A 4686

ASSEMBLY, No. 4686
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED MARCH 16, 2026
Sponsored by:
Assemblyman� DAVID BAILEY, JR.
District 3 (Cumberland, Gloucester and Salem)
SYNOPSIS
���� The �Real Estate Installment Contract Act.�
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act concerning real estate installment sales
contracts and supplementing Title 46 of the Revised Statutes.
���� Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� This act shall be known
and may be cited as the �Real Estate Installment Contract Act.�
���� 2.��� As used in this act:
���� �Property� means any real
property located in this State which has no more than four dwelling units, one
of which shall be or is intended to be occupied by the purchaser or a member of
the purchaser�s immediate family as a residence at the time that a real estate
installment contract is originated.
���� �Purchaser� means any person
acquiring an interest in property by means of a real estate installment
contract.
���� �Real estate installment
contract� or �contract� means an agreement which by its terms is not required
to be fully performed by the parties to the agreement within one year of the
date of the agreement and under which the seller agrees to convey title to a
property to the purchaser and the purchaser agrees to pay the purchase price by
periodic installment payments while the seller retains legal title to the
property, and the purchaser retains an equitable interest therein.
���� �Seller� means any person
conveying title by means of a real estate installment contract.
���� �Title� means the fee simple
estate, leasehold estate, or estate for years vested in the seller at the time
of the execution of a real estate installment contract.
���� 3.��� a.� A real estate
installment contract shall be in writing, and, upon execution by the seller and
purchaser, the seller shall deliver the original or a duplicate original of the
contract to the purchaser in recordable form. The contract shall contain the
following information:
���� (1)�� the names and mailing
addresses of the parties to the contract;
���� (2)�� the date on which the
contract was signed by each party and the effective date of the contract;
���� (3)�� a description of the
property which is the subject of the contract, which description shall be in a
form legally sufficient to convey title to real property;
���� (4)�� the aggregate purchase
price of the property affected;
���� (5)�� any additional charges
or fees imposed on the purchaser by the terms of the contract;
���� (6)�� the amount of the
purchaser�s down payment, if any;
���� (7)�� the principal balance
owed, which shall be the aggregate purchase price less the down payment;
���� (8)�� the amount and due date
of each installment payment;
���� (9)�� a complete description
of any mortgage or other lien encumbering the property, including the name and
address of the holder of each� mortgage or lien and the amount due to each
holder thereof, or, in the alternative, a statement that no such liens exist;
���� (10) a statement that, if the
seller defaults in payment of a mortgage or other lien encumbering the
property, the purchaser may, at the purchaser�s option, make payments, which
payments shall be credited by the seller against any payments required to be
made by the purchaser under the terms of the contract;
���� (11) a statement that, once
the purchaser has fully performed all of the purchaser�s obligations under the
contract, the seller shall deliver to the purchaser a deed conveying all of
seller�s right, title and interest in and to the property described in the
contract;
���� (12) a statement as to which
party shall be responsible for the payment of taxes, assessments, and other
municipal charges against the property from the effective date of the contract;
���� (13) a statement containing a
description of any pending order issued by any public agency against the
property arising from a violation of any statute, administrative regulation or
local ordinance, or in the alternative, a statement that no such order exists;
and
���� (14) acknowledgment of the
execution of the contract by both seller and purchaser before a notary public
or other officer entitled by law to take acknowledgements.
���� b.��� A seller shall not
encumber a property sold pursuant to a contract, by execution of a mortgage
unless the indebtedness secured by the mortgage, or aggregate indebtedness if
there is more than one mortgage, is less than the balance due under the
contract.
���� c.���� Within 20 days after a
contract has been executed by both the seller and purchaser, the seller shall
record the contract, or a short form thereof, in the office of the county clerk
or register in the county where the property is located.
���� d.��� Within 30 days of the
date that the purchaser shall have fully performed all of the purchaser�s
obligations under the contract, the seller shall deliver a deed to the
purchaser in recordable form, conveying to the purchaser all of the seller�s
right, title and interest in the property.
���� 4.��� a.� Upon breach or
default by any party with respect to any provision of a contract, which default
continues beyond the expiration of any applicable notice provision and period
to cure the default provided for in the contract, or upon the failure of any party
to comply with any provision of this act, the party aggrieved thereby may bring
an action for legal or equitable relief in Superior Court as may be appropriate
in the circumstances; except that if the seller seeks relief against the
purchaser on the grounds set forth in section 5 of this act, the seller shall
comply with the provisions thereof before commencing suit.
���� b.��� If, in any action
commenced in Superior Court to enforce the terms of a contract, the seller
demands forfeiture of the interest of the purchaser in the property, the action
shall be deemed to be one in the nature of a strict foreclosure of a mortgage
encumbering real property, in which case the seller shall be deemed to be the
mortgagee and the purchaser shall be deemed to be the mortgagor.
