Legislation Assembly Democrats Eliana Pintor Marin and Clinton Calabrese sponsored to require provisions regarding a sellers’ obligation to deliver marketable and insurable title in certain residential real estate contracts of sale advanced in the Assembly Monday.
The bill (A-3366), which supplements the “Fair Foreclosure Act,” addresses situations in which a residential mortgage lender foreclosing on a residential property, buys the property at the resulting sheriff’s sale, and subsequently seeks to sell the property (commonly known as a “Real Estate Owned” or “REO” property) through a contract with a new purchaser.
“There have been issues that arise in these transactions when a seller fails to deliver marketable and insurable title at closing,” said Pintor Marin (D-Essex). “This breaches the contract and leaves the buyer with considerable expenses they must incur to purchase the property.”
“As they stand now, these contracts give sellers a tremendous advantage and can make the home purchasing process an unimaginable financial hardship for buyers,” said Calabrese (D-Bergen, Passaic). “If a seller is unable to provide clear title, the buyer only gets reimbursed for their deposit while having already paid for appraisal fees, mortgage application fees, title and survey costs, and legal fees. Through this bill, buyers will have the ability to recover these out-of-pocket expenses.”
The bill provides certain protections to a purchaser in these situations by requiring that a real estate contract of sale between a seller who takes title to a residential property as a result of a sheriff’s sale under the provisions of the Fair Foreclosure Act and a purchaser will provide that:
(1) The seller will provide a marketable and insurable title to the purchaser;
(2) Any failure of the seller to satisfy the requirement of providing marketable and insurable title pursuant to paragraph (1) will constitute a breach of contract;
(3) In the event of a breach of contract pursuant to paragraph (2), in additions to any other remedies that the purchaser may have, the seller will return to the purchaser any deposit money paid by the purchaser and will reimburse the purchaser for any expenses incurred by the purchaser in connection with the purchase of the property.
The bill was advanced by the Assembly Financial Institutions and Insurance Committee. It will now go to the full Assembly for further consideration.