This is a status report provided by the New Jersey State Bar Association on recently passed and pending legislation, regulations, gubernatorial nominations and/or appointments of interest to lawyers, as well as the involvement of the NJSBA as amicus in appellate court matters. To learn more, visit njsba.com.
The governor signed into law the Real Estate Consumer Protection Act, which incorporates protections for consumers regarding real estate and commercial real estate transactions. S3192 (Diegnan)/A4454 (Freiman) outlines the responsibilities of a brokerage firm, buyer’s agent, seller’s agent, dual agent, designated agent and a transaction broker. It also establishes circumstances under which an individual is a buyer’s agent or a seller’s agent and delineates the terms of the broker agreement between the agent and a consumer.
The law becomes effective Aug. 1. The NJSBA monitored this bill but did not take a position on it.
Tax Lien Sales Certificate Holders Not Entitled to Equity Property Tax Lien Foreclosures
New Jersey’s tax sale law and In Rem Tax Foreclosure Act were revised to reflect the holding in the Tyler v. Hennepin County, MN, et al, 598 U.S. 631 (2023) and, in some instances, subject tax lien foreclosures to the same procedures as mortgage foreclosures. The U.S. Supreme Court in Tyler held that the property owner was entitled to the equity following a tax lien foreclosure.
Prior to the enactment of this law, a third-party lienholder could file suit to foreclose on a property after six months in the case of a municipality holding a tax sale certificate for a party that had been abandoned, or two years in the case of a third-party lienholder. Upon the foreclosure, the lienholder was able to receive the title and all the equity remaining in the property. The U.S. Supreme Court held that such retention of equity beyond the amount that was owed on overdue property taxes and interest was a taking under the Fifth Amendment of the U.S. Constitution.
Under the newly enacted law, except in the case of abandoned property, a property owner whose property is subject to a tax lien foreclosure has the right to file a written demandin Superior Court before a final judgment is entered, requiring the holder of the tax sale certificate to foreclose the right to redeem the certificate in the same manner as a mortgage foreclosure. That would compel a judicial sale or internet auction of the property through the Sheriff’s office, after which a property owner could apply to the court for any funds left from the sale after payment of the tax lien, attorney’s fees and sheriff’s costs.
If the owner or the owner’s heirs do not demand a judicial sale or internet auction, the tax sale certificate holder may foreclose without this sale, taking full title to the property, and there would be no claim against the holder of the tax sale certificate for equity. Any judicial sale or internet auction would be conclusively presumed the fair market value of the property and if no one bids on the property, it would be conclusively presumed there is no equity in the property.
Other provisions include provisions to pay out allowable costs and attorney’s fees from the sale; defines “surplus funds;” requires at least 30 days’ notice to the property owner entitled to redeem an outstanding tax lien; requires notice to property owners to advise of the right to request a judicial sale or internet auction; and a requirement for a detailed reimbursement structure for expenses actually incurred by the lien holder for preparation and litigation of a foreclosure action to be added to the amount required to redeem the tax sale certificate.
The newly enacted law was effective as of July 10 and has no effect on any foreclosure action in which a final judgment has been entered prior to the effective date. The NJSBA monitored this bill but did not take a position.