New Rule Now Mandates Foreclosing Lenders To Advise New Jersey Tenants Of Their Legal Right To Stay Put

In Northern New Jersey, The Record reports:

• New Jersey tenants whose landlords fall into foreclosure have a right to stay in their homes — and lenders must tell them that, under a new rule adopted by the New Jersey Supreme Court. [...] Under the rule, before lenders obtain a final foreclosure judgment, they must inform tenants living in the property that they have the right to stay. The rule also requires sheriffs to post notices about tenants' rights on the buildings before a foreclosure auction.

• New Jersey has some of the strongest tenant-protection laws in the nation. While the rising tide of foreclosures in other states has pushed out tenants, a New Jersey tenant "in good standing comes with the property when the property changes hands because of a foreclosure," [New Jersey Public Advocate Ronald K.] Chen wrote recently.(1)

• Matt Shapiro, president of the New Jersey Tenants Organization, praised the new rule. "Tenants have a lot of rights in New Jersey, but they don't always know it," he said. "A lot of tenants are being intimidated and displaced because they don't know their rights."

• Tenants in other states have much weaker protections, though a federal law passed earlier this year allows tenants to remain in their foreclosed rentals for at least 90 days.(2) Previously, many received almost no notice.

For the story, see In foreclosures, N.J. tenants have rights.

(1) "Tenants are the invisible victims of the foreclosure crisis,'' Chen reportedly said Tuesday. "It is critical that tenants are notified in these situations because many are unaware that, under New Jersey law, they cannot be evicted solely because of a foreclosure." Chen said his department has received nearly 200 calls since the beginning of the year from tenants who have been told — incorrectly — that they may have to move because their building is in foreclosure. Tenants living in foreclosed properties should call (609) 826-5070 if they are being pressured to leave, he said.

(2) Among other things, the new federal law requires lenders taking title to foreclosed homes respect any existing tenant leases, and provide at least 90 days notice when vacating month-to-month renters. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009. The new federal law appears to have little or no practical application in the state of New Jersey in light of existing state law that provides for greater protections for tenants.