The New Jersey bill will seek to reduce the impact of private investors on the ongoing housing crisis within the community. Once the bill is signed, the winning bidder would only have to pay a deposit of 3.5% of the overall amount instead of 20% (which is the current rate).
Bidders intending to live in the property for seven years would also have more than the current 30 days to put the rest of the money down. Under the bill, buyers could take up to 90 business days to complete a sale, and interest would not accrue on the balance for the first 60 days after a sale. If bidders can’t complete the sale through no fault of their own — such as when the appraised value is less than what they purchased the property for — they won’t be responsible for penalties or fees.
Under the bill, bidders can buy the property using financing if they provide documentation showing they were pre-approved by a financial institution regulated by the Department of Banking and Insurance. They must also prove they have completed eight hours of homebuyer education counseling through the U.S. Department of Housing and Urban Development.
If the buyer finances the bid and doesn’t live in the property for the required seven years, he can be fined $100,000, except in extenuating circumstances, like if the bidder or close family member died or became disabled.
If a community nonprofit wins the bid and intends to sell the property, the house must include a 30-year deed restriction that keeps the sale price affordable for low-income families to live in.
As of now, Gov. Phil Murphy is yet to comment on whether or not he is going to sign the bill into law. The bill was passed by the full Senate during a marathon session held on Wednesday – 29th June, 2022. This session also included discussions on dozens of other bills and the state budget.