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Stack, McKnight Bill Revising Tax Sale Law to Protect Property Owners’ Rights Advances

TRENTON – The Senate Community and Urban Affairs Committee advanced legislation today sponsored by Senator Brian Stack and Senator Angela McKnight that allows homeowners of property under foreclosure due to a tax lien to collect any remaining equity from the property through a judicial sale.

“The practice of property tax lienholders taking more than what is owed to satisfy a debt has created a market that enriches investors and makes the financial recovery of debtholders more difficult,” said Senator Stack (D-Hudson). “Providing individuals the opportunity to recoup the equity of their home is a fair way to diminish harm for property owners facing economic hardship and prevents opportunists from using an unfortunate situation to turn a profit.”

The bill, S-2334, amends current law to permit individuals whose property is under foreclosure due to a tax lien to require a judicial sale of their property upon request. The judicial sale would be in the same manner as a mortgage foreclosure judicial sale or an internet auction. After the sale or auction, the property owner would be able to collect the remaining equity from the sale of the property after all remaining debt has been paid off.

“This move protects property owner’s rights and guarantees a due process before lienholders can claim any remaining equity on a foreclosed home,” said Senator Angela McKnight (D-Hudson). “Alleviating the burden for homeowners and their families in the unfortunate event of losing a home will help make their future financial prospects more promising.”

Under current law, a lien holder can keep the surplus home equity value of a property after its sale.

The bill advanced out of committee in a 5-0 vote.