Foreclosure in New Jersey>Question Details

Michelle Qua…,  in Clark, NJ

Is it legal for a bank to serve a tenant foreclosure paperwork?

Asked by Michelle Quaglietta, Clark, NJ Wed Jan 21, 2009

Say that the owner had a rental property that was going into foreclosure and the bank sends out its courier and instead of serving the owner the paperwork -they give it to the tenant. Is that legal?

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16
Is there anyone that can help with some advice
0 votes Thank Flag Link Mon Jun 27, 2016
I am a current home owner in essex county ny .yesterday we had a foreclosure rep try to serve my tenant paper work for my potential foreclosure.is this legal ?
0 votes Thank Flag Link Mon Jun 27, 2016
Yes, it is legal in most jurisdictions. The reason is that the foreclosure paperwork is not really served on anyone in particular. It is usually recorded in the county where the property sits. This is usually deemed adequate "notice". Although, if a tenant is served at the owner's property, that may also be adequate notice, because it is presumed that the tenant would notify the owner, and the lender may not have been given any subsequent address by an owner if that owner was an "owner-occupier" when the loan was originated. One can always make the attempt to quash service on tenant for lack of notice to an 'owner', however, this may only be a futile attempt.

On the flip side - I have advised many a tenant about their rights and obligations when a landlord doesn't tell them about a pending foreclosure. There are many different and absolutely helpful steps you can take to keep yourself informed and lessen the likelihood you'll fall prey to an unscrupulous landlord/lessor. There are essentially two (2) or three (3) things you can do to arm yourself in this environment.

First, I would definitely pay for some service to check to see if a landlord/lessor is in the foreclosure process; that process in many jurisdictions can take up to 6 mos. Although, I believe there a limit to which you should pay, and not all services are accurate or even promising, nevertheless you should consider some type of notification service. One service that I know of that is accurate and relatively inexpensive is Tenant Protection Services http://www.TenantProtectionServices.com ***. Lessors typically pay or even charge their tenant/lessee a credit report fee of $25 in some areas. For a lessee to pay $15 for a report or $25 for a year is a very small fee to find out if a potential lessor is in foreclosure or once in the property to be notified if it falls into foreclosure at some point after signing a lease.

Second, I would negotiate with the lessor at the outset and put some terms into any lease or month-to-month rental. Now, be aware that there is no guarantee that a lessor will agree, and if you are bidding on a rental that has multiple offers to rent, you could be out of luck inserting your favorable terms. Although, as tough as it may be, it is worth a try. I would suggest that you make it a covenant of the lease contract that the lessor makes all mortgage, property tax, and insurance payments; if you are going covenant paying rent, keeping the place up, etc. If your landlord/lessor does not comply with those covenants, you may be able to forego your obligation to pay rent if you made the lessor’s obligation to pay the mortgage (or taxes) an affirmative covenant of the lease, the breach of which could then relieve you of the obligation to pay rent until the lessor’s default is cured.

Third, you can record your lease with the county recorder’s office for the county in which your potential property exists. This will put on notice any lienholder that is going to file a “notice of default” or “notice of Trustee sale” that you have a possessory interest in the property and should send you a copy of whatever they would record in the county with respect to that property. Although, you will have to pay for every page of your lease that gets recorded and every county charges differently. However, this is not a bad idea if notice is important.

If you follow all this and complete your due diligence, you will greatly reduce the chances you’ll have to sue your lessor for your deposit or rents or be surprised one day when the sheriff or the bank rep comes knocking your door, because they won’t; you’ll have already been noticed weeks or months beforehand. All the best.

*** disclosure – I know of the accuracy, because I have an affiliation to the service.
Web Reference: http://www.REALTYinLA.com
0 votes Thank Flag Link Fri Apr 3, 2009
Michelle,

Irregardless of whether your client is paying the mortgage and/or if the tenants are paying their rent....etc......

If your bottom line question still remains the same, I once again reiterate as in my first response - service upon a tenant of the property should not constitute the owner as being legally served. A foreclosure complaint specifically states the owner's name and therefore only the owner, spouse or adult child may accept service of the complaint. This does not constitute legal advice but strongly recommend that your client not leave his fate in the hands of realtors on Trulia but contact their attorney to determine if service upon the tenant was legal and if so, than the owner was legally served and the clock is ticking....

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116
GinaChirico@PruNewJersey.com
0 votes Thank Flag Link Thu Jan 22, 2009
Refer to the Star Ledger article dated 12/24 referring to evictions of tenants on foreclosed properties.
Tenant should not receive the foreclosure notice. They can receive an eviction notice. If the home is definitely being foreclosed upon, if I were the seller, I would not go thru the eviction process for the bank. The responsibility becomes the landlords and if he is no longer the landlord, why go thru the expense and aggravation, especially because it was probably the reason why the poor landlord was foreclosed upon in the first place.
But you should certainly contact the bank yourself to take over the listing.
Good luck
0 votes Thank Flag Link Thu Jan 22, 2009
Hi Michelle,

I tend to think that service upon a tenant does not meet the legal requirements of service upon the party who is the defendant in a legal action. But, I am not an attorney. There are free legal guidance sources for homeowners who have served foreclosure papers. I would suggest that you, or your client call upon them. I assume the property is in Essex County???? My guess, but it's only my guess, is that the owner still needs to be served. I am familiar with cases where tenants were served in addition to the actual defendant, for reasons I explained in an earlier post. But, I don't know that such is required.

The tenants should still pay their rent, even if the owner is unable to pay their mortgage. Failure of the tenant to pay their rent is equivalent to me not paying for an airline ticket to fly on an airline because the airline has unpaid bills and is in bankruptcy. I still have to pay to fly. Tenants still need to pay in order to keep renting. Just my 2 cents.

