March 20, 2008
ALBERTO RODRIGUEZ, PLAINTIFF-RESPONDENT,
LORENZO SANTANGELO, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF CALAGERO SANTANGELO A/K/A CHARLES SANTANGELO, DECEASED, DEFENDANT-APPELLANT, AND NANCY SANTANGELO, WIFE OF LORENZO SANTANGELO: ANGELINA SANTANGELO TELLEZ AND OMERLING TELLEZ, HER HUSBAND; ATLANTIC CITY SEWERAGE AUTHORITY; ATLANTIC CITY MUNICIAL UTILITIES AUTHORITY; STATE OF NEW JERSEY; UNKNOWN OWNERS/UNKNOWN CLAIMANTS, THEIR HEIRS, DEVISEES AND PERSONAL REPRESENTATIVES AND THEIR OR ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Chancery Division, Atlantic County, Docket No. F-3873-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 26, 2008
Before Judges Winkelstein, Yannotti and LeWinn.
On March 11, 2005, plaintiff Alberto Rodriguez filed an action in the Chancery Division to foreclose on a tax sale certificate. Defendant Lorenzo Santangelo appeals from an order entered by the court on July 22, 2005, striking his answer to the complaint, and an order entered on September 23, 2005, denying his motion for reconsideration. For the reasons that follow, we affirm.
The facts pertinent to this dispute are relatively straightforward. Calagero Santangelo and his wife Angelina Santangelo were the record owners of certain real property in Atlantic City, which is identified as Lot 21, Block 338 on the City's tax map, and commonly known as 127 North Georgia Avenue. Angelina Santangelo died in June 1973, and Calagero Santangelo died in January 1974.
On November 24, 1987, the City conducted a public sale of a tax sale certificate for unpaid municipal taxes assessed in 1986, and accrued interest, in the amount of $1,622.54. There were no bidders at the sale, and the certificate was sold to the City by default. The City's tax assessor issued Tax Sale Certificate No. 015876 to the City. On July 9, 1991, plaintiff purchased an assignment of the tax sale certificate from the City. The City Council confirmed the assignment by resolution adopted at its meeting of August 7, 1991. In 1994, the City recorded the tax sale certificate.
On December 5, 1995, the City sold Tax Sale Certificate No. 950338W to Tax Funding, L.P. for certain unpaid water service charges in the amount of $752.51 that had been assessed on the property. In addition, on May 28, 1998, the City sold Tax Sale Certificate No. 950122 to FUNB for unpaid taxes assessed on the property in 1997, plus accrued interest, in the amount of $2,530.83.
In 2004, plaintiff retained counsel for the purpose of foreclosing on the subject property. Plaintiff was advised that he could not foreclose because he had not done so within two years of the date of his purchase of the tax sale certificate and plaintiff's "right, title and interest" in the property had reverted to the City pursuant to N.J.S.A. 54:5-114.5.
Plaintiff's counsel approached the City in an effort to resolve the matter. On October 6, 2004, the City Council adopted a resolution authorizing the private sale of the tax sale certificate to plaintiff. The resolution noted that the City had assigned the certificate to plaintiff in 1991 but failed to record the assignment until 1994. The resolution stated that this may have cast "some question on the validity of the sale[.]"
The resolution further noted that plaintiff was unaware of the problem with the sale and "continued to pay taxes on the property through the years in excess of $45,000." The City gave plaintiff credit for all of the taxes and charges he had paid on the property, with interest. The tax assessor issued a "corrective assignment" on November 15, 2004, and it was recorded on February 9, 2005.
Plaintiff thereafter filed this foreclosure action. Defendant, who is the son of Angelina and Calagero Santangelo, and the executor of his father's estate, filed an answer in which he asserted that plaintiff could not maintain the foreclosure action because the initial tax sale certificate and the "corrective assignment" were invalid.
Plaintiff filed a motion to strike defendant's answer, and defendant filed a cross-motion for summary judgment, seeking dismissal of the foreclosure complaint. Defendant argued that the initial tax sale certificate had reverted to the City by operation of law because plaintiff did not institute a foreclosure action within two years of the date he acquired the certificate. Defendant additionally argued that the issuance by the City of tax sale certificates in 1995 and 1998 included the City's interest in the property as reflected in the 1987 tax sale certificate. Therefore, according to plaintiff, the City's subsequent "corrective assignment" was invalid.
Judge William C. Todd, III, considered the motions on June 22, 2005. After hearing argument from counsel, the judge placed his decision on the record. The judge noted that there were procedural problems with the initial tax sale certificate, specifically the City's failure to record that certificate until after the City had assigned it to plaintiff in 1991, and plaintiff's failure to foreclose within two years of the date he acquired the certificate. Judge Todd noted that plaintiff and the City had: recognized those issues and tried to resolve them through the use of [a] [c]orrective
[a]ssignment in the fall of 2004 and the subsequent foreclosure, and I believe . . . that the issue that's framed here is very simple: Is the [c]orrective [a]ssignment a valid assignment? The defendant says no, because the right to foreclose was arguably lost after two years passed from the date of the 1991 [a]ssignment. I don't think that's the appropriate perspective or the appropriate result.
. . . I assume the negotiations that led to the [c]orrective [a]ssignment to deal with those potential procedural problems [were] entirely appropriate. I don't think there's any question that it was . . . a legitimate response to the problem that both the City and the plaintiff would have otherwise had to address. There's no reason in this record to suggest that the plaintiff acted in bad faith. There's no reason . . . to bar the plaintiff from proceeding once the [c]orrective [a]ssignment has been filed. There is . . . no harm to the defendant . . . . The defendant continues to have the right to redeem.
