NJ Tax Lien Process
Please help me through this process (NJ)...
1. Homeowner doesn't pay taxes.
2. I buy a property tax lien at auction.
3. 1 yr goes by.
4. I buy the next year's lien at auction.
5. another year goes by.
6. Now that two years go by I can forclose. Does the city keep charging taxes? What if the tax lien each year is for $10,000 and the property is worth $60,000. Lets say I buy the first two liens so I'm 20K in. Now I forclose but it takes 5 years of process to forclose, will the state be charging $10,000 in taxes each of those years. Who pays the taxes?
Also what would happen if someone different bought the lien at auction in year 2?
Thanks for the help,
Mike
A similar process as you describe for NJ is done in many states with TLC's. The taxes do not stop. Did you really think they did? Nor should they. They keep mounting.
And, yes, at some point the equity of the property is wiped out and owners no longer find it profitable to pay the taxes in full. Sometimes, the TLC holders do not foreclose, under the mistaken belief that they can keep mounting up the interest. In Florida, with lower taxes that is probable, but in NJ, with high taxes, it is a mistake.
Therefore, if you buy year one, forclose as soon as possible. The person who purchased year two is behind you. They can forclose but only after the statutory time has elasped. Year one would still be paid of course, just like a first would be paid in a foreclosure action if the second were to foreclose.
To get more info re NJ, put New Jersey into the Search box.
Best of luck,
Mitchell Goldstein