55:14K-10. Foreclosure action; parties defendant; entry of judgment; conditions; orders; qualification of buyers; other judgments; notices prior to sale

a. In any foreclosure action involving a housing sponsor other than a foreclosure action instituted by the agency, the agency and the municipality in which any tax exemption or abatement is provided to the housing sponsor shall, in addition to other necessary parties, be made parties defendant. The agency and the municipality shall take all steps in the action necessary to protect the interest of the public therein, and no costs shall be awarded against the agency or the municipality.

b. Subject to the terms of any applicable loan agreement, contract or other instrument entered into or obtained pursuant to subsection a. of section 7 of this act, judgment of foreclosure in accordance with this section shall not be entered unless the court to which application therefor is made shall be satisfied that the interest of the lienholder or holders cannot be adequately secured or safeguarded except by the sale of the property; and in the proceeding the court shall be authorized to make an order increasing the rental or carrying charges to be charged for the housing accommodations in the housing project involved in the foreclosure, or appoint a member of the agency or any officer of the municipality in which any tax exemption or abatement with respect to the project is provided, as a receiver of the property, or grant such other and further relief as may be reasonable and proper; and in the event of a foreclosure or other judicial sale, the property shall be sold only to a housing sponsor which will manage, operate and maintain the project subject to the provisions of this act, unless the court finds that the interest and principal on the obligations secured by the lien which is the subject of foreclosure cannot be earned under the limitations imposed by the provisions of this act and that the proceeding was brought in good faith, in which event the property may be sold free of limitations imposed by this act or subject to such limitations as the court may deem advisable to protect the public interest.

c. In the event of a judgment against any housing sponsor in any action not pertaining to the foreclosure of a mortgage, there shall be no sale of any of the real property included in any housing project hereunder of the housing sponsor except upon 120 days' written notice to the agency. Upon receipt of the notice the agency shall take those steps as in its judgment may be necessary to protect the rights of all parties.

L.1983, c. 530, s. 10, eff. Jan. 17, 1984.