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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Indiana

Indiana is a mortgage state. The granting clause in a mortgage must contain the words “mortgages and warrants” in order for the mortgage to include all statutory warranties of title. See I.C. 32-29-1-5. In connection with financing construction of new improvements, I.C. 26-1-9.1-334 provides that a mortgage may be described as a “construction mortgage” to the extent it secures obligations incurred for the construction of improvements on land, including land acquisition costs. In such a case, a construction mortgage will have priority over a competing purchase money security interest in fixtures, so long as the mortgage is recorded before the goods become fixtures and the goods in question become fixtures before completion of construction. Further, a mortgage has the same priority in fixtures as the construction mortgage if such mortgage is given to refinance a construction mortgage.

SECURITY INSTRUMENT USED

I.C.&nbsp;36-2-11-16 sets forth the requirements for an instrument to be received by the Recorder and recorded. Indiana's primary requirements for an instrument to be recorded are: (i)&nbsp;the name of each person who executed the instrument is legibly printed, typewritten, or stamped immediately beneath the signature; (ii)&nbsp;the name of each witness to the instrument is legibly printed, typewritten, or stamped immediately beneath the signature of the witness; (iii)&nbsp;the name of each notary public whose signature appears on the instrument is legibly printed, typewritten, or stamped immediately beneath the signature of the notary public; (iv)&nbsp;the name of each person who executed the instrument appears identically in the body of the instrument, in the acknowledgment or jurat, in the person's signature, and beneath the person's signature; and (v)&nbsp;if the instrument is a copy, the instrument is marked “Copy”. Indiana also requires that (i)&nbsp;each signature must be notarized; (ii)&nbsp;the document must include a statement at the bottom of the last page immediately preceding any exhibits specifying the name and address of the individual who prepared the instrument; and (iii)&nbsp;the document must include the following certification at the bottom of the last page immediately preceding any exhibit pages: “I affirm under the penalties for perjury, that I have taken reasonable care to redact each social security number in this document, unless required by law. [insert name of instrument preparer]”.&nbsp; See I.C. 36-2-11-15. There may be additional requirements imposed by individual county recorders' offices relating to recording documents in specific counties.

RECORDING REQUIREMENTS

It is customary for all documents that contain payment obligations to specify that all payments shall be made “without relief from valuation and appraisement laws,” so the lender will not be required to comply with Indiana's statutory valuation and appraisement procedures prior to execution on a judgment on the borrower's property.

STATUTES TO BE WAIVED

(a)&nbsp; Powers of sale are not enforceable under Indiana law (I.C. 32-29-1-3); (b)&nbsp; A cognovit or confession of judgment clause is void in Indiana (I.C. 34-54-4-1). However, despite Indiana's aversion to cognovits provisions, a valid foreign judgment based on a cognovits note will be given full faith and credit. Cox v. First National Bank of Woodlawn, 426&nbsp;N.E.&nbsp;2d&nbsp;426 (Ind. Ct. App. 1981). A note containing a cognovits provision will be upheld as long as judgment is not sought based on the provision. Jaehnen v. Booker, 806&nbsp;N.E.&nbsp;2d 31 (Ind. Ct. App. 2004). (c)&nbsp; Under Indiana law, a prepayment premium must bear some reasonable relationship to the present value of the loss expected to result from a prepayment of indebtedness to avoid being construed as an unenforceable penalty. Weinreb v. Fannie Mae, 993 N.E.2d 223 (Ind. Ct. App. 2013). In this regard, the safest approach is to establish a yield maintenance formula for prepayment premiums. Additionally, Indiana cases have held that payment of a loan upon acceleration by a lender is not a prepayment (the loan is deemed due and payable) so the prepayment premium is not applicable unless the loan documents are carefully drafted to clearly provide otherwise. Coca-Cola Bottling Co. of Portland, Ind. v. Citizens Bank of Portland, 583 N.E.2d 184, 189 (Ind. Ct. App. 1991). (d)&nbsp; Absent unusual circumstances, a lender will not be entitled to recover attorneys' fees in connection with any litigation surrounding mortgaged property unless the mortgage specifies that the fees of lender's counsel are secured by the mortgage. Further, unless a mortgage specifies that the costs of collection that it secures include support staff costs as an element of reasonable attorneys' fees and that amounts expended in litigation preparation and computerized research, telephone and telefax expenses, mileage, depositions, postage, photocopies, process service, video tapes and the like are part of the reasonable costs of collection and enforcement secured by a mortgage, such expenses will not be recoverable. Finally, unless a document specifically provides otherwise, any costs associated with environmental testing, audits, reviews, inspection, remediation and clean-up are not recoverable as part of the costs of foreclosure and/or enforcement. (e)&nbsp; Due-on-sale clauses are generally enforceable in Indiana if a lender can show that its security interest is threatened. Central Nat. Bank of Greencastle v. Shoup, 501 N.E. 2d 1090 (Ind.&nbsp;Ct. App. 1986) However, when a due-on-sale clause is coupled with a prohibition against prepayment, Indiana courts may construe the 2 clauses together as an undue restraint on alienation of an interest in real property and thereby render either or both of such clauses unenforceable. (f)&nbsp; Absent agreement to the contrary, a borrower has the right to demand that collateral for a loan be marshalled together or independently to maximize the value of that collateral in connection with any sale thereof. Waiver of marshalling provisions may not be enforceable under Indiana law. (g)&nbsp; All conveyance documents must include a street address for the transferee; post office box addresses are not sufficient.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

A mortgage may secure future obligations and advances (whether made as an obligation, made at the option of lender, made after a reduction to a zero or other balance, or made otherwise) and future modifications, extensions, and renewals of any indebtedness or obligations secured by the mortgage to the same extent and with the same priority as if made on the date of execution of the mortgage if and to the extent the mortgage specifically states that it secures those future advances, modifications, extensions, and renewals and it specifies the maximum aggregate principal amount that may be secured thereby. See I.C. 32-29-1-10. Because Indiana law does not clearly distinguish between interest, costs, and impositions that are capitalized and become a part of the principal sum due and the actual principal amount loaned to the borrower, the principal amount stated as the maximum principal amount that is secured by the mortgage should be sufficient to cover such items provided that the mortgage includes a future advances clause referencing I.C. 32-29-1-10 and indicating that such capitalized interest, costs, and impositions are a part of the maximum principal amount secured.

SECURING FUTURE ADVANCES

Except for I.C. 32-29-1-10 dealing with future advances, there are no special requirements under Indiana law in order for a mortgage to secure contingent advances to protect the collateral so long as the mortgage clearly states that it secures all such amounts.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

TRUSTEE UNDER DEED OF TRUST: N/A.

