Tax Sales
This is for general information purposes only
Tax Sale
The Borough of Haddonfield holds a standard tax sale within the current year for delinquent taxes, municipal charges, and/or CCMUA balances of the prior years. The 2023 Tax Sale was held on December 7, 2023 at the Borough of Haddonfield. The Tax Sale was advertised in The Retrospect starting on November 10, 2023. For the purpose of this document, ‘tax’ refers to real estate taxes, utility balances, and any other outstanding municipal charge. If you are planning on attending the Tax Sale, please email the Tax Collector PRIOR to the sale to register at: mgiordano@haddonfield-nj.gov
OWNER NOTIFICATION
The State of New Jersey requires at least 4 weeks of notice be given to the property owner and any interested parties. Residents are notified via quarterly delinquent notices, an official notice of tax sale, newspaper advertisement, and public posting (in 5 Borough locales), that a lien on their property is up for Tax Sale. A copy of the newspaper listing is also mailed to everyone on the Tax Sale list. Failure to receive any of these notices does not invalidate the proceedings.
PRIOR TO SALE
Prior to the actual sale, the property owner may pay to avoid having a lien sold at auction. To do so, the past year’s taxes must be paid, as well as ALL the interest – for both years - and costs. Only certified checks, money orders or cash is accepted once the official notice is mailed. In addition, online payments at our website will not be accepted on delinquent accounts once the tax sale list has been created.
SALE PROCESS
The tax sale will be held at Borough Hall in Haddonfield. Liens shall be sold on such lands for so much as is sufficient to satisfy the municipal lien, with interest and cost on said amount. Interest and costs are computed to date of sale. Liens shall be sold on said lands to such person as will purchase the same, subject to redemption, at the lowest rate of interest, but in no case in excess of 18% per annum. If there are no bidders for any parcel of real estate, the lien will be struck off and sold to the Borough of Haddonfield at 18% and the municipality shall have the same remedies and rights as any other purchaser, including the right to bar or foreclose the right of redemption. The sale will be made and conduction with the provision of the revised statues of N.J.S.A, .54:5 et seq. as amended and supplemented. Industrial Property may be subject to the Spill Compensation and Control Act (N.J.S.A. 58:58:10-23 et seq.), the Water Pollution Control Act (N.J.S.A. 58:10-A-1 et seq.) and the Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.). The municipality is precluded from issuing a tax sale certificate to any prospective purchaser who is or may be in any way connected to the proper owner or operator of the site. IN THE EVENT THE OWNER IS ON ACTIVE DUTY WITH THE MILITARY, THE COLLECTOR SHOULD BE NOTIFIED IMMEDIATELY.
INTEREST/PREMIUM
The rate ‘sold’ to the winning bidder is the rate the lien holder will earn on the amount purchased. For example, if the winning bid is 10% on a $1,000.00 sale, the lien holder earns 10% return on that investment. If a premium is the winning bid, no interest is earned on the original lien, and the premium is paid to the Borough to hold. If, after 5 years, there is no redemption of the lien, the Borough retains the premium. If within the 5 year period the lien is redeemed, the premium is returned to the lien holder; no interest is paid on this amount. If the lien holder forecloses, the premium remains with the Borough. It is only when redemption is made within 5 years that a lien holder receives his premium back.
Why are premiums paid under these terms? The lien holder has a belief that s/he will earn enough, either through foreclosure or payment of subsequent taxes, to cover the principal and interest lost on the premium investment. Properties with higher valuations will receive larger premiums, as will properties with higher outstanding balances. Higher balances are less likely to be redeemed, and therefore, the lien holder has a higher chance of effecting foreclosure.
AFTER SALE
Payment must be made immediately to the Collector after the sale with cash or certified funds. Wire transfers may be acceptable provided advance notice has been given the Collector. Failure to make payment within the time allowed by the Collector will result in the property being again offered for sale.
The Collector must mail all certificates to the lien holders by the end of 10 days. The lien holder is responsible for recording the instrument at the County. Failure to do so in a timely manner may result in a nullification of the document. Effective 2010, the lien holder is legally obligated to provide the Tax Collector a copy of the recorded instrument upon its return from the County. This copy is also made a permanent record.
During the period between the sale and the mailing of the certificate, the property owner may come in and pay off the lien without incurring additional penalties. The lien holder is then notified of the payment and reimbursed.
