New Jersey-2016-A2953-Introduced

An Act requiring creditors to maintain the interior of vacant and abandoned residential property under foreclosure and amending P.L.2014, c.35 and P.L.2008, c.127.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 1 of P.L.2014, c.35 (C.40:48-2.12s) is amended to read as follows:

1. a. The governing body of any municipality may adopt ordinances to regulate the care, maintenance, security, and upkeep of [the exterior of] vacant and abandoned residential properties on which a summons and complaint in an action to foreclose has been filed.

b. (1) An ordinance adopted pursuant to subsection a. of this section shall provide that the creditor filing the summons and complaint in an action to foreclose shall be responsible for the care, maintenance, security, and upkeep of [the exterior of] the vacant and abandoned residential property, and if located out-of-State, shall be responsible for appointing an in-State representative or agent to act for the foreclosing creditor.

(2) An ordinance adopted pursuant to subsection a. of this section shall authorize a public officer, appointed pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), or any other local official responsible for administration of any property maintenance or public nuisance code to issue a notice to the creditor filing the summons and complaint in an action to foreclose, if the public officer or other authorized municipal official determines that the creditor has violated the ordinance by failing to provide for the care, maintenance, security, and upkeep of [the exterior of] the property. Such notice shall require the person or entity to correct the violation within 30 days of receipt of the notice, or within 10 days of receipt of the notice if the violation presents an imminent threat to public health and safety; provided, however, that such deadline may be extended if a court order is required to enter a property to correct an interior violation. The issuance of a notice pursuant to this paragraph shall constitute proof that a property is "vacant and abandoned" for the purposes of P.L.2012, c.70 (C.2A:50-73).

(3) An ordinance adopted pursuant to subsection a. of this section shall provide that an out-of-State creditor include the full name and contact information of the in-State representative or agent in the notice required to be provided pursuant to paragraph (1) of subsection a. of section 17 of P.L.2008, c.127 (C.46:10B-51).

c. (1) An out-of-State creditor subject to an ordinance adopted pursuant to subsection a. of this section found by the municipal court of the municipality in which the property subject to the ordinance is located, or by any other court of competent jurisdiction, to be in violation of the requirement to appoint an in-State representative or agent pursuant to the ordinance shall be subject to a fine of $2,500 for each day of the violation. Any fines imposed on a creditor for the failure to appoint an in-State representative or agent shall commence on the day after the 10-day period set forth in paragraph (1) of subsection a. of section 17 of P.L.2008, c.127 (C.46:10B-51) for providing notice to the municipal clerk that a summons and complaint in an action to foreclose on a mortgage has been served.

(2) A creditor subject to an ordinance adopted pursuant to subsection a. of this section found by the municipal court of the municipality in which the property subject to the ordinance is located, or by any other court of competent jurisdiction, to be in violation of the requirement to correct a care, maintenance, security, or upkeep violation cited in a notice issued pursuant to the ordinance shall be subject to a fine of $1,500 for each day of the violation. Any fines imposed pursuant to this paragraph shall commence 31 days following receipt of the notice, except if the violation presents an imminent risk to public health and safety, in which case any fines shall commence 11 days following receipt of the notice; provided, however, that if a court order is required to enter a property to correct an interior violation, any fines imposed pursuant to this paragraph shall commence 31 days following receipt of the court order, except if the violation presents an imminent risk to public health and safety, in which case any fines shall commence 11 days following receipt of the court order.

d. No less than 20 percent of any money collected pursuant to subsection a. of this section shall be utilized by the municipality for municipal code enforcement purposes.

(cf: P.L.2014, c.35, s.1)

2. Section 17 of P.L.2008, c.127 (C.46:10B-51) is amended to read as follows:

17. a. (1) A creditor serving a summons and complaint in an action to foreclose on a mortgage on residential property in this State shall, within 10 days of serving the summons and complaint, notify the municipal clerk of the municipality in which the property is located that a summons and complaint in an action to foreclose on a mortgage has been filed against the subject property. The notice shall contain the name and contact information for the representative of the creditor who is responsible for receiving complaints of property maintenance and code violations, may contain information about more than one property, and shall be provided by mail or electronic communication, at the discretion of the municipal clerk. In the event the creditor that has served a summons and complaint in an action to foreclose on a residential property is located out-of-State, the notice shall also contain the full name and contact information of an in-State representative or agent who shall be responsible for the care, maintenance, security, and upkeep of [the exterior of] the property if it becomes vacant and abandoned. If the municipality has appointed a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk shall forward a copy of the notice to the public officer or shall otherwise provide it to any other local official responsible for administration of any property maintenance or public nuisance code.

