Indiana Commercial Foreclosure Law

Continuing Legal Education Opportunity

Here's a link to an electronic version of the brochure for a seminar at which I'm scheduled to present in Indianapolis on March 11, 2009:  http://www.nbi-sems.com/Enbi/Brochurepdfs/47948.pdf.  It's a National Business Institute program entitled "Real Estate Foreclosure:  A Step-By-Step Workshop." I'm providing a legislative and case law update, as well as a walk-through of the steps for an Indiana foreclosure.  Please join us if you're interested. 

I'm working on a new post and hope to have it up over the weekend or Monday. 

Celebrating Two Years

Two years ago, on November 1, 2006, I launched this blog.  126 posts later, I'm still going strong.

Over the past year, I've slightly reconfigured my home page, which now includes a more exhaustive and specific "Categories" directory.  As new topics arise, I may add to this list to make it easier for readers to investigate a particular topic.  As always, I welcome your suggestions by email.  Please let me know if there is another area on which you'd like me to focus.

Click on the "About" link to see my bio, picture, contact information and link to my firm Wooden & McLaughlin's website.  Within a few months, my firm will be launching a new website, and we're all excited about that.     

Within the last several months, I opened the comments option, so please feel free to comment upon my articles.

The "Archives" section along the side of the home page allows you to review posts by month, but more importantly permits you to conduct a word search of all prior content on this blog.  This feature is like having Google specific to this blog.  You can research each and every blog post back to 11-1-06.  Remember that, among other things, I post on all published Indiana state and federal court judicial opinions relevant to the field of commercial foreclosure law.  How do I find the cases?  I have permanent computer searches set up on the Lexis legal research system.  Lexis delivers emails to me whenever a court publishes a new decision.  Readers will always be up to speed on any relevant legal developments under Indiana law.  

Another option for you is to sign up for an RSS feed and/or subscribe to research posts by email.  These are efficient and painless ways to have Indiana Commercial Foreclosure Law articles delivered to you.  By the way, the email feature is secure, and it will never result in any further contact by me.  Please pass these subscription programs along to your friends and colleagues.

I've added a couple more statute links along the left side of the home page this year.  The list of statutes consists of all Indiana Code provisions applicable to commercial foreclosure matters.  I also provide rule links to the Indiana Rules of Trial Procedure, the Indiana Rules of Evidence, together with a link to find each Indiana county's local procedure rules, if they exist.  These are at your fingertips whenever you surf to my blog.  

My home page has permanent links to the websites of all Indiana state and federal courts, as well as the Secretary of State and the Marion County (Indianapolis) civil sheriff's office websites.  These governmental office websites provide a wealth of information for secured lenders and their legal counsel.

In addition, I provide links to some key local media outlets, as well as links to the websites of what I understand to be the most pertinent trade associations.  If there are other websites you think would be valuable to readers, please let me know.

My mission is to provide a "one-stop shop" for secured lenders involved in the foreclosure of commercial real estate mortgages, enforcement of security interests and collection of business debts in Indiana.  I gear my content toward workout professionals and representatives of commercial lending institutions.  Naturally, in-house counsel and Indiana lawyers also will benefit from my efforts to provide an on-line resource for this specialized area.  Please keep reading and spread the word.  And, please contact me with any ideas as to how I can improve.  

Thanks,

John           

Comments Now Welcomed

I've decided after over 1 1/2 years of publishing this blog to try the "Comments" option TypePad offers.  Starting with the recent Premier Properties/Chris White post, readers can click on the "Comments" link at the bottom and provide feedback, etc. on the subject at hand.  I'm hopeful this will be interesting for secured lenders and counsel who regularly read my blog or others who stumble upon it through an internet search.  I'll test this for a period of time and see how it goes.  As always, I welcome your emails, and now look forward to reader's comments....   

For My Indiana Lawyer Readers...

If you or your colleagues are interested, click here for a link to an electronic version of the brochure for a continuing legal education seminar at which I'm scheduled to present on March 18, 2008 in Indianapolis.  They've entitled the conference "Real Property Foreclosure:  A Step-by-Step Workshop."

Memo To Self: Happy Anniversary

On November 1, 2006, I launched this blog.  One year, 68 posts and thousands of hits later, my site is going strong, and its visitors are steadily growing each week.  If you're new to Indiana Commercial Foreclosure Law, welcome.  If you've been here before, thank you and welcome back. 