TRUSTEE UNDER DEED OF TRUST N/A.

Indiana allows foreclosure only through judicial process, which is typically combined with a suit to enforce the note. The foreclosure suit is subject to Indiana's statutes and Rules of Trial Procedure. There is no right to a jury trial in a foreclosure action because mortgage foreclosure actions are equitable, and not legal, in nature. This is true even when the borrower asserts numerous “non-equitable” claims including, without limitation, violations of the Fair Debt Collections Practices Act, Real Estate Settlement and Procedures Act, as well as common law claims for breach of contract and breach of duty of good faith and fair dealing. Lucas v. U.S. Bank, N.A., 953 N.E.2d 457, 459 (Ind. 2011) (holding that “borrowers' claims and defenses shall be tried in equity because the core legal questions presented by the borrowers' defenses and claims are significantly intertwined with the subject matter of the foreclosure action”). Persons holding junior liens on the mortgaged property are not necessary parties to the foreclosure action, but if they are not named, their lien and “equity of redemption” are not extinguished. I.C. 32-29-8-4. Indiana allows sale of foreclosed properties through 2 methods. Traditionally, properties are sold through sheriff sale, with each county having different procedural requirements for the sheriff sale to proceed. Additionally, I.C. 32-29-7-4 provides that the foreclosed property may be sold by the sheriff through the services of a private auctioneer. See also, I.C. 32-30-10-9. Once a judgment of foreclosure is obtained (if the mortgagor does not appear or answer, judgment may be taken by default, but if it is contested, then judgment can be obtained only by summary judgment or following a trial on the merits), the sheriff may be requested to sell the property. Foreclosure sale may not be requested until after the statutory moratorium on execution expires. After the complaint is filed, an agreement under which the borrower waives the moratorium period in return for the lender waiving any deficiency may be filed. I.C. 32-29-7-5. A waiver of this moratorium period made in advance of the filing of a foreclosure complaint probably is not enforceable, but if enforced, the consideration for such a waiver will likely be deemed to be a waiver of any claim for a deficiency judgment. Before the property may be sold, it must be properly advertised either by the sheriff or the private auctioneer for at least 30 days before the sale. In a sheriff sale, the sheriff in each county determines when he or she will conduct foreclosure sales. In Indianapolis (Marion County), the sheriff conducts 12 sales each year (1 each month) and sets cut-off dates for accepting praecipes for the established sale dates. The frequency of sales in other counties varies. If the sale occurs pursuant to&nbsp;32-29-7-4 or I.C. 32-30-10-9, the sale date is set by the private auctioneer, after proper notice is given. In order to proceed by private auctioneer, the lender must request an order from the court after indicating that the sale is economically feasible to proceed by private auction or if all the creditors agree to the private auction. Proceeding with private auction allows the lender to credit bid. Often the lender chooses private auction to increase the speed of the process or to avoid bringing the property into its portfolio. The purchaser at a foreclosure sale, whether bought at a sheriff sale or at private auction, receives a sheriff's deed for fee simple title, and is entitled to immediate possession of the property. Under the typical form of foreclosure decree, the purchaser would be entitled to have the sheriff evict the occupants of the property after sending the required 10 day notices and thereafter presenting the deed to the sheriff. A separate proceeding for eviction is not necessary. Although the actual timing may vary from county to county, an uncontested foreclosure might require 5 to 8 months from filing of the complaint to the date of sale. A contested foreclosure, even if disposed of by summary judgment, might take longer depending upon how quickly the court schedules a hearing or a trial.

BRIEF DESCRIPTION OF PROCEDURE

The terms of I.C. 32-30-10.5 et seq. require creditors to take additional steps when foreclosing against residential properties. These steps include the certified mailing of a pre-suit notice to the borrower prior to filing a complaint for foreclosure and the submittal of a settlement conference notice for delivery to the borrower when the foreclosure complaint is filed. (a)&nbsp; Pre-Suit Notice. (i)&nbsp;&nbsp; The pre-suit notice requirement adds at least 30 days to the front end of the foreclosure process. (ii)&nbsp; No later than 30 days before a creditor files an action for foreclosure, the creditor shall send to the borrower by certified mail a pre-suit notice on a form prescribed by the Indiana Housing and Community Development Authority. (iii) The pre-suit notice must be sent either to the address of the mortgaged property or the last known mailing address of the borrower if the creditor's records indicate that the mailing address of the borrower is other than the address of the mortgaged property. (iv) If the creditor provides evidence that the pre-suit notice was sent by certified mail, return receipt requested, it is not necessary that the borrower accept receipt of the notice for an action to proceed to judgment. (b)&nbsp; Settlement Conference Notice. (i)&nbsp;&nbsp; The settlement conference requirement may delay the process of obtaining judgment for greater than 30 days depending on how quickly the court sets the matter for a conference following a borrower's request for the same. (ii)&nbsp; When a creditor files an action to foreclose a residential mortgage, the creditor must include with the complaint served on the borrower a notice that informs the borrower of the borrower's right to participate in a settlement conference. See I.C. 32-30-10.5-9; I.C. 32-30-10.5-8. The creditor must also include this notice on the first page of the summons. I.C. 32-30-10.5-8. The notice must be in a form prescribed by the Indiana Housing and Community Development Authority. (iii) The notice must inform the borrower that the borrower may schedule a settlement conference by notifying the court, not later than 30 days after the notice is served, of the borrower's intent to participate in a settlement conference. I.C. 32-30-10.5-9. (iv) The court will schedule a settlement conference between the creditor and the borrower if the borrower requests the court do so in response to the settlement conference notice. I.C. 32-30-10.5-10. The court will schedule the conference on or before a date that is not earlier than 25 days, or later than 60 days, after the date of the court's notice of the scheduling of the settlement conference. The parties may stipulate to hold the conference by telephone. An attorney for the creditor must attend the settlement conference. (v)&nbsp; The borrower must bring certain items to the settlement conference, including: (A)&nbsp;documentation of the borrower's present and projected future income, expenses, assets, and liabilities, including documentation of the borrower's employment history; and (B)&nbsp;any other documentation or information that the court determines is needed for the borrower to engage in good faith negotiations with the creditor. I.C. 32-30-10.5-10. The court shall identify any documents required with enough specificity to allow the borrower to obtain the documents before the scheduled settlement conference. (vi) The creditor must bring certain items to the settlement conference, including: (A)&nbsp;a copy of the original note and mortgage; (B)&nbsp;a payment record substantiating the default; (C)&nbsp;an itemization of all amounts claimed by the creditor as being owed on the mortgage; and&nbsp;(D)&nbsp;any other documentation that the court determines is needed. I.C. 32-30-10.5-10. (vii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If as a result of the settlement conference the parties agree to enter into a foreclosure prevention agreement, the agreement shall be reduced to writing and signed by both parties, and each party shall retain a copy of the signed agreement, which must be filed with the court no later than 7 business days after execution. I.C. 32-30-10.5-10. At the election of the creditor, the foreclosure shall be dismissed or stayed for as long as the borrower complies with the terms of the foreclosure prevention agreement. (viii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If as a result of a settlement conference the parties are unable to agree on the terms of a foreclosure prevention agreement: (A)&nbsp;the creditor shall, not later than 7 business days after the conclusion of the settlement conference, file with the court a notice indicating that the settlement conference was held and a foreclosure prevention agreement was not reached; and (B)&nbsp;the foreclosure action filed by the creditor may proceed. I.C. 32-30-10.5-10.

