S1491

An Act concerning foreclosure on residential properties, supplementing and amending various sections of the statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section ) This act shall be known and may be cited as the “New Jersey Foreclosure Fairness Act.”

2. (New section) a. A person who takes title, as a result of a sheriff’s sale or deed in lieu of foreclosure, to a residential property containing a dwelling, as defined in section 103(v) of the Truth in Lending Act, Pub.L.90-321 (15 U.S.C. s.1602(v)), with one to four family housing units or individual units of condominiums or cooperatives, and which is occupied by residential tenants, shall provide notice, in both English and Spanish, no later than ten business days after the sale, to the tenants in accordance with the provisions of subsection c. of this section. The notice shall be in the following form:

NOTICE TO TENANTS

THE FORMER OWNER OF . . . . . . . . . . . . (insert property address) HAS LOST THE PROPERTY AS A RESULT OF A FORECLOSURE. FROM THE TIME YOU RECEIVE THIS AND UNTIL FURTHER NOTICE, YOU SHOULD PAY RENT TO ……(insert name and address of person to whom rent is due) PLEASE SEND RENT BY ……(insert method of transmission) ON THE ……(insert day) OF EACH MONTH.

WITH LIMITED EXCEPTIONS, THE NEW JERSEY ANTI-EVICTION ACT, N.J.S.A.2A:18-61.1 ET SEQ., PROTECTS YOUR RIGHT TO REMAIN IN YOUR HOME. FORECLOSURE ALONE IS NOT GROUNDS FOR EVICTION OF A TENANT. YOU ARE PROTECTED BY THIS LAW EVEN IF YOU DO NOT HAVE A WRITTEN LEASE.

THE NEW OWNER CANNOT EVICT YOU WITHOUT "GOOD CAUSE," AS DETERMINED BY A COURT. EXAMPLES OF "GOOD CAUSE" ARE FAILURE TO PAY RENT, WILLFULLY DAMAGING THE PREMISES, OR PERSONAL OCCUPANCY BY THE NEW OWNER OF THE HOUSE OR APARTMENT THAT YOU NOW LIVE IN.

A RESIDENTIAL TENANT IN NEW JERSEY CAN BE EVICTED ONLY THROUGH A COURT PROCESS. ONLY A SHERIFF WITH A COURT ORDER MAY REMOVE YOU FROM THE PREMISES, AND ONLY AFTER YOU HAVE BEEN GIVEN THE OPPORTUNITY TO DEFEND YOURSELF IN COURT.

IT IS ILLEGAL FOR ANYONE TO TRY TO FORCE YOU TO LEAVE YOUR HOME IN ANY OTHER MANNER, INCLUDING BY SHUTTING OFF UTILITIES OR OTHER VITAL SERVICE OR FAILING TO MAINTAIN THE PREMISES. HOWEVER YOU MAY ACCEPT FINANCIAL COMPENSATION FOR LEAVING VOLUNTARILY IF THE NEW OWNER OFFERS SUCH COMPENSATION.

IF SOMEONE IS PRESSURING YOU TO LEAVE, CONSULT WITH AN ATTORNEY OR FILE A COMPLAINT WITH YOUR LOCAL PROSECUTOR.

b. The notice required pursuant to subsection a. of this section shall be printed in no less than 14 point bold point type on heavy stock, at least eight and one-half inches by 11 inches in size, and shall contain contact information, including the name, mailing address, e-mail address, and telephone number of the new owner or a person authorized to act on behalf of the new owner.

c. The new owner shall make a diligent effort to obtain the names of all tenants occupying the property for which a notice is required pursuant to subsection a. of this section. The notice shall be addressed to tenants by name; provided, however, that in the event a diligent search fails to identify the tenant by name, the new owner shall address the notice required pursuant to subsection a. of this section to “Tenant.” The new owner shall post the notice prominently on the front door of each tenant’s unit and send the notice to each tenant via certified and regular mail.

d. Any person taking title to the residential property as a result of a sheriff’s sale or deed in lieu of foreclosure, or that person’s agent or employee, shall provide a copy of the notice as set forth in subsection a. of this section with any written or verbal communication to a tenant for the purposes of inducing a tenant to vacate the property in accordance with the provisions of section 3 of P.L. , c. (C )(pending before the Legislature as this bill).

e. Service on any tenant of a summons and complaint in an action to foreclose on any residential property by any person, or the initial written or verbal communication by a foreclosing creditor to a tenant in a residential property subject to ongoing foreclosure proceedings, or any written or verbal communication that seeks to induce the tenant to vacate the property prior to the transfer of the property through sheriff’s sale or a deed in lieu of foreclosure, shall include a copy of the notice set forth in subsection a. of this section, except that the notice shall substitute the following three paragraphs for the first two paragraphs in the notice of subsection a. of this section:

A FORECLOSURE ACTION HAS BEEN INITIATED ON . . . . . . (insert address of property) AND THE OWNERSHIP OF THE PROPERTY MAY CHANGE AS A RESULT.

