New Jersey Property Tax Sale Certificates and Foreclosures

June 13, 2014

Thumbnail image for foreclosure.jpgIn New Jersey, every municipality is required by law to hold sales of unpaid property taxes at least once each year. The municipalities sell the tax liens to obtain the tax revenue which they should have been paid by the property owner. The municipal tax collector conducts the sale which allows third parties and the municipality itself to bid on the tax sale certificates (this is the document evidencing the taxes due and owing). The successful highest bidder then pays the outstanding taxes to the municipality and become the tax sale certificate holder. Then the holder records the tax sale certificate with the county clerk, who records the tax sale certificate as a lien against the property.

Purchasing the tax sale certificate is merely the first step. The tax sale certificate holder does not own the property, but merely has a lien against the property. The amount of the lien is the amount paid for the tax sale certificate plus interest (which normally accrues at a rate of 18%), costs and fees, including the certificate holder's attorneys fees. The tax sale certificate holder must foreclose on the tax lien in order to become the owner of the property. The certificate holder has priority over any other liens against the property, including mortgages and other lien holders. The certificate holder must wait a statutorily proscribed period after the date of the sale of the certificate to initiate a foreclosure action. A municipality which purchased the certificate must wait six months; any other purchaser must wait two years.

Non-municipal tax sale certificate holders must provide thirty days written notice of their intention to foreclose before they can begin the foreclosure process on the certificate. This notice must include the amount which the delinquent property owner can pay to redeem the tax sale certificate and have the lien released. The notice must be sent by certified mail return receipt to all owners and to the municipal tax collector.

Then, if the property owner does not redeem the tax sale certificate within that 30 day period, the certificate holder is permitted to file its complaint for foreclosure. The complaint must name everyone who has a recorded interest in the property, which includes all mortgage and lien holders. The complaint must identify the property, the property owner and state the redemption amount. It must be served by certified mail return receipt. The property owner continues to have the right to redeem the tax sale certificate up until date of the final judgment. If the certificate is redeemed after a foreclosure action has been commenced, the property owner should file an Affidavit of Redemption and the foreclosure action will be dismissed by entry of an Order.

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New Jersey Lemon Law - Protection for New Vehicles

June 2, 2014

depositphotos_5503419-Ecological-transport-metaphor-lemon-and-wheels.jpgPurchasing a new car is a major financial investment. Consumers incur high costs to purchase a vehicle and even higher costs to repair defects. Understanding the economic impact, New Jersey's Legislature passed the New Jersey Lemon Law Act. The law is one of the strongest, most comprehensive, and effective in the country. It protects consumers who purchase or lease vehicles that are defective.

The New Jersey Lemon Law covers all new vehicles that develop a defect during the first two years of ownership or 24,000 miles, whichever comes first. The law covers new passenger cars, trucks, motorcycles, and certain authorized emergency vehicles purchased, leased, or registered in the State of New Jersey. Commercial vehicles are not covered.

The law requires manufacturers to repair reported defects within a reasonable time. The law also provides for remedies to consumers whose vehicles are not repaired and the defect impairs the use, value, or safety of the new vehicle. The law, however, does not vehicle defects which are the results of an accident, abuse, vandalism, or wear and tear. Also, the law does not cover defects caused by repair or modification to a vehicle by a person other than the manufacturer or car dealer.

Defects should be immediately reported to the dealer. Consumers should keep copies of all receipts for repairs and record mileage as well as the repair work completed. Dealers are permitted a reasonable amount of time to make repairs to correct a defect.

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New Jersey's Anti Retaliation Laws

May 30, 2014

depositphotos_26346931-We-have-to-do-something-against-workplace-bullying.jpgNew Jersey employees in the private sector and many in the public sector are known as at-will employees. This means that employees may be fired at any time, for any reason, or for no reason. Employees, however, cannot be fired for retaliatory reason. New Jersey has expansive laws that protect employees from their employers' retaliatory conduct, including termination.

Employers can retaliate against employees in many different forms. Employers can retaliate against employees through harassment. For example, employers may try to reprimand, demote, or pass over for promotions employees who raise certain complaints or file certain claims. Another form of retaliation is firing an employee for engaging in certain activity.

