Assembly Commerce and Economic Development Committee Statement to Assembly, No. 5664 (December 11, 2023)

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This is the Assembly Commerce and Economic Development Committee statement to Assembly, No. 5664 with committee amendments, State of New Jersey, dated December 11, 2023. The committee reports Assembly Bill No. 5664 favorably and with committee amendments. As amended, the bill establishes the "Community Wealth Preservation Program" and expands access for certain buyers to purchase property from sheriff's sales, with up to 90 business days to complete a sale. It gives a foreclosed upon defendant, next of kin or tenant a right of first refusal, exercised with a 3.5 percent deposit. It also increases the minimum fee to be charged by virtue of an execution sale from $50 to $150.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                           STATEMENT TO

                      ASSEMBLY, No. 5664
                          with committee amendments



       STATE OF NEW JERSEY
                          DATED: DECEMBER 11, 2023

          The Assembly Commerce and Economic Development Committee
      reports favorably and with committee amendments Assembly Bill No.
      5664.
          As amended, this bill establishes the “Community Wealth
      Preservation Program” and expands access for certain buyers to
      purchase property from sheriff’s sales.
          Under the bill, a defendant in a foreclosure proceeding, next of kin
      of the foreclosed upon defendant, tenant of the foreclosed upon
      defendant, nonprofit community development corporation, or bidder
      who shall occupy the property for at least 84 months, will have up to
      90 business days to complete the sale of a foreclosing property, with
      no interest accruing on the balance of the sale for 60 business days
      following the sale. If the successful bidder does not pay the balance
      within this 90 business day period, the bidder would forfeit the deposit
      on the property and be responsible for the payment of accrued interest
      and fees or penalties incurred as a result of the sale being void, unless
      the failure to fulfill the balance is due to the bidder’s inability to close
      a mortgage through no fault of the bidder’s own.
          Under the bill, a foreclosed upon defendant, next of kin of the
      foreclosed upon defendant, tenant of the foreclosed upon defendant,
      nonprofit community development corporation, or bidder may
      purchase property in a sheriff’s sale by way of financing if the bidder
      provides documentation that the bidder has been pre-approved by a
      financial institution for financing the property. A bidder, other than
      the foreclosed upon defendant, the foreclosed upon defendant’s next of
      kin, or nonprofit community development corporation may only use
      the financing option if the property will be the bidder’s primary
      residence.
          In the case of a foreclosed residential property where the
      foreclosed upon defendant is an individual and not a corporate entity,
      if the foreclosed upon defendant, next of kin of the foreclosed upon
      defendant, or tenant of the foreclosed upon property has secured
      financing or assets sufficient to meet terms offered by the foreclosing
      plaintiff or an alternative financial institution to purchase the property,
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the foreclosed upon defendant, next of kin of the foreclosed upon
defendant, or tenant will have the right of first refusal to purchase the
property for the original upset price listed in the notice provided by the
foreclosing plaintiff before the time of sale. The right of first refusal
will only be made available to the foreclosed upon defendant, next of
kin of the foreclosed upon defendant, or tenant for the initial sale of
the foreclosed upon property, unless the sale is delayed or postponed,
upon which the foreclosed upon defendant, next of kin of the
foreclosed upon defendant, or tenant will retain the right of first refusal
for the rescheduled date of sale of the foreclosed upon property. Such
right will be deemed exercised if, prior to the opening of the bidding
on the foreclosed property, the foreclosed upon defendant, next of kin
of the foreclosed upon defendant, or tenant pays a 3.5 percent deposit
with the rest of the balance due within 90 business days by cash,
certified or cashier’s check, or by wire transfer, made payable to the
sheriff of the county in which the sale is conducted.
    If the foreclosed upon defendant, next of kin of the foreclosed
upon defendant, or tenant of the foreclosed upon property fails to
secure financing or assets sufficient to meet the terms offered by the
foreclosing plaintiff or an alternative financial institution to purchase
the residential property, the foreclosed upon defendant, next of kin of
the foreclosed upon defendant, or tenant may request that a nonprofit
community development corporation purchase the property. If the
nonprofit community development corporation agrees in writing to
purchase the property from the foreclosed upon defendant, next of kin
of the foreclosed upon defendant, or tenant, the corporation will have a
right of second refusal to purchase the property which is subordinate to
the first right of refusal provided to a foreclosed upon defendant, next
of kin of the foreclosed upon defendant, or tenant. If the foreclosed
upon defendant, next of kin of the foreclosed upon defendant, or tenant
decides not to participate in the sheriff’s sale, enter into an agreement
with the corporation, or fail to secure financing or assets sufficient to
meet the terms offered by the foreclosing plaintiff or an alternative
financial institution to purchase the property, a nonprofit community
development corporation will have the right of second refusal to
purchase the property in the amount approved for the opening bid of
the sheriff’s sale at the time of the sale. The right shall be deemed
exercised if, prior to the opening of the bidding on the foreclosed
property, the corporation pays a 3.5 percent deposit with the rest of the
balance due within 90 business days by cash, certified or cashier’s
check, or by wire transfer, made payable to the sheriff of the county in
which the sale is conducted or to the Special Master, if the sheriff
cannot conduct the sale. A nonprofit community development
corporation will only have a right of second refusal to purchase the
property if it satisfies certain conditions set forth within the bill.
    The bill additionally provides that, on sales conducted pursuant to
the Community Wealth Preservation Program, a sheriff will be entitled
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to charge six percent on sales made by virtue of an execution.
However, the bill provides that if a sale conducted pursuant to the
Community Wealth Preservation Program results in the property
reverting back to the foreclosing plaintiff, a sheriff will only be
entitled to charge a flat fee of $150.
    For other sales made by virtue of an execution, the bill increases
the fee to be charged by virtue of an execution sale from 4 to 5
percent, or 6 percent to 10 percent, depending on whether the sum
involved is greater than or less than $5,000, respectively. The bill also
increases the minimum fee to be charged by virtue of an execution sale
from $50 to $150.
    Finally, the bill provides creditors and creditors’ agents with
immunity from liability for damages to certain vacant and abandoned
property so long as reasonable care is exercised, and clarifies that
bidders are not authorized to enter the property prior to the time of
sale.

COMMITTEE AMENDMENTS:
    The committee amended the bill to:
    (1) allow the upset price to be adjusted, with conditions, from the
time a foreclosing plaintiff provides notice up to the date of sale;
    (2) establish that a foreclosed upon defendant, next of kin of the
foreclosed upon defendant, or tenant will have a right of first refusal to
purchase the property for the original upset price listed in the notice
provided by the foreclosing plaintiff;
    (3) clarify that a right of first refusal will not extend to sales of real
estate-owned property;
    (4) clarify the fee structure for sheriffs on sales made by virtue of
an execution and establish a flat fee for sales that revert back to the
foreclosing plaintiff;
    (5) require the language used for the envelope the notice is being
delivered comply with the federal “Fair Debt Collection Practice Act”;
    (6) remove requirement that a financial institution enforce a
successful bidder’s 84 occupancy requirement; and
    (7) make certain conforming and technical changes.


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