New Jersey Tax Lien Certificates

In New Jersey tax lien certificates are sold at each of the 566 municipal Tax Sales. Tax delinquent properties are advertised in a local newspaper prior to the municipal tax sale. Anyone wishing to bid must register preceeding the tax sale. Bids begin at eighteen (18) percent annually, compounded daily, however through competitive bidding interest can be bid down from eighteen (18) percent to zero (0) percent.

If the interest is bid down to zero (0) percent, then a "premium," bid commences. The bidder with the lowest interest rate or the greatest "premium" bid wins the right to purchase the tax lien certificate. It is important to note that the premium amount does not earn interest.

The winning bidder must record the purchase of the tax lien certificate in the County Clerk's Office within 90 days of the purchase or risk losing their interest.

Taxes continue to accrue on the property after the sale of the certificate. Bidders have the option to pay these subsequent taxes; if they are not paid, a tax sale certificate will be sold at the next tax sale. Any subsequent certificate issued will be paramount to any prior certificate. Subsequent taxes paid by the lien holder earn interest at the rate set by the municipality.

After two (2) years, the tax lien certificate owner can initiate proceedings in Superior Court to foreclose on the property. If foreclosure is perfected, then the name on the deed is changed to that of the tax lien certificate owner who can then take possession of the property.

If the tax lien certificate is redeemed by the delinquent property owner prior to foreclosure, the tax lien certificate earns a redemption penalty at the rate of 2, 4, or 6 percent, depending on the amount of the original tax lien certificate, in addition to any interest rate on the certificate.

According to New Jersey Law, on tax lien certificate greater than $200, a penalty of 2% is added to the tax lien certificate, tax lien certificates greater than $5,000 bring a 4% penalty and tax lien certificates greater than $10,000, a 6% penalty is added. Some municipalities include an additional 6% year end penalty on tax lien certificates over $10,000 and could raise the penalty to as much as 12%.

If the tax lien certificate is not redeemed, or the property foreclosed within the five (5) year period, then the premium amount escheats to the municipality.

Tax Sale Type: Tax Lien Certificates Sec. 54:5-46 New Window)

Contact: County Tax Collector (Sec. 54:5-19 New Window)

Interest Rate: 18% per annum (Sec. 54:5-61 New Window and (Sec. 54:5-32 New Window)

Penalty Rate: 4% - 6% (Sec. 54:5-61 New Window and (Sec. 54:5-32 New Window)

Bid Procedure: Bid Down (Sec. 54:5-32 New Window)

Redemption Period: Two (2) years (Sec. 54:5-86 New Window)

Law: New Jersey Revised Statutes, Title 54, Subtitle 2, Chapter 5, "Tax Sale Law." New Window

Additional Notes:

Amount to Redeem: According to (Sec. 54:5-32 New Window) the 'sale shall be made in fee to such person as will purchase the property, subject to redemption at the lowest rate of interest, but in no case in excess of 18% per annum. If at the sale a person shall offer to purchase subject to redemption at a rate of interest less than 1%, he may, in lieu of any rate of interest to redeem, offer a premium over and above the amount of taxes, assessments or other charges, as in this chapter specified, due the municipality, and the property shall be struck off and sold to the bidder who offers to pay the amount of such taxes, assessments or charges, plus the highest amount of premium...'.

In addition, according to (Sec. 54:5-61 New Window ) When the tax title certificate amount shall exceed the sum of two hundred ($200) dollars, the holder, upon redemption of the tax title shall be entitled to collect from the owner or other person having an interest in the lands an additional sum equal to two per cent of the amount so paid for the tax title certificate.

Furthermore, according to (Sec. 54:5-62 New Window ) When the tax title certificate amount shall exceed the sum of $5,000, such additional sum shall be equal to 4% of such amount paid; and when the tax title certificate amount exceeds $10,000, such additional sum shall be equal to 6% of such amount paid. This section shall also apply to all existing tax title certificates held by municipalities on the effective date of P.L.1991, c.75.

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Counties / Municipalities located in New Jersey

The following is a list of counties located in the state of New Jersey. Tax Lien Certificates for properties located in the following counties are sold at New Jersey county tax sales.

Learn more about each county's individual tax sale process by clicking on the name of the county for which you are interested from the list below: