Bill Text: IN HB1341 | 2012 | Regular Session | Introduced
Bill Title: Mortgage foreclosures and junior lienholders.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-01-11 - First reading: referred to Committee on Judiciary [HB1341 Detail]
Download: Indiana-2012-HB1341-Introduced.html
Citations Affected: IC 32-29-8-4.
Synopsis: Mortgage foreclosures and junior lienholders. Defines
"interested person" as: (1) a holder of an evidence of debt secured by
a mortgage that is being foreclosed; or (2) an owner of real property as
grantee in a deed of conveyance executed and delivered by a sheriff.
Defines "omitted party" as a person: (1) who, before the
commencement of an action for the foreclosure of a mortgage on real
property, has acquired a record interest in the real property that is
junior to the mortgage or other lien being foreclosed and would
otherwise be extinguished by the foreclosure; and (2) who is not
included as a defendant in the judicial foreclosure action or is included
as a defendant in the judicial foreclosure action but is not served with
process or notice of sale. Allows an interested person or an omitted
party to bring a civil action at any time to: (1) determine the extent of
an omitted party's interest in real property; or (2) terminate an omitted
party's interest in real property; that is the subject of a judicial sale.
Provides that in the civil action, the omitted party's interest in real
property: (1) must be terminated by a decree in which the omitted party
is afforded redemption rights if the omitted party would have been
entitled to redeem under certain circumstances; and (2) is not subject
to termination if the omitted party proves the omitted party has a right
to receive proceeds that would be paid at the judicial sale. Provides that
an amount paid for redemption to an omitted party may not be less than
the sale price that results from the foreclosure of the interested person's
senior lien plus interest.
Effective: Upon passage.
January 10, 2012, read first time and referred to Committee on Judiciary.
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A BILL FOR AN ACT to amend the Indiana Code concerning
property.
(1) a holder of an evidence of debt secured by a mortgage that is being foreclosed; or
(2) an owner of real property as grantee in a deed of conveyance executed and delivered by a sheriff under IC 32-29-7-10.
The term includes a person claiming an interest in real property by, through, or under a holder of an evidence of debt described in subdivision (1) or an owner of real property described in subdivision (2).
(b) As used in this section, "omitted party" means a person:
(1) who, before the commencement of an action for the foreclosure of a mortgage on real property, has acquired a record interest in the real property that:
(A) is junior to the mortgage or other lien being foreclosed; and
(B) would otherwise be extinguished by the foreclosure; and
(2) who:
(A) is not included as a defendant in the judicial foreclosure action; or
(B) is included as a defendant in the judicial foreclosure action but is not served with:
(i) process; or
(ii) notice of sale under IC 32-29-7-3(d).
The term includes a person claiming an interest in real property by, through, or under an omitted party.
(c) An interested person or an omitted party may bring a civil action at any time to:
(1) determine the extent of an omitted party's interest in real property; or
(2) terminate an omitted party's interest in real property;
that is the subject of a judicial sale. An interested person may not terminate an omitted party's interest in real property except as provided in this section.
(d) In a civil action brought under subsection (c), the omitted party's interest in real property:
(1) shall be terminated by a decree in which the omitted party is given redemption rights if the omitted party would have been entitled to redeem under:
(A) IC 32-29-7-7; or
(B) IC 34-55-4-8(a)(2);
upon terms the court considers equitable; and
(2) is not subject to termination if the omitted party proves the omitted party has a right to receive proceeds that would be paid at judicial sale. However, the interest of an omitted party shall be terminated upon payment of the proceeds the omitted party would receive at the judicial sale.
(e) When determining the terms for redemption for an omitted party under subsection (d)(1), the court shall consider all the following:
(1) Whether an omitted party or anyone claiming by, through, or under an omitted party:
(A) was given or had actual notice or knowledge of the foreclosure; and
(B) had an opportunity to intervene in the foreclosure
proceeding or otherwise exercise any rights to redeem.
(2) Whether an interested person in good faith has made
valuable improvements to the real property and, if so, the
value of all lasting improvements made on the real property
before the civil action was brought under this section.
(3) The taxes and assessments, with interest, paid by:
(A) the interested person; and
(B) those under whose title to the real estate the interested
person claims.
An amount paid for redemption to an omitted party may not be
less than the sale price that results from foreclosure of the
interested person's senior lien plus interest at the legal rate. The
court shall require payment of the redemption to be made not
more than ninety (90) days after the date the interest of an omitted
party is terminated under subsection (d).
(f) For purposes of this section:
(1) a senior lien that is the subject of a judicial sale is not
extinguished by merger with the title to real property
acquired by a sheriff's deed issued under IC 32-29-7-10 until
the interest of any omitted party has been terminated:
(A) as provided under this section; or
(B) by any other operation of law; and
(2) until the termination of the interest of an omitted party:
(A) an owner of the real property as grantee in a sheriff's
deed executed and delivered under IC 32-29-7-10; or
(B) any person claiming by, through, or under the owner;
is the equitable owner of the lien that is the subject of the
judicial sale with all rights against an omitted party that
existed before the judicial sale.
(g) The remedies provided for an interested person under this
section may not be denied because the interested person:
(1) had actual or constructive notice of an omitted party's
interest;
(2) was negligent in examining county records;
(3) was engaged in the business of lending; or
(4) obtained a title search, commitment, or policy.
