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New Jersey Foreclosure Law


New Jersey Foreclosure Law Summary

Quick Facts

- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: No
- Primary Security Instrument: Mortgage
- Timeline: Typically 90 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes

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How are mortgage liens treated in New Jersey?
New Jersey is known as alien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called amortgage.
 

How are New Jersey mortgages foreclosed?
In New Jersey, thelenders go to court in what is known as ajudicial 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 inSuperior Court along with what is known alis pendens.
A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon. Theforeclosure unit of theSuperior Court handles all foreclosures.

What are the legal instruments that establish a New Jersey mortgage?
The documents are known as themortgage,note, and in a commercial transaction, asecurity agreement. Sometimes the mortgage document is combined with the security agreement.  Amortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in thenote.

How long does it take to foreclose a property in New Jersey?
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 forbankruptcy. New Jersey has one of the longest wait times for foreclosures. Adefendant has 35 days in which to file ananswer to aforeclosure complaint otherwise default will be entered. Once default is entered the plaintiff must wait another 45 days before entering final judgment and thereafter awrit 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 statutoryright 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. Adeficiency 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 thefair 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.
http://lis.njleg.state.nj.us

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