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A Distinction between eviction, ejectment and loss of possession under fore-closure and the impact of Executive Order No. 106 of 2020.
Introduction
The paper shall look at the differences between the process of eviction, ejectment and loss of possession under fore-closure. It will first define and outline the salient features as laid out in statute and common law. Afterwards, it shall draw distinctions between them. The paper shall finally analyze the provisions under Executive Order No. 106 of 2020. The report shall, at its end, look at the possible impacts the order shall have on the process of eviction, ejectment and loss of protection and what this means for the parties involved.
The Process of Eviction
An eviction is when the landlord forces a tenant residing on the rental property to move out. Usually, removal is instituted by a landlord. It is essential for the landlord first to give notice to the tenant. The issue of a notice initiates the eviction process (NJ Rev Stat § 2A:18-61.1 (2013)). The notice serves to alert the tenant of the impending removal. The statute requires that the eviction notice indicates the date for eviction and the reasons for eviction (Id.).
A notice may be conditional or unconditional. The former refers to a situation where the notice lays out the date for eviction but sets out that if the tenant remedies the wrong, he/she has done. Therefore, on the performance of his/her part, the landlord will not evict the tenant. However, an unconditional notice requires that the landlord shall evict the tenant on the date stated, regardless of whether there is performance (Partroy Associates v. Di Guglielmo, No. A-2494-10T1 (N.J. Super. Ct. App. Div, 2011).
There are various grounds for eviction. An apparent basis is that the tenancy has expired, and thus the tenant has to move out. Another common reason is that the tenant has failed to pay rent. The rent here is the amount the tenant and the landlord have agreed to in their contract, whether oral or written (Supra). The rent issue also includes late payment of rent and a situation where the tenant does not pay the rent. However, where the tenant had utilized the rental fees to pay for utilities that the landlord would not pay for had he/he paid the rent (Scugoza v. Stockton, 166 N.J. Super. 122, (App. Div. 1979)).
Another reason for a notice of eviction is a claim that the tenant was in breach of their tenancy agreement. The rules set out in the rent contracts as there are different circumstances and housing arrangement. The terms under this requirement vary. As such, there could be an eviction where a tenant keeps pets where the agreement does not allow for it (Housing Authority of Atlantic City v. Coppock, 136 N.J. Super. 435 (App. Div. 1975).). The bottom line here is that the reasons given as a breach should be reasonable (N.J.S.A. 2A:18-61.1). In determining what is appropriate, the landlord’s arguments for the grounds should be sensible in the face of the facts of the case (Royal Associates v. Concannon, 200 N.J. Super. 84, (App. Div. 1985)).
The tenant refuses to leave on eviction; the landlord may sue the tenant for unlawful defiance. He/she will essentially seek the court to order an eviction against the tenant. The tenant may raise a defence against this lawsuit. First, the tenant could claim that the tenant did not serve the eviction notice. This means that he/she was ambushed with the decision to remove him/her from the property. Secondly, the tenant could argue that there was no reasonable ground for eviction. Here, the tenant will aver evidence that the grounds for breaking the rules tenancy agreement were unreasonable (534 Hawthorne Avenue Corporation v. Barnes, 204 N.J. Super. 148 (App. Div. 1985)).
The tenant could also argue that the notice did not provide sufficient time. The eviction notice sets the timeframe for the tenant to either plan for alternative housing or ensures performance obligations. What determines the sufficiency of time is the issue of whether such time was reasonable for the tenant to either move-out or perform his/her end of the agreement (A.P. Development Corporation v. Band, 550 A. 2d 1220 – NJ: Supreme Court 1988).
The Process of Ejection
An ejection is a process by which the lawful landowner removes an unauthorized occupant from the property. Here, there exists no relationship between the landowner and the person being ejected. This means that the person subject to ejection has no obligations to pay rent. The land or property, in this case, has the property. The owner will seek to sue the unauthorized occupant and seek an order for ejection (NJ Rev Stat § 2A:35-1 (2013)).
There are two possible situations here. First, there may be no existing rights in the property. In this case, the person being ejected had no rights to the property in the past or present (Vasquez v. Glassboro Service Association, Inc., 415 A. 2d 1156 – NJ: Supreme Court 1980). Second, the ejected person could have had rights initially but at present has lost those right and still resides on the same property. This could be either by the expiry of a lease contract or the alleged nonperformance or breach of a tenancy agreement (Norman Ostrow, Inc. v. Gad, NJ: Appellate Div. 2021).
