New Jersey Assembly Bill A1227

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Requires provisions regarding sellers' obligation to deliver marketable and insurable title in certain residential real estate contracts of sale.

Impact

The legislation introduces significant changes to existing state laws regarding seller obligations in the resale of foreclosed properties. It stipulates that any failure on the seller's part to provide the required marketable title will be deemed a breach of contract. In such instances, sellers will not only need to return any deposits made by purchasers but also reimburse any incurred expenses related to the transaction. This provision is expected to enhance buyer confidence in the market for foreclosed properties and to mitigate the risks associated with unclear property titles.

Summary

Bill A1227 aims to establish specific obligations for sellers in residential real estate transactions, particularly those properties that have been foreclosed under the provisions of the Fair Foreclosure Act. The bill mandates that sellers must provide a marketable and insurable title to the purchasers during the sale of such properties. This is particularly relevant for transactions involving 'Real Estate Owned' (REO) properties, where sellers, typically lenders or associated entities, have acquired properties via sheriff's sales following foreclosure proceedings. The essence of the bill is to protect purchasers from potential losses due to the seller’s failure to deliver clear title at closing, ensuring that the rights and financial interests of buyers are adequately safeguarded.

Contention

Notable points of contention could arise surrounding the enforceability of the bill's provisions, especially concerning contract clauses that attempt to limit seller obligations. Any such provisions would be considered null and void under the proposed legislation. Furthermore, the definition of the 'seller of residential property' within the bill recognizes the role of mortgage lenders and their affiliates, which could raise discussions about the responsibilities these entities have in managing foreclosures and subsequent property sales.