Bill Text: NJ A1873 | 2014-2015 | Regular Session | Amended
Bill Title: The "Real Estate Installment Contract Act."
Spectrum: Partisan Bill (Democrat 19-0)
Status: (Engrossed - Dead) 2015-12-07 - Received in the Senate, Referred to Senate Commerce Committee [A1873 Detail]
Download: New_Jersey-2014-A1873-Amended.html
ASSEMBLY, No. 1873
STATE OF NEW JERSEY
216th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2014 SESSION
Sponsored by:
Assemblyman JOHN J. BURZICHELLI
District 3 (Cumberland, Gloucester and Salem)
Assemblyman GARY S. SCHAER
District 36 (Bergen and Passaic)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
Co-Sponsored by:
Assemblymen Gusciora, Giblin, Prieto, Green, Assemblywomen Vainieri Huttle, Lampitt, Oliver, Assemblyman Moriarty, Assemblywoman Mosquera, Assemblyman DeAngelo, Assemblywoman Caride, Assemblymen Chivukula, Conaway and Coughlin
SYNOPSIS
The "Real Estate Installment Contract Act."
CURRENT VERSION OF TEXT
As amended by the General Assembly on October 16, 2014.
An Act concerning real estate installment sales contracts and supplementing Title 46 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Real Estate Installment Contract Act."
2. As used in this act:
"Property" means any real property located in this State which has no more than four dwelling units, one of which shall be or is intended to be occupied by the purchaser or a member of the purchaser's immediate family as a residence at the time that a real estate installment contract is originated.
"Purchaser" means any person acquiring an interest in property by means of a real estate installment contract.
"Real estate installment contract" or "contract" means an agreement which by its terms is not required to be fully performed by 1[one or more of]1 the parties to the agreement within one year of the date of the agreement and under which the seller agrees to convey title to a property to the purchaser and the purchaser agrees to pay the purchase price 1[in] by periodic1 installment payments while the seller retains 1legal1 title to the property 1[as security for the purchaser's obligation] , and the purchaser retains an equitable interest therein1.
"Seller" means any person conveying 1[an interest in property] title1 by means of a real estate installment contract.
1"Title" means the fee simple estate, leasehold estate, or estate for years vested in the seller at the time of the execution of a real estate installment contract.1
3. a. A real estate installment contract shall be in writing1,1 and1, upon execution by the seller and purchaser,1 the seller shall 1[provide a copy] deliver the original or a duplicate original1 of the contract to the purchaser 1[at or before the time the purchaser signs the contract] in recordable form1. The contract shall contain 1[at least]1 the following 1information1:
(1) the names and mailing addresses of 1[all]1 the parties to the contract;
(2) the date on which the contract was signed by each party 1and the effective date of the contract1;
(3) a 1[legal]1 description 1[, by metes and bounds or block and lot numbers,]1 of the property 1[conveyed] which is the subject of the contract, which description shall be in a form legally sufficient to convey title to real property1;
(4) the 1aggregate1 purchase price of the property 1[conveyed] affected1;
(5) any 1additional1 charges or fees 1[for services that are included in the contract separate from the purchase price] imposed on the purchaser by the terms of the contract1;
(6) the amount of the purchaser's down payment 1, if any1;
(7) the principal balance owed, which shall be the 1[contract] aggregate purchase1 price less the down payment;
(8) the amount and due date of each installment payment;
(9) a complete description of any mortgage or other lien encumbering 1[or secured by]1 the property, including the 1[identity] name1 and address of the 1[owner of record as to] holder of1 each mortgage or lien and the 1[total]1 amount due 1[under the mortgage or lien] to each holder thereof, or, in the alternative, a statement that no such liens exist1;
(10) a 1[requirement] statement1 that, if the seller defaults 1[on] in payment of1 a mortgage 1[on] or other lien encumbering1 the property, 1[the seller shall notify the purchaser and]1 the purchaser may, at the purchaser's option, make payments 1[on that mortgage and receive credit from] , which payments shall be credited by1 the seller 1[for any amounts paid toward any payments required on] against any payments required to be made by the purchaser under the terms of1 the contract;
(11) a 1[requirement] statement1 that 1, once the purchaser has fully performed all of the purchaser's obligations under the contract,1 the seller shall deliver 1to the purchaser1 a deed 1[and convey marketable] conveying all of seller's right,1 title 1[to the purchaser upon completion of the contract] and interest in and to the property described in the contract1;
(12) a 1[requirement that the seller] statement as to which party1 shall be responsible for the payment of taxes, assessments, and other 1municipal1 charges against the property from the 1effective1 date of the contract1[, unless otherwise agreed to by both parties]1; 1[and]1
(13) a 1statement containing a1 description of any pending order 1[of] issued by1 any public agency against the property 1arising from a violation of any statute, administrative regulation or local ordinance, or in the alternative, a statement that no such order exists; and
(14) acknowledgment of the execution of the contract by both seller and purchaser before a notary public or other officer entitled by law to take acknowledgements1.
b. A seller shall not 1[place or hold] encumber a property sold pursuant to a contract, by execution of1 a mortgage 1[on property sold pursuant to a real estate installment contract in an amount greater] unless the indebtedness secured by the mortgage, or aggregate indebtedness if there is more than one mortgage, is less1 than the balance due under the 1[real estate installment]1 contract.
c. Within 20 days after a 1[real estate installment]1 contract has been 1[signed] executed1 by both the seller and purchaser, the seller shall record the contract, or a short form thereof, in the office of the county clerk 1or register1 in the county where the property is located.
