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Town of Phillipsburg v. Block 1508, Lot 12

380 N.J. Super. 159, 881 A.2d 749 (App. Div. 2005)

FORECLOSURE; TAX SALES—Seeking direct redemption after entry of a tax sale judgment of foreclosure is an improper procedure; moving for intervention before judgment is the proper approach.

“[T]he municipal holder of two later-issued tax sale certificates obtained a judgment of foreclosure. It was undisputed that the property ... [had] long been vacant, [had] not been maintained for many years, and [was] in need of rehabilitation. Within three months of the recording of the judgment, the foreclosed holder of a [earlier] tax sale certificate, which had obtained its interest by assignment after the filing of the [municipality’s] complaint, sought to intervene in the action in order to vacate the judgment and redeem certain later-issued certificates.” The lower court granted the assignee’s motion to intervene but denied its motion to vacate the judgment and redeem the tax sale certificates. The assignee appealed. The Appellate Division agreed with the lower court that the assignee “had failed to satisfy any of the grounds provided by [Rule 4:50-1 which grants] relief from [a] final judgment.” The Court could not fault the lower court’s conclusions “that [the assignee] had not demonstrated either ‘mistake, inadvertence, surprise, or excusable neglect,” to satisfy section (a) of the Rule; “or ‘fraud’ under sub-section (c); or ‘any other reason justifying relief from the operation of the judgment or order’ under sub-section (f).” The assignee admitted “that it was aware of the pending foreclosure proceeding (and even the imminence of a final judgment for foreclosure), when it first inquired about the redemption of the tax sale certificates.” Moreover, the assignee provided “no explanation for its” four day delay between obtaining an assignment and recording it or “for its failure to move immediately to intervene in the Superior Court action when it was aware that entry of judgment in foreclosure was imminent.” The Court pointed out that “[w]hile [the assignee’s] motion to vacate was not absolutely barred by any provision of the [Tax Sale Law], denying the motion was an appropriate decision of [the lower court] and a reasonable exercise of discretion under Rule 4:50-1.” In sum, “[t]he law clearly gave [the assignee] an opportunity, even in the very last days before entry of judgment, to move to intervene in order to exercise its claimed right of redemption. It simply failed to do so, insisting instead upon a procedure long held to be improper: direct redemption after the filing of a complaint in foreclosure.” The Appellate Division found “no unfairness in the result.”

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