A2458

ASSEMBLY, No. 2458

STATE OF NEW JERSEY

INTRODUCED NOVEMBER 7, 1996

By Assemblymen CONNORS and MORAN

An Act concerning property taxes and liens and amending various sections of statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 65 of P.L.1948, c.67 (C.17:9A-65) is amended to read as follows:

65. A. No bank shall make a mortgage loan secured by a mortgage upon real property unless

(1) (Deleted by amendment, P.L.1985, c.528.)

(2) The mortgaged property shall consist of improved real property, including farmlands, or unimproved real property, if the proceeds of such loan shall be used for the purpose of erecting improvements thereon;

(3) The mortgage securing such loan shall constitute a first lien on a fee; a mortgage shall be deemed a first lien not subject to any prior lien, except for municipal liens, notwithstanding the existence of a prior mortgage or mortgages held by the bank, [or liens of taxes which are not delinquent] a lien of a condominium association for up to six months of customary condominium assessments pursuant to section 21 of P.L.1969, c.257 (C.46:8B-21), building restrictions or other restrictive covenants or conditions, leases or tenancies whereby rents or profits are reserved to the owner, joint driveways, sewer rights, rights in walls, rights-of-way or other easements, or encroachments, which the persons signing the certificate provided for in section 67 report in their opinion do not materially affect the security for the mortgage loan. Every mortgage shall be certified to be such a first lien by an attorney-at-law of the state in which the real property is located, or certified or guaranteed to be such a first lien by a corporation authorized to guarantee titles to land in such state;

(4) No such loan shall be made for a period longer than 40 years from its date, and no such loan shall exceed 80% of the appraised value of the mortgaged property; provided that there shall be included in the appraised value of the mortgaged property, for the purpose of this paragraph (4), the value of the improvements to be erected upon the mortgaged property wholly or partly with the proceeds of such loan; and

(5) The instrument evidencing the loan shall require payment to be made during each year on account of the principal amount of the loan, at a rate not less than 1% per annum of the original amount of the loan, if the original amount of the loan does not exceed 50% of the appraised value of the mortgaged property; or 2% per annum of the original amount of the loan, if the loan exceeds 50% but does not exceed 66 2/3% of such appraised value; or 4% per annum of the original amount of the loan, if the loan exceeds 66 2/3% of such appraised value; provided that, in lieu of such principal payments, the instrument evidencing any mortgage loan may require equal monthly payments, each applicable to principal and interest, in an amount sufficient to pay current interest and to repay the amount of the loan in not more than 40 years from its date; and provided further that when the proceeds of any such loan are to be used to pay, in whole or in part, the cost of constructing a building or buildings on the mortgaged property, and such proceeds are paid by the bank from time to time, final payment being made at or after completion, the instrument evidencing such loan need not require that any payment be made on account of the principal amount of the loan during the period from the date of such loan to a date not more than 18 months from the date of such loan; and such date marking the end of the period during which no payments are required to be made on account of the principal amount of the loan shall be deemed to be the date of such loan for the purpose of reckoning the 40-year period limited for the payment of such loan by this paragraph (5), and by paragraph (4) of this subsection.

B. The commissioner may, from time to time, with the concurrence of the banking advisory board, make, alter and rescind regulations: (1) Authorizing banks to make mortgage loans, or specified types or classes of mortgage loans, (a) which exceed 80% of the appraised value of the mortgaged property; (b) which mature in more than 25 years from their date; (c) which require smaller annual payments on account of the principal amounts thereof than those specified in paragraph (5) of subsection A of this section; (d) which provide for equal monthly payments, each applicable to principal and interest, in amounts sufficient to pay current interest on and to repay the amount of the loan in such number of years, more than 40 but not more than 45, as the regulations may specify; or (e) which substantially conform to the terms and conditions of mortgage loans authorized to be made by associations pursuant to the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-1 et seq.);

(2) Defining "improved real property" for the purposes of paragraph (2) of subsection A of this section;

(3) Increasing the percentage of the time deposits or the aggregate of the unimpaired capital stock and surplus of banks which banks may invest in mortgage loans beyond the limitation expressed in subsection A of section 69;

(4) Increasing the percentage of the principal balances owing on mortgage loans of the kind referred to in section 68 which shall not be included in the total of all principal balances owing on mortgage loans for the purposes of subsection A of section 69, or eliminating entirely the principal balances owing on such mortgage loans from such total of all principal balances.

C. In making, altering and rescinding regulations pursuant to subsection B of this section, the commissioner and the banking advisory board shall consider the statutes and regulations applicable to national banks in the making or acquiring of loans secured by interests in real property and the practices followed by national banks in the making or acquiring of such loans. The regulations so made shall, so far as the commissioner and the banking advisory board deem to be warranted by the state of the economy and to be consistent with sound banking practices, be directed toward the creation and maintenance of a substantial parity between banks and national banks in all matters relating to the making and acquiring of loans secured by interests in real property. The power to regulate as provided in subsection B of this section may be exercised by the commissioner and the banking advisory board within the standards established by this subsection, notwithstanding that the subject of such regulation is not expressly set forth in subsection B of this section.

D. A bank may make a mortgage loan in excess of the ratio between appraised value and the amount of the loan as established by subsection A(4) of this section, provided that the amount of such excess is secured by other collateral having a value at all times at least equal to the amount of the principal balance in excess of that amount permitted by subsection A(4) or as established by regulation of the Commissioner of Banking.

(cf: P.L.1995, c.354, s.1)

2. Section 181 of P.L.1948, c.67 (C.17:9A-181) is amended to read as follows:

181. A. 1. A savings bank may make or invest in mortgage loans in the manner and subject to the limitations prescribed by this section. For the purposes of this section, "mortgage loan" shall include every indebtedness secured by mortgage on real property, or on a lease of the fee of real property (in any case in which such lease is lawful security for such mortgage loan), except as otherwise provided by subsection Q. of this section, and a savings bank shall be deemed to have made a mortgage loan when

(a) It lends or participates in lending money to a borrower upon the security of real property; or

(b) It acquires, by purchase or otherwise, a mortgage loan or any share or part of or interest in a mortgage loan which is not subordinate to any share or part thereof or interest therein held by any other person.

A savings bank may sell, assign or otherwise dispose of a share or part of or interest in a mortgage loan held by it to any other person.

2. For all purposes of compliance with the applicable provisions and restrictions of subsections D. and G. of this section as to the percentage of the mortgage loan to the appraised value of the mortgaged property, and the term of and rate of amortization of such loan, the date of the acquisition by a savings bank of a mortgage loan or a share or part thereof or interest therein shall, as respects such savings bank, be deemed to be the date as of which the mortgage loan was made and the unpaid amount of the principal then due shall be deemed to be the amount of such mortgage loan.

B. No savings bank shall make a mortgage loan at any time when the total cost of acquisition by the savings bank of all real property owned by it, other than real property held for the purposes specified in subparagraph (a) of paragraph (5) of section 24, and the total of all principal balances owing to the savings bank on mortgage loans, less all write-offs and reserves with respect to such real property and mortgage loans, together exceeds, or by the making of such loan will exceed, 80% of its deposits. For the purposes of this subsection, principal balances owing on mortgage loans made pursuant to subsection Q.(1) of this section shall, only to the extent of the unguaranteed portion of such balances, and loans made pursuant to subsection Q.(2) of this section shall, only to the extent of 50% of such balances, be included in the total of all principal balances owing to the savings bank on mortgage loans; and for the purposes of this subsection, principal balances owing on mortgage loans made by the use of funds received by the bank pursuant to the provisions of the "New Jersey Housing and Mortgage Finance Agency Law of 1983," P.L.1983, c.530 (C.55:14K-1 et seq.), shall, only to the extent of 50% of such balances, be included in the total of all principal balances, owing to the savings bank on mortgage loans.

C. In the event that the real property offered as security for a mortgage loan is subject to one or more prior mortgage liens, the maximum amount of a mortgage loan which may be made pursuant to this section shall be reduced by the total amount of the mortgage loan or loans outstanding which are secured by the prior mortgage lien or liens, except that, if any prior mortgage lien or liens secure a line, or lines, of credit, the maximum amount of mortgage loan which may be made pursuant to this section shall be reduced by the total amount that may be borrowed under the line, or lines, of credit.

