By Maryann Morris

Blue Acres is New Jersey’s buyout program, run by the Department of Environmental Protection. They purchase properties damaged by repeated flooding from the homeowners, demolish them, and convert them to open space and natural flood storage. This is one potential option for storm survivors to use to get home and whole (or rather, it should be one of many options – in Manville it’s a different story). 

Like many aspects of storm recovery, buyouts can be confusing. Since I’ve been through it myself, I put together this guide to the buyout process based on what I’ve learned so far and heard from Blue Acres themselves. 

Questions and Answers

• How long will it take once I apply?
  • This is dependent on a number of factors, most notably how much money Blue Acres and the State of NJ have in their budgets to purchase your home. It could take 4 – 6 months if your case (property) is expedited, or it could take a few years. You will need to check with your case manager once one is assigned to you.
    
    
• Is the Blue Acres process really just 5 steps, like they say it is?
  • Yes and no. Once you apply and are assigned a case manager, Blue Acres lists this as the first “step” of the process.
    
    The next 2 steps they list (technical work and offers) take the longest. These can also be repetitive if you file any appeals. It can also take longer if you do not have your documentation readily available. You may be required to have an attorney review the contract and negotiate on your behalf. Questions you should ask potential attorneys are down at the bottom of this guide, provided by Blue Acres.
    
    The last step is closing and ensuring that ALL of your items are removed from the property. It should be completely empty, and absolutely NO debris, furniture, playsets, pools (excluding in ground), etc. should be left on the property, with all utilities turned completely off by the utility companies. You will be in violation of their contract if you do not do this! We would highly recommend you find an attorney if your case is “complicated.”
    
    
• Does Blue Acres truly use a “pre-flood value” of my home to determine their offer price?
  • While Blue Acres states they use the “pre-flood value” of your home to base their offer price on, it is important to know that the pre-flood value is based on a pre-flood appraisal. This is what your home would be appraised at prior to when Ida hit on September 1, 2021. Blue Acres uses their own 3^rd party appraisal company.
    
    
• Can I appeal the Blue Acres appraisal if I don’t agree with it or the offer amount?
  • You ARE allowed to appeal the appraisal amount Blue Acres gives you. This will mean that you as the homeowner must hire and pay for out of pocket your own appraiser to value your home using “pre-flood” guidelines Blue Acres provides to your chosen appraiser. This potentially will get you up to $30-60k more in the offer price but is NOT a guarantee! There will be a form provided by your case manager and guidelines to follow.
    
    You ARE allowed to appeal the appraisal amount Blue Acres gives you. This will mean that you as the homeowner must hire and pay for out of pocket your own appraiser to value your home using “pre-flood” guidelines Blue Acres provides to your chosen appraiser. This potentially will get you up to $30-60k more in the offer price but is NOT a guarantee! There will be a form provided by your case manager and guidelines to follow.
    
    
• I didn’t have flood insurance (or my insurance didn’t pay me much to repair), so I had to get an SBA loan. What happens to that loan?
  • If your SBA loan is under a certain threshold (verify with your case manager, but it is believed to be under $75k), the loan will move with you to your next property. HOWEVER, if your SBA loan is above that threshold, it becomes a lien on the property you are considering selling to Blue Acres.
    
    If there is a lien on the property from SBA, the SBA loan must be paid at time of closing on the home you are selling to Blue Acres. At time of closing, the difference between the sale price and the payoff to your mortgage will go directly to SBA. SBA will then provide lien release documentation and you will have to continue paying the SBA loan until it is fully paid off. There is no way to have this loan dismissed or forgiven.
    
    
• What if the offer price doesn’t cover enough for me to leave my home and move into another one?
  • Blue Acres is able to provide what they call “relocation assistance.” Without getting too technical, this is a separate pot of money they can pull from to help you and your family move to another home should the offer amount not be sufficient. This is entirely separate from the overall offer price from Blue Acres. It can help. But know that there are requirements for this assistance, such as that you are NOT allowed to buy another property in a flood zone. You will need to make sure that you can provide sufficient details and documentation as to all the expenses you paid out and what you will need in order to find a new property in today’s market.
    
    This relocation assistance will NOT be available to you until AFTER you have secured new housing (house, apt, etc.). The term “secured” as defined by Blue Acres means you have a signed contract or rental agreement. Once you have that, the relocation assistance will be released to you. The term “secured” does not equate to “closing.” There still may be some items you will need to pay out of pocket while waiting for the relocation assistance depending on your situation.

Visit NJOP’s Ida Recovery FAQ for more questions and answers about buyouts.

Questions to Ask Your Case Manager

If you’re applying for a buyout (or considering whether you should), the following questions may be useful for you to ask your case manager to get answers and details most accurate to your individual case. Don’t have a disaster case manager yet? Reach out ASAP to Andrea Wren-Hardin at 732-860-5086 or email idarecovery@gnjumc.org. 

• What documentation do you require?
• What documentation will help identify the expenses incurred to me that do not fall under the property appraisal or required documentation (i.e. photos of damage/repair loans, purchases for appliances/personal property/utilities/mortgage details/car purchases/etc.)?
• What does Blue Acres consider a “duplication of benefit” and how does it affect my offer price?
• What items, if any, can be included/excluded in the appraisal process? And how will it affect my offer price?
• How long is the appeal process if I want to appeal the appraisal?
• Can I appeal the offer price?
• Do I qualify for relocation assistance and what is that process?

Documentation to Have on Hand for Blue Acres

• Insurance Claim Details (payouts, coverage, etc.) for Flood, Home, Car/etc.
  • Proof of Loss documentation from claims is also important to have. You will need to get this from any insurance company that paid out from Ida damage.
• Repair Loan details (payouts, terms, etc.)
• Any lien documentation on the property
• Mortgage documentation
• Expenses paid for repairs (receipts, invoices, estimates)

Questions to Ask Lawyers

You may need to seek out a lawyer to help handle your buyout. Here’s what Blue Acres shared with us about that (including some questions you can use to help vet potential lawyers) – this is copied straight from my own offer packet: 

Selling your home to a state government agency like the New Jersey Department of Environmental Protection (NJDEP) will make your closing unique and different from what you experienced when you originally bought your property. By selling your property, you and NJDEP are moving toward a common goal: moving you and your family out of harm’s way as soon as possible. Hiring a competent, responsive attorney to represent you in the closing process is critical to meeting this mutual goal. NJDEP has put together a list of questions you may want to ask any attorney you consider hiring to represent you at closing:

• Are you in good standing with the State Bar to practice law in the State of New Jersey?
• How long have you been licensed to practice law in New Jersey?
• Does your practice specifically focus on real estate law?
• Does your office regularly handle residential real estate closings?  How many per month? How many staff members do you have available to dedicate to real estate closings?
• How much would you charge to handle a residential real estate closing with NJDEP that occurs by mail?
• Have you ever worked on real estate transactions with NJDEP or other government entities? Have you specifically worked with NJDEP on any of the Blue Acres program closings?  If so, how many, and may I contact those clients?
• What services do you provide in a residential real estate closing?
• Will you be available to timely respond to email correspondence and communications received from NJDEP’s legal team? Will you be available to timely respond to inquiries and correspondence from your clients?  Do you have the ability to sign documents electronically?
•  Given your workload, will you be able to prepare the closing information/documentation required by NJDEP within specific, short timeframes?
• Do you have any experience handling short sales?
• Can you give me a list of past clients I could contact as references for you?
• Do you have a website I could visit to learn more about your practice?