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Stewart Title Company Advisory Notice

Purchasing a Foreclosure has New Notice Requirements and Restrictions.


Be advised that on January 12, 2024, the State of New Jersey enacted the following bill, A5664, P.L.2023, c.255, establishing the Community Wealth Preservation Program. This bill shall take effect immediately.


The Community Wealth Preservation Program is designed to promote equity and fairness in foreclosure sales by providing opportunities for foreclosed-upon residents and their next of kin, tenants, and other prospective owner-occupants along with nonprofit community development corporations to purchase and finance a foreclosed-upon home.


Under this program, New Jersey homeowners experiencing foreclosure, their next of kin, or tenants living in a foreclosed property would have “the right of first refusal,” or the first opportunity when the property goes up for auction at the upset price, which is the minimum price a seller would accept at a sheriff’s sale. The upset price is typically equal to the combined total of any outstanding mortgage on the property, plus interest, fees, and other associated costs.


The bill further states that a foreclosed-upon family, their family members, or tenants of the property put down 3.5% at the auction, as opposed to the 20% deposit usually required, and must continue to use the home as their primary residence for a fixed term of at least 84 months (7 years). Those who attempt to sell a home reclaimed under the program within that time period would face a $100,000 fine on their first offense and $500,000 fines on subsequent offenses.


The deed for the property shall clearly state that the property may not be sold for 84 months from the date of the sheriff's sale, except pursuant to the exceptions permitting a successful bidder to vacate the property prior to residing in the property for 84 months. 

Specific exemptions in the bill which allow homeowners to sell the property within the seven-year period include financial hardship, a physical or mental illness preventing the homeowner from earning an income, the death of a spouse or child, a divorce or a change in employment, and predatory loan practices.


Please be advised that if the foreclosed homeowner re-acquires the property through this program, all liens of the foreclosed owner may re-attach to the property. Therefore, all such liens must be excepted for on the title commitment and policies without further information. This also includes any judgment liens that were addressed in the foreclosure action and were docketed after the recording of the Notice of Lis Pendens.


Lastly, please note that the bill does include new notice requirements regarding notice of the foreclosure sale and the upset price. Please review the chancery search for any notes regarding the notice of sale and contact your underwriter regarding any questions or further guidance.

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