New Jersey Department of the Public Advocate | The Rights of Tenants During Foreclosure

Foreclosure Alone is Not Grounds for Eviction

In some cases, tenants are offered “cash for keys” agreements, where they are given money to turn in their keys and move out, but the offer does not mention that they are also free to stay. In other cases, they are just told they have to get out.

According to the Public Advocate, the Department has learned that tenants are being informed by real estate agents, attorneys, and others acting on behalf of a lender that they must move because their building has been foreclosed upon. The Department has reached out to several of these organizations and individuals to put them on notice that their actions are illegal.

In 1994, the New Jersey Supreme Court held that the New Jersey Anti-Eviction Act protects tenants even when the property where they live is in foreclosure or has been foreclosed.

“A bank that forecloses on a residential property covered by this act takes the property with the tenants still in it. And, after the bank resells the property, the new owner becomes a landlord to those tenants,” said Chen.

“Real Estate Licensees have a legal obligation to their clients that requires them to be honest, forthright and to avoid misleading statements in notices that they send to the public. We expect our licensees to fulfill these obligations.” said DOBI Commissioner Steven M. Goldman. “If licensees do not completely share all information, or knowingly mislead residential tenants, the NJ Real Estate Commission will impose sanctions for this unethical behavior.”

Your Rights
Who to Contact
What is being done to protect tenants

Your Rights
Residential tenants in New Jersey cannot be evicted solely because the property where they live is in foreclosure or has been foreclosed.
In general, New Jersey law protects tenants against eviction from their homes so long as they:
- pay the rent,
- respect the peace and quiet of their neighbors,
- avoid willful or grossly negligent damage to the property, and
- obey the reasonable rules theyhave agreed to in writing.
Enacted in 1974, the New Jersey Anti-Eviction Act protects residential tenants from losing their homes through no fault of their own. The Act applies whether or not the tenant has a written lease. The Act does not apply to tenants of owner-occupied homes with two or fewer rental units; units set aside for developmentally disabled members of the owner’s immediate family; and hotels, motels and guest houses.

The laws protecting tenants from eviction apply throughout foreclosure proceedings and continue to have effect even after a new owner buys the property.
Who to Contact
The Department of the Public Advocate would like to hear from any tenants who have received notification that they must vacate their apartments due to a foreclosure. If you feel that you are at risk of being evicted from your rental home because of a foreclosure, please contact:

Department of the Public Advocate
Office of Citizen Relations
609-826-5070

Legal Services of New Jersey
888-576-5529

New Jersey Tenants’ Organization
201-342-3775
What is being done to protect tenants
The Department of the Public Advocate is distributing tenants’rights brochures throughout the state as part of its campaign to raise public awareness of this issue, as well as handling specific complaints through its Office of Citizen Relations (609-826-5070).

On January 11, 2010, the Legislature passed a bill that requires purchasers who acquire residential properties through a foreclosure sale to notify tenants of their rights by way of a prescribed notice. In addition, this bill makes lenders responsible for maintaining properties between the time the lender files a foreclosure action and the foreclosure sale if the defaulting owner has abandoned the property. This provision allows municipalities to hold foreclosing lenders accountable for the maintenance of tenanted properties during the foreclosure process. The bill is currently waiting for the Governor's signature. To read the bill, click here.

In November 2009, the Supreme Court adopted a rule that would require foreclosing entities to provide notice to tenants of their rights before a judgment of foreclosure could be finalized. To read the court rule, click here.

The New Jersey Real Estate Commission (REC), a division of the New Jersey Department of Banking and Insurance issued a bulletin to real estate licensees outlining their obligations to be completely forthright with tenants, enforcing New Jersey real estate licensing laws. REC will impose sanctions for unethical behavior, which includes knowingly mislead residential tenants or failure to completely share all information. Often, tenants are unaware that they have the right to stay in their apartment even if the building is in foreclosure.

The New Jersey Department of Community Affairs (DCA) also released a public bulletin, reminding landlords of the rights of tenants during a foreclosure and illegal measures for eviction. Furthermore, DCA explains the protocol for Judgement for Possession, which allows the landlord to force the tenant to move out of the premises.

Community-based organizations and municipalities, through the efforts of groups like the Newark/Essex Foreclosure Taskforce, are already conducting outreach, gathering information about the problem, and identifying solutions. The Department of the Public Advocate is hoping to work with these groups as well as other state agencies in order to identify a multi-faceted response to protect the rights of tenants.

The Department of the Public Advocate is also working with the state Board of Public Utilities to assist tenants whose utilities are shut off when a landlord who has defaulted on the mortgage also stops paying the utility bills. Tenants in this situation should call the Department of the Public Advocate at 609-826-5070 for a referral to the Board of Public Utilities.