ASSEMBLY STATE AND LOCAL GOVERNMENT
COMMITTEE
STATEMENT TO
ASSEMBLY, No. 3772
STATE OF NEW JERSEY
DATED: JUNE 24, 2024
The Assembly State and Local Government Committee reports
favorably Assembly Bill No. 3772.
This bill would revise the “tax sale law,” R.S.54:5-1 et seq., and
the In Rem Tax Foreclosure Act (1948), P.L.1948, c.96 (C.54:5-
104.29 et seq.), to bring those laws into compliance with the recent
United States Supreme Court decision in Tyler v. Hennepin County,
Minnesota, et al., 143 S. Ct. 1369 (2023) concerning the ability of a
property owner, whose right to redeem a tax lien on their property
has been foreclosed by the holder of a tax sale certificate, to receive
any of the owner’s equity remaining in the property after the tax
lien foreclosure.
Under current State law, the holder of a tax sale certificate, after
six months, in the case of a municipality that holds the tax sale
certificate or in the case of the holder of a tax sale certificate on a
property that is abandoned, or after two years, in the case of a third
party lienholder, may file suit in Superior Court to foreclose the
right of the property owner to redeem the tax lien. Upon the
foreclosure, the lienholder will receive title to the property and all
of the equity remaining in the property, leaving the former property
owner with no funds from the foreclosure with which to purchase
another property.
In the Tyler decision, the Supreme Court determined that
Hennepin County could not keep the equity in the property beyond
the amount it was owed for overdue property taxes and interest
thereon. Under the Court’s ruling, that excess equity was
considered as property that could not be taken from the former
property owner consistent with the takings clause restrictions of the
5th Amendment of the United States Constitution.
This bill would amend current law to permit a property owner to
require a judicial sale as in the manner of the foreclosure of a
mortgage of the property by the county sheriff in the same manner
as mortgage foreclosures are subject to a judicial sale as in the
manner of the foreclosure of a mortgage, or an Internet auction of
the property through the office of the county sheriff. The property
owner would have to make a motion to the Superior Court for either 2
a judicial sale as in the manner of the foreclosure of a mortgage or
an Internet auction of the property by the office of the county
sheriff within 45 days of receiving the complaint for foreclosure or,
in the case of an in rem foreclosure, within 45 days of receiving the
complaint for foreclosure or the publication of the notice of
foreclosure as required by law, whichever date is later. The
property owner would be advised of this information, in boldface
type, with the service of the complaint for foreclosure.
This bill would not require a judicial sale as in the manner of the
foreclosure of a mortgage or an Internet auction of the property
through the office of the county sheriff if the property owner does
not make a demand for one. This would save the lien holder from
incurring substantial costs associated with a judicial sale as in the
manner of the foreclosure of a mortgage or Internet auction of the
property through the office of the county sheriff. Many owners
have no equity in their property to protect during a tax lien
foreclosure. However, any property owner who wants a judicial
sale as in the manner of the foreclosure of a mortgage or an Internet
auction of the property through the office of the county sheriff will
be able to obtain one by simply requesting one from the court.