PROPERTY LAW SERIES
Tax Sales and Redemption
Edited by Stephen Lee with CRI
Tax Sale and Redemption
General Overview
– In NJ, real estate taxes are payable in four quarterly installments on 2/1, 5/1, 8/1, 11/1 of each year.
– Tax sale is on the delinquent tax and not on the property.
When Tax sale triggers
-If you don’t pay property tax till 8/1, the owner will be advised of the impending tax sale from Oct of the current year and no later than Dec 31 of the next year.
Where it happens:
-Tax sale is conducted the municipality tax collector’s office.
How to conduct tax sale
-Tax sale list is publicly announced : date, place and time, owner of record, property identification, amount owned.
-The sale is public sale and anyone may bid.
-Bidding is conducted on the basis of the amount of interest the bidder will charge the delinquent property owner – the lowest interest bidder is winner.
-The interest could be as high as 18%.
-Successful bidder will receive Tax Certificate from tax collector with tax lien ( date of sale, amount paid by the purchaser, rate of redemption, etc)
-The ceritificate should be recorded.
What owner can do – Redemption
-Owner can exercise the statutory right of redemption within 2 years, and pay the tax and interest to holder of tax certificate.
If owner doesn’t exercise the redemption right in 2 year:
-The Certificate holder may initiate foreclosure action to legally bar the owner’s right to redeem the property.
-The certificate holder would become the owner of the property in fee simple as of a final deadline established by the court.
What happens if no one bids:
-The municipality becomes the holder of the certificate and it may foreclose by a procedure called foreclosure in rem.
-Municipality may hold the certificate at least for 6 months.
-Notice of suit is provided by publication in a newspaper and by personal service or registered or certified mail upon the assessed owner and all other persons having an ownership or lien interest in the property.
-If no one contests the foreclosure, a final judgement is entered in favor of the municipality.
-When the judgement is recorded, the municipality acquires fee simple title to the foreclosed property.
How long the certificate is valid ?
-Tax sale certificates held by an individual have life of 20 years, but can be extended of the holder continues to pay taxes beyond 20-year period.
-The tax sale certificate held by municipality are enforceable forever.
Where I can get the tax sale info:
-Tax sale info an be obtained by contacting the tax collector in the municipality.
-Or the Website of Tax Collectors and Treasurers Association of New Jersey
— www.tcanj.org
