Effective July 2019, Critical changes to NJ Law on Adjournments of Sheriff Sales
For many years, New Jersey property owners who wished to adjourn – or delay – a Sheriff’s Sale of their property acted under a long-standing New Jersey statute which governed such requests. However, effective July 28, 2019, the New Jersey statute was modified significantly which may have a significant impact on the rights and options of New Jersey foreclosure.
The New Jersey Statute
Notwithstanding any other law or court rule to the contrary, a sheriff or other officer selling real estate by virtue of an execution may make five adjournments of the sale, two at the request of the lender , two at the request of the debtor, and one if both the lender and debtor agree to an adjournment, and no more, to any time, not exceeding 30 calendar days for each adjournment. However, a court of competent jurisdiction may, for cause, order further adjournments.N.J.S.A. § 2A:17-36 (Adjournments of sale of real estate)
One aspect of the change in the statute which is still being evaluated is whether the provisions of the amended statute apply to foreclosure proceedings which were pending prior July 28, 2019.
What does the new statute mean?
For a property owner facing foreclosure in New Jersey, where a sheriff’s sale is scheduled, the new statute allows the property owner to request up to two (2) up to 30 day adjournments of the sheriff’s sale date. The request is made in writing to the sheriff of the county in which the sale is scheduled. There is typically a $28.00 fee for the request which must be paid at the time requested. Practically speaking, as sheriff’s sales are held on a particular day of the week in each county, each request is likely to adjourn the sale for 28 days.
The statute also allows the plaintiff, often the mortgage company, to also request up to two (2) 30 day adjournments. In the past, the plaintiff could adjourn the sheriff’s sale an unlimited amount of times.
The plaintiff and defendant can also agree to a final or 5th adjournment of the sale by the consent of both parties.
Once the parties have used these adjournments, sheriff’s sales can only be adjourned by a Court Order. Further, under federal bankruptcy law, the filing of a bankruptcy petition operates as a “stay” of legal proceedings like foreclosure.
Some Examples of the Impact of the Amended Statute
While the amended statute on adjournments of New Jersey sheriff’s sales seems to be very similar to the prior statute, the changes may have a significant impact on a property owner’s rights an options in foreclosure.
It is important to remember that if a sheriff’s sale is held in New Jersey, the property owner loses his or her ownership interest in the property. This includes the requirement that a bankruptcy petition must be filed before a sheriff’s sale is held to preserve the property owner’s right to propose a way to avoid the loss of the property.
Chapter 13 Bankruptcy cases
If a Chapter 13 or Chapter 11 Bankruptcy petition is filed before a sheriff’s sale, the property owner can propose to cure arrears over the life of a plan. The plaintiff cannot conduct the sheriff’s sale due to the “automatic stay”. In the past, plaintiff’s would consistently adjourn the sheriff’s sale during the course of the bankruptcy case. This meant that the sale date remained a public record as a plaintiff was not limited.
With the change in the statute, the plaintiff now may only adjourn the sheriff’s sale twice after the bankruptcy case is filed.
This has a potential benefit for debtors in New Jersey bankruptcy cases involving foreclosure. The property is removed from the active list of foreclosed properties. For homeowners, this alleviates the constant anxiety of the potential sheriff sale date. With the spread of online data aggregators who publish “public” information on websites, the homeowner no longer has to face constant inquiries.
Loan modifications during foreclosure
New Jersey property owners facing foreclosure often attempt to resolve a foreclosure by entering into a loan modification application with the mortgage company. Where a sheriff’s sale is scheduled, this can often create a very dangerous situation while the homeowner awaits a decision from the bank and faces the potential loss of the property.
The new statute provides more clarity to homeowners. Due to the limit on the number of adjournments which may be granted to both the homeowner and the the bank, the homeowner now knows that they cannot rely on the plaintiff to adjourn the sale more than twice. This should cause any New Jersey property owner facing foreclosure to immediately consult with an experienced attorney when a sheriff’s sale is scheduled.
The attorneys at Gillman, Bruton & Capone, LLC, have always advised New Jersey property owners facing foreclosure and a sheriff’s sale to immediately consult with an attorney to learn their rights and options. The changes to N.J.S.A. § 2A:17-36 regarding adjournments of sheriff’s sales in New Jersey foreclosure proceedings should only further reinforce the need to consult an attorney in these situations.