With the beginning of the 2024 legislative session, we return to the Consumer Finance State Roundup, which is intended to provide a brief overview of recently enacted legislation of potential interest.
To date in January, one state has enacted a legislative measure of potential interest to Consumer Finance ABstract readers: New Jersey Assembly Bill 5664 (2023 N. J. Laws 255). Effective immediately upon approval by Governor Phil Murphy on January 12, the measure amends the state’s Fair Foreclosure Act (“Act”) to address requirements relating to sheriff’s sales, and establishes the Community Wealth Preservation Program (“Program”).
The measure substantially amends Section 2A:50-64 of the Act, which sets forth requirements for sheriff’s sales (including obligations of the plaintiff in a foreclosure action). First, prior to the sale, the measure the foreclosing plaintiff to disclose (if known) whether the property is vacant, tenant-occupied, or owner-occupied. Second, the measure prohibits the plaintiff (or that party’s agent) from contacting the defendant, their next of kin, or a community development corporation prior to providing the sheriff’s office with the reserve (or “upset”) price to inquire whether that party will participate in the sheriff’s sale or exercise other rights under New Jersey law.
Beyond the requirements for sheriff’s sales, the measure amends the Act to address conditions related to foreclosure proceedings and property maintenance requirements. After institution of a foreclosure proceeding pursuant to the Act, current law permits a creditor to engage an agent to be responsible for the care, maintenance, security, and upkeep of a vacant and abandoned property. The measure clarifies that neither the creditor nor the agent will be liable for damage caused by entry into the property, provided that such entry is peaceful and conducted with reasonable care.
According to the measure’s definition, the legislature created the Program “to assist prospective owner-occupants, nonprofit community development corporations, foreclosed upon defendants, next of kin of foreclosed upon defendants, and tenants of foreclosed upon defendants in purchasing and financing foreclosed upon residential properties in sheriff’s sales.” In a sheriff’s sale, an eligible party must provide an initial 3.5 percent deposit, and then has 90 days to pay the balance (or may provide proof of pre-approval to finance the remainder of the purchase amount). Such purchaser must maintain eligibility (to include that, in the case of an individual bidder, the party will occupy the purchased property as a principal residence for a period of at least 84 months after taking possession). The sheriff’s office must maintain and publicly display (i.e., on its website) information regarding the Program written in plain language to explain financing for the purchase of foreclosure sales.
Finally, the measure amends Section 22A:4-8 of the New Jersey Statutes, which relates to the fees that a sheriff may charge for execution of a sheriff’s sale. For sales by virtue of an execution conducted in accordance with the Act’s provisions, the amended section authorizes the sheriff to charge: (a) 6 percent; or (b) if a sale reverts to the foreclosing plaintiff, $150.