Paying Subsequent Tax Liens
3 Replies
- 1wDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 188 posts · 59 votes
Good question, @Kyle Vaz . In New Jersey, contact the municipal tax collector before paying subsequent taxes or charges instead of using the standard online portal.
A tax sale certificate holder can generally pay an installment once it becomes delinquent and add the amount to the certificate. Ask the collector about the timing, payment method, and any required affidavit or certification. Keep the receipt and obtain written confirmation that the payment was applied to your certificate and included in the redemption amount.
You typically do not need to re-record the original certificate after each payment, although municipal procedures may differ. Keep a calendar and copies of all payments and confirmations, and verify the process with the local tax collector and a New Jersey attorney experienced in tax sale certificates.
- 1wJoseph ScoreseBusiness MemberBanker · Philadelphia · Member since 2009 · 2k+ posts · 631 votes
Hi Kyle,
Great question. New Jersey tax lien investing has some very specific procedures, especially when it comes to subsequent taxes and municipal charges, so I would definitely confirm the process with the tax collector for the municipality where each certificate is located.
Generally, as the tax sale certificate holder, you want to stay on top of subsequent taxes and eligible municipal charges because paying them can help protect your position and those amounts may potentially be added to the amount required to redeem the certificate.
I would contact the municipal tax collector directly for each property and ask:
When subsequent taxes become eligible for payment by the certificate holder
Whether they recommend paying quarterly or after a specific delinquency date
How the payment needs to be identified as a subsequent payment associated with your tax sale certificate
Whether any additional documentation, endorsement, or recording is required
How subsequent municipal liens or charges such as water/sewer are handled
I would not simply pay the owner's upcoming tax bill online without first speaking with the tax collector and confirming how they will account for the payment. You want to make sure anything you advance is properly recognized in connection with your certificate and ultimately included in the redemption calculation where permitted.
Since you now have three certificates that have remained outstanding longer than your previous investments, this is also a good time to develop a relationship with each municipality's tax collector. They can tell you exactly how their office handles subsequent payments.
For anything involving your lien priority, redemption rights, interest, or eventual foreclosure rights, I would also recommend speaking with a New Jersey attorney experienced specifically in tax sale certificates. There are statutory requirements and timelines involved, and you don't want an administrative mistake affecting your investment.
Tax liens can be a great strategy, but in New Jersey, the details and documentation matter just as much as buying the certificate.
- 4dAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Kyle, for subs in New Jersey you pay the municipal tax collector directly, not the county. Taxes run quarterly there, so the cleanest way is to pay each quarter once it goes delinquent after the grace period rather than waiting until year end. Paying them as they come due also protects your position and lets those subs earn the redemption interest.
You usually do not need to record anything again. Your original certificate stays the controlling lien and the subs attach to it at the municipal level. I would just tell the collector in writing that you hold the certificate and want to pay the subs, then confirm they post each payment to your redemption figure. Practices vary town to town, so a quick call to each one saves headaches.
On taxes, the interest you collect at redemption is ordinary income in the year you receive it, not capital gain. The taxes and subs are just a return of your own money, so only the interest and statutory charges are income. Any premium you bid comes back without earning interest. And if one does not redeem and you take the property, your certificate cost, subs, and premium roll into your basis instead. Happy to connect!
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