Tax Sales - NJ Division of Local Government Services - DLGS
http://www.nj.gov/dca/lgs/taxes/collection/elements_of_tax_sales_nj.shtml[7/6/2011 1:24:48 PM]
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Elements of Tax Sales in New Jersey
New Jersey law requires all 566 municipalities to hold at least one tax sale per year, if the municipality has delinquent
property taxes and/or municipal charges. You can obtain information on upcoming tax sales by contacting the tax
collector in the municipality in question, or from the web site of the Tax Collectors & Treasurers Association of New
Jersey:
www.tctanj.org/taxsale.html. More detailed information on the tax sale process in New Jersey can be found at
www.njtaxlieninvestor.com*.
In New Jersey, property taxes are a continuous lien on the real estate. Property taxes are due in four installments
during the year: February 1, May 1, August 1, and November 1. Delinquency on a property may accrue interest at up
to 8 per cent for the first $1,500 due, and 18 per cent for any amount over $1,500. If the amount of delinquency on a
property exceeds $10,000 at the end of the municipal fiscal year, the municipality may charge up to a 6 per cent year-
end penalty.
At the tax sale, title to the delinquent property itself is not sold. What is sold is a tax sale certificate, a lien on the
property. Tax sale certificates can earn interest of up to 18 per cent, depending on the winning percentage bid at the
auction. At the auction, bidders bid down the interest rate that will be paid by the owner for continuing interest on the
certificate amount. If the interest is bid down to one per cent, then a “premium,” is bid starting at $0 to whenever the
bidding stops to obtain the tax sale certificate. The premium is kept on deposit with the municipality for up to five
years. If the tax sale certificate is not redeemed, or the property foreclosed upon within the five year period, then the
premium escheats to the municipality. No interest accrues on the premium to the benefit of the buyer of the tax sale
certificate.
The winning bidder is the one who bids the lowest percentage of interest or bids the highest premium. Bidders are
urged to contact the Tax Collector for local payment restrictions before the sale) At the close of the sale, the winning
bidder must immediately pay (pursuant to the local restrictions) the municipality the taxes and interest to date; in
exchange the municipality will provide the bidder the tax sale certificate. In order for the winning lien holder to protect
their interest in the tax sale certificate, it should be recorded in the Deed Room at the County Clerk’s Office within 90
days of the sale.
Taxes continue to accrue on the property after the sale of the certificate. Bidders have the option to pay these
subsequent taxes; if they are not paid, a tax sale certificate will be sold at the next tax sale. Any subsequent certificate
issued will be paramount to any prior certificate. Subsequent taxes paid by the lien holder earn interest at the rate set
by the municipality.