Proposed Tax Lien Legislation

A new legislative proposal in New Jersey could eliminate?the tax lien investors from the tax sale process.

There is a legislative proposal in the New Jersey State Legislature that would end tax lien investing in the state as we know it. The proposed legislation would give municipalities the option to do away with tax lien sales and take over the tax lien. In addition to taking over the lien they would also foreclose the property and own it if the lien is not redeemed within the 2 year redemption period. With this system the municipality would fund tax receivables with a short-term bond or note.

Tax Lien Lady’s Comments On The Proposed Legislation:

Although this is alarming to the tax lien investor because it would do away with tax sales in New Jersey, I think that it would also be bad for New Jersey homeowners and taxing district in New Jersey as well. It would be bad for property owners because without the interest rate being bid down at the tax sale, they will always have to pay the maximum interest rate on their delinquent taxes (18%).? And it is not so good for the municipality because I believe it will take them longer to get the delinquent tax money needed to make their budget.

If this legislation is passed, it does not mean that each municipality has to do away with tax sales. It simply gives them the option to do so. I am hoping that the bill does not pass because I don’t see the benefit here to anyone. If it does pass I hope that most municipalities in New Jersey see the folly of doing away with the tax lien auctions, and do not adapt it, but keep things as they are.

There is one very big problem I see with this legislation. If a municipality has a lot of unsellable property that is delinquent and they take the liens to these properties, selling a bond??to pay the delinquent taxes on these properties, and they eventually foreclose the liens and take possession of the properties.???Who will pay the?interest and the principal on that bond? Where will the money come from?

I am not an attorney nor am I a financial expert, but does anyone else see a problem with this? Most states either sell the tax lien or the tax deed to get the money from their delinquent tax roll. Is anyone familiar with a state that does not do this – that takes over the properties and then either keeps them or resells them? And how is that working?

About Joanne

Joanne Musa is known online as the Tax Lien Lady. She helps people who want to invest their money profitably in tax liens and tax deeds and get high returns on their money without the typical risks of real estate investing or the uncertainty of the stock market. Get your free special report on "7 Steps to Building Your Profitable Tax Lien Portfolio" by Clicking Here.
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