On September 14, 2011, Governor Chris Christie signed into law (A-2748) legislation governing bulk sales transactions which exempts purchasers buying one and two family residences, and certain seasonal rental properties from individuals, estates, or trusts from the notification requirements imposed under bulk sales law. As a result of this amendment to the law, if an individual, estate, or trust is the seller of a one or two family home or certain seasonal rental property owed state taxes on revenue earned from the rental property, the purchaser will no longer be considered liable for any taxes owed by the seller. However, purchasers buying one and two family residences, and certain seasonal rental properties from business entities, including corporations, partnerships, and limited liability companies (each a “Business Entity”, collectively, “Business Entities”), remain responsible for the bulk sales notification requirements. Generally, bulk sales laws apply to transactions involving the sale, transfer, or assignment, in bulk, of business assets of any part or the whole of the person’s business assets, other than in the ordinary course of business, and require a purchaser to provide notice of the transaction to the New Jersey, Division of Taxation. N.J.S.A. § 54:50-38(a). However, the reporting requirement is based upon the type of seller involved in the transaction. For example, if an individual sold a single family home to a Business Entity, the sale would be exempt from reporting. On the other hand, if a Business Entity sold the same single family home to an individual, the sale would not be exempt from the reporting requirements and the purchaser must report in accordance with N.J.S.A. § 54:50-38(a). The law immediately offers relief from the unnecessary delay of one and two family residential real estate transactions due to the previous bulk sales notification requirements imposed by the New Jersey, Division of Taxation, which often resulted in unnecessary closing delays and/or required sellers to place large sums in escrow until the Division of Taxation cleared a property sale. This law (A-2748) went into effect immediately but is retroactive to August 1, 2007. Thus, any transactions that occurred between August 1, 2007 and September 14, 2011 are, in essence, not subject to the bulk sales requirements. The Division of Taxation is working to issue clearance letters to release funds that are currently held in escrow on transactions which were, but are no longer subject to the bulk sales requirements as a result of this amendment to the law. For more information, please contact Genova Burns LLC at email@example.com or (973) 533-0777. THIS CLIENT ADVISORY IS FOR INFORMATIONAL PURPOSES ONLY, AND SHALL NOT BE CONSIDERED AS LEGAL ADVICE.