by Jose D. Roman | Jan 25, 2025 | Consumer Advocacy, Legal Bulletin, NJ Supreme Court
On January 9, 2025, the New Jersey Supreme Court issued a decision addressing whether the state’s old Tax Sale Law (before it was amended in 2024) violated the Fifth Amendment Takings Clause by allowing the forfeiture of surplus equity from tax foreclosures without just compensation. In an opinion by Chief Justice Stuart Rabner, in 257-261 20th Avenue Realty, LLC v. Alessandro Roberto (A-29-23) (088959) the Court found the prior version of the Tax Sale Law to be unconstitutional. Relying on the U.S. Supreme Court’s 2023 ruling in Tyler v. Hennepin County, the Court held that property owners in New Jersey have a recognized right to surplus equity—the value of a property beyond the amount owed in taxes. The ruling clarified that private lienholders, acting jointly with municipalities to enforce tax foreclosures, are considered state actors subject to the requirements of the Takings Clause of the US Constitution.
Background of the Case
The case arose from a Paterson, NJ property owner’s failure to pay three sewer tax bills totaling just $606.00. The City of Paterson placed tax liens on the property, which were purchased by 257-261 20th Avenue Realty, LLC at a public auction. Years later, the company filed for foreclosure, and the property owner failed to respond, resulting in a judgment of foreclosure.
The property owner subsequently sought to vacate the judgment, arguing that the property —valued at over $500,000.00 — held significant equity vital for his retirement. He had invested $200,000.00 in improvements and had set aside $50,000.00 to pay the judgment. Despite these circumstances, the foreclosure judgment transferred the entire property, including its substantial surplus equity, to the lienholder without compensating the property owner for the value exceeding the tax debt.
The trial court vacated the judgment under NJ Court Rule 4:50-1(f), finding exceptional circumstances, and the Appellate Division affirmed, citing the U.S. Supreme Court’s decision in Tyler v. Hennepin County (2023), which held that forfeiture of surplus equity in tax foreclosures violates the Takings Clause.
Key Issues Addressed by the NJ Supreme Court
- Takings Clause and Surplus Equity: The Takings Clause of the Fifth Amendment prohibits the government from taking private property for public use without just compensation. The NJ Supreme Court, relying on Tyler, held that surplus equity—the value of the property exceeding the tax debt—is a protected property right. The pre-2024 Tax Sale L allowed the complete forfeiture of surplus equity to lienholders, a practice deemed unconstitutional.
- Lienholders as State Actors: The Court rejected the argument that private lienholders are not state actors and thus not subject to the Takings Clause. Tax foreclosure involves a public function—collecting taxes—and relies on a statutory framework created by the state. The Court determined that the collaboration between municipalities and lienholders renders the latter state actors for constitutional purposes.
- Public vs. Private Use: The Court dismissed the contention that the taking of surplus equity was not for public use. The Tax Sale serves a public purpose by enabling municipalities to collect taxes. However, the US Constitution requires that property taken for public use must be accompanied by just compensation, which the pre-2024 TSL failed to provide.
Significance of the Tyler Precedent
The NJ Supreme Court’s decision heavily relied on the U.S. Supreme Court’s 2023 ruling in Tyler v. Hennepin County. In Tyler, the Court held that a Minnesota tax foreclosure law allowing the forfeiture of surplus equity was unconstitutional. Similarly, the NJ Supreme Court found that property owners in New Jersey have a recognized right to surplus equity under both state and federal law. As Tyler is binding precedent, the NJ Supreme Court clarified that it did not need to rely on Rule 4:50-1(f)to vacate the foreclosure judgment but instead resolved the case on constitutional grounds.
