Unintended Consequences of Recent Legislation Regarding New Jersey Sheriff’s Sales
By: Nick Canova, Esq.
Fein Such Kahn & Shepard, P.C.
On April 29, 2019 New Jersey Governor Phil Murphy signed several laws intended to impact foreclosures in the State of New Jersey. The laws were recommended in a September 2018 report by the Special Committee on Residential foreclosures. The stated goal of these laws was to “assist homeowners facing the prospect of foreclosure and pave the way for community revival by addressing blight.”
One of these laws, Senate Bill No. 3464, was intended to amend P.L.1995 c.244 (C.2A:50-64) and N.J.S.2A:17-36, by changing the procedures for how foreclosure sales are held and altering the adjournment of sale process with the hopes of bringing uniformity to the process throughout the state.
The amendment provided that as of August 1, 2019 a Sheriff must conduct a foreclosure sale within 150 days, instead of within 120 days, of the Sheriff’s receipt of a Writ of Execution. Subsection 3(b) of the legislation does allow for the foreclosing plaintiff to apply for an order appointing a Special Master where it becomes apparent that the Sheriff cannot comply with the imposed time limitations. However, the appointment of a Special Master comes along with its own hurdles, as it is not a commonly utilized method of proceeding to sale. To date, the Sheriffs seem to be in compliance with the 150 days deadline.
The amendment further states that a Sheriff or other officer conducting a foreclosure sale may make up to five (5) adjournments – no more than two (2) adjournments may be made solely at the request of the lender, two (2) at the request of the debtor, and one (1) additional adjournment may be granted if both the lender and debtor agree to the adjournment. Under this amendment, each adjournment can be no more than thirty (30) calendar days in length, and any additional requests for time beyond what is delineated in this legislation will be subject to the court’s review and approval, even where both parties agree.
The unintended effect of this law is to force a foreclosing lender to choose between reviewing for loss mitigation or having to cancel the sale. Plaintiffs no longer have the unfettered ability to adjourn a sale as needed in order to complete a loss mitigation review.
The most problematic section of the amendment was set forth under Paragraph (6) which also took affect August 1, 2019 and mandates that the Sheriff’s office use a Deed prepared by the Plaintiff’s attorney. The form of the Deed was provided within the body of the actual amendment. The amendment also states that the Deed must be delivered to the Sheriff within ten (10) days of the sale. An additional complication is where the property is sold to a third-party at Sheriff’s sale. Under the amendment, Plaintiff’s counsel would be required to perform this task even in instances where the purchaser ultimately defaults on completing their bid, an all too unfortunate common practice.
Prior to the enactment of this law, the preparation of the Deed was a function traditionally handled by the Sheriff. In the weeks that followed the effective date of this law, each of New Jersey’s twenty-one (21) counties began promulgating their own procedures based on their interpretations of this law. Some counties advised firms to utilize the form of Deed as set forth in the law, while others provided county-specific Deeds created by their internal counsel and a handful of counties advised that they will continue to prepare the Deeds, despite the edict within the new law. As you can see, these differing approaches left local counsel needing to decide how to best protect their clients, while navigating the differing approaches set forth by the various the Sheriff offices, an entity that our office relies on to effectively conduct the foreclosure sales. The only current County where we see a delay with receiving executed deeds is Bergen County.
We are fortunate that the core of our Sales Department has been working together and along with the various Sheriffs for roughly a decade and their knowledge base along with the rapport they have built over the years has made the transition due to these changes as pain free as possible.
Fein, Such, Kahn & Shepard, P.C. is here to assist our clients in navigating the ever-changing terrain imposed by the Courts and legislators in the state of New Jersey and Pennsylvania.
For more information about the content of this article or the services provided by our Creditors’ Rights Department, please contact Eric Kapnick, Esq. or Nicholas Canova, Esq.