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Judicial Foreclosure in New Jersey

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What is the New Jersey Judicial Foreclosure Process?

In New Jersey, foreclosures are administered through the superior court system in the various counties throughout the state. Lenders begin the process by filing a judicial foreclosure action with the goal of having the court a final judgment of foreclosure. The property that is the subject of the foreclosure is then sold through a public sale. The initial complaint is accompanied by a lis pendens, a recorded document that provides public notice the property is being foreclosed upon.

How is a Mortgage Created in New Jersey?

The documents are known as the mortgage note or, in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. The mortgage or security agreement is filed with the county clerk and establishes the underlying debt , the terms of repayment, and the priority of a particular mortgage or security interest as against other lenders on the same property.

How Long does it Take to Foreclose in New Jersey?

In theory, it usually takes approximately 270 days or more to carry out an uncontested foreclosure. In reality, the process is often delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy. It can often take as long as 900 days to complete the foreclosure process in this state.

Structurally, New Jersey has one of the longest foreclosure processes. A borrower has 35 days in which to file answer to the foreclosure complaint. Even if a default is entered, the lender must wait another 45 days before entering final judgment and then await a writ of execution to allow the sheriff to carry out the foreclosure sale process. The defaulting borrower is then given at least 10 days notice before the foreclosure sale can take place.

On top of that, New Jersey has a statutory right of redemption. This allows the foreclosed borrower to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. But this must be done within 10 days of the foreclosure sale.

The Sheriff's Sale May Not be the End - Deficiency Judgments

If a sheriff's sale does not result in recovery of the amount due on the loan, the lender can seek a deficiency judgment. However, New Jersey follows a "Fair Market Credit" doctrine set forth under N.J.S.A 2A:50-3 which is a safeguard against low or minimal bids. Under this doctrine the defaulting borrower is given credit for the fair market value of the property regardless of the bid at the foreclosure sale. Deficiency actions must be brought within three (3) months of the foreclosure sale.

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The Hartmann Law Firm LLC

56 Ellison Rd
Watchung, NJ 07069
Telephone: 908-731-6976 
Toll Free: 877-223-9930
Fax: 908-462-3808
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