Residential Notice Requirements

Typically, a foreclosure sale will not occur until at least 6 months after the foreclosure complaint is filed.

TYPICAL LENGTH OF PROCEDURE

Although sheriff's sales in the various Indiana counties are slightly different, the standard form of bidding at a sheriff's sale is by written bid on a form prescribed by the sheriff's office. At the scheduled time on the day of the sale, if only 1 bid has been made on the property, the sheriff's sale with regard to that property is closed and the property is conveyed to that bidder. If more than 1 bid has been submitted on a particular piece of property, some counties award the property to the highest written bid at the close of the sale, while others open competitive auction-style bidding on the property and the person with the highest oral bid becomes the owner of the property. In order to bid at a sheriff's sale, the bidder must use either cash, certified check, or bid with its judgment. A lender holding a foreclosure judgment on its mortgage can bid using its judgment up to the full amount of that judgment so long as it pays by cash or certified check for any interests such as delinquent taxes or prior mortgages that are prior to the mortgage and the costs of the sale. Calculation of the judgment amount should include any post-judgment expenses permitted by the judgment, such as tax payments and insurance expenses. A letter should be sent to the sheriff at least several days prior to the sale detailing all such additions, if any. If a judgment requires the sale of several different parcels on which a lender has a judgment, the lender is still entitled to use its judgment to bid for the property provided the total sum of any credits against its judgment (for successful bids) and any money it receives (from the sheriff's sale of the foreclosed property to other bidders) does not exceed the amount of its judgment unless the lender brings additional funds to the sale. In addition to the written bid document, the bidder must supply to the sheriff several other documents, including a return of sale and a sheriff's deed.

FORECLOSURE BID REQUIREMENTS

A borrower has a right to “redeem” the property covered by the mortgage up to the time of the sheriff's sale by paying the full amount of the judgment, including all interest and costs, but the borrower has no statutory right to reinstate the original terms of its mortgage loan. I.C. 32-29-7-7. There is no right of redemption after foreclosure sale except under federal law and for interest holders omitted from the proceeding. The only delay or “redemption period” under Indiana law is a moratorium on execution on foreclosure judgments of 3 months (for mortgages executed on and after July&nbsp;1, 1975) after the date of filing the complaint before requesting that the sheriff set a sale of the foreclosed property. I.C. 32-29-7-3. For mortgages executed before July&nbsp;1, 1975, the moratorium is longer. This moratorium can be eliminated in foreclosures involving abandoned residential property if the court finds that the property has been abandoned. I.C. 32-29-7-3(a)(2).

REDEMPTION PERIOD AND PRICE

Frequently, lenders include waivers of rights of redemption in their mortgage documents. To the extent that such a waiver is enforceable, Indiana law (I.C. 32-29-7-5) provides that the consideration for such a waiver, whether or not expressed by its terms, is the waiver and release by the judgment holder of any deficiency judgment against the borrower.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

Where an in personam judgment has been taken and there is a deficiency after the foreclosure sale, so long as the lender has not waived its rights to a deficiency, that deficiency can be collected pursuant to post-judgment procedures established by the Indiana statutes and trial rules. Collection of a deficiency is typically had by way of attachment or garnishment. The typical method for commencing collection involves the filing with the court of a verified motion for proceedings supplemental, which enables the plaintiff to require the defendant to appear in court to answer as to any assets that he or she may have. Indiana statute (I.C. 28-9-1-1 et seq.) provides for a freeze on the bank account of a debtor upon the delivery of interrogatories to that bank. I.C. 28-9-4-2 requires a bank to freeze any assets of the debtor in its possession within a “commercially reasonable time” after receipt of bank interrogatories. The bank interrogatories must include the payment of the fee to the garnishee bank or the freeze upon the account may be set aside by the debtor and any assets held by the bank may continue to be accessed by the debtor. In the event the debtor has any additional assets in the form of wages or funds held in bank accounts, a final order in garnishment and an order requiring that those funds be paid over to the court for disbursement to the lender must be obtained. The debtor, as well as any person sharing an account with the debtor, is entitled to assert any exemptions he or she may have to the garnishment. A lender's ability to collect a deficiency after foreclosure may be affected by a line of cases wherein Indiana courts have set aside foreclosure sales as a result of a determination that the bid price was so low as to be shocking to the court's sense of conscience and justice. See Arnold v. Melvin R. Hall, Inc., 496 N.E.2d 63 (Ind. 1986) and also Midwest Federal Savings Bank v. Epperson, 579 N.E.2d 124 (Ind. Ct. App. 1991). It is unclear, however, where the line lies between an adequate and an inadequate bid, but “mere allegation that the price paid for the land at the sale is inadequate will not suffice.” Arnold, 496 N.E.2d at 65.

DEFICIENCIES

A lease or purchase agreement that is subordinate to the mortgage being foreclosed is terminated upon the foreclosure sale so long as all parties to the lease or purchase agreement are named in the foreclosure action, proper service is had on those parties, and none of the parties has a valid defense to such foreclosure suit. If, however, the parties to any such subordinate leases or purchase agreements are not named or served in the foreclosure complaint, those leases or purchase agreements survive the foreclosure sale. See Myers v. Leedy, 915 N.E.2d 133, 137 (Ind. 2009).

