This bill amends New Jersey's tax sale law in light of the U.S. Supreme Court's ruling in *Tyler v. Hennepin County, Minnesota*, which raised concerns about municipalities or lienholders retaining excess equity after a tax sale foreclosure. The legislation aims to safeguard property owners by ensuring that any equity remaining after a lienholder is reimbursed for property taxes and interest is returned to the former property owner. It introduces new legal language that requires the Superior Court to order the return of excess equity, addressing the issue of "equity theft."

Furthermore, the bill modifies the foreclosure process by preventing the court from granting full ownership of the property to the purchaser of a tax sale certificate. Instead, it prioritizes the lienholder's claim, allowing the property to be auctioned with proceeds first allocated to reimburse the lienholder and settle any municipal liens before returning any remaining funds to the original property owner. This approach aims to protect property owners from losing their equity and provides them with the opportunity to secure alternative housing, thereby mitigating potential hardships such as homelessness. The bill aligns New Jersey's practices with those of other states that return excess funds to property owners following a tax lien foreclosure.

Statutes affected:
Introduced: 54:5-104.32, 4:5-104.32