What Happens If I Don't Pay Property Taxes in New Jersey?

If your New Jersey property taxes are delinquent, the collector (on behalf of the municipality) can sell your home at a public auction, subject to your right of redemption. (N.J. Stat. 54:5-31). After the sale, the purchaser gets a "certificate of sale." (N.J. Stat. 54:5-46). If no one buys the home at the sale, the municipality gets the certificate of sale.

But the person or entity that gets the certificate of sale can't get ownership of your home right away. You'll get some time to get caught up on the overdue amounts before this happens.

However, you'll most likely eventually lose the property permanently if you don't pay off the debt during the redemption period after the sale. That's because the purchaser gets the right to foreclose to get title (ownership) of your home if you don't pay up.

How Property Taxes Work

People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.

If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on your behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, you must pay them directly.

When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property act as collateral for the debt. All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.

What Are the Consequences of Not Being Able to Pay Property Taxes in New Jersey?

In New Jersey, you might lose your home if you don't pay the property taxes.

How the New Jersey Tax Certificate Process Works

At the public auction, the property is sold (subject to the right of redemption) to the person who offers the lowest interest rate on the tax debt, which can't exceed 18%.

But if at the sale a person offers a rate of interest less than 1%, or at no interest, that person may, instead of an interest rate, offer a premium over the tax amount due, including assessments and charges, and the home is sold to the bidder who offers to pay the tax amount, plus the highest amount of premium. (N.J. Stat. § 54:5-32).

Notice of a Tax Certificate Sale in New Jersey

Before the sale takes place, the tax collector must generally provide you with notice by mail, publication, and posting.

• Notice by mail. The collector must mail you (the property owner) notice about the sale unless the collector doesn't have your current mailing address for some reason. (N.J. Stat. § 54:5-27).
• Notice by posting. The collector must post the notice in five public places in the municipality. (N.J. Stat. § 54:5-26).
• Notice by publication. The collector must also publish the notice in a newspaper once a week for four weeks or publish it for two weeks and mail you a notice by regular or certified mail. (N.J. Stat. § 54:5-26).

How to Stop a Tax Sale in New Jersey

At any time before the sale, the taxpayer may pay the amount due plus interest and costs and stop the sale. (N.J. Stat. § 54:5-29).

The Purchaser (or Municipality) Must Foreclose Your Right of Redemption to Get Your Home

To get ownership of your home, the purchaser that bought the property, or the municipality if no one else bids, must foreclose your "right of redemption." The right of redemption is the right to pay off the debt and prevent the loss of the property.

Redeeming Your Property After a Property Tax Sale

Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.

How the Right to Redeem Usually Works

In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.

In other states, though, the redemption period happens before the sale.

How Long Is the Redemption Period After a New Jersey Tax Certificate Sale?

In New Jersey, the length of the redemption period depends on whether a third party was the winning bidder at the sale and whether the home is vacant.

Redemption Period If Someone Bought the Tax Lien

The winning bidder must wait two years after the tax lien sale before filing a complaint in court to foreclose. (N.J. Stat. Ann. § 54:5-86). So, you get at least two years after the sale to pay off the tax debt if a third party bought the lien at the sale.

Redemption Period If No One Bought the Lien

If no one bids on the lien at the tax lien sale, the municipality must wait for six months before starting the foreclosure. (N.J. Stat. Ann. § 54:5-86).

Redemption Period If You Move Out

If you've abandoned (that is, permanently moved out of) the home and the property meets specific criteria under state law, the foreclosure can start immediately after the tax lien sale. (N.J. Stat. Ann. § 54:5-86).

When the Right to Redeem Ends After a New Jersey Tax Sale

You can redeem at any time up until the court enters a judgment in the foreclosure. (N.J. Stat. Ann. § 54:5-86, § 54:5-87).

How the Lien Purchaser Gets Title to Your Home If You Don't Redeem

After the redemption period expires, the purchaser or municipality can begin a foreclosure by filing a complaint (a lawsuit) with the Superior Court. (N.J. Stat. § 54:5-86). The court will eventually enter a judgment, which eliminates the right to redeem. (N.J. Stat. § 54:5-86, § 54:5-87).

What Options Do I Have If I Can't Afford to Pay My Property Taxes in New Jersey?

Even though you'll get a redemption period after a New Jersey tax sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable.

You could, for example, find out if you meet the criteria for a property tax abatement or request a change in the property's assessment if you feel your assessed property value isn't reflective of the fair market value.

Getting Help

If you're already facing a property tax sale in New Jersey and have questions (or need help redeeming your property), consider talking to a foreclosure, tax, or real estate lawyer.