The opinion of the court was delivered by: Kuskin
On May 3, 1994 plaintiff acquired, by assignment from defendant Township of Rockaway, Tax Sale Certificate No. 6-80 covering property designated on the Township Tax Map as Block 20603, Lot 23 (the "Property"). Plaintiff appealed the 1996 assessment on the Property, the Morris County Board of Taxation affirmed the assessment, and this appeal followed. The Township has moved to dismiss on the ground that plaintiff, as the holder of a tax sale certificate who does not have title to the Property, lacks standing to prosecute the appeal.
The document assigning the Tax Sale Certificate to the plaintiff required foreclosure of the right of redemption "within two years of May 3, 1994" in order to avoid forfeiture of title, but this time period was extended by Resolution of the Township governing body until May 3, 1997. *fn1 As of the date of filing of the Tax Court appeal, the plaintiff had initiated a foreclosure action, but had not obtained a judgment, and there had been no redemption of the Certificate. Plaintiff paid the property taxes due with respect to the Property from the time of his acquisition of the Certificate. As of the date of filing of defendant's motion, property taxes were current.
Under facts similar to those present here, Judge Lario, in Northfield v. Zell, 12 N.J. Tax 180 (Tax 1991), held that the holder of a tax sale certificate had neither an express statutory right nor an implied right to appeal the property tax assessment on the property covered by the certificate and there was no "compelling reason to confer standing to appeal." Id. at 186. I agree that the Tax Sale Act, N.J.S.A. 54:5-1 to -129, confers no express right of appeal. I respectfully disagree, however, with Judge Lado's Conclusions that a tax sale certificate holder has no implied right of appeal and there is no compelling reason to confer standing. I hold that the holder of a tax sale certificate, who has paid taxes from the time of acquisition of the certificate, is a "taxpayer" under N.J.S.A. 54:3-21 and has standing to prosecute an appeal.
N.J.S.A. 54:3-21 provides in relevant part that "[a] taxpayer feeling aggrieved by the assessed valuation of his [, her or its] property" may, on or before April 1, appeal to the county board of taxation and, if the assessed valuation of the property exceeds $750,000, appeal directly to the Tax Court. "Taxpayer" as used in this statute has been construed to include parties other than the owner of the property. In Ewing Tp. v. Mercer Paper Tube Corp., 8 N.J. Tax. 84 (Tax 1985), the Tax Court made an extensive historical analysis of the use of the word "taxpayer" and held that a lessee, whose lease covered the entire assessed premises for the full tax year and required the lessee to pay all taxes, was a "taxpayer" having the fight of appeal within the meaning of the statute.
It can be reasonably inferred that it has been and still is the Legislature's purpose to afford the fight to appeal essentially to any person whose tax payments are adversely affected by an improper assessment and not only an owner in fee of the assessed property appealed.
In Village Supermarkets, Inc. v. West Orange Tp., 106 N.J. 628 (1987), the Supreme Court extended, to certain tenants of a multi-tenant shopping center, standing to prosecute an appeal with respect to the entire center. The Court described the issue of whether a particular tenant has such standing as "one of degree, depending upon the relative circumstances of the parties and their economic interests," Id. at 633, and articulated five factors to be considered in deciding such issue. Two of these factors, although phrased in terms of the landlord-tenant relationship, have applicability outside that relationship. One such factor is whether a tenant "will adequately represent the interests of the landlord and other tenants, or whether the tenant has interests adverse to either group," and the other factor is "the tenant's ability to mount and prosecute an effective appeal." Id. at 634-35.
