Court: New Jersey Superior Court Appellate Division; September 9, 1999; New Jersey; State Appellate Court
The case involves a tax sale foreclosure where the occupants, not named as defendants, aim to reopen the Judgment in favor of the plaintiffs and redeem the property. Alternatively, they seek a declaration as bona fide tenants, asserting their right to possession under the Anti-Eviction Act. The plaintiffs oppose this and request an Order for possession.
The procedural history began on July 29, 1998, with the plaintiff filing a Foreclosure Complaint and lis pendens. Although service was completed on the record owner, Midlantie Bank, N.A., no Answer was filed, leading to a redemption order on December 29, 1998. Following the failure to redeem, final Judgment was entered for the plaintiffs on March 5, 1999, and recorded on March 12, 1999.
It was later discovered that Midlantie Bank had transferred title to Robert Herdelin in November 1995, but he did not officially file his Deed until January 21, 1999, and had not paid taxes during that period. After the Judgment was entered, Herdelin attempted to vacate it on March 29, 1999, but his motion was denied due to insufficient evidence of excusable neglect. During the proceedings, it was revealed that Herdelin’s daughter was living at the premises. The court, recognizing potential rights concerning her occupancy, denied the plaintiffs’ possession request without prejudice, pending further information.
Herdelin subsequently submitted a certification indicating his daughter was occupying the property under a lease starting in October 1998, with a term of three years. The court scheduled a testimonial hearing to assess the legitimacy of this lease. Despite no new motion concerning Herdelin's daughter's tenancy, the court agreed to proceed with the hearing and allowed for discovery, raising the issue of whether her occupancy could provide a right to redeem the property regardless of her tenant status. Counsel were instructed to prepare briefs on this matter for consideration during the hearing.
Over four months after the entry of Judgment, neither Ms. Herdelin nor Mr. McKissock filed a motion to intervene or vacate the default. On August 9, 1999, two days before a scheduled hearing, counsel for the occupants requested a postponement to allow for a motion to intervene. The request was denied; however, the court proceeded as if a motion had been filed, deeming it a formality due to the court's own inquiry into their rights. A hearing on August 11, 1999, addressed the occupants' rights to redeem under N.J.S.A. 51:5-54, revealing unresolved factual issues regarding Ms. Herdelin’s and Mr. McKissock’s statuses. The trial began the next day, featuring stipulations, exhibits, and live testimony.
Key findings of fact include: Ms. Herdelin, daughter of Robert Herdelin, moved into a property owned by her father in Brigantine, NJ, after living in Pennsylvania. This property, Unit #201 at the Sanderling Condominiums, became her primary residence without a formal lease; she did not pay rent, and utility bills were in her father's name. Although she assisted her father with cleaning in lieu of rent, this arrangement lacked a formal structure. Ms. Herdelin was aware that her residence was temporary and contingent on her father's decision to sell the property. Mr. McKissock, who moved in with her after they began dating, also did not pay rent and maintained a Philadelphia address.
Robert Herdelin understood that the unit was for sale and could require him to vacate at any time. He claimed to provide services to Mr. Herdelin in lieu of rent, but his vague testimony failed to substantiate this assertion. Following an unsuccessful application, Robert prepared a lease that indicated a three-year tenancy with Ms. Herdelin and Mr. McKissock, starting in October 1998, at a monthly rent of $300. Although both Ms. Herdelin and Mr. McKissock testified that the signatures on the lease were theirs, they did not rely on the document. Instead, their counsel stipulated that they were month-to-month tenants, conceding the fair market value of the property was $1,000 per month, contradicting the lease amount. The court found the lease to be invalid and potentially fraudulent, indicating that Ms. Herdelin and Mr. McKissock had not been truthful in their testimony regarding the lease.