Judge Todd entered an order dated June 22, 2005, striking defendant's answer to the complaint. Defendant thereafter filed a motion for reconsideration. The judge denied that motion by order entered on September 23, 2005, for the reasons that the judge had placed on the record on June 22, 2005. This appeal followed.
Defendant first argues that the judge erred by failing to find that plaintiff's tax sale certificate was null and void and could not thereafter be the subject of a "corrective assignment." We disagree.
Whenever taxes remain unpaid or any municipal lien on real property "remains in arrears on the 11th day of the eleventh month in the fiscal year" in which "the same became in arrears," the person charged by law with the duty to collect the monies due may "enforce the lien" through a tax sale and issuance of a tax sale certificate. N.J.S.A. 54:5-19. A municipality may bid upon and acquire the certificate if it is authorized to do so by the governing body. N.J.S.A. 54:5-30.1. The owner of the property, "his heirs, holder of any prior outstanding tax lien certificate, mortgagee, or occupant of the property may redeem the property "at any time" until the "right to redeem has been cut off in the manner" provided by law. N.J.S.A. 54:5-54.
However, purchasers of tax sale certificates "must foreclose . . . the right of redemption, and record the final judgment in the county wherein the land is situate within two years from the date of the confirmation of the sale by the governing body." N.J.S.A. 54:5-114.4. If the final judgment has not been recorded within this timeframe, or upon the expiration of any extension of time granted by the governing body for good cause, "then the sale shall be null and void, and the right, title and interest of the purchaser shall cease and revert to the municipality." N.J.S.A. 54:5-114.5.
In this matter, it is undisputed that plaintiff failed to record the final judgment of foreclosure within two years of the date the governing body confirmed his purchase of the tax sale certificate. Therefore, pursuant to N.J.S.A. 54:5-114.5, the initial assignment by the City of the tax sale certificate was null and void and plaintiff's "right, title and interest" in the property reverted to the City.
However, the reversion to the City of plaintiff's "right, title and interest" in the property did not affect the validity of the 1987 tax sale certificate. The City had validly acquired the certificate at the 1987 tax sale and, after the reversion, the City retained its "right, title and interest" in the property as evidenced by the tax sale certificate. The City thereafter had the statutory authority to make a private sale of the certificate pursuant to N.J.S.A. 54:5-112, for an amount "not less than the amount of the municipal liens charged against the" property. The City did so by issuing the "corrective assignment" in 2004.
Defendant argues, however, that the 1987 tax sale certificate was rendered null and void by the tax sales that occurred in 1995 and in 1998. In support of this contention, defendant relies upon N.J.S.A. 54:5-39, which provides that:
[w]hen a parcel of land is held by a purchaser under a sale not redeemed, until the right of redemption is barred, all subsequent taxes, assessments for benefits and other municipal charges shall be assessed in the name of the owner, as if no sale had been made. In the event the municipality is the purchaser, such subsequent taxes, assessments for benefits and other municipal charges, shall be additional liens on the land and be added to the amount of the sale, and shall be paid before the land can be redeemed from the sale. No further sale of a parcel while held by the municipality shall be made for subsequent municipal liens, unless directed by resolution of the governing body of the municipality. In that case the officer shall enter the property on his tax sale list, and make up a new calculation to July first preceding the time of the proposed sale, in the manner hereinbefore directed, the amount included in the former sale to be entered in the calculation as a sale, as if it were an independent lien originating on the date of the sale, the interest thereon to be computed from that date, so that whenever a sale is held to enforce a municipal lien it shall include all municipal liens or charges against the property mentioned in the notice of sale.
However, contrary to defendant's argument, the tax sales that occurred in 1995 and 1998 did not render the City's 1987 tax sale certificate null and void.
According to N.J.S.A. 54:5-39, a municipality may acquire a tax sale certificate at a sale to enforce a municipal lien. The municipality is not required to make additional sales to enforce liens for any subsequent unpaid taxes, assessments or municipal charges on the property. In these circumstances, any such unpaid taxes, assessments and charges are added to the amount of the tax sale certificate and must be paid "before the land can be redeemed from the sale." Ibid.
However, N.J.S.A. 54:5-39 provides that a municipality may make additional sales of tax certificates to enforce liens on the property for subsequent unpaid taxes, assessments and charges when it is authorized to do so by a resolution of the governing body. Such a sale may consist of the "the amount included in the former sale" and the interest that has accrued since that sale. Ibid. Nevertheless, N.J.S.A. 54:5-39 provides that the sale only includes those liens and charges that are specifically "mentioned in the notice of sale."
In this matter, when the City issued the tax sale certificate in 1995, it did so to enforce a lien for unpaid water service charges in the amount of $752.51. The City did not include in that sale the amount of the earlier tax sale or any other liens and charges. Similarly, when the City issued the tax sale certificate in 1998, it did so to enforce a lien for unpaid property taxes in the amount of $2,530.83. Like the 1995 tax sale, the sale in 1998 did not include the amount of the 1987 sale or any other liens or charges.
Indeed, there is no evidence that there were any other liens or charges on the property at the time of the 1995 and 1998 tax sales. It is undisputed that, after he acquired the City's tax sale certificate in 1987, plaintiff paid virtually all of the taxes and charges assessed against the subject property.
Therefore, the City's 1987 tax sale certificate was not rendered null and void by the tax sales that occurred in 1995 and 1998. Those sales did not, by their terms, include any municipal liens and charges other than those specified in the sales. Consequently, the City retained its "right, title and interest" in the property as evidenced by the 1987 tax sale certificate and validly issued the "corrective assignment" of that certificate pursuant to N.J.S.A. 54:5-112.
We have considered the other arguments raised by defendant and find them to be without sufficient merit to warrant any discussion in this opinion. R. 2:11-3(e)(1)(E).
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