Earlier this year, we announced new support for loans secured by a borrower’s ownership shares and lease in a cooperative unit (“cooperative loans”) in New Jersey, and that our approach to documentation for these loans was to treat them as being secured by real property.
Upon further consultation with some clients and other legal sources on “The Cooperative Recording Act of New Jersey” (N.J. Stat. Ann. §§ 46:8D-1 et seq.), we believe this Act permits a creditor to make an election as to whether their secured interests are governed by laws affecting real property or personal property.
In order to support this type of election, we will be supporting both types of New Jersey cooperative loans in the same manner that we are for Minnesota and Washington. We will continue to provide our standard New Jersey mortgage (Cx340) and similar real property-type documents when “Co-op is Real Property or Personal Property” (FI 123528) equals “Real Property”. We will be providing our standard loan security agreement (Cx4987) and similar personal property-type documents when FI 123528 equals “Personal Property”.
Specific details are outlined below. An updated “Cooperative Matrix” – which lists the standard cooperative loan documents we provide for each state – will be posted to our website in the near future.
Configuration Changes
We will be making the following print configuration changes to the following documents:
- NJ Mortgage (Cx340).
- Adding the following to print Condition 2:
- Co-op is Real Property or Personal Property = Real Property
- Adding the following to print Condition 2:
- NJ Assignment of Mortgage (Cx1540).
- Adding the following to print Condition 1:
- Cooperative = No
- Creating a new print Condition 2 and configuring it as follows:
- Co-op is Real Property or Personal Property = Real Property
- Cooperative = Yes
- Document Package Type = Closing
- MERS Assignment Type = Non-MERS
- MERS Assignment Type = To
- Print Regular To MERS/Non-MERS Assignments = Yes
- State Code = New Jersey
- Adding the following to print Condition 1:
- NJ Assignment from MERS (Cx4336).
- Adding the following to print Condition 1:
- Cooperative = No
- Creating a new print Condition 2 and configuring it as follows:
- Co-op is Real Property or Personal Property = Real Property
- Cooperative = Yes
- Document Package Type = Closing
- MERS Assignment Type = From
- MERS Assignment Type = None
- MERS Assignment Type = To
- Print From MERS Assignments = Yes
- State Code = New Jersey
- Adding the following to print Condition 1:
- NJ Assignment – INV BLANK (Cx4523).
- Adding the following to print Condition 1:
- Cooperative = No
- Creating a new print Condition 2 and configuring it as follows:
- Co-op is Real Property or Personal Property = Real Property
- Cooperative = Yes
- Document Package Type = Closing
- MERS = No
- State Code = New Jersey
- Adding the following to print Condition 1:
- Loan Security Agreement – COOP (Cx4987).
- Adding the following to print Condition 3:
- State Code = New Jersey
- Adding the following to print Condition 3:
- Assignment of Security Agreement – COOP (Cx4988).
- Adding the following to print Condition 2:
- State Code = New Jersey
- Adding the following to print Condition 2:
- Cooperative Rider (Cx22760).
- Removing the following from print Condition 1:
- State Code = New Jersey
- Adding the following to print Condition 2:
- State Code = New Jersey
- Removing the following from print Condition 1:
Content Edits
We will be making textual edits to the following documents in order to make them compatible with cooperative loans in New Jersey. Most of these changes are similar to the ones we’ve made in other “personal property states,” such as Maryland, Minnesota, and Washington (see here and here for details):
- 3170 Rider 1-4 Family (Cx32)
- 3890 Rider Second Home (Cx35)
- F3190 Rider Balloon (Cx253)
- 3177 Biweekly Payment Rider (Cx750)
- 3178 Biweekly Payment Rider Without Conversion (Cx751)
- 3180 Rider Balloon (Cx752)
- F3191 Rider Balloon (Cx762)
- Balloon Rider – Multistate (Cx1210)
- Assignment of Lease – COOP (Cx4982)
- Loan Security Agreement – COOP (Cx4987)
- 3198 Biweekly Rider (Cx19236)
- 3199 Biweekly Rider Without Conversion (Cx19238)
- Cooperative Loan Recognition Agreement (Cx22776)
Notable changes include the following:
- F3190 Rider Balloon (Cx253). Because title insurance is usually not obtained in states which treat cooperative loans as being secured by personal property, plus the fact that the loan security agreement is not usually recorded in such states, we are modifying some of the wording in Section 2 to make it “neutral” regarding these types of actions (e. the language will be broad enough to cover scenarios involving title insurance and recordings of the security instrument, as well as those scenarios which do not involve these actions).
- 3180 Rider Balloon (Cx752). For reasons similar to those for making changes to Cx253, we are changing the last clause of Section 5 from “updating the title insurance policy, if any” to “conducting or updating a lien search and/or leasehold title insurance policy, if any”, in order to make the text “neutral” regarding title insurance.
- F3191 Rider Balloon (Cx762)., For reasons similar to those for making changes to Cx253 and Cx752, we are modifying a few of the words in Section 2 of this document (and removing the last clause of the last sentence of Section 5) to make the language of this document “neutral” regarding title insurance and recording.
- Loan Security Agreement (Cx4987). References to sections of the Uniform Commercial Code (“UCC”) in Section 14 have been made to the equivalent sections of New Jersey’s version of the UCC (N.J. Stat. Ann. §§ 12A:1-101 et seq.). We are also deleting, in Subsection 14(E), any references to a partial satisfaction (by retention) of the property in all state-specific versions of this form.
- Cooperative Loan Recognition Agreement (Cx22776). Because New Jersey law places severe restrictions upon a cooperative association’s right to limit the subletting of cooperative units,i we will be adding the clause “(to the extent permitted by N.J. Stat. Ann. § 46:8D-13.1)” to Subparagraph (2)(a), to ensure that this Subparagraph does not conflict with state law.
Effective Date
These changes will take effect on April 30, 2019. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 288338
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i “The Legislature finds and declares that it is in the public interest of the citizens of this State that the availability of rental housing be encouraged. Therefore restrictions imposed by certain cooperative agreements which unreasonably inhibit or prevent the holder of a proprietary lease to a cooperative unit from making the unit available for rental shall be contrary to the public policy of the State of New Jersey and shall be unenforceable.” (N.J. Stat. Ann. § 46:8D-13.1[a])