Tax Lien & Eminent Domain

8 Replies

A county in NJ is going to begin foreclosure using Eminent Domain on a property that I hold a tax lien on. Does anyone know if the lien gets paid off or whether I get stripped?

Appreciate the feedback.

Regards,

Glenn

Wow that's not something you hear about every day.  I don't know the answer, but I would like to know.  I found this article on nolo which may or may not apply here.  If I were to guess, it would be that your liens are safe.  I doubt the county would want to disenfranchise its own tax lien investors.  Seems the investors would have a cause of action if the tax liens were stripped, since they facilitated purchase of the liens in the first place.  Have you called the county to ask about it?

Strange situation but gun to my head, I'd guess your liens are protected.  States that have tax liens at all tend to protect them pretty vigorously.  Even against themselves.  

Obviously you should consult an attorney that specializes in all things tax liens up there in NJ and speak with the county directly.

In this case, the lien was sold by the town and the foreclosure is being initiated by the county. Another interesting point is the tax sale was recent, about the same time that the County Board of Freeholders voted to use Eminent Domain. The actual timing of events may create some additional questions.

I haven't received formal notice yet, but was told it was forthcoming. The tax collector who sold the lien had never seen this before and couldn't offer any insight. The County hasn't returned my call yet. I know this is really an "attorney question", but I thought I would try this forum to do some homework on a topic I have not seen before.

Ask your lawyer to take a look at UNION COUNTY UTILITIES AUTHORITY, PLAINTIFF, v. PAUL JOSEWITCH, et als.  Superior Court of New Jersey, Law Division, Union County, 269 N.J. Super. 218; 634 A.2d 1378; 1993 N.J. Super. LEXIS 887

Do you know if they are taking the whole thing or just a portion?  That is key.  I have had three or four of these pop up over time and all have been tiny slices for sidewalks, etc. and in the end it does not effect the overall lien on the rest of the property.  I just got served on one in Sussex County where they are taking a couple hundred square feet to redo curbing and an intersection

That's an excellent point Jared. I haven't received the paper work yet so I'm not sure if it's a piece or the whole thing. What's your experience if it's the whole property?

Glenn

The one time it happened I was paid fairly quickly after getting served, so I was not privy to all the in's and out's.  Depending on the type of action and how many parties are involved (especially an action involving the DEP, ) it is possible to lose out on your investment or at the very least, just get back what you paid.

Updated almost 3 years ago

I should add that the possibility of being completely out of luck is probably low. Worse case is you could lose out, but that is rare and in extreme cases.

So it looks like the county is going to take a portion of the property for road improvement purposes. The owner will be paid an appraised value and all liens remain in place. If the county had taken the entire parcel, the appraised value would be distributed first to lien holders, with the balance to the property owner. 

The only way a lien holder loses is if the appraised value is less than the lien.

Thanks everyone for your input.

Regards,

Glenn

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