July 8, 2008
WACHOVIA BANK, N.A., AS ASSIGNEE FOR PHOENIX FUNDING, INC., PLAINTIFF-RESPONDENT,
DOLORES GROFF-KELSO, JOSEPH KELSO, HUSBAND OF DOLORES GROFF-KELSO, PNC BANK, NEW CENTURY FINANCIAL SERVICES, INC., ERIN CAPITAL MANAGEMENT, LLC AND PALISADES COLLECTION, LLC, DEFENDANTS.
MICHAEL BONNER, INTERVENOR-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Camden County, F-11898-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 14, 2008
Before Judges Payne and Messano.
In this tax certificate foreclosure matter, third-party contract purchaser Michael Bonner appeals from an order entered on December 19, 2005, denying his motion to stay judgment of foreclosure and to admit Bonner to the cause in order to redeem property owned by Dolores Groff-Kelso, prior to the final date for redemption; granting the motion of Wachovia Bank, N.A., as assignee for Phoenix Funding, Inc., for entry of a final judgment of foreclosure; and placing a constructive trust on the November 10, 2006 contract of sale between Bonner and GroffKelso that required Wachovia to provide Groff-Kelso "the same net sum that she would have received from Michael Bonner had the transaction contained in the contract been completed" and required Wachovia to "honor the contract including those provisions contained in paragraph eleven relating to use and occupancy and the buy-back agreement." On appeal, Bonner argues, in light of the Supreme Court's later-decided opinion in Simon v. Cronecker, 189 N.J. 304 (2007), made retroactive by Malinowski v. Jacobs, 189 N.J. 345 (2007), that the decision of the motion judge was mistaken. We agree, reverse, and remand the matter for further proceedings in accordance with the opinion that follows.
The record establishes that in June 2004, a tax lien for unpaid taxes on property in Bellmawr owned by Groff-Kelso was sold to plaintiff Wachovia as assignee for Phoenix Funding. After waiting the requisite two years, on July 13, 2006, Wachovia filed its complaint to foreclose its tax sale certificate. In an order entered on September 28, 2006 setting the amount, time and place of redemption, it was specified that the amount required to redeem the premises from the tax sale certificate was $23,569.32, and November 13, 2006 was fixed as the final date for redemption. Tender to the Bellmawr tax collector was required.
On November 10, 2006, Bonner, having learned of the foreclosure action through a record search, entered into a contract for the purchase of the property, which he tentatively valued at $125,000, for $75,000 as is. Paragraph eleven of the contract contained a use and occupancy clause permitting GroffKelso to remain resident on the property for six months, upon payment of a monthly amount of $850 plus utilities, and it permitted her to buy back the property at the conclusion of the six-month period for $100,000. Bonner claims to have recorded the contract.
On November 13, 2006, Bonner filed a motion to stay entry of judgment, intervene and redeem the property, accompanying his motion with a certification setting forth his status as a contract purchaser and attaching a copy of the contract. Wachovia, in turn, cross-moved for entry of final judgment. In support of its motion, Wachovia claimed that Bonner was a title raider whose conduct violated public policy; that he sought to purchase the property at issue for "nominal" consideration; and that the buy-back provision of the contract, if exercised, converted the sale into a usurious loan. Wachovia also claimed that Bonner, as a contract purchaser, lacked standing to move to intervene.
As we have previously noted, the motion judge denied leave to intervene, agreeing that Bonner's conduct violated public policy, and it granted Wachovia's motion for a judgment of foreclosure, while placing a constructive trust on the contract between Bonner and Groff-Kelso.
In Cronecker, the Supreme Court held that the Tax Sale Law does not prohibit a third-party investor who timely intervenes in a foreclosure action from purchasing a property owner's interest for more than nominal consideration and redeeming the tax certificate, 189 N.J. at 328-31, and it held that the Law requires intervention in the cause by that investor in order to effect the purchase and redemption, id. at 335-37. As a consequence, we reverse the order entered by the motion judge. Remanding the matter for consideration of whether disqualifying "nominal" consideration was offered by Bonner under the standards set forth in Cronecker, id. at 331-35.
Reversed and remanded for further proceedings in accordance with this opinion.
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