The ejectment process starts with the landlord giving the notice to vacate. As in eviction, the notice here provides the occupant with a period in which he/she is to leave the property. It is unconditional, and failure to vacate will force the claimant to take legal action. If the defendant fails to leave, the claimant will file a lawsuit (N.J.S.A. 2A:39-1). The landlord will have to produce an order to show cause, a proposed order for possession, a writ of possession and a verified complaint. The case will proceed on a summary process, and if successful, the judge will sign an order to show cause and later set a date for hearing of the matter. The landlord is a duty to serve the document to the occupant within ten days (Rule 4:67-3). After filing proof of service, the court will conduct a hearing on the date.
In determining the ejection issue, the court will look at whether the parties have legal right over the property in question. Here the court will assess which of the parties has a corroborative right to possession of the property. The reason behind this is to show that whereas the claimant owns and has actual possession of the property, and the defendant interferes with this possession (Assocs. v. Miranda, 115 N.J. 522, 531 (1989)).
The defendant can raise an argument that there still exists a leasehold or a tenancy relationship between the claimant and the respondent. This will show that both parties have rights over the property. Therefore, ejecting the respondent, in this case, will be unjust dispossession from property he/she rightfully possesses. To prove this, the defendant can show evidence of an agreement and payment as a consideration in the contract (Central Avenue Realty, Inc. v. Smith, 264 N.J. Super. 344, 350 (App. Div. 1993)). If the claimant (landlord) is successful, the court will order to remove the defendant (occupant) from the land.
Loss of Possession Pursuant to a foreclosure
The loss of possession pursuant to a foreclosure arises after the occupant of the property has failed to meet his/her obligation to a mortgage agreement. This happens when the property owner had signed a mortgage on the property and has defaulted in paying the mortgage payments. The lender will begin the foreclosure process in a bid to recover compensation as a result of the default in payments.
The foreclosure will begin with a notice being sent to the landowner (NJ Rev Stat § 2A:50-56 (2013)). The notice informs the landlord that the mortgaged property will be foreclosed following the missed payment. It will set a date for the foreclosure and give, time usually 30 days, to resolve the matter. The time allocated here is mainly a measure to mitigate the impending removal from the property. The mitigation may include a payment scheme between the lender and the landowner to discuss settlement. If this fails, the lender will initiate a lawsuit.
The lender will proceed to court and file a suit. It will be required to serve the landowner with a summons to enter appearance and a copy of the complaint it has filed. The landlord will be accorded 35 days to respond and file its response to the court and the lender. Failure to respond could lead to the lender seeking a final foreclosure judgment (N.J. Stat. Ann. § 2A:50-58) where there is a response, the suit proceeds. The court at this stage will require the parties to first go through foreclosure mitigation (N.J. Stat. Ann. § 2A:50-76).
The court will set a hearing date where it will determine whether the foreclosure is proper. In its determination, the court is to be guided by equity. Therefore, it will have to analyze the facts of the case and look at whether the foreclosure order would, in this case, be fair (Deutsche Bank Trust v. Angeles, 53 A. 3d 673 – NJ: Appellate Div. 2012). This will involve assessing whether the notice for foreclosure was served, which should be evidenced by a return of service. Also, the court will determine whether the lender gave reasonable notice. This means that the notice stipulated was within the statutory period and was not later than those 30 days.
Furthermore, the defendants can also claim that the missed payments were a result of the misrepresentation. For instance, where there is a negligent misrepresentation. A lender makes an alteration to the loan agreement or places a clause carelessly and includes the terms that were not valid (U.S. Bank National Association v. Guillaume, 38 A. 3d 570 – NJ: Supreme Court 2012). Here the defendant could prove that the lender was not diligent and that a material term was misrepresented.
The lender is booming, and the court holds that the foreclosure is proper, the lender will carry out a foreclosure sale (Hardyston Nat. Bank v. Tartamella, 267 A.2d 495, 56 N.J. 508 (1970).). The foreclosure will have successfully transferred the ownership of the property to the lender. The landowner will be removed from the property. As such, the lender will have exclusive rights to sell the property to get the sum of money that was defaulted in the mortgage (Id.). as the lender seizes ownership. The sale will then take place by way of an auction. Here the lender will advertise the property and open it up to bids. The lender starts with a credit bid rather than a cash bid. Here the lender bids the amount it is owed by the defendant or even a lower price. Once the hammer falls, whoever is a success will take ownership of the property, and the lender gets the loan repaid (U.S. ex rel. United States Department of Agriculture v. Barbra Scurry, 940 A.2d 1164, 193 N.J. 492 (2008)).