EFFECT OF FORECLOSURE UPON LEASES

Indiana has no single-action rules. Consequently, if a mortgage covers a number of properties, a lender can foreclose or exercise other remedies with respect to 1 property without forfeiting its rights to foreclose or exercise its remedies with respect to any of the other properties at other times so long as a portion of the indebtedness remains unsatisfied. However, there have been some cases suggesting that equitable principles may require an election of remedies to avoid an unconscionable result. Indiana law does require that if the lender brings an action on the note and during its pendency brings a separate action on the mortgage, that the two actions be consolidated (I.C. 32-30-10-10) or the action on the note dismissed. This provision is not, as in some states, an anti-deficiency statute or single-action statute which would “prevent a mortgagee from maintaining an action for a money judgment on the mortgagor's promissory note without first foreclosing on the security, Indiana has no such restrictions.” First Indiana Federal Sav. Bank v. Hartle, 567 N.E. 2d 834, 837 (Ind. Ct. App. 1991). I.C. 32-30-10-10 “restricts a mortgagee only from foreclosing a mortgage while at the same time suing on the debt in a separate action.” Id. (emphasis in original). “A lender may sue on both the debt and the mortgage in the same action.” Id. n.4. To the extent the properties described in a single mortgage are located in more than one county, the lender need not go to each county to file a foreclosure complaint, but may simply file in one county in which one of the mortgaged properties is located to foreclose on all of the mortgaged property. The judgment rendered in such a foreclosure action must either be recorded (i)&nbsp;in the lis pendens record kept by the clerk of the court in each county in which real estate affected by the judgment is located, or (ii)&nbsp;in each county's circuit court judgment docket. I.C. 32-29-7-6.

ONE-ACTION RULES

Under Indiana's Foreclosure Prevention Agreements for Residential Mortgages law (I.C. 32-30-10.5-1 et&nbsp;seq.), the lender must give written notice to homeowners informing them of a loan default and that the lender may initiate foreclosure on the property if the default continues for 30 or more days after receipt of said notice. When the lender files a foreclosure suit, it must send a second written notice to the homeowner informing the homeowner that they may be entitled to a court-ordered settlement conference for purposes of attempting to negotiate a foreclosure prevention agreement, which may include a forbearance agreement or a deed-in-lieu agreement, among other possible solutions. The homeowner has 30 days after the date of the notice to contact the Court to schedule a settlement conference with the lender. The forms of both notices are promulgated by the Indiana Housing and Community Development Authority. See above section entitled RESIDENTIAL NOTICE REQUIREMENTS.

FORECLOSURE ON OWNER-OCCUPIED RESIDENTIAL PROPERTY

Although Indiana has adopted the Uniform Consumer Credit Code, which contains certain restrictions on interest rates chargeable on “consumer” transactions, there is, for practical purposes, no usury law in Indiana. The only analogous laws are those involving criminal sanctions for “loan-sharking” that involve the use or threat of use of force in collection of payments.

USURY CEILING

N/A. Indiana has not opted out of the federal preemption of usury.

USURY EXEMPTIONS

Indiana, like most states, adopted revised Article&nbsp;9 of the UCC effective July&nbsp;1, 2001. Under revised Article&nbsp;9, the local law of the jurisdiction where the debtor is located governs perfection, the effect of perfection or nonperfection, and the priority of a security interest. I.C. 26-1-9.1-301. A debtor is “located” in the state under whose law it is organized, if it is a registered organization, the state where it maintains its chief executive office if it has more than one place of business and is not a registered entity, its place of business if it has only one and is not a registered organization, and the state of its principal residence, if an individual. I.C. 26-1-9.1-307. If a debtor is located in Indiana, I.C. 26-1-9.1-501 provides that financing statements should be filed with the Indiana Secretary of State except where the collateral is timber, as-extracted collateral, or a fixture filing in fixtures, in which case the filing should be made in the office where a mortgage of the related real property would be filed. In order for a financing statement to operate as a fixture filing, it must include a legal description of the real property upon which the applicable fixtures are located. The form of financing statement used in Indiana may be found at the Indiana Secretary of State's web page (https://www.in.gov/sos/business/division-forms/).

LOCATIONS FOR FILING

A mortgage may operate as a fixture filing to cover goods that are or are to become fixtures or covering as-extracted collateral or timber to be cut. The mortgage must indicate it is to also serve as a fixture filing or as a financing statement covering as-extracted collateral or timber to be cut; the goods or collateral are or are to become fixtures related to the real property described in the mortgage; the mortgage satisfies the requirements for a financing statement in section 26-1-9.1 et seq.; the mortgage sufficiently provides the name of a debtor, and the mortgage is properly recorded. Also, in Indiana a financing statement may be filed before a security agreement is made or a security interest otherwise attaches. I.C. 26-1-9.1-502(d).

SECURITY INSTRUMENT AS FIXTURE FILING

There is no deviation from the official version in Indiana's version of revised Article&nbsp;9 with respect to the treatment of fixtures.

INDIANA DEVIATIONS FROM OFFICIAL VERSION OF REVISED ARTICLE 9 IN TREATMENT OF FIXTURES

UNUSUAL PROVISIONS OR REQUIREMENTS

All suretyship defenses and rights under I.C. 34-22-1 et seq., including, without limitation, the following: (a)&nbsp;notice of acceptance of the guaranty, of any extension of credit, advance, loan or similar accommodation by the lender to the borrower, and the amount of the guaranteed indebtedness that may exist from time to time; (b)&nbsp;presentment, demand, protest, or notice of dishonor, nonpayment or other default with respect to any of the guaranteed indebtedness; (c)&nbsp;any requirement that the lender marshal the security, or institute suit, or exercise or exhaust its rights or remedies against the borrower, or against any other person, guarantor, mortgage, or other collateral guaranteeing or securing all or any part of the guaranteed indebtedness prior to enforcing any rights the lender has under the guaranty or otherwise against the guarantor; (d)&nbsp;any right of subrogation with respect to the guaranteed indebtedness or any collateral therefor; (e)&nbsp;any defenses existing or arising or asserted by reason of the invalidity or disability, in whole or in part, at the time of its acceptance, or at any other time, of the collateral, the fact that any of the property or collateral may at any time be in default or be incorrectly estimated, or the deterioration in market or other value, waste, loss by fire, theft, loss or substitution of any property or part of the collateral; and (f)&nbsp;waiver of all valuation and appraisement laws, including an agreement that all payments required pursuant to the guaranty shall be made without relief from valuation and appraisement laws.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

If a lender/mortgagee makes a credit bid, the entire amount of the judgment plus interest and costs, at a sheriff's sale, the bid constitutes a complete satisfaction of the judgment, leaving no deficiency to collect. This is the case even if the property is worth less than the bid amount. If the judgment has been satisfied, then the judgment debt is discharged. Titan Loan Investment Fund, L.P. v. Marion Hotel Partners, L.L.C, 891 N.E.2d 74 (Ind. Ct. App. 2008).

