The State of New Jersey is always concerned about collecting tax due on sale transactions, big and small. The Bulk Sales Act requires parties to a transaction involving the sale of real estate, a business, or both, to file a notification form with the Division of Taxation prior to closing. Upon receipt of that form, the Division reviews the transaction and notifies the parties of the amount to be held in escrow at closing, pending the seller filing the applicable tax return and paying any tax due.
The notice needs to be filed with the State at least 10 business days prior to the closing.
The escrow may be able to be reduced if the seller submits a Asset Transfer Tax Declaration form to the Division.
The buyer of real estate or a business needs to see to it that the notification is filed and processed because if the seller fails to pay any tax due on the transaction, the buyer is liable to pay that tax.
There are a number of exemptions from the bulk sale requirements. For example, a person selling a one family or two family home need not file the notification. However, the sale of a vacant lot is not exempt. The sale of a one family house by a limited liability company or corporation is not exempt.
A seller may show that it is selling the property in the ordinary course of business and therefore need not file. Typically, homebuilders qualify for this exemption.
An experienced real estate attorney can protect you from liability under the New Jersey bulk sales law, and prevent an unwanted surprise following closing.