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Strategic Municipal Investments, L.L.C. v. Dziedzic

A-2490-06T5 (N.J. Super. App. Div. 2008) (Unpublished)

FORECLOSURE; TAX SALE; INTERVENORS —If a prospective buyer of a property in foreclosure offers more than a nominal amount to the property owner and files a motion for intervention before the final judgment in foreclosure is issued, it doesn’t matter that the prospective buyer fails to serve additional parties to the foreclosure action before the final foreclosure judgment has been issued.

A bank purchased a tax sale certificate on a residential property and then assigned it to a buyer. The assignee-holder brought a foreclosure action, naming the property owner and additional parties related to the matter. The lower court entered a default judgment in favor of the holder and set a final redemption date along with the redemption amount. Following the redemption date, but prior to the entry of a final foreclosure judgment, an intervenor made an offer to the property owner for the purchase of the property for more than double the amount that was required for redemption of the property, and also filed a motion to intervene in the foreclosure proceedings. Due to a holiday that occurred during the same week, the motion was not entered by the computerized system for case assignment until five days after it was filed. During the five day period, the foreclosure unit was unaware of the intervenor’s motion and issued a final judgment in favor of the buyer. The intervenor then sought a stay of the final judgment and argued that its motion to intervene was timely. The lower court found that the intervenor failed to serve the additional parties to the matter with its motion to intervene. Thus, it considered the intervenor’s request to have been post-judgment. The lower court affirmed the final judgment on the foreclosure.

The intervenor appealed, seeking a reversal of the lower court’s denial of its request to intervene and for a vacation of the foreclosure judgment. The holder argued that the intervenor had no right to intervene and, as a result, never acquired an interest in the property. The Appellate Division disagreed with the holder’s argument, finding that the motion to intervene was filed prior to the final judgment of foreclosure. It pointed out that the judicial test for whether an intervenor is allowed to join foreclosure proceedings is whether it offered the property owner more than nominal consideration for the property interest. The Court further pointed out that the test was adopted to prevent investors from exploiting vulnerable homeowners who faced foreclosure and that any such transactions were required to have judicial supervision. It also found that the intervenor’s failure to serve the additional parties to the foreclosure action was inconsequential since the judgment creditors’ on the property would not have been negatively affected. As a consequence, the Court reversed the lower court’s decision and vacated the judgment of foreclosure. It was remanded the matter for a determination of whether the amount offered by the intervenor to the property owner was more than nominal, leaving it to the lower court to decide whether it was necessary to serve the additional parties to the foreclosure action.


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