Bill > S3343

Introduced Session

This bill revises New Jersey's tax lien foreclosure laws to comply with the United States Supreme Court's decision in Tyler v. Hennepin County, Minnesota, et al., 143 S. Ct. 1369 (2023), and the New Jersey Appellate Division court decision in 257-261 20th Avenue Realty, LLC v. Alessandro Roberto, et al., A-3315-21 (December 4, 2023). In the Tyler decision, the Supreme Court concluded that the taking of the entirety of a property owner's equity in a parcel of real estate because that property owner was delinquent in the payment of property taxes attributable to the parcel of real property violates the Takings Clause of the Fifth Amendment to the United States Constitution. In the Roberto decision, the Appellate Division found that New Jersey's tax sale law, which established the confiscation of a property owner's equity when a tax lien on a property is foreclosed, violates the Takings Clause of the Fifth Amendment to the United States Constitution as determined in the Tyler case, and also approved the retroactive application of the decision to any foreclosure case pending final judgment to account for the new principle of law established in Tyler (The Appellate Division court referred to this as "pipeline retroactivity"). In order to address the Tyler and Roberto decisions, the bill provides that notwithstanding any provision of the "tax sale law," R.S.54:5-1 et seq., or the "In Rem Tax Foreclosure Act, 1948", P.L.1948, c.96 (C.54:5-104.29 et seq.), or any other law to the contrary, in the case of a parcel of real property that is the subject of a foreclosure action filed in Superior Court pursuant to the provisions of either law, upon the approval of the action to foreclose the right of redemption by the court, the court may not award a property ownership to the tax lien purchaser. Instead, the court would be required to order: (1) a judicial sale of the property to be conducted by the sheriff of the county in which the property is located, pursuant to any direction or guidance promulgated by the Administrative Office of the Courts or the Division of Local Government Services in the Department of Community Affairs; (2)that the sum of all property taxes paid by the tax lien purchaser, and interest due thereon, together with all costs related to the filing and adjudication of the action to foreclose the right of redemption that were paid by the tax lien purchaser, would be the first priority lien on the property, paramount to any other lien, including any outstanding municipal lien; and (3) that all costs of the judicial sale incurred by the sheriff's office would be reimbursed from the proceeds of the sale. The bill also provides that the amount received at the judicial sale would be conclusively deemed to be the fair market value of the property, and in the event that there are no bidders at the judicial sale and the purchaser obtains fee title from the sheriff, the property would be deemed to have no equity. With regard to the disbursement of funds from a judicial sale of a foreclosed property, the bill would require the sheriff to make the following reimbursements from these moneys in the following order not later than 14 days following receipt by the sheriff of the moneys paid by the winning bidder: (1) to the purchaser, the sum of all property taxes paid, and interest due thereon, together with all costs related to the filing and adjudication of the action to foreclose the right of redemption, notwithstanding any other provision of law. These costs may include, but shall not be limited to, the costs associated with prejudgment noticing, any service and filing fees, and all reasonable attorney's fees; (2) to the municipality in which the real property is located, the amount of any other municipal liens on the property together with interest due and owing thereon; 3) to the sheriff's office, the amounts needed to reimburse the costs of the judicial sale, and (4) to the defendant, all remaining moneys from the judicial sale, except that if the sheriff is unable to locate and forward any remaining moneys to the defendant, those funds would escheat to the municipality. The bill would also prohibit the payment by a bidder at a tax lien sale of a premium payment to the municipality in order to obtain a tax sale certificate, once the interest rate has been bid down to zero. Instead, the bill would require a tax collector to accept interest rate bids in even increments and in fractional interest rates of 0.25percent only. If multiple bidders offer the same lowest rate of interest, the collector would then be required to use a random-number generator to select the successful bidder. If a tax sale certificate is not purchased, the certificate would be struck off to the municipality at the maximum rate of interest allowed by law. The bill would entitle the collector to a fee of five percent of the amount of the delinquent taxes and interest when a tax sale certificate is sold, except that the fee would be included in the face value of the certificate, and the collector would not be entitled to the fee until that certificate is redeemed or purchased.

Committee Categories

Vince Polistina (R)*, 

Introduced in the Senate, Referred to Senate Community and Urban Affairs Committee (on 06/03/2024)

Official Document