D. When the real property offered as security for a mortgage loan consists of a lot of land, or, in the case of condominiums, an interest in a lot of land, upon which there is one or more one-, two-, three-, or four-family dwellings including appropriate garages or other outbuildings, if any, or upon which such dwelling or dwellings, garages or outbuildings are in the course of construction or are to be constructed, the amount of the mortgage loan shall not exceed 90% of the appraised value of the real property; provided, however, where mortgage guaranty insurance is issued incident to such loan pursuant to the provisions of the Mortgage Guaranty Insurance Act, P.L.1968, c.248 (C.17:46A-1 et seq.), the amount of the mortgage loan shall not exceed 95% of the appraised value of the real property.

E. (Deleted by amendment.)

F. (Deleted by amendment.)

G. When the real property offered as security for a mortgage loan consists of a lot of land upon which there is a building or buildings other than dwellings of the nature described in subsection D. of this section, or upon which such other buildings are in the course of construction, or are to be constructed, or when such land is paved for parking lot purposes, the amount of the mortgage loan shall not exceed 80% of appraised value of such real property. The instrument evidencing a mortgage loan made pursuant to this subsection shall require that the loan be repaid in full in not more than 30 years and one month from the date it is made; and (a) if the amount of such loan, when made, exceeds 50%, of the appraised value of the real property, that payment shall be made in reduction thereof at least semiannually, at an annual rate equal to at least 1% of the original amount of such loan; or (b) if the amount of such loan, when made, does not exceed 50% of the appraised value of the real property, that payments shall be made in reduction thereof at least semiannually, at an annual rate equal to at least 1/2% of the original amount of such loan; provided, that, in lieu of such principal payments, the instrument evidencing any mortgage loan may require equal monthly payments each applicable to principal and interest in an amount sufficient to pay current interest and to repay the amount of the loan in not more than 30 years and one month from its date. When, however, the amount of such loan does not, when made, exceed 50% of the appraised value of such real property, and the instrument evidencing such loan requires that it be paid in full in not more than five years and one month from the date it is made, the instrument need not require that any payment be made in reduction of such loan prior to its maturity date. Notwithstanding the limitations prescribed by subsection D. and hereinabove in this section, a savings bank may make a mortgage loan secured by a lot of land or two or more lots of land, contiguous or not, upon each of which there is a building or buildings, or upon each of which a building or buildings are in the course of construction or are to be constructed. The limitations of this section governing the term of the loan, rate of amortization, and the percentage of the mortgage loan to the appraised value of each type of building, including land, shall apply. No loans shall be made under subsection D. or G. hereof to any one person or on any one property if the loans shall exceed 15% of the surplus, undivided profits, and reserves of the savings bank, or $50,000.00, whichever is greater.

H. When the real property offered as security for a mortgage loan is of the nature described in subsection D. of this section, and the amount of the loan does not exceed 66 2/3% of the appraised value of such real property, the instrument evidencing such loan shall be sufficient if it conforms to the requirements of subsection G. of this section.

I. A mortgage loan may be made for the purpose of enabling a borrower to construct a building or buildings upon real property owned by him, and, in such a case, the appraised value of the real property shall include the value of the building or buildings to be constructed, but at no time shall a greater sum be advanced on account of such loan than, in the opinion of (1) the appraisers hereinafter provided for, or (2) one of such appraisers and an officer of the savings bank designated for that purpose by the board of managers, is warranted by the state of completion of the buildings in process of construction. For the purposes of compliance with the applicable requirements of subsection G. of this section as to the term of and the rate of amortization of a loan made pursuant to this section, such loan shall be deemed to have been made when the final advance shall be made to the borrower on such loan, or 60 months from the date of the mortgage securing such loan, whichever is earlier.

J. When the real property offered as security for a mortgage loan consists of unimproved land, and the proceeds of the mortgage loan are not to be used to construct a building on the land, the amount of the loan shall not exceed 50% of the appraised value of the real property. When the real property offered as security for a mortgage loan consists of unimproved land, and the proceeds of the loan are to be used for improvements to the land, the amount of such loan shall not exceed 75% of the appraised value of such real property. The instrument evidencing a loan made pursuant to this subsection shall require that such loan be paid in full in not more than 10 years and one month from the date it is made. No loan made pursuant to this subsection shall exceed $10,000.00, or 3/10 of 1% of the deposits of the savings bank, whichever is greater; nor shall any loan be made at any time when the total of all such loans exceeds, or if the making of such loan would cause such total to exceed 2% of the deposits of the savings bank.

K. No mortgage loan shall be made except upon a written certification signed by at least two persons, each of whom shall be either a manager of the bank or an appraiser appointed by its board of managers. In the case of a mortgage loan secured by a mortgage upon real property, such certification shall state the opinion of such persons as to the value of the land and the improvements thereon or to be erected thereon and the character of such improvements. In the case of a mortgage loan secured by a mortgage upon a lease of the fee of real property, such certification shall state the opinion of such person as to the value of the leasehold interest to be subject to the mortgage, including the leasehold interest in the improvements erected or to be erected upon the leased property and the character of such improvements. Such certification shall be filed with the records of the bank, and shall be preserved until the savings bank has no interest, as mortgagee or otherwise, in the real property.

L. Purchase money mortgage loans made by a savings bank on the sale of real property owned by it shall not be subject to the preceding subsections or to subsection P. of this section, except that such loans shall be included in determining whether the total amount of mortgage loans held by a savings bank exceeds 80% of its deposits.

M. No savings bank shall make a mortgage loan secured by a mortgage upon a lease of the fee of real property unless

(1) The leased property is located within this State or, if outside this State, the leased property is located within 50 miles of the border of this State;

(2) The leased property shall consist of improved real property, including farmlands, or unimproved real property if the proceeds of such loan shall be used for the purpose of erecting improvements thereon;

(3) The mortgage securing such loan shall constitute a first lien on a lease of the fee of real property, which fee is not subject to any prior lien; the fee shall be deemed not subject to any prior lien [notwithstanding the existence of liens of taxes which are not delinquent] , except for municipal liens, notwithstanding a lien of a condominium association for up to six months of customary condominium assessments pursuant to section 21 of P.L.1969, c.257 (C.46:8B-21), building restrictions or other restrictive covenants or conditions, joint driveways, sewer rights, rights in walls, rights-of-way or other easements, or encroachments, which the persons signing the certificate provided for in subsection K. of this section report in their opinion do not materially affect the security for the mortgage loan. Every mortgage shall be certified to be such a first lien by an attorney-at-law of the state in which the real property is located, or certified or guaranteed to be such a first lien by a corporation authorized to guarantee titles to land in such state;

(4) Such loan shall not exceed 66 2/3% of the appraised value of the leasehold interest subject to the mortgage, including the leasehold interest in the improvements erected upon the mortgaged property, or to be erected thereon wholly or partly with the proceeds of the mortgage loan; and

(5) The instrument evidencing the loan shall require that payment be made on account of the principal amount of such loan at an annual rate sufficient to repay such loan not later than one year prior to the expiration of the lease;

(6) Notwithstanding the foregoing, the terms of the loan are authorized for an association pursuant to subsections C. and D. of section 155 of the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-155).

N. The instrument evidencing a mortgage loan may be in such form, and may contain such provisions, not inconsistent with law, as the savings bank may choose to insert for the protection of its lien and the preservation of its interest in the real property mortgaged to it.

