Tax Foreclosures
“…in this world, nothing is certain except death and taxes” – Benjamin Franklin
And in New Jersey, if you don’t pay your property taxes, you will lose your home.
Property taxes are charged by the city or town where you live, and are based on how much your house is worth. You usually get a bill for property taxes four times each year.
If you do not pay your property taxes, your city or town can sell the right to collect the taxes to a private investor, or can continue to collect the taxes themselves.
Either way, your unpaid taxes will include interest of up to 18%, and all future unpaid property taxes get added to the bill.
This same process applies to unpaid water, sewer, and other bills owed to your city or town.
If the property taxes remain unpaid, the private investor or the city can file a foreclosure complaint and have the Sheriff serve it on you. The Court will set a date for you to pay all of the back taxes, interest, and other fees in full.
If you do not make the full payment by the deadline (called the redemption date), the lienholder will obtain final judgment and title to your house transfers to the investor or municipality that brought the foreclosure.
You can lose your property even if your house is worth much more than the taxes owed, and even when you have a mortgage or other liens on the property.
After the foreclosure, the new owner can remove you from your property. Anyone who is living in the property has to leave, even if the tax bill was not in your name, unless you are a tenant with a bona fide lease from the former owner.
What can you do to save your home?
You must pay down the tax arrears as soon as possible.
If you cannot pay the arrears all at once, ask to set up a repayment plan with your local tax office. The tax office can allow up to three years to repay the back taxes.
Even if the tax lien is now owned by a private investor, payments still must be made to your local tax office.
If a payment plan with your local tax office is not available, a Chapter 13 bankruptcy may give you up to five years to pay the back taxes.
When there is significant equity in your property, you may consider taking out a mortgage to pay off the property taxes. If you are 62 or older, a reverse mortgage may pay off your back taxes and not require you to make a monthly mortgage payment.
Keep in mind, you will need to stay current on your upcoming taxes while pursuing any of these options. Otherwise, these new tax bills will get added to the old bill with interest.
Recent Changes to the Tax Sale Law
In 2023, the U.S. Supreme Court ruled that the government cannot keep all of the equity in a person’s home if the house is worth more than the outstanding tax bill. Early in 2025, the New Jersey Supreme Court applied that same rule to private investors who bring tax foreclosure actions.
As a result of these decisions, the New Jersey Legislature amended the Tax Sale Law to allow homeowners to request a sheriff’s sale in tax foreclosure cases. After the property is sold at a sheriff’s sale, the homeowner can make a claim for the equity that is left over after the tax liens are paid.
This change to the law does not allow you to save your home or stay in your property, but it does prevent you from losing all of your equity when your home is worth far more than the tax bill.
It is important to know that the sheriff’s sale under the revised law does not happen automatically – you must file a request for the sale with the court in the foreclosure case. Even if you do not want your property to be sold at a sheriff’s sale, filing this request will give you some extra time to list your home with a realtor to maximize the sale price, or to pursue alternative financing options.
For more information about tax foreclosures and the recent changes to the law, or for further assistance, please contact
Central Jersey Legal Services.
Mercer County: (609) 695-6249
Middlesex County: (732) 249-7600
Union County: (908) 354-4340
