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First Savings Bank, SLA v. Bianconi

A-1090-00T5 (N.J. Super. App. Div. 2002) (Unpublished)

FORECLOSURE; EVICTION— A tenant who is a part owner of a house under foreclosure can be treated as an owner thereof when determining if the house is owner-occupied for purposes of applying the Anti-Eviction statute.

A bank foreclosed on a mortgage. Despite a number of delays, including by reason of its borrower’s bankruptcy filings, the sale finally took place. Following the sheriff’s sale, an individual moved to set aside the sale. He was relying on a deed that the borrower had signed after the lender had filed a lis pendens. The deed was not recorded until a year later, just two days before the sheriff’s sale. The deed purported to grant the individual a ten percent interest in the home. At a hearing before the lower court, the ten percent owner also alleged that he was, and had been, a tenant at the property. The lower court ruled that he could not be both a tenant and an owner and therefore he had no right to remain in the property after the foreclosure sale. His claims that he had arising out of having received the deed also were denied, because at the time the deed was given, the lis pendens had already been filed. The Appellate Division agreed that “[a]s a holder of a partial interest in the property under an unrecorded deed, [the claimant’s] interest rose no higher than that of the [remaining ninety percent owner] and was cut off, ..., in the foreclosure proceedings.” The Court also agreed that “in the case of the lease signed subsequent to the mortgage,” the tenant’s interest was also cut off by the foreclosure. This, however, does not necessarily mean that every such tenant can be evicted. In some cases, the provisions of the Anti-Eviction Act may offer continued protection to a tenant. In this case, however, the claimant was “in possession as an owner-occupant. As such, he gained no rights under the Act.” This is because the Act does not afford its extensive anti-eviction rights to tenants in owner-occupied premises with not more than two rental units.

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