New Jersey Commercial Foreclosure Law Update: New Requirements Impacting Municipalities and Creditors Foreclosing on Commercial Properties in New Jersey

On January 18, 2022, New Jersey Governor Phil Murphy signed into law Assembly Bill 2877 (2020 Bill Text NJ A.B. 28771) which is an act “concerning property registration ordinances to address risk of blight” and serves to revise various provisions of New Jersey law (the “Act”). The Act, which took effect immediately, imposes new obligations on municipalities and creditors foreclosing on commercial properties in New Jersey including, among others, office, industrial, warehouse, retail, hospitality, and multi-family housing with more than four dwelling units.

The Act provides guidance to local municipalities to establish registration policies (to the extent they do not already exist) to curtail the potential of rundown and/or dilapidated commercial properties within local communities. The Act expressly authorizes municipalities to adopt uniform ordinances to: (1) create a property registration program for the identification and monitoring of commercial properties in foreclosure; (2) regulate the care, maintenance, security, and upkeep of the exterior of vacant and abandoned commercial properties in foreclosure; and (3) impose property registration fees on creditors, on an annual or semi-annual basis. To the extent that municipalities already have pre-existing property registration ordinances concerning commercial properties, those municipalities must amend their ordinances to conform with the requirements of the Act by August 1, 2022.

Regarding creditors, the Act requires, among other things, that such creditors foreclosing on commercial properties be proactive and provide notice to the municipal clerk of all properties located in the subject municipality where the creditor has commercial foreclosures. Specifically, a creditor serving a summons and complaint in a commercial foreclosure “shall, within 10 days of serving the summons and complaint, notify the municipal clerk and the mayor or other chief executive officer of the municipality in which the property is located” that a summons and complaint in a mortgage foreclosure action has been filed against the subject commercial property. The creditor must then supply the contact information including the name, address, and telephone number for the creditor’s representative responsible for addressing complaints of property maintenance and code violations, and the name and contact information for those responsible for any care, maintenance, security, or upkeep of the commercial property. To the extent that the creditor is located out-of-state, it must designate an in-state representative for the commercial property.

The creditor’s notice to the municipality must identify whether the commercial property is vacant and/or abandoned. The notice may contain, among other things, information about more than one property, and shall also include the street address, lot, and block number of each such property. Should the contact information for the referenced representatives of the creditor change during the pendency of the foreclosure proceedings, the creditor must notify the municipality of such change within ten days. The new registration and notice requirements included in the Act are like those which already exist for residential properties in foreclosure and their maintenance and registration under N.J.S.A. 46:10B-51.

Within 30 days following the effective date of the Act, any creditor that has initiated foreclosure proceedings pending in the Superior Court of New Jersey shall provide to the municipal clerk of the municipality in which the commercial property is located, a listing of all commercial properties for which the creditor has foreclosure actions pending by street address and lot and block number. The local municipalities may impose an annual property registration fee upon the creditor not to exceed $500 per property in foreclosure, and not to exceed $2,000 for vacant or abandoned commercial properties.

Under the Act, municipal clerks must also be vigilant. It is incumbent upon the municipal clerk or other responsible local official to notify a foreclosing creditor when the commercial property becomes vacant, and the exterior of the property is in disrepair and/or a nuisance or in violation of any applicable state or local code. Under the Act, a property is considered vacant and abandoned if it is not legally occupied by a mortgagor or tenant, and in such condition that it cannot be legally reoccupied because of the presence or finding of at least two of the following factors: overgrown or neglected vegetation; accumulation of newspapers, circulars, flyers, or mail on the property; disconnected gas, electric, or water utility services to the property; accumulation of hazardous, noxious, or unhealthy substances or materials on the property; the accumulation of trash, or debris on the property; absence of window treatments such as blinds, curtains, or shutters; the absence of furnishings and personal items; statements of neighbors, delivery persons, or government employees indicating that the property is vacant and abandoned; windows or entrances to the property that are boarded; and/or risks to the health, safety, or welfare of the public or any adjoining or adjacent property owners due to acts of vandalism, loitering, criminal conduct, or the physical destruction or deterioration of the property.

Following receipt of such notification from the municipality, the creditor must abate the nuisance or correct the violation. If the creditor does not do so within the specified period required by the municipality, the Act permits the municipality to impose penalties upon the creditor. If the municipality expends public funds to abate a nuisance or correct a violation in situations where the creditor was given appropriate notice but failed to abate the nuisance or correct the violation as directed, the Act provides the municipality with the same recourse against the creditor as it would have against the title owner of the property to enforce a lien pursuant to current law.

The “takeaway” under the Act for creditors foreclosing on commercial properties is to be attentive to the registration requirements and the status of the properties which they seek to foreclose. By exercising due care and diligence throughout the foreclosure proceedings with proper and timely notices, and upkeep and maintenance of the properties, creditors can avoid costly fines and/or penalties.

We are available to answer any questions you may have concerning the Act or commercial foreclosures in New Jersey. Phil’s email address is and Kerry’s email address is

[1] (P.L.2021, c.444)

Philip Rosen practices in New Jersey and New York, is a member of the firm’s management committee and the chair of the firm’s New Jersey creditors’ rights group. Phil’s diverse practice includes mortgage-related litigation, foreclosures, title and real estate disputes, bankruptcy matters and assisting investors in their acquisition of performing and defaulted loan portfolios. He is seasoned in foreclosure law having foreclosed millions of dollars in commercial and residential mortgages for banks, private equity firms and securitized servicers. Phil is a frequent lecturer and presenter and his recent seminars for NACLE in which he presented with Kerry Duffy, Esq. include “So Your Commercial Borrower Is In Default? Protecting your Security Interest” and “Navigating New Jersey Residential Foreclosures: A Plaintiff’s Guide to the Process.”

Attorney Philip S. Rosen

Kerry Duffy practices in New Jersey and engages in civil trial and appellate practice, including foreclosures, commercial litigation, and bankruptcy/creditor’s rights matters for financial institutions and private investors. Kerry has in-depth knowledge of New Jersey foreclosure law, having presented at the National Business Institute Seminar, Real Property Foreclosure: A Step-by-Step Workshop, and serving as a co-presenter with Philip S. Rosen, Esq. for the NACLE seminars titled, “So Your Commercial Borrower Is In Default? Protecting your Security Interest” and “Navigating New Jersey Residential Foreclosures: A Plaintiff’s Guide to the Process.”

Attorney Kerry Duffy