The primary legal issue at hand concerns the right of the movants to reopen the foreclosure judgment and redeem the tax sale certificate related to the plaintiffs' title. This encompasses whether Ms. Herdelin and Mr. McKissock possess a valid lease or are entitled to protections under the Anti-Eviction Act. The court concluded negatively on both counts. It noted that neither Ms. Herdelin nor Mr. McKissock were parties to the action nor had they formally sought to intervene or reopen the judgment. Their claim to tenancy rights was initially raised by Robert Herdelin in response to a possession request, and despite being notified, neither occupant pursued intervention. Their legal focus remained on tenancy status until prompted by the court. Although their actions were somewhat delayed, the court allowed for their rights to be considered in the hearing without further postponement.
Movants are identified as the primary parties in this legal opinion, bearing the burden of persuasion, although the findings would remain unchanged regardless of such burden. They assert two claims: first, that they are lawful tenants protected from eviction by the Anti-Eviction Act; second, that they are occupants entitled to redeem under the Tax Sale Act, specifically N.J.S.A. 54:5-54.
Regarding the tenancy claim, the court finds that the facts do not substantiate the movants' assertion of tenant status. Despite the movants' claims, including misleading information from Robert Herdelin, the evidence indicates that they occupy the premises at his pleasure without a definite term or reasonable rental agreement, categorizing them as licensees rather than tenants. The court references a similar case, Security Pacific Nat. v. Masterson, where the court ruled against a claim of tenancy designed to obstruct foreclosure rights, emphasizing that the Anti-Eviction Act protects only bona fide tenants.
In evaluating the tenancy, several criteria are assessed: the relationship between the parties, the fairness of the rental payments, and the reasonableness of the lease term. The alleged lease, involving family members, is scrutinized due to inherent biases. The rent stipulated is significantly below market value, and the movants' claims of performing cleaning and odd jobs as compensation lack specificity. Although they initially claimed to have signed a three-year lease, this conflicts with evidence that Mr. Herdelin was advertising the property as vacant. Attempts to redefine their status to month-to-month tenants were not agreed upon by the plaintiffs' counsel, and overall testimony failed to support their claims. Consequently, the court concludes that the movants do not possess a bona fide tenancy.
Movants assert their right to redeem property under N.J.S.A. 51:5-54, arguing that as occupants, they qualify for redemption despite not being tenants protected by the Anti-Eviction Act. The statute allows redemption by various parties, including occupants of land sold for municipal taxes, but does not define "occupant." Case law provides clarification: in Cannici v. Scott, the court defined "occupant" as someone with a lawful right or interest in the land, and ruled that an expired tax sale certificate meant the occupant had no such right to redeem. Similarly, in Taylor v. Borgfeld, the court found that a lease from a municipality without legal authority to grant possession did not confer lawful interest to the occupant. Jefferson v. Davis reinforced this by concluding that mere occupancy, without title or lawful interest, rendered occupants as mere trespassers, thus disqualifying them from redemption rights. Collectively, these cases establish that only lawful occupants with a recognized interest in the property are entitled to redeem under the statute, contrasting with an earlier ruling that equated occupancy with an interest in land.
Guidance from the case Lipman v. Shriver emphasizes the importance of interpreting the Tax Sale Law based on its intended spirit rather than strictly on specific language. The court highlighted that interests eligible for redemption under N.J.S.A. 54:5-51 are those that would be extinguished by a foreclosure, asserting that holders of easements lack redemption rights since their interests remain intact post-foreclosure. Conversely, unenforceable mortgage holders can redeem their interests. The court determined that the movants, claiming occupancy rights via a lease with Ms. Herdelin's father, do not possess an enforceable leasehold interest, either legally or equitably. Their purported tenancy does not qualify for redemption rights as it would not be cut off by a tax sale foreclosure. Therefore, without a lawful interest, the movants are not entitled to redeem under N.J.S.A. 54:5-51. The court also noted that the Tax Sale Act is designed to favor the extinguishment of redemption rights to ensure marketable titles. The movants' lack of enforceable leasehold interest, coupled with their dependency on the owner’s discretion for occupancy, precludes them from the protections of the Anti-Eviction Act. Consequently, their application for possession and redemption is denied, and the plaintiffs will be granted possession, requiring the movants to vacate by October 1, 1999.
