WHAT IS A TAX SALE?
Tax sale is the enforcement of collections against a property by placing a lien against the property for all outstanding municipal charges due at the end of the calendar year (December 30). Municipal charges include but are not limited to:
- Added / omitted assessments
- Sewer charges
- Special assessment charges
- Taxes
- Water charges
Tax Sale Process
Prior to the day of sale, the tax collector has responsibilities set by the State of New Jersey Statute N.J.S.A 54:5, including the following:
- All homeowners are notified of the pending sale (Tax Sale Notice) and the amount due to stay out of tax sale. Due to changes in the New Jersey State Tax Sale Law, the tax collector must create the tax sale list 50 days prior to the sale, and all charges on that list together with cost of sale must be paid to stay out of sale.
- Copies of the tax sale notice must be advertised one time in each of the four weeks preceding the tax sale. This ad does not have to run on the same day every week, just one time in four consecutive weeks. The tax collector can make the decision to mail notices in lieu of advertising for two weeks out of the four.
- A copy of the published tax sale notice is to be mailed to the homeowner. Failure to mail the notice, or failure for the homeowner to receive notification does not invalidate any tax sale proceeding.
- Copies of the notice will be posted in five public places in the municipality.
- On the fifth week, the tax collector may hold the tax sale.
What Happens at the Tax Sale
On the day of sale, anyone that is not the owner of the known property shall be allowed to bid for a lien against the property.
Auction
When the tax sale is held (as specified in the notice of sale), the collector sells each parcel of land which has been properly advertised (if it is still delinquent) at a public auction. The sale is made in the amount that was advertised or less if a partial payment has been made prior to the sale, but the property cannot be sold for more than the amount it was advertised for.
Bidding
Prior to the day of sale the collector will require every bidder to fill out a bidder information sheet (This time line fluctuates depending on the sale; online auctions require a deposit and registration to be done 1 week in advance of sale) We urge any prospective bidders to contact our department a month prior to sale for more information.. This will contain information regarding their address, how he/she wishes to receive their tax sale certificate, their federal tax ID number, and the signature of the person bidding.
Bidding at the sale begins when a potential purchaser (bidder) offers an initial bid (rate of return, i.e., interest rate), usually the maximum bid of 18%. If there is competitive bidding, the rate of the bid goes downward until it reaches 0%. After 0% a bidder may then offer a dollar value, which is known as a premium for the privilege of purchasing the certificate, and can go as high as any one bidder is willing to pay. Therefore the property is sold to the lowest percentage of redemption interest bid, or to the highest premium bid.
If there are no bidders on a parcel for sale, then the collector must strike it off in the name of the municipality at a redemption interest rate of 18%.
Payment at Sale
Payment is due at the time of sale. If payment is not made before the conclusion of the sale, then the collector must open the property back up to bidding. After every property has been sold, and all payments have been collected, the tax sale is adjourned.
After the Tax Sale
After the sale, the tax collector will issue tax sale certificates to the proper bidders within 10 days of the close of sale. It is the responsibility of the bidder to record their lien with the county after they receive the certificate.
Subsequent Payments
After the tax sale certificate has been issued, the lien holder now has the right to pay any delinquent municipal charges that have not gone to sale. These are known as subsequent payments.
The lien holder has the right anytime a payment falls delinquent to pay the charges due to the municipality. These payments are added to the tax sale certificate.
Redeeming Tax Sale Certificates
Once a lien has been placed on a parcel, the only persons able to redeem that lien are the owner, his/her heirs, the holder or a prior outstanding tax lien certificate, mortgage, or legal occupant of property sold at a tax sale, and they may only redeem until the right to redeem has been cut off.
Payment to redeem a lien must be made in full by cash or certified funds to the Tax Collector's Office. Once the redemption has occurred, the tax collector will notify the lien holder of payment. They will return the original certificate back to the collector endorsed for cancellation. Upon receipt of the cancelled certificate, the redemption funds will be released to the lien holder.
When the collector receives this cancelled certificate, they will send it to the party that redeemed the lien. It is their responsibility to have this lien removed from the property at the county office.
Unredeemed Liens
If a lien that has been sold to an outside bidder is not redeemed within two years from the date of sale, that bidder now has the right to begin foreclosure proceedings.
If a lien that has been struck off to the municipality is not paid, the municipality has the right to an In Rem Foreclosure six months after the date of sale.
