by Caitlin M. Donnelly, Esq. 
KML Law Group, PC 
USFN Member (NJ, PA) 

On February 22, New Jersey enacted AB 2964, requiring any owner acquiring title to a non-owner-occupied residential property as the result of a sheriff's sale or a deed in lieu to provide a new notice post-sale.  The notice must include the name and address of the new owner, and contact information for an in-state representative, if the owner is out of state.  The notice must be sent to the municipality in which the property is located and any applicable common interest community (HOA, COA, etc.) within 10 business days of taking title. This bill became effectively immediately. Notably, there is no penalty provision for failure to comply with this new requirement.

Previously, some new owners already had to provide a similar notice, but creditors only provided such notice to the municipality at the commencement of a foreclosure and were exempt from any requirement to report the transfer post-sale or after a DIL, creating an inadvertent exemption for creditors. This bill’s stated purpose was to eliminate that exemption, as part of an effort to assist prospective purchasers and tenants of foreclosed residential properties in confirming ownership of such properties and to begin to address what was stated as an emerging problem of bad-faith actors falsely claiming to own these properties and fraudulently attempting to lease or sell them.  

There are two challenges associated with this legislation.  First, the definition of the term “taking title”, which triggers the notice requirement under the statute, is not defined. Whether someone takes title when the gavel drops at the judicial sale, after the redemption period expires, or upon delivery or recording of the deed is an issue that may need judicial interpretation.  

Furthermore, there is currently no registration requirement for a homeowner’s association or other type of common interest association in New Jersey.  As a result, it is often difficult to ascertain whether there even is such an association for a particular property, and even more difficult to find accurate and up to date contact information for that entity.

AB 2964 is one of three recent foreclosure-related bills to pass through the New Jersey legislature.  The other two are AB 1063, which enhances homeowner notification of foreclosure mediation program requirements, and AB 5130 establishes the New Jersey Foreclosure Prevention Act.  Although not part of a sweeping foreclosure-related legislative package like that of 2019, we expect additional foreclosure and eviction legislation to be contemplated as the state grapples with the anticipated post-COVID-19 moratorium volume increases and how best to protect its residents.  

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April 2021 e-Update