ISSUES AND GUIDELINES RELATED TO SEEKING AND OBTAINING DEFICIENCY JUDGMENTS

I.C.&nbsp;32-28-4 et seq.&nbsp;treats the statute of limitations for mortgages differently depending on whether or not the maturity date is stated in the mortgage. If a maturity date is stated, the statute of limitations will expire 10 years after the stated maturity date if no foreclosure action is filed. If the maturity date is not stated in the mortgage, then the expiration of the mortgage depends on the date of creation of the mortgage. If the parties created the mortgage before July 1, 2012, the lien expires 20 years after the mortgage execution date (or the date of recording if no date of execution is included), unless the mortgagee files a foreclosure action within that 20-year period. If the parties created the mortgage after June 30, 2012, the mortgage lien expires 10 years after the mortgage execution date (or the date of recording if no date of execution is included), unless the mortgagee files a foreclosure action within that 10-year period. I.C. 32-28-4-3 provides a remedy for situations in which a mortgage does not identify a maturity date. The remedy is to record an affidavit that states a maturity date. The filing of this affidavit allows the application of 10-year/20-year rules. Pursuant to the Indiana Code, mortgages recorded after July 1, 2012 omitting a maturity date will expire in 10 years, unless a Section 3 affidavit is recorded or a foreclosure is filed within such period.

STATUTE OF LIMITATION PERIOD

I.C. 32-28-1-1 requires the holder of a mortgage, upon payment and discharge of the indebtedness secured by the mortgage, to record a release of the mortgage with the county recorder of the county in which the mortgage was originally recorded. If the mortgage documents do not specifically impose any obligation upon the borrower to pay for the cost of preparation and recordation of a release, the lender will be obligated to absorb those costs. If a lender fails to record a release within 15 days after written demand therefor by the borrower, the lender may be liable to the borrower for $500 plus costs and reasonable attorneys' fees for enforcing the statute. I.C. 32-28-1-2.

REQUIREMENTS FOR RELEASE OF LIEN

Under Indiana law (I.C. 34-55-10-2), property constituting the personal or family residence of a judgment debtor or a dependent of such judgment debtor is exempt from execution, levy and from a bankruptcy estate to the extent of $15,000 per person. The exemption is individually available to joint judgment debtors even as it relates to property held by them in the entireties. Real Estate held in the entireties is fully exempt from the bankruptcy estate unless a joint petition of the spouses is filed or their individual petitions are consolidated. These exemptions do not apply to voluntarily granted liens such as mortgages. Common law exempts entireties property from levy and execution on judgments owed by only one of the spouses. There is, however, a U.S. Supreme Court case indicating that entireties property is subject to federal tax liens for the obligations of only one of the spouses (see Unites States v. Craft, 535 US 274 (2002)).

HOMESTEAD ISSUES

A security interest in a manufactured home that is not inventory held for sale may only be perfected by indicating the security interest on the certificate of title or duplicate certificate of title for the manufactured home. See I.C. 9-17-5-5 and I.C. 9-13-2-196. The filing of a financing statement is not “necessary or effective to perfect a security interest in property subject to . . . any Indiana certificate-of-title statute covering . . . mobile homes . . . which provides for a security interest to be indicated on a certificate of title as a condition or result of perfection.” I.C. 26-1-9.1-311. Finally, a perfected security interest in fixtures (such as a manufactured home attached to real estate) has priority over a conflicting interest of an encumbrance or owner of the real property if the security interest is created in a manufactured home in a manufactured-home transaction and perfected pursuant to the Indiana certificate-of-title statute covering mobile homes. See I.C. 26-1-9.1-334; See also and Conseco Finance Servicing Corp. v. Old National Bank, 754 N.E.2d 997, 1002 (Ind. Ct. App. 2001). An initial financing statement that indicates that it is filed in connection with a manufactured-home transaction is effective for 30 years after the date of filing if it indicates that it is filed in connection with a manufactured-home transaction. I.C. 26-1-9.1-515. The owner of both the real estate and manufactured or mobile home may apply for an affidavit of transfer to real estate with the Bureau of Motor Vehicles to be recorded, after endorsed by the auditor, in the county in which the manufactured home is located. I.C. 9-17-6-15.1. The filing of the affidavit of transfer to real estate with the retired certificate of title, if available, is deemed a conversion of the manufactured home to an improvement upon real estate upon which it is located. I.C. 9-17-6-15.5. A security interest in a manufactured home that is inventory held for sale or lease by a person in the business of selling such goods is subject to the rules of Article&nbsp;9.1 of the Uniform Commercial Code regarding security interests in inventory. See I.C. 26-1-9.1-311(d).

PERFECTION OF LIEN IN MANUFACTURED HOME

COMMUNITY PROPERTY

None, other than nominal per page recording fees.

MORTGAGE TAX

DOCUMENTARY STAMP TAX

TRANSFER TAX

Taxes are assessed in arrears and are due and payable in 2 annual installments on May 10 and November 10. On January 1, taxes for the current year become a lien due and payable the following year. On or after January 1 of each calendar year, the county treasurer certifies to the county auditor a list of real property for which the prior year's spring installment or before are delinquent and eligible for tax sale or in the case of real property for which a county executive has certified to the county auditor that the real property is vacant or abandoned, the prior year's fall installment or before that are delinquent as determined under I.C. 6-1.1-37-10. I.C. 6-1.1-24-1. Only an owner automatically receives notice of an upcoming tax sale. See IC 6-1.1-24-4. A mortgagee desiring notice of properties eligible for tax sale or notice of tax sale must continue to send a letter annually to the county auditor requesting tax sale information. See I.C. 6-1.1-24-3(c) and I.C. 6-1.1-24-1(d).

REAL ESTATE TAX SALES

Although mortgage documents frequently contain choice of law provisions selecting the laws of another state to govern the enforceability of the documents, Indiana law governs matters relating to the creation, validity, priority and enforcement of the liens of, and security interest created by, the loan documents. I.C. 26-1-9.1-301. Choice of law provisions should be otherwise enforceable since the intent of the parties is an important factor in determining the law to be applied. Allen v. Great Am. Reserve Ins. Co., 766 N.E.2d 1157 (Ind. 2002). The Indiana Supreme Court has stated that this intent will be given effect except under exceptional circumstances showing a purpose to commit a fraud on the law. Paulausky v. Polish Roman Cath. Union of Am., 39 N.E.2d 440 (Ind. 1942). Enforceability of the choice of law stipulations contained in loan documents is strengthened if (i)&nbsp;the courts of the state whose laws are selected to govern the enforceability of the loan documents would enforce the choice of law stipulations; (ii)&nbsp;the parties have no significant contacts with the State; (iii)&nbsp;no portion of the transaction contemplated by the documents was negotiated in the State; (iv)&nbsp;the transactions are closed outside the State; and (v)&nbsp;the only contact with the State is that part of the collateral securing the loan is located in the State.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

