Update on Bulk Sales Act
This comment updates my September 2011 Newsletter regarding the “New Obligation Imposed on a Seller of Real Estate.”
Governor Christie recently signed legislation that effectively repeals application of the Bulk Sales Act to the sale of one and two family homes. This legislation should be a source of relief for parties engaged in the average sale of a single family home. The application of the Bulk Sales Act to the sale of one and two family homes had been considered very deleterious to home sales, especially short sales in New Jersey. The new legislation retroactively provides that as long as the Seller is not a limited liability company, the Bulk Sales Act will not apply and the C9600 form does not need to be filed for closing. However, there are still tax implications from the sale of even a one or two family home, and you should consult your tax consultant in this regard.
The Bulk Sales Act, when it applied to one and two family homes, was not a new tax, but rather a method by which the state could try to make sure that a Seller paid any taxes owed as of the date of closing. There is still a real possibility that taxes are owed from the sale of a one or two family home, but the Bulk Sales Act will no longer apply to such transactions, unless the Seller is a limited liability company.
The new law is retroactive. Therefore, because a past transaction addressed by the new legislation is no longer subject to Bulk Sales, neither a Seller nor a Buyer need to be concerned about the New Jersey Division of Taxation uncovering such a sale and coming back against them. The Bulk Sales applicability to one and two family homes was wildly unpopular among realtors and attorneys, and such groups lobbied vigorously to have the law repealed as it relates to one and two family homes.
Please contact us for a free consultation (856-637-3000) in the event that you are considering entering into a real estate transaction. I will be happy to assist you.
– Robert J. Wiltsee, Esquire