Bulk Sales Exemptions for Real Estate Become More Clear Under New Law
Pursuant to the Act, whenever a person sells or transfers all or any part of the person’s business assets (which has been deemed to include certain kinds of real estate in some instances) otherwise than in the ordinary course of business, the purchaser or transferee of those assets must file an application with the State of New Jersey notifying it of the proposed price, terms and conditions of the sale/transfer and whether or not the purchaser/transferee has any knowledge that the seller/transferor owes any kind of taxes to the State of New Jersey. If such notice is not filed, then the purchaser/transferee could become liable for such taxes of the seller/transferor after the closing is consummated.
In order to add some clarity to the Act, the law was amended in 2011 to ensure that individuals, estates and trusts that were purchasing single family homes, condominium units, co-ops and seasonal rental properties would be exempt from the bulk sales notification requirements. However, due to the varying structure and complexity of real estate transactions, further clarity was still needed. Hence, the new law was adopted.
The new law provides that the bulk sale notification requirements and potential tax liability noted above do not apply to the sale, transfer or assignment of a simple dwelling house or a seasonal rental unit (or a lease thereof) if the seller, transferor or assignor is NOT ONLY an individual, estate or trust BUT ALSO any combination thereof that owns the simple dwelling house or seasonal rental unit or lease for the seasonal use or rental of real property as joint tenants, tenants in common or tenancy by the entirety [emphasis underlined]. This additional language makes it clear that not only individuals, estates or trusts are exempt from the Act, but also that combinations of more than one such individual, estate or trust are also exempt. As such, this avoids any confusion as to whether or not the bulk sales notice has to be filed under such circumstances.
Similarly, the recently enacted statute makes it clear that the Act also does not apply to the sale or transfer of a grant, tax credit, or tax credit transfer certificate that has been awarded or issued to a person in connection with certain state or local business assistance or incentive programs or activities. These exempt programs and activities include the Corporation Business Tax Credit Certificate Transfer Program, the Business Retention and Relocation Assistance Program, the Business Employment Incentive Program, the Urban Transit Hub Tax Credit Program, the Grow New Jersey Assistance Program, and the State or Local Economic Redevelopment and Growth Grant Program, all as established by applicable state law. The bulk sales notice does not have to be filed under any of these circumstances, either.
The new law takes effect immediately and shall apply retroactively to all sales and transfers that occur on or after August 1, 2007.
If you have any questions regarding the new law and its applicability to your transactions, please contact Richard R. Ahsler of this office.