In the event that the property being foreclosed on is an affordable unit pursuant to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), then the creditor shall identify that the property is subject to the "Fair Housing Act."

The notice shall also include the street address, lot and block number of the property, and the full name and contact information of an individual located within the State who is authorized to accept service on behalf of the creditor. The notice shall be provided to the municipal clerk within 10 days of service of a summons and complaint in an action to foreclose on a mortgage against the subject property.

(2) Within 30 days following the effective date of P.L.2009, c.296 (C.2A:50-69 et al.), any creditor that has initiated a foreclosure proceeding on any residential property which is pending in Superior Court shall provide to the municipal clerk of the municipality in which the property is located, a listing of all residential properties in the municipality for which the creditor has foreclosure actions pending by street address and lot and block number. If the municipality has appointed a public officer pursuant to P.L.1942, c.112 (C.40:48-2.3 et seq.), the municipal clerk shall forward a copy of the notice to the public officer, or shall otherwise provide it to any other local official responsible for administration of any property maintenance or public nuisance code.

b. If the owner of a residential property vacates or abandons any property on which a foreclosure proceeding has been initiated or if a residential property becomes vacant at any point subsequent to the creditor's filing the summons and complaint in an action to foreclose on a mortgage against the subject property, but prior to vesting of title in the creditor or any other third party, and [the exterior of] the property is found to be a nuisance or in violation of any applicable State or local code, the local public officer, municipal clerk, or other authorized municipal official shall notify the creditor or the representative or agent of an out-of-State creditor, as applicable, which shall have the responsibility to abate the nuisance or correct the violation in the same manner and to the same extent as the title owner of the property, to such standard or specification as may be required by State law or municipal ordinance. The municipality shall include a description of the conditions that gave rise to the violation with the notice of violation and shall provide a period of not less than 30 days from the creditor's receipt of the notice for the creditor to remedy the violation, which time period may be extended if a court order is required to enter a property to correct an interior violation. If the creditor fails to remedy the violation within that time period, the municipality may impose penalties allowed for the violation of municipal ordinances pursuant to R.S.40:49-5; provided, however, that if a court order is required to enter a property to correct an interior violation, any fines imposed pursuant to this subsection shall commence not less than 31 days following receipt of the court order.

c. If the municipality expends public funds in order to abate a nuisance or correct a violation on a residential property in situations in which the creditor was given notice pursuant to the provisions of subsection b. of this section but failed to abate the nuisance or correct the violation as directed, the municipality shall have the same recourse against the creditor as it would have against the title owner of the property, including but not limited to the recourse provided under section 23 of P.L.2003, c.210 (C.55:19-100).

(cf: P.L.2014, c.35, s.2)

3. This act shall take effect immediately.

STATEMENT

This bill would require creditors to maintain the interior of vacant and abandoned residential property under foreclosure. Current law only requires creditors to maintain the exterior of vacant and abandoned residential property under foreclosure. The interiors of vacant and abandoned residential properties present a host of serious maintenance issues to neighbors. For instance, mold, vermin, and fire hazards can easily affect neighbors, particularly in the case of attached housing. This bill would extend creditors' responsibility to maintain vacant and abandoned residential property under foreclosure to include the interior of such property in order to protect neighbors and to prevent municipalities from bearing such maintenance costs.

The bill would also allow municipalities to adopt ordinances providing for a fine of $1,500 for each day a maintenance violation concerning the interior of a vacant and abandoned residential property under foreclosure goes uncorrected following a 30-day window to correct, or a 10-day window to correct in the case of an imminent threat to public health and safety. Current law only allows municipalities to adopt ordinances providing for such penalties with respect to the exterior of vacant and abandoned residential property under foreclosure.

Under the bill, the deadlines for correcting interior violations may be extended if a court order is needed to enter a property to make such corrections.