O. Notwithstanding the limitations prescribed by the preceding subsections or by subsection P. of this section, a savings bank may

(1) For the purposes of preventing or mitigating loss, or of preserving the lien of its mortgage, or of conserving the value of the real property affected by its mortgage, (a) extend the time for the payment of principal or interest, (b) modify or waive any of the terms or conditions of the instrument evidencing a mortgage loan, (c) settle or compromise all or part of the amount due or to grow due on a mortgage loan, (d) sell or assign the mortgage loan, or a share or part thereof or interest therein, for such consideration as it shall deem proper, and (e) advance funds for the payment of any tax, lien, charge or claim whatsoever; and

(2) Make a loan in addition to an existing mortgage loan or loans held by it, upon the security of the same real property and secured by the existing mortgage or mortgages, in an amount not to exceed the difference between the balance due on the existing mortgage or mortgages and the original amount thereof; provided, however, that no such additional loan shall be made which shall increase the total amount due upon such mortgages over the amount which could be loaned upon the security of such real property. Such additional loan shall be repaid in equal monthly installments, beginning within one year from the date of such loan, with the payments adjusted so that the additional loan shall be repaid in full either before or at the maturity of the existing mortgage. If the unexpired term of such mortgage or mortgages shall have been reduced to 15 years or less, such term may be extended for an additional period of not more than 15 years. Adjustment of payments and extension of mortgage terms pursuant to this section shall comply with the provisions of subsection G. or H. of this section. If so provided in the original mortgage or a supplement or amendment thereto, persons who acquire any rights in or liens upon the mortgaged real property subsequent to the recording of the original mortgage or such supplement or amendment, as the case may be, shall hold such rights and liens subject to the prior lien of the original mortgage and such supplement or amendment, if any, as security for such additional loan; and in such case, no title certificate or insurance under subsection C. of this section shall be required with respect to such additional loan.

P. Except as otherwise provided by this section, no savings bank shall make a mortgage loan if the making of such loan would cause the total of all unpaid balances of such loans held by the savings bank upon the security of the same real property or leasehold, to exceed the limitations imposed by this section upon the amount of a mortgage loan which may be made upon the security of such real property or such leasehold.

Q. A savings bank may invest in

(1) (a) Veterans' loans, wherever located, made pursuant to Title III of the Act of Congress of June 22, 1944, known as the "Servicemen's Readjustment Act of 1944," as amended, supplemented, revised, or recodified from time to time, which the Administrator of Veterans' Affairs or other officer or agency which succeeds to his powers and functions under said act has insured or guaranteed or has made a commitment to insure or guarantee, to the extent and in the manner provided in said act or the regulations made thereunder; and

(b) Veterans' loans, wherever located, made and insured or guaranteed in part as provided in paragraph (1)(a) of this subsection of this section, and, as to the balance thereof, insured or guaranteed by an insurer or guarantor named or described in paragraph (2) of this subsection of this section.

(c) Mortgages or deeds of trust or other securities made pursuant to paragraph (1)(a) of this subsection of this section shall not be subject to the provisions and restrictions of this section, except that they shall be included in determining whether total mortgage investments are within the limitation prescribed by subsection B. of this section, provided, however, that said mortgages or deeds of trust or other securities shall not be subject to the provisions of any law of this State prescribing or limiting the interest which may be taken upon such loans or investments.

(2) (a) Mortgages or deeds of trust or other securities of the character of mortgages which are first liens on the fee of real property or a lease of the fee of real property, wherever located, which (i) the United States, or (ii) the Federal Housing Commissioner under the Act of Congress of June 27, 1934, known as the "National Housing Act," 48 Stat. 1246 (12 U.S.C. 1701 et seq.) as amended, supplemented, revised or recodified from time to time, or other officer or agency which succeeds to his powers and functions, or (iii) the State of New Jersey or an officer or agency thereof, or (iv) any other officer or agency of the United States or of this State which the commissioner shall have approved for the purposes of this section as an insurer or guarantor, has fully insured or guaranteed or made a commitment to fully insure or guarantee.

(b) Mortgages or deeds of trust or other securities made pursuant to paragraph (2)(a) of this subsection of this section shall not be subject to the provisions and restrictions of this section, except that they shall be included in determining whether total mortgage investments are within the limitation prescribed by subsection B. of this section, provided, however, that said mortgages or deeds of trust or other securities shall not be subject to the provisions of any law of this State prescribing or limiting the interest which may be taken upon such loans or investments.

R. The commissioner may, from time to time, make, alter and rescind regulations:

(1) Authorizing savings banks to make mortgage loans or specified types or classes of mortgage loans (a) which exceed the specified percentages of the appraised value of the mortgaged property; (b) which mature later than the specified periods from their date; (c) which require smaller annual payments on account of the principal amounts thereof than those specified in this section; (d) which provide for equal monthly payments each applicable to principal and interest in amounts sufficient to pay current interest on and to repay the amount of the loan in such number of years more than 40, but not more than 45, as the regulation may specify; or (e) which substantially conform to the terms and conditions of mortgage loans authorized to be made by associations pursuant to the "Savings and Loan Act (1963)," P.L.1963, c.144 (C.17:12B-1 et seq.);

(2) Increasing the percentage of deposits of savings banks which savings banks may invest in mortgage loans;

(3) Increasing the percentage of principal balances owing on mortgage loans referred to in subsection Q. which shall not be included in the total of all principal balances owing on mortgage loans for the purpose of subsection B.; or

(4) Eliminating entirely the principal balances owing on such mortgage loans from such total of all principal balances.

S. Notwithstanding the provisions of this section, a savings bank may make a mortgage loan in excess of the ratio between appraised value and the amount of the loan as such ratio is established herein, provided that such excess is secured by other collateral having a value at all times at least equal to the amount of the principal balance in excess of the amount permitted by subsection G., H., J., or M., of this section or as established by regulation of the Commissioner of Banking.

(cf: P.L.1995, c.354, s.2)

3. Section 11 of P.L.1963, c.144 (C.17:12B-11) is amended to read as follows:

11. A mortgage upon real property or a mortgage upon a lease of the fee of real property shall be deemed a first lien as follows:

(a) A mortgage upon real property shall be deemed a first lien not subject to any prior lien, except for municipal liens, notwithstanding the existence of a prior mortgage or mortgages held by the association, [or liens of taxes or assessments which are not delinquent] a lien of a condominium association for up to six months of customary condominium assessments pursuant to section 21 of P.L.1969, c.257 (C.46:8B-21), building restrictions or other restrictive covenants or conditions, leases or tenancies whereby rents or profits are reserved to the owner, joint driveways, sewer rights, rights in walls, rights-of-way or other easements, or encroachments which do not materially affect the security for the mortgage loan.

(b) A mortgage upon a lease of the fee of real property shall be deemed a first lien [notwithstanding the existence of liens of taxes or assessments which are not delinquent] not subject to any prior lien, except for municipal liens, notwithstanding the existence of building restrictions or other restrictive covenants or conditions, joint driveways, sewer rights, rights in walls, rights-of-way or other easements, or encroachments which do not materially affect the security for the mortgage loan.

(c) A mortgage upon an apartment which is part of a horizontal property regime, established under the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.) or upon a unit which is part of a condominium established pursuant to the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.) shall be deemed a first lien not subject to any prior lien, except for municipal liens, notwithstanding the existence of other proportionate undivided interests in the "general common elements" or "common elements" of such horizontal property regime or condominium, as the case may be, as the same are defined in the "Horizontal Property Act," and the "Condominium Act," respectively, and notwithstanding the indivisibility of such common elements or the existence of a prior mortgage or mortgages held by the association upon such apartment or unit or the existence of a prior mortgage or mortgages on other apartments or units within the particular horizontal property regime or condominium, as the case may be, regardless of whether such prior mortgages are held by the association or any other mortgagee [and notwithstanding liens of taxes or assessments which are not delinquent], and notwithstanding the existence of building restrictions or other restrictive covenants or conditions, leases or tenancies whereby rents or profits are reserved to the owner, or other easements or encroachments which do not materially affect the security for the mortgage loan.

(d) Every mortgage shall be certified to be a first lien by an attorney at law of the state in which the real property is located, or certified or guaranteed to be a first lien by a corporation authorized to guarantee titles to real property in such state.

