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Township of Frelinghuysen v. Block 201, Lot 31

A-2691-02T1 (N.J. Super. App. Div. 2003) (Unpublished)

TAXATION; TAX SALES—Notwithstanding a statute that purports to impose a three month time limit on reopening a tax sale judgment, a court, under the court’s rules, has the inherent power to reopen a tax sales judgment, but should take the statutory three month time limit into account when deciding what constitutes a reasonable delay by a taxpayer in making such a request.

A sophisticated investor owned vacant land. It failed to pay real estate taxes for nine years. Consequently, the municipality filed an in rem tax foreclosure complaint. The municipality served the summons and complaint on the property owner via certified mail, return receipt requested, in compliance with the Court’s rules. It received no response. A representative of the property owner signed the certified receipt, but the property owning investor claimed that the mail service that it used to transport its mail to [it] from the post office must have lost the document “before actual receipt by any employee.” The property owner found out about the final judgment of foreclosure about six months after it was issued when it had communications with the local tax assessor about a farmland assessment. About ten months after entry of the final judgment, the property owner filed a motion to vacant the foreclosure judgment, but it was denied because the lower court did not think that the circumstances involved rose to sufficient equitable grounds to vacate the final judgment. On appeal, the property owner contended that its application to reopen the foreclosure judgment should have been granted because its failure to respond to the foreclosure action “was the result of excusable neglect.” The municipality responded that the application was untimely under the New Jersey statute that requires that “such requests must be made within three months of the judgment, absent a claim of lack of jurisdictional fraud in the conduct of the action.”

The Appellate Division took note that the Court Rules for reopening the judgment have supremacy over the foreclosure statutes, “and [there is an] inherent power of the court to grant relief from a foreclosure sale. This is because an application to reopen a judgment is a matter of practice and procedure subject to the rule-making power of the Supreme Court.” On the other hand, the Appellate Division took note that a tax foreclosure “involves an area of special legislative concern since it deals with the collection of municipal taxes and the settlement of tax title liens,” and consequently, “courts should pay deference to the three-month limitation in the statute in determining what is a reasonable time within which to seek to vacate a tax foreclosure judgment pursuant to the Rules of Court.” With that in mind, and considering the nature of the property and that the property owner “waited ten months after entry of judgment and seven months after the statutory the three-month time limit had expired, before filing its motion to vacate, despite receiving numerous phone calls advising of the foreclosure and [the municipality’s] ownership interest.”

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