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IN REM TAX FORECLOSURES:A WEBINARKeith A. Bonchi, Esq.Goldenberg Mackler Sayegh MintzPfeffer Bonchi & Gill (Northfield)Sharon LorenziniParalegal, Goldenberg Mackler SayeghMintz Pfeffer Bonchi & Gill (Northfield)WRPP021617

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Thank you for logging in. We will begin shortly.IN REM TAXFORECLOSURES

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IN REM FORECLOSURESA WEBINARKeith A. Bonchi, Esq.Sharon Lorenzini, Paralegal660 New Road, 1st FloorNorthfield, NJ 08225(609) 646-0222

In Rem Tax Foreclosure Act (1948)N.J.S.A. 54:5-104.29 et. seq. Used exclusively by municipalities until2015 (amended C 15, PL 2015) to allowprivate lien holder to foreclose In Rem onabandoned properties.

Why Do MunicipalitiesForeclose In Rem? To compel payment of taxes. To remove non-performing properties fromtax rolls. To increase collection rate to lowerreserve for uncollected taxes. To control abandoned properties. To stabilize tax base.

Prior to Instituting Foreclosure aMunicipality Should Pass a resolution appointing counsel todo the In Rem.Pass a resolution listing the lands to beforeclosed.Indentify which tax sale certificates are tobe foreclosed.Budget the funds necessary to pay forthe foreclosure.NOTE: Check to see ifproperties are contaminated

Ordering Foreclosure Searches Quality of Title CompanyCosts60 year county searchesJudgment searches – 20 years last pastUp to 200 properties can be included inone complaint.

N.J.S.A. 54:5-104.34“Time for Institution of Action” More than 6 months expired from tax sale. All or any portion of general land taxes leviedand assessed the land for 21 months precedingthe action. Amendment effective January 5, 1996, provides:“Such action on a tax sale certificate mayinclude the lien for unpaid taxes, utility liens orany other municipal liens in conjunction with orindependent of one another.” Thus, certificatesforeclosed In Rem on or after January 5, 1996,need not be based on general land taxes whichwas a previous limitation.

Please note that N.J.S.A. 54:5-86(6) states:“Any person holding a tax sale certificateon a property that meets the definition ofabandoned property as set forth in P.L.2003, c. 210 (c. 55:19-78 et. al.), either atthe time of the tax sale or thereafter, mayat any time file an action with the SuperiorCourt in the county wherein saidmunicipality is situate, demanding the rightof redemption on such property be barredpursuant to the “tax sale law”, R.S. 54:5-1et. seq. .”

N.J.S.A. 54:5-104.35Resolution by Governing BodyThe governing body of any municipality may, from time to time, determine, byresolution, to foreclose any of the tax sale certificates held by it, by the summaryproceedings In Rem provided by this act. Such resolution shall list the lands againstwhich such proceedings shall be instituted. Such list, to be known as the “TaxForeclosure List,” shall be prepared and certified by the tax collector. It shallschedule the lands and certificates in numerical sequence, and shall contain thefollowing information:(a)(b)(c)(d)(e)(f)(g)(h)(i)Schedule number.Description of the land as it appears on the tax duplicate and in the certificate of tax sale.Serial number, or, if no serial number, other identification of the certificate of tax sale.Date of tax sale.Book and page or date and instrument number of the record of the certificate in the office of the countyrecording officer if such certificate has been recorded at the time of the adoption of such resolution, and theprior recording of the tax certificate shall not be a prerequisite to the adoption of the resolution.The amount of the sale as set forth in the certificate.The amount of all tax liens accruing subsequent to the tax sale, including interest, penalties and costs.The amount required to redeem.The name of the person appearing as the owner of the land to be affected by the foreclosure proceedings as itappears on the last tax duplicate of the municipality, or the word “unknown” if no name appears thereon.

Preparing Complaint The format of the complaint follows. Eachcomplaint contains a full caption. Theproperties are listed in numerical order byblock and lot number – lowest block andlot number to highest. A copy of the municipal resolutionauthorizing the foreclosure must beattached to complaint.

An expanded tax list must be attached tocomplaint. Using the tax list attached to theresolution, add 2 additional columns: [1]Estimated Amount to Redeem as of(approximate date when complaint will befiled); and [2] Estimated Amount to Redeemas of (date six months out). The tax collector is required to sign thecertification page attached to the complaint. Approximately 1 year ago, the ForeclosureUnit requested that a Second Count forpossession be added to the In Remcomplaint.

Complaint is filed on eCourts54:5-104.41“The plaintiff shall file the complaint in theoffice of the municipal tax collector, thecounty recording officer and the AttorneyGeneral of the State of New Jersey.”This requires an Acknowledgment of Filingby the Tax Collector, County RecordingOfficer and Attorney General.

