Sponsored by:
Senator BRIAN P. STACK
District 33 (Hudson)
Senator ANGELA V. MCKNIGHT
District 31 (Hudson)
Co-Sponsored by:
Senator Amato
SYNOPSIS
Revises process for property tax lien holder to foreclose right to redeem property tax lien; allows property owner to protect remaining equity.
CURRENT VERSION OF TEXT
As introduced.
An Act revising the process for a property tax lien holder to foreclose the right to redeem a property tax lien, amending various parts of the statutory law, and supplementing chapter 5 of Title 54 of the Revised Statutes and P.L.1948, c.96 (C.54:5-104.29 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.54:5-33 is amended to read as follows:
54:5-33. a. Payment for the sale shall be made before the conclusion of the sale, or the property shall be resold. Any premium payment shall be held by the collector and returned to the purchaser of the fee if and when redemption is made. If redemption is not made within five years from date of sale the premium payment shall be turned over to the treasurer of the municipality and become a part of the funds of the municipality. In the event that a petition of bankruptcy has been filed by the property owner, the five year limitation shall be extended for each day that the foreclosure action is precluded by that bankruptcy filing.
b. If the tax sale certificate is redeemed through a judicial sale as in the manner of the foreclosure of a mortgage or through an Internet auction through the office of the county sheriff, and the redemption is made within five years of the date of the tax sale, the tax collector shall refund the premium to the holder of the tax sale certificate.
In the event that the holder of the tax sale certificate, or an assignee, is the successful bidder at the judicial sale as in the manner of the foreclosure of a mortgage or an Internet auction through the office of the county sheriff, the tax collector shall not refund any premium.
(cf: P.L.2009, c.320, s.7)
2. R.S.54:5-87 is amended to read as follows:
54:5-87. a. The Superior Court, in an action to foreclose the right of redemption, may give full and complete relief under this chapter, in accordance with other statutory authority of the court, to bar the right of redemption and to foreclose all prior or subsequent alienations and descents of the lands and encumbrances thereon, except subsequent municipal liens, and to adjudge an absolute and indefeasible estate of inheritance in fee simple, to be vested in the purchaser. The judgment shall be final upon the defendants, their heirs, devisees and personal representatives, and their or any of their heirs, devisees, executors, administrators, grantees, assigns or successors in right, title or interest and no application shall be entertained to reopen the judgment after three months from the date thereof, and then only upon the grounds of lack of jurisdiction or fraud in the conduct of the suit. Such judgment and recording thereof shall not be deemed a sale, transfer, or conveyance of title or interest to the subject property under the provisions of the "Uniform Voidable Transactions Act," R.S.25:2-20 et seq.
b. In order to preserve any equity that may exist in the property being foreclosed, the owner, or the owners heirs, shall have the right to demand, by written request to the Superior Court no later than 45 days after being served with the foreclosure complaint, that the holder of the tax sale certificate foreclose the right to redeem that certificate in the same manner as a mortgage, through a judicial sale as in the manner of the foreclosure of a mortgage of the property through the office of the county sheriff, or in the alternative, through an Internet auction of the property through the office of the county sheriff. The final judgment shall provide for a writ of execution to the sheriff of the county in which the property is located, and the holding of either a judicial sale as in the manner of the foreclosure of a mortgage, or an Internet auction. In the event that the owner or the owners heirs do not demand a judicial sale as in the manner of the foreclosure of a mortgage, or an Internet auction, the owner of the tax sale certificate may proceed under subsection a. of this section and foreclose without a judicial sale as in the manner of the foreclosure of a mortgage, and the owner and the owners heirs shall have no claim against the holder of the tax sale certificate for any equity in the property. The amount received through the judicial sale as in the manner of the foreclosure of a mortgage, or through the Internet auction, as appropriate, shall be conclusively presumed to be the fair market value of the property. In the event that no one bids on the property through the judicial sale as in the manner of the foreclosure of a mortgage or at the Internet auction, and the owner of the tax sale certificate obtains fee title from the sheriff, it shall be conclusively presumed that there is no equity in the property. In the event that the sheriff has not established an Internet auction, the defendant shall only be entitled to a judicial sale as in the manner of the foreclosure of a mortgage.
The sheriff of the county shall deposit with the clerk of the Superior Court any surplus funds derived from the judicial sale as in the manner of the foreclosure of a mortgage or the Internet auction, as appropriate, after the holder of the tax sale certificate has been paid the redemption moneys, allowable costs, and attorneys fees as set forth by the court in the final judgment of foreclosure. The sheriff shall deduct the costs to the office of the county sheriff of holding the judicial sale as in the manner of the foreclosure of a mortgage or Internet auction, as appropriate, have been withheld by the sheriff from those funds. All subsequent lienholders named in the foreclosure shall have the right to file a motion in the Superior Court for any surplus funds, in the order of their priority, not later than the first day of the seventh month next following the issuance of the sheriffs deed. The owner, or the owners heirs, shall be entitled to any remaining surplus, and shall be entitled to file a motion to the court for the payment of the surplus. After five years from the date of the judicial sale as in the manner of the foreclosure of a mortgage, the clerk of the court shall pay any unclaimed monies to the holder of the tax sale certificate. If the holder of the tax sale certificate is unable to be located, the funds shall revert to the municipality wherein the property is located, and shall be paid by the clerk of the court to the chief financial officer of the municipality.
As used in this section, surplus funds shall mean and include any funds derived from the judicial sale as in the manner of the foreclosure of a mortgage or Internet auction through the office of the county sheriff of a property pursuant to this section, after the holder of the tax sale certificate has been fully redeemed, and paid moneys due and owing to the holder of the tax sale certificate. The redemption amount shall also include any costs charged by the sheriff to the holder of the tax sale certificate to conduct the judicial sale as in the manner of the foreclosure of a mortgage or the Internet auction.
c. In the event that any federal statute or regulation requires a judicial sale as in the manner of the foreclosure of a mortgage of the property in order to debar and foreclose a mortgage interest or any other lien held by the United States or any agency or instrumentality thereof, then the tax lien may be foreclosed in the same manner as a mortgage, and the final judgment shall provide for the issuance of a writ of execution to the sheriff of the county wherein the prop