The recent opinion of the Supreme Court of New Jersey in 257-261 20th Avenue Realty, LLC v. Alessandro Roberto has, at least temporarily, made changes to how tax foreclosure rulings in New Jersey work. The way foreclosures are based on tax liens may have changed because of the precedence set by the opinion, although time will tell.
The precedence set by this opinion could change in the near future as laws and rulings on the topic develop. If you are facing foreclosure for tax delinquency, it’s important to consult an attorney who is up to date with the changes to rulings and the law.
Contact Joshua Denbeaux to learn more about recent updates on tax delinquency foreclosure laws and how we may be able to help you.
What Does This Ruling Mean?
Before we get to 257-261 20th Avenue Realty, LLC v. Alessandro Roberto, we have to start with another case, US Supreme Court opinion Tyler v. Hennepin, that the New Jersey Supreme Court used as the precedent to reject the arguments made in 20th Avenue Realty, LLC and effectively change New Jersey’s Tax Sale Law, called TSL.
In Tyler, a Minnesota homeowner stopped paying real estate taxes after moving to a senior living community and had $15,000 in accumulated tax debt over five years. Hennepin County foreclosed on the property and had a $25,000 surplus after the foreclosure sale. The homeowner was not able to get the surplus from Hennepin County, losing out on the $25,000 of equity. The US Supreme Court ruled this was an illegal taking under the Fifth Amendment’s Taking Clause.
Back to 20th Avenue Realty, the case at hand, the owner of the building was late on municipal sewer taxes in 2010 and 2016, and the debt was sold to a third-party company for a measly $606 under New Jersey’s TSL rules.
Over the years, the third party allowed the debt to accumulate to $32,973.15 in interest and fees. The third party later foreclosed on the building with a final judgment from New Jersey courts. Part of New Jersey TSL law allows final judgments for tax foreclosures to also foreclose on a homeowner’s right to redemption, meaning a property owner could not pay off the debt to stop foreclosure and lost the surplus equity beyond the unpaid debt when the property was foreclosed on.
As part of the foreclosure in 20th Avenue Realty, the owner would have lost equity from owning the building for over twenty years because he did not pay his municipal sewer tax to the tune of hundreds of thousands of dollars. The commercial property was valued between $475,000 and $535,000, while the original unpaid taxes amounted to just $606.
When deciding on 20th Avenue Realty, the Supreme Court of New Jersey ruled that this is an illegal taking, stating that the government can’t take more than it’s owed and applying the opinion from Tyler as the reasoning behind their decision.
This is a major change in New Jersey regarding tax delinquency foreclosures, which previously allowed third-party companies to buy unpaid tax bills and sit on them for years, waiting for the right time to pounce on unsuspecting homeowners.
If you own a property being foreclosed on for late property taxes, utilities, or other government charges and you’re facing a significant loss of equity, the precedence set in this case says that the courts should only rule that you owe the amount you owe. This precedence set by the Supreme Court of New Jersey should determine how current cases are decided. This could change at any time. It’s important to be aware of any changes in tax delinquency foreclosure rulings or laws to know how they might impact you.
Contact A Foreclosure Attorney Today
Dealing with a tax delinquency foreclosure can always be difficult, especially when the legal precedent changes. If you’re facing a tax foreclosure, speaking with an attorney who knows about these changes and how to use them to your advantage is paramount.
Working with an attorney can help you stay on top of tax delinquency foreclosure changes and how they could affect you or your case. It’s a good idea to consult an attorney that you trust.
Contact Denbeaux Law today to learn more about how we may be able to help you with your situation.
