A2748

An Act exempting sales of certain seasonal rentals and other dwelling units from the bulk sale notification requirements, amending P.L.2007, c.100.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 5 of P.L.2007, c.100 (C.54:50-38) is amended to read as follows:

5. a. (1) Whenever a person shall make a sale, transfer, or assignment in bulk of any part or the whole of the person's business assets except as provided by paragraph (2) of this subsection, otherwise than in the ordinary course of business, the purchaser, transferee or assignee shall, at least 10 days before taking possession of the subject of the sale, transfer or assignment, or paying therefor, notify the director by registered mail, or other such method as the director may prescribe, of the proposed sale and of the price, terms and conditions thereof whether or not the seller, transferrer or assignor has represented to, or informed the purchaser, transferee or assignee that the seller, transferrer or assignor owes any State tax and whether or not the purchaser, transferee, or assignee has knowledge that such taxes are owing, and whether any such taxes are in fact owing. Within 10 days of receiving such notice, the director shall notify the purchaser, transferee or assignee by such means as the director may prescribe that a possible claim for State taxes exists and include the amount of the State's claim.

(2) (a) Paragraph (1) of this section shall not apply to the sale, transfer or assignment of a simple dwelling house. “Simple dwelling house” means a dwelling unit, attached or detached, and land appurtenant thereto, including but not limited to a one-family building or structure, a unit of a horizontal property regime established pursuant to the "Horizontal Property Act," P.L.1963, c.168 (C.46:8A-1 et seq.), a unit in a housing cooperative as defined under "The Cooperative Recording Act of New Jersey," P.L.1987, c.381 (C.46:8D-1 et seq.), or a unit of a condominium property established pursuant to the "Condominium Act," P.L.1969, c.257 (C.46:8B-1 et seq.), but does not include a structure or structures containing more than one unit of dwelling space or containing, according to the records of the municipal property tax assessor, commercial property including, or in addition to, a unit of dwelling space.

(b) Paragraph (1) of this section shall not apply to the sale, transfer or assignment of a seasonal rental unit or the sale, transfer or assignment of a lease for the seasonal use or rental of real property. For the purposes of this paragraph, “seasonal rental unit” means a “time share estate” as that term is defined by section 2 of P.L.2006, c.63 (C.45:15-16.51) and means a dwelling unit rented for a term of not more than 125 consecutive days for residential purposes by a person having a permanent residence elsewhere and “lease for the seasonal use or rental of real property” means a “time share use” as that term is defined by section 2 of P.L.2006, c.63 (C.45:15-16.51) and means the use or rental for a term of not more than 125 consecutive days for residential purposes by a person having a permanent place of residence elsewhere.

b. If, upon receiving timely notice of a sale, transfer or assignment from a purchaser, transferee or assignee, the director fails to provide timely notice to the purchaser, transferee or assignee that a possible claim for such State tax or taxes exists, the purchaser, transferee or assignee may transfer over to the seller, transferrer or assignor any sums of money, property or choses in action, or other consideration to the extent of the amount of the State's claim. The purchaser, transferee or assignee shall not be subject to the liabilities and remedies imposed under the provisions of the uniform commercial code, Title 12A of the Revised Statutes of New Jersey, and shall not be personally liable for the payment to the State of any such taxes theretofore or thereafter determined to be due to the State from the seller, transferrer or assignor.

c. If the purchaser, transferee or assignee shall fail to give notice to the director as required by the preceding paragraph, or if the director shall inform the purchaser, transferee or assignee that a possible claim for such State tax or taxes exists, any sums of money, property or choses in action, or other consideration, which the purchaser, transferee or assignee is required to transfer over to the seller, transferrer or assignor shall be subject to a first priority right and lien for any such State taxes theretofore or thereafter determined to be due from the seller, transferrer or assignor to the State, and the purchaser, transferee or assignee is forbidden to transfer to the seller, transferrer or assignor any such sums of money, property or choses in action to the extent of the amount of the State's claim. For failure to comply with the provisions of this section the purchaser, transferee or assignee, in addition to being subject to the liabilities and remedies imposed under the provisions of the uniform commercial code, Title 12A of the Revised Statutes of New Jersey, shall be personally liable for the payment to the State of any such taxes theretofore or thereafter determined to be due to the State from the seller, transferrer or assignor, and such liability may be assessed and enforced in the same manner as the liability for any State tax under the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.

(cf: P.L.2007, c.100, s.5)

2. This act shall take effect immediately, and shall apply retroactively to sales, transfers and assignments on or after August 1, 2007.

STATEMENT

This bill exempts sales of seasonal rentals, and some sales of other dwellings that might at one time have been vacation homes, from the “bulk sale” notification requirements that are used to administer State taxes.

To help assure that a business pays all of its State taxes due before the sale of a substantial part of the assets (a “bulk sale” of assets) of the business is completed, recently enacted law requires the purchaser of those assets to notify the Director of the Division of Taxation of the sale at least 10 days before the transfer of goods or payment, or the purchaser can become liable for taxes owed by the seller.

If the director notifies the purchaser that the seller owes State taxes, the purchaser must hold back from the seller any sums owed the State. If the purchaser fails to notify the director, the purchaser can be held liable for any taxes of the seller. The director must respond within 10 days of receiving the notice, and if the director fails to respond to the notice within the allowed time the sale can continue and the purchaser has no liability for the seller’s taxes.

While these procedures ensure the proper payment of tax in commercial transactions, they add an unnecessary layer of complication to home sales. Neither the seller or the purchaser of a home may be aware that some prior owner of the property rented out the property as a vacation home and failed to make proper payment of related tax liabilities, and either the seller or the purchaser could potentially be held liable for that prior owner’s taxes unless they go through the trouble and expense of filing the notice with the Director of the Division of Taxation and delaying the sale until the expiration of the period in which the director can respond.

This bill provides an exemption from the bulk sale notification requirements for sales of single noncommercial dwelling units, whether those units are detached single-family homes, condominiums or coops. That exemption under this bill does not extend to transactions that transfer multiple dwelling units or that transfer a single dwelling unit along with commercial property.

This bill also provides exemptions from the bulk sale notification requirements for sales of seasonal rental units and for sales of seasonal leases. Seasonal rental unit and seasonal lease are defined in parallel with other statutory uses of those terms to refer to a dwelling unit rented for a term of not more than 125 consecutive days for residential purposes by a person having a permanent residence elsewhere. To clarify that those terms are intended to apply to timeshares, the bill explicitly makes time shares exempt from the bulk sale notification requirements.

The bill is retroactive to August 1, 2007,the date on which the bulk sale notification requirements first took effect.