November 24, 2025

BY CATHERINE APONTE, ESQ. PARTNER
CAPONTE@FRIEDMANVARTOLO.COM

ON JANUARY 12, 2024, New Jersey enacted sweeping amendments to N.J.S.A. 2A:50-64, which created the Community Wealth Preservation Program. Otherwise known as the “CWPP,” the program was touted by the state to create affordable housing and “level the playing field” for those engaging in the foreclosure auction process.1 The CWPP sought to accomplish these lofty goals by creating two rights of refusal; specifically a first right of refusal granted to the foreclosed upon defendant, their next of kin, and tenants, and a second right of refusal for non-profit community development corporations.2 However, these rights of refusal are not a true right of refusal as generally understood by the legal definition and standard.3 Instead, for those entitled to exercise the rights of refusal, the CWPP provides an option to purchase the property at a reduced purchase price to the exclusion of any other higher or better offer made at auction.4

As a starting point, the amendments to N.J.S.A. 2A:50-64 require foreclosing plaintiffs to advertise at least four (4) weeks prior to scheduled sale its upset price.5 The upset price is the lowest amount the foreclosing plaintiff will accept for the property.6 Upon exercising the right of refusal all bidding is quashed and the foreclosing plaintiff must accept the upset price, even where that amount is less than the amount owed under the duly entered judgment or where there are higher bids for the property at auction. Consequently, destroying the equity available in the property for either junior lienholders or the foreclosed upon borrower and their next of kin. This distortion of the right of refusal violates the Fourteenth Amendment’s Due Process Clause and is an unconstitutional taking under the Fifth Amendment as both the Supreme Court of the United States7 and Supreme Court of New Jersey8 have affirmatively upheld equity as a constitutionally protected property right.

Constitutional challenges became ripe as sham nonprofits began abusing the second right of refusal afforded to non-profit community development corporations.9 Following several challenges to the constitutionality of the exercise of the second right of refusal, New Jesey consolidated dockets under Atlantic County Sheriffs and Joseph O’Donoghue v. State of New Jersey, under docket C-000094-24. Ultimately, the Court struck down the second right of refusal as unconstitutional, thereby eliminating its use going forward, while also rationalizing that if an as applied challenge with similar facts is raised as to the first right of refusal it would also likely be found unconstitutional. Additionally, considering the rampant abuse by non-profits and the unconstitutionality of the CWPP, Senate Bill S4470 was introduced on May 19, 2025, to attempt to address the problems.¹⁰ Unfortunately, the proposed legislation does not remediate the underlying problems, and can be considered to exacerbate issues with proposed changes.

1  Governor Murphy Signs Legislation Establishing Community Wealth Preservation Program, https://www.nj.gov/governor/news/news/562024/20240112b.shtml (January 12, 2024).
2 N.J.S.A. 2A:50-64(d) and N.J.S.A. 2A:50-64(g).
3 Right of First Refusal as defined by is a contractual right to meet the terms of a third party’s higher offer. Black’s Law Dictionary, Bryan A. Garner, J.D. LLD. 4th ed. 2011.
4 N.J.S.A. 2A:50-64(d) and N.J.S.A. 2A:50-64(g).
5 N.J.S.A. 2A:50-64(a)(5)(a).
6 N.J.S.A. 2A:50-64(p) (defining the upset price as the minimum amount that a foreclosed upon property shall be sold for in a sheriff’s sale as determined by the foreclosing plaintiff.
7 Tyler v. Hennepin County, 598, U.S. 631 (2023).
8 257-261 20th Ave. Realty, LLC v. Roberto, 259 N.J. 417 (N.J. 2025).
9 Sham Nonprofits Are Abusing NJ’s New Foreclosure Law, Senator Says, Eric Kiefer, Patch,https://patch.com/new-jersey/belleville/sham-nonprofits-are-abusing-nj-s-new-foreclosure-law-senator-says (Apr. 15, 2025).
¹⁰ N.J. R. S4470 (N.J. 2025).