(cf: P.L.1995, c.354, s.3)

4. Section 21 of P.L.1969,c.257 (C.46:8B-21) is amended to read as follows:

21. a. The association shall have a lien on each unit for any unpaid assessment duly made by the association for a share of common expenses or otherwise, including any other moneys duly owed the association, upon proper notice to the appropriate unit owner, together with interest thereon and, if authorized by the master deed or bylaws, late fees, fines and reasonable attorney's fees; provided however that an association shall not record a lien in which the unpaid assessment consists solely of late fees. Such lien shall be effective from and after the time of recording in the public records of the county in which the unit is located of a claim of lien stating the description of the unit, the name of the record owner, the amount due and the date when due. Such claim of lien shall include only sums which are due and payable when the claim of lien is recorded and shall be signed and verified by an officer or agent of the association. Upon full payment of all sums secured by the lien, the party making payment shall be entitled to a recordable satisfaction of lien. Except as set forth in subsection b. of this section, all such liens shall be subordinate to any lien for past due and unpaid property taxes, the lien of any mortgage to which the unit is subject and to any other lien recorded prior to the time of recording of the claim of lien.

b. A lien recorded pursuant to subsection a. of this section shall have a limited priority over prior recorded mortgages and other liens, [other than liens for unpaid property taxes] , except for municipal liens or liens for federal taxes, to the extent provided in this subsection. This priority shall be limited as follows:

(1) To a lien which is the result of customary condominium assessments as defined herein, the amount of which shall not exceed the aggregate customary condominium assessment against the unit owner for the six-month period prior to the recording of the lien.

(2) With respect to a particular mortgage, to a lien recorded prior to: (a) the receipt by the association of a summons and complaint in an action to foreclose a mortgage on that unit; or (b) the filing with the proper county recording office of a lis pendens giving notice of an action to foreclose a mortgage on that unit.

(3) In the case of more than one association lien being filed, either because an association files more than one lien or multiple associations have filed liens, the total amount of the liens granted priority shall not be greater than the assessment for the six-month period specified in paragraph 1 of this subsection. Priority among multiple filings shall be determined by their date of recording with the earlier recorded liens having first use of the priority given herein.

(4) The priority granted to a lien pursuant to this subsection shall expire on the first day of the 60th month following the date of recording of an association's lien.

(5) A lien of an association shall not be granted priority over a prior recorded mortgage or mortgages under this subsection if a prior recorded lien of the association for unpaid assessments has obtained priority over the same recorded mortgage or mortgages as provided in this subsection, for a period of 60 months from the date of recording of the lien granted priority.

(6) When recording a lien which may be granted priority pursuant to this act, an association shall notify, in writing, any holder of a first mortgage lien on the property of the filing of the association lien. An association which exercises a good faith effort but is unable to ascertain the identity of a holder of a prior recorded mortgage on the property will be deemed to be in substantial compliance with this paragraph.

For the purpose of this section, a "customary condominium assessment" shall mean an assessment for periodic payments, due the association for regular and usual operating and common area expenses pursuant to the association's annual budget and shall not include amounts for reserves for contingencies, nor shall it include any late charges, penalties, interest or any fees or costs for the collection or enforcement of the assessment or any lien arising from the assessment. The periodic payments due must be due monthly, or no less frequently than quarter-yearly, as may be acceptable to the Federal National Mortgage Association so as not to disqualify an otherwise superior mortgage on the condominium from purchase by the Federal National Mortgage Association as a first mortgage.

c. Upon any voluntary conveyance of a unit, the grantor and grantee of such unit shall be jointly and severally liable for all unpaid assessments pertaining to such unit duly made by the association or accrued up to the date of such conveyance without prejudice to the right of the grantee to recover from the grantor any amounts paid by the grantee, but the grantee shall be exclusively liable for those accruing while he is the unit owner.

d. Any unit owner or any purchaser of a unit prior to completion of a voluntary sale may require from the association a certificate showing the amount of unpaid assessments pertaining to such unit and the association shall provide such certificate within 10 days after request therefor. The holder of a mortgage or other lien on any unit may request a similar certificate with respect to such unit. Any person other than the unit owner at the time of issuance of any such certificate who relies upon such certificate shall be entitled to rely thereon and his liability shall be limited to the amounts set forth in such certificate.

e. If a mortgagee of a first mortgage of record or other purchaser of a unit obtains title to such unit as a result of foreclosure of the first mortgage, such acquirer of title, his successors and assigns shall not be liable for the share of common expenses or other assessments by the association pertaining to such unit or chargeable to the former unit owner which became due prior to acquisition of title as a result of the foreclosure. Any remaining unpaid share of common expenses and other assessments, except assessments derived from late fees or fines, shall be deemed to be common expenses collectible from all of the remaining unit owners including such acquirer, his successors and assigns.

f. Liens for unpaid assessments may be foreclosed by suit brought in the name of the association in the same manner as a foreclosure of a mortgage on real property. The association shall have the power, unless prohibited by the master deed or bylaws to bid on the unit at foreclosure sale, and to acquire, hold, lease, mortgage and convey the same. Suit to recover a money judgment for unpaid assessments may be maintained without waiving the lien securing the same.

(cf: P.L.1996, c.79, s.5)

5. R.S.54:4-65 is amended to read as follows:

54:4-65. a. The Director of the Division of Local Government Services in the Department of Community Affairs shall approve the form and content of property tax bills.

b. Each tax bill shall have printed thereon a brief tabulation showing the distribution of the amount raised by taxation in the taxing district, in such form as to disclose the rate per $100.00 of assessed valuation or the number of cents in each dollar paid by the taxpayer which is to be used for the payment of State school taxes, other State taxes, county taxes, local school expenditures and other local expenditures. The last named item may be further subdivided so as to show the amount for each of the several departments of the municipal government. In lieu of printing such information on the tax bill, any municipality may furnish the tabulation required hereunder and any other pertinent information in a statement accompanying the mailing or delivery of the tax bill. There shall be included on or with the tax bill the delinquent interest rate or rates to be charged and any end of year penalty that is authorized.

c. The appropriate tax bill or form mailed with the tax bill shall also contain a statement reporting amounts of State aid and assistance received by the municipality, school districts, special districts and county governments used to offset local tax levies. The director shall provide each tax collector with a certification of the amounts of said State aid and assistance for inclusion in the tax bill.

d. The tax bill or form mailed with the tax bill shall include thereon the date upon which each installment is due.

(cf: P.L.1994, c.32, s.2)

6. R.S.54:4-66 is amended to read as follows:

54:4-66. a. Taxes for municipalities operating under the calendar fiscal year shall be payable the first installment as hereinafter provided on February 1, the second installment on May 1, the third installment on August 1 and the fourth installment on November 1, after which dates if unpaid, they shall become delinquent and remain delinquent until such time as all unpaid taxes, including taxes and other liens subsequently due and unpaid, together with interest have been fully paid and satisfied;

b. From and after the respective dates hereinbefore provided for taxes to become delinquent, the taxpayer or property assessed shall be subject to the interest and penalties hereinafter prescribed;

c. The dates hereinbefore provided for payment of the first and second installments of taxes being before the true amount of the tax will have been determined, the amount to be payable as each of the first two installments shall be one-quarter of the total tax finally levied against the same property or taxpayer for the preceding year or, if directed to do so for the tax year by resolution of the municipal governing body, one-half of the tax levied for the second half of the preceding tax year, as appropriate; and the amount to be payable for the third and fourth installments shall be the full tax as levied for the current year, less the amount charged as the first and second installments; the amount thus found to be payable as the last two installments shall be divided equally for and as each installment. An appropriate adjustment by way of discount shall be made, if it shall appear that the total of the first and second installments exceeded one-half of the total tax as levied for the year;

d. (Deleted by amendment, P.L.1994, c.72).

e. Taxes may be received and credited as payments at any time, even prior to the dates hereinbefore fixed for payment, from the property owners, their agents or lien holders; however, no interest shall accrue until the delinquency date. Up to and including the payment date for each quarter, priority of payment shall be given to the property owner when third party tax liens exist against the property.

(cf: P.L.1994, c.72, s.1)

7. Section 2 of P.L.1994, c.72 (C.54:4-66.1) is amended to read as follows:

2. Taxes in municipalities operating under the State fiscal year shall be payable and shall be delinquent pursuant to the following provisions:

a. Taxes shall be payable the first installment as hereinafter provided on February 1, the second installment on May 1, the third installment on August 1 and the fourth installment on November 1, after which dates if unpaid, they shall become delinquent and remain delinquent until such time as all unpaid taxes, including taxes and other liens subsequently due and unpaid, together with interest have been fully paid and satisfied;

b. From and after the respective dates hereinbefore provided for taxes to become delinquent, the taxpayer or property assessed shall be subject to the penalties hereinafter prescribed;

c. The following terms and phrases shall have the meaning defined below when calculating taxes under this section:

"Assessed value" means the net valuation taxable of each parcel of property in a municipality in the current tax year.

