If you are going to a New Jersey Sheriff Sale here are 6 Things to Know when Buying a Home at a Sheriff Auction.
If you are thinking of picking up a bargain at an NJ Sheriff Sale, make sure you are well armed with knowledge before placing a bid. Here is a list of 6 things to understand about sheriff sale auctions:
Damage Deposits after Foreclosure Auction
– If there are tenants in the property, you are responsible for their damage deposit when you buy the home at the sheriff auction. As strange as it may sound, NJSA 46:8-21 provides that an owner turning over property to a purchaser at a foreclosure sale is obligated to transfer the security deposit to the new owner. By law, you are supposed to get the deposit from the former owner, but this person just lost their property at a New Jersey Sheriff Sale/foreclosure auction. This is a case, where you are 100% right to ask for the money, but instead may be forced to have the sheriff remove the former owner from the property, or get out a non-paying tenant or a combination of both. If the deposit is not given to you, the old owner remains is obligated to return it to the tenant at the end of the lease. However, you as the new owner is obligated to the tenant for the security deposit, regardless of whether it is ever transferred by the prior owner. On the flip side, you buying the property are also owed the previous rent if the owner was not paid. In many cases, tenants stop paying landlords as soon as they find out the home is going to be foreclosed. This puts the tenants in a position where they can be evicted as the homeowner is entitled to rent up until the deed passes into the hands of the new owner.
– Tenants retain their rights under landlord-tenant laws in New Jersey even when properties are foreclosed. You can read all about tenant rights at New Jersey Department of Community Affairs. If you want to evict a tenant, you will have to either make sure you are doing it for cause, like non-payment of rent or damage to the property or if it is less than a 4-unit property and you are planning to occupy a unit for yourself you have options. In these cases talking with an NJ landlord attorney will ensure you can actually get them evicted or ejected from the property legally.
Environmental Violation for an Underground Storage Tanks (UST)
– Imagine buying a home at a bargain at a New Jersey Sheriff Sale and then finding out you also own a leaking oil tank. If you want to read horror stories relating to USTs look here. It is possible to find out if homes have decommissioned USTs prior to purchase by checking with the town.
House Listed for Sale Never Sells
– Even though the New Jersey Sheriff Sale auctions websites lists 100’s to 1000’s of homes at auction depending on the county many of these homes will never make it to auction. Is someone declares bankruptcy, the sale is stopped; if they sell the home prior to the auction, the sale is stopped; if the home is given as a deed-in-lieu of foreclosure, the sale is stopped and the home may eventually be listed on someplace like Xome.com or Hubzu.com or any of the other REO clearing websites. The owner may also apply for a 28 day adjournment. Or, if the bank does not have an attorney at the sale the sale will be pushed to the next sale date because the property cannot sell without a bank represenative.
Homeowner Buys the Property back or Declares Bankruptcy after the Auction
– The homeowner has 10 days to redeem the property by paying the sheriff the amount owed to the bank. Or, if in that 10-day redemption period the previous owner declares a chapter 13 bankruptcy, the owner then extends his time to redeem for 60 days. This can become troublesome if you as the current buyer was planning on moving into the property or renting it out.
HOA or COA Fees
– You will most likely be responsible for Condo or Homeowners fees that the previous owner didn’t pay if they are applicable to the unit you are buying. There are options out of this type of situation, and speaking with an attorney to go over your options may make the most sense.
Another thing to be aware is that if you as a third party purchaser paid more money than the upset price of the bank there may be excess funds being held by the sheriff that would be used to pay off additional liens on the property. You may be able to make a motion with the court to get the excess funds back to bay these liens. The former owner may also make this same motion to get the excess funds. If you have any questions, talk to an attorney to go over all of your options related to your situation. Call 973-200-1111