Need Info -- Property Tax Sale Problem

Hello,

I am trying to help a good friend deal with problems pertaining to his property taxes in the NJ town he lives in. He owes the entire amount for 2020 and if it is not paid by early November, his house will go up for Tax Sale.

He and his brother are both disabled with numerous health issues and barely able to make ends meet on their Social Security checks. He does not want to lose their home of 45 years where they’ve lived since they were teens. He turned 65 this year.

My friend has started a GoFundMe to try and raise the money needed but it is going extremely slow. I would post the link here but I don’t know if that is against the rules on this board. I will if its allowed.

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My question is, what can be done to help him? Is there some agency he should contact which can help him or get a postponement on the tax deadline for the year? Is there any way to get assistance paying all or part of the taxes or getting them lowered?


Sadly, this will be a recurring problem for your friend as taxes are due every year. A one-time solution like Go Fund Me is not the answer.


It sounds like the best solution is likely to sell the house or perhaps to look into a reverse mortgage.


I cannot comment on the specific situation without more facts but in general a Tax sale does not mean the house gets sold. It means the Town sells the "Tax Lien" often to an investor who holds on to it until the taxpayer pays it plus interest. The interest is what entices these investors. I believe that after two years the person who bought the lien can foreclose on the property.

In the meantime I suggest you call the tax collector for the Town and see if there is a discount for senior citizens or the disabled.


Check this out

https://libguides.njstatelib.org/get_help/seniors#:~:text=Tax%20Assistance&text=Tax%20Counseling%20for%20the%20Elderly,years%20of%20age%20or%20older.&text=The%20Senior%20Freeze%20(Property%20Tax,their%20principal%20residence%20(home).


at 62, they were eligible for a reverse mortgage.  I think there is a provision if only 1 is over 62.

being on SSDI, they should have had their tax amount frozen the year they became disabled.  if they didn't previously do that, it's not retroactive, but they can start it now so the taxes don't go up anymore.

I know I sent my freeze paper work in 2014, state says they never got it, and no one is available to have an intelligent conversation with to correct the problem.  My base year should be 2009, but instead its 2015 and I am losing money because my tax is based on a higher base year. once you miss a year, they cancel you original base year and start you again in the current year.

also a tax lien doesn't take away the house, an investor buys the debt and if the owner pays them back, the owner keeps the house.


Check with the local welfare office.

I would be leary about the reverse mortgage. It can bite you in the *** in future.... especially when one of the brothers dies.   

As pointed out above, this is a recurring problem. They may need to move to a location in a smaller house and with lower tax rates.


if both are over 62, both are on the reverse mortgage....and the survivor gets to stay in the home.  i do think there is provision for the younger owner to stay even if not on the reverse mortgage.

but if may be get a RM or lose the house soon.

how old is the brother, if he is at least 62, that makes things easier.


https://www.elderlawanswers.com/feds-move-to-protect-some-surviving-spouses-of-reverse-mortgage-holders-14761

HUD developed a new rule
that took effect August 4, 2014, and that better protects at least some
surviving spouses. Under the rule, if a couple with one spouse under
age 62 wants to take out a reverse mortgage, they may list the underage
spouse as a “non-borrowing spouse.” If the older spouse dies, the
non-borrowing spouse may remain in the home, provided that the surviving
spouse establishes within 90 days that she has a legal right to stay in
the home (this could, for example, be an ownership document, a lease,
or a court order). The surviving spouse also must continue to meet the
other requirements of a reverse mortgage holder, such as paying property
taxes and insurance premiums.

this specifically refers to spouses, i don't know how being siblings fits in, may be a loop hole in the law.  if the sibling is under 62, you have to look into if he will qualify to stay in the home under this rule.

there are a few other non FHA RM programs with their own criteria.


