Abandoned Properties and

Receivership Laws

• The Abandoned Properties Rehabilitation Act (one-page summary)

• Sample Abandoned Property List Ordinance

• Abandoned Property Reporting Form

• Abandoned Property Toolkit

• Abandoned Property Law (P.L.2003, c.210)

• Problem Properties Legislation Signed Into Law

• Abandoned Property Scenarios Under New Law

• Click here for summary of Multifamily Housing Preservation and Receivership Act.

• Receivership law (P.L.2003, c.295)

• Abandoned Properties Guidebook

• Abandoned Properties Guidebook Order Form

The Abandoned Property Rehabilitation Act, P.L.2003, c.210

The Abandoned Property Rehabilitation Act was enacted into law January 8, 2004. It offers New Jersey’s municipalities and others a toolkit of new means by which they can gain control of abandoned properties and restore them to productive use. Its principal features are as follows:

1.                   Accelerated foreclosure of abandoned properties

§         Third parties that buy tax liens on abandoned properties at a regular tax sale or get assignments of tax liens from municipalities can initiate foreclosure proceedings immediately

§         The lien purchaser has the right of entry on such properties in order to make repairs, abate nuisances, and preserve the value of the property.

2.                   Special tax sale

§         Municipalities can remove properties that are on abandoned property list from a tax sale and set them aside for a special tax sale

§         Municipalities can set terms for special tax sale, including limiting eligible bidders to qualified entities, setting performance requirements for bidders, and combining properties into single bid packages

§         Municipalities can require that if the successful bidder fails to carry out its obligations under the sale, the liens or the properties revert to the municipality

3.                   Spot blight eminent domain

§         Eminent domain can be used to take any property on the abandoned properties list

§         Law sets standard for appraisals in such proceedings, providing that where the value of the property after rehabilitation  or new construction is less than the total development cost, the value of the land is presumed to be zero

4.                   Possession of vacant structures

§         Municipalities or qualified entity designated by municipalities may seek receivership rights from superior court to renovate abandoned properties

§         Before entity is given possession, court must give opportunity to owner & lien holders to demonstrate they will carry out renovation in timely fashion

§         Entity must submit a realistic rehabilitation plan for court approval

§         Entity can receive state grants, and can borrow money for renovation

§         Money borrowed by entity can receive lien priority over existing liens and mortgages

§         If owner fails to regain control, court can order sale of property after rehabilitation.

Other important provisions of the law include:

 A.       Standardized definition of an abandoned property

§         Definition applies to buildings only, not to vacant lots

§         Will make it easier to take legal action against abandoned buildings

§         Building must have been vacant for 6 months and must meet one other condition

§         Other conditions include need for rehabilitation, nuisance conditions, or tax delinquency

B.       Abandoned property list

§         Municipalities may create abandoned property lists

§         Only properties on list are eligible for special tax sale or spot blight eminent domain (see above)

§         List does not have to contain all abandoned properties in the municipality to take effect

C                Recourse against other assets of property owners

§         Municipalities have recourse against any other assets of the owner of an abandoned property to recover funds spent by the municipality for repairs, boarding or demolition of the property under nuisance abatement laws

This is only a short summary of the act’s provisions. For further information, contact Beth Smith, the Housing and Community Development Network of New Jersey, at 609-393-3752, ext. 11.

Problem Properties Legislation Signed Into Law

Standing (left to right):  Pat Morrissy, Executive Director, HANDS, Inc.; Alan Mallach, Network Executive Board member; Assemblywoman Bonnie Watson Coleman; Trenton Mayor Douglas Palmer; Irvington Mayor Wayne Smith; Assemblyman Jerry Green; Senator Shirley Turner; Senator Ronald Rice; Hamilton Mayor Glen Gilmore.

Seated (left to right):  Helen Yeldell, New Jersey State League of Municipalities; Governor James E. McGreevey; Diane Sterner, Executive Director, Housing and Community Development Network of New Jersey.

On Thursday, January 8, 2004, Governor McGreevey signed into law the Abandoned Properties Rehabilitation Act, bipartisan legislation to fight urban blight and revitalize neighborhoods by helping municipalities and others gain control of abandoned properties and return them to productive use. Census data suggests there are some 62,000 abandoned residential units in New Jersey, not to mention large numbers of abandoned commercial and other non-residential structures.  But getting these properties into responsible hands often takes years under existing law. The new law (P.L.2003, c.210) makes it clear that property ownership involves responsibilities. It creates several pathways for others to step in when those responsibilities are not being carried out and people, properties and communities are at risk. Sponsored by Assemblywoman Bonnie Watson Coleman, and Assemblyman Jerry Green, and Senators Richard Codey, Robert Singer, and Ronald Rice, the new law provides new tools for municipalities, CDCs and others to get control of abandoned properties for rehabilitation and reuse, such as special tax sales, accelerated foreclosures, and the ability to petition the court for possession of vacant problem properties.

On Wednesday, January 14, 2004, Governor McGreevey signed into law the Multifamily Housing Preservation and Receivership Act, legislation promoted by the Network to help stop the loss of precious affordable rental housing by making make it easier to turn at-risk, deteriorating property over to receivers for repair and maintenance as quality rental housing. Sponsored by Assemblywoman Bonnie Watson Coleman, Assemblyman Jerry Green, and Senators Richard Codey, Robert Singer, and Ronald Rice, the new law (P.L.2003, c.295) also creates a carve-out of funds within DCA’s Balanced Housing Program to help receivers stabilize these properties and to build the capacity of more organizations to preserve and manage affordable rental housing.

The Network is now actively working on the implementation of these new laws. If you would like to get involved in these efforts, or if you have any questions about the laws and how they could help your community, do not hesitate to contact the Network at (609) 393-3752.

The Network thanks Governor McGreevey and the sponsors for providing cities and community leaders with new tools to help move their neighborhoods from distressed to dynamic.

The Network also thanks Network members and allies whose actions in support of this legislation made a difference every step of the way! 

Above: Pat Morrissy, Executive Director of HANDS, Inc., thanks Governor McGreevey for signing Abandoned Properties Rehabilitation Act into law as Diane Sterner, Alan Mallach, and Assemblywoman Bonnie Watson Coleman, the bill's primary sponsor, look on.