Many people do not realize that Condominium Associations can foreclose units in the same manner as a mortgagee, pursuant to N.JS.A. 46:8B-21.

The Complaint to Foreclose is filed in the County where the unit is located. A copy of the filed Complaint is then served upon the unit owner via personal service. The unit owner will have 35 days to file an Answer to the Association’s Complaint. In the event the Unit Owner fails to file an Answer, the Association can proceed with filing a Request to Enter Default.

Upon the court entering default, the Association must serve the default upon the unit owner and proceed to file a Notice of Motion for a Determination of Attorneys’ Fees and Costs. This motion allows the judge to review all of the legal fees incurred in the collection matter and make a determination of the amount of legal fees he or she determines is reasonable in accordance with N.J.S.A. 46:8B-21.

After this, an Order awarding attorneys’ fees and costs is entered, and served upon the unit owner. At this point, the Association will file a Final Judgment of Foreclosure application with the Foreclosure Unit. The Final Judgment package calculates the amount due by adding the principal amount included in the liens together with the attorney fee award ordered by the court, and providing a credit to the debtor for any payments remitted.

The Final Judgment of Foreclosure may be entered by the Foreclosure Unit as quickly as three (3) months or as long as nine (9) months, depending upon how back-logged the foreclosure unit is at that particular time. As soon as the judgment and writ are entered and served upon the unit owner, the Association will file a sheriff’s sale package with the county sheriff’s office, requesting a sale date. Sale dates are usually scheduled within two (2) to five (5) months of the request, depending upon the county.

On the day of the sale, the Association opens the bidding. If no one bids against the Association, the Association will be the successful bidder, and the Unit will go to the Association subject to the mortgage and any other liens or encumbrances. In the event that a third party is the successful bidder at the sale, the Association would get paid the judgment amount, and the third party would take the unit subject to the mortgage and any other liens or encumbrances.

For more information on Association foreclosures, feel free to contact the Community Associations Group.