The New Jersey Chancery Division in Bergen County recently vacated a final judgment of foreclosure based on the defendant’s principal’s health issues and its attorney’s alleged negligence.  See BV001 REO Blocker, LLC v. HB (USA) Properties, LLC, Docket No. BER-F-2097-19.  Plaintiff filed a tax foreclosure complaint relating to the defendant entity’s property in January 2019 and served defendant in February.  The principal of defendant, who lived in the home, hired an attorney to represent defendant in the action.  During this period, the principal was dealing with his own health issues, “such as tonsillar cancer, and new medical issues involving his eyesight, back pain, and a stage 4 diagnosis of prostate cancer in May 2019,” as well as his children’s “severe mental health issues.”  The principal also allegedly informed the attorney that he had family members who could pay the tax lien.  Nonetheless, defendant did not file an answer, plaintiff moved for final judgment, and the Court entered final judgment on July 31, 2019.  Upon being served with the final judgment motion papers, defendant’s counsel informed the principal that he had until August 19 to pay off the taxes.  Defendant attempted to do so on August 14, but was informed by the tax collector that it was too late.  On November 17, 2019, defendant moved to vacate default judgment under Rule 4:50-1(f).

The Court granted the motion.  First, the Court held that N.J.S.A. 54:5-87—which plaintiff cites and which holds that a party has three months to seek to vacate a tax sale judgment, absent fraud or lack of jurisdiction—does not control here.  Instead, it held that Rule 4:50-1 “has supremacy over the foreclosure statutes that Plaintiff cites as controlling” in “appropriate cases,” and that this case was “appropriate” due to “the myriad of issues Defendant faced.”  Second, the Court held that the final judgment should be vacated under Rule 4:50-1 based on the attorney’s apparent negligence and the other underlying factors.  The Court found that “Defendant had the necessary funds and was ready to pay off the tax lien,” but failed to do so because “Defendant’s attorney purportedly gave Defendant misinformation.”  Stated otherwise, the Court found that “Defendant took every action that it thought was necessary to satisfy its debt, while also dealing with a host of serious personal and familial health issues.”  It also found that defendant’s delay in bringing this motion was minimal and that plaintiff would not be prejudiced.  Finally, the Court noted that the tax lien was $180,000 and the property was worth $1.15 million and, in addition to the fact that plaintiff would obtain a substantial windfall, defendant’s principal would be evicted from his home if the foreclosure were not vacated.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.