New Jersey applies the Bulk Sale Law to Real Estate sales regarding incoming producing property. There is a lengthy list of specific types of transactions that are included, herein. The purpose of this law is to make sure that any taxes that are owed or were previously due from an owner of income producing property have been satisfied.
The parties are required to notify the New Jersey Division of Taxation prior to the closing of the impending sale and to provide relevant data regarding the Seller including tax identification number. The Division of Taxation will thereupon provide to the parties in the transaction an amount which must be held in escrow by the Purchasers Attorney until such time that the Seller resolves all of their outstanding tax obligations. The Division of Taxation provides an estimated amount because they have not received all of the final tax information from the Seller.
Parties to these types of transaction need to keep the Bulk Sale Law in mind for several reasons. There is a delay that occurs when waiting for the Division of Taxation to provide the escrow amount of the parties. Additionally the sum to be held in escrow can be quite large which will affect the closing figures.
The Seller and its accountants can usually resolve the tax issues from the Division of Taxation rather quickly and if any money is owed , it can be paid from the the sum being held in escrow at the time of the closing.