Bill Text: NJ S773 | 2010-2011 | Regular Session | Amended

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Bill Title: The "Residential Property Lease-Purchase Act."

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2011-03-03 - Reported from Senate Committee with Amendments, 2nd Reading [S773 Detail]

Download: New_Jersey-2010-S773-Amended.html

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[First Reprint]

SENATE, No. 773

STATE OF NEW JERSEY

214th LEGISLATURE

 

PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION

 

 

Sponsored by:

Senator  STEPHEN M. SWEENEY

District 3 (Salem, Cumberland and Gloucester)

Senator  ROBERT W. SINGER

District 30 (Burlington, Mercer, Monmouth and Ocean)

 

 

 

 

SYNOPSIS

     The "Residential Property Lease-Purchase Act."

 

CURRENT VERSION OF TEXT

     As reported by the Senate Commerce Committee on March 3, 2011, with amendments.

  

An Act concerning certain residential lease-purchase transactions, 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 "Residential Property Lease-Purchase Act."

 

     2.    As used in this act:

     "Option to purchase agreement" means a contract between a tenant-buyer and property owner which contains an exclusive, irrevocable right for a specified period, provided by the property owner to the tenant-buyer for a fee or other consideration, to purchase a property upon which the tenant-buyer resides pursuant to a related residential lease agreement for a determinable price.  The tenant-buyer shall not be required to exercise the optional right to purchase the property under any contract agreed to with the owner.

     "Owner" means any person who owns property, and who contracts with a tenant-buyer for a residential lease agreement with accompanying option to purchase agreement, permitting the tenant-buyer to reside at the property with the option of purchasing the property ¹, but shall not include a bank, savings bank, savings and loan association, credit union, or other federally insured financial institution, or insurance company, or affiliate or subsidiary thereof, organized, chartered, licensed, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States¹.

     "Property" means residential real property in this State, consisting of one to four dwelling units, at least one of which is occupied by a tenant-buyer pursuant to a residential lease agreement with accompanying option to purchase agreement for the property.

     "Residential lease agreement" means a contract, accompanied by an option to purchase agreement, between a property owner and tenant-buyer that contains terms under which the tenant-buyer is permitted to lease the property for a specified period and reside there as a tenant.

 

     3.    a.  Any residential lease agreement with accompanying option to purchase agreement shall be in writing in a form containing at least 12-point type.  The property owner shall provide an executed copy of the written lease agreement, properly notarized by a notary public who is commissioned pursuant to the "Notaries Public Act of 1979," P.L.1979, c.460 (C.52:7-10 et seq.), to the tenant-buyer who will reside at the property, at the time at which the tenant-buyer signs the agreement.

     b.    The written residential lease agreement shall contain at least the following:

     (1)   the name and mailing address of the property owner and any agent for the owner acting as a landlord for the property;

     (2)   the name of the person residing at, and responsible for, the property as a tenant;

     (3)   the name of any additional occupant residing at the property;

     (4)   the date on which the residential lease agreement is signed by both the tenant-buyer and the property owner;

     (5)   the recorded physical location of the property that is the subject of the residential lease agreement;

     (6)   the monthly rental obligation for the tenant-buyer residing on the property;

     (7)   the length of time of the residential lease agreement;

     (8)   the mailing address to which the monthly rental obligation shall be remitted, if different from the mailing address for the property owner and agent provided under paragraph (1) of this subsection;

     (9) the amount of any security deposit required by the residential lease agreement, and an indication that all information concerning the investment or deposit of the security deposit shall be provided to the tenant-buyer under the agreement, as required by section 1 of P.L.1967, c.265 (C.46:8-19); ¹[and]¹

     (10) a notice that, as a condition of the residential lease agreement, an option to purchase agreement for the property shall be executed between the property owner and tenant-buyer pursuant to the provisions of section 4 of this act ¹; and

     (11) A disclaimer stating that only the following amounts paid by the tenant-buyer to the property owner on a monthly basis in excess of the monthly rental obligation pursuant to paragraph (7) of subsection c. of section 4 of this act shall be refundable in the event of an eviction:

     (a) 25% of the amount paid in excess of the required monthly rental obligation if the eviction occurs in the first year of the lease-purchase agreement;

     (b) 50% of the amount paid in excess of the required monthly rental obligation if the eviction occurs in the second year of the lease-purchase agreement; and

     (c) 75% of the amount paid in excess of the required monthly rental obligation if the eviction occurs in the third year or thereafter of the lease-purchase agreement¹.

 

     4.    a.  As a condition of a residential lease agreement executed pursuant to section 3 of this act, an option to purchase agreement shall be executed for the same property between the property owner and tenant-buyer.  The terms and conditions of the option to purchase agreement shall be contingent upon the tenant-buyer's fulfillment of all obligations under the residential lease agreement.  The failure to fulfill any obligation under the residential lease agreement shall render the option to purchase agreement voidable by the property owner.

     b.    The option to purchase agreement shall be in writing in a form containing at least 12-point type.  The property owner shall provide an executed copy of the written option to purchase agreement, properly notarized by a notary public who is commissioned pursuant to the "Notaries Public Act of 1979," P.L.1979, c.460 (C.52:7-10 et seq.), to the tenant-buyer at the time at which the tenant-buyer signs the agreement.

     c.     The written option to purchase agreement shall contain at least the following:

     (1)   the name and mailing address of the tenant-buyer under the executed residential lease agreement and the option to purchase agreement;

