In Green Knight Capital, LLC v. Calderon, (A-40-21/086367) (Decided November 17, 2022), the Supreme Court of New Jersey addressed whether a party that acquires an interest in property subject to a tax sale foreclosure action must lose the opportunity it has acquired after attempting to redeem the tax sale certificate before moving to intervene. According to the court, the answer is no.
Facts of Green Knight Capital, LLC v. Calderon
Plaintiff Green Knight Capital, LLC purchased a tax sale certificate on a condominium unit owned by defendant Gabriel Calderon for $3,168.71. After waiting the two years required by statute, Green Knight commenced this action in April 2020, seeking to foreclose Calderon’s right of redemption.
In August 2020, 133 73rd Street Apt, LLC (the LLC) contracted with Calderon to purchase the unit. This transaction, which netted Calderon $63,194.58, closed on September 22, 2020; that same day, the settlement agent forwarded a $21,612.72 check to the municipal tax office to redeem the tax sale certificate. Two days after the closing, Green Knight moved for the entry of default and for an order setting the time, place, and amount for redemption. The following day, Green Knight learned of the attempt to redeem the tax sale certificate.
In October, Green Knight moved for an order barring the LLC from redeeming and for other relief. In November, the LLC cross-moved for intervention and for permission to redeem. One month later, the chancery judge entered three orders that allowed the LLC to intervene and denied Green Knight’s motions. In the wake of this disposition, the LLC redeemed the tax sale certificate. The Appellate Division affirmed, holding that when an investor has established “an interest in the property in the foreclosure action, is prepared to redeem the tax sale certificate, and files a motion to intervene before the entry of an order setting the last date for redemption, the investor is permitted to intervene and redeem the tax certificate.”
NJ Supreme Court Decision in Green Knight Capital, LLC v. Calderon
The New Jersey Supreme Court affirmed. “We conclude that the Tax Sale Law bears no hostility toward investors who otherwise meet the requirements of N.J.S.A. 54:5-89.1 when they prematurely attempt to redeem,” the court wrote. “Although the investor must always intervene before being allowed to redeem, a misstep like that which occurred here puts the tax sale certificate holder in no worse position than it would have possessed had the error not occurred.”
In reaching its decision, the court noted that in accordance with Simon v. Cronecker, 189 N.J. 304, 311 (2007), the Tax Sale Law was not hostile to competition between a tax sale certificate holder and a real estate investor as such competition would likely benefit the distressed property owner. The court went on to find no indication that the Tax Sale Law required strict compliance with the procedural steps for an investor to redeem a certificate.
“The concept urged by Green Knight — that there may be no forgiveness for an investor’s mistaken or premature attempt to redeem — stands in stark contrast to the law’s evolving attitude toward late investors and its greater interest in providing property owners with the opportunity to salvage or maximize their interests before foreclosure,” the court wrote. “We find no reason to impose a rule that requires courts to be unforgiving when an investor mistakenly attempts redemption before seeking intervention.”
Lastly, the New Jersey Supreme Court rejected the Appellate Division’s holding that an investor must intervene before the issuance of an order setting the last date for redemption. “The Tax Sale Law and our court rules, however, impose no such deadline,” the court wrote.