Caps interest rate for redemption of tax lien at 9 percent per year.
By lowering the maximum interest rate for tax lien redemptions, S979 could positively affect homeowners and property owners, especially those with limited financial resources. The reduction in the interest rate could lessen the burden of accumulating debt from unpaid taxes, providing a more manageable path for individuals to retain ownership of their properties. This legislative change is anticipated to enhance the overall stability of the housing market by preventing homes from being lost due to excessive interest rates on tax liens.
Senate Bill S979, introduced on January 31, 2022, aims to cap the interest rate for the redemption of tax liens at a maximum of 9 percent per year. This legislative change is significant because the current law permits an interest rate of up to 18 percent annually. The proposed amendment to R.S.54:5-32 seeks to provide financial relief to property owners who may be struggling with tax obligations, making it more feasible for them to redeem their property from tax liens before facing foreclosure or loss of ownership.
However, the bill may face contention from various stakeholders. Entities that benefit from higher interest rates on tax lien redemptions, such as financial institutions or municipalities that rely on the revenue generated from higher interest, may oppose the bill. Critics argue that capping the interest at a lower rate could reduce the incentive for investors to purchase tax liens, potentially harming municipal revenue streams. As such, the discussion surrounding S979 is likely to involve balancing the needs of property owners with the fiscal implications for local governments.