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ARTICLE · 05 NOVEMBER 2025

"Right Of Second Refusal" In Community Wealth Preservation Act Declared Unconstitutional

Riker, Danzig, Scherer, Hyland & Perretti
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Subsection (g) of the Community Wealth Preservation Act (N.J.S.A. 2A:50-64(g)) is unconstitutional – The New Jersey Superior Court held that N.J.S.A. Section 2A:50-64(g)...

United StatesGovernment, Public Sector
Michael O'Donnell
Michael O'Donnell
Keshav Agiwal
Keshav Agiwal

What You Need to Know

Subsection (g) of the Community Wealth Preservation Act (N.J.S.A. 2A:50-64(g)) is unconstitutional – The New Jersey Superior Court held that N.J.S.A. Section 2A:50-64(g), which allows non-profit entities a right of second refusal in foreclosure actions, violates a property owner's right to surplus equity under the Takings Clause of both the U.S. and New Jersey Constitutions and it prevents junior lienholders from recovering surplus funds.

Introduction

In Atlantic County Sheriffs & Joseph O'Donoghue v. State of New Jersey, No. MER-C-94- (N.J. Super. Ct. Ch. Div. Aug. 28, 2025), the Superior Court of New Jersey, Chancery Division, Mercer County considered whether N.J.S.A. Sections 2A:50-64(d) and (g) violated the Takings Clause of both the New Jersey Constitution and United States Constitution. The Court found that N.J.S.A. Section 2A:50-64(g) violated the Takings Clause of both the New Jersey and U.S. Constitutions by depriving

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