Bill > S3404

Introduced Session

This bill, entitled the "Real Estate Installment Contract Act," provides that, in connection with the use of a real estate installment contract to purchase residential real property, the contract must contain certain disclosures, the purchaser has legal and equitable remedies available upon a seller's default on the contract, and a seller must adhere to certain procedures in enforcing the contract upon a purchaser's default. As an alternative to the more traditional use of a mortgage to finance the purchase of real property, a real estate installment contract allows a purchaser of real estate to make installment payments to the seller towards the eventual purchase of the property, while the seller retains title to the property as security for the purchaser's obligations until the completion of all contract terms. The bill requires a real estate installment contract to be in writing and to disclose certain information, including: the aggregate purchase price of the property; any additional charges or fees imposed on the purchaser by the terms of the contract; the principal balance owed; the amount and due date of each installment payment; and a complete description of any mortgage or other lien encumbering the property. In addition, the bill requires the seller to record either the contract or a short form of the contract, and puts certain restrictions on the seller's ability to hold or place mortgages on the property. If there is a breach or default by either the seller or purchaser under a real estate installment contract, legal or equitable relief may be sought by either party in Superior Court. Certain procedures must be followed in situations in which the purchaser defaults on a payment or otherwise defaults on the contract or is in breach of any other obligation. The seller shall provide the purchaser with a written notice which specifies the nature and extent of the breach or default and which notifies the purchaser that if the purchaser does not cure the default within 30 days of receiving the notice, the seller may file suit in Superior Court to enforce the terms of the contract, in which case judgment may be entered against the purchaser, which may result in the forfeiture of the purchaser's interest in the property and the removal of the purchaser from the property. The seller may only bring an action to enforce the forfeiture of the purchaser's interest in the property and for recovery of possession of the property by use of the procedures for foreclosure and judicial sale of residential real property available to lenders pursuant to the provisions of the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et seq.). The bill clarifies that the State's civil and criminal usury laws apply to real estate installment contracts in a manner to be prescribed by the Commissioner of Banking and Insurance by regulation. As an alternative to the more traditional use of a mortgage to finance the purchase of real property, a real estate installment contract allows a purchaser of real estate to make installment payments to the seller towards the eventual purchase of the property, while the seller retains title to the property as security for the purchaser's completion of all contract terms. While the regulation of real estate installment contracts under the bill includes some provisions relating to mortgage loan law, to which usury laws normally apply, other provisions relate to contract law, to which usury laws do not normally apply. Accordingly, the bill clarifies that the protections afforded consumers by the State's usury laws also apply to real estate installment contracts. The bill allows the commissioner to take anticipatory administrative action in advance of the effective date of the bill as necessary for the enforcement of usury laws.

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John Burzichelli (D)*, 

Introduced in the Senate, Referred to Senate Commerce Committee (on 02/09/2026)

Official Document