Tax Liens + Municipal Finance

Mon. Dec. 11, 2017

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Property Tax Liens & Better Municipal Finance

If you are a New Jersey municipal Tax Collector, Tax Assessor, or finance officer, we've created a web page just for you .

Does your municipality suffer from holding tax liens struck off to your own account, because you could not sell them? These unsold tax liens are not only uncollected taxes, but they actually represent NEGATIVE cash flow, because the municipality must still remit its share of this "phantom income" to the County. So you have to borrow the money, pay debt service, and can't offer the property up for subsequent tax sales.

The most common solution to municipal tax liens is to conduct an ""In Rem Tax Foreclosure"". If the municipality wants to take title to the properties, this is the appropriate course of action. If however the properties are potentially contaminated, or a property owner is in bankruptcy, or if the municipality has an unspoken policy against foreclosing voters, the tax liens may linger "on the books" for years.

As a reminder, there are other options available to Tax Collectors to facilitate municipal finance. These include:


  • The Abandoned Property Rehabilitation Act is a relatively recent (2004) New Jersey law that empowers municipalities to deal with derelict properties. It can help reduce the number of dilapidated properties in a community. If the owner won't take responsibility for the physical and economic condition of a property, the municipality can do so, or "sell" a tax lien to a private investor who will. For more information please see The Abandoned Properties Act .

  • The Jones Act is a New Jersey law (NJSA 54:5-113) that allows a taxing authority to sell municipally-held tax sale certificates to a private party at less than full redemption price. There are certain conditions, on the buyer and seller, but the bottom line is that it is another option tax collectors have to improve municipal finance, and promote community development. Cherokee has acquired tax liens under the Jones Act. For New Jersey Tax Collectors and other municipal officials interested in learning more about this option, you should contact Keith Bonchi, an attorney in Northfield New Jersey who is Counsel to the Tax Collectors + Treasurers Association of New Jersey. His office is (609) 646-0222. The web site of his law firm (Goldenberg Mackler) is www.gmslaw.com