The tax lien system generates more than $325 million in annual revenue for New Jersey state’s municipalities and huge profits for the “suits” on wall street as well as other institutional players. In Manchester, New Jersey the October 6 tax lien auction day is a sight to behold. Hunched over their papers , raising their hands to bid on tax liens, members of the community flock to the municipal town hall to take part in the tax lien sales. The sale of these tax liens took less than 90 minutes, and $160,000 deposited into the township treasury is testimony to the success of the day’s events. In this sale, three institutional investors walked away with more than half of the tax lien.
The real challenge to this day comes from when the property owners realize how expensive and tasking it is to fall behind on property tax payments. These small tax debts can quickly snowball , as it is considered debt now owned by a range of investors from private citizens to corporations and usually carry annual interest rates as high as 18 percent. If these debts are not paid in full within two years, the lien holder has the right to seize the property by means of a foreclosure, and it would not matter if the remaining debt is as small as $20, which was the case in the Manchester, New Jersey October 6 Tax Lien day.
States across the country use tax liens sales to ensure the on time payment of delinquent taxes. States like Delaware and North Carolina keep liens on properties until the debt is paid. New Jersey however, sells more liens than any other state a reported average of 400 per day. Last year’s sales in the state of New Jersey amounted to more than 146,000 liens which totalled to $327 million in unpaid bills, according to the National Tax Lien Association.
According to The Daily Record, “at least one homeowner impacted by the Oct 6 sale lien didn’t seem to fully grasp exactly how precarious her situation might be.” The article went on to relate on the lack of transparency of the New Jersey state officials in the sale of these tax liens. Most investors it seems. are interested in seizing the properties and this might be the root of some of the problems.
To learn more about New Jersey state tax lien sales , visit this article by The Daily Record.