Find Out How Homes Are Foreclosed in New Jersey
Every home or property that is foreclosed in NJ goes through the same process. The steps that lead a home to go up for public auction at a Sheriff Sale are described below.
Notice Of Intent Mailed to Debtor
When a debtor fails to pay their financial obligation the mortgagee must send a Notice Of Intent (NOI) by registered or certified mail indicating that the lender intends to foreclose. The debtor has 30 days to cure the default to avoid foreclosure.
Lender's Attorney Searches for Intervening Liens
The lender's attorney obtains mortgage documents, performs searches and inspections and obtains title insurance.
Mortgagee Files Complaint
If the debtor has not cured the default within the time prescribed, the lender's attorney then files a complaint with the Clerk of the Superior Court.
Lis Pendens is Recorded
After the complaint is filed and docket number assigned the lender's attorney prepares a Lis Pendens which gets submitted and recorded by the County Recording Office (County Clerk).
Lis Pendens is latin for "suit pending". It is a notice that a law suit has been filed that affects the title or claiming interest to real property.
The lis pendens cuts off the right of any other person that records their lien or other document against the property after the lis pendens was recorded.
When a lis pendens is recorded the debtor cannot sell the property without until the lis pendens is released.
Amendment of Complaint
The lender's attorney orders continuation search and upper court search to identify any intervening liens between the time of the first search and time the lis pendens was recorded.
If additional intervening liens were identified through the search the lender's attorney will file and Amendment to Complaint.
Borrower is Served Documents
The lender's attorney will prepare a Summons along with the Complaint and Amendment to Complaint (if applicable) and send it to the County Sheriff or other process server to be served upon the borrower (defendant).
After being served with the Summons and Complaint the defendant has 35 days to file a response with the Court.
If any amendments are filed to the complaint all parties affected by the amendments need to be served.
The defendant has 20 days to respond to any amendments.
Borrower: If the borrower believes the lender does not have the legal right to foreclose on the property or the amount due, they can file a contesting answer providing reasons why the lender does not have the right to a foreclosure judgment.
Other parties: Other parties that were named in the complaint because they have an interest in the property can file a contesting answer to assert any rights they have.
If a contesting answer was filed the case is sent to a County Vicinage Judge to resolve the contested issues either through Summary Judgment or trial. When the issues are resolved the case is returned to the NJ Foreclosure Unit.
If no contesting answers are filed the case will not be resolved by a judge. Instead the complaint will be sent to the Office of Foreclosure in Trenton.
Lender's Attorney Requests Entry of Default or Notice of Motion
If the complaint was not contested, the attorney for the lender mails a notice indicating they will apply for entry of a foreclosure judgment after 14 days from the time the notice was mailed.
The defendant may send to the lender's attorney by registered or certified mail (return receipt requested) within 10 days of receipt of the 14 day notice a good faith statement that certifies there is a reasonable likelihood they will be able to provide the payment necessary to cure the default within 45 days of when the 14 day notice was mailed. If this letter is sent final judgment cannot be entered until 45 days after the 14 days notice was sent.
After final judgment is entered the defendant loses any right to cure the default.
Final Judgment Requested
Once all complaints have been resolved or defaulted by not appearing, the lender's attorney will send all the necessary paperwork to the Court Foreclosure Unit. This includes copies of the complaint, motions, orders, proof of service, etc.
If everything is in order the Foreclosure Unit will enter the final judgment.
Writ of Execution Sent to County Sheriff
A Writ of Execution is a court order granted to a plaintiff seeking to satisfy a monetary judgment. The Writ of Execution will contain details on the property and information on prior liens.
The County Sheriff will then schedule the property for sale at public auction to satisfy the judgment.
The attorney for the lender must mail out a notice of sale to the debtor and other parties participating in the foreclosure a Notice of Sale at least 10 days prior to sale.
The sheriff may give up to 2 adjournments up to 14 days each. After the second adjournment no other adjournments may be granted other than by court order or debtor filing for bankruptcy relief.
The property then goes up for sale by the sheriff and is sold to the highest bidder who will receive a Sheriff's Deed once all conditions of sale are met.
There is a 10 day redemption period after the sale. The debtor can directly pay the Sheriff the amount of the judgment and any fees to keep ownership of the property. Or they can file a motion with the County Judge with tender or offer of tender of the amount due along with a notice sent to the Sheriff and plaintiff.
If an objection to Sale is filed within the redemption period the County Judge must schedule a hearing within 20 days of the Sale. If the Sale is approved by the Judge and Order of Confirmation of the Sale is entered ordering the Sheriff to deliver the deed to the successful bidder.
If the property is occupied an application for Writ of Possession is made by the plaintiff on an ex parte basis.
Writ of Possession is sent to the County Sheriff to schedule and eviction date. Plaintiff's attorney sends a notice of eviction to occupants.
Tenants with a valid lease may be protected from eviction until their lease expires.
Plaintiff will schedule movers and a locksmith to coordinate with the eviction by the County Sheriff. The plaintiff must pay for these services and 30 days of storage in a safe storage facility rented in the defendant's name. After the first 30 days it becomes the defendant's responsibility to pay the storage fees.
This information is provided as a guide and not as legal advice.