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Simon v. Sjoblom

A-3687-97T2 (N.J. Super. App. Div. 1999) (Unpublished)

TAX SALES; FRAUD—An allegation of fraud in the setting of a municipal tax assessment is cognizable only in an appeal from the assessment and not as a defense to a later tax sale.

A property owner’s home was the subject of a final judgment of foreclosure of a tax sale certificate. Judgment was obtained following the property owner’s default by failure to file an answer in the foreclosure action. The holder of the tax sale certificate was given 20 days to provide appropriate notice to the property owner, but there was a snafu in the giving of that notice. Nonetheless, the lower court ultimately denied at least four motions by the property owner to set the judgment aside. The Appellate Division upheld the lower court’s ruling because it was clear that the property owner had actual notice of the proceedings. Substantively, the property owner intended to raise the defense that the foreclosure action was grounded in fraud. Specifically, it asserted that the municipality had assessed the property at an exorbitant value which resulted in a confiscatory property tax. According to the property owner, this assessment was inspired by malice in order to force a default on the property tax obligation and to allow the municipality to acquire the property. The Court ruled that such a defense is not relevant in the context of the foreclosure of a tax sale certificate. New Jersey law provides that the certificate of tax sale is presumptive evidence of the title of the buyer to the land described in the certificate in all proceedings commenced by the buyer of the certificate. After two years, no evidence is admissible to rebut that presumption, “unless the holder thereof shall have procured it by fraud, or had previous knowledge that it was fraudulently made or procured.” Although the property owner asserted a defense grounded in fraud, the Court ruled that it was not the type of fraud referred to in the statute. Instead, the property owner was asserting that the valuation process, an integral part of the process which establishes the amount of property taxes due from each property owner, was infected by fraud. Such a defense is cognizable only in an appeal from the assessment.


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