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

Summary

Statement of the Assembly Commerce and Economic Development Committee of the State of New Jersey, dated December 11, 2023, reporting Assembly Bill 5664 favorably with committee amendments. The bill establishes the Community Wealth Preservation Program and expands access to property sold at sheriff's sales. A foreclosed upon defendant, their next of kin or tenant, a nonprofit community development corporation, or a bidder who will occupy the property for at least 84 months would have up to 90 business days to complete a purchase. The defendant, next of kin or tenant would hold a right of first refusal at the original upset price on paying a 3.5 percent deposit, and a nonprofit community development corporation a right of second refusal. Sheriff fees for program sales would be six percent, or a $150 flat fee when property reverts to the plaintiff.

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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, 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 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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