Friday, July 15, 2011

New Jersey Tax Lien Certificate Sales

There are two tax lien sales that I know of coming up in August in New Jersey. The Tax Collectors and Treasurers Association of New Jersey (TCTANJ) keeps a calendar of upcoming sales on their website at http://www.tctanj.org/taxsale.html, so make this your first stop if you are interested in sales in this state.

Borough of Hillsdale, Bergen County, New Jersey
August 31, 2011
Tax liens – public
Time: 10:00 a.m.
Location: Council chambers, 380 Hillsdale Avenue
Tax sale list: request by emailing CandaceSchaefer@hillsdalenj.org
Registration: at the door

Borough of Hillsdale: http://www.hillsdalenj.org
Tax Collector: http://www.hillsdalenj.org/department_detail.cfm?dept_id=2&#resources
Candace Schaefer, Tax Collector
380 Hillsdale Avenue, Hillsdale, NJ 07642
Phone: 201-666-4800 ext 1501
Email: CandaceSchaefer@hillsdalenj.org

Township of Hopewell, Mercer County, New Jersey
August 22, 2011
Tax liens – public
Time: 10:00 a.m.
Location: Municipal Auditorium
Tax sale list: request by emailing mkennedy@hopewelltwp.org
Registration: at the door

Borough of Hopewell: http://www.hopewelltwp.org
Tax Collector: http://www.hopewelltwp.org/tax_collector_main.html
Mary Kennedy-Nadzak, Tax and Utility Collector
201 Washington Crossing-Pennington Road
Titusville, NJ 08560
Phone: 609-737-0605
Email: mkennedy@hopewelltwp.org

There are two types of tax sales in New Jersey. The accelerated tax sale is held prior to the end of the year for that year’s tax delinquencies. It is a one-time cash inflow benefit, for the first year it is held.

The standard tax sale is held within the current year for delinquent taxes of the prior year. The sale can be held at any time. The tax sale list must be prepared a minimum of 50 days before the sale. The advertisement lists the following property information: block, lot, last assessed owner, location, type of debt, and balance to be sold.

Sales are open to the public. Only the prior year’s taxes and interest, and related costs, are sold. Bidding starts at 18%, and goes down until bidding stops. Bid parameters are set by the Collector, and may be in whole, half or quarter percentage points. In 2010, the tax sale law was amended to allow Collectors to accept 0% bids (vs. 1%). You will need to check with the Tax Collector conducting the sale to see if 0% bids are allowed. Otherwise, after 1%, premiums are bid. A $0 premium is not allowed. Premiums may be offered by hundreds, fifty, etc. 

If a premium is the winning bid, no interest is earned on the original lien, and the premium is paid to the Township to hold. If, after 5 years, there is no redemption of the lien, the Township retains the premium. If within the 5-year period the lien is redeemed, the premium is returned to the lien holder; no interest is paid on this amount. If the lien holder forecloses, the premium remains with the Township. It is only when redemption is made within 5 years that a lien holder receives his/her premium back.Typically, properties with higher valuations will receive larger premiums, as will properties with higher outstanding balances. Higher balances are less likely to be redeemed, so there is a great chance the lien will go to foreclosure.

Payment by the winning bidder is due immediately after the sale. You will want to ask the Tax Collector’s office what type of payment it accepts – this is likely to vary from town to town. The Collector is required to mail all certificates to the lien holders by the end of 10 days. The lien holder is responsible for recording the instrument at the County. Failure to do so in a timely manner can result in a nullification of the document. Effective 2010, the lien holder is legally obligated to provide the Tax Collector a copy of the recorded instrument upon its return from the County.  This copy is made a permanent record.

During the period between the sale and the mailing of the certificate, the property owner may come in and pay off the lien without incurring additional penalties. The lien holder is then notified of the payment and reimbursed.

I'll talk some more about the New Jersey tax sale process in my next blog.

Happy investing,

Michael Williams

P.S. The Platinum Rogue Investor Collection has all the information you need to get started in tax sale investing. Call 816-673-1874 for more information.



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