Expedited Foreclosure Process Bill Introduced in New Jersey
Updated 4/30/18: NJ A3823 (“Concerns expedited process for foreclosing vacant and abandoned residential properties in uncontested actions”) has been changed to A2085 for the current session and remains in the Assembly Housing and Community Development Committee. An identical Senate bill, S1243, is a carryover of S1832 from the previous session and is pending in the Senate Community and Urban Affairs Committee.
Updated 12/18/17: NJ A3823 (“Concerns expedited process for foreclosing vacant and abandoned residential properties in uncontested actions”) was reported out the Assembly Appropriations Committee with amendments and a second reading on December 18.
Legislation Update
May 26, 2016
Statement
This bill provides an expedited process for residential mortgage lenders to foreclose vacant and abandoned residential properties and enhances the remedies available to common interest communities when lenders delay the foreclosure of vacant and abandoned properties.
The bill provides that a residential mortgage lender may file a motion to proceed summarily to foreclose vacant and abandoned property if the foreclosure action is uncontested as defined pursuant to R.4:64-1(c) of the Rules Governing the Courts of the State of New Jersey.
The bill requires any defense or objection to an application to proceed summarily to foreclose vacant and abandoned property to be accompanied by an affidavit stating that the defense is not made solely for the purpose of delaying the relief requested pursuant to the summary action. The defense or objection must be presented within 30 days of the filing of the service of the application. Any defense or objection that is presented without the affidavit, or that is not presented within the 30 day time period, shall not be considered by the court, except for good cause shown.
The bill requires the Superior Court to order payment by a plaintiff of $1,000 as a fee for costs associated with the use of the summary process for vacant and abandoned properties, which shall be retained by the Administrative Office of the Courts in a non-lapsing account for use by the Office of the Superior Court Clerk.
Under current law, a residential mortgage lender may commence a summary action to foreclose a mortgage debt in Superior Court if the court finds that at least two out of 15 conditions exist that indicate the property is abandoned. This bill adds to this list a certification from the board of a planned real estate development stating with specificity that the property has been observed to be abandoned.
This bill also provides that, when a lender is entitled to proceed through the foreclosure process in a summary manner, but has not done so, the board of a planned real estate development may file a motion to compel expedited judgment and sale, or in the alternative, payment of association fees. The bill requires the motion to be accompanied by an affidavit from a person having personal knowledge of the contents and shall contain the facts necessary to establish that the action is uncontested. The Superior Court shall subsequently enter an order compelling the lender to file an application to proceed in a summary manner within 30 days or, where the lender declines to file that motion, to pay to the planned real estate development the assessments for periodic payments due for regular and usual operating and common area expenses coming due on or after the thirty-first day following entry of the order to pay.
Alternatively, the court may approve an application for an Order Appointing a Fiscal Agent. The bill allows the board of a common interest ownership association to apply to the Superior Court for an Order Appointing a Fiscal Agent over an abandoned or unoccupied unit. The fiscal agent will be responsible for maintaining the unit and paying, through a licensee or otherwise, maintenance fees and assessments for benefits such as utilities, common element expenses, amortization of common elements, administrative costs and maintenance of the physical structure in order to protect, preserve and maintain the unit for the benefit of the planned real estate development, the unit owners in the common interest community and any others with an interest in the unit, including, without limitation, mortgage holders. The fiscal agent is also intended to prevent the impairment of the utility of the unit for the association, the other unit owners in the planned real estate development, and others with an interest in the unit such as a mortgage holder.
Under the bill, when a fiscal agent receives payments, the fiscal agent must deposit the payments in a banking institution in its name as the fiscal agent and shall pay the association the following charges:
(1) 10 percent of the payment due pursuant to any license agreement issued by the fiscal agent to reimburse the association for the purposes of managing receivership;
(2) current maintenance fees on a monthly basis; and
(3) any prior past due maintenance fees, assessments, late charges, interest and reasonable counsel fees and costs, until paid in full.
Upon application of the rent or any other payments, including, but not limited to, reimbursement to the receiver of any and all costs incurred to rehabilitate the unit to make it habitable, and once the rent or other payments satisfy in full the underlying debt due to the association for delinquent fees and charges assessed to the unit, further monthly payments are to be applied on a pro rata basis to:
(1) the association to satisfy monthly maintenance fees or assessments as may be applicable; and
(2) monthly mortgage debt payment amortization, except that the payment shall not include any acceleration of principal or interest due to a default under the terms of the loan.
Source: New Jersey Legislature
Additional Resources:
S2156 (full text)
S2545/A3793 (bill info)
