Holmdel Township's annual lien sale will be held on September 18.
At last year's sale, as the ten o'clock start drew near, 30 poker-faced investors sat silently, staring out their spreadsheets on their laps and avoiding eye contact, each armed with knowledge on how much they would bid on 28 properties on the list.
David Merkin, a 45-year old unemployed technology specialist from Long Island, found the Holmdel lien sale through the Internet. "I think there are more people coming to these," he said, looking around the hushed meeting room. "People are listening to infomercials."
Holmdel Tax Collector and Township CFO Jeanette Larrison presides over the annual lien sale, which is required by state statute. "The purpose of the sale is to collect prior year delinquencies," which can include 2011 property tax payments, water, sewer, electric and other fees, she explained. In Holmdel, typically less than one percent of the residents are late, she said.
By the close of the September 13 sale in 2011, the township was paid back its $109,000 in cash, from lienholders who bought the tax and sewer utility payment debt. "That made us whole."
The lien sale is very important to balancing the books, she said. "As you know, the budget is based on how much in taxes we collect in a year. People have to pay their taxes."
The lienholders bid on how much interest they think will be charged on the delinquency in tax sale.
The auction begins at 18% and from there the bids go downward.
Once the percentage reaches zero, the bidders may then elect to pay a premium.
The premium bids, in Holmdel, are required to be made in $100 increments. In the past, successful premium bids have ranged from $100 to $100,000 or more.
The premium collected does not initially belong to the Township; it is held in trust for the lien holder and refunded after the lien has redeemed.
The monies only escheat to the Township should the lien not be redeemed within 5 years, or if the lien holder has foreclosed on it.
Last year an energetic bidding war was waged on a premium to take hold of the $37,745 in back taxes owed by "Har-Beau Enterprises, LLC" at 8 Arbor Lane. A representative of CrestarCapital of Cherry Hill purchased it for $80,000.
Speaking in general, Larrison explained: "Basically the lienholder is thinking if you delinquent for 2010, then you are delinquent for 2011. Now the lienholder is owed the money. They can get the 18 percent interest on subsequent payments."
After two years, the lienholder can begin foreclosure proceedings.
"If you don’t have a mortgage and you haven’t paid your taxes and in real danger of losing your home if they do foreclosure. Because you have to pay the lienholder off in one lump sum, the situation can be dire. "It begins to snowball," said Larrison.
In 2012, -- although many people will likely heed the warning and pay the township what is due prior to the start of the sale.
The tax lien sale begins at 10 a.m. on September 18 in the meeting room at Holmdel Town Hall, 4 Crawfords Corner Road.
In Hazlet, the tax sale will be held October 11 at the Municipal Building, 1766 Union Avenue. According to the Tax Collector's Office, the public notice will be published in the Asbury Park Press legal ads section on Sept. 27 and Oct. 4.