1d. Within 30 days of the date that the purchaser shall have fully performed all of the purchaser's obligations under the contract, the seller shall deliver a deed to the purchaser in recordable form, conveying to the purchaser all of the seller's right, title and interest in the property.1
4. 1a.1 Upon 1breach or1 default by 1[a seller of] any party with respect to1 any provision of a 1[real estate installment]1 contract, which default continues beyond the expiration of any applicable notice provision and period to cure the default provided for in the contract, or upon the failure of 1[a seller] any party1 to comply with any provision of this act, the 1[purchaser] party aggrieved thereby1 may bring an action for legal 1[and] or1 equitable relief in Superior Court 1as may be appropriate in the circumstances; except that if the seller seeks relief against the purchaser on the grounds set forth in section 5 of this act, the seller shall comply with the provisions thereof before commencing suit1. 1[Equitable relief in the action may include rescission of the contract and restitution to the purchaser in an amount equal to all amounts the purchaser paid to the seller plus the reasonable value of any improvements to the property made by the purchaser and any other proximately caused or incidental damages, less the fair rental value of the property for the period of time that the purchaser was in possession of the property.]
b. If, in any action commenced in Superior Court to enforce the terms of a contract, the seller demands forfeiture of the interest of the purchaser in the property, the action shall be deemed to be one in the nature of a strict foreclosure of a mortgage encumbering real property, in which case the seller shall be deemed to be the mortgagee and the purchaser shall be deemed to be the mortgagor.1
5. a. If a purchaser 1[fails to make] defaults in1 a payment 1or payments due,1 or otherwise defaults on a 1[real estate installment]1 contract, 1[the seller may initiate the forfeiture of the interest of a purchaser under the contract by serving on] or is in breach of any other obligation imposed upon the purchaser by the contract, the seller, prior to commencing an action in Superior Court to enforce the terms of the contract as provided in section 4 of this act, shall serve upon1 the purchaser a written notice which:
(1) reasonably identifies the contract and describes the property 1[covered by it] affected thereby1 ;
(2) specifies 1[the terms and conditions of the contract which have not been complied with] the nature and extent of the breach or default by the purchaser1; and
(3) notifies the purchaser that 1[the purchaser's interest in the contract will be forfeited unless the purchaser performs the terms and conditions of the contract within 30 days of the completed service of notice] unless the breach or default is cured within 30 days of service of 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 property1.
b. 1The notice shall be entitled "Notice of Breach or Default under Real Estate Installment Contract."1 The seller shall serve the notice 1[by hand delivery to] upon1 the purchaser 1[or by delivery]1 by 1hand or by registered or1 certified mail 1, return receipt requested,1 to the last known address of the purchaser. 1[The seller shall not enforce the forfeiture of the interest of the purchaser under the contract pursuant to section 6 of this act until 30 days after the date of the completed service of the notice. A] If a1 purchaser 1[in] cures the breach or1 default 1[may avoid the forfeiture of the purchaser's interest under the contract by making all payments currently due and any fees or charges for which the purchaser is liable or by otherwise performing the purchaser's obligations under the contract within the 30-day period] within 30 days after service of the notice, the seller shall be barred from filing suit in Superior Court to enforce the contract. If the purchaser fails to cure the breach or default within 30 days after the service of the notice, the seller may file suit in Superior Court to enforce the contract, as provided in section 4 of this act.
c. 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.). For purposes of an action to enforce a contract under this act, the seller shall be deemed to be a lender, and the purchaser shall be deemed to be a debtor, as those terms are defined in the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et seq.)1.
1[6. If a purchaser fails to make a payment or otherwise defaults on a real estate installment contract and if the purchaser is still in default after the expiration of the period prescribed by section 5 of this act, the seller, after complying with the notice requirement set forth in section 5 of this act, shall only enforce the forfeiture of a purchaser's interest under the contract as follows:
a. If a purchaser has paid in accordance with the terms of a real estate installment contract for a period of less than five years from the date of the first payment and the purchaser has made payments of less than twenty percent of the purchase price of the property under the contract, the seller may bring an action in Superior Court for forfeiture of the purchaser's interest in the contract and for recovery of possession of the property.
b. If a purchaser has paid in accordance with the terms of a real estate installment contract for a period of five years or more from the date of the first payment or has made payments in excess of twenty percent of the purchase price of the property under the contract:
(1) for purposes of the "Fair Foreclosure Act," P.L.1995, c.244 (C.2A:50-53 et seq.), the contract shall be deemed to be a residential mortgage, the seller shall be deemed to be a lender, and the purchaser shall be deemed to be a debtor; and
(2) the seller may 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."]1
1[7.] 6.1 The provisions of the civil usury law, R.S.31:1-1, and the criminal usury law, N.J.S.2C:21-19, shall apply to real estate installment contracts in a manner, which may include compliance and enforcement mechanisms, to be prescribed by the Commissioner of Banking and Insurance by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
1[8.] 7.1 This act shall take effect on the 60th day following enactment and shall apply to real estate installment contracts entered into on or after that date, but the Commissioner of Banking and Insurance may take anticipatory administrative action in advance of the effective date as shall be necessary for the implementation of section 1[7.] 6.1 of this act.