First post.  I thought it might be useful to re-publish my very first post: 

I designed this blog to provide a resource for individuals in the banking and commercial lending industry who deal with Indiana-related commercial foreclosure issues.  Today, November 1, 2006, my blog debuts with the goal of publishing posts at least weekly in one of four categories:  Court Commentary, Notable News, Practical Pointers and Statutes Say.

Court Commentary will have content analyzing recent Indiana state and federal court opinions on the substantive law and procedural rules that govern this field.

Notable News will provide Indiana-related news, from various media outlets, impacting commercial lenders generally and the work-out/foreclosure side of their businesses specifically.

Practical Pointers will include articles designed to assist secured lender representatives who are, or are about to be, involved in a commercial foreclosure lawsuit. 

Statutes Say will publish posts about Indiana statutory law applicable to commercial foreclosures and secured collections.

I’m excited about developing a resource for commercial lending institutions faced with under-performing or non-performing loans.

  Because this is a new blog, I hope to receive feedback on how I can make it more useful.  I welcome suggestions, which you can e-mail to me by clicking on the “E-Mail Me” link.  My contact information in its entirety can be found by clicking on the “About” link. 

Features.  In addition to the fresh content offered at least weekly, over the course of the past year I've enhanced some of the permanent features of this blog that appear along the left side of the home page.  These include: 

• The "About" link, which takes you to my bio
• The self-explanatory "Email Me" link
• Links to the four categories described that allow you to review all posts on that subject
• The ability to conduct a Google search of this blog - to research all issues I've addressed
• A link to subscribe to this site's RSS feed - a great way to have new posts automatically delivered
• The opportunity to sign up to receive emails of new posts - this is secure and will never result in contact from me
• Links to the relevant Indiana statutes
• Links to the pertinent Indiana procedural rules
• Links to the major Indiana state and federal court websites
• Links to local media websites
• Links to the predominate trade/professional organizations for secured lenders
• Links to posts, archived by month

Finally, each post can be emailed by clicking on "Email this" at the end of each post.

I would like to thank my collegue Matthew Adolay for reviewing my articles before I formally post them.  Having his pair of eyes has been a great help and has ensured that my work is readable and understandable.  Thank you, Matt.

Again, this blog is dedicated to commercial lenders and banks needing to foreclose on loan collateral, enforce liens and collect commercial, secured debts.  If you work in this area or routinely deal with these issues, please stop by from time to time.  And, always remain mindful that my objective is to be a resource for you, so email or call if you think I can improve this blog in any way.  Thanks.

WELCOME TO MY BLOG: INDIANA COMMERCIAL FORECLOSURE LAW

I designed this blog to provide a resource for individuals in the banking and commercial lending industry who deal with Indiana-related commercial foreclosure issues.  Today, November 1, 2006, my blog debuts with the goal of publishing posts at least weekly in one of four categories:  Court Commentary, Notable News, Practical Pointers and Statutes Say.

Court Commentary will have content analyzing recent Indiana state and federal court opinions on the substantive law and procedural rules that govern this field.

Notable News will provide Indiana-related news, from various media outlets, impacting commercial lenders generally and the work-out/foreclosure side of their businesses specifically.

Practical Pointers will include articles designed to assist secured lender representatives who are, or are about to be, involved in a commercial foreclosure lawsuit. 

Statutes Say will publish posts about Indiana statutory law applicable to commercial foreclosures and secured collections.

I’m excited about developing a resource for commercial lending institutions faced with under-performing or non-performing loans.

  Because this is a new blog, I hope to receive feedback on how I can make it more useful.  I welcome suggestions, which you can e-mail to me by clicking on the “E-Mail Me” link.  My contact information in its entirety can be found by clicking on the “About” link. 

JUST WHAT IS COMMERCIAL FORECLOSURE LAW?

The cast of characters.  Everyone knows what a bank is.  Most of us understand what a lender is – an institution from whom money is borrowed.  Adding the word “commercial” to describe a lender simply means that the financial entity deals with businesses as opposed to individuals.  Black’s Law Dictionary defines “commercial loans” as:  “loans made to businesses as distinguished from personal-consumer credit loans.”  Although a lender could make both commercial and consumer loans, this blog is dedicated primarily to commercial matters. 

