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Wachovia Bank, N.A. v. DiLorenzo

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 1, 2007

WACHOVIA BANK, N.A., AS ASSIGNEE FOR PHOENIX FUNDING, INC., PLAINTIFF-RESPONDENT,
v.
ARLENE DI LORENZO, DEFENDANT-APPELLANT,
AND MR. DI LORENZO, HUSBAND OF ARLENE DILORENZO, FERNWOOD FUNDING, LLC, FCC NATIONAL BANK AND SOCIETY HILL AT BERNARDS I CONDOMINIUM ASSOCIATION, INC., DEFENDANTS.

On appeal from the Superior Court of New Jersey, Chancery Division, Somerset County, Docket No. F-19186-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: May 2, 2007

Before Judges Cuff, Winkelstein and Fuentes.

Plaintiff Wachovia Bank, N.A. (Wachovia) filed a complaint to foreclose in personam a tax sale certificate for unpaid municipal taxes on real property owned by defendant Arlene DiLorenzo. She appeals from one order barring redemption and imposing a constructive trust and a second order denying her motion for reconsideration. We affirm.

Since both orders subject to this appeal were entered, the law governing the ability of third-party investors to redeem tax sale certificates within the time prescribed by statute has been clarified in three recent opinions. In Simon v. Cronecker, 189 N.J. 304 (2007), the Court held that the statutory scheme governing foreclosure of tax sale certificates was not designed to prevent a financially distressed property owner from selling their property to a third party. Id. at 328. Rather, the Legislature has enacted measures to assure that financially distressed property owners are not exploited by unscrupulous investors. Ibid. To that end, a third-party investor will be allowed to redeem a tax sale certificate if the investor moves in a timely manner to intervene in the foreclosure action, id. at 336-37, and offers more than nominal consideration. Id. at 335.

In Simon v. Rando, 189 N.J. 339 (2007), a holder of a tax sale certificate initiated a foreclosure action. A third-party investor purchased prior tax sale certificates and sought to redeem the tax sale certificates held by the other holder without intervening in the pending foreclosure action. Id. at 342. The Court reiterated that a third-party investor must intervene in the foreclosure action in order to allow judicial scrutiny of the integrity of the redemption process. Id. at 343-44. Finally, in Malinowski v. Jacobs, 189 N.J. 345, 351 (2007), the Court held that Simon v. Cronecker and Simon v. Rando were to be applied retroactively.

Here, Judge Williams barred the redemption because Jerome Kienlen, the third-party who advanced the funds to defendant to redeem the property, did not intervene in the tax sale certificate foreclosure action and because the judge found that he was a title raider. The judge acknowledged that the consideration offered to defendant might be more than nominal.

We need not address whether the consideration was nominal. The dispositive issue is whether the investor intervened in the foreclosure action. It is undisputed that Kienlen did not do so; therefore, we affirm the December 2, 2005 order barring redemption and the January 20, 2006 order denying defendant's motion for reconsideration. In doing so, we also affirm the constructive trust imposed by Judge Williams. This device requires plaintiff to acquire the property under the same terms and conditions as the Kienlen contract and allows defendant to benefit from the bargain she struck.

Affirmed.

20070601

© 1992-2007 VersusLaw Inc.



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