Abandoned Property List
Creating a municipal abandoned property list is an important first step in assessing the community's abandoned property problems. It is a key legal tool, as certain municipal powers can only be used with properties that are on an abandoned property list. It is also an important management tool through which a city's officials, CDCs and residents can better understand the dimensions of their abandoned property problems, and frame better strategies to deal with them.
PROCEDURES FOR CREATING AND MAINTAINING AN ABANDONED PROPERTY LIST
The legal instrument known as an abandoned property list was first established in New Jersey law by the 1996 Urban Redevelopment Act (P.L.1996, c.62). The provisions of that act were substantially amended by the Abandoned Properties Rehabilitation Act in 2004. Since placing a property on an abandoned property list triggers significant municipal powers with respect to that property, the law sets forth a series of procedures that must be followed closely to ensure that properties are not mistakenly entered onto that list, and that property owners are given a full opportunity to present evidence that the property is indeed not abandoned.
The process is divided into three steps, as follows:
• Authorizing the list.
• Creating the list.
• Providing notice and offering owners the opportunity to appeal inclusion on the list.
The process is depicted in graphic form in Chart 2.2. Each of the steps is discussed below, as is the procedure by which owners can subsequently remove their properties from the abandoned property list.
STEP 1: AUTHORIZING THE LIST
The abandoned property list must be formally authorized by the municipal governing body.
(a) Authorization process. The governing body must enact an ordinance directing the public officer to “identify property for the purpose of establishing an abandoned property list throughout the municipality or within those parts of the municipality as the governing body may designate.” (N.J.S.A.55:19-55.a.). If the municipality has not designated a public officer for this purpose, it must do so before the ordinance authorizing the list can go into effect.
|Since municipalities can appoint more than one public officer for different purposes, the municipality should explicitly designate the public officer who will have the responsibility of preparing and maintaining the abandoned property list. Designation of the public officer is made by resolution of the governing body, except for municipalities operating under the Faulkner Act mayor-council (strong mayor) plan where the authority to designate the public officer falls to the mayor (N.J.S.A.55:19-80).
Effective January 8, 2005, if a municipality has not yet adopted an ordinance directing the public officer to prepare an abandoned property list, citizens of the municipality can use the New Jersey initiative procedure to propose such an ordinance, which must then be voted upon by the governing body. The number of legal voters in the municipality who sign the petition must equal at least five percent of the total votes cast in the last municipal election, but may not be fewer than 100 signers in any municipality with a population of 1,000 or more (N.J.S.A.55:19-104)
(b) Defining the geographic scope of the ordinance. The law permits the governing body to determine whether the abandoned property list will be municipality-wide or limited to certain designated areas. From a practical standpoint, there is no downside to making the list municipality-wide. It does not trigger additional work for the public officer, since the law permits the public officer to be selective in placing properties on the list, rather than requiring that the list be an exhaustive one, or that it be based on a comprehensive inventory of all abandoned properties.
Making the list municipality-wide gives the public officer the opportunity to put scattered abandoned properties on the list when buildings are abandoned in otherwise relatively stable areas, rather than limit the list to those areas where abandoned properties are most pervasive. This is where having a property on the list can be particularly useful, since one of the most powerful tools triggered by the list is the ability to exercise what is known as “spot blight” eminent domain.
STEP 2: CREATING THE LIST
Once the ordinance has been enacted, a specific procedure to create the abandoned property list must be followed.
(a) Creating the initial list. The public officer creates the abandoned property list.
The list consists of those properties that the public officer determines to be abandoned, based on the statutory definition. As noted above, the list does not have to include every abandoned property in the municipality. The requirement in the 1996 Urban Redevelopment Act that the list be based on a comprehensive inventory of abandoned properties has been eliminated. In a municipality with a large number of abandoned properties, a complete list is a practical impossibility. Properties are continually being abandoned, and, to a greater or lesser degree, continually being removed from that state through rehabilitation or demolition. Recognizing this reality, the law provides that “the abandoned property list shall become effective […] at such time as any one property has been placed on the list….” (N.J.S.A.55:19-102.h.).
