Purpose of the Law
On July 10, 2024 Gov. Phil Murphy signed into law a major revision of the New Jersey tax sale foreclosure process. The purpose of this revision is to help homeowners preserve some of the equity that they would have lost in the tax sale foreclosure process. The bill is an attempt to conform New Jersey tax sales to a United States Supreme Court decision in a case called Tyler v. Hennepin County. This Supreme Court case bars governments from keeping home equity in excess of what a taxpayer owes.
Before this revision, a Sheriff sale was not required when the property was foreclosed on by a tax lien holder. Instead, when the foreclosure judgment was entered, title automatically transferred to the tax lien holder. This process was very different from a mortgage foreclosure which requires that a Sheriff auction sale be held before the property is transferred. As a result, many homeowners not only lost their house, but also lost large amounts of equity they had accumulated in their home.
What Are the Changes in The Law?
Under the new law, in a tax lien foreclosure action, a homeowner, or their heirs, can notify the Court in writing, any time until the entry of the judgment, that they are requesting that the property be sold at a Sheriff’s Sale or at an online auction. Once the notice is given, it is automatically required that a Sheriff sale or online auction be scheduled after the foreclosure judgment is entered
Once the property is sold, the homeowner is now entitled to file a motion to obtain what is called “surplus funds.” Surplus funds is what remains after the payment to the tax lien holder, any other liens on the property and the costs for the county sheriff’s office that administered the sale.
The Law Does Not Stop the Foreclosure Process
While the new law is beneficial for homeowners, it is important to understand that it does not stop the tax lien foreclosure process or help save your home when you owe real estate taxes or other municipal fees. It merely provides for a remedy to obtain surplus funds, if any exist, after the property is sold. Often there are no surplus funds left.
How to Stop the Foreclosure Process
If you are facing a tax lien foreclosure, and want to save your home, it is important to contact an experienced tax foreclosure attorney when the process begins. Under the revisions to the law, before a tax lien foreclosure can be filed a “Notice of Intent to Foreclose” must be sent to the homeowner. As soon as you receive such a notice you should immediately contact an experienced tax lien foreclosure defense attorney to understand your options.
There are ways to avoid a tax lien foreclosure judgment and sale. They include redeeming (paying) the tax lien, using a Chapter 13 bankruptcy proceeding to repay the tax lien over time, or, if paying is not an option, trying to sell the property in order to get the most value for the home.
Contact Bruce Levitt If You Are Facing a Tax Lien Foreclosure
The lawyers at Levitt & Slafkes, P.C. have been helping homeowners fight mortgage and tax lien foreclosures for more than 30 years. If you have any questions or need additional information contact us by telephone at 973-323-2953 or contact us online.