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Ruggieri v. 465 Alvine Trust-Philip Ruzic

A-1447-03T5 (N.J. Super. App. Div. 2005) (Unpublished)

CONTRACTS; INSTALLMENT SALES — A land contract in which the buyer is responsible for paying the seller the purchase price in installments for an extended period of time as opposed to paying all at the closing will not be deemed a mortgage contract if the terms were freely negotiated and equitable.

A buyer entered into a written contract to purchase property. The contract provided that the buyer would pay the purchase price in monthly installment for seven years. In addition to the monthly payments, the buyer was responsible for paying the real estate taxes and obtaining insurance for the property. The contract contained a default clause which provided that in the event the buyer failed to make its payments under the contract, the buyer would be deemed in default and would have ninety days to cure the default. If the buyer failed to cure within the ninety day period, the seller was entitled to eject the buyer from the property and retain all of the monthly payments that had been received to date under the contract. After the contract was executed, the buyer lived on the property for several years during which he made all of his monthly payments under the contract. The buyer, however, failed to obtain insurance for the property. He also did not pay the real estate taxes for the property for two years. As a result, the municipality issued a certificate of tax sale, which the seller later redeemed. The seller then filed an eviction complaint against the buyer seeking possession of the property. The seller asserted that it was entitled to possession of the property pursuant to the sales contract because its buyer had defaulted on the contract by failing to pay the taxes and insurance. The seller further asserted that it was entitled to all of the monthly payments made to date under the contract. In response, the buyer introduced evidence showing that it had obtained insurance for the property. It admitted that it had not paid all of the taxes, but agreed that the seller should not be entitled to possession of the property because the sale contract was a mortgage subject to the New Jersey Fair Foreclosure Act. The lower court rejected the buyer’s assertion that the sale contract was a mortgage. It held that the contract was an enforceable installment contract because the terms were freely negotiated and equitable. On the other hand, it also held that the seller was not entitled to possession of the property because it had failed to notify the buyer that he was in default by serving him a ninety-day written notice to cure. As a result, the lower court dismissed the seller’s complaint. The seller appealed the lower court’s ruling. Shortly thereafter, the seller served its buyer with a ninety-day notice to cure. The buyer then paid the taxes within the cure period.

On appeal, the Appellate Division agreed that the sales contract was an enforceable installment contract as opposed to a mortgage. It held that the outstanding real estate taxes were no longer an issue because the buyer had paid the taxes within the cure period. It did, however, find that there was a material factual dispute as to whether the buyer had obtained insurance coverage on the property and that the dispute had not been addressed by the lower court. As a result, it reversed and remanded the case to the lower court.


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