When, If Ever, Is A Residential Mortgage Not “Residential” For The Purpose of Foreclosure?

     by:  Peter J. Gallagher (@pjsgallagher)

Believe it or not, this question comes up from time to time in my practice (exciting life, I know). In recent years I have prosecuted many foreclosure actions, but only commercial foreclosures. So the first question I usually ask a colleague who comes to me with a foreclosure  question is: "Is it a commercial or residential property?" When the answer starts with something like, "Well, that is actually an interesting question . . . " then I can almost guess what is coming next. Usually it is some variation of: "It is a home, but they mortgaged it to get money to start a commercial enterprise, so I want to argue that its commercial property." Unfortunately, you usually can't make that argument (at least not successfully), and the Appellate Division's recent decision in City National Bank of New Jersey v. Hodge reminded us all of that fact again.

To begin with, the differences between commercial and residential foreclosures in New Jersey are significant. Most importantly, commercial foreclosures are not subject to the Fair Foreclosure Act, including the various notice requirements that are required for residential foreclosures under the Act. Simply put, New Jersey law provides greater protections for residential owners who are about to lose their homes than they do for commercial owners who are about to lose their place of business. This means that the burdens on lenders seeking to foreclose on a residential mortgage are more demanding, if not entirely onerous.

 

Continue reading “When, If Ever, Is A Residential Mortgage Not “Residential” For The Purpose of Foreclosure?”

New Jersey Urban Transit Hub Tax Credits – Going, Going, Gone?

by:  Katharine A. Muscalino

The Urban Transit Hub Tax Credit program was introduced in 2008 to provide financial incentive to developers, property owners, and tenants to make substantial capital investments in Urban Transit Hubs. Originally endowed with $1.5 billion, the program has evolved considerably since its inception and is nearing exhaustion.

Of the $1.5 billion dedicated to the Urban Transit Hub Tax Credit program, $250 million has been earmarked for residential projects. As of February 14, 2012, New Jersey’s Economic Development Authority (“EDA”) has already allocated $219.6 million to individual residential applicants, and just extended an additional $17.7 million to Pennrose, a developer proposing to demolish Trenton’s Miller Homes public housing project with low-rise residences. Because so few tax credits remain for residential projects, the EDA has announced it is no longer accepting applications for residential Urban Transit Hut Tax Credits. The remaining unassigned residential tax credits will be allocated to previously approved “ready-to-go” residential projects that have applied for amendments to their Urban Transit Hub Tax Credit applications to increase their credits to up to 35% of their project financing. The Pennrose project, originally approved for tax credits equaling 25% of its project financing and now approved for credits for 35% financing, is one such “ready-to-go” project whose tax credits have been increased by the EDA.

Of the $1.3 billion of tax credits that have not been set aside for residential projects, $100 million has been dedicated to Offshore Wind projects by the Offshore Wine Economic Development Act (expiring January 2013) and $200 million has been set aside for the Grow NJ program (expiring July 2014). An additional $696.5 million has been allocated to individual commercial projects, leaving just $253.5 million available for commercial projects in Urban Transit Hubs. Developers, owners, and tenants of commercial property in an Urban Transit Hub should submit their tax credit applications as soon as possible to insure they don’t miss out.

Residential projects in the Urban Transit Hubs need not abandon hope altogether yet. The EDA has directed that in September 2012, the agency will undertake an evaluation of the commercial projects in its “pipeline,” meaning those that have already submitted an application and are waiting to be approved, as well as the progress of approved projects. Depending on its conclusions following this review, the EDA may recommend that any remaining commercial allocations, as well as the $100 million earmarked for the Offshore Wind project, be reallocated to new residential projects in Urban Transit Hubs and to Grow NJ projects. The EDA will make its final determination as to the reallocation of the Offshore Wind $100 million following the program’s January 2013 sunset, and may introduce a competitive process for the award of any remaining tax credits.

A Look At What The Occupy Wall Street Protesters Are Really Occupying

by: Peter J. Gallagher

The Wall Street Joural Law Blog had an interesting article — "Private Owners Of Public Spaces In 'Occupy Wall Street's' Wake" — on the property that the so-called 99%ers are actually occupying in the Wall Street area. Parks like Zucotti Park are known as "privately owned public spaces" or POPS, which are "part of New York’s incentive zoning program, under which buildings are granted additional floor area or related waivers in exchange for providing these spaces."  (Zucotti Park, formerly known as Liberty Plaza Park, is actually named for the chairman of the entity that now owns the park.)  The owners of Zucotti Park claim that they have not been able to clean the park since the day before the protests began.  This has led some to call for the Department of City Planning to create new rules for POPS that would allow the private owners to close the parks at a set time, which Stephen Spinola, head of the Real Estate Board of New York, claims would “add to security and allow maintenance.”  As a practical matter, the article notes, this might be difficult because each of the 516 POPS in New York City has its own contract with the City and its own rules.  Moreover, changing the rules governing the City’s POPS to allow the private owners to control access, even for seemingly benign purposes, would surely spark protests of its own.

Good News For Condo Collections

by:  Katharine A. Muscalino

Collections have become an area of increasing concern for condominium associations, as unit owners struggle to pay their maintenance fees on time and in full during the current economic downturn.  As unit owners’ debt continues to rise, associations are left with few options to collect: a lien on the unit and a lawsuit against the individual unit owner.

Many condominium associations have been frustrated in their attempts to collect from a unit owner individually, as Special Civil Court judges are often sympathetic to delinquent unit owners, offering extensions, scrutinizing certifications of amounts due, and reducing or eliminating the association’s ability to collect attorneys’ fees.  Grandview at Riverwalk Port Imperial Condominium Association is one such association, but its frustrations were recently assuaged on appeal in Grandview at Riverwalk Port Imperial Condominium Association, Inc. v. Han

In this case, the association sued a unit owner for failure to pay maintenance fees, only to have the Special Civil Court inexplicably deny their demand for attorneys’ fees.  The Association appealed the judge’s rejection of their demand and the Appellate Division reversed the Special Civil Court, finding that the fees were authorized by statute and by the Association’s governing documents.  Noting that the unit owner had not objected to reasonableness of the attorneys’ fees and that the Appellate Division itself perceived “nothing unreasonable” in the attorneys’ fees, the Appellate Division remanded the matter to have the judgment amended to reflect the attorneys fees. 

It’s About Time! (Of Application)

The Community Builders & Remodelers Association of NJ recently published an article authored by Doug Henshaw and Steve Gouin (not pictured), entitled It's About Time! (of Application).  The article reports on significant changes to the state’s Municipal Land Use Law that are set to take effect in less than one week. Effective May 5, 2011, a new “Time of Application” law mandates that municipal review of a development application must be governed by regulations in effect on the date the application is filed.  This new provision reverses the current legal doctrine and presents a straightforward and sensible approach to both development and municipal planning – it should also spark economic growth.  The article reports on the details of the new provision and its potential impacts on New Jersey’s developers, investors, and business owners.