Bill > A1458

Introduced Session

This bill would revise the process governing an action filed in Superior Court by the holder of a tax lien on certain parcels of real property when that person institutes an action to foreclose the right of redemption of the tax lien. The right of redemption of a tax lien is the right of the owner of the property on which the tax lien exists to pay the holder of the tax lien and remove the lien from the property. Currently, under R.S.54:5-86, for persons who do not acquire a tax sale certificate from a municipality, an action to foreclose the right of redemption may be instituted at any time after the expiration of the term of two years from the date of sale of the tax sale certificate. Once an action to foreclose the right to redeem has been filed by a tax lien holder, the right to redeem continues to exist until barred by the judgment of the Superior Court. However, upon the action by the judge to bar the right of redemption and foreclose all liens other than municipal liens, the judge grants the holder of the tax sale certificate the title to the property, and that person becomes the owner of the property. At this point, the previous owner's rights to the property are permanently extinguished and the previous owner also loses any value, commonly referred to as equity, built up in the property through appreciation, or the payoff of a mortgage. For a property taxpayer who has paid down a mortgage, who has equity in a property, or whose property has considerably appreciated over time, the loss of the property in a tax lien foreclosure, and all of the equity in the property as well, could lead to homelessness or other hardship, as there are no funds with which to rent, or to purchase, another property. The provisions of this bill are intended to address the unfairness of the loss of that equity to property owners who lose property in a tax lien foreclosure. Under the bill, in the case of a parcel of real property that is the subject of a tax lien foreclosure action filed in Superior Court, upon the approval of the action to foreclose the right of redemption by the Court, the Court would not grant the plaintiff (the tax lien holder) ownership of the property. Instead, the Court would order that all of the property taxes paid by the plaintiff, 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 plaintiff, would be the first priority lien on the property, paramount to any other lien, including any outstanding municipal lien, and would order the sheriff of the county in which the parcel of real property is located to hold an Internet auction of the property. Once the Internet auction is over and the property has been sold, not later than 14 days following receipt by the sheriff of the moneys paid by the winning bidder at the auction, the sheriff must forward to the tax lien holder plaintiff the sum of all property taxes paid by the plaintiff, and interest due thereon, together with all costs related to the filing and adjudication of the action to foreclose the right of redemption. The sheriff must also pay to the municipality the amount of any other municipal liens on the property plus any interest due and owing thereon, and retain for the sheriff's office sufficient funds to cover the costs of the auction. Once those payments are made, the sheriff would then forward any remaining moneys collected from the winning bidder of the auction to the defendant. This allows the defendant to retain funds to either purchase, or rent, another property. Property equity is a valuable asset to property owners that should be retained by the property owners. It provides a property owner with opportunities to turn the equity to cash to purchase or rent another property, or to pay for items like living expenses in retirement, a child's college savings, or the health care of a loved one. Equity theft happens when government uses the property to settle an unpaid tax debt and allow someone other than the property owner collect the excess revenue. Like other assets, home equity should be protected from unjust government seizure. The State is part of a small number of states that do not provide property owners the remaining equity following a tax sale foreclosure.

AI Summary

Committee Categories

Antwan McClellan (R)*,  Alex Sauickie (R)*,  Jay Webber (R), 

Introduced, Referred to Assembly Housing Committee (on 01/13/2026)

Official Document