     (2)   the name and mailing address of the property owner;

     (3)   the date on which the option to purchase agreement is signed by both the tenant-buyer and the property owner;

     (4)   the recorded physical location of the property that is the subject of the option to purchase agreement, which shall be the same property that is the subject of the residential lease agreement executed pursuant to section 3 of this act;

     (5)   (a)  the purchase price or other consideration provided for the property that is the subject of the option to purchase agreement; or

     (b)   the manner in which the purchase price or other consideration shall be determined at the time the tenant-buyer exercises his optional right to purchase the property from the property owner, which shall include an appraisal of the property by a real estate appraiser licensed or certified pursuant to the "Real Estate Appraisers Act," P.L.1991, c.68 (C.45:14F-1 et al);

     (6)   the amount of any fee or other consideration provided by the tenant-buyer at the time of the execution of the option to purchase agreement as consideration for the agreement, and additionally, the amount, if any, of this fee or other consideration that shall be applied as credit towards the purchase of the property if the tenant-buyer exercises his optional right to purchase the property from the property owner;

     (7)   the amount of any money to be provided by the tenant-buyer to the property owner, to be credited toward the purchase of the property, remitted on a monthly basis in excess of the monthly rental obligation established pursuant to the executed residential lease agreement between the parties;

     (8)   the amount of any charge or fee to the tenant-buyer for services included in the option to purchase agreement that is distinct from the fee, money, or other consideration described in paragraphs (5) through (7) of this subsection;

     (9)   a notice that the property owner shall be responsible for the payment of taxes, insurance, assessments, and any other charges against the property during the length of time of the agreement, and if the tenant-buyer exercises his optional right to purchase the property, the property owner shall deliver the deed and convey title to the property free of any liens or encumbrances as a condition of the settlement of the option to purchase agreement; and

     (10)  a notice that the property owner, as a condition of the settlement of the option to purchase agreement, shall not possess a mortgage on the property in an amount greater than the purchase price or other consideration provided for the property as agreed to between the owner and tenant-buyer pursuant to paragraph (5) of this subsection.

     d.    With respect to the amount of any fee or other consideration provided by the tenant-buyer at the time of the execution of the option to purchase agreement as consideration for the agreement, as set forth in paragraph (6) of subsection c. of this section:

     (1)   the entire fee or other consideration shall be provided by the tenant-buyer at the time of the execution of the option to purchase agreement;

     (2)   the property owner may declare some or all of the fee or other consideration to be non-refundable, regardless of whether the tenant-buyer exercises his right to purchase the property from the property owner pursuant to the option to purchase agreement, or declare that some or all of the fee or other consideration shall be credited toward the purchase of the property, if the tenant-buyer does exercise his right to purchase the property, so long as this declaration is agreed to by the tenant-buyer and expressly stated in the agreement; and

     (3)   the fee or other consideration provided the property owner shall not constitute an equitable ownership interest in the property.

     e.     With respect to any money provided by the tenant-buyer to the property owner, remitted as a monthly credit towards the purchase of the property in excess of the monthly rental obligation established pursuant to the executed residential lease agreement between the parties, as set forth in paragraph (7) of subsection c. of this section:

     (1) ¹except as provided in paragraph (11) of subsection a. of section 3 of this act with respect to an eviction,¹ the property owner may declare some or all of the money to be non-refundable, if the tenant-buyer does not exercise his right to purchase the property from the property owner pursuant to the option to purchase agreement, so long as this declaration is agreed to by the tenant-buyer and expressly stated in the agreement; and

     (2)   the money provided to the property owner shall not constitute an equitable ownership interest in the property.

     f.     If the tenant-buyer exercises his right to purchase the property from the property owner pursuant to the option to purchase agreement, any amount still owed toward the purchase price or other consideration for the property, as set forth in the agreement, following the application of any fee, money, or other consideration described under paragraphs (6) and (7) of subsection c. of this section by the property owner and credited toward the purchase, shall be the sole responsibility of the tenant-buyer.

     ¹g.   If the tenant-buyer exercises his right to purchase the property from the property owner pursuant to the option to purchase agreement, the property owner shall execute a new deed for the property, which shall be filed with the office of the county clerk or register of deeds in the county in which the property resides.¹

 

     5.  a.  A tenant-buyer or property owner may bring an action in a court of competent jurisdiction for legal and equitable relief against the other party for failing to comply with the provisions of this act, or if the other party violates any of the contract provisions set forth in any written agreement for a residential lease agreement or accompanying option to purchase agreement between the parties.  The relief sought by the tenant-buyer or property owner may include enforcement or rescission of any agreement, damages, including consequential damages, and restitution.

     b.    A property owner, in accordance with N.J.S.2A:18-51 et seq. and any other applicable State eviction law, may initiate an eviction action against a tenant-buyer as a tenant under a residential lease agreement, for failure to comply with the provisions of that agreement.

 

     6.    The provisions of this act shall not be construed to affect, modify, or rescind any right, benefit, privilege or obligation, or available legal remedy to enforce or cancel any right, benefit, privilege or obligation, under any applicable State and federal law concerning the purchase of a property, and any mortgage or other financing of the purchase, that is the subject of a residential lease agreement with accompanying option to purchase agreement. 

 

     7.    This act shall take effect on the first day of the third month next following enactment, and shall apply to any residential lease agreement and accompanying option to purchase agreement executed on or after the effective date.