On appeal from Superior Court of New Jersey, Chancery Division, Morris County, F-10783-04.
The opinion of the court was delivered by: Payne, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman, Payne and Sabatino.
The New Jersey's Tax Sale Law, N.J.S.A. 54:5-1 to -104.75, governs the creation, enforcement and collection of liens for unpaid taxes and other municipal liens on real property. Pursuant to that statute, if taxes owed to a taxing authority are delinquent for a stated period, a lien arises on the land on which the taxes are assessed. N.J.S.A. 54:5-6. The authority may enforce the lien by selling it pursuant to statutory procedures. N.J.S.A. 54:5-19. When such a sale occurs, the purchaser acquires the lien interest of the taxing authority represented by a tax sale certificate, an interest that is subordinate to the statutory right of redemption of the property owner and parties holding other statutorily designated interests. Savage v. Weissman, 355 N.J. Super. 429, 439 (App. Div. 2002). The right of redemption of a holder of a property interest superior to that of the tax sale certificate holder can be exercised by paying the amounts owed plus accrued interest at any time until the right to redeem has been cut off. N.J.S.A. 54:5-54. After two years, however, the purchaser of a tax sale certificate may institute an action to bar the right of redemption and foreclose on the property. N.J.S.A. 54:5-86. If redemption occurs, the holder of the tax certificate receives a return of its investment plus interest and expenses. N.J.S.A. 54:5-58. If redemption does not occur and an order of foreclosure is entered, the holder of the tax sale certificate receives the greater benefits of ownership of the property.
Because the complaint in foreclosure must identify parties with a recorded interest in the property that is subject to foreclosure, N.J.S.A. 54:5-86.3, the opportunity arises for third-party "raiders" who search records maintained by the Superior Court's Foreclosure Unit to locate one or more of those parties, purchase their interest and effect a redemption that might not otherwise occur, thereby markedly reducing the economic benefits accruing to the tax sale certificate holder. Cherrystone Bay, LLC, the proposed intervenor in this case, has frequently acted as such a raider. Its efforts in that regard have led to considerable litigation and a number of court decisions that are presently under review in the Supreme Court. See Simon v. Rando, 374 N.J. Super. 147 (App. Div.), certif. granted, 183 N.J. 585 (2005); Malinowski v. Jacobs, No. A-5083-03T2 (App. Div. July 8, 2005), appealed as of right pursuant to R. 2:2-1(a)(2); Simon v. Cronecker, No. CPM-F-18991-03 (Ch. Div. December 1, 2005), certif. granted, 186 N.J. 365 (2006); and Grivas v. Smyth, No. CPM-F-79-04 (Ch. Div. December 1, 2005), certif. granted, 186 N.J. 365 (2006).
This appeal presents an issue that does not exist in any of the cases before the Supreme Court. It arises out of the fact that the conclusion of the period for redemption established by the court in a strict foreclosure action does not signal the end of the right to redeem, which occurs only when the judgment of foreclosure is entered. N.J.S.A. 54:5-86; Landa v. Adams, 162 N.J. Super. 318, 323 (App. Div 1978) (holding that the right to redeem remains until the close of the day upon which judgment is entered). Typically, a substantial time delay occurs between the execution of a certification of non-redemption by the tax collector at the end of a court-set redemption period and the entry of the judgment of foreclosure. Here, however, the process was accelerated, so that judgment was entered on the day following the conclusion of the redemption period. That judgment acted as a bar to efforts by the property owners, defendants Frank and Patricia Hemberger, assisted financially and otherwise by Cherrystone, to redeem the property on the day after entry of judgment.
Following rejection by the tax assessor of their proffer of funds, the Hembergers, represented by counsel referred to them by Cherrystone*fn1 and paid for by that entity, moved pursuant to R. 4:50-1 to vacate the foreclosure judgment. This appeal is from orders denying that motion, as well as orders denying a subsequent motion for reconsideration by the Hembergers and a motion to intervene by Cherrystone.
On June 6, 2002, plaintiff Robert Del Vecchio purchased a tax sale certificate on residential property owned by the Hembergers. After waiting the necessary two years, on June 18, 2004, he instituted a foreclosure action, naming as defendants the Hembergers and their mortgagee, National Financial Company, as well as other parties. However, on December 13, 2004, Del Vecchio voluntarily dismissed National Financial from the action, thereby preserving its two mortgages on the property from foreclosure. Following entry of the judgment of foreclosure, Del Vecchio purchased an assignment of the mortgages from National Financial.
January 31, 2005 was fixed by the court as the final date for redemption, and on February 1, 2005 a final judgment of foreclosure was entered. On February 2, 2005, Cherrystone contracted with the Hembergers for the purchase of their house for a price of $84,000, from which would be subtracted outstanding tax obligations of approximately $34,000, leaving the Hembergers with approximately $50,000. Cherrystone arranged for the Hembergers to use Cherrystone's $34,000 "down payment" to redeem the property,*fn2 and it agreed to fund any legal services required by the Hembergers in connection with the sale transaction. Also on February 2, 2005, Patricia Hemberger and the President of Cherrystone, Michael Bonner, proceeded to the tax collector's office and proffered a Wachovia Bank cashier's check identifying Cherrystone as remitter in the amount of $33,000, together with $1,000 in cash, to the tax collector. However, redemption was not permitted because, according to the tax collector, the final judgment of foreclosure had been entered. A judgment bearing the date of February 1, 2005 has been produced in this litigation.
In their motion to vacate judgment, filed on March 16, 2005, one and one-half months after the entry of the judgment, the Hembergers argued that the February 1 judgment was void because, they claimed, it was based upon faxed copies of both the certification of non-redemption by the tax collector and Del Vecchio's certification as to the genuineness of the tax collector's signature, submitted pursuant to R. 1:4-4(c). In support of that contention, the Hembergers pointed to a fax bar on the certification of non-redemption, which indicated transmittal of the document by Del Vecchio to State Capital Title on January 31, 2005. (However, it is noteworthy that Del Vecchio's own certification does not bear such a fax bar.) In addition to the purported irregularity in the documents supplied by Del Vecchio, Bonner certified that ...