Property tax foreclosure in New Jersey

The property tax process in New Jersey, step by step

1. Taxes become delinquent and interest starts

   February 1, May 1, August 1 and November 1 (calendar-year towns)

   Property taxes are due in four quarterly installments and become delinquent if not paid on the due date. Your town can charge interest of up to 8 percent a year on the first $1,500 of the delinquency and up to 18 percent on the amount over $1,500, and it may allow a 10-day grace period.

   N.J.S.A. 54:4-66; N.J.S.A. 54:4-67

2. Ask about an installment agreement before the sale

   Before your town's tax sale

   A town may pass a resolution letting owners pay back taxes in equal monthly installments over no more than 5 years and leave those properties out of the tax sale. You must keep paying new taxes on time, and the agreement is void if a payment is more than 30 days late. Ask your tax collector whether your town offers this.

   N.J.S.A. 54:5-19

3. Notice of the tax sale

   Each of the 4 calendar weeks before the sale

   The tax collector must post the sale notice in 5 public places in town and publish it in a local newspaper once a week for 4 weeks, listing your name and the amount due. The collector may mail you a notice in place of two of the newspaper ads. Not getting a properly mailed notice does not cancel the sale.

   N.J.S.A. 54:5-25; N.J.S.A. 54:5-26

4. The tax sale certificate auction

   The fiscal year after the taxes went unpaid, or in the last month of the same year (accelerated sale)

   Bidders compete by offering the lowest interest rate, starting at 18 percent a year. If bidding reaches 0 percent, bidders offer a cash premium instead. The winner pays your taxes and gets a certificate that is a lien on your home; you still own it and can still live there.

   N.J.S.A. 54:5-19; N.J.S.A. 54:5-32

5. Redeem by paying the tax collector

   Any time until the court enters final judgment

   You, your heirs, your mortgage lender or an occupant can redeem by paying the town's tax collector the certificate amount, interest, later taxes the holder paid and allowed costs. A redemption penalty of 2, 4 or 6 percent applies when the certificate is over $200, $5,000 or $10,000. Ask the tax collector in writing for a payoff figure: you get two free calculations a year.

   N.J.S.A. 54:5-54; N.J.S.A. 54:5-61

6. Foreclosure lawsuit and your right to demand a sheriff's sale

   6 months after the sale (town holder) or 2 years (other holders); your demand is due before final judgment

   The holder must send you a written notice by certified mail at least 30 days before filing, and the papers must tell you in bold type that you can demand a sheriff's sale or online auction. To protect your equity, send a written request to the Superior Court before final judgment. If you do not, the holder can take your home without a sale and you lose any claim to the equity.

   N.J.S.A. 54:5-86; N.J.S.A. 54:5-97.1; N.J.S.A. 54:5-87(b); N.J.S.A. 54:5-98.1

7. Claim the surplus after a sheriff's sale

   After the sale; unclaimed court money is presumed abandoned after 10 years

   After Tyler v. Hennepin County (2023), New Jersey's 2024 law requires the sheriff to deposit any surplus with the Superior Court clerk after paying the holder and sale costs. The certificate holder gets a first lien of 10 percent of the surplus, up to $5,000, plus any unpaid costs and fees. You claim the rest only by filing a motion in the Superior Court, and you do not need to pay anyone a fee to file it.

   P.L. 2024, c. 39; N.J.S.A. 54:5-87(b); N.J.S.A. 54:5-98.1; N.J.S.A. 46:30B-41

Common questions in New Jersey