After Tax Sale

Payment must be made immediately to the Collector after the sale with cash or certified funds. Wire transfers may be acceptable provided advance notice has been given the Collector. Failure to make payment within the time allowed by the Collector will result in the property being again offered for sale.

The Collector must mail all certificates to the lien holders by the end of 10 days. The lien holder is responsible for recording the instrument at the County. Failure to do so in a timely manner may result in a nullification of the document. Effective 2010, the lien holder is legally obligated to provide the Tax Collector a copy of the recorded instrument upon its return from the County. This copy is also made a permanent record.

During the period between the sale and the mailing of the certificate, the property owner may come in and pay off the lien without incurring additional penalties. The lien holder is then notified of the payment and reimbursed.
Subsequent Taxes
Once a bidder has become a lien holder, she/he has the right to pay any delinquent municipal tax, and have it added to the lien. Bear in mind that the original certificate amount earns what the lien holder bid at sale. Any additional tax paid by the lien holder earns the interest rate outstanding on that balance.

Example: the certificate was sold for $1,000 at 10%, the lien holder paid subsequent taxes which had an interest rate of 18%, and the lien holder also paid delinquent sewer, which has an interest rate of 8%. The lien holder earns 10% on the certificate, 18% on subsequent taxes, and 8% on the subsequent utility balance.

A lien holder may pay subsequent taxes at any time; however, if a property owner pays the same quarter, within the 10 day grace period, the lien holder will have his funds returned. The property owner always has priority if payment is made before the last day of the grace period.

In order to have the subsequent payments added to the lien, the lien holder must file affidavits at time of payment. If the lien holder chooses not to pay subsequent taxes, a new lien may be placed on the property for sale the following year.

Foreclosure


The lien holder must hold the certificate for 2 years before foreclosure can occur. At any time in those 2 years, the property owner, or other interested party, can redeem the lien. After the foreclosure process has begun, only the Court can grant the right to redeem. The lien holder is not obligated to foreclose.

As mentioned, foreclosure results in the premium being turned over to the municipality. Liens held by the municipality may be foreclosed after 6 months.  They can be assigned to outside parties for full or partial value.

Once the foreclosure process has begun, redemption can only be made with permission of the Court. Interest paid to lien holders at time of redemption is taxable interest, and 1099s are issued. Tax information is required prior to the tax sale and issuance of certificates.
Priority of Liens
The most recent, or newest, lien is known as the paramount lien. All other liens existing prior to the paramount lien are known as subordinate liens. Subordinate liens may redeem paramount liens, but paramount liens cannot redeem subordinate liens.Paramount liens can foreclose all subordinate (older) liens. Subordinate liens cannot foreclose paramount liens.