In New Jersey tax lien certificates are sold at each of the 566 municipal Tax Sales. Tax delinquent properties are advertised in a local newspaper prior to the municipal tax sale. Anyone wishing to bid must register preceeding the tax sale. Bids begin at eighteen (18) percent annually, compounded daily, however through competitive bidding interest can be bid down from eighteen (18) percent to zero (0) percent.

If the interest is bid down to zero (0) percent, then a "premium," bid commences. The bidder with the lowest interest rate or the greatest "premium" bid wins the right to purchase the tax lien certificate. It is important to note that the premium amount does not earn interest.

The winning bidder must record the purchase of the tax lien certificate in the County Clerk's Office within 90 days of the purchase or risk losing their interest.

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.

After two (2) years, the tax lien certificate owner can initiate proceedings in Superior Court to foreclose on the property. If foreclosure is perfected, then the name on the deed is changed to that of the tax lien certificate owner who can then take possession of the property.

If the tax lien certificate is redeemed by the delinquent property owner prior to foreclosure, the tax lien certificate earns a redemption penalty at the rate of 2, 4, or 6 percent, depending on the amount of the original tax lien certificate, in addition to any interest rate on the certificate.

According to New Jersey Law, on tax lien certificate greater than $200, a penalty of 2% is added to the tax lien certificate, tax lien certificates greater than $5,000 bring a 4% penalty and tax lien certificates greater than $10,000, a 6% penalty is added. Some municipalities include an additional 6% year end penalty on tax lien certificates over $10,000 and could raise the penalty to as much as 12%.

If the tax lien certificate is not redeemed, or the property foreclosed within the five (5) year period, then the premium amount escheats to the municipality.

Tax Sale Type: Tax Lien Certificates Sec. 54:5-46 )

Contact: County Tax Collector (Sec. 54:5-19 )

Interest Rate: 18% per annum (Sec. 54:5-61 and (Sec. 54:5-32 )

Penalty Rate: 4% - 6% (Sec. 54:5-61 and (Sec. 54:5-32 )

Bid Procedure: Bid Down (Sec. 54:5-32 )

Redemption Period: Two (2) years (Sec. 54:5-86 )

Law: New Jersey Revised Statutes, Title 54, Subtitle 2, Chapter 5, "Tax Sale Law."

Additional Notes:

Amount to Redeem: According to (Sec. 54:5-32 ) the 'sale shall be made in fee to such person as will purchase the property, subject to redemption at the lowest rate of interest, but in no case in excess of 18% per annum. If at the sale a person shall offer to purchase subject to redemption at a rate of interest less than 1%, he may, in lieu of any rate of interest to redeem, offer a premium over and above the amount of taxes, assessments or other charges, as in this chapter specified, due the municipality, and the property shall be struck off and sold to the bidder who offers to pay the amount of such taxes, assessments or charges, plus the highest amount of premium...'.

In addition, according to (Sec. 54:5-61 ) When the tax title certificate amount shall exceed the sum of two hundred ($200) dollars, the holder, upon redemption of the tax title shall be entitled to collect from the owner or other person having an interest in the lands an additional sum equal to two per cent of the amount so paid for the tax title certificate.

Furthermore, according to (Sec. 54:5-62 ) When the tax title certificate amount shall exceed the sum of $5,000, such additional sum shall be equal to 4% of such amount paid; and when the tax title certificate amount exceeds $10,000, such additional sum shall be equal to 6% of such amount paid. This section shall also apply to all existing tax title certificates held by municipalities on the effective date of P.L.1991, c.75.

New Jersey Tax Sale Discussion

Below you will find a collection of the latest user questions and comments relating to Tax Lien Certificates New Jersey.

Tracy

What happens if you don't record the tax certificate and the owner pays the lien? Are you still entitled to your investment?

linda peterson

I have a tax lien on my property, I am trying to save my property, They want over 10000.00 . I have been trying to get my liens from Galloway Township N.J. The names AND ADDRESS. They will not give them to me. Can I get this on the web-site? I did call them and they said I cant even get it if I come down. What can I do?

TaxLienUniversity.com

Well, I would consider hiring an attorney who can advise you.

Tax Sale Investor

Recently. I received the final judgment for a tax lien property. I presented this information to the tenants, but they do not know what to believe because the previous owner keeps telling the tenants that he owns the property. Is there anything I can do to prove to the tenants that I am the rightful owner and should be allowed to collect rent next month?

TaxLienUniversity.com

Yes, New Jersey tax lien certificates can be really profitable but you're right, the laws can be a bit confusing not to mention intimidating. You should be aware that you must record the purchase of a tax lien certificate within 3 months of the tax sale in order for the tax lien certificate to be deemed valid.

Jeff Parsons

New Jersey tax lien certificates seem like they have the potential of being highly-profitable but I'm not good at understanding the laws. Is there anything I should be aware of before I get started?

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Counties located in New Jersey

The following is a list of counties located in the state of New Jersey.

Tax Lien Certificates for properties located in the following counties are sold at New Jersey county tax sales.

Learn more about each county's individual tax sale process by clicking on the name of the county for which you are interested from the list below:

Tax Lien University, Inc. is an educational organization, and individual performance depends upon the individual skills, time availability, and dedication of each student. Testimonials included may not represent typical results. Unique experiences and past performances do not guarantee future results. Tax Lien University, Inc. its owners, employees, and affiliates do not give investment or financial advice and are not licensed as brokers by or registered as advisors with any agency. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.