Deborah Madey - Broker
Peninsula Realty Group
0 votes Thank Flag Link Thu Jan 22, 2009
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
To answer your question Deborah- My client is the owner of the investment property which is currently occupied by a tenant- My client the owner has defaulted on his mortgage as a result the banks have started foreclosure proceeding- Instead of the bank serving the owner the notice of foreclosure they gave it to the tenants- As a result of this the tenants now know that they proerty is in foreclosure and have decided not to pay the rent. -- My client(the owner) has filed for an eviction to get the dead beat tenants out.

So my question was basically is it legal for the bank to serve foreclosure paperwork to the tenants?
0 votes Thank Flag Link Thu Jan 22, 2009
Michelle: I get it. Your client has not paid his mortgage and the tenant is not paying him. How unfair and nasty that tenant is! Everyone should pay what they contracted to do. Oh, whoops, I forgot about your client.

I might add the question: As a Realtor who is NOT an attorney, what's in it for you? It sounds as if you not only don't have a dog in this fight, you don't have a commission at the end of this particular rainbow.
0 votes Thank Flag Link Thu Jan 22, 2009
Michelle,

Is your client the owner? And, is the owner evicting the tenants? Are you saying the tenant was served with papers for eviction as a result of an action that the owner took?

Deborah Madey - Broker
Peninsula Realty Group
0 votes Thank Flag Link Thu Jan 22, 2009
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Unfortunately since the tenant knows that the owner is in default they haven't payed any rent in the past 3 months. My client has since filed for an eviction and is due in court on Monday.
0 votes Thank Flag Link Thu Jan 22, 2009
Michelle,

This is not legal advice, since I am not an attorney. Since you stated the property was going into foreclosure, it sounds like the notice to the tenants was a "notice" so that the tenants could/would not later adjoin the suit as defendant with an interest in the property. That service does not replace the service upon the parties who are in default on the loan.
0 votes Thank Flag Link Thu Jan 22, 2009
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
Contact
Michelle: Now you do have a legal question. If the owner's address is NOT the property to which the foreclosure was addressed, it will take an attorney's advice as to whether the owner was properly served and, if not, what further must be done to notify the owner. While this is all legal stuff, I would imagine that public notice in a newspaper may be sufficient and, if so, better subscribe to the paper of record for the court involved.

As a practical matter, legal or not, if the property is in default, ducking a summons will be but a delaying tactic at best. If the Lone Ranger is riding in at full speed with the cash to save the farm, it may be worth it to delay but otherwise it probably is best just to move on with it, don’t you think?
0 votes Thank Flag Link Thu Jan 22, 2009
My concern is for the owner not the tenant.
0 votes Thank Flag Link Thu Jan 22, 2009
Though this a legal question, if the bank attempts to deliver foreclsoure notifications and they are not accepted, the process is delayed. Perhaps the bank tried to serve the owner, but was unable to do so.

Call NJ Legal Services at 888-576-5529, the NJ Tenants Organization at 201-342-3775 or the Department of the Public Advocate at 609-826-5057. All three are very much involved in ensuring tenants are protected during foreclosures.

Laura Giannotta
Keller Williams Atlantic Shore
0 votes Thank Flag Link Thu Jan 22, 2009
Michelle: It is certainly should not be illegal. I guess you can send anything you want to anyone you like, unless it violates some privacy law or other.

Why this was done and what kind of "Papers" were served I don't know and it gets to be something an attorney may be better able to answer. However, having said that, let me say that the address may be the one that the mortgage company has for the owner and they have cited it to the courts, who have delivered the summons to the only address they know.

Conversely, the tenant may be being advised that a foreclosure has already taken place and that the landlord is moving to evict the tenant, a usual practice. In this case, the Laws of NJ are different from those of other states and we have a Landlord Tenant court. The tenant has specific rights and cannot be evicted without a court order (Sorry, landlord(s), you just can't show up and say "beat it.") Depending on the specific circumstances the tenant should be able to stay to the end of their lease and the landlord should be required to continue to provide services as per the lease contract. (They can't turn off the heat or fail to maintain the place.) If the is no lease, then the landlord can provide notice that the month-to-month tenancy is over. Landlords still cannot evict without a court order and the sheriff's department enforcement, as far as I know. The sheriff will be very formal and send and post notices as to the schedule for any court order actions.

Here's a website with the entire drill: http://www.foreclosureuniversity.com/studycenter/foreclosure…
0 votes Thank Flag Link Thu Jan 22, 2009
Michelle,

I'm not so sure that the bank serving foreclosure papers on a tenant is legal or considered legally served. The tenants are not the owners of the property nor can they be forced to leave because of a foreclosure suit against the landlord/owner.

I disagree with Rene. Cash for keys is not legal. Here are two articles from nj.com:

http://www.nj.com/starledger/stories/index.ssf?/base/news-12…
http://www.nj.com/jjournal/stories/index.ssf?/base/news-3/12…

The jist is.....NJ “State Officials are warning Landlords, Realtors and Lawyers such actions could bring charges”. The article cited charges against two well known brokers for issuing letters to tenants for “cash for keys” programs or other inducements to have tenants vacate properties because of foreclosure.

Steven Goldman,, Banking and Insurance Commissioner said, “landlords and others who force tenants out without a legal eviction order face both civil and criminal charges. Likewise, they said, lawyers and real estate agents who try to force tenants out could lose their licenses and face fines”.

Hope that helps.

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116
GinaChirico@PruNewJersey.com
0 votes Thank Flag Link Wed Jan 21, 2009
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