The right to a receiver usually is determined by whether the foreclosure is of a property occupied by the mortgagor is his principal residence or is a commercial property. In the former case, there is no general right to the appointment of a receiver and a receiver will be appointed only in the relatively unusual case in which appointment is necessary in the eyes of the court to preserve the property or prevent fraud or waste. However, if the foreclosure is of a commercial property, the mortgagee essentially has an absolute right to the appointment of a receiver in the event that any 1 of 6 conditions are met. I.C. 32-30-5-1 provides that if at the time a motion for appointment of receiver is filed the property is not occupied by the owner as the owner's principal residence, the court will appoint a receiver if: (a)&nbsp; it appears that the property is in danger of being lost, removed, or materially injured; (b)&nbsp; it appears that the property may not be sufficient to discharge the mortgaged debt; (c)&nbsp; either the mortgagor or the owner of the property has agreed in the mortgage or in some other writing to the appointment of a receiver; (d)&nbsp; a person not personally liable for the debt secured by the mortgage has, or is entitled to possession of all or a portion of the property; (e)&nbsp; the owner of the property is not personally liable for the debt secured by the mortgage; or (f)&nbsp; all or any portion of the property is being, or is intended to be, leased for any purpose. Pursuant to I.C. 32-30-5-2, a party, an attorney representing a party, or another person with an interest in an action may not be appointed as a receiver in that action. Thus, a mortgagee may not be appointed as receiver in an action involving its mortgage or the property subject thereto. Wells Fargo, N.A. v. Tippecanoe Associates, LLC limits the receiver's ability to sell real estate at a private sale free and clear of all liens. The Indiana Court of Appeals held that, “every defendant in a mortgage foreclosure action has the right to redeem its property by paying off the amount due at any time before the property is sold at a sheriff's sale”. 923 N.E.2d 423, 432 (Ind. Ct. App. 2010). The Appellate Court held that the Trial Court's authorization of the receiver to sell the real estate at a private sale without the borrower's consent denied the borrower of its statutory right of redemption. Id. at 433. The court stated, “any receiver charged with preserving and maintaining mortgaged property must do so through the date of the sheriff's sale and may not sell the real property prior to that time without the owner's consent”. Id. Therefore, the receiver may not sell real property by private sale over the objection of a mortgagor.

RECEIVER AVAILABLE

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

Generally speaking, a lender must be qualified in Indiana as a foreign entity in order to transact business in the State, but certain mortgage loan related activities may not constitute “transacting business.” I.C. 23-0.5-5-5 provides that the following activities, among others, do not constitute transacting business for qualification purposes: Maintaining, defending, mediating, arbitrating or settling an action or proceeding; Making loans or otherwise creating or acquiring indebtedness, mortgages, or security interests in real or personal property; Securing or collecting debts or enforcing mortgages and security interests in property securing the debts, and holding, protecting, or maintaining property so acquired; Owning, without more, property; Conducting an isolated transaction completed within thirty (30) days that is not conducted in the course of repeated transactions of a like nature. Assuming a lender's sole activity in the State is the making of an isolated loan secured by real estate located in the State, that in and of itself will not require the lender to be qualified to transact business as a foreign entity in Indiana. If a lender is in fact transacting business within the State, not only must it qualify to do so, it also may be deemed to be a “taxpayer” pursuant to the Indiana Financial Institutions Tax, I.C. 6-5.5 et seq., and therefore subject to a franchise tax measured by its net income apportioned to Indiana. Failure to qualify where required would not affect the validity or enforceability of loan documents, except a lender could not maintain a proceeding in any court in the State until it qualifies, and the state may impose a penalty of up to $10,000 for failure to qualify.

LENDER QUALIFICATION AND/OR LICENSURE

Indiana does not have any unusual provisions or requirements with respect to modifications of existing mortgage loans. In order to place a modification agreement of record, the modification must comply with Indiana recording statutes and reference the modified mortgage either by cross-reference to the instrument number of the original mortgage or by attaching and incorporating the legal description of the property encumbered by the modified mortgage.

MODIFICATION

If the State initiates remediation of a contaminated property, it may secure payments of amounts expended on the clean up or other response action undertaken by filing a lien on the property on which such clean up or action is performed pursuant to I.C. 13-25-4-11. The State must provide 30 days' prior written notice of intent to impose such a lien to the owner of the property to be liened, or, if such owner is not known, to the tenant or other person controlling the property. The lien is perfected by filing a notice of lien with the recorder of the county in which the property is located after such 30-day notice is given. Before the date the state intends to impose the lien, the owner of the property may request a hearing pursuant to I.C. 13-25-4-20 before an environmental law judge to determine if there is probable cause to impose the lien. Liens are discharged or released, per I.C. 13-25-4-15, when the State issues a certificate of discharge recorded with the county recorder. The statute does not specify the relative priority of such a lien, so presumably Indiana's first in time rule applies. Liens may also be filed against petroleum facilities for reasonable remediation costs.

ENVIRONMENTAL LIEN LAW ISSUES.

