5th lien/Judgement Question - Posted by Sam_N.J.

Posted by sam on May 23, 2000 at 14:51:11:

I fully understand this is for discussion purposes only - again appreciate your help.

I did not describe the lien list correctly - the municiple taxes are in arrears, BUT, no tax certificates have been sold.

So the 1st recorded lien is the 1st mortgage, IF, I retain an esq. and he/she can tell me this state tax is #1. Than I would change my offer with the state from “releasing” the lien to buying the lien.

Do you work in Mercer?

5th lien/Judgement Question - Posted by Sam_N.J.

Posted by Sam_N.J. on May 23, 2000 at 05:06:42:

Good news - Vacant house, worth $120,000 “as is”.
Bad news - liens total $200,000 plus.

I have settlement on the first 4 liens as follows

  1. munciple taxes 2,800 - settle for 2,800

  2. 1st mortgage 17,000 - settle for 17,000

  3. Judgement for 6,000 - discharge for 2,000

  4. Judgement/State taxes $131,000 - will release for 35,000
    total so far approx. ==================== $57,000

  5. Judgement - So far so good, until I spoke to the last lien holder - a judgement agaist the owner in favor of a large insurance company from a court action - insurance company has a judgement for $48,000, I offered them $10,000 to release the property. They countered at $45,000 and are not negotiable.

Any ideas???

Possible? - Posted by Bud Branstetter

Posted by Bud Branstetter on May 23, 2000 at 17:52:48:

With the fact that it is a private mortgage you need to investigate if the lien can be revised. If it can then you can revise it to be like a line of credit loan so that you can do fix up or pay taxes. If they are not pursuing the judgements then settling property taxes is the priority. L/O the house and/or eventually buying the lien you can foreclose to either get paid off or own the property. You do not want to disturb the priority by doing a refi.

Your’e missing the forest because of the trees… - Posted by Ben (NJ)

Posted by Ben (NJ) on May 23, 2000 at 09:23:29:

the state tax lien is very likely the highest priority of all the liens you mention.(the only one that may be senior is the municipal tax lien, check the recording dates, first in time, first in right is the rule) You are also getting the best deal on that lien. Instead of paying it off can you get an assignment of the state’s position and then foreclose on the property? If so, either way you are in a great position. You either get paid off in full making a big spread because of the discount or you get the property
for $35,000 and wipe out all junior debts. Before you proceed check out everything I have said with your own attorney, make sure the State has top priority, is willing to give an assigment and is eligible to foreclose immediately so you don’t have to wait. Good luck!

Re: Your’e missing the forest because of the trees… - Posted by Ben - more info.

Posted by Ben - more info. on May 23, 2000 at 11:54:35:

Thanks for your response.

I’m not sure the State Tax Lien is a prioty lien.

few more details - Brother A. and Brother b.

brother a. deeded the property to brother b. in 1992.

1st mortgage for $17,000 is from 1978 from brother A

Unfortunely brother b had a few ongoing creditor problems and later had the 3 judgements recorded against his name.

the 6,000 from a hospital in 1993.

the $131,000 from the State of N.J. in 1994.

and the $48,000 in 1998.

The State of N.J. lien is for failure to pay gross income and sales tax on a coffee shop he used to own, it was recorded in 1994 and is a DJ judgement, it reads -----
State of N.J vs. brother “B” t/a brother b’s coffee shop —

So the date makes it a 4th lien, I don’t know if State gross income/sales tax makes it a superior lien. The person in the Div. of Taxation is clueless.

Does the mere fact that the creditor is the State of N.J. make it superior to morgages and judgements recorded prior - if so your advice to buy/assign the state lien would be the way to go…if not

I still have the problem with the 5th judgement vs the insurance co. who refuses to discount.

Thanks in advance for your help.

The following is not to be considered legal advice but is for discussion purposes only, please retain your own counsel - Posted by Ben (NJ)

Posted by Ben (NJ) on May 23, 2000 at 13:58:52:

That having been said have your attorney look up the following case…Union County Utilities v. Josewitch, 269 NJ Super. 218 (law div. 1993). This case held that State tax liens which attached before the end of the preceding year for unpaid sales, use and gross income tax HAD PRIORITY over a municipal tax lien which attached on the first day of the year in which they were assessed. I am a municipal tax lien foreclosure attorney and can tell you to a 100% certainty that the municipal tax lien is senior to most mortgages and judgments. If this case says that the state sales, use and gross income tax lien is senior to the municipal lien, then by logical extension, the state tax lien is tops over everything. What year is the municipal lien? You may also consider buying that, do you know who holds it? I can probably put you in touch with them or a foreclosure attorney if you need one. Ben