Bill Text: IN SB0298 | 2012 | Regular Session | Introduced
Bill Title: Mortgages and liens on real property.
Spectrum: Bipartisan Bill
Status: (Enrolled - Dead) 2012-03-19 - Signed by the Governor [SB0298 Detail]
Download: Indiana-2012-SB0298-Introduced.html
Citations Affected: IC 32-28-4; IC 32-29.
Synopsis: Mortgages and liens on real property. Provides that a
mortgage or vendor's lien on real estate in Indiana expires five years
after the due date of the last installment of the secured debt. (Current
law provides that a mortgage or lien expires ten years (or 20 years for
a mortgage or lien created before September 1, 1982) after the due date
of the last installment of the secured debt.) Provides that if the record
of the mortgage or lien does not show the due date of the last
installment, the mortgage or lien expires six years (instead of 20 years
under current law) after the date of execution of the mortgage or lien.
Provides that if: (1) the record of the mortgage or lien does not show
the due date of the last installment; and (2) the execution date is
omitted from the mortgage or lien; the mortgage or lien expires 6 years
(instead of 20 years under current law) after the mortgage or lien is
recorded. Makes corresponding changes in the provision that allows the
mortgagee or lienholder to file an affidavit stating when the debt
becomes due. For purposes of an action to foreclose a mortgage on an
interest in real property in Indiana, defines an "interested person" as:
(1) the holder of the evidence of debt secured by the mortgage being
foreclosed; or (2) a person to whom a sheriff's deed is conveyed as a
purchaser of the property at a judicial sale ordered in the action.
Defines an "omitted party" as a person who: (1) before the foreclosure
action acquired in the property a record interest that is junior or
subordinate to the mortgage being foreclosed; and (2) either is not
named as a defendant in the action or not served with process, or is not
served with a notice of sale after a judicial sale is ordered in the action.
Provides that at any time after a judgment and decree of sale is entered
Effective: Upon passage; July 1, 2012.
January 5, 2012, read first time and referred to Committee on Insurance and Financial
Institutions.
Digest Continued
in an action to foreclose a mortgage on an interest in real property in
Indiana, an interested person or an omitted party may bring a civil
action to: (1) determine the extent of; and (2) terminate; an omitted
party's interest in the property. Provides that upon the filing of such an
action, the court shall determine the extent of the omitted party's
interest and issue a decree terminating that interest, subject to the right
of the omitted party to redeem the property if the omitted party would
have had redemption rights under existing law. Sets forth factors that
the court must consider in determining the terms of redemption.
Provides that: (1) the amount to be paid for redemption may not be less
than the sale price resulting from the foreclosure of the senior lien, plus
interest; and (2) the time allowed for payment of the redemption
amount may not exceed 90 days from the date of the court's decree.
Provides that: (1) the senior lien on which the foreclosure action was
based is not extinguished by merger with the title to the property
conveyed to a purchaser at the judicial sale until the interest of any
omitted party has been terminated through an action authorized under
the new provisions or by operation of law; and (2) until an omitted
party's interest is terminated, the purchaser at the judicial sale is the
equitable owner of the senior lien and has all rights against an omitted
party as existed before the sale. Provides that an interested person's
rights under the new provisions may not be denied because of certain
acts or omissions by the interested person. Makes technical changes.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
property.
(b) An action may not be brought or maintained in the courts of Indiana to foreclose a mortgage or enforce a vendor's lien reserved by a
been due more than twenty (20) years.
(b) If:
(1) the record of a mortgage or lien described in section 1 of this chapter does not show when the debt or the last installment of the debt secured by the mortgage or lien becomes due; and
(2) the date of execution has been omitted in a mortgage or vendor's lien;
the mortgage or vendor's lien expires
(c) Upon the request of the owner of record of real estate encumbered by a mortgage or lien that has expired under this section, the recorder of the county in which the real estate is situated shall certify on the record that the mortgage or vendor's lien is fully paid and satisfied by lapse of time, and the real estate is released from the lien.
(1) the original mortgagee;
(2) the owner of the mortgage; or
(3) the owner of a vendor's lien;
may file an affidavit with the recorder of the county where the mortgage or lien is recorded, stating when the debt becomes due. An affidavit must be filed under this section not later than
(b) The filing of an affidavit under subsection (a) has the same effect with respect to the duration of the lien of the mortgage or vendor's lien described in the affidavit and with respect to the time
within which an action may be brought or maintained to foreclose the
mortgage or vendor's lien as though the time of maturity of the debt or
the last installment of the debt secured by the mortgage or vendor's lien
had been stated in the mortgage or vendor's lien when recorded. The
affidavit is prima facie evidence of the truth of the averments contained
in the affidavit. The lien of a mortgage or vendor's lien on the real
estate described in the affidavit expires twenty (20) six (6) years after
the time when the debt or the last installment of the debt secured by the
mortgage or vendor's lien becomes due, as shown by the affidavit.
Upon the expiration of a mortgage or lien as described in this section
and at the request of the real estate owner, the recorder of the county
in which the affidavit is recorded shall certify on the record of the
mortgage or vendor's lien that the mortgage or vendor's lien is fully
paid and satisfied by lapse of time and that the real estate is released
from the lien.
