Legal Question in Tax Law in New Jersey

Re: tax lien public auction premium bids

The premium is based upon the fact that you are bidding on an interest rate. The opening bid is traditionally at 18% and goes down. Since this rate is significantly higher than what you could get elsewhere, the "discount" in rate is reflected in the premium paid. One of several things happens, of which you should be aware. If the taxes are paid, you get paid, plus your interest. The taxes get paid either by the owner redeeming the lien, or selling the property. If the property is sold, your tax lien is a prioerity, so you get first payment. If the taxes are not paid or the property sold, the only way you get paid is to foreclose on the property and, if granted, have a public sale. Depending upon the bids at the sale, you may get paid in full or not, as the highest bidder does not have to provide full payment. Thus, I suggest, if the proiperty has value (always consider the possibility of having to do a foreclosure), you can bid at the foreclosure sale. If you bid at least what you are owed, and someone bids higher, you are assured of being paid, unless the costs of the sale produce less than what you are owed, when deducted from the final bid.