Property Tax Liens In New Jersey
New Jersey is a popular state for tax liens.
The interest rate is 18% per annum and the redemption period is 2 years. There is also a penalty in addition to the interest.
The penalty is from 2-6% depending on the certificate amount, and is only paid on the certificate amount, not on subsequent tax payments.
Like the New England states tax sales are conducted on the municipal level, not by the county. It is the municipal tax collector who is in charge of the tax sale.
Most municipalities allow you to register for the tax sale immediately before the start of the sale. In some of the smaller municipalities all you need to do is sign your name on a list of bidders and you don’t have to fill out a bidder information sheet or w-9 form unless you actually purchase a lien.
Only the larger cities and towns require advance registration in order to bid. 45 The bidding procedure is different from other states in that the interest rate is bid down and then premium is bid.
If you bid premium (and most liens in New Jersey are won at high premiums) you don’t get any interest on the certificate amount, however you do get interest on the subsequent tax payments. Interest on subs is 8% per annum until $1500 is owed, then it’s 18%.
If you purchase a tax lien certificate that is $1500 or more, all of your subs will earn 18% per annum. Payment must be made immediately after the sale with cash, certified funds, or money order.
A few of the more sophisticated municipalities will take payment by wire transfer, but most will not. Some tax collectors will not let you leave the sale to secure funds, so you must have them on hand. There is a 10-day grace period after the sale in which the lien can be redeemed without penalty.
The lien purchaser will have to wait until the 10-day grace period is over in order to pay any subsequent taxes. A “tax lien certificate” is issued to the lien purchaser within 10 days and it must be recorded with the county clerk within 3 months of the sale. If the certificate is not recorded with the county, all you have is a piece of paper and no lien. Leftover liens not sold at the tax lien sale may be sold “over the counter.”
New Jersey is a very competitive tax sale state however, and if there are any liens left over, they are usually for junk properties. Liens may also be sold or “assigned” to another investor. If the lien is not redeemed within the 2-year redemption period the purchaser may start foreclosure on the property.
Foreclosure proceedings in New Jersey can be complicated. It’s best to secure the services of an attorney who specializes in tax lien foreclosures.
If no foreclosure action is taken after 20 years from the date of the sale, the tax lien certificate is void. There are hundreds of municipalities in New Jersey and they each have a tax sale once a year. In a densely populated state such as New Jersey you would expect to find some information about tax sales online.
That, however, is not the case. There is very little information on tax sales for New Jersey municipalities online. For most municipalities, all you’ll find is the contact information for the municipal tax collector.
If you go to the county websites you can find links to the municipalities. From there you can find a link to the tax collector or tax office.
Sometimes the tax collector is considered part of the finance department.
The best source of detailed tax sale list for New Jersey is Lien Source. Their website is www.liensource.com.
Many New Jersey municipalities offer tax sales online.
Currently all of the online New Jersey tax sales are on www.RealAuction.com.