Assembly Commerce and Economic Development Committee Statement to Assembly, No. 793 (1R) (March 14, 2022)

Summary

An Assembly Commerce and Economic Development Committee statement to the First Reprint of Assembly, No. 793, State of New Jersey, dated March 14, 2022, reporting the bill favorably with committee amendments. The bill, the "Community Wealth Preservation Program," would reduce the deposit at a sheriff's sale of residential property from 20 percent to 3.5 percent, under certain circumstances, for bidders who will occupy the property for at least 84 months. A financing bidder who does not use the property as a primary residence would face a fine of up to $100,000 for the first violation and $500,000 for each later violation. Such bidders would need eight hours of homebuyer education and counseling from HUD. The amendments cap the upset price at 50 percent of the outstanding mortgage and costs.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT COMMITTEE

STATEMENT TO

[First
Reprint]

ASSEMBLY,
No. 793

with
committee amendments

STATE
OF NEW JERSEY

DATED: MARCH
14, 2022

The Assembly Commerce and Economic Development
Committee reports favorably Assembly Bill No. 793 (1R).

As amended, this bill, designated as the “Community
Wealth Preservation Program,” would revise sheriff’s procedures for the sale of
residential foreclosure properties. The bill reduces the deposit required at
the time of a sheriff’s sale for residential property from 20 percent to 3.5
percent, under certain circumstances. Current law provides that all bidders on
properties for sale at sheriff’s sales are required to deposit 20 percent of
the purchase price of the property.

Under the bill, in the case of residential property in
which the bidder will occupy the property for at least 84 months, the bidder
will have up to 90 business days to complete the sale, 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.

The bill provides that the sheriff require the
foreclosing plaintiff to disclose whether the property is vacant,
tenant-occupied, or owner-occupied.

Under the bill, a 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 or the foreclosed
upon defendant’s next of kin, may only use the financing option if the property
will be the bidder’s primary residence. If a successful bidder finances the
property and does not use the property as a primary residence, the bidder will
be subject to a fine of up to $100,000 for the first violation and $500,000 for
each violation thereafter. However, there are exceptions to the penalties if
the bidder must vacate the property due to death of the bidder or the bidder’s
spouse, disability of the bidder or the bidder’s spouse, divorce, military deployment,
or foreclosure.

To be a successful bidder on a residential property
the bidder, who is not the plaintiff, who intends to occupy the property and
finance the purchase of the property, shall have received eight hours of homebuyer
education and counseling from the United States Department of Housing and Urban
Development (HUD), and shall present certification of completion of that
training at the time of purchase.

The bill requires each sheriff’s office to maintain
information, written in plain language, regarding the program to finance the
purchase of residential property in a foreclosure sale on its internet website
in a manner that is accessible to the public. Additionally, each sheriff’s
office is to display information, written in plain language, regarding the
program in its office in a manner that is conspicuous to the public. The information
posted on a sheriff’s website or displayed in a sheriff’s office concerning the
program must contain language notifying the public that the program excludes
those purchasing property for investment purposes.

For any county in which the primary language of 10
percent or more of the residents is a language other than English, the bill
directs the sheriff’s office to provide the information required for the
program in that other language or languages in addition to English. The
alternate language would be determined based on information from the latest
federal decennial census.

With the exception of sales conducted pursuant to the
Community Wealth Preservation Program, 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) require that the upset price for the sale of the
foreclosed upon property be no higher than 50 percent of the sum of the
outstanding mortgage and any interest, fees, or other costs accumulated from
the beginning of the foreclosure action;

(2) define the term “upset price” to mean the minimum
amount that a foreclosed upon property will be sold for in a sheriff’s sale;

(3) lower the minimum fee to be charged for a sale by
virtue of execution from $750 to $150;

(4) permit the sheriff’s office to collect a flat fee
of six percent on any sale by virtue of an execution;

(5) make the bill take effect 90 days from the date
of enactment rather than immediately upon enactment; and

(6) make certain technical changes.

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