Foreclosure Unit Update: The New Jersey Foreclosure Unit is attempting to shorten the delay in entering final judgments in foreclosure actions. As of February 2, 2005, the New Jersey Foreclosure Unit was experiencing delays of approximately two months in entering final judgments.
Practice tip: Depending on the facts of the case, mortgagees may want to evaluate the merits of seeking court approval to force the sale of mortgaged property while the foreclosure is pending. This relief, commonly called a “sale pendente lite”, was recently granted by a state court judge in Bergen County.
Two mortgagees held mortgages with a combined balance of $7.5 million which were secured by property with a fair market value of $2.65 million. The property owners made it clear that they were unwilling (or unable) to pay the real estate taxes which were accruing at the rate of $36,000 per year, and had no intention of making interest payments. Although the property owners were not contesting the foreclosure, they remained in possession of the building.
The court reviewed the existing case law and determined that the “loss of interest and impairment of funds ultimately to be realized by the accumulation of property taxes” is grounds to authorize the sale of the property while the foreclosure proceeds. The court entered an order (1) authorizing the immediately listing of the property, (2) directing the property owners to cooperate with the mortgagees in showing the property to prospective buyers, and (3) appointed a receiver to sign all necessary papers in conjunction with the sale. While the property was being listed, the mortgagees continued with their foreclosure actions.
Keep this case in mind when you have a property with no equity that is being further consumed by unpaid property taxes.