The field of law.  To me, commercial foreclosure law refers to the rules and procedures applicable when a business defaults on a loan secured by some kind of collateral.  So, if you work for an institution that loaned money to a business, and if the borrower defaulted under the terms of the loan agreement, then commercial foreclosure law provides the judicial framework for the protection of your rights.  Typically, those rights involve the ability to collect money owed by the borrower through the sale of the loan collateral. 

Collateral.  Black’s states that collateral is property pledged as security for the satisfaction of a debt.  If a business defaults on a loan, the lender can initiate a foreclosure action to compel the sale of the loan collateral and therefore collect the amounts owed by the borrower through proceeds from the sale.  There are all kinds of business-related collateral.  Perhaps the most recognizable is real estate – the land a business owns.  Some of the most interesting cases, however, deal with personal property collateral, which can be any property imaginable that is owned by a business – a fleet of cars, office furniture or intangibles such as accounts receivable. 

Lien.  A lien is a description of an encumbrance on property:  “a claim . . . on property for payment of some debt.”  Black’s.  In the context of my blog, a lien arises by written contract between a lender and a borrower – either a real estate mortgage agreement or a personal property security agreement.  The lien granted by a borrower to a lender gives a lender the right to foreclose upon the subject property (collateral) for payment of the debt in the event of a default.

Commercial foreclosure.  Turning again to Black’s, a foreclosure is defined, in part, as the “enforcement of a lien . . . or mortgage . . ..”  Paraphrasing Black’s, foreclosure is the legal process by which real or personal property subject to a lien is sold in satisfaction of a debt.  To foreclose means to terminate a borrower’s rights in the subject property.  A foreclosure that is commercial merely refers to the termination of a business borrower’s rights in its property. 

A form of collection.  Commercial foreclosure law is a special kind of collection law.  It’s a body of rules governing how banks and financial institutions recover money by asserting rights in, and selling, collateral that a business granted to secure the loan.  It’s the set of legal principles applicable to a lender needing to collect money owed by a business, which failed to make its loan payments or otherwise defaulted under the terms of the loan documents. 

If any of these matters are relevant to what you do for a living, I welcome your visits to my blog and hope that you will e-mail me with your questions or comments.

WHAT ARE STATUTES AND WHICH ONES APPLY TO INDIANA COMMERCIAL FORECLOSURES?

A statute is a law, or a set of laws, established by the legislative branch of the government.  In Indiana, the General Assembly is our state’s legislature.  Indiana’s statutes are contained in the Indiana Code, abbreviated as Ind. Code or I.C.  The list of statutes that could apply to a commercial foreclosure matter is far too long to outline here.  But the most relevant statutes can be found in the links on the left side of my blog’s home page.  They include:

·                    Mortgages, Generally (I.C. 32-29)

·                    Mortgage Foreclosure Actions (I.C. 32-30-10)

·                    Indiana Uniform Commercial Code – Secured Transactions (I.C. 26-1-9.10); there are seven “parts” of this statute; Part 6 “Default” is most applicable to my blog because it furnishes rules about defaults and the enforcement of a security interests upon defaults

·                    Judgments in Mortgage and Lien Actions (I.C. 32-30-12)

·                    Execution of Judgments (I.C. 34-55)

·                    Receiverships (I.C. 32-30-5)

·                    Indiana’s Uniform Fraudulent Transfer Act (I.C. 32-18-2)

·                    Lis Pendens (I.C. 32-30-11) 

·                    Judgment Liens (I.C. 32-30-13)

·                    Adverse Claims Act (I.C. 28-9)

·                    Attachment (I.C. 34-25-2)

·                    Garnishment (I.C. 34-25-3) 

In the statutory cites, the first number designates the title, the second the article, the third the chapter, and the fourth the section.  For example, the statute applicable to redemption by an owner of real estate before a sheriff’s sale is Title 32, Article 29, Chapter 7, Section 7 (I.C. 32-29-7-7).  In future posts, I’ll describe many of these statutes in more detail.

