Guide · New Jersey tax liens
Tax Lien Foreclosure in New Jersey
The short answer
In New Jersey, unpaid property taxes can be sold at a municipal tax sale as a tax sale certificate, which becomes a lien on the property. A private certificate holder must wait two years before filing to foreclose, and a municipality six months. You can redeem by paying what is owed until the court enters final judgment. Since 2024, an owner can also ask for the property to be sold before final judgment to keep any equity above the debt.
How does a New Jersey tax sale work?
When property taxes, water or sewer charges go unpaid, the municipal tax collector can sell the debt at a public tax sale. The buyer receives a tax sale certificate, which is a lien on the property. Bidders compete by offering the lowest interest rate on the debt, starting at a maximum of 18 percent. If bidding reaches zero, they bid a premium instead. If no one bids, the municipality keeps the certificate.
You can stop the sale at any time before it happens by paying the taxes owed plus interest and costs.
When can a tax sale certificate holder foreclose?
| Certificate held by | Earliest foreclosure filing |
|---|---|
| A private investor | Two years after the tax sale |
| The municipality | Six months after the tax sale |
| Any holder, if the property is legally abandoned | Right after the sale |
How do you redeem a tax sale certificate?
You redeem by paying the amount needed to clear the certificate, which includes the taxes paid by the holder, interest and allowed costs. You can redeem until the court enters a final judgment of foreclosure. After that, the right to redeem ends. The amount grows over time, so redeeming early costs less.
What changed in 2024?
In 2023 the U.S. Supreme Court ruled in Tyler v. Hennepin County that a government cannot keep a home owner's equity above the tax debt. New Jersey changed its tax sale law in 2024 to match. An owner, or the owner's heirs, can now ask that the property be sold at a judicial sale or online auction before the court enters final judgment. After the debt and the costs of the sale and the certificate holder are paid, the remaining equity goes to the owner. This does not apply to abandoned property, and asking after the holder has moved to foreclose can mean paying added costs.
What can an owner do before final judgment?
- Redeem. Pay off the certificate through the municipal tax collector.
- Refinance or borrow. On investment or business property, a short-term bridge loan can pay off the certificate and stop the foreclosure.
- Sell. A sale that pays off the certificate at closing ends the case.
- Ask for a sale to protect equity. Under the 2024 law, request a sale before final judgment.
- Get advice. Tax foreclosure moves on strict deadlines. Speak with a New Jersey attorney.
Common questions
How long do I have to pay off a tax lien in New Jersey before foreclosure?
A private certificate holder must wait two years after the tax sale to file for foreclosure, and a municipality six months. You can redeem until the court enters final judgment.
What interest rate does a New Jersey tax sale certificate carry?
Bidders compete down from a maximum of 18 percent. If bidding reaches zero, they bid a premium above the amount owed instead.
Can I lose my equity in a New Jersey tax foreclosure?
Since 2024, an owner can ask for the property to be sold at a judicial sale or online auction before final judgment and receive the equity left after the debt and costs are paid. This does not apply to abandoned property.
Can a bridge loan pay off a tax lien?
Yes, on investment or business property. The loan pays the redemption amount through the tax collector and the foreclosure ends.
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This guide is general information about New Jersey law and practice, not legal advice. Dror Partners is not a law firm or a foreclosure consultant. For advice about your case, speak with a New Jersey attorney or a free HUD-certified housing counselor.