SUBSEQUENT TAXES
Once a bidder has become a lien holder, s/he has the right to pay any delinquent municipal tax, and have it added to the lien. Bear in mind that the original certificate amount earns what the lien holder bid at sale. Any additional tax paid by the lien holder earns the interest rate outstanding on that balance. Example: the certificate was sold for $1,000.00 at 10%, the lien holder paid subsequent taxes which had an interest rate of 18%, and the lien holder also paid delinquent sewer, which has an interest rate of 8%. The lien holder earns 10% on the certificate, 18% on subsequent taxes, and 8% on the subsequent utility balance.
A lien holder may pay subsequent taxes at any time; however, if a property owner pays the same quarter, within the 10 day grace period, the lien holder will have his funds returned. The property owner always has priority if payment is made before the last day of the grace period.
In order to have the subsequent payments added to the lien, the lien holder must file affidavits at time of payment. If the lien holder chooses not to pay subsequent taxes, a new lien may be placed on the property for sale the following year.
FORECLOSURE
The lien holder must hold the certificate for 2 years before foreclosure can occur. At any time in those 2 years, the property owner, or other interested party, can redeem the lien. After the foreclosure process has begun, only the Court can grant the right to redeem. The lien holder is not obligated to foreclose. As mentioned, foreclosure results in the premium being turned over to the municipality.
REDEMPTION
Redemption can only be made through the Collector for entire amount outstanding. This insures that the lien holder receives their legally owed monies, and protects the redeeming party from being overcharged. Effective 2010, such requests must be in writing. Also, in a calendar year, two requests by the same party for the same lien are provided gratis. After the second request, the Borough may, by ordinance, charge a $50.00 fee for any further requests. If a lien holder requests a redemption statement, the Borough may, again by ordinance, charge a $50.00 fee to the lien holder.
The owner of a property, or a legally interested party (mortgagee, heir, etc), may redeem at any time as long as foreclosure has not begun. The legally interested party must prove to the Collector, upon request, their right to redeem. Under NJSA 54:5-54 “Except as hereinafter provided, the owner, his heirs, holder of any prior outstanding tax lien certificate, mortgagee, or occupant of land sold for municipal taxes, assessment for benefits pursuant to RS 54:5-7 or other municipal charges, may redeem it at any time until the right to redeem has been cut off by paying to the Collector the amount required for redemption”
The lien holder is entitled to receive their original investment, the interest on the certificate, any subsequent taxes paid plus the interest accrued on them, the amount legally allowed by the state for search and recording (if recorded), and a redemption penalty. This penalty is assessed at time of redemption only- a foreclosure does not receive this penalty. The certificate must be $200.00 or greater; penalties are 2% ($200.00 - $5,000.00), 4% ($5,001.00 - $10,000.00), or 6% (over $10,000.00). The penalty is only assessed on the original certificate.
PRIORITY OF LIENS:The most recent, or newest, lien is known as the PARAMOUNT LIEN. All other liens existing prior to the paramount lien are known as SUBORDINATE LIENS.
Subordinate liens may redeem paramount liens, but paramount liens cannot redeem subordinate liens. Paramount liens can foreclose all subordinate (older) liens. Subordinate liens cannot foreclose paramount liens.
OTHER INFORMATION
If no one bids on the property, the Borough assumes the lien at an interest rate of 18%. The Borough may bid on properties as well.
Lien holders have no legal right to exercise rights of ownership, seek entry to, or inspect property, or act as landlord. They should not attempt to communicate with the owner unless it is through the Collector’s office.
Interest paid to lien holders at time of redemption is taxable interest, and 1099's are issued. Tax information is required prior to the tax sale and issuance of certificates.
If a resident has filed for bankruptcy prior to the sale, the Collector must obtain a stay in order to sell the lien. If a resident files for bankruptcy after sale and before foreclosure, any premium due date would be extended for each day that the foreclosure action is precluded by the filing (effective January 2010).
Liens held by the municipality may be foreclosed after 6 months. They can be assigned to outside parties for full or partial value.
Effective 2010, the Collector may, at their discretion, remove any total delinquency (including costs) of less than $100.00 from the tax sale. This property may be so exempted for up to 5 years, if the accrued balance remains below $100.00. All costs remain as a lien upon the property.