However, not every termination or reprimand allows employees to have an actionable claim against employers. Instead, employees must engage in certain protected activity and the retaliatory conduct must be the motivation for the employees' protected activity.

New Jersey's Conscientious Employee Protection Act also known as New Jersey 's "Whistleblower" law makes it illegal for employers to retaliate against employees who object to or refuse to participate in an activity which the employees reasonably believe are illegal, criminal or fraudulent, or violates a clear mandate of public policy relating to public health, safety, welfare or the environment. Employers which retaliate against employees who object or refuse to participate in this type of activity can subject themselves to a lawsuit and significant consequences.

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New Jersey Guardianship Proceedings

May 28, 2014

incapacitated.jpgWhen a person can not continue to manage her own affairs due to a physical or mental incapacity, another person needs to have the power to do so. If the incapacitated person had executed a valid power of attorney prior to their incapacity, the individual incapacitated person chose and appointed as their agent has that power. However, once a person is no longer able to take care of themselves, they can no longer execute a valid power of attorney. In that case, an application for guardianship must be made to the Superior Court of New Jersey to have a trusted family member, friend or professional to handle the person's affairs. Unless the person appointed someone prior to their incapacity through a power of attorney or the court appoints a guardian there will be no one with legal authority to act on behalf of the incapacitated person.

A guardianship proceeding is an involved and difficult process where the court must be satisfied that the person is indeed incapable of managing their own affairs, and then determine the appropriate person to appoint as their guardian to make decision for the mentally incapacitated person (who is called a "ward"). This is commonly needed for older adults who have become incapacitated due to physical or mental illness.

A guardianship must be established when a person has lost capacity and there is no one who can lawfully act for him or her. Guardianships are divided into two types, the guardianship over the person and guardianship over the person's property. Guardianship of the person authorizes the guardian to make personal and medical decisions for the incapacitated person. Guardianship of the property authorizes the guardian to make financial decisions for the incapacitated person. While these are legally two separate roles which can be filled by separate individuals, most often one individual will be appointed as guardian of both the person and the person's property. There can also be more than one guardian, where two or more people are appointed as co-guardians and must act together. The law allows any responsible adult to be a guardian, but the law gives priority to the spouse of the incapacitated person, and if the spouse is unwilling or unable, priority is then given to an adult child.

An action for guardianship is commenced in Superior Court of New Jersey in the county where the prospective ward resides. In order to get a guardian appointed the court will review the personal, medical, and financial information regarding the ward. Every guardianship action starts with a complaint filed in Superior Court of New Jersey in the county where the incapacitated individual is domiciled. The complaint must state the petitioner's name, age, domicile and address, the mentally incapacitated person's name, age, domicile and address, a list of the names and addresses of immediate family members, her finances, and why the guardianship is needed.

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Death Taxes: Estate and Inheritance Taxes

May 18, 2014

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Both the federal and many state governments in the United States, including New Jersey, assess an estate tax upon transfer of a deceased person's assets. Thus, while it is often begrudgingly referred to as a "death tax," it is actually a type of transfer tax which is imposed upon the transfer of the property in the taxable estate of every decedent (the deceased) who was a citizen or resident of the United States.

The "taxable estate" can be calculated by subtracting permitted deductions from the gross estate. The "gross estate" includes the value of all property that the decedent had an interest in at the time of her death. The gross estate may also include any interest in the estate as dower or curtesy (an amount promised by one spouse to another in the event of death), items that the decedent transferred in the three years prior to death which were not sold for value or excluded as gifts, certain property that the decedent transferred but retained a life estate in, the value of property in which the decedent had a reversionary interest in excess of five percent of the property value, annuities, some jointly owned property, powers of appointment, and some life insurance policies, among other things.

Some common deductions from the gross estate, which are used to calculate the total "taxable estate," may include funeral expenses, estate administration expenses, claims against the estate, some unpaid mortgages, certain charitable contributions, property or bequests left to the surviving spouse, interest in a qualified family-owned business, and state estate or inheritance taxes.

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Understand the Difference between Marketable Title and Title When Purchasing a Foreclosed Property

May 8, 2014

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When you purchasing a foreclosed property, you often get a property which seems to be worth more than you are paying for it. One of the reasons you are getting a bargain is because most selling banks will only accept your offer if you will agree to accept insurable title. They will not guarantee that you will get marketable title. If you are purchasing a property in foreclosure in New Jersey, it is important to understand the distinction and know what you are getting.

