Tax sale certificates and tax foreclosure in New Jersey
A mortgage is not the only way to lose a home in New Jersey. Unpaid property taxes and municipal charges follow their own path: a tax sale, a certificate, a right to redeem, and eventually a foreclosure. Since 2024 you can also demand, before judgment, that the foreclosure go through a sale so that any equity above the debt can be preserved.
The tax sale sells a lien, not your house
You can redeem until a foreclosure judgment
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The town sells the debt,
not the house.
When property taxes or other municipal charges stay unpaid, the municipality enforces its lien at a tax sale. What it sells is a tax sale certificate: a lien on your property, subject to your right to redeem.
Bidders at the tax sale compete by bidding down the interest rate the certificate will carry, which may not exceed 18 percent a year. You still own the home. The certificate holder, which may be a private buyer or the municipality itself, now holds a lien that grows with interest until it is paid.
You, your heirs, a mortgage lender or an occupant can redeem the certificate by paying the redemption amount, interest and costs to the municipal tax collector, at any time until a foreclosure judgment cuts that right off.
Ask the tax collector first
The collector must give you two free redemption calculations a year. That figure, not an estimate from a letter or a caller, is what it takes to redeem.
Who holds the certificate
Private holder or municipality.
Both can end in a foreclosure in the Superior Court. The main difference is how soon.
| Consideration | Private certificate holder | Municipality holds the certificate |
|---|---|---|
| How they got it | Bought it at the tax sale by bidding the lowest interest rate | The municipality is the purchaser of the certificate |
| Interest | The rate bid at the sale, never more than 18 percent a year | Ask the tax collector for the figure on your certificate |
| Earliest foreclosure filing | Two years after the tax sale | Six months after the tax sale |
| Your right to redeem | Until the foreclosure judgment | Until the foreclosure judgment |
| Equity protection since 2024 | You may demand a judicial sale or Internet auction before final judgment | The same right, and the summons must state it in bold type |
Shorter periods apply to abandoned property. Penalties on redemption and each municipality’s tax sale date are not stated here; the municipal tax collector publishes them.
What exists
The routes the law provides.
- 01
Redeem
Pay the redemption amount, interest and costs to the tax collector. It is available until a foreclosure judgment and it ends the certificate.
- 02
Get the real number
Ask the tax collector for a redemption calculation. The collector must provide two a year free of charge.
- 03
Watch the two-year mark
A private holder may file to foreclose two years after the tax sale; a municipality that holds the certificate may after six months, and shorter periods apply to abandoned property. Redemption stays open until a foreclosure judgment cuts it off, but the filing is the point to act.
- 04
Demand an equity-preserving sale
Before final judgment you may ask the Superior Court in writing for a judicial sale or Internet auction, so the value above the debt is not simply lost.
- 05
Claim the surplus
After such a sale the holder is paid what it is owed and the surplus is deposited with the court clerk, and the owner may claim it by motion.
- 06
Read the summons
A foreclosure summons on a tax sale certificate must tell you of the right to demand a sale. If a municipality is foreclosing, that notice must be in bold type.
In detail
Redemption, foreclosure, and the equity rule.
Three things every owner facing a tax sale certificate should understand.
Redemption is the whole game until judgment
New Jersey lets the owner, heirs, a mortgagee or an occupant redeem at any time until the right to redeem is cut off by a foreclosure judgment. Redemption means paying the tax collector the redemption amount with interest and costs for the benefit of the certificate holder.
The longer a certificate is outstanding the more interest accrues, so the cheapest time to redeem is early.
When the holder can foreclose
A private holder may file to foreclose the right of redemption once two years have passed since the tax sale. Where the municipality holds the certificate, the wait is six months. Abandoned properties can be foreclosed sooner. The case is filed in the Superior Court.
Why the equity rule changed
In Tyler v. Hennepin County, decided on 25 May 2023, the United States Supreme Court held that a government which keeps the value of a tax-foreclosed home beyond the tax debt commits a taking.
