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Fish Two Holdings, L.L.C. v. Goodliffe

A-4487-02T1 and A-4601-02T1 (N.J. Super. App. Div. 2004) (Unpublished)

FORECLOSURES; TAX SALE—A non-owner spouse, as a lawful occupant of the property, is entitled to receive service of a tax sale foreclosure complaint.

A married couple filed an action to vacate a final judgment of tax foreclosure on their marital home. The home was only in the wife’s name at the time of the judgment. The wife was personally served with the foreclosure complaint and the husband was served by certified mail only. A judgment was entered and the property was then purchased by a third party. The third party bought the home knowing that the married couple was still living there and without viewing the inside of the home or obtaining a professional property appraisal. The couple asserted that the judgment should be vacated because the husband was not personally served. The wife argued excusable neglect for failing to answer the complaint.

The lower court held that the tax foreclosure judgment should be vacated because: (1) the husband had a legal interest in the property and therefore should have been personally served with the complaint; (2) the wife demonstrated excusable neglect warranting vacating the judgment; and (3) the third party was not a bona fide purchaser because it knew or should have known that there were problems with title to the property. The third party appealed arguing that personal service upon the husband was not required and service by certified mail was sufficient.

The Appellate Division affirmed the lower court’s ruling, holding that service by certified mail was not sufficient and that the third party was required to personally serve the husband. It ruled that the husband was a lawful occupant of the land under tax foreclosure law and therefore had a lawful interest in the home despite the fact that he did not own the home. It noted that a state statute grants a non-owner spouse a property interest in the principal matrimonial residence. This entitles the spouse to a right of possession which may not be involuntarily taken without a judgment. It noted that the third party had knowledge of the husband which automatically placed the third party on notice of the husband’s interest in the property.

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