended motion requesting that the lender be permitted to intervene.

The lower court denied the motion, holding that when the lender could not intervene. It determined that the lender tried to present the check to redeem the property, but that the lender was not the proper party since the owner was not present and the lender did not give the monies to the owner to demand that her check be accepted. It ruled that prior case law gave the tax collector the authority to accept redemption payments only from the defendant named in the caption of the foreclosure complaint. The owner appealed.

The Appellate Division reversed and remanded. It held that the lender should have been permitted to intervene. It ruled that where an entity is not named in the foreclosure complaint and seeks to redeem, he or it must move to intervene in the action. It declared that tax collectors should not be placed in a position where they must make legal decisions regarding the identity of the redeemer. Tax collectors should only look to the foreclosure complaint for the names of persons with an interest in the property absent a court ruling permitting a third-party to intervene. Here, the Court was not prepared to adopt a broad rule that all lenders must intervene. Nevertheless, it observed that prior case law recognized that bank loans in exchange for a mortgage might be involved in the redemption financing. The Court also found that the need for intervention under the present factual scenario was apparent – to allow the owner to convey the property to a third-party. But, it held that intervention rules should be applied liberally. In this case, it declared that a post-complaint mortgage gave the lender an interest in the property. Then, since the application to intervene was made on the redemption date, but before the entry of a final tax foreclosure judgment, the motion was timely. It remanded the matter to the lower court to determine if more than “nominal consideration” was being offered by the lender in accordance with the tax sale law.


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