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Malinowski v. Jacobs

A-5083-03T3 (N.J. Super. App. Div. 2005) (Unpublished)

FORECLOSURE; INTERVENTION—The recent case law rule that a party may not intervene in a foreclosure action after the complaint has been filed without first obtaining the court’s permission to intervene is not to be applied retroactively.

An investor purchased a tax sale certificate on a property. Four years later, he commenced a foreclosure action in which he named the property owner as a defendant. He also named the holder of a mortgage on the property as an additional defendant. No defendant submitted a responsive pleading and, as a result, the lower court set a date and place for redemption. One month later, the mortgage holder assigned his interest in the mortgage to a successor. A couple of days later, the president of the successor contacted the municipality’s tax collector’s office to inquire about the tax sale certificate. The president was informed that the tax sale certificate had not yet been redeemed. The very next day, the president went to the tax collectors office with the amount necessary to redeem the certificate. He was unable to redeem the certificate because the office had closed early that day. The president then went back to the office the following day to redeem the certificate. When he arrived, he was told that he needed additional money to pay the full amount of the certificate. The president then went to a nearby bank to obtain the additional monies. By the time he returned to the office to redeem the certificate, the office had closed for the day. The president returned to the office the next day and tendered the full amount of the redemption funds to the tax collector. He later learned that the certificate holder had obtained a final judgment in the foreclosure action. The successor mortgagee then immediately filed a motion to vacate the judgment, asserting, among other things, that its delay in responding to the action was due to the early closure of the tax collector’s office. The lower court denied the motion on the basis that the closure of the tax collector’s office was not sufficient grounds to warrant vacating the judgment. The successor mortgagee appealed the lower court’s determination.

The Appellate Division reversed the lower court’s ruling. On appeal, the tax certificate holder asserted that the successor mortgagee should have been barred from intervening in the case pursuant to the Court’s recent decision in Simon v. Rando, 374 N.J. Super. 147 (App. Div. 2005). In Simon v. Rando, the Court set forth a new rule regarding intervention in foreclosure matters, holding that a party may not intervene in a foreclosure action after the complaint has been filed without first obtaining the court’s permission to intervene. That rule was passed in order to discourage third parties from intervening in foreclosure actions in order to further their own interests, rather than the interests already involved in the action. The Court questioned the efficiency of the new rule. It found that the new rule required third parties to delay foreclosure actions by forcing the court to evaluate motions to intervene prior to proceeding with the underlying action. It further found that the new rule should not be applied retroactively to this case because it would result in an unjust result, and that the evidence presented by the successor mortgagee indicated that its president had made a good faith effort to redeem the certificate within the time allotted by law. It also noted that the successor mortgagee had paid more than nominal consideration to obtain the assignment of the mortgage. As a result, it found that there was sufficient grounds to vacate the final judgment, and reversed and remanded the matter to the lower court.

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