January 24, 2022
New Municipal Notice and Registration Requirements for Commercial Foreclosures in New Jersey
On January 18, 2022, Governor Murphy signed a new law into effect that greatly increases the obligations, and potentially the financial burden, on commercial lenders foreclosing properties in New Jersey. Prior to January 18, 2022, commercial lenders were generally exempt from having to register with municipalities if they were foreclosing vacant and abandoned properties and from providing notice of pending foreclosures to municipal officers as is required with residential foreclosure filings. Now, many of those same requirements have been imposed on commercial foreclosure filings as well.
The new law, portions of which went into effect immediately upon the bill’s signing by Governor Murphy, require that commercial lenders notify the municipal clerk and mayor (or other chief executive office) of a newly filed commercial foreclosure within ten (10) days of serving the summons and complaint in the matter. For cases currently pending, creditors have thirty (30) days to provide the necessary notice. The notice must advise the municipality of the existence of the pending foreclosure action and provide the full name, address, and telephone number of an in-State representative of the creditor responsible for receiving complaints relating to property maintenance and code violations. The notice must also include the full name and contact information for any person or entity retained by the creditor to be responsible for any care, maintenance, security, or upkeep of the property. A municipality may also adopt an ordinance that requires a creditor to provide additional information about the foreclosure case regarding the date the complaint was filed, the court in which the complaint was filed, the docket number, and identify whether the property is vacant and abandoned as per the applicable statute.
A municipality is also authorized to adopt an ordinance that requires the registration of any properties which are subject to pending foreclosure actions, whether they are vacant and abandoned properties or not. The law allows an annual registration fee of $500.00 per property plus $2,000.00 per property if it is vacant and abandoned or becomes vacant and abandoned at any time after the foreclosure is filed. Failure to register the property is subject to a $1,500.00 fine and a $2,500.00 fine for an out-of-State creditor. We expect that any municipalities that do not currently have such ordinances will move to adopt them as soon as possible to capture the revenue created by the registration fees.
Finally, the new law adds commercial properties to the types of properties that must also be registered as vacant and abandoned with any municipalities which already have enacted ordinances requiring the registration of vacant and abandoned properties. The same registration and renewal fees, and penalties for any violations, that apply to residential properties can now be applied to commercial properties.
The new law has the potential to significantly increase the costs to foreclose commercial properties, especially in contested matters, if properties are not registered properly and if vacant and abandoned properties are not appropriately maintained. Hill Wallack LLP’s experienced creditors' rights attorneys can assist any lenders or servicers who have questions regarding complying with the new requirements imposed on commercial foreclosure cases.
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