New Jersey has seen an upward trend in foreclosure activity, presenting potential opportunities for savvy
buyers and investors. However, buying a foreclosed home is not the same as a traditional sale. It involves
a complex legal process with significant risks that require a clear understanding of the law.

Understanding the Legal Process and Risks

Unlike many states, New Jersey’s foreclosure process is judicial, meaning it goes through the court
system. A lender must file a lawsuit to initiate the foreclosure, which can take months or even years. This
lengthy process can be a double-edged sword: it allows time for due diligence, but also introduces
variables.

One of the most significant risks is the “as-is” nature of these sales. Buyers often can’t inspect the
property beforehand and are responsible for any hidden damage, liens, or code violations. This can lead
to unexpected, and expensive, repairs.

The Right of Redemption: A Critical Pitfall

Perhaps the most critical legal concept for foreclosure buyers in New Jersey is the right of redemption.
This legal right allows the original homeowner to reclaim their foreclosed property even after a sheriff’s
sale.

In New Jersey, a homeowner typically has a 10-day period after the sheriff’s sale to file a motion to
object to the sale and a longer, six-month period to redeem the property if the lender obtains a
deficiency judgment. To redeem, the homeowner must pay the full amount of the judgment, including
interest, costs, and all reasonable expenses the new buyer incurred. This means your winning bid and
any money you’ve spent on the property could be for naught if the previous owner exercises their right.

How an Attorney Mitigates Risk

Navigating this legal minefield is where a real estate attorney becomes invaluable. They can:

• Conduct a thorough title search to uncover any hidden liens or claims on the property.
• Advise you on the risks of a specific property and the legal process.
• Help you understand the right of redemption and how it applies to your purchase.
• Assist with legal filings and ensure all procedures are followed correctly to protect your
  investment.

Given the complexities and potential for significant financial loss, a legal professional is a crucial partner
in any foreclosure purchase.

For more details, please reach out to Adam Brown, Real estate attorney.