New Jersey responded with P.L.2024, c.39, approved on 10 July 2024. Before final judgment, the owner may demand in writing that the Superior Court have the certificate foreclosed through a judicial sale or Internet auction "to preserve any equity". The holder is paid its redemption amount, costs and fees; the surplus is deposited with the court clerk, and the owner may claim it by motion.
The demand has a deadline
The right to demand a sale lasts only until final judgment is entered, and the judgment also cuts off the right to redeem. If you have been served with a tax foreclosure summons, the date of judgment is the date to plan around.
This page describes general New Jersey foreclosure procedure. It is not legal advice, and procedure has exceptions, county practice and case law that no general page can apply to an individual situation. NewJerseyForeclosureHelp.com is not a law firm, a lender, or a government agency. If a deadline, court date, or sale date is approaching, speak with an attorney promptly.
Common questions
About tax sale certificates.
Does a New Jersey tax sale mean I lost my house?
No. A municipal tax sale sells a tax sale certificate, which is a lien on your property subject to your right to redeem, not the house itself. You still own the home until a foreclosure judgment cuts off the right to redeem.
How do I redeem a tax sale certificate?
Pay the redemption amount, interest and costs to the municipal tax collector, who holds it for the certificate holder. The owner, heirs, a mortgage lender or an occupant may redeem, at any time until a foreclosure judgment. The collector must provide two free redemption calculations a year.
When can the certificate holder foreclose?
A private holder may file to foreclose the right of redemption two years after the tax sale. If the municipality holds the certificate, it may file after six months. Shorter periods apply to abandoned property.
What is the most interest a tax sale certificate can carry?
Bidders at the tax sale bid down the interest rate, and it may not exceed 18 percent a year. The rate on a particular certificate is the one bid at the sale; the tax collector can tell you what it is.
Can I keep my equity if a tax certificate is foreclosed?
Since P.L.2024, c.39 (approved 10 July 2024), an owner may demand in writing to the Superior Court, before final judgment, that the certificate be foreclosed through a judicial sale or Internet auction to preserve any equity. The holder is paid what it is owed and the surplus is deposited with the court clerk for the owner to claim by motion.
Statutes and sources behind this guide
- X1: A New Jersey municipality enforces unpaid property taxes and municipal liens by a **tax sale**: it sells a tax sale certificate, a lien on the property subject to redemption, not the house itself. Bidders bid down the interest rate, which may not exceed **18%** a year. (N.J.S.A. 54:5-19, 54:5-32), read 2026-09-23
- X2: The owner, heirs, a mortgagee or an occupant may **redeem** at any time until the right to redeem is cut off by a foreclosure judgment, by paying the redemption amount, interest and costs to the tax collector. The collector must provide two free redemption calculations a year. (N.J.S.A. 54:5-54), read 2026-09-23
- X3: A private certificate holder may file to foreclose the right of redemption **two years** after the tax sale; a municipality that holds the certificate may do so after **six months**. Shorter periods apply to abandoned property. (N.J.S.A. 54:5-86), read 2026-09-23
- X4: In *Tyler v. Hennepin County* (U.S. Supreme Court, 2023-05-25) a government that keeps the value of a tax-foreclosed property beyond the tax debt commits a taking., read 2026-09-23
- X5: New Jersey's response, P.L.2024, c.39 (approved 2024-07-10): before final judgment, the owner may demand in writing to the Superior Court that the certificate holder foreclose through a judicial sale or Internet auction "to preserve any equity". The holder is paid the redemption amount, costs and fees; the surplus is deposited with the court clerk and the owner may claim it by motion. The summons must tell the owner of this right, in bold type where a municipality forecloses. (P.L.2024, c.39, amending N.J.S.A. 54:5-86, -87, -98 and others), read 2026-09-23
Claims on this page were checked against published New Jersey law and court guidance, the 2024 amendments and the Supreme Court's opinion on 2026-09-23 and are recorded in the site's evidence file. Penalty schedules and sale dates are not stated because they vary by municipality.
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