A5377

An Act concerning exemptions from debt execution or attachment and supplementing Title 2A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Condominium” means the same as defined pursuant to section 3 of the “Condominium Act,” P.L.1969, c.257 (C.46:8B-3).

“Dwelling house” means any residential property assessed as real property; but, the term shall not include a unit in a condominium or a horizontal property regime.

“Homestead” means any of the following if it is the primary residence of the owner, the owners’ family members, or anyone who has an interest in the property:

(1) a dwelling house, appurtenances, and any land on which that dwelling house and any appurtenances are located;

(2) a condominium unit or a unit in a horizontal property regime; or

(3) a manufactured home as defined pursuant to section 2 of P.L.1990, c.61 (C.54:4-8.58), including any appurtenances and land on which the manufactured home and any appurtenances aresituated.

Notwithstanding section 2 of P.L.1990, c.61 (C.54:4-8.58), manufactured homes constructed before 1974 shall be included in the definition of homestead even if they were not manufactured in accordance with the National Manufactured Housing Construction and Safety Standards Act of 1974.

“Horizontal property regime” means the form of real property ownership provided for under the “Horizontal Property Act,” P.L.1963, c.168 (C.46:8A-1 et seq.).

“Owner” means, but is not limited to, a natural person who is a sole owner, joint tenant, tenant by the entirety, tenant in common, life estate holder, a holder of a beneficial interest in a trust, a purchaser under a deed of trust, mortgage, or contract, or a holder of a remainder interest.

“Primary residence” means a homestead occupied by the owner or a member of the owner’s immediate family as the owner's or family’s primary residence, as distinguished from a vacation home, property owned and rented or offered for rent by the owner, and other secondary real property holdings.

2. a. In the case of bankruptcy, each owner may exempt from attachment, execution, and forced sale a homestead as defined pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this act) in an amount that is not to exceed:

(1) $250,000 if the owner is an individual under the age of 65;

(2) $500,000 if the owner is a couple that are both under the age of 65;

(3) $500,000 if the owner is an individual over the age of 65;

(4) $750,000 if the owner is a couple comprised of one individual that is over the age of 65 and one individual under the age of 65; or

(5) $1,000,000 if the owner is a couple that are both over the age of 65.

The amounts set forth in subsection a. of this section shall be automatically adjusted to reflect the percentage change, if any, from January 1 to December 31 of the preceding year, in the Consumer Price Index for All Urban Consumers, Annual City Average for the Mid-Atlantic Region, or its successor index, as published by the Bureau of Labor Statistics in the United States Department of Labor, or its successor agency, beginning January 1, 2027 and every three years thereafter. Adjustments made pursuant to this paragraph shall be rounded up to the next $50.

b. An owner who is entitled to a homestead exemption shall hold that exemption by operation of law and no written claim or recording shall be required.

c. The owner's exemption allowed pursuant to this section shall be determined on the date the bankruptcy petition is filed or, with respect to property that becomes property of the estate after that date, the date the property becomes property of the estate.

d. The exemption allowed pursuant to this section shall not apply to real property that is part of and subject to a community association; condominium association; homeowners’ association; cooperative; or any other common interest association that may be subject to the “Planned Real Estate Development Full Disclosure Act,” P.L.1977, c.419 (C.45:22A-21 et seq.), but only with respect to claims regarding unpaid assessments; special assessments; rent, in the case of a proprietary lease; cooperative shares; and other charges due and owing the community association arising out of the real property for which the homestead exemption is sought.

3. a. A homestead exemption may be abandoned by any of the following:

(1) a declaration of abandonment or waiver;

(2) a transfer of the homestead property by deed of conveyance; or

(3) a permanent removal of the owner as a resident of this State. The owner may be removed from the homestead for up to two years without an abandonment or a waiver of the exemption.

b. A declaration of abandonment or waiver pursuant to paragraph (1) of subsection a. of this section shall be executed by the owner and acknowledged. A declaration of abandonment or waiver is effective only from the time of its recording in the office of the county clerk.

4. The homestead exemption provided pursuant to this act shall not affect or apply to attachments, executions and sales in connection with court judgments concerning:

a. fraud;

b. fraudulent transfers or conveyances;

c. duress; or

d. fraud, deceit, or manipulation in a fiduciary capacity.

5. This act shall take effect on January 1, 2027, except that the Commissioner of Banking and Insurance may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes homestead exemptions for persons in debt. Under the bill, an owner who has declared bankruptcy can exempt from an attachment, execution, and forced sale a homestead in an amount that is not to exceed:

(1) $250,000 if the owner is an individual under the age of 65;

(2) $500,000 if the owner is a couple that are both under the age of 65;

(3) $500,000 if the owner is an individual over the age of 65;

(4) $750,000 if the owner is a couple comprised of one individual that is over the age of 65 and one individual under the age of 65; or

(5) $1,000,000 if the owner is a couple that are both over the age of 65.

The amounts set forth in the bill that can be used to exempt a homestead from an attachment, execution, and forced sale will be automatically adjusted triennially using the Consumer Price Index for All Urban Consumers, Annual City Average for the Mid-Atlantic Region, beginning January 1, 2027.

“Homestead” is defined in the bill to mean any of the following if it is the primary residence of the owner, the owners’ family members, or anyone who has an interest in the property: 1) a dwelling house, appurtenances, andany land on which that dwelling house and any appurtenances are located; 2) a condominium unit or a unit in a horizontal property regime; or 3) a manufactured home, including any appurtenances and land on which the manufactured home and any appurtenances are situated. “Homestead” excludes personal property.

The homestead exemption does not apply to real property that is part of and subject to a common interest association that may be subject to other current statutory provisions, but only with respect to claims for charges due and owing the community association arising out of the real property for which the exemption is sought.

The bill also provides that, in a bankruptcy case, the owner’s homestead exemption shall be determined on the date the bankruptcy petition is filed or, with respect to property that becomes property of the estate after that date, the date the property becomes property of the estate.