Legal Updates

In response to the current COVID-19 pandemic, on Thursday, March 19, 2020, The New Jersey State Legislature enacted bills (A-3859 and S-2276) that allow New Jersey Governor Phil Murphy to issue an Executive Order preventing law enforcement officers from taking action to evict or otherwise displace residential tenants and homeowners. Immediately following the passage of the bills, Governor Murphy signed Executive Order 106, placing a moratorium on the removal of lessees, tenants or homeowners from residential properties. Governor Murphy noted the Executive Order is consistent with a recent federal 60-day suspension of evictions and foreclosures by the United States Department of Housing and Urban Development (HUD), Fannie Mae and Freddie Mac. The New Jersey moratorium does not have a definitive end date. Rather, it will remain in effect for no longer than two months from the end of the Public Health Emergency established by Executive Order 103.

The Order applies only to residential properties and specifically excludes residential health care facilities, hotels, motels and other guest properties or rooms “rented to a transient guest or seasonal tenant.” At this stage, commercial tenancies are not subject to the moratorium, but other states have discussed or enacted moratoriums to protect small businesses from eviction actions.

Significantly, the Order does not prevent mortgage or lease holders from pursing judgments of evictions or foreclosure. Rather, it prevents those parties from seeking removal of a lessee, tenant or homeowner once judgment is obtained per execution of a Warrant of Removal or Writ of Possession. Accordingly, a party may still pursue its appropriate judicial remedies in the event of a mortgage default or breach of lease.

The Order also provides that courts may, either on their own motion or motion of the parties, permit removal of individuals from residential property if the court determines that removal is “necessary in the interest of justice.” This action will preempt actions taken by local municipalities such as Newark, where Mayor Ras Baraka issued his own Executive Order imposing a moratorium on some rent evictions for any tenant directly or indirectly affected by a quarantine order.

The Executive Order here, much like the entire COVID-19 pandemic, has the potential to impact multiple industries. Recall that in 2010, New Jersey’s Supreme Court imposed a foreclosure moratorium on the majority of residential lenders that lasted between nine and 10 months. The current Executive Order is not as exhaustive or restrictive as in 2010 in that it does not impede the ability of parties to pursue and obtain judgments for foreclosure. Nonetheless, it will likely protract the foreclosure process and create additional logistical issues concerning the maintenance and protection of foreclosure properties.

We will continue to monitor the situation in New Jersey regarding the rights of lease and mortgage holders, tenants and homeowners as they are impacted by governmental efforts to respond to the COVID-19 pandemic.