"Billing percentage" is used to calculate the amount required to meet municipal and non-municipal fiscal obligations for the first six months of the calendar year.

"Calendar year" means the current calendar year.

"Certification of tax billing levies" is the form and associated procedures promulgated by the director on which the tax collector calculates the appropriate billing amounts for the first and second installments of the calendar year.

"Director" means the director of the Division of Local Government Services.

"Municipal tax levy" means the tax levy set in the municipal budget for the current fiscal year.

"Non-municipal tax levy" means the total of all of the tax levies certified by the county board of taxation for non-municipal purposes for the calendar year.

"Preliminary municipal tax levy" is the amount certified by the governing body for the purposes of third and fourth installment municipal tax levy.

"Prior year" means the calendar year just previous to the quarters being billed.

"Six month required non-municipal tax levy" means the amount necessary to be paid by the municipality to the county and non-municipal taxing districts for the first six months of the calendar year.

"Total adjusted prior year taxes" means the prior year taxes billed after adjustments are made to incorporate changes to tax bills between tax billings.

"Total assessed value" means the total net valuation taxable for the municipality pursuant to the most recent Table of Aggregates promulgated by the County Board of Taxation.

d. The following formulas shall be utilized in calculating the taxes for each parcel or property:

(1) the municipal rate shall be the preliminary municipal tax levy divided by the total assessed value per one hundred dollars of assessed valuation.

(2) the non-municipal rate shall be the non-municipal tax levy divided by the total assessed value per one hundred dollars of assessed value.

(3) "Municipal billing percentage" shall be the municipal tax levy less the sum of the adjusted taxes billed for the prior year third and fourth installments, divided by the total adjusted prior year taxes.

(4) "Non-municipal billing percentage" shall be calculated by dividing the six month required non-municipal tax levy by the total adjusted prior year taxes.

e. Taxes for each parcel or property shall be calculated as follows: (1) The tax collector shall prepare the certification of tax billing levies and calculate the first and second installments by computing the municipal portion, which shall be the municipal billing percentage multiplied by the total adjusted prior year taxes; and then the non-municipal portion, which shall be the non-municipal billing percentage multiplied by the total adjusted prior year taxes. The sum of the two shall be divided in half for each installment. A copy of the certification shall be filed with the director and the county board of taxation.

(2) The third and fourth installments shall be calculated by computing the municipal portion, which shall be the product of the municipal rate times the total assessed value per one hundred dollars of assessed value, and subtracting the taxes billed for the previous first and second installments; and then the non-municipal portion which shall be the product of the non-municipal rate times the total assessed value per one hundred dollars of assessed value, and subtracting the taxes billed for the previous first and second installments. The sum of the two shall be divided in half for each installment.

f. Taxes may be received and credited as payments at any time, even prior to the dates hereinabove fixed for payment, from the property owners, their agents or lien holders; however, no interest shall accrue until the delinquency date. Up to and including the payment date for each quarter, priority of payment shall be given to the property owner when third party tax liens exist against the property.

(cf: P.L.1994, c.72, s.2)

8. R.S.54:4-67 is amended to read as follows:

54:4-67. a. The governing body of each municipality may by resolution fix the rate of discount to be allowed for the payment of taxes or assessments previous to the date on which they would become delinquent. The rate so fixed shall not exceed 6% per annum, shall be allowed only in case of payment on or before the thirtieth day previous to the date on which the taxes or assessments would become delinquent. The governing body may also fix the rate of interest to be charged for the nonpayment of taxes [or], assessments, or other municipal liens or charges, unless otherwise provided by law, on or before the date when they would become delinquent, and may provide that no interest shall be charged if payment of any installment is made within the tenth calendar day following the date upon which the same became payable. The rate so fixed shall not exceed 8% per annum on the first $1,500.00 of the delinquency and 18% per annum on any amount in excess of $1,500.00, to be calculated from the date the tax was payable until the date that actual payment to the [lienholder will be next authorized] tax collector is made. Additionally, the governing body may establish, by resolution, a single delinquency rate not to exceed 18% per annum.

b. In any year when the governing body changes the rate of interest to be charged for delinquent taxes, assessments or other municipal charges, or to be charged for the end of the year penalty, the governing body, after adoption of a resolution changing the rate of interest, shall provide a notice to all taxpayers, prior to the date taxes are next due or with the tax bill, stating the new rate or rates to be charged and the date that the new rate or rates take effect. The notice may be separate from the tax bill. A copy of the notice shall be filed with the Director of the Division of Local Government Services in the Department of Community Affairs. No change in the rate of interest or the end of year penalty shall take effect until the required notice has been provided and filed in accordance with this subsection.

"Delinquency" means the sum of all taxes and municipal charges due on a given parcel of property covering any number of quarters or years. The property shall remain delinquent, as defined herein, until such time as all unpaid taxes, including subsequent taxes and liens, together with interest thereon shall have been fully paid and satisfied. The delinquency shall remain notwithstanding the issuance of a certificate of sale pursuant to R.S.54:5-32 and R.S.54:5-46, and for the purposes of satisfying the requirements for filing any tax appeal with the county board of taxation or the State tax court. The governing body may also fix a penalty to be charged to a taxpayer with a delinquency in excess of $10,000 who fails to pay that delinquency as billed, prior to the end of the fiscal year. If [such taxes are fully] any fiscal year delinquency in excess of $10,000 is paid [and satisfied] by the holder of an outstanding tax sale certificate, the holder shall be entitled to receive the amount of the penalty as part of the amount required to redeem such certificate of sale providing the payment is made by the tax lien holder prior to the end of the fiscal year. If the holder of the outstanding tax sale certificate does not make the payment in full prior to the end of the fiscal year, then the holder shall be entitled to a pro rata share of the delinquency penalty upon redemption, and the balance of the penalty shall inure to the benefit of the municipality. The penalty so fixed shall not exceed 6% of the

amount of the delinquency with respect to each most recent fiscal year only.

(cf: P.L.1994, c.32, s.4)

9. R.S.54:5-19 is amended to read as follows:

54:5-19. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on [April first] the 11th day of the 11th month in the fiscal year [following the fiscal year] when the same became in arrears, [or, in the case of municipalities that operate on the State fiscal year, on October first in the fiscal year following the fiscal year when the same became in arrears,] the collector or other officer charged by law in the municipality with that duty, shall, subject to the provisions of the next paragraph, enforce the lien by selling the property in the manner set forth in this article.

The term "collector" as hereinafter used includes any such officer, and the term "officer" includes the collector.

The municipality may by resolution direct that [where] when unpaid taxes or other municipal liens or charges, or part thereof, are in arrears [for more than one year] as of the 11th day of the 11th month of the fiscal year, such sale shall include only such unpaid taxes or other municipal liens or charges as were in arrears in the fiscal year designated in such resolution, and may by resolution, either general or special, direct that there shall be omitted from such sale any or all such unpaid taxes, and other municipal liens, or parts thereof, on real property, upon which regular, equal monthly installment payments are being made, in pursuance to such agreement as may be authorized by said resolution between the collector and the owner or person interested in the property upon which such delinquent taxes may be due; provided, that said agreement shall require payment of such installment payments in amounts large enough to pay in full all delinquent taxes, assessments and other municipal liens held by the municipality, in not more than five years from the date of such agreement; provided, that the extension of time for payment of such arrearages herein authorized shall not apply to any parcel of property which prior thereto has been included in any plan theretofore adopted by any municipality of this State under and pursuant to the provisions of any public statute of this State whereunder prior extensions for the payment of delinquent taxes were authorized; provided further, that the right of any person interested in such property to pay such arrears in such installments shall be conditioned on the prompt payment of the installments of taxes for the current year in which such agreement is made, and all subsequent taxes, assessments and other municipal liens imposed or becoming a lien thereafter, including all installments thereafter payable on assessments theretofore levied, and also the prompt payment of all installments of arrears as hereinbefore authorized; and provided further, that in case any such installment of arrears or any new taxes, assessments or other liens are not promptly paid, that is to say, within thirty days after the date when the same is due and payable, then such agreement shall be void, and in any such case the collector, or other officer charged by law with that duty, shall proceed to enforce such lien by selling in the manner in this article provided.

