Protects equity accrued by property owner in tax sale foreclosure.
Impact
If enacted, A1035 would significantly alter both the rights of property owners facing foreclosure and the operations of tax lien holders. The bill ensures that the rights of redemption remain with the homeowner until a clear judicial process establishes otherwise. It introduces requirements for an internet auction process that allows previous property owners to retain funds from the sale of their homes if the property is sold in the auction. The intention is to enable property owners to use any leftover funds to secure new housing or manage financial hardships caused by foreclosure, thereby alleviating possible homelessness and economic distress.
Summary
Assembly Bill A1035 aims to protect the equity accrued by property owners in tax sale foreclosures. This legislation addresses the current process, wherein property owners can lose not only their properties but also the equity built up over time through appreciation or mortgage payoff when a tax lien foreclosure occurs. The bill proposes revisions to the existing framework outlined in R.S.54:5-86 and R.S.54:5-87, which currently allows tax lien holders to acquire absolute ownership of properties once a foreclosure action is approved by the court. Under the new provisions, property taxes paid by the tax lien holder will become the first priority lien on the property, while ownership will not be granted to the purchaser at the foreclosure action.
Contention
Supporters of A1035 argue that it is a necessary reform to protect property owner equity from being unjustly seized by government actions. They express that current laws can lead to severe hardships, including homelessness, when owners lose both their homes and equity. However, some critics may argue that this protection could deter investment in tax sale properties or complicate the foreclosure process for municipalities and tax lien holders. The balance between protecting homeowners and allowing for municipal revenue recovery remains a point of debate among lawmakers and stakeholders.
Repeals $100,000 cap on sales and use tax exemption for certain capital improvements made by businesses participating in Urban Enterprise Zone program.