The selling bank will often add an addendum to the contract for your purchase specifically stating that the bank will often provide only "insurable" title at closing, as opposed to the standard contract provisions requiring a seller to provide "marketable" title. The bank will further offer to pay for all or part of the costs to obtain title insurance if the buyer obtains the insurance from the title insurance company designated by the seller. While this can result in significant savings, it is important to understand what you will get (and what you will not get) as part of this bargain.

Prior to issuing a policy of title insurance, a title insurance company will conduct numerous searches on the property to determine if there are any clouds on the property's title, if there are issues with the deed, the ownership status of the property, any tax liens against the property, the status of property tax payments, and judgments, etc. The question is, will you be satisfied with receiving insurable title, as opposed to marketable title?

"Marketable" title means that the chain of ownership to a particular piece of property is clear and free from defects. It can be sold without additional effort by the seller or potential buyer to "clear" the property's title. To transfer marketable title, a seller must cure or repair any defects found during the title search, such as, for example, paying off liens and/or having them discharged as of record.

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Organizations Exempt from New Jersey Sales Tax

April 29, 2014

cash-register.jpg Every person or company engaged in a business, trade, or profession in New Jersey (other than as an employee), must register with the State for tax purposes. Retailers doing business in the State are required to collect sales taxes and remit them to the State. Each retailer obtains authority to collect sales taxes through a Certificate of Authority issued by New Jersey's Division of Taxation. This Certificate must be prominently displayed at each retailer's place of business.

However, some organizations can obtain exempt status for purchases, meaning that they do not need to pay sales taxes. These organizations must obtain an exemption certificates and must present them to retailers when purchasing goods and/or services that are generally subject to sales tax. The retailers must then keep the physical certificates for at least four years after the date of the transaction, and make them available for inspection by the Division of Taxation if it should request.

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When is "Time of the Essence" in a New Jersey Residential Real Estate Contract

April 24, 2014

house1.bmpBuyers and sellers often think that they will be closing on the purchase or sale of a house on the closing date written in the contract for sale. However, in New Jersey, the closing date is not an "essential" term of the contract. Either party may request, and must be afforded a reasonable extension of the closing date. This can cause angst for buyers or sellers who believe that the contract date is set in stone.

The closing date in the contract is an estimated date for the closing rather than a "hard date". If the parties agree to a "time of the essence" closing date, it can enforceable. It is, however, unlikely that attorneys for either party would agree to make the closing date an essential term, because it could subject their client to liability for breach of the contract if, even due to circumstances beyond their control, they were not able to close on the date stated in the contract. If time is of the essence, then failure to close on the date specified in the contract would constitute a material breach of the contract and subject the party to liability.

As an example for this discussion, let's assume that the date closing is not made an essential term in the contract. Once the closing date specified in the contract has passed, the party who is ready to close can then set a new date for the closing and declare that that closing on that date is "time is of the essence," provided the legal requirements to do so are met. At that point, if the non-declaring party does not close on the new date (usually two weeks after the declaration of time being of the essence), they will be in breach of the contract and subject to liability for that breach. The non-breaching party can seek remedies including specific performance, which compels the breaching party to proceed with the contract, or they can receive monetary compensation for the breach.

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New Jersey Home Purchase Closings

April 22, 2014

house.bmpFinding a home you want to buy and making an offer which is accepted by the seller is only the beginning of the process to purchase a home in New Jersey. The next step is signing a contract to purchase the home. The contract is a written agreement outlining the parties' rights and responsibilities. If your contract was prepared by a realtor, it will be subject to a three day attorney review period which allows three business days for the contract to be reviewed by the parties' respective attorneys. Either attorney may invalidate the contract for any reason whatsoever within the three day period or either attorney may request amendments to the original contract. The amendments will be in the form of a letter addendum or rider to the contract and will require both the sellers' and the buyers' signatures which signify their agreement to the amendments.

