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Tri-State Investments Assets, LLC v. Talarico

A-6525-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

TAX LIENS; FORECLOSURE; VACATION—It is a property owner’s responsibility to see that the municipality properly applies its property tax redemption payment, and “making the parties whole” is not the appropriate standard to vacate a tax sale foreclosure judgment in the “interests of justice ” because of the Court’s Rules are intended to give relief only in exceptional circumstances.

A property owner failed to pay taxes, resulting in the issuance of several tax lien certificates. A company bought a certificate and sought foreclosure. Default was entered against the owner, an order setting the time, place, and amount of redemption was entered, and a final date for redemption was set. Prior to that date, the owner appeared in person at the office of the local tax collector and paid off several of the certificates. However, he claimed that the tax collector’s office mistakenly paid off the wrong certificates and failed to discharge the certificate for which the property was being foreclosed. Because that certificate was unpaid, a final judgment of foreclosure was entered. Following the foreclosure, the owner paid the municipality the amounts required to redeem the certificates for the property in question. He was then sent a copy of the final judgment of foreclosure. He moved to vacate the judgment pursuant to Court Rule 4:50-1.

The lower court granted the motion to reopen the judgment, conditioned on the owner paying the certificate holder all of the costs and expenses it incurred to purchase, enforce, and foreclose the tax lien certificate. In deciding whether to apply the Court Rule, the lower court first rejected its subsection (a), stating that it did not believe that the owner could establish the kind of mistake, inadvertent surprise, or excusable neglect that the Rule requires. The lower court held that the owner had an obligation to know which certificates had been paid by the tax collector’s office. Furthermore, it held that he could not claim a lack of sophistication for something he had a legal obligation to know. Nonetheless, the lower court went on to consider sub-section (f), and stated that the court had the “ability to make both parties whole financially.” Thus, the lower court concluded that by conditioning relief upon the owner paying the certificate holder’s costs, it was making the holder “whole.” In response, the holder contended that it was not made whole because it was denied the opportunity to gain title to the property.

On appeal, the Appellate Division noted that under N.J.S.A. 54:5-87, a property owner has only three months after a foreclosure judgment has been entered to redeem its interest in the property, and held that “making the parties whole” was not an appropriate standard for addressing a Rule 4:50 motion. Subsection (f) is to be used to grant relief only in exceptional circumstances. Some relevant factors include the extent of the delay in making the application for relief, the underlying reason, any fault on the part of the litigant, and any prejudice toward the other party. The Court held that nothing in the circumstances of this case met the requirements for using subsection (f). Even if the error was allegedly committed by a third party, the Court felt that the owner was the party with the greatest interest in seeing that the unpaid certificate was redeemed by a certain time. He had the opportunity at any time to confirm its redemption, and according to his own statements, he had cash available at the time to do so. Therefore, the Appellate Division reversed the lower court’s decision and held that the factors in this case did not allow relief to be granted pursuant to Court Rule 4:50.


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