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Kanter v. Township of Rockaway

June 08, 2004


On appeal from Superior Court of New Jersey, Law Division, Morris County, L-3778-02.

Before Judges Stern, A. A. Rodríguez and Kimmelman (retired on recall).

The opinion of the court was delivered by: RODRÍGUEZ, A. A., J.A.D.


Argued: November 5, 2003

The tax sale law, N.J.S.A. 54:5-1 to -137 (TSL), governs the creation, enforcement and collection of liens on real property to secure the payment of delinquent municipal taxes and assessments. The Legislature has provided several methods to aid municipalities in liquidating delinquent taxes. See Dvorkin v. Dover Tp., 29 N.J. 303, 309-12 (1959); Michael G. Pellegrino and Ralph P. Allocca, Tax Certificates: A Review of the Tax Sale Law, 26 Seton Hall L. Rev. 1607, 1609-13 (1996). In certain circumstances, a municipality is forced to purchase the tax sale certificate itself. Pellegrino, supra, 26 Seton Hall L. Rev. at 1611. Section 114.2 of the TSL sets out two methods for the assignment of tax sale certificates by a municipality. The first method is assignment to the highest bidder at a public sale. N.J.S.A. 54:5-114.2(a). The second method is an assignment for an amount lower than the balance due on the taX sale certificate. N.J.S.A. 54:5-114.2(b). In order to effectuate a subsection b sale, the governing body of the municipality must give public notice that it will receive bids on the tax sale certificate for amounts lower than the balance due. If the governing body receives a bid that it is inclined to accept, it must then give public notice of the amount of the bid and its intention to accept or reject the bid at its next regular meeting. At the meeting, the governing body may receive higher bids from any person. The governing body may accept or reject any of the bids.

The issue presented in this appeal is whether, at a subsection b sale, the governing body must accept the highest bid. We hold that the TSL vests upon the governing body the discretion to reject a higher bid and accept a lower one if such acceptance will result in a prompt return of the property to the tax rolls or benefit the public in some other way.


The operative facts here are as follows. In 1990, the Township of Rockaway (Rockaway) purchased for $4,856.36 its own Tax Sale Certificate (#23-90) for unpaid municipal liens on real property located on Pawnee Avenue. As far back as 1969, the property had been used as a gasoline service station and automobile repair shop. As a result, it contained underground storage tanks. Rockaway hired The Whitman Companies (Whitman), an environmental consulting firm, to do a study of the property. Whitman determined that there was soil contamination, which would cost almost $130,000 to remediate. By June 2002, the redemption amount on the tax sale certificate totaled $173,585.73. Thus, the estimated costs of the environmental clean up and taxes owed exceeded the assessed value of the property, $267,900. The Rockaway Township Council passed a resolution authorizing the assignment of the tax sale certificate for an amount less than the outstanding taxes pursuant to N.J.S.A. 54:5-114.2(b). Notices to bid were published and posted at the Municipal Building, the Public Library and three other locations in the municipality as required by the TSL.

Anthony J. Mazzola submitted a written bid for $2,500. The written bid contained the following representation by Mazzola:

I have been a resident of Rockaway since 1988. I own and run Mazzola's General Contracting since 1992 with the majority of my clientele in and around White Meadow Lake and Rockaway Township. I consider myself an active member of the community and township and have been involved with help and support for the clean up of the above mentioned property, including the introduction between the Whiteman Company and Rockaway Township; a meeting that made the township aware of grant money for the purpose of the preliminary assessment, site investigation and remedial investigation, at no cost to the town. I have actively participated with the Township of Rockaway and the [Whitman] Environmental Company to complete the preliminary assessments and environmental studies to date.

My efforts are based on the intent of taking ownership of the said property for my own business, which will be the primary residence of Mazzola's General Contracting, a small office and show room where my clients will have the opportunity first hand to see the quality and operation of my business.

As a resident of White Meadow Lake I am more than aware of the eye sore and burden this piece of property has become. It is my intent if I am awarded this tax certificate to clean up, paint and protect the building [from] further vandalism in the shortest amount of time possible while ownership and foreclosure legalities are in progress.

Rockaway published the $2,500 bid in the Daily Record and announced its intention to accept additional higher bids at the next Township Council meeting.

At that meeting, appellant Kenneth Kanter submitted a written bid for $3,550 and explained that he wanted to build a medical or dental office on the property. Then, Mazzola and Kanter made additional bids. A final bid of $17,510 was submitted by Kanter. Due to the unexpected interest on the property, ...

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