N.J.S.A. 54:5-104.44“Upon the filing of such copy of the complaint, the countyrecording officer shall forthwith cause the action to beindexed in the name of all persons appearing in the taxforeclosure list and the complaint in the same index usedfor notices of Lis Pendens, and the filing of saidcomplaint shall be noted in the margin of the record ofeach certificate of tax sale referred to in said complaint.”This is the NOTICE OF LIS PENDENS to the world.

Preparing Service List As soon as the searches are received, andthe complaint filed, inquiry shouldcommence to assemble the service list foreach schedule. The notice should be mailed to theproperty owner at the [1] property address;[2] address in the deed; [3] addressaccording to the tax office records.

Note: If the property being foreclosed isvacant land, notice need not be mailed tothe property, but it should be noted in thetax list that it is vacant land and there is nomail delivery. Notice should also be mailed to any otheraddress for the property owner ascertainedthrough diligent inquiry.

If the property has a structure, it issuggested that a notice addressed to‘Owner/Occupant/Tenant’ at the propertyaddress also be sent. Notice must be mailed to all others holdingany type of lien against the premises i.e.mortgage, prior tax sale certificate,judgment, lis pendens, etc.

If, through the searches or inquiry, it is foundthat the property owner is deceased, diligentinquiry is required to locate whomeverinherited the property. There may be a filedwill showing the beneficiaries or the ownermay have died intestate in which case,inquiry is needed to locate any and allintestate heirs. This may take considerableeffort and time to accomplish. If the property owner is an entity, the Stateof New Jersey should be given notice forpossible unpaid NJ corporation franchise orother taxes.

If anyone in title is deceased, the State ofNew Jersey should be given notice forpossible unpaid NJ Transfer InheritanceTaxes and/or NJ Estate Taxes. There are situations when an owner isdeceased, but no beneficiaries or heirscan be located. In those situations,Unknown Owners/Unknown Claimantsshould also be noticed. In that case, theState of New Jersey should also be givennotice for possible escheat.

Keep in mind that if the foreclosuresearches show any type of federal lien,whether it be a mortgage, judgment, IRSlien, that property cannot be foreclosedthrough the In Rem process. It can,however, be foreclosed through an InPersonam action.

Keep in mind that a Certification of Inquiryis not required to be filed in an In Remaction, but complete inquiry materialshould be compiled and maintained. Thequestion of inquiry usually comes upfollowing completion of the foreclosure andthe resale of the property or in a motion tovacate final judgment. Be ready to supportto whom notice was given, the addressesof service. Title companies, on a resale,often question the exclusion of judgmentcreditors. Be in a position to provide basisfor judgment eliminations.

There are numerous websites available tolocate the current name and address ofany bank, savings and loan, or otherlending institution. There are websites available to locate thecurrent name and address of anyinsurance company.

If an estate is located for a deceasedperson, where an executor oradministrator is appointed, notice shouldbe given to the executor or administrator incare of the Surrogate’s Office of thecounty where the estate is filed. That is inaddition to the personal address for thatexecutor or administrator. Keep in mind that more notice is betterthan not enough notice. Effort is required.

Preparation of the service schedules should beworked on as soon as the complaint is filed whilewaiting for the search continuation following filingthe complaint in the county of venue. This is oftenvery time consuming. Do not arrange for publication until your servicelists are completed and envelopes prepared. A separate service list should be prepared foreach schedule. In addition, the last service list should be a list of‘Additional Parties/All Properties’. That list wouldinclude the State of New Jersey, and any and allcompanies that provide services to properties inthat municipality – i.e. water,sewer.trash etc.

Posting, Mailing and Publication When the search continuations arereceived through the date the complaint isfiled in the county, if there are anyadditional liens that are shown, thoseadditional liens should be added to theappropriate service schedules previouslyprepared.

After the search continuations arereceived and all service schedules areprepared and expanded, if necessary, thenotice for the newspaper should beprepared. If working with an abstractingcompany, that company should review theform of notice before it is submitted to thenewspaper.

When you are ready to publish, select apublication date at least 7 days out. Email thenotice to the paper [must be a newspapercirculating in the municipality where theproperties are located]. It is highly suggestedthat you request a proof prior to publication foryour review and approval. Within 7 days after publication, a copy of thenotice should be mailed by certified mail, returnreceipt requested, and by ordinary mail to eachlisting in each service list. [It is our procedure tomail on the same date as publication.]

Within 15 days of the publication date, acopy of the notice should be ‘posted’ in theOffice of the Tax Collector, in the Office ofthe County Clerk/Register, in 3conspicuous places in the municipality,and on each property where ‘UnknownOwners/Unknown Claimants’ are listed. [Itis our procedure, to have a notice postedon every property being foreclosed.] Following publication, obtain an Affidavit(Proof) of Publication from the newspaperto submit with your final judgmentpackage.