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Rodriguez v. Santangelo

A-1794-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

TAX SALES — Once a municipality validly reacquires a tax sales certificate following the holder’s failure to foreclose within the required statutory period, it has the authority to privately resell the certificate to the original assignee and to issue a corrective assignment.

A tax sale certificate for a residential property was acquired by a municipality after there were no bidders at the tax sale. At the time of the sale, the two property owners were deceased for nearly fourteen years. The certificate was later assigned to a buyer. The assignment was not recorded for roughly three years. In the meantime, two additional tax certificates for taxes and water were sold to two other parties. Nearly ten years later, the assignee of the original certificate found out that he could not foreclose on the property because he failed to do so within two years of his purchase of the certificate. In fact, he discovered that his interest in the property had reverted back to the municipality. The municipality acknowledged that since the assignment to the buyer was not recorded for three years, the validity of the original assignment was in question. The municipality also acknowledged that its assignee might have been unaware that the sale’s validity was in question and also that he paid the taxes on the property throughout the intervening time. In light of the assignee’s upkeep of the taxes, the municipal tax assessor issued a corrective assignment of the municipality’s interest in the property to the assignee.

After the corrective assignment was recorded, the buyer brought a foreclosure action. The executors for the original property owners sued the assignee and the municipality. The lower court found that the corrective assignment was a legitimate remedy to the procedural problems in the assignment of the certificate and that there had been no bad faith on the assignee’s part. It struck the argument by the executor of the property owners’ estate (who was the son of the property owners) that the foreclosure action was barred on the grounds that the initial tax sale certificate and the corrective assignment were invalid. The executor’s motion for reconsideration of the lower court’s decision was denied.

On appeal, the Appellate Division rejected the executor’s argument that the issuance of additional tax sale certificates to the other two parties rendered the initial tax certificate invalid. It pointed out that, according to statute, the tax sale certificates to the other two parties did not prevent the acquisition of title by the assignee, but that they constituted liens on the property. The Court held that the municipality had validly acquired the tax sale certificate and that after the interest in the certificate reverted to the municipality, it had the authority to privately sell the tax sale certificate to the original assignee and to issue the corrective assignment. Thus, the lower court’s decision to strike the executor’s argument in the buyer’s foreclosure action was affirmed.

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