After attorney review of the contract has been completed, you now have a valid and binding contract to purchase the home. The next step is to make arrangements for a home inspection as soon as possible and within the time period specified in the contract. Contracts are usually subject to home inspections (structural, water, septic, termite, etc.) and mortgage contingencies. Most purchasers prefer to have a licensed home inspector inspect the premises for defects. This is highly recommended since purchasing a house is a substantial investment. You should select the inspection company and have the realtor arrange for an appropriate time to inspect the house. The attorney will not usually be involved with the selection of the inspection firm nor the scheduling of the inspection. However, if the inspection discloses any problems which need to be addressed, the lawyer will negotiate a resolution with the seller's attorney.

While the inspection process is proceeding, you should select a lender and begin the mortgage application process as soon as possible since the contract only provides for a certain number of days to arrange for a mortgage. If you do not obtain a written mortgage commitment from your lender within the time specified in the contract, the transaction could be placed in jeopardy because you would need to either cancel the contract or proceed knowing that you risk being forced to go through with the purchase even if you cannot get a mortgage loan. A representative of your lender should be able to inform you at the time the application is made how long you can expect the lender to take in issuing a mortgage commitment. You can expect the lender to require at least 30 days from submission of the loan application to issue a commitment.

When you receive your mortgage commitment, read it carefully and in its entirety before signing. Your signature indicates your acceptance of the terms of the commitment. This is a contract made between you and the lender. It outlines the terms of your mortgage; consequently, be sure you understand it before you sign. The mortgage commitment will state a time period or a date after which the commitment is no longer valid. This is a most important date, particularly if you are "locked-in" at an interest rate during a period of rapid interest changes, since your purchase and financing must have taken place by that time.

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New Jersey's Sales Tax Exceptions and Anomalies

April 17, 2014

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Sales taxes are an inevitable part of life in New Jersey, and indeed, across the country. Sales taxes make it possible for the state to fund important government programs and operations such as transportation infrastructures, aid to schools (to the extent that it supplements local property tax and other funding sources), health and welfare aid programs, licensing and compliance departments, and other general state expenditures.

However, individual taxpayers may also benefit from their payment of sales tax on a more direct basis by claiming sales taxes as an itemized deduction on their tax returns. Generally people who itemize their deductions for their federal taxes also deduct their income taxes. However, taxpayers have the option to elect to deduct any state and local general sales taxes paid during the course of the year instead.

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New Jersey Make Major Revisions to Its Limited Liability Company Law

April 15, 2014

stock-photo-2760185-corporate-seal.jpgThe Legislature has recently made important changes to the laws governing New Jersey limited liability companies, which were effective March 1, 2014. The new revisions make drastic changes to the way New Jersey law treats limited liability companies. The law still allows the owners of a limited liability company to change the way they want their business to be run if they do not want it run in accordance with the law's acts default provisions. However, when the LLC operating agreement is silent, the new Revised Uniform Limited Liability Company Act will govern.

Because these changes drastically alter the way LLCs are operated, profits are distributed, and decisions are made, it is essential to have your operating agreement reviewed by an experienced business attorney knowledgeable in the new Revised Uniform Limited Liability Company Act. Our attorneys are experienced in these areas and we have formed and crafted operating agreements to run hundreds limited liability companies. Please call us to have your LLC's operating agreement reviewed by one of our business attorneys.

The following are some of the important changes.

Distributions. Under the old law, members of an LLC received distributions or profits and losses according to their ownership interest. Therefore, if two owners own the company 75 percent and 25 percent, they would receive profits and distributions of 75 and 25 percent, respectively. The new LLC law, however, requires that profits and losses be shared equally. Thus in that same company, rather than splitting the losses 75 and 25, each member would received half the profits, despite their unequal shares. Of course, this can be changed in the operating agreement, which can provide that distributions be made in proportion to ownership percentages, or based on any other reasonable formula.

Fiduciary Duties. The new LLC law creates an express fiduciary duty of loyalty for all members. Members cannot compete with their limited liability company or engage in self dealing. Thus, leasing property to the LLC or lending it money can be construed as self dealing. But again, this can be changed in the operating agreement.

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New Jersey's Employment Laws Which Protect Against Sexual Harassment

April 11, 2014

New Jersey's employment laws protect employees from workplace sexual harassment. People accused of sexual harassment may be subject to individual liability under both civil and criminal laws. Employers may also be found liable for sexual harassment because of their employees' actions.

