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Connors v. Connors

BER-C-389-03 (N.J. Super. Ch. Div. 2005) (Unpublished)

FORECLOSURE; TENANCIES IN COMMON; REDEMPTION—A tenant in common who redeems a property from a pending tax sale but did not live at the property, is entitled to recoupment from the other tenants in common.

In 1979, a father deeded his property to his three adult sons. One of the sons lived on the property until his father’s death in 1982. Even though they did not get along, there was no written or oral agreement among the three brothers dealing with the maintenance and repair of the property. The resident son paid for the general upkeep of the property and paid the property taxes and insurance until 1997, when he stopped because of financial difficulties. This resulted in the filing of an uncontested foreclosure action. This son knew or should have known that there would be negative consequences if the taxes were not paid, and he had actual knowledge of their not being paid. The remaining two brothers never bothered to verify whether the taxes were being paid. It was only at the last minute after seeing a published foreclosure notice that one of the other brothers acted to rescue the property,. But for his having paid over $43,000 to redeem the lien, the property would have been lost.

The “rescuing” brother then negotiated with the resident brother to acquire the resident brother’s one-third interest. The resulting contract for sale called for a sale at $54,000 and included a use-and-occupancy clause to allow the resident brother and his family to remain on the property for a certain period of time. The “rescuing” brother then unsuccessfully tried to negotiate with the third brother to acquire the remaining one-third share. The resident brother then sued, claiming that the sales agreement was obtained by duress and was unconscionable. All three brothers wanted the property sold and wanted to receive a share of the net proceeds, but the “rescuing” brother wanted his contract enforced so that he could receive two-thirds of the sales proceeds. He also wanted credit for the taxes and insurance costs he advanced. The third brother did not want to pay any of the taxes, which he argued should have been the resident brother’s responsibility and which should have been assessed against the resident brother’s interest because he was still in possession.

First, the Court upheld the contract between the two brothers, noting that the actual negotiations were handled by lawyers. Furthermore, there was no obvious unconscionability as to the price because neither side offered any evidence as to the value of the property. The Court was given an opinion by a local real estate broker that the market value of the house was $375,000. Thus, each one-third share would have been around $125,000. However, the Court pointed out that after subtracting the amount the “rescuing” brother paid to redeem the lien from $125,000, and taking into consideration the delinquent taxes to be assumed together with the value of the use-and-occupancy, the resulting figure was not so far from the contract price as to “shock the conscience of the court.” Thus, eliminating the “unconscionability” aspect left a clearly enforceable, simple contract negotiated by lawyers.

As to the issue of who was responsible for the taxes, the Court noted that the rescuing brother’s $43,000 payment prevented the loss of the property and preserved the brothers’ financial interests. The third brother failed to act diligently with regard to his own interest and did not keep himself apprised of the tax payments. Even if he assumed it was being paid by the first brother, he never bothered to check; and, even when he learned of the delinquency, he did nothing. Thus, the Court held that the rescuing brother was to be reimbursed from the sale proceeds for his $43,000 payment and ordered that once the property was sold, the rescuing brother was to receive two-thirds of the proceeds after that reimbursement.

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