Unpaid Taxes are auctioned off by the municipality to investors but that Tax Sale Certificate lien can not be foreclosed for a period of time which I believe is 2 years. If this involves 2020 taxes, this is not an emergency.


it is an urgent matter, even though it may be 2 years before they lose the house, it will cost a lot more to clear everything up if they don't pay the taxes before the auction.

if you are able, you can try to buy the tax lien and work with them to pay you back.


jmitw said:

it is an urgent matter, even though it may be 2 years before they lose the house, it will cost a lot more to clear everything up if they don't pay the taxes before the auction.

if you are able, you can try to but the tax lien and work with them to pay you back.

That would alleviate this year's problem but what about the future?

Selling the house and moving into senior subsidized housing may be the only option.  They would get housing that they can afford, along with medical supervision.

Selling the house, they would leave with a lump sum, minus the tax they owe. But the longer they delay, they will leave with less money that will be subtracted from future tax.

Again, put a call into the town's social worker. 


 a reverse mortgage on an average paid off house could likely cover about 10 -15 years +property tax.

If they still need assistance as that time comes close, they can look into apply for senior subsidized housing (at least 5 years before).

moving into senior subsidized takes a long time.  The 2 people I know recently had to wait 5 years.  they sell the house now, they have no where to go.

the bigger concern may be when 1 of them passes, if money is a problem now, not likely the other can afford it on his own....unless there is life insurance.


take this house for example, its the cheapest house for sale at market rate in maplewood: its also in need of updating which is a common situation when the residents lived there a long time and are on social security.

https://www.realtor.com/realestateandhomes-detail/52-Hughes-St_Maplewood_NJ_07040_M64788-98077

property tax is at about 9000, they could get 150K reverse mortgage total.  that would pay the taxes for 16 years (maybe a couple years less if some goes to repairs). Hopefully, they did do the property tax freeze and their taxes are actually lower.

and frankly at that point, if they are 80 years old, let someone buy the tax debt....and they can live there a couple more years while arranging for subsidized housing.

just found another article that says 80% can be borrowed, so on a 250K house, that would be 200K...in this case enough to cover tax for 20 years.


As others have written, a Go Fund Me is a short term solution that will not help the homeowners in the situation you describe.  They need a long term solution.  Speaking with the appropriate person in their municipal or county social services office, depending upon the jurisdiction that provides social services in their area, is a good place to start. 

They should speak with their municipality's finance office to learn about the tax freeze program, homestead rebate,  and other tax assistance programs to learn what might apply to them.  Eligibility for these programs can be complicated and they may need help with the paperwork.  

If either is a veteran who has a service related disability, they should check with a VA service officer to determine what benefits they are entitled to that they may not be receiving.  If either is certified with 100% disability, they may not have to pay any real property taxes themselves.  

This may be a good time to meet with a financial advisor who can provide advice as to whether a reverse mortgage would work in their situation.  There are not for profit organizations that can provide this service at little or no cost.  They just need to be careful that the person they speak with is qualified to help them.

Getting on a waiting list for subsidized senior housing, whether or not they would currently accept the unit when their name is reached, is a good fall back position for them to take at this time.  

Depending on the nature of their disability, looking into legitimate work from home options to supplement their income is another possibility.  They should be careful though since many of these opportunities are scams.

Depending on their disability, if either or both need help with performing basic tasks and they qualify for Medicaid looking into assisted living now would be another option since one or both might need it in the not too distant future.

Which of these actions could help depends on their circumstances.


with assisted living, I've read that medicaid only pays the medical portion, they would have to pay the housing portion themselves.  they would have to both go into assisted living at the same time and sell the house, but them medicaid wouldn't pay the medical portion since they have resources.  The money would run out in a year or 2....and then they would have to move into a minimal nursing home.

if only 1 goes into assisted living, they will have no way to pay the housing portion, and the remaining sibling likely can't afford the house on their own.

since it is likely they will need medicaid to pay for a nursing home for at least 1 of them at some point, and medicaid will charge that against the house, they might as well use he equity to stay in the house now...

once medicaid is providing services, it will be a basic nursing home.

if staying in the home as desired is determined to not be a viable option, it may be possible to sell the house and buy something cheaper, maybe a condo....although HOAs are notoriously nightmares...and neighbors can be aggravating




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