<ol>
 <li> INCEPTION OF L&M LIEN: I.C. 32-28-3-2 and I.C. 32-28-3-5 govern the priority of L&M liens. I.C. 32-28-3-5 provides that any L&M Lien created “relates back to the date the mechanic or other person began to perform the labor or furnish the materials or machinery.” This section goes on to say that an L&M Lien has priority over all liens created after it, except the liens of other mechanics and materialmen or, where the property is not residential or utility property, a prior recorded mortgage.</li>
</ol> Indiana has in essence split its L&M Lien law into 2 classes, 1 involving residential property and utility property (“Residential”), and the other involving all other types of property (“Commercial”). According to the statute, whether an L&M Lien is governed by the Residential aspect of the statute or the Commercial depends on the nature of the property that is the subject of the construction contract giving rise to the L&M Lien. If the contract is for construction of a 1-2 family dwelling or certain public utilities, any lien filed is governed by the older Residential provisions of the statute. Projects not fitting into the Residential category are governed by the separate Commercial rules regarding priority. This statute supports the proposition that an L&M Lien on a Residential project will have priority so long as work has been commenced by an L & M lienholder prior to the date of filing of a mortgage. However, in construing these statutes, Indiana Courts have held that the lien of a construction mortgage has “parity” with an L&M Lien. Indiana Courts have based this concept on the idea that funds provided by the construction lender are used to pay other potential L&M Lien claims of other contractors or materialmen whose L&M Lien rights would, under I. C. 32-28-3-5, have parity with the actual L&M Lien claim that was filed. An exception to this rule was identified in Beneficial Finance Co. v. Wegmiller Bender Lumber Co., Inc., 402 N.E.2d 41 (Ind. App. 1980), which indicates that if the potential L&M Lien claimant does not have notice of the existence of the mortgage and both starts and completes work before the recording of the mortgage, then the mortgage holder may not be entitled to parity with competing L&M Lien claims. In the situation where the mortgage is recorded before commencement of work by any of the L & M Lienholders, the construction mortgage may be entitled to priority over the L & M Liens, but the law on this issue, as well as with regard to many of the priority issues on residential type projects is confused, with seemingly inconsistent decisions of the courts on record. From a practical point of view, this means that the recordation of the mortgage prior to the date of commencement of construction has some significance. In a commercial project, a mortgage has priority over all L & M liens recorded after the mortgage is recorded to the extent of the funds owed to the mortgage lender for the specific project to which the lien rights relate. Creating further confusion is I.C. 32-28-3-2, which provides, in part, that “where ... the land is encumbered by [a] mortgage, the [L&M Lien], so far as concerns the buildings erected by said lienholder, is not impaired by . . . foreclosure of [the] mortgage. The buildings may be sold to satisfy the [L&M Lien] and be removed not later than 90 days after the sale by the purchaser.” The L&M Lien may still, under the applicable statutes, have priority as to the value of the improvements (as separate and distinct from the value of the land). However, applicable case law provides the lien of the construction mortgage take priority over a later recorded L&M Lien with respect to improvements. See Harold McComb & Son, Inc. v. JP Morgan Chase Bank, NA, 892 N.E.2d 1255, 1259-62 (Ind. Ct. App. 2008). This statute does not clearly limit its application to either Residential or Commercial projects so, presumably, it applies to both. With respect to owner-occupied single or double occupancy residential dwellings, I.C. 32-28-3-1 contemplates that a notice of the existence of lien rights be provided to the owner in connection with either new construction or renovation/remodeling work by a subcontractor or material supplier as a condition precedent to acquiring lien rights. In the case of new construction, notice must be given to the owner and recorded with the county recorder within 60 days of the date of the first delivery of materials or labor performed. In the case of renovation/remodeling work, some type of notice must be given to the owner (but need not be recorded) within 30 days of the date of the first delivery of materials or labor performed. An entity with a direct contract with the owner need not provide such notice to acquire lien rights. No-lien contracts are permissible in connection with residential properties, but are prohibited in connection with commercial properties. See I.C. 32-28-3-1; I.C. 32-28-3-16. To be effective, a no-lien contract must contain the legal description of the property, be acknowledged as provided in the case of deeds, and recorded in the office of the recorder of the county where the real estate is located within 5 days of its execution. <ol>
 <li> Priority as to Removable Fixtures: The term “removable” fixture is something of an oxymoron in Indiana. Once an item is characterized as a fixture it takes the character of real property and is “lienable” without regard to whether or not it is susceptible to being moved or removed. In Menzenberger v. American State Bank, 198 N.E. 819 (Ind. App. 1935), a materialman was entitled to lien on residential property for iron grillwork and curtain poles and rods where these items were attached to walls or woodwork by screws, and could not be removed without damage to house itself, but was not entitled to lien on residential property for curtains, draperies, shower curtains, or bathroom rugs, even though the curtains and draperies were made for particular openings, and were hung from poles and rods by rings and hooks. Consequently, items that are “removable” do not appear to be “lienable” under the mechanic's lien statute and, consequently, we never get to this issue of priority. The mortgage lender who has a valid lien and security interest in such “removable” fixtures and other personal property will have priority.</li>
</ol>

LABOR AND MATERIAL LIEN (“L&M LIEN”) CLAIMS—PRIORITY ISSUES

Current ALTA forms are used in Indiana for mortgage policies and leasehold mortgage policies.

Form Usually Required by Lender

All forms used and rates charged by title insurance companies must be filed and approved by the Indiana Department of Insurance. Title insurance companies can only issue the endorsements that have been filed with the Indiana Department of Insurance. Lenders will need to verify with the title insurance company what endorsements are filed and available. Generally, ALTA endorsements are available. Lenders typically require “extended coverage” by deleting the standard, pre-printed exceptions. This can be accomplished in most instances by furnishing the title company with a current ALTA/NSPS Land Title Survey and a “mortgagor's affidavit” addressing “off-record” title issues. Lenders also typically require “gap coverage” insuring over any matters that might be placed of record between the effective date of the commitment and the date the lender's mortgage is recorded (The mechanics of the recording and indexing systems in most counties in Indiana are such that there is a backlog of recorded documents that are not yet posted in the office's public records system, creating a “gap” period between filing and public notice of that filing. In some counties, the gap period is 6 weeks or more. Title companies routinely insure over the gap for an additional fee and/or an affidavit and indemnity from the borrower). Many counties are now accepting documents for recording electronically, which has reduced the gap period considerably in those counties. The following special endorsements, where applicable, are routinely required by lenders in Indiana: (i)&nbsp;ALTA 25-06 survey; (ii)&nbsp;ALTA 21-06 location endorsement, (iii)&nbsp;ALTA 9 or other form of “comprehensive” endorsement, (iv)&nbsp;ALTA 3.0 for unimproved land or 3.1 zoning endorsement for improved land (v)&nbsp;ALTA 19-06 contiguity endorsement, (vi)&nbsp;ALTA 17-06 physical access endorsement, (vii)&nbsp;ALTA 20-06 first loss, (viii)&nbsp;ALTA 6-06 variable rate mortgage endorsement, (ix)&nbsp;ALTA 14-06 future advance endorsement, (x)&nbsp;pending disbursements provision in policies for construction loans, (xi)&nbsp;ALTA 12-06 aggregation or tie-in endorsement, (xii)&nbsp;ALTA 27-06 usury endorsement, (xiii)&nbsp;ALTA 17 utility access endorsement, (xiv)&nbsp;fairway endorsement, (xv)&nbsp;ALTA 15-06&nbsp;non-imputation endorsement, (xvi)&nbsp;ALTA 9.6-06 private rights, (xvii)&nbsp;ALTA 28-06 easement-damage or forced removal, and (xviii)&nbsp;endorsement to delete the arbitration provision. For construction loans, lenders frequently request mechanics lien coverage by way of deletion of the mechanics lien exception or issuance of the ALTA 32-06 endorsement.

Endorsements Available

Title companies are required by law to issue a closing protection letter (CPL) to a lender, borrower, buyer and seller in all residential real estate transactions in which (1)&nbsp;a title policy is issued by the title company; and (2)&nbsp;the title company is also acting as a settlement or closing agent. A CPL may be issued in a commercial transaction (defined as a non 1-4-family transaction). A separate CPL may be issued to each party. The law requires that a fee filed with and approved by the Indiana Department of Insurance shall be charged to the party benefitting from the CPL.

