Oakland has scheduled an accelerated tax lien sale for December 28th to collect overdue taxes. Municipalities in New Jersey normally schedule tax lien sales after the end of the fiscal year, with a recent sale in July 2010 being used to collect taxes for 2009. There does exist in NJ the option of a municipality receiving its revenue before the end of the fiscal year, hence the term“accelerated”.
While the standard tax lien sale is held for delinquent taxes of the prior year, and benefits the property owner, the accelerated sale allows a municipality to collect due taxes before the fiscal year ends. The sale can be held at any time.
A Bergen Record article from October of 2010 reported on Oakland’s plans to utilize the accelerated process. Town officials recognized that there has been an increase in tax delinquency that they attribute to the poor economy. A review of previous tax liens sales confirms a dramatic increase from approximately 10 properties in delinquency for the 2008 tax season, to 50 for the 2009 season, and the accelerated sale to be held for the 2010 season lists 72 properties.
Officials in Haddon Township debated the merits of holding an accelerated tax sale as they sought to deliver to residents a budget with no tax increases. There were concerns over the impact it would have on financially stressed families, and also whether it was a short term fix to more long term problems.
New Jersey is an inviting location for real estate speculators looking to turn a profit on the purchase of tax liens. Many late night television commercials, Internet study guides, and software is dedicated to helping investors profit from the purchase of tax liens. New Jersey is considered a very favorable landscape with respect to good interest rates and short time limits.
This is one reason many out of state speculators and firms seek to attend these sales, and why a federal investigation is ongoing with respect to price fixing. The investigation has involved BankofAmerica and JPMorgan amongst others partaking in the estimated 5 billion dollar industry.
An Asbury Park Press article chronicling the woes of NJ taxpayers reports that, “There are no grace periods for those who have lost their jobs or can’t make the payments. Any missed tax payment starts the penalty clock running — 8 percent a year interest on the first $1,500; 18 percent on any amount over that. If you happen to owe more than $10,000 by Dec. 31, tack on another 6 percent for a total of 24 percent interest….And if your lien is bought in a tax sale, you have two years to pay back the private lien holder, usually a corporation. With interest and penalties, a homeowner can end up paying 30 percent interest on amounts greater than $10,000.”
The 72 properties listed in the tax lien sale for Oakland this December range from a high of $17,000 to a low of $64.