How are mortgage liens treated in New Jersey?
How are New Jersey mortgages foreclosed?
In New Jersey, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. The court with jurisdiction over a foreclosure is known as the Superior Court. A complaint is filed in Superior Court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon. The foreclosure unit of the Superior Court handles all foreclosures.
What are the legal instruments that establish a New Jersey mortgage?
The documents are known as the mortgage,note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.
Depending on the court schedule, it usually takes approximately 250 days or more to effectuate an uncontested foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy. New Jersey has one of the longest wait times for foreclosures. A defendant has 35 days in which to file an answer to a foreclosure complaint otherwise default will be entered. Once default is entered the plaintiff must wait another 45 days before entering final judgment and thereafter a writ of execution is issued and delivered to the Sheriff to effectuate the foreclosure sale process. The defaulting borrower must be given at least 10 days notice before the foreclosure sale can take place.
Is there a right of redemption in New Jersey?
New Jersey has a statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a time limit of only ten (10) days to undertake such redemption after the foreclosure sale.
Are deficiency judgments permitted in New Jersey?
Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. New Jersey however has a “Fair Market Credit” doctrine set forth under N.J.S.A 2A:50-3 which is a safeguard against low or minimal bids which may give rise to a windfall in the event of a deficiency proceeding. Under this doctrine the defaulting borrower is given credit for the fair market value of the property regardless of what the bid at the foreclosure sale was. This is however an affirmative defense which must be raised in a deficiency proceeding. Deficiency actions must be brought within three (3) months of the foreclosure sale.
What statutes govern New Jersey foreclosures?
The laws that govern New Jersey foreclosures are found in N.J.S.A. 2A:50-1 et. seq.