A-4945-17T4
N.J. Super. Ct. App. Div.Jun 26, 2019Background
- NJHR5 purchased two condominium units (Unit A and Unit B) at sheriff's sale in June 2016 after mortgage foreclosures and sought to quiet title against association liens recorded in 2011 (Unit A) and 2007 (Unit B).
- Essex Place Condominium Association had recorded association liens for unpaid assessments (Unit A: recorded Jan 5, 2011; Unit B: recorded Aug 28, 2007) and was named/served in the mortgage foreclosure actions but did not meaningfully prosecute its own interests (no answer for Unit A; non-contesting answer for Unit B).
- Final judgments of foreclosure for both units stated the sales would be subject to the Association’s limited priority rights under N.J.S.A. 46:8B-21.
- Plaintiff argued the Association’s priority expired sixty months after recording under N.J.S.A. 46:8B-21(b)(4), and that as a purchaser via foreclosure plaintiff is not liable for pre-acquisition assessments under N.J.S.A. 46:8B-21(e).
- The Law Division granted summary judgment to plaintiff as to the count seeking declaration that the liens’ priority expired after sixty months; the Association’s cross-motion was denied and other claims were later dismissed by consent, preserving the lien-priority ruling for appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Association’s recorded liens retained statutory limited priority after 60 months | The sixty-month statutory priority expired—liens lost priority before plaintiff acquired title, so plaintiff is not liable | The Association contends its priority "vested" when foreclosure proceedings commenced during the 60-month window and the Chancery judgments preserved its priority | Court held the statutory 60-month limited priority expired; priority did not vest solely by commencement of foreclosure and Chancery judgments incorporated statutory limits |
| Whether plaintiff (an investor purchaser at sheriff’s sale) is liable for pre-foreclosure assessments | Plaintiff: not liable under N.J.S.A. 46:8B-21(e) for assessments that became due before acquisition by foreclosure | Association: seeks to enforce liens against purchaser despite subsection (e) protections | Court held subsection (e) shields purchaser; plaintiff not liable for prior-owner assessments |
| Whether Association’s inaction (failure to foreclose or join mortgage foreclosure) affects its lien priority | Plaintiff: Association failed to exercise due diligence to protect lien priority and could have acted within 60 months | Association: argues lack of remedy and that priority was established earlier | Court found Association failed to exercise due diligence; statute requires timely action to maintain limited priority |
| Effect of Chancery Division final judgments stating sale subject to Association’s rights under N.J.S.A. 46:8B-21 | Plaintiff: judgments are limited to statutory scope and do not override statutory 60-month expiration | Association: judgments preserved the Association’s limited priority despite passage of time | Court held judgments only incorporated statutory rights; they did not extend the statutory limited priority beyond 60 months |
Key Cases Cited
- Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189 (standard for de novo review of summary judgment)
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (summary judgment standard)
- Chase Manhattan Mortg. Corp. v. Spina, 325 N.J. Super. 42 (interpretation of condominium lien limited priority)
- Micheve, LLC v. Wyndham Place at Freehold Condo. Ass'n, 370 N.J. Super. 524 (investor-purchaser protected from predecessor owner's unpaid maintenance fees)