Mortgage lenders are not the only entities in New Jersey with the power to initiate foreclosure proceedings. Under New Jersey law, municipalities can also initiate foreclosure when local property taxes go unpaid. This is true even if your property is encumbered by a mortgage or owned outright.
There are ways to prevent a property tax foreclosure but pursuing those options on your own could be risky. Working with a dedicated foreclosure defense attorney will put you in a position to keep your home and resolve your tax dispute. It can only benefit you to discuss your options with a New Jersey property tax foreclosure lawyer.
A property tax foreclosure is similar to a standard foreclosure in some ways. It is a legal process that could lead to a homeowner losing their property due to unpaid taxes. Instead of a mortgage lender pursuing the foreclosure, a property tax foreclosure is pursued by a New Jersey municipality.
Property taxes are due in four installments during the year: February 1, May 1, August 1, and November 1. If they are not paid, interest on the delinquent amount accrues at up to 8 percent for the first $1,500 due, and 18 percent for any amount over $1,500. If the amount of delinquency on a property exceeds $10,000 at the end of the municipal fiscal year, the municipality may charge up to a 6 percent year-end penalty.
State law allows a municipality to conduct a “Tax Sale” when a homeowner owes property taxes that are past due. During this process, the municipality will auction off and provide to the successful bidder a “Tax Sale Certificate” on the property with unpaid taxes.
This certificate does not grant the holder an immediate right to the property. Instead, the highest bidder for the certificate may only seek foreclosure after two years have passed since the original sale. If the tax debt is not cured during that time, the holder of the certificate may foreclose on the property. A consultation with an experienced property tax foreclosure lawyer in New Jersey could further explain the tax sale process.
There are challenges that come with trying to redeem the property after the tax foreclosure proceedings have begun. In fact, in most cases, it is impossible to redeem the tax debt after a final judgment has been entered by the Court. While there have been cases in which an Edison property tax foreclosure attorney has been able to recover title to the property after a tax foreclosure is finalized, these cases are rare. Typically, those rare cases involve property that had little to no debt.
Bankruptcy is one option that will allow you to protect yourself from losing your home from a tax foreclosure. You will need to file your bankruptcy petition before the Court enters a final judgment in tax foreclosure. Pursuing bankruptcy not only provides a homeowner the time and the ability to resolve their tax debt but also provides the opportunity to improve their overall financial condition. Bankruptcy can help to free up the funds necessary to redeem the tax debt and end the risk of losing your home to foreclosure.
Chapter 13 bankruptcy is one of the most useful tools for addressing delinquent property taxes and avoiding the threat of losing your home through a tax foreclosure. In a Chapter 13, the homeowner can propose a plan that allows them to repay their delinquent real estate tax debt, while remaining current on their future obligations. Upon the filing of a bankruptcy, the Automatic Stay is imposed. The Automatic Stay prevents any property tax foreclosure from moving forward. In some cases, a homeowner might be able to reach an agreement through the bankruptcy process to reduce the interest payments on these past-due tax debts.
If you are facing the risk of foreclosure due to delinquent property taxes, all is not lost. You have a number of options that could help you keep your home and resolve your tax obligations. Let a New Jersey property tax foreclosure lawyer guide you through the process of addressing your tax debt and keeping your home. Schedule a consultation with the experienced, dedicated attorneys at Gillman, Bruton, & Capone to discuss your situation.
The information set forth above is not legal advice which can be provided to you only after a full review and evaluation by an attorney of your particular circumstances and the remedies which may be available.