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Expedited Foreclosure of ‘Vacant and Abandoned’ Property

The Legislature has enacted P.L. 2012, c. 70, which amends Title 2A, Chapter 50, to add a new section, N.J.S.A. 2A:50-73, to the existing statutes governing mortgage foreclosures. Under the Act, lenders may commence suits to foreclose, in summary fashion, mortgages which encumber residential properties defined as “vacant and abandoned”. In order to be able to utilize this procedure, the mortgagee must demonstrate to the court, by “clear and convincing evidence”, that (a) the property is not occupied by the mortgagor or a lessee; and (b) the presence of at least two (2) items from a list of fifteen (15) criteria, which include (but are not limited to) overgrown or neglected vegetation; accumulation of junk, litter, trash, or debris; the accumulation of newspapers, circulars, flyers or mail; disconnected utility services; etc. N.J.S.A. 2A:50-73a. Nevertheless, certain properties which might otherwise meet the “vacant and abandoned” criteria are exempt, including certain buildings which are in the process of construction or rehabilitation; are occupied on a seasonal basis; or are the subject of a probate action or title dispute. N.J.S.A. 2A:50-73b.

In addition to the procedures set forth in the Fair Foreclosure Act [“FFA”], N.J.S.A. 2A:50-53 et seq., a lender may commence a “summary action” (i.e., proceed by order to show cause) to foreclose residential property which meets the “vacant and abandoned” criteria discussed above. In the alternative, after a foreclosure suit under the FFA is filed, if the property meets the criteria set forth above, the lender is permitted to utilize VARPFA to file an “application to proceed in a summary manner because the residential property …is believed to be ‘vacant and abandoned’ ”. N.J.S.A. 2A:50-73c. Special rules for service of process upon the property owner are set forth in the Act. N.J.S.A. 2A:50-73d. If the court is satisfied that there is “clear and convincing evidence” that the property meets the statutory definition of “vacant and abandoned”, judgment will be entered in favor of the plaintiff lender. N.J.S.A. 2A:50-73e. However, if the mortgagor or any other defendant files a responsive pleading, or if the court finds that the property is does not fall within the definition of “vacant and abandoned”, judgment will not be entered in favor of the lender. Rather, the foreclosure will proceed in accordance with the normal process for suits filed under the FFA. N.J.S.A. 2A:50-73f.

If judgment is entered, the sheriff must conduct the sale within 60 days of delivery of the writ or execution. Otherwise, the foreclosing lender may apply to the court for the appointment of a special master to conduct the sale. N.J.S.A. 2A:50-73j.

VARPFA was enacted on December 3, 2012. Although the Act takes effect “immediately”, its provisions are “inoperative” until April 1, 2013.

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