Municipal Lien Process

For the purpose of this page, ‘tax' refers to real estate taxes, utility balances, and any other outstanding municipal charge.

Types of Tax Sale


Accelerated Tax Sale


The accelerated tax sale is held prior to the end of the year for that year's tax delinquencies. It is a one time cash inflow benefit for the first year it is held. There are no delinquencies as of the year end; the reserve for uncollectibles becomes much smaller.

Standard Tax Sale


The standard tax sale is held within the current year for delinquent taxes of the prior year. This benefits the property owner. The sale can be held at any time.

The tax sale list must be prepared a minimum of 50 calendar days before the sale. It is kept as a permanent tax record.

Owner Notification


Residents are notified via quarterly delinquent notices, on official notice of tax sale, newspaper advertisement, and public posting (in 5 Township locales), that a lien on their property is up for sale. New Jersey requires at least 4 weeks of notice be given to the property owner and interested parties, immediately prior to the week of the sale.

The advertisement lists property information: block, lot, last assessed owner, location, type of debt, and balance to be sold. When advertising begins, additional fees are assessed for the cost of holding the sale, as well as advertising costs. The minimum is $15 and the maximum is $100: it's based on 2% of the total prior year's tax and interest. The costs are added to the lien. Up to two mailings of the notice may replace two publications, and up to $25 may be charged for each mailing. The mailings need not be certified. These costs are also added to the lien.

Prior to Sale


Prior to the actual sale, the property owner may pay to avoid having a lien sold at auction. To do so, the past year's taxes must be paid, as well as all the interest for both years, and costs. Only certified checks, money orders or cash are accepted once the official notice is mailed. For a municipality that accepts credit card payments, no such payment may be accepted on delinquent accounts 50 days prior to the tax sale.
Sale Process
The sale is open to the public. Only the prior year's taxes and interest, and related costs, are sold. Interest on the current year's delinquencies is not sold, although it must be paid to avoid sale "Prior to Sale". Bidding starts at 18%, and goes down until bidding stops. After 0%, premiums are bid. Bid parameters are set by the Collector, and may be in whole, half or quarter percentage points. Premiums may be offered by hundreds, fifty, etc.

If no bids are made on the property, the Township retains the lien, at 18%.

Interest/Premium


The rate "sold" to the winning bidder is the rate the lien holder will earn on the amount purchased. For example, if the winning bid is 10% on a $1,000 sale, the lien holder earns 10% return on that investment. If a premium is the winning bid, no interest is earned on the original lien, and the premium is paid to the Township to hold.

If, after 5 years, there is no redemption of the lien, the Township retains the premium. If within the 5 year period the lien is redeemed, the premium is returned to the lien holder; no interest is paid on this amount. If the lien holder forecloses, the premium remains with the Township. It is only when redemption is made within 5 years that a lien holder receives his premium back.

Premiums are paid under these terms because the lien holder has a belief that she/he will earn enough, either through foreclosure or payment of subsequent taxes, to cover the principal and interest lost on the premium investment. Properties with higher valuations will receive larger premiums, as will properties with higher outstanding balances. Higher balances are less likely to be redeemed, and therefore, the lien holder has a higher chance of effecting foreclosure.