Sexual harassment does not need to be sexual in nature. It can take at least two forms: (1) hostile work environment, and (2) "quid pro quo" sexual harassment. Hostile work environment sexual harassment is conduct that has been directed towards someone because of that person's sex. For example, harassment that is based on stereotypes about women or men can be construed to be sexual harassment. Of course, harassment that is sexual in nature is sexual harassment. Therefore, inappropriate sexual propositions, jokes or advances can be construed sexual harassment and result in a civil lawsuit. This type of conduct is prohibited.

"Quid pro quo" sexual harassment is also prohibited. Quid pro quo sexual harassment is the demand by an employer, manager, or supervisor that terms and conditions of employment, such as raises, promotions, or simply keeping the employee's job, in return for sexual favors. For example, if a boss requires an employee to have sex or enter into a romantic relationship to keep her job, get a promotion or avoid discipline, then the employer could be liable for quid pro quo sexual harassment.

Employees complaining about workplace sexual harassment are protected from retaliation. In fact, it is a violation of New Jersey's employment laws for employers to retaliate against employees for their complaints about behavior that that employees reasonably believe is sexual harassment.

Simply, employees should not have to endure the stress or indignity of inappropriate sexual conduct in the workplace. However, not every type of workplace conduct based on gender is unlawful. Instead, to have an actionable claim of sexual harassment the conduct complained of must be serious enough or frequent enough to make a reasonable person believe that her working conditions are hostile or abusive.

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Pregnancy Discrimination Under New Jersey's Law Against Discrimination

April 9, 2014

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New Jersey's Law Against Discrimination (the "LAD") covers a wide variety of activities and relationships, including employment relationships. It makes it unlawful to discriminate against an employee or potential employee on the basis of race, national origin, nationality, age, gender, sexual orientation, religion, and several other specified classifications.

In January of 2014, Governor Christie signed into law a bill (S2995) that both protects pregnant employees from discrimination and requires employers to provide pregnant employees with reasonable accommodations so that they can continue working. The Act applies both to women who are currently pregnant and those who have recently given birth. Therefore, if the pregnant woman, or woman who recently gave birth, requires accommodations in the form of, for instance, a modified schedule, additional breaks, or less strenuous work duties, as long as those accommodations are reasonable under the circumstances, the employer must allow them and cannot retaliate against the employee for needing, using, or asking for those accommodations.

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New Jersey's Sales Tax

March 31, 2014

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Sales taxes are imposed on all sorts of goods and services sold or provided in New Jersey. Generally the tax rate for most of those goods and services is seven percent (which was increased from six percent in 2006).

Most goods and services are taxed, including, for example, tangible personal property; digital products' the production, installation, or maintenance of tangible personal property or digital products; storage of personal property; mail processing services; utility services; tanning services; tattooing; investigation and security services; information services; non-prescription massaging services; limousines and other transportation services; telephone answering services; radio subscription services; prepared foods (such as in restaurants); food provided through a vending machine; landscaping; entertainment (movie tickets, amusement parks, sports events, plays, etc.); gym memberships; and parking garages.

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Permissible Tax Deductions

March 25, 2014

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On the federal level, income taxes, and indeed all taxes to some extent, are regulated and enforced by the Internal Revenue Service ("IRS"). While there are numerous statutes, regulations, and other laws which mandate the payment of taxes on any number of goods, services, and activities, the tax bible is the Internal Revenue Code ("IRC"). The IRC has been further expanded upon and interpreted in the regulations adopted by the United States Department of the Treasury located in Title 26 of the Code of Federal Regulations ("CFR"). The IRS also issues numerous publications in an attempt to provide further guidance for people, companies, and tax professionals, typically referred to as Internal Revenue Bulletins ("IRB").

Oftentimes people frustrated with paying income taxes, while pulling their hair out or throwing their hands up, wonder if there is some way they can avoid the tax altogether. They might start devising some strategy to argue against the very concept of paying income taxes. However, rest assured, the power of the government to enforce the payment of income taxes is legal and valid, and its not going away.

Indeed, the very first section of the IRC imposes tax on income. The IRC goes on to define taxable income as gross income after permissible deductions are subtracted, and requires everyone (with limited exceptions) to file their tax returns every year. However, when calculating personal income taxes, there are certain ways that a taxpayer may make deductions upon the tax that they would otherwise owe. In doing so, people may either itemize their deductions or accept the "standard deduction."

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