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Elad, LLC v. Kazmin

A-5935-01T5 (N.J. Super. App. Div. 2003) (Unpublished)

LIENS; TAX SALES—Persons who, for nominal consideration, purchase properties that are subject to tax sales certificates do not have the right to redeem those properties upon tax sale foreclosure.

A property owner failed to pay property taxes. The municipality then held a public sale and sold a tax sale certificate to the highest bidder. After the appropriate time, the certificate holder filed a tax sale foreclosure complaint. The property owner defaulted, and an order was entered on the record setting the last day on which the property owner could redeem the certificate. The certificate holder then assigned its interest in the tax sale certificate and litigation to another holder. A third party purchased the property from the property owner by quitclaim deed for $2,000 and contacted the new certificate holder to redeem it. The certificate holder filed a motion to bar the third party from redeeming the tax sale certificate. The lower court barred redemption. Under N.J.S.A. 54:5-89.1, a person may not redeem a tax sale certificate if he acquired the property for nominal consideration after the tax sale foreclosure complaint was filed. The lower court found that the third party’s payment of $2,000 for a property that had $60,000 or more in equity in it constituted nominal consideration. The Appellate Division affirmed. The legislative purpose behind the statute was to prevent “title raiders” or “heir hunters” from swooping in at the last minute to obtain title to real property for nominal consideration and frustrating the efforts of tax sale certificate holders who researched the title, incurred expense, and waited the obligatory redemption period before seeking to enforce their rights. Municipalities would not be able to sell tax sale certificates if third parties who purchased the property for little value on the eve of the redemption deadline would be permitted to redeem the certificates. The Court agreed with the lower court’s determination that $2,000 was insufficient consideration under the statute.

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