If you are a New Jersey homeowner, you must pay property taxes on your home. Failing to do this could eventually lead to a tax foreclosure. Keep reading to learn more about how the tax foreclosure process works in New Jersey, how you’ll find out about a looming tax foreclosure, how much time you get to pay off the taxes before you lose ownership of your property, and other important information.

How Property Tax Lien Sales and Tax Foreclosures in New Jersey Work

When a homeowner becomes delinquent on New Jersey property taxes, the overdue amount becomes a lien on the home. (A lien is a legal claim against the property.) The municipality can then sell that lien at a public auction to a third party (N.J. Stat. Ann. 54:5-31). The purchaser of the lien then gets what’s called a certificate of sale (N.J. Stat. Ann. 54:5-46).

If you don’t pay the delinquent taxes (plus interest and some other amounts), the person or entity that bought the lien may foreclose to get title (ownership) of your home. (If you are having trouble paying your property taxes, learn about your  options to avoid a tax sale.)

How the Tax Lien Sale Works

At the public auction, the lien is sold to the person who offers the lowest interest rate on the tax debt, which cannot exceed 18% (N.J. Stat. Ann. § 54:5-32). If no one buys the lien at the sale, the municipality gets the certificate of sale and may foreclose on your home after a certain amount of time passes.

Notice of the Tax Lien Sale

Before the tax lien 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 a notice about the tax lien sale (unless the collector does not have your current mailing address for some reason) (N.J. Stat. Ann. § 54:5-27).

Notice by posting.  The collector must post the notice in five public places in the municipality (N.J. Stat. Ann. § 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 copy by certified mail (N.J. Stat. Ann. § 54:5-26).

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

In order to get title to your home, the purchaser that bought the lien at the tax lien sale (or the municipality if no one bought the lien) must foreclose your right of redemption.

What is a right of redemption?  The right of redemption is your right to pay off the debt and prevent the loss of your home. (This is also called “redeeming” the home.)

How long you get to redeem the home.  In New Jersey, you typically get at least two years (if someone bought the lien) or six months (if the municipality got the certificate of sale) to redeem your home after the tax lien sale (N.J. Stat. Ann. § 54:5-86). This period of time is called a “redemption period.” (Learn more in  Getting Your Home Back After a Property Tax Sale in New Jersey.)

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

Where to Read Up on New Jersey’s Property Tax Laws

To find New Jersey’s laws that discuss property tax lien sales, go to Title 54, § § 54:5-1 through 54:5-137 of the New Jersey Statutes. You can find a link to the statutes on the New Jersey Legislature’s website atwww.njleg.state.nj.us. (If you need help finding the statutes, see Nolo’s  Legal Research FAQs & Basic Info  area.)

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