New Law – Foreclosure of Mortgages on Vacant and Abandoned Properties

DATE: March 22, 2013

TO: All Agents and Employees

FROM: Nancy L. Koch, Esq. CTP
Vice President & NJ State Counsel
Old Republic National Title Insurance Company

RE: New Law – Foreclosure of Mortgages on Vacant and Abandoned Properties

At the end of last year, Governor Christie signed into law an act which permits lenders to foreclose mortgages using an expedited summary action if the encumbered residential property is deemed to be abandoned and vacant. Enacted as Chapter 70 of the Public Laws of 2012, the new law will be found in the New Jersey Statutes at NJSA 2A:50-73. The law takes effect on April 1, 2013.

The new procedure applies only to residential real estate which is proven to be “vacant and abandoned”. In order to be found to be “vacant and abandoned”, a court must find:

A — That the mortgaged property is not occupied by a mortgagor or tenant (which tenancy was created before the service of the notice of intention to foreclose); and

B — At least 2 of the following conditions exist:
 Overgrown or neglected vegetation
 Accumulation of newspaper, circulars, flyers or mail on the property
 Disconnected gas, electric, or water utility services to the property
 Accumulation of hazardous, noxious or unhealthy substances or materials on the property
 Accumulation of junk, litter, trash or debris on the property
 Absence of window treatments such as blinds, curtains or shutters
 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 mortgagee or other authorized party has secured or winterized the property due to the property being deemed vacant and unprotected or in danger of freezing
 A written statement issued by any mortgagor expressing the clear intent of all mortgagors to abandon the property
 Any other reasonable indicia of abandonment.

A residential property shall 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 is in compliance with applicable ordinances, codes, regulations and statutes
 A building occupied on a seasonal basis, but otherwise secure
 A building that is secure, but is the subject of a probate action, action to quiet title, or other ownership dispute.

Under the new law, after a foreclosure has been commenced, the lender may file an application to proceed in a summary manner because the residential property that is the subject of the action is believed to be “vacant and abandoned.” In order to so proceed, the foreclosing party must establish that a process server has made two unsuccessful attempts to serve the mortgagor or occupant at the property, which attempts must be at least 72 hours apart and during different times of day, either before noon, between noon and 6 p.m., or between 6 p.m. and 10 p.m.

The court may enter a final foreclosure judgment in this type of matter upon a finding a) by clear and convincing evidence that the residential property is vacant and abandoned, and b) that a review of the pleadings and documents filed in the action supports the entry of a final foreclosure judgment. A final judgment may not be entered where any defendant has filed an answer or appearance which has not been withdrawn and the objection or defenses asserted provide cause to preclude entry of a final judgment.

Under the new law, the Sheriff is directed that the property shall be sold within 60 days of the sheriff’s receipt of the writ of execution. If it becomes apparent that the Sheriff cannot comply with the 60 day time frame, the foreclosing plaintiff may apply to the court for an order appointing a Special Master or Judicial Agent to hold the foreclosure sale.

The foregoing is a summary of the law. If you would like to review a full copy, it can be accessed at www.njleg.state.nj.us; choose “Chapter Laws” under “Laws and Constitution” from the menu on the left margin, choose “Chapter Laws 2012”, page down to P.L. 2012, c. 70.

Underwriting Guidelines: Any title deriving through this new procedure must be submitted to a member of our underwriting staff for approval.

As always, please address any questions you may have to a member of our underwriting staff.

Nancy L. Koch, Esq. CTP
Vice President & NJ State Counsel
Old Republic National Title Insurance Company
119 Cherry Hill Road, Suite 100
Parsippany, NJ 07054
973-541-2400, ext. 12404
201-839-9019 (fax)
nkoch@oldrepublictitle.com

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