If you have a legal question about a particular commercial foreclosure situation, the first place to turn is the Indiana Code.  You might find a statute that directly addresses the issue.  If so, the statute arguably is the definitive authority on the matter.  In other words, the statute ultimately controls the legal rights and obligations of the parties.  Frequently, to the dismay of parties involved in litigation, there is no statute on point or, if there is one, the statute may be less than clear.  That’s when case law (the common law) must be studied because written court decisions often interpret statutes.

Many of the rules applicable to real estate mortgages and personal property security interests, as well as the procedures for foreclosure actions, are contained in the Indiana Code.  One of the goals of my blog is to provide links to all the pertinent statutes.  So, if you are wondering whether there is an Indiana statute that speaks to a particular matter, please email me.  I'm happy to supply links to all the noteworthy statutes.

COURT COMMENTARY = CASE LAW

Do you understand the difference between “case law” and “statutory law”?  Have you ever wondered what the term “common law” meant?  If you struggle with these legal terms, this article will help. 

Judge-made law.  Statutes come from the legislative branch of the government, while case law is the product of the judicial branch.  Black’s Law Dictionary defines “case law” as “the aggregate of reported cases as forming a body of jurisprudence, where the law of a particular subject . . . is formed by the adjudged cases . . ..”  The definition of “common law” in Black’s states, in part:  "the body of those principles . . . which derive their authority solely from usages and customs . . . or from judgments and decrees of the courts recognizing, affirming and enforcing such usages and customs . . .."  The labels of common law and case law essentially are interchangeable. 

Legal precedent/ stare decisis.  These concepts play an important role in the development of case law.  Borrowing again from Black’s, legal precedent is a prior decision of a court that furnishes authority for a similar, future case involving a similar question of law.  Courts decide cases largely on the basis of principles established in prior cases, which are close in facts or legal principles to the case at hand.  A court’s decision on a new matter will create a rule of law for a particular type of case that will be referred to in the future when a similar case is decided. The doctrine of stare decisis, which is defined by Black’s as “to abide by, or adhere to, decided cases,” is a significant principle in the creation of case law.  Trial courts and courts of appeals stand by precedent so as not to disturb a settled point. Note Black’s: "when court has laid down a principle of law applicable to a certain state of facts, it will adhere to that principle, and apply it to all future cases, where facts are substantially the same; regardless of whether the parties and property are the same."

From where does a case come?  Much of the case law applicable to Indiana foreclosures comes from the Indiana Court of Appeals the Indiana Supreme Court .  This is how case law is born:  Lawsuits are filed and litigated in trial courts (circuit and superior courts in each Indiana county).  Parties who are the subject of an adverse ruling by a trial court, either in connection with a pre-trial motion or at trial, can appeal the decision to the Indiana Court of Appeals.  The Indiana Court of Appeals studies the trial court’s record of proceedings and then decides the appeal.  Often the appellate court will issue a written opinion, commonly called a case (hence, “case law”).  The opinion typically summarizes the facts, states the issues, outlines the applicable legal rules and provides an analysis applying the rules to the facts.  The opinion ends with a conclusion, sometimes called a “holding,” which states whether a party won or lost on the question(s) presented.  A party can appeal the Indiana Court of Appeals’ decision to the Indiana Supreme Court.  The Indiana Supreme Court, if it accepts the appeal, then will issue its own written opinion.  These written, appellate opinions are published in hard-bound law books (reporters) and electronically (for instance, through LexisNexis).  They also can be accessed through the Court’s websites: Court of Appeals Opinions and Supreme Court Opinions.

Cases equal education.  The appellate court’s opinions, which collectively constitute case law, deal with a wide range of issues from specific rights and obligations of a party, to the interpretation of a statute and how it applies to a given circumstance.  Because the opinions provide the reasoning behind the court’s conclusion, they offer insight into a particular rule of law.  That reasoning is valuable to lawyers and parties, who use it as guidance for future conduct and decisions.  This is why providing "court commentary" on my blog is so important.  Relevant decisions by courts teach banks and commercial lenders, who deal with loans in default and the collection of commercial debts, about their rights and duties.  If you need to know whether Indiana law previously has addressed a particular question, lawyers like myself are trained to do the legal research necessary to find the answer, assuming a definitive answer exists.  But don't be surprised if there isn't a case on point.  Frequently, there are gaps in the law that create uncertainty.  Lawyers often are called upon by their clients to advise how a specific matter may be determined when there is neither a case nor a statute directly on point.