Bill Would Allow Municipalities to Issue Fines if Foreclosed Property Falls into Disrepair
TRENTON – A bill sponsored by Senator Ronald L. Rice, which would create a mechanism for municipalities to fine creditors when foreclosed properties fall into disrepair was approved by the Senate Commerce Committee today by a vote of 5-0 with one abstention.
“New Jersey, like the rest of the country, is in the middle of a foreclosure crisis, and when these foreclosed properties fall into disrepair, they can have a negative impact on the property values and safety of the surrounding neighborhood,” said Senator Rice, D-Essex. “When a creditor forecloses on a property, they still have a responsibility to the municipality to ensure that the property doesn’t become a burden on the rest of the community. This bill would give local officials the authority to issue citations and impose fines to make sure that creditors live up to their responsibilities.”
The bill, S-115, would provide a cause of action against creditors who are in the process of foreclosing on a vacant residential property if it falls into disrepair. The bill would allow the appropriate municipal code enforcement officials to issue a citation against the creditor if the condition of the property is found to be in violation of a municipal ordinance, rule or regulation. Under the bill, municipal courts could impose a fine on the creditor for up to $2,500 for each day that the property is deemed to be in violation, and 20 percent of the money collected through this provision would be allocated for municipal code enforcement.
The bill would also require out-of-state creditors who have served notice of intention to foreclose on a residential property to designate an in-state person or entity responsible for the care, maintenance and up-keep of the property.
“When foreclosed properties are abandoned by the creditors that are foreclosing on those properties, they become another blight on the neighborhood, depreciating property values and inviting crime,” said Senator Rice. “By holding creditors’ feet to the fire in terms of maintaining these properties, we can avoid some of the blight which is infecting our communities.”
Senator Rice noted that New Jersey has consistently ranked high in the nation in terms of foreclosure filings. In 2010, three New Jersey municipalities ranked in the top 60 with respect to the percent of housing in foreclosure: Newark (35th), Camden (41st) and Edison (58th).
“New Jersey has been especially hard-hit by the foreclosure crisis, and unless we lean on creditors to maintain abandoned, foreclosed properties, the problem will only get worse before it gets better,” said Senator Rice. “This is a matter of protecting our communities, and protecting local homeowners from property devaluation or crime moving in next door. This bill would prevent the downward spiral of urban and suburban blight and would force creditors to live up to their responsibility to maintain foreclosed properties.”
The bill now heads to the full Senate for consideration.