As we all know, the housing crisis that begin in 2008 had many crippling effects on the U.S. economy as a whole and New Jersey in particular. The New Jersey Courts attempted to combat many aspects of the mortgage foreclosure crisis through sweeping litigation and reforms aimed at the largest lenders who were found to have regularly violated New Jersey law in foreclosure cases. An already weakened position was further impacted by the destruction caused in late 2012 by Hurricane Sandy. As a whole, the better part of the last decade has seen a massive and significant effect on the New Jersey housing market and, most important, New Jersey property owners.
One of the less discussed topics amongst laypeople is the impact of the thousands of properties that were left abandoned by one – or more – of these situations. While “experts” can debate the numbers, it is impossible to dispute that a great number of properties in this state are sitting in continuing decay. These properties are often owned by owners who were also financially devastated by the economic and housing crisis and were unable to maintain the properties. The owners do not use the properties as a residence nor are they being rented to tenants. Owners are even more frustrated when they are unable to surrender the properties to the mortgage companies.
Due to the impact of of the mortgage foreclosure crisis, the mortgage companies also failed to complete – or, in some cases, even begin – the foreclosure process. Banks, who have been a primary cause of the crisis, and who have also been one of the few beneficiaries of the “recovery”, have lamented that the process of foreclosure in New Jersey, set forth in the “Fair Foreclosure Act,” N.J.S.A. § 2A:50-53 et seq., creates barriers to their completion.
In order to address this issue, in 2012, effective and operative April 1, 2013 (and amended and made effective August 15, 2014), the New Jersey Legislature enacted N.J.S.A. § 2A:50-73 (“Summary action to foreclose mortgages on certain properties”). The provision authorizes “lenders to bring summary actions to foreclose mortgages on vacant and abandoned residential property. In order to secure entry of a foreclosure judgment, the lender would have to follow procedures in addition to those set out in the “Fair Foreclosure Act” and the Rules of Court.”
N.J.S.A. § 2A:50-73(a) states that a property may be considered “vacant and abandoned” where it meets at least two (2) of the following conditions:
(1) overgrown or neglected vegetation;
(2) the accumulation of newspapers, circulars, flyers or mail on the property;
(3) disconnected gas, electric, or water utility services to the property;
(4) the accumulation of hazardous, noxious, or unhealthy substances or materials on the property;
(5) the accumulation of junk, litter, trash or debris on the property;
(6) the absence of window treatments such as blinds, curtains or shutters;
(7) the absence of furnishings and personal items;
(8) statements of neighbors, delivery persons, or government employees indicating that the residence is vacant and abandoned;
(9) windows or entrances to the property that are boarded up or closed off or multiple window panes that are damaged, broken and unrepaired;
(10) doors to the property that are smashed through, broken off, unhinged, or continuously unlocked;
(11) 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;
(12) 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;
(13) 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;
(14) a written statement issued by any mortgagor expressing the clear intent of all mortgagors to abandon the property;
(15) any other reasonable indicia of abandonment.
The provision also states that a property is not “vacant and abandoned” if: (1) 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; (2) there is a building occupied on a seasonal basis, but otherwise secure; or (3) there is a building that is secure, but is the subject of a probate action, action to quiet title, or other ownership dispute.
The provision allows for a “summary action to foreclose a mortgage debt secured by residential property that is vacant and abandoned”. This would allow, subject to the limits of the statute, the lender to seek a completion of foreclosure without meeting all the requirements of the Fair Foreclosure Act.
While it remains open to debate whether the enactment of the “vacant and abandoned” provision is in the best interests of property owners, those who own property which has remained in this condition should immediately consult an experienced New Jersey Foreclosure Attorney to review how this provision, and other federal and state laws, may impact on their circumstances.