NJ Property Tax Foreclosure

Property owners in New Jersey may be faced with a Property Tax Foreclosure.    If you fall behind on the payment of property taxes, New Jersey State Law may ultimately subject you to a Property Tax Foreclosure.

New Jersey law entitles a municipality which is owed past due taxes to conduct a “Tax Sale”.   If the outstanding amounts are not satisfied or the sale not canceled for other reasons, the municipality will sell by auction a Tax Sale Certificate to the successful bidder. If no other action is taken to redeem or otherwise address the outstanding amounts, the Tax Sale Certificate holder may be able to pursue a foreclosure action against the property two (2) years after the initial sale. In New Jersey, there are many inherent risks when a homeowner owns property subject to a property tax lien because of the ability for the amounts due to increase rapidly (interest may accrue at a rate of up to 18%) and the strict foreclosure laws relating to a property tax lien. The failure of a homeowner to maintain current with property tax payments is also often a basis for a mortgage company to foreclose, depending on the specific terms of a mortgage and note.

Filing a Chapter 13 Bankruptcy may allow the homeowner to repay the delinquent property taxes and thereby avoid the loss of their home. A Chapter 13 Bankruptcy Plan, if approved by the Bankruptcy Court, would provide for monthly payments to repay delinquent property taxes and allow the homeowner to resume making future property tax payments as they become due.  In most personal bankruptcy cases, when the Bankruptcy Petition is filed, the automatic stay goes into effect and stops the continuation of foreclosure proceedings. This allows property owners the ability to propose a Plan to repay the taxes and preserve their Property.   In a Chapter 13 Bankruptcy Plan, a homeowner may also propose to reduce the interest rate on the outstanding taxes making it easier to payoff the past due amounts.

Property taxes are due in four installments during the year: February 1, May 1, August 1, and November 1. If they are not paid, interest on the delinquent amount accrues 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.

Frequently Asked Questions About Delinquent Property Taxes, Tax Sales and Foreclosure

The information set forth above is not legal advice which can be provided to you only after a full review and evaluation by an attorney of your particular circumstances and the remedies which may be available.