NJ Tax Sale Foreclosure Doesn't Strip Municipality From Obtaining Dedicated Land

In a decision rendered on January 15, 2008, the New Jersey Supreme Court held that a tax sale certificate and subsequent foreclosure by the purchaser of a tax sale certificate did not prevent the municipality from obtaining the land, which prior owners had dedicated for public use as a park 78 years ago. However, the township must reimburse the tax sale certificate holder for its expenses plus interest, the Supreme Court ruled.

The irony of this case is that the township sold the lot at a municipal tax sale without realizing that the property was previously dedicated for public use. After the sale, the township approached the purchaser on several occasions offering to buy the lot back so that it could be dedicated as a park. The purchaser declined, and thereafter successfully obtained title to the property in a separately filed foreclosure suit, and contracted to sell the property to a construction company for the building of a residence.

The township filed a separate lawsuit against the tax sale certificate holders and the construction company, claiming that the park lot was dedicated to the township for public use and that the conversion of the lot for private use would violate the rights of the public in the property. In its complaint, the township asked the court to fix the amount it should pay to the certificate holders to reimburse them for the amounts paid on the certificates, the subsequent taxes they paid, plus a reasonable interest rate. Although losing at the trial level, the township was successful on appeal and the Supreme Court affirmed.

It is rather remarkable that the Supreme Court allowed the township to belatedly accept a 78-year old dedication after the township sold the property at a tax sale and the purchaser completed the foreclosure process.

In my opinion, this decision reflects the Supreme
Court's desire to protect open space in New Jersey.