When a homeowner stops making payments on their mortgage, the lender will initiate a foreclosure proceeding. Mortgages are secured loans, meaning that they are attached to a piece of collateral, usually the property that mortgage is being used to purchase. If the borrower stops making payments on the loan, the lender is within their rights to repossess the property in an attempt to cover their losses. This is done through the foreclosure proceeding.
When a foreclosure proceeding is complete the lender will prevail if it’s demonstrated that the borrower is unable to get current on their mortgage payments and maintain them in the future. When the lender prevails the process of initiating a sheriff’s sale will begin. The sheriff’s sale is an auction where the sheriff of the county where the property is located will auction off the property to the highest bidder and then pay the proceeds to the lenders in order of priority.
The holder of the first mortgage will receive all proceeds until they’re debt is paid in full, with the remainder going to holders of second mortgages like home equity loans. If there is a surplus after all lenders have been paid it will go to the homeowner. If there is a deficiency, meaning that the sale was not enough to cover the amount owed to the holder of the first mortgage, it’s possible they will sue the homeowner to recover the remaining amount owed.
Anyone going through a sheriff’s sale should consult with an attorney to make sure that they understand the process, their rights, and the options available to them before the sale takes place. Read on to find out more important information about sheriff’s sales in New Jersey.
It’s likely that any homeowner going through a foreclosure proceeding will be aware of an impending sheriff’s sale, but the law still requires that notification be made at several points before the sale takes place to ensure that all interested parties are aware of when and where it will occur.
The lender or holder of the mortgage is required to send notice to the homeowner by certified or registered mail at least 10 days before the sale takes place. This is to make sure that the homeowner is completely aware of the timing of the sale and has been given an opportunity to explore their options before the sale actually occurs.
In addition to this, the sheriff is required to provide notice in a number of ways. It’s important to remember that the lender and the homeowner may not be the only interested parties in a sheriff’s sale. Holders of other debt associated with the property like home equity loans as well as potential purchasers of the property will need to be aware of the sheriff’s sale to protect their interests.
In order to provide this general awareness of the sale, the sheriff will need to publish notice in two newspapers in the county in which the property is located for four consecutive weeks prior to the initial date of the sale. The first publication must be at least 21 days before the sale, and the last one must be at least one day and not more than eight days before the sale.
The sheriff will also need to post notice in their office, usually located in the municipal building for the county where the property is located. This must be done at least three weeks prior to the sale. Lastly, save for some exceptions, notice will be posted on the property itself.
Anyone unsure about whether a property is scheduled for a sheriff’s sale should call the sheriff directly, rather than relying on the bank or its attorneys, who may not have the most up to date information. Many counties in New Jersey also list upcoming sales on the county website, though this information is also subject to delays in updating and therefore might not always be accurate.
Delaying the Sheriff’s Sale with Adjournments
The sheriff’s sale truly marks the last chance for a homeowner to retain their property, and as such the courts will allow the homeowner two adjournments as a matter of course. When a sheriff’s sale is adjourned, the property will still be up for sale but the date of the sale will be pushed back, usually by 30 days but in some cases it may be longer.
The bank is also given two opportunities to adjourn, and they will often take these opportunities to give themselves time to prepare for the sale. One more adjournment will be given out to the parties without cause if they are both in agreement as to its necessity.
Adjournments can be attained by going to the sheriff’s offices before the sale and paying a small fee by cash or money order. Once the allowed adjournments are used up, the homeowner will need to petition the court if they want to push back the date of the sale any further. This will likely require an adequate reason for delay to be presented by the homeowner.
Anyone looking for more time before a sheriff’s sale takes place should consult with an experienced attorney immediately to discuss their available options.
Other Ways to Delay a Sheriff’s Sale
Adjournments aren’t the only method of delaying a sheriff’s sale. Homeowners have a few more relevant options that should be considered, including:
- Loan modification: sometimes a borrower and a lender can agree to new terms on a loan which will enable the borrower to get current and continue making payments. This is called a loan modification, and typically involves taking past due payments and either adding them to the back end of the loan or paying them out over the course of the remaining scheduled payments. These loan modifications usually also include some reduction in interest rates in order to make the future payments feasible for the borrower. It’s entirely up to the bank whether or not to accept a modification, and any proposal must be submitted at least 45 days prior to the sheriff’s sale to give the lender time to review and decide on the proposal.
- Bankruptcy: Filing for bankruptcy under any chapter will initiate the automatic stay, which will immediately halt the foreclosure proceeding. This is not a solution so much as a delay, as the foreclosure will resume after the completion of the bankruptcy unless some other arrangement is agreed to by the lender and borrower during the bankruptcy proceeding.
Once the sheriff’s sale takes place, a homeowner’s only remaining option to keep their property is through redemption (see below). This is usually difficult to achieve, so it’s crucial for the homeowner to consult with an attorney prior to the sale and discuss any and all viable options for keeping their property.
What Happens at a Sheriff’s Sale
If there are no adjournments or other reasons for delay, the sheriff’s sale will take place at the time and place set forth in the various notices discussed above. Usually these sales take place at the office of the sheriff or in the county courthouse. Most sheriff’s sales occur weekly or bi-weekly and involve multiple properties being auctioned off, as the proceeding will be for the sale of any properties located within the subject county.
Anyone attending the sheriff’s sale can expect a lot of participants to show up, from lenders and other homeowners to investors looking for a good deal on a new piece of property. Before any property is auctioned off, a representative of the county will list all relevant mortgages, as well as any state or federal liens on the property. Purchasers may be responsible for paying off liens from entities like the tax collector or a homeowner’s association.
The auction occurs just like most people imagine, a starting price is stated and then participants can raise their hand and offer a higher bid. Once there are no higher bids, the last bidder will be awarded the property and asked to approach the sheriff’s desk to fill out the relevant paperwork. They will be required to submit a deposit in the form of a cashier’s check, and to pay the remaining amount of the bid within a set time after the auction.
After the Sheriff’s Sale
Once the sale is complete the homeowner’s options become very limited. The only way they can retain the property at this stage is to “redeem” it within 10 days of the completion of the sale. Property redemption can only occur by refinancing and getting current on all payments, or selling the home and paying the lender in full plus relevant costs. While selling the property may not be a great option, successfully doing so will greatly lessen the impact on the homeowner’s credit history.
If nothing else is done after the sheriff’s sale, the winning bidder will be the new owner of the property. That doesn’t mean that they can immediately enter the property and remove the current occupants. The new owner will be required to get a warrant for the previous homeowner’s removal from the property.
Getting this warrant usually takes 4-6 weeks to achieve, but can take longer depending on any special circumstances of the occupant. The occupant may file a motion with the court requesting additional time if they can provide adequate reasoning for this need. Absent any other reasons for delay, if the previous homeowner refuses to vacate then the new owner will be able to have the sheriff enter the property and remove them.
Foreclosure and the sheriff’s sale process can be intimidating to navigate, especially for a homeowner that has never experienced these proceedings before. Consulting with an experienced attorney can provide the homeowner with valuable knowledge of their available options as well as a sense of comfort that no option is being left on the table. It’s always best to consult with a professional when one’s property is at risk. At Rosenblum Law our attorneys are ready to help, call us today.