Kanter v. Township of Rockaway

Citations: 369 N.J. Super. 473; 849 A.2d 578; 2004 N.J. Super. LEXIS 200

Court: New Jersey Superior Court Appellate Division; June 8, 2004; New Jersey; State Appellate Court

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The court opinion delivered by Rodríguez addresses the tax sale law (N.J.S.A 54:5-1 to -137), which establishes the framework for creating, enforcing, and collecting liens on real property for unpaid municipal taxes. The law provides municipalities with various methods to address delinquent taxes, including the necessity for municipalities to sometimes purchase their own tax sale certificates. Section 114.2 outlines two assignment methods for tax sale certificates: assignment to the highest bidder at public sale (N.J.S.A. 54:5-114.2(a)) and assignment for an amount less than the outstanding balance (N.J.S.A. 54:5-114.2(b)). For the latter, public notice must be given for bids below the balance due, and the governing body can accept or reject bids at its next meeting, retaining discretion to choose a lower bid if it serves the public interest or facilitates a quicker return of the property to the tax rolls.

In the case of the Township of Rockaway, which acquired its own tax sale certificate for $4,856.36 in 1990 concerning a property historically utilized as a gasoline station with underground tanks, an environmental study revealed significant soil contamination requiring approximately $130,000 for remediation. By June 2002, the total redemption amount on the tax sale certificate had escalated to $173,585.73, surpassing the property's assessed value of $267,900. The appeal focuses on whether the governing body is obligated to accept the highest bid at a subsection b sale, to which the court concluded that the governing body possesses the discretion to reject higher bids in favor of lower ones if it benefits the municipality.

The Rockaway Township Council authorized the assignment of a tax sale certificate for less than the outstanding taxes under N.J.S.A 54:5-114.2(b). Notices for bidding were appropriately published and posted. Anthony J. Mazzola submitted a bid of $2,500, detailing his history as a resident and business owner in Rockaway, his community involvement, and his intentions to clean and utilize the property for his contracting business. The bid was published in the Daily Record, and higher bids were invited at the next Council meeting, where Kenneth Kanter submitted an $8,550 bid for a medical or dental office. After further bidding, Kanter's final bid reached $17,510. Due to the increased interest, the Council rejected all bids to assess their options and authorized a new private sale with a $20,000 minimum bid. Mazzola submitted a $20,000 bid, reiterating his plans for the property. At the subsequent meeting, Kanter verbally bid $22,500, which was rejected in favor of Mazzola's bid.

The resolution regarding the assignment of Tax Sale Certificate Number 23-90 outlines Rockaway's goals for the Property, which include recovering unpaid taxes, site remediation, and returning the Property to the tax rolls. Mr. Mazzola intends to proceed with foreclosure and clean-up promptly. The Township Council believes assigning the certificate to Mazzola, who submitted a lower bid, aligns with their objectives. Kanter initiated legal action to prevent this assignment, but Judge Barbara Zucker-Zarett denied his request for restraints and upheld the assignment after a hearing. The judge noted that New Jersey statute N.J.S.A. 54:5-114.2(b) allows municipalities to reject higher bids, confirming the Council's discretion in this matter. Kanter's subsequent appeal, arguing that the assignment was arbitrary and contrary to the statute, was rejected. The court emphasized that the statute does not mandate acceptance of the highest bid and grants governing bodies the discretion to make such decisions.

The Supreme Court in Dvorkin emphasized that N.J.S.A. 54:5-114.2 aims to return properties to the tax rolls by mandating foreclosure at the purchaser's expense within two years of a tax sale certificate assignment, as outlined in N.J.S.A. 54:5-114.4. The governing body has the discretion to consider a bidder's intent to occupy or improve the property, which may enhance its potential for tax revenue compared to an investor holding the certificate. The Tax Sale Law (TSL) is interpreted liberally to further its goals. In this case, the governing body favored Mazzola's lower bid due to his commitment to occupy, improve the property, and address soil contamination, aligning with N.J.S.A. 54:5-114.2(b). Mazzola's second personal statement reiterated his plans for property refurbishment, which included landscaping, exterior cleaning and painting, and a new roof. The decision was affirmed.