In New Jersey, a homeowner can lose his or her home for failure to pay real estate taxes to the town/city where the property is located. Unlike mortgage foreclosure cases where the property is required to go to a judicial sale and the homeowner is given one final shot to save the home by “redeeming” or paying off the judgment within 10 days from the sale date, in tax foreclosure cases there is no judicial sale and the opportunity to redeem is thus lost once the final judgment is entered.  In other words, the entry of a final judgment in real estate tax foreclosure cases serves to transfer title of the property to the foreclosing plaintiff.

What, if anything, can the homeowner do in this situation to recover the property?   One possible avenue of attack is to determine whether the plaintiff properly served the initial complaint on the homeowner, for defective service of process can render the entire judgment void.  Even is successful, however, the tax lien will remain and will need to be paid at some point in order for the homeowner to save his/her home.

A final judgment of foreclosure entered pursuant to the New Jesey Tax Sale Law, N.J.S.A. 54:5-1 to -104.75, gives “full and complete relief . . . to bar the right of redemption, and to foreclose all prior or subsequent encumbrances,” granting the successful party an estate in fee simple upon the recording of the judgment.  N.J.S.A. 54:5-104.64. Because its chief purpose is to aid municipalities in the raising of revenues, Bron v. Weintraub, 42 N.J. 87, 91 (1964), the New Jersey Legislature has declared that the Tax Sale Law “shall be liberally construed as remedial legislation to encourage the barring of the right of redemption by actions in the Superior Court to the end that marketable titles may thereby be secured,” N.J.S.A. 54:5-85. N.J.S.A. 54:5-87 declares that judgments entered pursuant to the Tax Sale Law “shall be final . . . and no application shall be entertained to reopen the judgment after three months from the date thereof, and then only upon the grounds of lack of jurisdiction or fraud in the conduct of the suit.”  N.J.S.A. 54:5-104.67 repeats this admonition.

As one NJ appeals court observed, “N.J.S.A. 54:5-87 and N.J.S.A. 54:5-104.67 are inconsistent in that the three month limitation period they refer to commences, in the former, from the entry of the judgment and, in the latter, from the recording of the judgment.”  Fresh Fish Holdings, L.L.C. v. 61 Main Street, Inc., 2006 N.J. Super. Unpub. LEXIS 113, *2 n. 2 (App. Div. March 30, 2006)(emphasis in original).  Although N.J.S.A. 54:5-87 indicates that no application to reopen a judgment can be made after three months from the date of judgment, R. 4:50-1 allows a period of one year to bring the motion, or if the judgment is void, then a reasonable period of time is allowed within which to bring the motion under R. 4:50-1(d).  In foreclosure actions where there is a conflict between a statute regarding practice and procedure, the New Jersey Court Rules are generally paramount.  M & D Associates v. Mandara, 366 N.J. Super. 341, 351 (App. Div. 2004)(citing Bergen-Eastern Corp. v. Koss, 178 N.J. Super. 42, 45 (App. Div. 1981), certif. granted, 87 N.J. 351, appeal dismissed, 88 N.J. 499 (1981); Borough of New Shrewsbury v. Block 115, Lot 4, Assessed to Hathaway, 74 N.J. Super. 1, 8 (App. Div. 1962)).

Due Process Requires Notice of the Lawsuit

Notice is a basic procedural necessity to ensure that a party’s due process rights are enforced.  Mettinger v. Globe Slicing Mach. Co., 153 N.J. 371, 389 (1998) (citing Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S. Ct. 652, 656-57, 94 L. Ed. 865, 873 (1950)). “‘An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'”  O’Connor v. Altus, 67 N.J. 106, 126 (1975) (quoting Mullane, supra, 339 U.S. at 314, 70 S. Ct. at 657, 94 L. Ed. at 873); Jameson v. Great Atl. & Pac. Tea Co., 363 N.J. Super. 419, 425 (App. Div. 2003) (quoting Davis v. DND/Fidoreo, Inc., 317 N.J. Super. 92, 97 (App. Div. 1998), certif. denied sub nom, Davis v. Surrey Downs/Fidoreo, Inc., 158 N.J. 686 (1999).