CLOSING PROTECTION COVERAGE

Default interest must be reasonable. In Art Country Squire, L.L.C. v. Inland Mortg. Corp., 745 N.E. 2d 885 (Ind. Ct. App. 2001), the Indiana Court of Appeals held that the default interest rate agreed to by the parties in the loan documents constituted liquidated damages and that the lender was therefore required to prove that the default interest rate was reasonable at the time it was established. The resolution of whether the default rate is proper is a question of law. The Court will consider the facts, the intention of the parties, and the reasonableness of the stipulation under the circumstances of the case. Consequently, it appears now that any lender seeking to assert a default interest rate will need to present evidence that the default interest rate was reasonable at the time it was established, regardless of the level of sophistication of the parties and/or the agreement contained in the loan documents. It is unclear what form such evidence must take and the extent to which such evidence is required, or whether summary judgment will be available in cases where a borrower challenges a default rate of interest. It is also unclear whether including language in the loan documents to the effect that the parties agree that the default rate of interest specified therein is a reasonable and fair estimate of the losses that would be suffered by the lender in the event of a default by the borrower will be sufficient to establish that the default rate of interest was reasonable at the time of making the loan.

Default Interest

The Indiana Supreme Court has indicated that the doctrine of equitable subrogation had been recognized in Indiana for over a century, is highly favored, should be liberally applied, and is a remedy to avoid an unearned windfall by junior lien holders. Bank of New York v. Nally, 820 N.E.2d 644 (Ind. 2005). In their opinion, the Court held that (i)&nbsp;equitable subrogation requires the subrogee to discharge the entire debt held by the original obligor; (ii)&nbsp;neither actual or constructive notice of a preexisting junior lien(s) is a bar to subrogation; (iii)&nbsp;in addition to avoidance of windfalls, equitable subrogation requires consideration of other equitable factors, notably the absence of any prejudice to the interests of junior lienholders; and (iv)&nbsp;the negligence of a party seeking subrogation will not bar him or her from relief where such negligence does not prejudice the interests of the person to whose rights subrogation is sought.

Equitable Subrogation

The Indiana Commercial Real Estate Broker Lien Act (I.C. 32-28-12.5-1 et seq.) (the “Act”), allows a principal broker to place a lien on commercial real estate to secure fees or commissions payable pursuant to a written agreement relating to a sale or lease of that real estate. Once all notice requirements of the Act are satisfied, a broker can file a notice of lien to secure its commission within the time periods specified in the Act. A notice of lien must be recorded in the county where the real estate is located and, at a minimum, contain the names of the principal broker and the owner of the real estate, a legal description of the real estate, the amount of the lien, and the principal broker's license number. The principal broker must serve the owner of record with notice of the lien no less than 10 days after it has been recorded; failure to do so renders the lien unenforceable. A broker's lien is subordinate to any encumbrances recorded before the principal broker's lien. Broker's liens are also subordinate to mechanic's liens recorded after, but relating to materials or services provided before, the principal broker's lien was recorded. Liens under the Act may be foreclosed under the same rules and procedures as mortgage foreclosures. A lien that is not foreclosed within 1 year of its recording is extinguished, and the principal broker cannot place another lien for the same claim. Alternatively, a lien can be removed by establishing an escrow account between the principal broker, the party owing the fees, and an independent escrow agent, of at least 110% of the fees claimed. The formation of the account extinguishes the lien against the real estate and creates a lien on the funds in escrow. An owner, buyer, and tenant also have the right under the Act to serve a written demand on a principal broker to bring a suit to enforce the lien, or file an answer in a pending suit. If the broker does not respond appropriately within 30 days of such written demand, the lien is extinguished.

Broker's Liens

Unpaid condominium association assessments and dues become a lien at the time they are assessed. The lien has priority over all other liens except for taxes and the unpaid balance on a first mortgage of record. If a mortgagee of a first mortgage of record or other purchaser of a condominium unit obtains title to the unit as a result of foreclosure of the first mortgage, the acquirer of title, or the acquirer's successors and assigns, is not liable for the share of the common expenses or assessments by the association of co-owners chargeable to the unit that became due before the acquisition of title to the unit by the acquirer. The unpaid share of common expenses or assessments is considered to be common expenses collectible from all of the co-owners, including the acquirer or the acquirer's successors and assigns. I.C. 32-25-6-3.

condominium ASSOCIATION FEES AND ASSESSMENTS

Unpaid homeowner's association assessments become a lien upon recording of a notice of lien in the recorder's office of the county in which the land is located. The lien attaches as of the date of recording and does not date back to date of assessment or recording of the document establishing the assessments. I.C. 32-28-14-5, 6. If the mortgagee of a first mortgage of record or other purchaser of real estate obtains title to the real estate as a result of foreclosure of the first mortgage, the acquirer of title or the acquirer's successors and assigns are not liable for the share of the common expenses or assessments by the homeowners association chargeable to the real estate that became due before the acquisition of title to real estate by the acquirer. The unpaid share of common expenses or assessments is considered to be common expenses collectible from all of the owners of real estate in the subdivision, including the acquirer or the acquirer's successors and assigns. I.C. 32-28-14-7.

HOMEOWNERS ASSOCIATION FEES AND ASSESSMENTS

I.C. 27-7-3.7-4 et seq. requires that money funding a real estate purchase or refinance transaction in Indiana must be irrevocable and unconditional wired funds or good funds as defined in the statute. Specifically, all funds in the amount of $10,000 or more, in the aggregate, received from any party to a real estate transaction must be wired funds unconditionally held and irrevocably credited to the escrow account of the closing agent. Funds less than $10,000, in the aggregate, received from any party to the transaction must be “good funds” defined under the statute as follows: (1)&nbsp;cash; (2)&nbsp;Wired funds unconditionally held and irrevocably credited; (3)&nbsp;Certified or cashier's checks drawn on existing account at a bank, savings and loan association, credit union or savings bank chartered under the laws of the state or the United States; (4)&nbsp;a check drawn on the trust account of a real estate broker licensed under I.C. 25-34.1 if the closing agent has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account on which the check is drawn at the time of disbursement of funds; (5)&nbsp;a personal check not to exceed $500; (6)&nbsp;a check issued by the state, the United States, or a political subdivision of the state or the United States; (7)&nbsp;a check drawn on the escrow account of another closing agent, if the closing agent in the escrow transaction has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account upon which the check is drawn at the time of disbursement of funds. &nbsp;

Indiana

Mortgage Law Summary

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Mortgage Law Summary for Indiana

Indiana

Mortgage Law Summary

Continue reading theMortgage Law Summary for Indiana

Continue reading the
Mortgage Law Summary for Indiana