This does not mean that the public officer can arbitrarily pick and choose from among the abandoned properties in the community for the list. A public officer who did so would be legitimately subject to criticism, and the validity of the list might be subject to legal question at the point it was used as a basis for municipal action. If the cost and time involved is not excessive, the public officer may want to conduct or commission a citywide abandoned property inventory for the purpose of creating the list. Where this is not feasible, the public officer should adopt a rational scheme for setting priorities. Some potential criteria for prioritizing abandoned properties might include:
• Properties in redevelopment areas.
• Properties in areas where a neighborhood revitalization plan has been approved by the Department of Community Affairs pursuant to N.J.S.A.52:27D-490 et seq., or in which a CDC is working in partnership with the city to develop such a plan.
• Properties in areas that have been designated for other targeted strategies, such as neighborhood preservation areas, empowerment zones, etc.
• Properties that have been the subject of complaints to the municipality.
The public officer has the discretion to determine at what point to cut off the process of creating the initial list, particularly as properties can easily be added to the list later. The number of properties on the initial list should reflect the municipality’s redevelopment priorities, as well as the resources that are available to maintain the list and take action on the properties on the list. The entry for each property must contain five pieces of information. This information must be gathered both for purposes of identification and to address the notice requirements of the law.
(1) The tax block and lot number of the property
(2) The street address of the property
(3) The name and address of the owner of record, to the extent known
(4) The name and address of any mortgagee, servicing organization, or property tax processing organization that receives a duplicate copy of the tax bill
(5) The factual basis for the public officer’s determination that the property is abandoned based on the statutory definition of abandoned property, with documentation for the finding.
The factual basis for the determination must be carefully documented, to ensure that it will withstand possible challenge. Once this information has been assembled for all of the properties, the public officer must then comply with the notice requirements of the law.
(b) Adding properties to the list. The municipality may add properties to the abandoned property list at any time (N.J.S.A.55:19-55.b.). In light of the strict notice requirements of the law, it may be cumbersome to add properties one or two at a time, except where adding a particular property is a matter of great urgency. It is usually better to assemble a number of additional properties, which can then be added as a body to the list. The public officer may want to establish a regular schedule for adding properties to the list—perhaps once or twice a year—particularly if the initial list only included some of the areas of importance to the municipality or to CDCs and community organizations.
Any interested party may submit a request to the public officer that a particular property or properties be added to the abandoned property list. The party must specify in writing the address and block and lot number of the property, and the reasons why it should be added to the list.
|An “interested party” for this purpose includes any resident of the municipality, any owner or operator of a business within the municipality, or any organization representing the interests of residents or engaged in furthering the revitalization of the neighborhood in which the property is located (N.J.S.A.55:19-105.a)
Once the public officer receives such a request, the public officer must provide a written response within 30 days indicating either that:
• The property will be added to the list
• The property will not be added to the list, and stating the reasons for not adding the property to the list. (N.J.S.A.55:19-105.a.)
While the law does not require the public officer to add the property immediately to the list, it is reasonable to assume that he or she must do so in a timely fashion. Having regular schedule for adding properties to the list enables the public officer to be responsive to citizen requests, while avoiding placing undue burdens on that official.
STEP 3: NOTICE AND APPEAL
Property owners must be notified and given the opportunity to appeal inclusion of their property on an abandoned property list.
The provisions for notice and appeal, while strict, are not unduly onerous. The steps in the notice and appeal process along with the timetable for each step are summarized in Table 2.2 and described more fully below. Even with an appeal from an unhappy property owner, the status of the property should almost always be resolved within 120 days or less after the property is first identified for the list.
• The public officer must publish the list and provide notice to owners
A notice containing information about the properties on the list must be published in the municipality’s official newspaper, and sent by certified and regular mail to the owner of record within 10 days after publication. Notice by regular mail must also be given to any entity that receives a duplicate copy of the tax bill from the municipal tax collector. The law does not require a title search or other investigation of potential lienholders. If an address cannot be obtained for an owner of record, notice must be posted on the property. The mailed notice must contain the factual basis for the finding that the building is abandoned property, and the information relied on for that finding. The public officer must also file a copy of the notice with the county clerk or register of deeds and mortgages, as applicable, which has the effect of a filing of a notice of lis pendens.
