Bill > S4470

Introduced Session

This bill revises oversight of the "Community Wealth Preservation Program" and requirements for nonprofit community development corporations. Under the bill, a nonprofit community development corporation with a written agreement to purchase a foreclosed upon residential property for the foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant of that foreclosed upon property will be subject to a 30-year renewable deed restriction requiring the nonprofit and any future owners to sell the property to a household earning no more than 120 percent of area median income and spending no more than 35 percent of gross monthly income on the mortgage, property taxes, interest, and home insurance of the property or, if the nonprofit or future owners decide to rent the property, rent the property to a household earning no more than 80 percent of area median income and spending no more than 35 percent of gross monthly income on rent. The bill also provides a formula for future owners that are still subject to the deed restriction to determine the future sales price of the property. Nonprofits and future owners subject to the deed restriction will additionally be subject to State affordable housing laws and regulations. Despite the deed restriction above, a nonprofit with a written agreement to purchase the property for a foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant will not be subject to the deed restriction language if the foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant decide to purchase the property back from the nonprofit. The bill provides that a sheriff's office will now be required to, within 90 days of the date of a sheriff's sale, deliver a fully executed deed to the successful bidder at the sale. Current law requires a sheriff's office to deliver a fully executed deed to the successful bidder of a sheriff's sale within two weeks of the date of sale. The bill additionally extends the statutory right of redemption for foreclosed upon defendants to within 90 days of the date of the sheriff's sale, instead of 10 days after the date of sale as currently provided. The bill additionally removes the right of first of refusal for tenants of the foreclosed upon property to purchase the property and removes the right of second refusal for nonprofit community development corporations that do not have a written agreement to purchase the property for the foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant of the foreclosed upon property. The bill also requires successful individual bidders who will occupy the foreclosed upon residential property for 84 months to be subject to a deed restriction that outlines the requirements that successful individual bidders must follow. The bill provides new requirements for nonprofit community development corporations that agree in writing to purchase a foreclosed upon residential property for a foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant of the foreclosed upon property. Nonprofits will now be required to negotiate with the foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant on a lease agreement that must include the following: (1) an affordability benchmark that will require lease payments to be set within a reasonable percentage of the occupant's verified monthly income, not to exceed 39 percent of total household income; (2) lease payments that are set at a fixed-rate or indexed to inflation, with a maximum increase of no more than two percent per year; (3) a lease schedule of a minimum of 12 months, with renewal options and clear conditions for termination; (4) eviction protection clauses for occupants who comply with lease obligations; and (5) an option to purchase the property from the corporation, which must include: (a) the purchase price, including the total sales price broken down into the monthly principal, interest, taxes, and insurance. The total monthly housing cost must be comprised of the principal, interest, taxes, and insurance, and must not exceed 39 percent of the household's total monthly income. If the offered sales price would cause monthly housing costs to exceed 39 percent, the sales price will be reduced to align with the monthly housing cost limit; (b) a timeframe, which must be no less than one year from the date in which the occupant signs the lease agreement, in which the occupant may exercise the option to purchase the property; and (c) an ownership transition process, with defined requirements for title transfer, including compliance with escrow, inspections, and financial readiness. Under the bill, a nonprofit community development corporation that decides to independently bid for a foreclosed upon residential property or purchase a foreclosed upon property on behalf of a foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant of the foreclosed upon property will be required to be included within a list of nonprofit community development corporations established by the Department of Community Affairs before it can purchase a foreclosed upon property. To be included within the department's list, the nonprofit must be in existence for 48 months, meet the provided definition of a State community housing development organization, and submit the following materials to the department: (1) the most recent form 990 that the nonprofit community development corporation provided to the United States Internal Revenue Service; (2) letters of reference from at least three other nonprofit community development corporations; (3) a signed statement from the chief executive officer of the nonprofit community development corporation confirming that none of board members of the corporation have been found liable of a housing violation or violation pursuant to the "Consumer Fraud Act" within the past 10 years; (4) an affidavit signed by the executive director and president of the board of directors, or equivalent, of the nonprofit community development corporation that names any representatives that are authorized to bid on behalf of the corporation during the sheriff's sale. The authorized representatives may be an employee or a board member of the corporation; and (5) any other information that the department deems necessary.A nonprofit community development corporation that is not included in the department's list pursuant to this paragraph will be prohibited from entering a bid in a sheriff's sale. A corporation that is included within the list pursuant to this bill will be required to provide the materials required pursuant to this bill once each year to the department to maintain eligibility within the list. A corporation must inform the department if there are material changes to the items provided to the department. The department will be required to publish and maintain the list of eligible nonprofit community development organizations on its Internet website. The bill further provides that a nonprofit community development corporation intending to bid in a sheriff's sale for a foreclosed upon residential property will be required to provide to the sheriff on the date of sale with a watermarked certificate from the Department Community Affairs confirming that the nonprofit is on the department's list of eligible nonprofit community development corporations. Each sheriff's office will be required to consult the list of eligible nonprofit community development corporations established by the department before permitting a nonprofit to bid. The bill provides that a nonprofit community development corporation that is included on the department's list of eligible nonprofit community development corporations will be limited to purchasing one foreclosed residential property in any given county per month, with a maximum of two properties purchased within the State per month. The aforementioned limits will not apply to a nonprofit that purchased a foreclosed residential property on behalf of a foreclosed upon defendant, next of kin of the foreclosed upon defendant, or tenant of the foreclosed upon property. The bill also revises requirements for nonprofits that independently bid on foreclosed upon residential properties and revises fines and enforcement provisions for nonprofits and successful individual bidders that fail to meet the requirements of the "Community Wealth Preservation Program." The bill additionally includes new reporting requirements for sheriff's offices, revises the definition of "nonprofit community development corporation," and includes a new definition for the term "next of kin."

Committee Categories

Britnee Timberlake (D)*,  Andrew Zwicker (D)*, 

Senate Community and Urban Affairs Hearing (10:00:00 6/5/2025 Committee Room 1, 1st Floor, State House Annex, Trenton, NJ) (on 06/05/2025)

Official Document