Tyler v Hennepin County Shockwaves Sounding in NJ Appeals Court
On December 4, 2023, a panel of the Appellate Division of the Superior Court of New Jersey published an opinion that adopted the holding of Tyler v. Hennepin County to reject one of appellant’s arguments.
The case is captioned 257-261 20th Avenue Realty, LLC v. Alessandro Roberto, and the full text of the opinion is found here. a3315-21 Dec 4 2023. A quick review of the caption reveals a short list of heavy hitters in the property rights’ (i.e. Pacific Legal Foundation) and the Tax Sale Ass’n (Adam Greenberg, Esq.) bar. I’ll let everyone read the case, which I’d bet will be submitted for New Jersey Supreme review any day now.
The legal backdrop is New Jersey’s Tax Sale Law (TSL). In general, when a property owner fails to pay real estate tax (or other municipal charges), the municipality is permitted to sell a tax sale certificate for the face amount of the arrearages. In this case, there were three such certificates sold (totaling about $800.00) in 2010/2011 creating a lien against commercial property located in Paterson. In 2021, the tax sale certificate holder commenced an action to foreclose on the owner’s right of redemption, i.e. take title to the property as permitted under the TSL. The certificate holder followed the procedures and obtained a judgment of foreclosure from the Law Division.
Thereafter, the property owner moved to vacate the judgment arguing that it had sufficient funds to redeem the certificates. The redemption amount, including statutory interest (max 18%) and costs totaled about $40,000 in 2021. The Law Division judge granted the owner’s motion and vacated the judgment that would have allowed the tax sale certificate holder to take title to a commercial property that was valued at between $475,000 and $535,000. But that didn’t happen. So, the tax sale certificate holder appealed (apparently unhappy with the $40,000 return on his $800 investment).
Before Tyler, I suspect the Law Division opinion would have been “affirmed o.b.”
“Although we conclude that the judge did not abuse his discretion in vacating final judgment under Rule 4:50-1(f), we address the application of Tyler, as “the underlying issue is one of substantial importance and is capable of repetition while evading review.” [Slip op at 18].
The opinion then outlined the history of the TSL; the facts and holding of Tyler; and applied it to the case and bar to conclude:
“Therefore, it is clear a third-party tax sale certificate holder’s taking of property without just compensation, through a tax sale foreclosure, is not shielded from the application of the holding in Tyler as a violation of the Fifth Amendment Takings Clause and under the New Jersey Constitution.” Slip op at 26.
The Appellate Court also found that Tyler should have “pipeline retroactivity” (meaning, applies to all pending cases). Not sure whether that means all pending cases where title to property was taken by foreclosure under the TSL (which wouldn’t be that many cases), or whether the court intended to cast a wider net.
As Benjamin Franklin observed long ago, “in this world, nothing is certain except death and taxes.” I’m certain that the shockwaves of Tyler will continue to reverberate.