The distinction between eviction, ejectment and loss of possession pursuant to foreclosure
Before going into the differences, it is first essential to note down the similarities in the three processes. It is evident that, in each of the processes, an occupant of the property is removed from the property he/she has by another. Also, the act of removal here relates to the intricate question of who has the better claim to the property.
Furthermore, the three processes require the courts to assess whether the actions taken by the claimants in these cases were reasonable, procedural and just. Moreover, the three processes cannot be initiated without notice and reasonable time allocated. In each, the occupant must b given a notice by the claimant, and the claimant should provide this in a reasonable time (Id.).
Concerning the differences, the first difference is as to the nature of the relationship between the parties. An eviction involves either a tenancy or a lease agreement. Here the parties are either a leaser and a lease or a landlord and a tenant. The ejectment will involve a landlord and an unauthorized occupant. There could be a relationship such as a lease, but such an agreement has been terminated and is no longer existent. The loss of possession, according to foreclosure, involves the lender and a borrower default.
Also, in whereas an eviction relates to land owned by the claimant and only in possession of the tenant (Id.). He/she only enjoys this right of possession provided the rent is paid. In ejectment, the ejector enjoys full rights of possession and ownership, and the occupant has no legal claim over the property (Supra). In the loss of possession in foreclosure, the lender has only a right of possession and ownership on default of the mortgage payment. The borrower has exclusive rights of possession and request if he/she is in default of the mortgage payment.
The possible results of the suits are also different. An eviction may either result in removing the occupant from the land, or the claimant could have to stay at the property if the notice was unreasonable. The possible outcomes in an ejectment are only the removal of an unauthorized occupant (Id.). The loss of possession pursuant to foreclosure could result in either removal and sale of the property or a mitigating measure that sees the arrangement continue with renewed terms (Supra). If the landowner is prosperous in both the ejectment and erection will possibly result in the landlord retaining possession of the land. However, in foreclosure, the successful lender will have to sell the property to recover the defaulted payment. Also, the foreclosure is the only case where the landowner is the borrower, loses possession of the property (Id).
The impacts of Executive Order No. 106 of 2020.
Before looking at the impacts of the order, it is essential to understand what its objectives were. Governor Phil Murphy signed the Executive Order among many other previous orders during the COVID-19 pandemic. The order came due to the drastic economical impacts resulting from the closure of businesses and stagnation of trade. Since people could not go to work and many companies either cut down on their staff or shut down altogether, many people in New Jersey had lost stable income.
The situation was even more depressing for those who could not pay off their mortgage as a result of the pandemic. Many people fell behind on rent, while others were unable to meet their lease obligations. This would mean that many people would be evicted and ejected from their homes, while some would lose their property to foreclosure sales. Apart from the evident issue of being without a home, the now homeless population will be susceptible to contracting the COVID-19 virus.
Thus, the order directed that the lessees, tenants, and homeowners should not be removed from their property by way of either eviction or foreclosing. The impact of this would be that where a tenant was in default of rent owing to the prevailing pandemic, the landlord will not initiate an eviction proceeding against that tenant or tenants. Also, whereas a result of the pandemic, a lease has expired and owing to the lack of income, the lessee cannot renew it, then the occupant should not be ejected. Regarding mortgages, it meant that a homeowner, having been affected by the pandemic and now have no means to pay the mortgage instalments, would not have his/her house sold in a foreclosure sale (Para. 2 Executive Order 106 of 2020).
The order also prohibits the court officers and local sheriffs from implementing foreclosures and evictions. The impact of this is that the bank cannot seek to have its sale implemented. In addition, an eviction cannot take place as there will be no legal parties to enforce the eviction. Without the sheriffs, court officers or the use of agents to carry out the removal, any action will be procedurally improper. The enforcement of such an order can only be possible where a court will hold a hearing to decide whether there are reasonable grounds to allow the enforcement.
Another impact of the Executive order is that the claims are still proceeding in court for foreclosure and eviction. Whereas the ruling allows the proceedings to continue to their final judgment, the effect of this judgment is stayed. The claimant cannot thus seek to enforce the orders received during this COVID-19 period. However, the court can still hold a vital interest to review and hold that an implementation is required.
Conclusion
In general, Executive Order no. 16 of 2020 was intended to protect homeowners, tenants and lessees from losing their homes in the COVID-19 period. To dispossess the New Jersey residents from the property in a period and circumstance that would be in truth unfair and unjust. Furthermore, the temporary orders would stay the proceeding in evictions, ejectment and loss of possession due to a foreclosure. Whereas the impacts seem to be harsh against landlords and lenders, it does seek out a legitimate goal and act to bring about fairness and equity.
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