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FUNB v. Roney

A-2131-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

TAXATION; TAX SALES CERTIFICATES—Where a taxpayer argues that a municipality made significant mistakes in calculating the taxes owed on a tax sales certificate, the taxpayer may be permitted to join the holder and the municipality in a single action rather than have to redeem the certificate and seek a refund from the municipality.

A homeowner failed to pay property taxes, leading to a company buying the tax sale certificate. After two years, the company filed a foreclosure complaint. The homeowner claimed, however, that the municipality incorrectly taxed his property and incorrectly applied a payment. The lower court opined the homeowner’s only option was to redeem the certificate from the company and then sue the municipality for “return of the payment and any damages for added interest.”

In light of the amount of time the company held the certificate and the amount of interest allowed by the statue, the cost of redemption was significant. Therefore, on appeal, the Appellate Division found that it was unfair to require the homeowner to expend a large sum of money to redeem the certificate and then to spend even more money to separately sue for the return of money paid to the municipality. Instead, it felt the more equitable approach would be to remand the case so that the municipality could be joined as a party; and if the municipality was responsible for an improper tax assessment or improper application of taxes paid, the municipality, and not the homeowner would be responsible for the costs of redemption. If both parties shared fault, an equitable allocation of the costs of redemption would be required.


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