For those in New Jersey facing deficiency judgments, New Jersey laws allow deficiency actions in cases where the proceeds of a public sale after a foreclosure is less than the loan amount. The defendant is liable for the difference between what was received at sale and the amount of the original loan. The courts determine the deficiency amount by considering the fair market value at the time of sale. Deficiency actions must be brought within three months of the foreclosure proceedings.
Current Laws in New Jersey
2A:50-1. No personal deficiency judgment in foreclosure actions or execution thereon for balance due
No judgment shall be rendered in any action to foreclose a mortgage for any balance which may be due plaintiff over and above the proceeds of the sale of the mortgaged property, and no execution shall issue therein for the collection of any such balance.
2A:50-2.1. Time for bringing action on note for deficiency
In the case of a mortgage given to secure a debt evidenced by a note, where foreclosure proceedings are instituted within the time prescribed by the Statute of Limitations, action on the note for any deficiency may be commenced within the 3-month period provided by N.J.S. 2A:50-2, regardless of whether said action would otherwise be barred for lapse of time.
2A:50-3. Answer disputing amount of deficiency; determination of amount
The obligor in any bond or note specified in section 2A:50-2 of this Title, with respect to any bond given after March 29, 1933, and with respect to any note given after the effective date of this amendatory act may file an answer in the action for deficiency, disputing the amount of the deficiency sued for. In that event both parties may introduce evidence as to the fair market value of the mortgaged premises at the time of the sale thereof in the foreclosure action, and the court, with or without a jury, shall determine the amount of such deficiency, by deducting from the debt secured the amount determined as the fair market value of the premises. If all parties to the action shall so agree, the court may accept as the fair market value of the mortgaged premises the value fixed by three appraisers, to be named by agreement of all the parties to the action, which agreement shall be evidenced by a stipulation to be filed in the action.
Talk with an Attorney
If you face a deficiency judgment in New Jersey, you can raise the fair market credit as an affirmative defense if the sale bid was too low, widening the difference between the sale proceeds and the original loan cost. You may be given credit for the fair market value in this case. Talk with an experienced attorney to discuss the details of your case.
