NJ Enacts Law Governing Foreclosed Vacant and Abandoned Properties
New Jersey recently enacted Assembly Bill No. 2877 (the Act), which improves the guidance provided to local governments concerning the establishment of registration policies to address the risk of blight of commercial and residential properties. The Act became effective on January 18, 2022. However, municipalities that already have existing ordinances that address property registration programs have until August 1, 2022, to make their ordinances consistent with the requirements of the Act.
In general, the Act requires that a creditor that has initiated a foreclosure proceeding on commercial property, within 10 days of initiating the preceding, notify the municipal clerk where the property is located that a foreclosure has been filed against the property. The notice must also provide certain information about the property and the creditor who is responsible for the property. Further, the Act requires creditors to provide the municipal clerk with a listing of all commercial properties in the municipality for which the creditor has foreclosure actions currently pending. A municipality can impose certain fees on a creditor for failing to comply with the Act’s registration requirements.
The Act also requires the municipal clerk or other responsible local official to notify a foreclosing creditor in the event that a commercial property in foreclosure becomes vacant or if the exterior of the property is found to be a nuisance or in violation of any applicable state or local code. Pursuant to the Act, the creditor has the responsibility to abate the nuisance or correct the violation. If the creditor fails to remedy the violation within a specified period, the Act permits the municipality to impose penalties against the creditor. Further, if the municipality expends public funds in order to abate a nuisance or correct a violation on a commercial property where the creditor was given proper notice, but failed to abate the nuisance or correct the violation, the Act provides the municipality with the same recourse against the creditor as it would have against the title owner of the property to enforce a lien pursuant to current law.
In addition, the Act authorizes a municipality to adopt ordinances to: (1) create a property registration program for the identification and monitoring of residential and commercial properties in foreclosure; (2) regulate the care, maintenance, security, and upkeep of the exterior of vacant and abandoned residential and commercial properties in foreclosure; and (3) impose property registration fees on creditors, on an annual or semi-annual basis.
