A law enacted in 2010 called the New Jersey Foreclosure Fairness Act (“NJFFA”), found in N.J.S.A. 2A:50-69 to -71, offers valuable protections to residential tenants living in foreclosed properties. Specifically, new owners of a property acquired through foreclosure are required to serve residential tenants with a detailed written notice informing them of their tenancy rights under New Jersey law and where to send future rent payments.
Also, the NJFFA obligates foreclosing lenders to comply with additional reporting requirements, such as serving the municipal clerk (where the foreclosed property is located) with written notice of the commencement of a foreclosure case, and reporting to the Department of Banking and Insurance on a quarterly basis about the number of foreclosure cases initiated by the lender.
RESIDENTIAL PROPERTIES OCCUPIED BY TENANTS
Under the NJFFA, a person who acquires title to a residential property through a judicial sheriff’s sale or deed in lieu of foreclosure is required to provide tenants with a written notice no later than 10 business days after the sale notifying tenants that the property’s ownership has changed hands and that they are not required to vacate the premises.
The NJFFA specifies that the new owner must serve the written notice on the tenants by regular and certified mail, must be in both English and Spanish, must contain contact information about who is owed future rent and include a basic explanation of the tenant’s rights under the New Jersey Anti-Eviction Act.
In buildings with 10 or fewer dwelling units, the new owner must make a good faith effort to obtain the names of all the tenants occupying the property. Notices must be addressed to tenants by name, unless the new owner is unable to identify the tenant by name, then the owner shall address the notice to “Tenant.” The notice must also be posted prominently on the front door of each tenant’s unit.
If the property contains 10 or more units, the new owner must post the notice in a common area of each residential building or structure on the property. If there is no common area, the notice must be posted in a conspicuous location in each building, such as the walls of the front vestibule or any foyer or hallway near the main entrance of the building.
In issuing the written notice to tenants the new owner of the property cannot use any communication intended to induce the tenant to vacate the premises except that the new owner can make a bona fide monetary offer in writing. Pressuring” tactics which the owner is prohibited from engaging in include, but are not limited to:
1) Mischaracterizing or misrepresenting the rights of the tenant under the law;
2) Implying the tenant is obligated to accept the offer;
3) Implying that there will be consequences against the tenant for failing to accept the offer;
4) Harassment, including but not limited to discontinuance of utilities, failure to maintain common areas or facilities, or any other failure to maintain the premises in a habitable condition; and
5) An increase in rent in excess of any rent control or rent leveling ordinance, or if the property is not subject to rent control, an unreasonable or unconscionable rent increase
The tenant has 5 business days from receipt of a monetary offer in which to notify the new owner in writing of the acceptance or rejection of the offer.
TREBLE DAMAGES FOR VIOLATIONS OF THE NJFFA
A new property owner who violates the notice requirements could be faced with liability of treble damages in the amount of $2,000 per violation plus attorney’s fees and costs. Further civil or criminal actions may also be commenced against the creditor who violates the NJFFA.
NOTICE REQUIREMENTS TO MUNICIPAL CLERK
Independent of the notice provisions to tenants, the NJFFA also requires that creditors serving foreclosures summons and complaints on residential property must, within 10 days of service of the summons and complaint, notify the municipal clerk where the property is located. In addition, the creditor must also notify the municipality if the owner of a residential property vacates or abandons a property on which a foreclosure action has been initiated. There is also a requirement to specify in the Foreclosure Complaint and notify the municipal Clerk if the property being foreclosed is an “Affordable Housing” unit. This notice must also be delivered to the municipal clerk within 10 days of service of the summons and complaint.
After such notice if such property is found to be a nuisance or in violation of any applicable State or local code, the municipality must notify the creditor, whose responsibility it will be to correct the nuisance or violation. If the municipality expends public funds to abate a nuisance or correct a violation the municipality shall have the same recourse against the creditor as it would have against the “title owner”.
FORECLOSURE REPORTING REQUIREMENTS TO NJ DEPARTMENT OF BANKING AND INSURANCE
Any creditor that initiates a mortgage foreclosure action in the Superior Court of New Jersey must report to the Department of Banking and Insurance, on a quarterly basis and in a specific format (organized by municipality), information about the number of mortgage foreclosures initiated by the creditor.
MORE INFORMATION ON TENANT’S RIGHTS – NJ DEPARTMENT OF COMMUNITY AFFAIRS
The New Jersey Department of Community Affairs provides more detailed information on the rights of residential tenants occupying foreclosed properties.