(c) The recorder shall charge a fee for filing the affidavit in
accordance with the fee schedule established in IC 36-2-7-10.
(1) is assigned a mortgage and fails to
(2)
is bound by the court's judgment or decree as if the person were a party to the suit.
(1) purchases a mortgaged premises or any part of a mortgaged premises under the court's judgment or decree at a judicial sale or who claims title to the mortgaged premises under the judgment or decree;
(2) buys the mortgaged premises or any part of the mortgaged premises without actual notice of:
(A) an assignment that is not of record; or
(B) the transfer of a note, the holder of which is not a party to
the action;
holds the premises free and discharged of the lien. However, any
assignee or transferee may redeem the premises, like any other creditor,
during the period of one (1) year after the sale or during another
period ordered by the court in an action brought under section 4
of this chapter, but not exceeding ninety (90) days after the date of
the court's decree in the action.
(1) the holder of the evidence of debt secured by the mortgage being foreclosed;
(2) a person who:
(A) purchases the property at a judicial sale after a judgment and decree of sale is entered in the action; and
(B) to whom a deed is executed and delivered by the sheriff under IC 32-29-7-10; or
(3) any person claiming by, through, or under a person described in subdivision (1) or (2).
(b) As used in this section, "omitted party", with respect to an action to foreclose a mortgage on an interest in real property in Indiana, means a person who:
(1) before the commencement of the action has acquired in the property a record interest that:
(A) is junior or subordinate to the mortgage being foreclosed; and
(B) would otherwise be extinguished by the foreclosure; and
(2) is either:
(A) not named as a party defendant in the action or, if named as a party defendant, is not served with process; or
(B) not served with a notice of sale under IC 32-29-7-3(d) after a judgment and decree of sale is entered in the action.
The term includes any person claiming by, through, or under a person described in this subsection.
(c) At any time after a judgment and decree of sale is entered in an action to foreclose a mortgage on an interest in real property in Indiana, an interested person or an omitted party may bring a civil action to:
(1) determine the extent of; and
(2) terminate;
the interest of an omitted party in the property subject to the sale.
(d) Except as provided in subsection (e) and subject to subsections (f) and (g), upon the filing of an action described in subsection (c), the court shall determine the extent of the omitted party's interest in the property and issue a decree terminating that interest, subject to the right of the omitted party to redeem the property on terms as the court considers equitable under the circumstances after considering the factors set forth in subsection (f), if the omitted party would have had redemption rights:
(1) before the sale under IC 32-29-7-7; or
(2) after the sale, as described in 34-55-4-8(a)(2).
(e) If the omitted party proves that the omitted party has a right to receive proceeds actually paid at the judicial sale, the omitted party's interest in the property is not subject to termination by an action brought under this section unless the proceeds that the omitted party would have received at the judicial sale are paid to the omitted party.
(f) In an action brought under this section, if the court determines that the omitted party is entitled to redemption under subsection (d), the court shall consider the following in deciding the terms of the redemption:
(1) Whether the omitted party:
(A) was given or had actual notice or knowledge of the foreclosure; and
(B) had opportunity to intervene in the foreclosure action or otherwise exercise any right to redeem the property.
(2) Whether any interested person in good faith has made valuable improvements to the property and, if so, the value of all lasting improvements made to the property before the commencement of the action under this section.
(3) The amount of any taxes and assessments, along with any related interest payments, related to the property and paid by the interested person or by any person under whose title to the property the interested person claims.
(g) If the court determines that the omitted party is entitled to redemption under subsection (d), and after considering the factors set forth in subsection (f), the court shall grant redemption rights to the omitted party that the court considers equitable under the circumstances, subject to the following:
(1) The amount to be paid for redemption may not be less than the sale price resulting from the foreclosure of the
interested person's senior lien, plus interest at the statutory
judgment rate.
(2) The time allowed for payment of the redemption amount
may not exceed ninety (90) days after the date of the court's
decree under subsection (d).
(h) The senior lien upon which the foreclosure action was based
is not extinguished by merger with the title to the property
conveyed to a purchaser through a sheriff's deed executed and
delivered under IC 32-29-7-10 until the interest of any omitted
party has been terminated:
(1) through an action brought under this section; or
(2) by operation of law.
Until an omitted party's interest is terminated as described in this
subsection, any owner of the property as a holder of a sheriff's
deed executed and delivered under IC 32-29-7-10, or any person
claiming by, through, or under such an owner, is the equitable
owner of the senior lien upon which the foreclosure action was
based and has all rights against an omitted party as existed before
the judicial sale.
(i) An interested person may not terminate an omitted party's
interest in real property that is the subject of a foreclosure action
except through an action brought under this section. An interested
person's rights under this section may not be denied because the
interested person:
(1) had actual or constructive notice of the omitted party's
interest in the property;
(2) was negligent in examining county records;
(3) was engaged in the business of lending; or
(4) obtained a title search or commitment or a title insurance
policy.