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By Jennifer L. Alexander, Esq. May 2, 2019 Posted in Community Association Law

Two bills sit on Governor Murphy’s desk for signature that could alter the landscape of the current foreclosure process in New Jersey.

Zombie Foreclosures are bank foreclosures on vacant units, which are stalled or delayed for years. Associations with units stuck in zombie foreclosures must deal with a lengthy foreclosure process. Associations have a strong interest in expediting these foreclosures because an abandoned unit does not pay maintenance fees. Associations lose less money when they expeditiously complete the foreclosure process.

The members of the associations benefit from this revision to the foreclosure process. If the associations are not receiving income from a vacant unit, the only other source of income for the association is from its remaining members. Members, to avoid having to foot the bill of an abandoned unit, would prefer to have the association foreclose quickly on the abandoned unit.

With assistance from the New Jersey Legislative Action Committee (LAC) of the Community Associations Institute (CAI), the New Jersey Legislature recognized the associations’ desire to expedite the foreclosure process. Both bills passed unanimously through the New Jersey Senate and Assembly.

The first bill amends foreclosure laws for vacant units, allowing for an expedited foreclosure process. Under this revised process, the association must certify that the property is vacant in order for the process to begin. Upon certification filed by the association, it may require a Sheriff’s sale of a vacant unit within ninety (90) days of final judgment. If the Sheriff is unable to comply with this expedited schedule, the lender may apply for a special master or judicial agent to complete the sale within ninety (90) days.

The second bill expands the 6-month limited priority lien to all common interest communities, except for cooperatives under this bill, include interest, late fees, fines, expenses, and reasonable attorneys’ fees incurred as a result of the collection effort in the lien filing, regardless of the absence of authority in the governing documents. The six-month priority lien would then be cumulatively renewed on an annual basis, as necessary.

These advances in the foreclosure legislation, if the bills are signed, will allow associations to expedite foreclosures to recover some of the losses currently experienced in the foreclosure process. If you have any questions about the information contained herein, or you would like to speak with one of our shareholders, Robert Griffin, Esq. or Jennifer Alexander, Esq., concerning a Community Association Law matter, please feel free to contact us!


The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based upon particular circumstances.  Each legal matter is unique, and prior results do not guarantee a similar outcome.


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