NJ Taxpayers Lose Bid for Surplus From Third-Party Property Sale

A group of New Jersey municipalities that sold tax sale certificates to private parties that later foreclosed on the property didn’t violate the original property owners’ rights under the Fifth Amendment, a federal judge ruled.

The US Supreme Court’s 2023 decision in Tyler v. Hennepin County held that seizing and selling property to recover unpaid taxes is permitted, but can’t retain any surplus funds from the sale above the amount of tax owed without running afoul of the Constitution.

But Hazlet, Trenton, and Lawrence, N.J., sold the tax liens at issue before any sale or auction of the properties, which ...