���� 5.��� a.� If a purchaser
defaults in a payment or payments due, or otherwise defaults on a contract, or
is in breach of any other obligation imposed upon the purchaser by the
contract, the seller, prior to commencing an action in Superior Court to
enforce the terms of the contract as provided in section 4 of this act, shall
serve upon the purchaser a written notice which:
���� (1)�� reasonably identifies
the contract and describes the property affected thereby;
���� (2)�� specifies the nature and
extent of the breach or default by the purchaser; and
���� (3)�� notifies the purchaser
that unless the breach or default is cured within 30 days of service of the
notice, the seller may file suit in Superior Court to enforce the terms of the
contract, in which case judgment may be entered against the purchaser, which
may result in the forfeiture of the purchaser�s interest in the property and
the removal of the purchaser from the property.
���� b.��� The notice shall be
entitled �Notice of Breach or Default under Real Estate Installment Contract.�� The
seller shall serve the notice upon the purchaser by hand or by registered or
certified mail, return receipt requested, to the last known address of the
purchaser. If a purchaser cures the breach or default within 30 days after
service of the notice, the seller shall be barred from filing suit in Superior
Court to enforce the contract. If the purchaser fails to cure the breach or
default within 30 days after the service of the notice, the seller may file
suit in Superior Court to enforce the contract, as provided in section 4 of
this act.
���� c.���� The seller may only
bring an action to enforce the forfeiture of the purchaser�s interest in the
property and for recovery of possession of the property by use of the
procedures for foreclosure and judicial sale of residential real property
available to lenders pursuant to the provisions of the �Fair Foreclosure Act,�
P.L.1995, c.244 (C.2A:50-53 et seq.). For purposes of an action to enforce a
contract under this act, the seller shall be deemed to be a lender, and the
purchaser shall be deemed to be a debtor, as those terms are defined in the
�Fair Foreclosure Act,� P.L.1995, c.244 (C.2A:50-53 et seq.).
���� 6.��� The provisions of the
civil usury law, R.S.31:1-1, and the criminal usury law, N.J.S.2C:21-19, shall
apply to real estate installment contracts in a manner, which may include
compliance and enforcement mechanisms, to be prescribed by the Commissioner of Banking
and Insurance by regulation adopted pursuant to the �Administrative Procedure
Act,� P.L.1968, c.410 (C.52:14B-1 et seq.).
���� 7.��� This act shall take
effect on the 60th day following enactment and shall apply to real estate
installment contracts entered into on or after that date, but the Commissioner
of Banking and Insurance may take anticipatory administrative action in advance
of the effective date as shall be necessary for the implementation of section 6
of this act.
STATEMENT
���� This bill, entitled the �Real
Estate Installment Contract Act,� provides that, in connection with the use of
a real estate installment contract to purchase residential real property, the
contract must contain certain disclosures, the purchaser has legal and
equitable remedies available upon a seller�s default on the contract, and a
seller must adhere to certain procedures in enforcing the contract upon a
purchaser�s default. As an alternative to the more traditional use of a
mortgage to finance the purchase of real property, a real estate installment
contract allows a purchaser of real estate to make installment payments to the
seller towards the eventual purchase of the property, while the seller retains
title to the property as security for the purchaser�s obligations until the
completion of all contract terms.
���� The bill requires a real
estate installment contract to be in writing and to disclose certain
information, including: the aggregate purchase price of the property; any
additional charges or fees imposed on the purchaser by the terms of the
contract; the principal balance owed; the amount and due date of each
installment payment; and a complete description of any mortgage or other lien
encumbering the property. In addition, the bill requires the seller to record
either the contract or a short form of the contract, and puts certain
restrictions on the seller�s ability to hold or place mortgages on the
property.
���� If there is a breach or
default by either the seller or purchaser under a real estate installment
contract, legal or equitable relief may be sought by either party in Superior
Court.� Certain procedures must be followed in situations in which the purchaser
defaults on a payment or otherwise defaults on the contract or is in breach of
any other obligation.� The seller shall provide the purchaser with a written
notice which specifies the nature and extent of the breach or default and which
notifies the purchaser that if the purchaser does not cure the default within
30 days of receiving the notice, the seller may file suit in Superior Court to
enforce the terms of the contract, in which case judgment may be entered
against the purchaser, which may result in the forfeiture of the purchaser�s
interest in the property and the removal of the purchaser from the property.� The
seller may only bring an action to enforce the forfeiture of the purchaser�s
interest in the property and for recovery of possession of the property by use
of the procedures for foreclosure and judicial sale of residential real
property available to lenders pursuant to the provisions of the �Fair
Foreclosure Act,� P.L.1995, c.244 (C.2A:50-53 et seq.).
���� The bill clarifies that the
State�s civil and criminal usury laws apply to real estate installment
contracts in a manner to be prescribed by the Commissioner of Banking and
Insurance by regulation. �As an alternative to the more traditional use of a
mortgage to finance the purchase of real property, a real estate installment
contract allows a purchaser of real estate to make installment payments to the
seller towards the eventual purchase of the property, while the seller retains
title to the property as security for the purchaser�s completion of all
contract terms. While the regulation of real estate installment contracts under
the bill includes some provisions relating to mortgage loan law, to which usury
laws normally apply, other provisions relate to contract law, to which usury
laws do not normally apply. Accordingly, the bill clarifies that the
protections afforded consumers by the State�s usury laws also apply to real
estate installment contracts.
���� The bill allows the
commissioner to take anticipatory administrative action in advance of the
effective date of the bill as necessary for the enforcement of usury laws.