• Owner or lienholder may file notice of appeal
Any owner or lienholder may challenge the inclusion of a property on the list within 30 days from receipt of the notice, or 40 days from mailing or publication of the notice. The only grounds for successfully appealing inclusion of a property on the list are that the property is not abandoned. There are two ways in which such an appeal can be grounded:
(1) The property was placed on the list in error, based on successfully refuting the public officer’s findings that the property meets the definition of abandoned property. This is likely to require proof either that the property is in fact legally occupied or that rehabilitation of the property is under way. Other claims are possible, but likely to be rare.
(2) The property should be excluded from the list because an entity other than the municipality holds the tax sale certificate.
The owner must provide the public officer with an affidavit or certification, along with whatever documentation he or she considers appropriate to establish that the property is not abandoned. The public officer can accept a late filing but only for good cause shown.
The owner can also get a property removed from the list by restoring the property to sound condition or making a firm commitment to do so. This is a separate procedure described below.
• The public officer holds a hearing
The public officer must schedule a hearing on any timely appeal within 30 days of receipt of the appeal. The law does not give the public officer the right to dismiss a timely appeal without a redetermination hearing, even if it may be obvious that the appeal is without foundation. Any interested party has the right to participate in a redetermination hearing. If the party has given the public officer prior written notice of its desire to participate, the public officer must notify the party that a hearing is pending at least 20 days beforehand. The party must then notify the public officer at least 10 days before the hearing that it plans to participate, and the nature of the testimony or other information that it plans to present at the hearing (N.J.S.A.55:19-105.b.).
Participation by third parties is an important safeguard of the integrity of the process. Property owners may misrepresent information, and an overtaxed public officer may not always be in a position to challenge that information. Knowledgeable residents and service providers may be able to bring valuable information to the attention of the public officer. Neighborhood associations and CDCs should take full advantage of the right to participate in redetermination hearings. The advance written notice that the interested party must provide to the public officer could, rather than specifying individual buildings, express a desire to participate in all hearings, or in all hearings on properties within a particular neighborhood. The party would then receive notice of all potentially relevant hearings, and could select those to participate in, based on whether it had relevant information to present.
If the holder of a tax sale certificate seeks to have a property removed from the list, they must show that they have paid all municipal taxes and liens due on the property within 30 days after the property was placed on the list. From a practical standpoint, if they provide that evidence to the public officer in a timely fashion, there is no need for a hearing, and the property can be removed from the list forthwith.
If the holder of the certificate, however, does not then or subsequently provide the public officer with documentation that she has initiated and is diligently pursuing foreclosure proceedings on the property within six months after the property was first placed on the list, the public officer must restore the property to the list. In that event, the property remains on the list and is subject to the legal remedies connected with the list, even if the holder of the certificate subsequently files for foreclosure.
• The public officer decides the appeal and provides notice of the decision
The public officer must decide the appeal within 10 days of the hearing, and notify the owner of the decision promptly, by certified and regular mail. The public officer should send the same notification to any party that participated in the hearing. If the decision is to remove the property from the abandoned property list, the property should be promptly removed from the list. The owner has the right to appeal an adverse determination by the public officer to Superior Court. Except for the rare occasions where an owner will consider it worth his or her while to do so, the process ends at this point, and any property still on the list is subject to the legal remedies provided in the Abandoned Properties Rehabilitation Act.
REMOVING A PROPERTY FROM THE ABANDONED PROPERTY LIST
Once a property has been placed on the list, the owner can get the property removed from the list by remedying the conditions that led it to being placed on the list. There are three alternative routes, or scenarios, by which this can take place (N.J.S.A.55:19-57).
• The owner demonstrates to the satisfaction of the public officer that the conditions that led to the property being put on the abandoned property list have been remedied in full
• The owner initiates work to remedy the conditions
If the public officer finds that the owner is actively engaged in remediating the conditions, the public officer can grant the owner a period of up to 120 days to complete the work, during which time the municipality will not take further action against the property. The ability to grant such a period, and the length of the period, are at the discretion of the public officer.
