ON APPEAL FROM AN ORDER OF THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW JERSEY [Case No. 07-27999/GMB]
The opinion of the court was delivered by: Simandle, District Judge
This matter is before the Court upon appeal from a Bankruptcy Court Order entered on February 4, 2008, which denied the motion of Debtor Lorraine R. Rossiter ("Appellant" or "Debtor") for an extension of the automatic bankruptcy stay on judicial proceedings pertaining to a piece of property located in Gloucester Township, New Jersey, and granted the motion of Trustee Betty Simon ("Appellee") for relief from the automatic bankruptcy stay. Appellant argues that the Bankruptcy Court's order granting Appellee relief from the automatic stay, in which the court determined that the property in question was not property of Debtor's estate, was in error. At issue in this appeal is whether 11 U.S.C. § 1322(c)(1), under which a debtor may cure a default on a lien on the debtor's principal residence until such residence is sold at a foreclosure sale, grants a debtor any rights with respect to such a residence if a final judgment of foreclosure was entered as to that residence prior to the filing of the bankruptcy petition. For the reasons set forth below, the Court agrees with the Bankruptcy Court that this question must be answered in the negative, and will affirm the order of the Bankruptcy Court.
The real property at issue in this appeal is located at 74 Girard Avenue in Gloucester Township, New Jersey (the "property"). (Bonchi Decl. Ex. C.) Appellant obtained title to this property for one hundred dollars through a quitclaim deed executed by her mother, Ada Rossiter, on January 26, 2004. (Id.)
This deed was recorded in the Camden County Clerk's Office on April 17, 2007. (Id.)
At the time Appellant obtained title to the property, it was subject to a tax sale certificate held by Appellee. (Bonchi Decl. Ex. A at 1.) In 2003, after Ada Rossiter failed to pay municipal taxes, the Township of Gloucester acquired a lien on the property pursuant to N.J.S.A. 54:5-6, which lien the Township sold to Appellee via a tax sale certificate dated July 3, 2003 and recorded in the Camden County Clerk's Office on August 7, 2003. (Id.)
Under New Jersey law, such a tax sale certificate "creates . . . a lien on the premises and conveys the lien interest of the taxing authority" to the certificate holder, subject to the property owner's statutory right of redemption. Cherokee Equities, L.L.C. v. Garaventa, 382 N.J. Super. 201, 206 (Ch. Div. 2005) (citation omitted); see also N.J.S.A. 54:5-31 to -32, -46. However, "if the property owner does not redeem the tax certificate within two years of the [sale of the certificate], the holder may acquire title to the property free and clear by instituting an action to foreclose the right of redemption against anyone with an interest in the land." Simon v. Cronecker, 189 N.J. 304, 319 (2007) (citing N.J.S.A. 54:5-86 to -87). By February 1, 2007, the Rossiters owed upon the tax sale certificate the sum of $20,875.33 in principal, interest, and subsequent property taxes that had been paid by Appellee. (Bonchi Decl. Ex. A at 1.)
Appellee initiated foreclosure proceedings on the property in the Superior Court of New Jersey, Chancery Division, in February 2007. (Id.) On March 8, 2007, Judge Shuster issued an order setting April 23, 2007 as the final date for redemption of the tax sale certificate; a final notice of redemption was mailed by certified mail to Ada Rossiter. (Id. at 2.) On July 18, 2007, after the final redemption deadline expired with no offer by Ada Rossiter or "any person or persons acting [on her] . . . behalf" to pay the sum owed to Appellee on the tax sale certificate, Judge Shuster entered an order adjudging that "Ada Rossiter and the Gloucester Township Grants Administration Office and all persons claiming by, from or under them stand absolutely debarred and foreclosed of and from any and all rights, and equity of redemption" to the property, and ordering that Appellee "is vested with an absolute and indefeasible estate of inheritance in fee simple to the [property]." (Id. at 2-3.)
On December 6, 2007 -- more than four months after the final judgment of foreclosure was entered in Appellee's favor -- Appellant filed a petition for bankruptcy pursuant to Chapter 13 of the Bankruptcy Code. See In re Lorraine M. Rossiter, D.N.J. Bankr. Pet. No. 07-27999 (GMB), Docket Item 1. The parties filed cross-motions pertaining to the automatic bankruptcy stay*fn1 of proceedings pertaining to the property, with Appellant seeking to extend the automatic stay and Appellee seeking relief from the automatic stay. In re Lorraine M. Rossiter, Docket Items 8, 12. On January 22, 2008, Bankruptcy Judge Gloria Burns convened a hearing to address these cross motions. Judge Burns entered an order granting Appellee's motion for relief from the automatic stay on January 23, 2008, and entered an order denying Appellant's motion to extend the stay on February 4, 2008, In re Lorraine M. Rossiter, Docket Items 21, 23; ...