(cf: P.L.1991, c.75, s.43)

10. R.S.54:5-26 is amended to read as follows:

54:5-26. Copies of the notice of a tax sale shall be set up in five of the most public places in the municipality, and a copy of the notice shall be published in a newspaper circulating in the municipality, once in each of the four calendar weeks preceding the calendar week containing the day appointed for the sale. In lieu of any two publications, notice to the property owner may be given by mail, the costs of which shall be added to the cost of the sale in addition to those provided in R.S.54:5-38 not to exceed $25 for each notice. If ordinances of the municipality are required to be published in any special newspaper or newspapers, the notice shall be published therein.

(cf: R.S.54:5-26)

11. R.S.54:5-47 is amended to read as follows:

54:5-47. The certificate shall be substantially in the following form:

"I, .................................... , collector of taxes of ................................................ (name of municipality), hereby certify that on ......................................, 19........ , I sold to ................................. for ........................................... dollars, the lands in the municipality described as ........................................ on the tax duplicate of the municipality, and assessed thereon to .................................. as owner (followed by amplified description if desired). The amount of sale was made up of the following items (followed by the items, including interest and costs). The sale is subject to redemption on repayment of the amount of the sale, together with interest thereon at the rate of ................... per cent per annum from the date of sale, and the costs incurred by the purchaser. The sale is subject only to municipal liens accruing after .................................... (insert date of last item of taxes or assessment for which sale is made). [The right to redeem will expire in six months after the service of notice to redeem, except that the right to redeem shall extend for six months from the date of sale when the municipality is the purchaser and extend for two years from the date of sale for all other purchasers.]

"Witness my hand and seal this ...................................... day of ....................... , 19 (Followed by acknowledgment)."

(cf: P.L.1991, c.75, s.47)

12. Section 1 of P.L.1940, c.90 (C.54:5-52.1) is amended to read as follows:

1. In case of the destruction or loss of a tax title certificate which was [acquired] issued by any municipality in this State at a tax sale held in that municipality [and the said municipality is the lawful owner thereof], the collector of taxes, the receiver of taxes, or the person lawfully charged with the collection of taxes in said municipality shall issue and execute a new certificate of tax sale in place of the one which has been destroyed or lost; provided, he or she shall have been duly authorized so to do by a resolution of the governing body of the said municipality[; and provided, further, said original tax sale certificate had been issued at least two years prior thereto]. There shall appear on the new certificate a statement that it is a duplicate of the original one which was destroyed or lost and the date of said original certificate and the date of the tax sale upon which it was issued and the name and title of officer who issued same. The municipality may charge a fee not to exceed $100 for the duplicate certificate.

(cf: P.L.1940, c.90, s.1)

13. R.S.54:5-54 is amended to read as follows:

54:5-54. Except as hereinafter provided, the owner, his heirs, holder of [a prior] any prior outstanding tax lien certificate, mortgagee, or occupant of land sold for municipal taxes, assessment for benefits pursuant to R.S.54:5-7 or other municipal charges, may redeem it at any time until the right to redeem has been cut off in the manner in this chapter set forth, by paying to the collector, or to the collector of delinquent taxes on lands of the municipality where the land is situate, for the use of the purchaser, his heirs or assigns, the amount required for redemption as hereinafter set forth.

(cf: P.L.1994, c.32, s.8)

14. R.S.54:5-55 is amended to read as follows:

54:5-55. The collecting officer on receiving payment in full shall[, except as provided in section 54:5-56 of this title,] execute and deliver to the person redeeming a certificate of redemption which may be recorded with the register of deeds, or if there is no register, with the county clerk. The county clerk or register, as the case may be, shall, on request, note on the record of the original certificate of sale a reference to the record of the certificate of redemption, and shall be entitled therefor to the same fees as provided respectively for the cancellation of mortgages and for the record of discharges thereof, or, at the option of the person redeeming, the collecting officer shall procure and deliver to the owner the certificate of sale receipted for cancellation by indorsement in the same manner required by law to satisfy or cancel a mortgage, whereupon the record of the certificate of sale shall be canceled by the county clerk or register, as the case may be, in the same manner and for the same fees as in the case of mortgages.

(cf: R.S.54:5-55)

15. R.S.54:5-57 is amended to read as follows:

54:5-57. a. The collecting officer shall at once, on receipt of the redemption money, mail notice thereof to the purchaser, if his address can be ascertained, and shall pay all redemption moneys to him or his assigns on his surrender of the certificate of sale and compliance with the provisions of [sections] section 54:5-55 [and 54:5-56] of this title.

b. Notwithstanding any provision of the "Uniform Unclaimed Property Act (1981)," R.S.46:30B-1 et seq., when the holder of a tax sale certificate for which a redemption amount has been paid to the collecting officer has not claimed that redemption amount within a five-year period from the date of notice to the holder sent by certified mail, return receipt requested, all sums due to the holder shall escheat to the State and 75% of that sum shall be retained by the municipality holding the funds and the remaining 25% shall be forwarded to the Treasurer of the State of New Jersey pursuant to rules and regulations promulgated by the Division of Local Government Services in the Department of Community Affairs in consultation with the State Treasurer. Notice shall be deemed to have been given for the purposes of commencing the five-year period if the whereabouts of the holder are unknown, as verified by the return of a certified letter addressed to him at his last known address.

(cf: R.S.54:5-57)

16. R.S.54:5-58 is amended to read as follows:

54:5-58. The amount required to redeem within 10 days from and including the date of sale, unless a tax sale certificate has been duly issued, shall be the sum paid at the sale, with interest from the date of sale at the rate of redemption for which the property was sold. After 10 days from the date of sale, including the date of sale as the first day, or after issuance of the tax sale certificate, the amount required for redemption shall be that amount plus the expenses incurred by the purchaser as hereinafter provided, and subsequent municipal liens, as provided in sections 54:5-59 and 54:5-60 of this Title. Where, because of municipal fiscal restrictions imposed upon the tax collector, the transmission of the redemption sum to the purchaser is dependent upon the approval of the governing body, or other officer, of the municipality, such interest shall be computed to the time when such governing body or officer may next act with respect thereto.

(cf: P.L.1965, c.187, s.4)

17. R.S.54:5-60 is amended to read as follows:

54:5-60. If the certificate of sale is not held by the municipality, the amount required for redemption shall include all sums for subsequent taxes, municipal liens and charges, and interest and costs thereon, actually paid by the holder of the tax title or his predecessor therein, together with interest on the amount so paid at the rate or rates chargeable by the municipality, provided the holder of such title shall have made and filed with the collecting officer an affidavit showing the amount of such payment, which affidavit may be taken before such officer.

(cf: R.S.54:5-60)

18. R.S.54:5-112 is amended to read as follows:

54:5-112. When a municipality has or shall have acquired title to real estate by reason of its having been struck off and sold to the municipality at a sale for delinquent taxes or assessments, the governing body thereof may, by resolution adopted by a majority thereof by roll call, sell such real estate at private sale to such person and for such sums, not less than the amount of municipal liens charged against the same, except as provided in subsection a. of section 38 of P.L.1996, c.62 (C.55:19-57), as shall seem to be to the best interest of the municipality. Upon the adoption of the resolution and the payment of the consideration as stated therein, the officers of the governing body authorized by resolution shall make, execute, acknowledge and deliver a deed without covenants to the purchaser, which deed shall vest in the purchaser all of the right, title and interest of the municipality in the real estate therein described. The deed need not contain any recitals, except a statement of the actual consideration. Such sales shall not include real estate, title to which has been perfected by the municipality. Any and all further or additional assignments of the tax sale certificates shall be promptly recorded in the office of the county clerk or register of deeds, as the case may be, of the county wherein the real property is situate, and a photocopy of the recorded assignment shall be served upon the local tax collector by certified mail, return receipt requested. When assignments have not been recorded and served upon the tax collector, the tax collector and the municipality shall be held harmless for the payment of any redemption amounts to the holder of the tax sale certificate as appears on the records of the tax collector.