In Chemical Bank New Jersey. N.A. v. Absecon, 13 N.J. Tax 1 (Tax 1992), the Tax Court held that a mortgagee whose mortgage is in default, and who has paid taxes for the year under appeal (1991) *fn2, had standing to prosecute a tax appeal. Judge Rimm found that this standing derived from common law and contractual interests in the property. The common law interests included: fee simple title to the mortgaged premises subject to defeasance by the payment of the mortgage debt, with the right of possession postponed until default; the right to recover monetary damages resulting from injury to the mortgaged premises; and, under Burke v. Hoffman, 28 N.J. 467, 475 (1958), "'an interest in land,' and priorities ... governed by the rules applicable to interests in land, and not by the rules which govern interests in personalty." Chemical Bank, supra, 13 N.J. Tax at 8-9. The mortgagee's contractual interests included the following rights expressly set forth in the Chemical Bank mortgage document (and typically included in commercial mortgage documents): the right to make such payments as the mortgagee deemed advisable to protect the security of the mortgage; the right to pay taxes, assessments, water and sewer charges as well as insurance premiums; the right to repair and maintain the mortgaged premises and avoid waste; and the right, upon default, to enter into possession and rent the premises.
Based on these interests of the mortgagee in the property, Judge Rimm concluded that: "Permitting a mortgagee, whose mortgage is in default and who has paid real estate taxes, to challenge a local property tax assessment 'makes eminent good sense in the marketplace'." Id. at 12. With reference to the factors set forth in Village Supermarkets, he found "no reason to believe that the mortgagee will not adequately represent the owner's interest nor that it does not have the ability to mount and prosecute an effective appeal." Id. at 13.
Whether, under the standards suggested by the foregoing cases, the property interest of a holder of a tax sale certificate is sufficient to confer standing to prosecute a tax appeal must be determined by examining the components and parameters of such interest as defined by statute and decisional law in connection with the sale of a certificate, redemption of a certificate and foreclosure of the right of redemption.
With respect to the sale of a certificate, N.J.S.A. 54:5-46 requires the certificate to be acknowledged by the officer conducting the sale "as a conveyance of land" and "set forth that the property therein described was sold by him to the purchaser ...." The form of certificate itself, set forth in N.J.S.A. 54:5-47, provides: "I ... collector of taxes of ... (name of municipality), hereby certify that on ..., 19... I sold to ... the lands in the municipality described as ... subject to redemption on repayment of the amount of the sale, together with interest thereon at the rate of... and the costs incurred by the purchaser." N.J.S.A. 54:5-50 provides that the certificate of sale may be recorded in the office of the clerk or register of deeds in the county in which the land is located "as a mortgage of land."
Based on the foregoing statutes, some New Jersey courts have described the municipality's sale of the certificate as a transfer of title. In Brinkley v. Western World. Inc., 281 N.J. Super. 124 (Ch. Div. 1995), aff'd, 292 N.J. Super. 134 (App. Div. 1996), for example, the court described a tax sale certificate as "a conveyance of land subject to redemption, and ... an assignment of the tax lien," and noted that, when a court sets aside a certificate, "it [is] very much as if the court [has] voided a contract for the sale of real property." Id. at 132 (citation omitted). Recent Appellate Division decisions, such as Jefferson Tp. v. Block 447A, Lot 10, 228 N.J. Super. 1 (App. Div. 1988), describe somewhat differently the property interest transferred by a tax sale certificate. In holding that a tax sale certificate holder has a constitutional right to notice of foreclosure by a subsequent certificate holder, the court described the certificate holder as follows:
The holder of a tax sale certificate does not have title to the land. The holder's purchase of the certificate at a tax sale does not divest the delinquent owner of his title to the land. The certificate holder succeeds to the lien interest of the taxing district. The certificate holder's inchoate interest ... consists of three significant rights. The holder has the right to receive the sum he paid for the certificate with interest at the redemption rate for which the property was sold. The holder has the right to redeem from any other holder a subsequently issued tax sale certificate. Finally, and most important, the holder has the right to acquire title by foreclosing the equity of redemption of all outstanding interests including the owner's ....
Foreclosure by a municipality under the [In Rem Tax Foreclosure Act, N.J.S.A. 54:5-104.29 to - 104.75] extinguishes all the prior holder's rights, including the right to receive, upon redemption, the amount originally paid by the holder for the tax certificate. Consequently, the holder of a tax sale ...