A party may seek relief from a final judgment or order based on the criteria set forth in R. 4:50-1, including:  * * * “(d) the judgment or order is void; * * * or (f) any other reason justifying relief from the operation of the judgment or order.”   R. 4:50-1(d), (f).   Subparts (a), (b), or (c) of R. 4:50-1 allow a period of one year to bring the motion.  R. 4:50-2.  Otherwise, the motion to vacate must be brought within a reasonable time if the judgment is void under R. 4:50-1(d). R. 4:50-2; see also Citibank, N.A. v. Russo, 334 N.J. Super. 346, 353 (App. Div. 2000) (stating a motion to vacate judgment must be made within a reasonable time). An application to vacate a judgment based on R. 4:50-1 is within the sound discretion of the trial court and “should be guided by equitable principles in determining whether relief should be granted or denied.”  Housing Auth. of the Town of Morristown v. Little, 135 N.J. 274, 283 (1994). The application is “viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached.”  Marder v. Realty Constr. Co., 84 N.J. Super. 313, 319 (App. Div. 1964), aff’d, 43 N.J. 508 (1964).  A motion based on R. 4:50-1(f) must be supported by “truly exceptional circumstances” in the interests of finality of judgments.  Housing Auth., supra, 135 N.J. at 286.

Obtaining Personal Service on Individual Defendants in New Jersey

R. 4:4-4 spells out the primary method of obtaining in personam jurisdiction in civil cases brought in the Superior Court of New Jersey.  As to individuals, personal service must be made as follows:

Upon a competent individual of the age of 14 or over, by delivering a copy of the summons and complaint to the individual personally, or by leaving a copy thereof at the individual’s dwelling place or usual place of abode with a competent member of the household of the age of 14 or over then residing therein, or by delivering a copy thereof to a person authorized by appointment or by law to receive service of process on the individual’s behalf;

R. 4:4-4(a) (emphasis added).   Thus, the Rule provides for serving an individual defendant by delivering the Complaint upon another competent member of the household who is is 14 years or older and resides at the house, or by serving the Complaint on the defendant’s “individual dwelling place or usual place of abode.”

In the event a plaintiff cannot effect service in accordance with R. 4:4-4(a), a plaintiff may pursue alternative or substituted methods of personal service conditioned on providing the required affidavit of due diligence detailing the efforts undertaken to serve a party, as more specifically set forth in R. 4:4-5(b).  For example, R. 4:4-4(b) authorizes personal service by the simultaneous mailing of certified and regular mail, and by court order, among other methods.  In addition, R. 4:4-5 authorizes personal service by publication in a newspaper of general circulation in the county where the action is venued.  “‘The requirements of the rules with respect to service of process go to the jurisdiction of the court and must be strictly complied with.  Any defects . . . are fatal and leave the court without jurisdiction and its judgment void.'”  Berger v. Paterson Veterans Taxi Serv., 244 N.J. Super. 200, 204 (App. Div. 1990) (quoting Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 493, cert. denied, 344 U.S. 838, 73 S. Ct. 25, 97 L. Ed. 652 (1952)).

Judgment Based on Defective Service of Process is Deemed Void

The court lacks jurisdiction over a defendant and the authority to enter judgment if the defendant was not properly served with process. City of Passaic v. Shennet, 390 N.J. Super. 475, 483 (App. Div. 2007). “Personal service is a prerequisite to achieving in personam jurisdiction[.]”   Berger, supra, 244 N.J. Super. at 204-05; R. 4:4-4(a). “The primary method of obtaining in personam jurisdiction over a defendant in this State is by causing the summons and complaint to be personally served[.]” R. 4:4-4(a). In cases where a defendant asserts defects in service of process, due process may be implicated, and further showings, such as that of a meritorious defense, may not be required.  Pressler & Verniero, Current N.J. Court Rules, comment 5.4.2 on R. 4:50-1(d) (2012) (citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 108 S. Ct. 896, 99 L. Ed.2d 75 (1988)).

Because of the aforementioned due process requirements, when service of process is defective or non-existent and a default judgment results, the judgment is generally void.  Jameson, supra, 363 N.J. Super. R 425; Sobel v Long Island Entm’t Prods., Inc., 329 N.J. Super. 285, 293 (App. Div. 2000); Rosa v. Araujo, 260 N.J. Super. 458, 462 (App. Div. 1992), certif. denied, 133 N.J. 434 (1993).  “A default judgment will be considered void when a substantial deviation from service of process rules has occurred, casting reasonable doubt on proper notice . . . . Such a judgment will usually be set aside under R. 4:50-1(d).”  Jameson,  363 N.J. Super. at 425 (citations omitted).  “If a judgment is void in this fashion, a meritorious defense is not required to vacate under the rule.”  M & D Associates, supra, 366 N.J. Super. at 353 (citing Jameson, 363 N.J. Super. at 425).

It is incumbent upon the tax investor plaintiff to provide the Court with an affidavit of service of his/her process server demonstrating proof of service on all individual defendants.  A defendant who has lost his/her home through a tax foreclosure search should investigate whether or not plaintiff has met its burden. If not, there may be a basis for the defendant to void the judgment. 

A more in-depth discussion of this topic appears in a brief filed by my office in the matter of Royal Tax Lien Services v. Arik, Superior Court of New Jersey, Chancery Division, Bergen County, Docket No.: F-7409-11.