(cf: P.L.1996, c.62, s.43)

19. R.S.54:5-113 is amended to read as follows:

54:5-113. When a municipality has or shall have acquired title to real estate by reason of its having been struck off and sold to the municipality at a sale for delinquent taxes and assessments, the governing body thereof may by resolution authorize a private sale of the certificate of tax sale therefor, together with subsequent liens thereon, for not less than the amount of liens charged against such real estate, except as provided in section 2 of P.L.1993, c.113 (C.54:5-113.1) and subsection a. of section 38 of P.L.1996, c.62 (C.55:19-57). The sale shall be made by assignment executed by such officers as may be designated in the resolution. When the total amount of the municipal liens shall, at the time of the proposed sale or assignment, exceed the assessed value of the real estate as of the date of the last sale thereof for unpaid taxes and assessments, the certificates, together with subsequent liens thereon, may be sold and assigned for a sum not less than such assessed value. Any and all further or additional assignments of the tax sale certificates shall be promptly recorded in the office of the county clerk or register of deeds, as the case may be, of the county wherein the real property is situate, and a photocopy of the recorded assignment shall be served upon the local tax collector by certified mail, return receipt requested. When assignments have not been recorded and served upon the tax collector, the tax collector and the municipality shall be held harmless for the payment of any redemption amounts to the holder of the tax sale certificate as appears on the records of the tax collector.

(cf: P.L.1996, c.62, s.44)

20. Section 4 of P.L.1993, c.325 (C.54:5-113.4) is amended to read as follows:

4. Notwithstanding the provisions of any other law, rule or regulation to the contrary, a municipality may assign, pledge or transfer to the New Jersey Economic Development Authority tax sale certificates held by the municipality for property located within its boundaries, together with subsequent liens thereon, as collateral for any bonds or notes issued by the authority by or on behalf of the municipality on the same terms and conditions as set forth in section 2 of P.L.1993, c.113 (C.54:5-113.1) for any purposes permitted by law. For the purposes of this section "municipality" shall include municipalities acting jointly pursuant to section 2 of P.L.1993, c.113 (C.54:5-113.1). Any and all further or additional assignments of the tax sale certificates shall be promptly recorded in the office of the county clerk or register of deeds, as the case may be, of the county wherein the real property is situate, and a photocopy of the recorded assignment shall be served upon the local tax collector by certified mail, return receipt requested. When assignments have not been recorded and served upon the tax collector, the tax collector and the municipality shall be held harmless for the payment of any redemption amounts to the holder of the tax sale certificate as appears on the records of the tax collector.

(cf: P.L.1993, c.325, s.4)

21. Section 1 of P.L.1941, c.232 (C.54:5-114.1) is amended to read as follows:

1. In addition to any method now provided by law the governing body of any municipality may sell any certificate of tax sale held by such municipality by one of the following methods, but such sale shall not affect or impair any municipal lien subsequent to the certificate of tax sale:

(a) At public sale to the highest bidder. Such public sale shall be held after public notice of the time and place of sale, stating the description of the several lots and parcels of land covered by the certificate of sale and the name of the owner of the land as contained in the collector's list, together with the total amount required for redemption including all subsequent municipal liens with interest and costs, and stating in substance that the respective certificates of sale, not including any municipal lien subsequent thereto, will be sold to the highest bidder at said public sale, subject to confirmation by the governing body at its next regular meeting after the sale. Copies of the notice shall be set up in five of the most public places in the municipality and a copy of the notice shall be published in a newspaper circulating in the municipality once in each of two calendar weeks preceding the calendar week containing the day appointed for the sale. When the owner's name appears in the list and his post-office address is known, the collector shall mail to him at that address, postage prepaid, a copy of the notice, but failure to mail the notice shall not invalidate any proceeding hereunder. Such public sale may be adjourned once for a period not exceeding one week without readvertising; or

(b) The governing body may from time to time determine by resolution the certificates of tax sale held by such municipality which such municipality will agree to sell for an amount lower than the amount due on each such certificate of tax sale. After such determination the municipality shall give public notice set up in five of the most public places in such municipality, stating the description of the several lots and parcels of land covered by such certificate of sale and the name of the owner of the land as contained in the collector's list, together with the total amount required for redemption including all subsequent municipal liens with interest and costs, and stating in substance that the municipality will receive bids for any such certificate of sale, not including any municipal liens subsequent thereto, even though such bid be less than the amount due on such certificate of tax sale. Upon the receipt of any bid for any such certificate of sale, not including any municipal liens subsequent thereof, which the governing body may be inclined to accept, the governing body shall give public notice setting forth the amount of the bid for the certificate of sale, not including any municipal liens subsequent thereto, the description of the several lots and parcels of land covered by such certificate of sale, the name of the owner of the land as contained in the collector's list, and also the total amount which would otherwise be required for redemption, and stating in substance that the governing body will accept or reject such bid at a regular meeting of the governing body and setting forth the place, time and date of such regular meeting. A copy of this last-mentioned public notice shall be set up in five of the most public places in the municipality and a copy of the same shall be published in a newspaper circulating in the municipality at least once in the week preceding the date set for the regular meeting of the governing body at which meeting such bid will be passed upon. When the owner's name appears in the list and his post-office address is known, the collector shall mail to him at that address, postage prepaid, a copy of this last-mentioned notice, but failure to mail the notice shall not invalidate any proceeding hereunder. At the regular meeting of the governing body, as contained in said notice, the governing body may accept or reject any such bid as contained in such notice or may at such meeting accept or reject any higher bid which may then be made for said certificate of sale, not including any municipal liens subsequent thereto, by any person.

Any and all assignments of a tax sale certificate purchased pursuant to this section shall be promptly recorded in the office of the county clerk or register of deeds, as the case may be, of the county wherein the real property is situate, and a photocopy of the recorded assignment shall be served upon the local tax collector by certified mail, return receipt requested. When assignments have not been recorded and served upon the tax collector, the tax collector and the municipality shall be held harmless for the payment of any redemption amounts to the holder of the tax sale certificate as appears on the records of the tax collector.

(cf: P.L.1941, c.232, s.1)

22. Section 1 of P.L.1943, c.149 (C.54:5-114.2) is amended to read as follows:

1. The governing body of any municipality may sell any certificate of tax sale including all subsequent municipal liens held by such municipality by one of the following methods:

(a) At public sale to the highest bidder. Such sale shall be held after public notice of the time and place stating the description of the several lots and parcels of land covered by the certificate of sale, and the name of the owner of the land as contained in the collector's list, together with the total amount required for redemption including interest and costs to the date of sale and the amount of subsequent liens with interest, and stating in substance that the respective certificates of sale, including subsequent municipal liens will be sold to the highest bidder at said public sale subject to confirmation by the governing body at its next regular meeting after the sale. Copies of the notice shall be set up in five of the most public places in the municipality, and a copy of the notice shall be published in a newspaper circulating in the municipality once in each of two calendar weeks preceding the calendar week containing the day appointed for the sale. When the owner's name appears on the list and his post-office address is known, the collector shall mail to him at that address, postage prepaid, a copy of the notice, but failure to mail the notice shall not invalidate any proceedings hereunder. Such public sale may be adjourned once for a period not exceeding one month without readvertising; or