Impact on Tax Foreclosure in New Jersey
This ruling has profound implications for New Jersey’s tax foreclosure system. Property owners now have a constitutionally recognized right to retain surplus equity in foreclosure proceedings. Municipalities and lienholders cannot confiscate more value than is necessary to satisfy the tax debt. This is a clear shift toward greater accountability and fairness in tax foreclosure practices. It is a major win for the average New Jersey property owner.
by Jose D. Roman | Jan 16, 2025 | Consumer Advocacy
Homeopathy is a system of alternative medicine that uses extremely diluted over the counter substances to treat a wide variety of symptoms. It is based on an 18th century pseudoscientific claim that “like cures like,” that is that the substances causing symptoms could, when diluted, treat sick individuals. While its proponents claim it offers a natural and effective means of healing, homeopathy lacks scientific credibility and is essentially used as a modern means of selling snake oil. Even though it is widely known that these treatments don’t work, homeopathy remains legal and homeopathic products take up a massive amount of shelf space at retail drug stores, even in the State of New Jersey — a state with some of the toughest consumer protection laws in the country. Why is this legal? Is there anything consumers can do to combat this in New Jersey?
What Is Homeopathy?
Homeopathy originated in the late 18th century with Samuel Hahnemann, a German physician who theorized that substances causing symptoms in healthy individuals could, when diluted, treat similar symptoms in sick individuals. Homeopathic remedies are typically diluted to the point where no molecules of the original substance remain, leading critics to fairly describe these products for what they actually are, sugar pills or placebos. Homeopathy is widely regarded as pseudoscience because it lacks empirical support. Key criticisms include:
- Scientific Implausibility: The principle of “like cures like” and the extreme dilutions used in homeopathy contradict basic principles of chemistry and biology. It also defies common sense. How can you dilute something out of existence and expect that the nothing you’re left with will trigger a symptom fighting response in your body.
- Lack of Evidence: Systematic reviews have found no reliable evidence that homeopathy is more effective than a placebo.
- Safety Concerns: Homeopathic products are often marketed without rigorous testing for safety, consistency or contamination, unlike conventional pharmaceuticals.
Despite these issues, homeopathy persists, largely due to consumer demand and legal protections.
Why Is Homeopathy Legal in the United States?
Homeopathy is legal in the United States primarily because of historical and regulatory factors:
- The Food, Drug, and Cosmetic Act (1938): This law recognized homeopathic remedies as a category of drugs, giving them a unique status. The U.S. Food and Drug Administration (FDA) historically deferred to the Homeopathic Pharmacopeia of the United States (HPUS) for standards on homeopathic products.
- Limited Oversight: Until recently, the FDA did not rigorously regulate homeopathic products. While the agency has since updated its enforcement policies to prioritize products that pose risks to public health, many homeopathic remedies still reach consumers with minimal scrutiny.
- Consumer Protection vs. Freedom of Choice: Lawmakers have historically balanced consumer protection with individuals’ rights to choose alternative treatments, even if they lack scientific support.
Legal Issues and Homeopathy in New Jersey
New Jersey does not have specific laws regulating homeopathy, but several legal issues can arise:
- Consumer Fraud Act: New Jersey’s Consumer Fraud Act (N.J.S.A. 56:8-1 et seq.) prohibits deceptive practices in the sale of goods and services. Misleading claims about the efficacy of homeopathic remedies could expose manufacturers and retailers to liability.
- Professional Licensing: Practitioners who incorporate homeopathy into their treatments must comply with state licensing laws. For example, licensed physicians and naturopaths offering homeopathic treatments must ensure that they do not misrepresent the efficacy of these remedies or engage in unprofessional conduct.
- Product Liability: If a homeopathic remedy causes harm due to contamination or improper labeling, manufacturers and distributors could face liability under New Jersey product liability laws.
- Insurance Coverage: Many insurance policies do not cover homeopathic treatments. Practitioners and patients may encounter legal disputes over reimbursement claims.
Conclusion
Homeopathy remains a legally accessible yet scientifically discredited practice in the United States, including New Jersey. While its legal status reflects historical and regulatory compromises, consumers should approach homeopathic remedies with skepticism and consult qualified healthcare professionals for evidence-based treatments.
For more information detailed information on the medical and scientific issues read Science-Based Medicine and NeuroLogica Blog.