Public Sale of Abandoned Homes in New Jersey
Most of the readers of this article know New Jersey’s new Tenant Abandoned Property Law (N.J.S.A. 2A:18-72, et. seq.) allows a landlord to dispose of a tenant’s abandoned unclaimed property by “public or private sale.” (If you are reading this and you are not aware of this law, you are missing out on a simple process for abandoned home title processing and therefore this is a good opportunity for you to educate yourself).
If you follow the procedure set forth in the law any property a tenant or a lien holder leaves behind or fails to assume responsibility for is “conclusively deemed abandoned.”
More specifically, N.J.S.A. 2A:18-78 (Landlord Rights) provide:
“Property that has been conclusively presumed to be abandoned may be disposed of in any of the following ways:
- The landlord may sell the property at a public or private sale;
- The landlord may destroy or otherwise dispose of the property if a landlord reasonably determines that the value of the property is so low that the cost of storage and conducting a public sale would probably exceed the amount that would be realized from the sale (notice the rent due is not included in this particular calculation); or
- The landlord may sell certain items and destroy or otherwise dispose of the remaining property in accordance with subsections a. and b. of this section.
A public or private sale authorized by this section shall be conducted in accordance with the provisions of 12A:9-504 of the Uniform Commercial Code.” (C.12A:9-504).
Please note the reference to N.J.S.A. 12A:9-504. This is part of the Uniform Commercial Code and it relates to creditors rights and obligations in disposing of collateral which is security for a loan. That law provides:
“Disposition of the collateral may be by public or private proceedings and may be by way of one or more contracts. Sale or other disposition may be as a unit or in parcel. . .(the time and place) must be commercially reasonable. . . reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private or other intended disposition is to be made shall be sent by the secured party to the debtor. . .in the case of consumer goods no other notification need be sent. In other cases, notification shall be sent to any other secured party from whom the secured party has received. . .written notice of a claim of interest in the collateral. The secured party may buy at any public sale and if the collateral is of a type customarily sold in a recognized market or is of a type which is subject of widely distributed standard price quotations he may buy at a private sale.”
The key language in this statute is the fact that the creditor referred to in that statute, which by way of analogy is the landlord in the abandoned property sale, may only be the purchaser at a private sale if the collateral “. . .is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations…”
The author is personally unaware of facts which would support the conclusion that a mobile home being sold on the mobile home lot (and that is the analysis that has to be made if the landlord is intending to purchase the home so it can be left on the lot and resold) fits this description. I understand there might be “blue book” quotations out there, but those are not accurate numbers, when you are talking about on site resale value. Experience shows that on site resale values for the same model, make and age of home will vary greatly depending upon which part of the State the home is located in, which community the home is located in, and which municipality (rent controlled or not) the mobile home is located in.
Therefore, it would be extremely difficult if not impossible to justify a private sale.
The purpose of this law is to give landlords a “sleep at night” way to dispose of abandoned tenant property. On occasion, that abandoned tenant property can have a significant value, and that makes it fodder for subsequent litigation. Therefore, every landlord should definitely take advantage of the provisions of this law, but you should do so in a fashion that puts you in the best defensible position. That means you should conduct a public sale.
In conducting a public sale, the only procedural difference is notice to the tenant, and potential public bidding. The average publication costs are approximately $65.00.
The notification should state the terms of sale. That means, if the home has to leave the park (if you are intending to remove it from the park if you are the purchaser) then you can insist on it if you are not. If you are intending to keep the home or resell it, then the buyer has to have the same option. You cannot discriminate as it relates to the terms you will impose upon yourself if you are the purchaser, on the one hand, and third party buyers on the other hand.
However, if a person intends to buy the home, and leave it in the park, and you have an owner-occupancy requirement, then you can require them to pre-qualify as a tenant prior to being able to bid. You must put that request in your published notice.
A NJ Abandoned Property and Landlord/Tenant Attorney
By Christopher J. Hanlon, Esq.,
Should you have the need for legal counsel in this area, please contact me at email@example.com or call toll-free (855) 376-5291.