Posted by Ben (NJ) on January 08, 2003 at 15:19:17:
Probably, anything they have on mortgage foreclosure would cover this.
Tax lien priorities - Posted by Ken (NJ)
Posted by Ken (NJ) on January 08, 2003 at 09:19:04:
Someone called me on a property today. He stopped paying taxes on the thing way back in 1994. I called the tax office and learned that there are 6 tax liens against the place totaling about 65k. FMV is about 65k, but the place has been vacant for 10 years. I guess it would need about 25k in work to get it back in line. Obviously, those numbers do not work as the place is very much upside down.
If it were a bank holding a mortgage, I would think short sale. But these are tax liens, possibly held by multiple investors.
Is there a priority among tax leins, or are they all equal? For example, could the 2000 lien be foreclosed, wiping out the prior liens? Or do they all share an equal priority? I am working from the assumption that all of the liens would need to be paid in full to transfer title. Is that right? If they are equal priority, why would anyone buy a lien when the property is upside down?
I am just trying to see if I am missing an angle here.
Thanks!
-Ken (NJ)
Re: Tax lien priorities - Posted by Ben (NJ)
Posted by Ben (NJ) on January 08, 2003 at 09:51:51:
NJ is an inverse priority state. In other words the
most recent certificate has the highest priority and can foreclose out the junior liens. The remedy of the junior lienholder is to redeem (pay off) the senior lien. As far as strategy, I wouldn’t touch the property as a straight sale since all tax liens would have to be paid off to get clear title. The only thing I would do is buy the lien with the highest priority (that is at least two years old) and then begin foreclosure proceedings. Your only risk then is being paid off (with interest). You then can foreclose and end up with clear title. Some of the older lienholders may take a discount but obviously it would have to be so low to make any sense. The foreclosure will take at least one year so if you are in a hurry, then pass on this deal. One other possibility, one of the other liens may already be in foreclosure which means you can step in their shoes and continue it. Good luck.
Re: Tax lien priorities - Posted by Redline
Posted by Redline on January 08, 2003 at 11:19:46:
If the newest lien is older than 2 years, is there any reason why they wouldn’t be foreclosing here?
Also you say junior lienholders may take a discount. Well if they weren’t prepared to pay off the senior lien then they’d end up with nothing at the foreclosure, right? So wouldn’t they sell?
This tax lien stuff is confusing to me. Just when I think I’ve got it down, I find something new. Is there any one place to go to get all this information (besides you?) 
Thanks,
RL
Re: Tax lien priorities - Posted by Ben (NJ)
Posted by Ben (NJ) on January 08, 2003 at 11:41:32:
In a perfect world, every lienholder would keep current with the taxes and begin foreclosure immediately after two years. That way no other cert. would ever be issued and no one would have priority over them. They would also acquire the property with the least amount invested. In our world, companies merge, go out of business, sell their liens rather than foreclose, walk away rather than payoff senior liens, lose their certificates, die, etc,etc. The NJ Institute for Continuing Legal Education in New Brunswick publishes a tax foreclosure practice book with all the details, statutes etc. Geared to the attorney so very technical but excellent.
Do they also - Posted by IB (NJ)
Posted by IB (NJ) on January 08, 2003 at 14:05:17:
publish anything on judicial foreclosure?