WILLIAM H. MONE reports on a recent decision from the Superior Court of New Jersey, Appellate Division.
Following the death of his father in 2014, a New Jersey man submitted his father’s will to probate as the executor of the estate. The man’s brother filed a petition challenging the will. The two brothers subsequently filed a consent order with the court settling their dispute, which revolved around the disposition of real property owned by their father.
The consent order granted the brother the option to purchase the deceased father’s property, subject to several conditions. In order to exercise his right to purchase the property, the brother had to first (1) obtain financing by a date certain, (2) pay outstanding taxes he owed relative to the disposition of the estate of the brothers’ mother, who had pre-deceased their father, and (3) pay the outstanding tax sale certification for the property. The brother’s option to purchase the property expired on a date certain. If the brother failed to properly exercise his option to purchase the property, the executor would then have the opportunity to do so. If neither brother purchased the property, it would be sold.
The brother did not exercise his option to purchase the property in a timely manner and his executor-brother rejected his request for additional time. After the deadline for him to do so had passed, he received a letter from the State of the New Jersey indicating that the executor (his brother) had failed to file an income tax return for their father’s estate. The non-executor brother then filed a motion to vacate the consent order he entered into with his executor-brother, alleging that the executor-brother’s failure to file a tax return voided the consent order and prevented him from obtaining “free and clear” title to the property. The motion was denied, and the non-executor brother appealed the court’s decision.
On appeal, the Appellate Division held that the lower court had correctly denied the non-executor brother’s motion. In doing so, the Appellate Division noted that the non-executor brother received notice of the failure to file the estate’s tax return after the expiration of his option to purchase the property and therefore could not have affected his ability to do so. The Appellate Division further held that while the executor-brother’s failure to file an estate tax return may have constituted a breach of the consent order, such a breach did not require the court to void the remaining terms and obligations therein.
Please contact William H. Mone if you have any questions or need assistance in connection with this subject.