• The owner posts a bond
If an owner pays all taxes and municipal liens, including interest and penalties, on the property and posts cash or a bond in an amount which the public officer finds adequate to remediate all of the conditions that led to the property being placed on the abandoned property list, the property is removed from the list. If the conditions have not been fully remediated within one year after posting the cash or bond, the cash or bond is forfeit to the municipality. The municipality must then use the cash or bond, along with accrued interest, either to rehabilitate or demolish the property or, where appropriate, conduct environmental remediation. Any funds left are returned to the owner.
|The provisions of this last section are mandatory, not discretionary, in the law. If the conditions have not been remedied in one year, the law provides that the cash or bond shall be forfeit, and that in that event, the municipality shall use those funds to rehabilitate, remediate or demolish the property.
USING THE ABANDONED PROPERTY LIST
Once a property has been placed on the abandoned property list, and the time for appeal expired or the appeal denied, the municipality may exercise any of the legal remedies associated with the list against that property. The remedies are available for that property even if other properties on the list are still going through the appeal process (N.J.S.A.55:19-102.h.). Although each legal remedy is described in further detail in a later section, this section will summarize what those remedies are. In addition, this section contains a brief discussion of the use of the abandoned property list as a management tool, as part of a municipal property information system.
LEGAL REMEDIES ASSOCIATED WITH AN ABANDONED PROPERTY LIST
A property that is placed on an abandoned property list has special status with respect to New Jersey’s tax sale and eminent domain laws. These are summarized below.
• Tax sale law
Special tax sales. A municipality can take properties on an abandoned property list that are also eligible for tax sale under N.J.S.A. 54:5-19, take them off the regular tax sale and hold a special tax sale for those properties. Under a special tax sale, the municipality can set qualifications and performance requirements for bidders, in order to ensure that the properties go to entities that will reuse them in a manner consistent with the public interest (N.J.S.A.55:19-101).
Rehabilitation may be required of tax certificate purchaser or assignee. If tax liens on properties on an abandoned property list are sold at the regular tax sale or subsequently assigned by the municipality, the municipality may establish as a condition of sale or assignment that the buyer of the certificate be “obliged to perform and conclude any rehabilitation or repairs necessary to remove the property from the abandoned property list…and post a bond in favor of the municipality to guarantee the rehabilitation or repair of the property” (N.J.S.A. 55:19-56.a.).
• Having established this condition of sale or assignment, the municipality may, however, waive the bond requirement for any purchaser or assignee that meets the definition of a “qualified rehabilitation entity” under the law
• Redemption without rehabilitation barred. Once the municipality or a purchaser of a tax sale certificate on a property on the abandoned property list has instituted a foreclosure action, the owner may not redeem the property unless the owner either (1) posts cash or a bond equal to the cost of removing the conditions that led to the property being placed on the list; or (2) demonstrates to the court that the conditions have been remedied in full.
• Spot blight eminent domain
The Urban Redevelopment Law authorizes municipalities to use their eminent domain power to take property on an abandoned property list (N.J.S.A.55:19-56.c.2). This is often called “spot blight” eminent domain, since the property does not have to be in a redevelopment area to be subject to this provision. Once acquired, the property can be reconveyed to another party for the purpose of clearance, development, redevelopment or repair. The Abandoned Properties Rehabilitation Act added specific guidance for the valuation of properties taken under this section.
CREATING A PROPERTY INFORMATION SYSTEM
An abandoned property list can be used by the municipality to track the location of abandoned properties in the municipality and the steps being taken to address the problem.
The value of the list can be further enhanced if it is integrated into a municipal property information system, which can be used to track problem properties and properties at risk of abandonment, as well as abandoned properties.4 A property information system typically includes the following information:
• Property ownership, including municipal ownership
• Assessed valuation
• Tax delinquency and tax liens
• Other municipal liens
• Code violations and nuisance abatement activity
Additional useful and generally obtainable information can include:
• Utility shut-off notices
• Real estate transactions
• Criminal activity
Property-specific data can be overlaid with Census data, in order to link property information with demographic and economic information about the population within the area.
A municipality can use a property information system in many different ways:
• As an early warning system to identify buildings at risk and potential public interventions
• As a basis for an abandonment prevention strategy
• To identify trends in neighborhood change, particularly destabilization
• To identify appropriate areas for property assembly
• To facilitate neighborhood revitalization planning
The abandoned property list is a key element in the larger municipal strategy to reduce the number of abandoned properties in the community, and put them back to productive use. As such, it is most valuable when it is well integrated into the city’s overall information base and planning process.
Click here for Tables 2.1 & 2.2