New Jersey Legislative Update

New Jersey Legislative Update

The New Jersey legislature recently enacted laws establishing a summary action to foreclose mortgages on vacant and abandoned residential property, effective December 3, 2012.  However, the Senate bill’s provisions will not apply until April 1, 2013.

NEW JERSEY SENATE BILL 2156

“Vacant and abandoned” residential property means residential real estate with respect to which the lender proves by clear and convincing evidence that the mortgaged real estate is vacant and has been abandoned.  Real property will be considered “vacant and abandoned” if the court finds that the mortgaged property is not occupied by a borrower, or tenant as evidenced by a lease agreement, entered into prior to the service of a notice of intention to commence foreclosure and at least two of the following conditions exist:

  • Overgrown or neglected vegetation;
  • The accumulation of newspapers, circulars, flyers, or mail on the property;
  • Disconnected gas, electric, or water utility services to the property;
  • The accumulation of hazardous, noxious, or unhealthy substances or materials on the property;
  • The accumulation of junk, litter, trash or debris on the property;
  • The absence of window treatments such as blinds, curtains, or shutters;
  • The absence of furnishings and personal items;
  • Statements of neighbors, delivery persons, or government employees indicating that the residence is vacant and abandoned;
  • Windows or entrances to the property that are boarded up or closed off or multiple window panes that are damaged, broken, and unrepaired;
  • Doors to the property that are smashed through, broken off, unhinged, or continuously unlocked;
  • A risk to the health, safety, or welfare of the public, or any adjoining or adjacent property owners, exists due to acts of vandalism, loitering, criminal conduct, or the physical destruction or deterioration of the property;
  • An uncorrected violation of a municipal building, housing, or similar code during the preceding year, or an order by municipal authorities declaring the property to be unfit for occupancy and to remain vacant and unoccupied;
  • The lender or other authorized party has secured or prepared the property for cold weather due to the property being vacant and unprotected or in danger of freezing;
  • A written statement issued by any borrower expressing the clear intent of all borrowers to abandon the property; or
  • Any other reasonable indication of abandonment.

A residential property will not be considered “vacant and abandoned” if on the property there is:

  • An unoccupied building, which is undergoing construction, renovation, or rehabilitation that is proceeding diligently to completion, and the building is in compliance with all applicable ordinances, codes, regulations, and statutes;
  • A building occupied on a seasonal basis, but otherwise secure; or
  • A building that is secure, but is the subject of a probate action, action to quiet title, or other ownership dispute.

A summary action to foreclose a mortgage debt secured by residential property that is vacant and abandoned may be brought by a lender in the New Jersey Superior Court.  In addition, a lender may, at any time after filing a foreclosure action, file with the court, in accordance with the Rules Governing the Courts of the State of New Jersey (the “Rules”), an application to proceed in a summary manner because the residential property that is the subject of the foreclosure action is believed to be “vacant and abandoned.”  This does not apply to a foreclosure of a timeshare interest secured by a mortgage.

In addition to the service of process required by the Rules, a lender must establish, for the entry of a residential foreclosure judgment, that a process server has made two unsuccessful attempts to serve the borrower or occupant at the residential property, which attempts must be at least 72 hours apart, and during different times of the day, either before noon, between noon and 6 P.M., or between 6 P.M. and 10 P.M.

In addition to any notices required to be served by law or the Rules, a lender must, with any order to show cause served as original service of process or a motion to proceed, serve a notice that the lender is seeking, on the return date of the order to show cause, or on the date fixed by the court, to proceed summarily for entry of a residential foreclosure judgment because the property is vacant and abandoned.

When a property is vacant and abandoned, a lender will not be required to serve the borrower with a notice to cure.

The court may enter a final residential mortgage foreclosure judgment upon a finding by clear and convincing evidence that the residential property is vacant and abandoned, and that a review of the pleadings and documents filed with the court supports the entry of a final residential mortgage foreclosure judgment.

A final residential mortgage foreclosure judgment will not be entered if the court finds that:

  • The property is not vacant or abandoned; or
  • The borrower or any other defendant has filed an answer, appearance, or other written objection that is not withdrawn and the defenses or objection asserted provide cause to preclude the entry of a final residential mortgage foreclosure judgment.

If a final residential mortgage foreclosure judgment is not entered on the original or adjourned return date of an order to show cause or the date fixed by the court to proceed, the court may direct that the foreclosure action continue on the normal track for residential mortgage foreclosure actions for properties that are not vacant and abandoned and the notice to cure served with the order to show cause or the order fixing that date for the matter to proceed summarily will not be effective.  All actions brought to foreclose on real property must proceed in accordance with the Rules.

If the court makes a finding in the foreclosure judgment that the property is vacant and abandoned, the sheriff must sell the property within 60 days of the sheriff’s receipt of any writ of execution issued by the court.  If the sheriff cannot conduct the foreclosure sale, the foreclosing lender may apply to the court for an order appointing a Special Master or judicial agent to hold the foreclosure sale.