(b) The governing body may from time to time determine by resolution the certificates of tax sale including all subsequent liens held by such municipality which such municipality deems advisable to sell for an amount lower than the total amount due, together with interest and costs on the certificate of sale. After such determination the municipality shall give public notice set up in five of the most public places in such municipality, stating the description of the several lots and parcels of land covered by such certificate of sale and subsequent municipal liens and the name of the owner of the land as contained in the collector's list, together with the total amount required for redemption including all subsequent municipal liens with interest and costs and stating in substance that the municipality will receive bids for any such certificate of tax sale and subsequent municipal liens, even though such bid be less than the total amount due on such certificate of tax sale including all subsequent liens plus interests and costs. Upon the receipt of any bid which the governing body may be inclined to accept, the governing body shall give public notice setting forth the amount of the bid for the certificate of tax sale including subsequent municipal liens together with interest and costs, the description of the several lots and parcels of land covered by such certificate of sale and subsequent municipal liens, the name of the owner of the land as contained in the collector's list and also the total amount which would otherwise be required for redemption to the date of proposed sale and stating in substance that the governing body will accept or reject such bid at a regular meeting of the governing body and setting forth the place, time and date of such regular meeting. A copy of this last-mentioned public notice shall be published in a newspaper circulating in the municipality at least once in the week preceding the date set for the regular meeting of the governing body at which meeting such bid will be passed on. When the owner's name appears in the list and his post-office address is known, the collector shall mail to him at that address, postage prepaid, a copy of this last-mentioned notice, but failure to mail the notice, shall not invalidate any proceeding hereunder. At the regular meeting of the governing body, as contained in said notice, the governing body may accept or reject any such bid as contained in such notice or may at such meeting accept or reject any higher bid which may then be made by any person for said certificate of sale, including subsequent municipal liens.

(cf: P.L.1943, c.149, s.1)

23. Section 3 of P.L.1943, s.149 (C.54:5-114.4) is amended to read as follows:

3. Any and all purchasers of the tax sale certificates and subsequent municipal liens purchased, as hereinabove described, must foreclose at their own expense, the right of redemption, and record the final judgment in the county wherein the land is situate within two years from the date of the confirmation of the sale by the governing body. Any and all further or additional assignments of the tax sale certificates shall be promptly recorded in the office of the county clerk or register of deeds, as the case may be, of the county wherein the real property is situate, and a photocopy of the recorded assignment shall be served upon the local tax collector by certified mail, return receipt requested. When assignments have not been recorded and served upon the tax collector, the tax collector and the municipality shall be held harmless for the payment of any redemption amounts to the holder of the tax sale certificate as appears on the records of the tax collector.

(cf: P.L.1953, c.51, s.97)

24. This act shall take effect immediately.

STATEMENT

This bill would provide municipalities with greater flexibility in conducting tax sales and would: expand taxpayers' right to notice of delinquent interest rates, clarify the calculation of amounts required to redeem tax sale certificates, and clarify other ambiguous sections of law concerning municipal liens.

Specifically, sections 1 through 4 of the bill would amend various sections of the banking and property titles to clarify that municipal liens always have priority over mortgage and condominium liens.

Section 5 of the bill would amend R.S.54:4-65 to require that notice be given to property taxpayers, on or with the tax bill, of the municipality’s delinquent interest rate and the end of the year penalty for nonpayment of taxes. Current law does not require that such notice be given.

Sections 6 and 7 would amend R.S.54:4-66 and section 2 of P.L.1994, c.72 (C.54:4-66.1) respectively, to establish that the property owner always has priority over holders of tax liens to pay the taxes owed on a property up to and including the payment date for each quarter when third party tax liens exist against the property. These amendments are intended to clarify that a tax collector is required to accept payment from the property owner, if payment is tendered up to and including the payment date for each quarter, when both the property owner and the holder of a tax sale certificate attempt to pay quarterly taxes due.

Section 8 would amend R.S.54:4-67 to permit a municipality to establish either a single delinquency interest rate or a two-tier rate, as current law permits. This section would require that in any year when the governing body changes the delinquency interest rate or the end of the year penalty, it would be required to provide notice of the new rate and its effective date either with the tax bill or through a separate mailing before the date taxes are next due. The changes would not be effective until the notice is provided to the taxpayer and filed with the Director of the Division of Local Government Services in the Department of Community Affairs. This filing provision is intended to permit the department to compile data on all municipal interest rates and penalties in order to provide information to the Governor, Legislature and other departments.

This section would also clarify that for the purposes of the requirements for filing a tax appeal, a taxpayer would still be considered delinquent notwithstanding that taxes have been paid by a tax lienholder. This section would also entitle a lienholder to a pro rata share of any penalty amount imposed by the municipality on delinquencies in excess of $10,000 for that portion of the delinquency paid by a lienholder in the current fiscal year.

Section 9 of this bill would amend R.S.54:5-19 to permit tax lien sales to occur after the 11th day of the eleventh month of the fiscal year of the municipality. Currently, tax lien sales may not be held before April 1 of the fiscal year next following the fiscal year when the taxes became in arrears. This provision would permit municipalities to realize funds from a tax lien sale in the year in which the taxes are due, rather than having to wait until April 1 or October 1 of the following fiscal year. The effect of this provision would be to enable municipalities to improve their tax collection levels to a higher percentage, thereby reducing the reserve for uncollected taxes in the following year's budget to a much lower level, without losing any of their revenues from delinquent interest and other penalties. In many municipalities the reserve for uncollected taxes represents the largest budget item.

Section 10 of the bill would amend R.S.54:5-26 to provide that in lieu of any two of the required four publications of notice of a tax sale, the property owner may be provided notice by mail, the cost of which would be added to the cost of the sale, not to exceed $25 for each notice.

Section 11 of the bill would amend R.S.54:5-47, a notice provision, to make the notice statement consistent with the requirements of R.S.54:5-86, recently amended by section 41 of P.L.1996, c.62.

Section 12 of the bill would amend section 1 of P.L.1990, c.90 (C.54:5-52.1) to provide a mechanism for the issuance of duplicate tax title certificates in the case of the destruction or loss of a tax title certificate issued by the municipality. The municipality would not be permitted to charge a fee in excess of $100 for a duplicate certificate. Under current law a tax collector is not permitted to pay out redemption moneys until the tax title certificate is surrendered, so the holder of a lost or destroyed certificate has no remedy.

Section 13 of the bill would amend R.S.54:5-54 to clarify that liens for assessments for benefits for municipal improvements are included as redeemable liens prior to the entry of judgment which cuts off such right. The section also clarifies that the right of redemption includes all lien holders, not just holders of prior liens.

Sections 14 and 15 of the bill would amend R.S.54:5-55 and R.S.54:5-57 respectively, to remove an obsolete reference to a repealed section of law. Section 15 would also provide a mechanism for the escheat of unclaimed redemption moneys to the State when held by a municipality for five years after notice to the tax lien holder. The municipality would retain 75% of the sum and the State Treasurer would receive 25%.

Section 16 of the bill would amend R.S.54:5-58 to specify the calculation of the amount required to redeem a tax sale certificate based upon when the redemption occurs. When a tax sale certificate is issued within the 10-day period following the date of the tax sale, including the date of sale as the first day, then the amount required to redeem shall include all sums paid, together with interest and lawful expenses, by the certificate holder.

Section 17 of the bill would amend R.S.54:5-60 to clarify that all sums for subsequent taxes, municipal liens and charges, and interest and costs actually paid are included in the amount required for redemption of a tax sale certificate that is not held by a municipality.

Sections 18 through 23 of the bill would amend R.S.54:5-112, R.S.54:5-113, section 4 of P.L.1993, c.325 (R.S.54:5-113.4), section 1 of P.L.1941, c.232 (C.54:5-114.1), and section 1 of P.L.1943, c.149 (C.54:5-114.2) to require that all assignments of tax sale certificates be recorded at the county recording office and notice of the assignment be given to the appropriate municipal tax collector. If an assignment has not been recorded and notice has not been given to the tax collector, then the municipality will be held harmless for the payment of any redemption amounts to the holder of record of the tax sale certificate.

The committee amended sections 1 through 4 of the bill in order to ensure that those sections clearly provide that all municipal liens are prior in interest to mortgage and condominium liens.

Section 13 of the bill clarifies that the holder of a subsequent tax lien would retain priority over the holder of a prior tax lien.

Section 15 specifies that this new escheat provision would supersede any conflicting provision of the "Uniform Unclaimed Property Act (1981), R.S.46:30B-1 et seq..

Permits improvement of municipal cash flow by authorizing earlier tax sales and clarifying redemption law.