Ask Nick – Bankruptcy, Foreclosure, and Tax Liens

Q:

With respect to a New Jersey bankruptcy filing, the Township of Middletown Tax Collector filed a late proof of claim for outstanding property taxes, which claim the trustee is now refusing to distribute.  Accordingly, our client, the servicer for the mortgagee, is concerned that it will eventually be held liable for the outstanding amount of property taxes. Assuming that the trustee’s refusal is justified (which it appears to be), who will be liable for the outstanding amount of property taxes (the debtor or the mortgagee) upon its obtainment of a judgment of foreclosure?

A:

Municipal Liens are priority liens and do not normally get resolved by Bankruptcy or Foreclosure. Therefore, once the foreclosure is completed and the Sheriff’s Deed is issued, the successful bidder would be responsible for the municipal liens and all property taxes and assessments.

 

Under no circumstances is Fortune Title Agency, Inc. or any of its employees giving any legal advice.  The Ask Nick Q’s and A’s are based on situations that the company has experienced and is sharing with the public for informational purposes only.  Always contact your attorney for any legal advice.

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