Questions & Answers


How does the sheriff sale process work in New Jersey?

Answer


New Jersey’s sheriff sales are administered by the sheriff’s department associated with the county in which the relevant property is located. Thus, in New Jersey the sheriff sale process is conducted in accordance with the local rules of the county in which such a sale takes place.

Notwithstanding the local distinctions between the sheriff sale process in New Jersey from county to county, in the context of all New Jersey sheriff sales the relevant properties are sold subject to the first mortgage on the property, if applicable, which typically takes the form of the first lien on the property. Furthermore, such a sale in New Jersey is subject to any local, state or federal liens. Given the possible existence of these liens or other liens, a title search is typically run prior to bidding to determine the manner and extent to which the property is encumbered by liens. It is imperative that bidders obtain the information provided in the title report, specifically as it related to outstanding liens, as the successful bidder at the sheriff’s sale auction assumes as must ultimately pay for such liens.

The auction associated with a sheriff’s sale is conducted by way of a voice auction. Typically the creditor/plaintiff (i.e. the bank’s attorney) will being the bidding process with a hundred dollar ($100.00)  bid, with bidding continuing until a winner in the form of the highest bidder for the property is determined. If the successful bidder is a party other than the plaintiff/creditor’s counsel, the plaintiff’s counsel will keep bidding to ensure that another party does not obtain the property in connection with a bid that represents an amount less than the amount of the judgment owed to it. Put differently, the plaintiff’s attorney will continue to escalate its bid until the upset amount, which typically refers to the amount owed on the first mortgage plus certain fees and costs, is reached. This strategy is employed for the purpose of protecting the plaintiff from a situation in which a savvy third-party bidder is able to assume that property for an amount less than the judgment amount resulting in the creditor in question not being made whole. As a corollary to this, once the upset price is reached, the plaintiff/creditor’s attorney often does not continue to bid as the creditor’s interest are protected by virtue of a third-party bid which exceeds the upset price.

Once the highest bidder has been determined the sale will be concluded. At this time, the successful bidder must put down a deposit in the amount of twenty percent (20%) of the successful bid. Further, in New Jersey, the conclusion of this sale triggers a ten (10) day redemption period for the benefit of the defendant property owner. During this period, the former owner can attempt to object to the sale or the former owner can redeem the property by paying off the amount associated with the judgment in question, in addition to other liens, fees and costs. After the redemption period has expired, assuming the former property owner neither redeems nor successfully disputes the sale, a Sheriff’s Sale Deed is prepared. In New Jersey, this occurs approximately thirty (30) days after the auction. On or before the expiration of thirty (30) days from the date of the Sale Deed the balance owed in connection with the successful bid must be paid.

In the context of New Jersey sheriff sale auctions, after the balance is paid the purchaser becomes the rightful owner of the property. As such, the purchaser is required to pay all related fines and record the relevant deed. Moreover, the purchaser is required to furnish the former owner with notice that title has transferred.

If you are interested in learning more about New Jersey sheriff’s sales, or if you have any related questions call us today at (973) 500-8024 or (212) 960-8308, or submit your contact information below and we can contact you directly.