UNTIL SUCH TIME AS THE OWERSHIP CHANGES, YOU SHOULD CONTINUE TO PAY RENT TO YOUR LANDLORD. YOU SHOULD GET AND KEEP RECORDS OF YOUR RENTAL PAYMENT, SUCH AS RENT RECEIPTS OR CANCELED CHECKS.

IF YOU ARE UNSURE ABOUT WHO YOUR LANDLORD IS, OR TO WHOM YOU SHOULD PAY RENT, YOU SHOULD SAVE YOUR RENT MONEY SO THAT YOU WILL HAVE IT WHEN THE OWNER DEMANDS THE RENT. NONPAYMENT OF RENT IS GROUNDS FOR EVICTION.

f. Any person, or that person’s agent or employee, who violates the provisions of this section shall be subject to the same civil remedies as are provided for in subsection a. of P.L.1975, c.311 (C.2A:18-61.6), or, in the alternative, damages in the amount of $2,000 per violation, plus attorney’s fees and costs. Nothing in this subsection shall limit the liability, either civil or criminal, of a person, or a person’s agent or employee, who violates any other law or regulation.

3. (New section) a. No person, or the person’s agent or employee, who has filed a complaint in an action to foreclose on a residential property, as described in section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill), or who takes title to a residential property as a result of a sheriff’s sale or other transaction following the filing of a complaint in an action to foreclose a mortgage on the property shall make any communication to induce the tenant to vacate the property except through a bona fide monetary offer, which shall be made in accordance with the provisions of subsections d. and e. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. No person, or the person’s agent or employee, who has filed a complaint in an action to foreclose on a residential property shall take any action placing pressure on a tenant to accept any offer to vacate the property, including, but not limited to:

(1) Mischaracterizing or misrepresenting the rights of the tenant under the Anti-Eviction Act, P.L.1974, c.49 (C.2A:18-61.1 et seq.), or any other State law or municipal ordinance;

(2) Stating the actions the owner may take against the tenant or implying the tenant is obligated to accept an offer or implying consequences against the tenant for failing to accept an offer;

(3) Any form of tenant harassment, including, but not limited to, discontinuance of electricity, heat, or other utilities, failure to maintain the common areas or facilities of the property, or any other failure to maintain the premises in a habitable condition;

(4) Any rent increase in violation of a municipal rent control or rent leveling ordinance, or in the event the property is not subject to rent control, any rent increase in excess of the increase in the consumer price index for all urban consumers in the New York City and Philadelphia areas as reported by the United States Department of Labor.

c. Any person, or that person’s agent or employee, who violates the provisions of this section shall be subject to the same civil remedies as are provided for in subsection a. of P.L.1975, c.311 (C.2A:18-61.6), or, in the alternative, damages in the amount of $2,000 per violation, plus attorney’s fees and costs. Nothing in this subsection shall limit the liability, either civil or criminal, of a person, or a person’s agent or employee, who violates any other law or regulation.

4. Section 17 of P.L.2008, c.127 (C.46:10B-51) is amended to read as follows:

17. a. (1) A creditor serving a [notice of intention to foreclose] summons and complaint in an action to foreclose on a mortgage on residential property in this State shall [serve] , within 10 days of serving the summons and complaint, notify the [public officer] municipal clerk of the municipality in which the property is located [, or, if the municipality has not designated a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk with a copy of the notice at the same time it is served on the owner of the] that a foreclosure complaint has been filed against the subject property. The notice shall contain the name and contact information for the representative of the creditor who is responsible for receiving complaints of property maintenance and code violations, may contain information about more than one property, and shall be provided via written communication, or through electronic communication, at the discretion of the municipal clerk. If the municipality has appointed a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk shall forward a copy of the notice to the public officer or shall otherwise provide it to any other local official responsible for administration of any property maintenance or public nuisance code.

