Les Realty Corp. v. Hogan

314 N.J. Super. 203, 714 A.2d 366 (Ch. Div. 1998)
  • Opinion Date: February 17, 1998

MORTGAGES; FORECLOSURE; LIEN PRIORITY—A child support judgment entered before a mortgage is recorded does not have priority over a recorded mortgage unless it is docketed statewide before the mortgage is recorded.

The buyer at a foreclosure sale brought this action in an effort to foreclose and bar the mortgagee/property owner from any equity of redemption in the home that was collateral under the mortgage. On July 30, 1992, the (then married) borrowers delivered a note secured by the mortgage. Foreclosure commenced on May 31, 1995. Final judgment was entered on January 12, 1996. On March 5, 1997, the Sheriff sold the premises. On June 25, 1997, the buyer resold the property.

On June 18, 1991, a child support judgment was entered against the husband-mortgagee in favor of his wife-mortgagee. This judgment was not docketed in Trenton until September 1, 1992, nearly a month after the mortgage was recorded. The wife-mortgagee contended that the judgment became a lien when it was entered in June of 1991. The buyer at the foreclosure sale contended the judgment did not have the effect of a statewide lien until it was docketed in 1992.

Since the property was located in Union County and the judgment was rendered in Union County, the Court explored whether the mortgagee was on constructive notice of the yet undocketed judgment. The Court found that if a judgment is properly docketed in the County Judgment Book, the title searcher should be able to find it through a county search. The Court required the buyer to furnish the Court with proofs as to (1) what the Union County records revealed and (2) whether a customary county judgment search would have revealed a child support judgment. In response, the buyer provided evidence that the Union County records did not reveal the child support judgment. As a result, the buyer (as successor to the mortgagee) was not chargeable with notice until 1992, after the mortgage was recorded. Lastly, the Court determined that the Automated Child Support Enforcement System did not give priority to child support judgments, therefore “the first in time, first in right rule” applied to give the mortgage priority over the child support judgment..