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Micheve, L.L.C. v. Wyndham Place at Freehold Condominium Association

370 N.J. Super. 524, 851 A.2d 743 (App. Div. 2004)

CONDOMINIUMS; FORECLOSURE—After a foreclosure sale, an investor-purchaser is treated no differently than a mortgagee who might have “bought in” at the sale in that neither is liable for previously unpaid condominium charges.

A buyer successfully bid for a condominium unit at a sheriff’s sale following a foreclosure judgment. The buyer then resold the unit to a third party. When the property was sold, the condominium association assessed the new buyer for maintenance fees and for the unpaid portion of common expenses that the former owner owed. In response, the new buyer sued the condominium association. The lower court held that the buyer was entitled to a refund because, pursuant to New Jersey statute, a buyer at a condominium unit foreclosure sale is not responsible for the unpaid portion of common expenses chargeable to the former owner.

The Appellate Division affirmed the lower court’s decision and held that a buyer of a condominium unit at a foreclosure sale is not liable for any fees owed by the original owner. The association’s remedy was to collect either out of any excess proceeds resulting from the sheriff’s sale or to collect the unpaid expenses, as a common expense, from among all the remaining unit owners, including the owner who acquired the property at foreclosure. The association had argued that the buyer should not have been exempt from total liability because it was not a mortgagee of a first mortgage of record, but rather a purchaser at a foreclosure sale and was in essence an investor. However, the statute specifically applies to “a mortgagee ... or other purchaser” who obtains title as a result of a foreclosure. The Court held that the buyer was unquestionably a “purchaser” who obtained title pursuant to a foreclosure sale. Nothing in the statutes indicates that investor-purchasers are to be treated differently than mortgagees “buying in” at their own foreclosure sale.

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