Property is the ultimate form of collateral. In New Jersey, when you take out your mortgages and pay your taxes, you offer up your property and home as collateral in case you fail to meet said payments. You have title to the property but the lender or creditor has a lien on the property. If you cannot pay your lender, then said lender will be within their legal rights to go and collect on their collateral. That means you might lose your house and home when the authorities – led by the county sheriff -- set out to sell our property. This process, referred to as a sheriff sale, is a means to pay off the outstanding debt to the lender that you have accrued.
However, each state conducts sheriff sales in a different manner. The rules that govern each sale depends on the state the property is owned in. Sometimes, court decisions or changes in the laws drastically alter how sheriff sales are conducted, as well as how this alters how sales can be conducted.
Such is the case for New Jersey. The rules for adjourning sheriff sales changed significantly on July 28, 2019, when the New Jersey statute was modified impacting the rights and options of borrowers under New Jersey foreclosure law. N.J.S.A. 2A:17-36, governs the rules on adjournments of sheriff sales and provides:
Most homeowners don’t pay enough attention to educating themselves about the foreclosure process. Look at it this way, if you’re buying a home and don’t know the foreclosure process and your options, you’re like a soldier without a rifle - you are flying blind my home-owning friend. Educating yourself about the foreclosure process and your options should be one of the first things a homeowner should do before or after buying a home. This blog will explore the foreclosure process and how you could save your home or investment property through a bankruptcy.
Foreclosure is the judicial process by which a lender takes title and possession to property after a homeowner stops making mortgage payments. Generally, a “mortgage” is comprised of a promissory note (the “Note”) and a mortgage (the “Mortgage”). The Note memorializes the money lent to the homeowner to fund the purchase, the terms of repayment, and the borrowers promise to repay the money lent. The Mortgage is the “security” for the Note i.e. it gives the lender the right to take the property if the Note isn’t repaid. The Sheriff then sells the property at public auction and the money received is given to the lender as repayment for the Note. New Jersey is a judicial foreclosure state, meaning the lender must go through the courts to foreclose upon a property. A lender cannot resort to “self-help” by changing locks or just showing up and demanding the owner vacate the premises.
Many people file for bankruptcy to protect their real property from being foreclosed on. There is a specific section within the Bankruptcy Code that mandates that creditor collection actions against property of the debtor must cease immediately upon the filing of the bankruptcy. This blog will explore that section of the bankruptcy code and how parties can avoid a creditor obtaining relief from that section.
The foreclosure process can be complicated and seeking legal representation is always recommended. Sometimes borrowers ignore the foreclosure timeline until their property is sold at a sheriff sale. The borrower, however, should have been properly served with the notice of sale. The sale is the last step in the foreclosure process and effectively divests the ownership interest into the sale purchaser. What happens if the borrower seeks to save their property after the sale? This is a possibility, but places a large burden on the homeowner.
Many people who own real property through a single member limited liability company or sole shareholder corporation tend to think of the real property being owned by them individually. However, the Bankruptcy Code has different rights for individuals who own real property than entities. This blog will explore how the Bankruptcy Code affects an entity whose sole asset is real property and things to consider if you are considering putting such an entity into a bankruptcy case.
If you own a home and you are in financial turmoil, you may be wondering what will happen to your home if you file for bankruptcy. For many, the primary concern that they have when entering the bankruptcy process is that their home is protected. This blog will explore the implications of filing for personal bankruptcy in a chapter 7 or chapter 13 on an individual’s residential real property.
As an aside, in either chapter 7 or chapter 13 a debtor would need to continue to pay their mortgage and property taxes in order to avoid an eventual foreclosure.
Real estate foreclosure in New Jersey has many technical requirements and many different time frames to keep track of whether or not you are the lender or the borrower. Sometimes when title defects are discovered during the foreclosure process, it is sometimes best to dismiss the action without prejudice and re-file to ensure clear title. A clear title is a property title without any kind of lien or levy from creditors or other parties and poses no question as to legal ownership. However, not all errors will necessarily cause the foreclosure to be defective. This post describes some, but not all, of the potential issues that may arise as well as some solutions to these problems.
Foreclosure is the action of taking possession of a mortgaged property when the mortgagor (borrower) fails to keep up with their mortgage payments. The collateral is ultimately put up for sale by the creditor. Foreclosures vary from state-to-state and can be initiated either judicially or non-judicially. To be non-judicial, there must be a clause in the mortgage that provides for sale of the property in the event of default. In a non-judicial foreclosure, the lender will complete the foreclosure without the court system. In a judicial foreclosure, a civil lawsuit is filed against the borrower to obtain a court order to foreclose. Judicial foreclosures eventually end with the property being sold at a sheriff sale to the highest bidder. New Jersey is a judicial state.
Even before a foreclosure judgment is entered, a mortgage holder may be entitled to injunctive relief restraining a homeowner from collecting or receiving rents if it can show that it will undoubtedly suffer immediate, irreparable harm in the event the restraints are not granted. It may also be able to obtain a court order compelling the tenants of the mortgaged premises to pay rents to a receiver.