In the event that the property being foreclosed is an affordable unit pursuant to the “Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), then the creditor shall identify that the property is subject to the "Fair Housing Act.”

The [copy served on the public officer or municipal clerk] notice shall also include the street address, lot and block number of the property, and the full name and contact information of an individual located within the State who is authorized to accept service on behalf of the creditor. The notice shall be provided to the municipal clerk within 10 days of service of a summons and complaint in a foreclosure action.

(2) Within 30 days following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), any creditor that has initiated a foreclosure proceeding on any residential property which is pending in Superior Court shall provide to the municipal clerk of the municipality in which the property is located, a listing of all residential properties in the municipality for which the creditor has foreclosure actions pending by street address and lot and block number. If the municipality has appointed a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3

et seq.), the municipal clerk shall forward a copy of the notice to the public officer, or shall otherwise provide it to any other local official responsible for administration of any property maintenance or public nuisance code.

b. If the owner of a residential property vacates any property on which a foreclosure proceeding has been initiated or if a residential property becomes vacant at any point subsequent to the creditor's filing the [notice of intention to foreclose] foreclosure complaint, but prior to vesting of title in the creditor or any other third party, and the property is found to be a nuisance or in violation of any applicable State or local code, the local public officer [or] , municipal clerk, or other authorized municipal official shall notify the creditor, which shall have the responsibility to abate the nuisance or correct the violation in the same manner and to the same extent as the title owner of the property, to such standard or specification as may be required by [the public officer or municipal clerk] State law or municipal ordinance.

c. If the municipality expends public funds in order to abate a nuisance or correct a violation on a residential property in situations in which the creditor was given notice pursuant to the provisions of subsection b. of this section but failed to abate the nuisance or correct the violation as directed, the [public officer or municipal clerk] municipality shall have the same recourse against the creditor as it would have against the title owner of the property, including but not limited to the recourse provided under section 23 of P.L.2003, c.210 (C.55:19-100).

(cf: P.L.2008, c.127, s.17)

5. (New section) The provisions of any regulation, ordinance, rule, or resolution of any municipality, county or other subdivision of the State, or any agency or instrumentality of that municipality, county or other subdivision, relating to foreclosure practices, or the extension, delay, forbearance or imposition of moratorium periods concerning foreclosures, are superseded by the provisions of the “Save New Jersey Homes Act of 2008,” P.L.2008, c.86 (C.46:10B-36 et seq.) and the forbearance and nuisance abatement provisions of the “Mortgage Stabilization and Relief Act,” P.L.2008, c.127 (C.55:14K-82 et al.).

6. Section 4 of this act shall take effect on the 10th day after the date of enactment, and the remainder of the act shall take effect on the 30thday after the date of enactment.

STATEMENT

This bill imposes additional requirements on lenders seeking to foreclose on a residential mortgage property and take title to the property. The bill requires persons taking title to a property through sheriff’s sale or deed in lieu of foreclosure to send notice to any tenants at the property that ownership has changed and that the tenants are not required to vacate the premises unless the new owner files an eviction complaint in Superior Court and obtains a court order requiring the tenant to move. A new owner who does not provide the notice to the residential tenant is liable to the tenant in a civil action for triple damages plus attorney’s fees and costs or damages up to $2,000 plus attorney’s fees and costs.

The new owner must include the notice in any communication with the tenant which seeks to induce the tenants to vacate the property. The new owner of the property must make a diligent effort to obtain the names and addresses of all tenants occupying the property. If enacted, this legislation would prohibit the new owner from harassing a tenant or mischaracterizing the right of the tenant to remain in the property under any federal, State, or local law.

The bill amends the “Mortgage Stabilization and Relief Act,” P.L.2008, c.127, to require a lender that files a foreclosure complaint to provide to the municipal clerk of the municipality where the property is located, or other authorized municipal official, the location all properties the creditor is foreclosing upon within the municipality and the status of each action. Current law requires the Department of Banking and Insurance to provide detailed information on residential foreclosures, arranged by county. The bill requires that this information be arranged by municipality and include the disposition of all foreclosure actions initiated by the creditor within the municipality. Information sent to the municipal clerk by the creditor may be provided by way of electronic communication.

The bill further amends the Mortgage Stabilization and Relief Act to require that a creditor serving a complaint for foreclosure on a property that is an affordable housing unit pursuant to the Fair Housing Act notify the municipality, via electronic communication, that the property is an designated as affordable housing.