Indiana Commercial Foreclosure Law

Is The Label “Indiana Lender Liability Act” A Misnomer?

In the past, I’ve heard things from secured lenders like:  “you don’t see any exposure to our bank under the Lender Liability Act, do you?” or “surely the borrower won’t countersue us under Indiana’s lender liability statute.”  People are sometimes surprised to learn that the so-called “Indiana Lender Liability Act” (“ILLA”), Ind. Code § 26-2-9, doesn’t list claims or causes of action that can be asserted against a lender.  The ILLA primarily deals with the issue of evidence, specifically the inadmissibility of oral testimony about the terms of a loan.  (Interestingly, the statute’s official title in the Indiana Code is “Credit Agreements.”)  The definitive ILLA case is Sees v. Bank One, 839 N.E.2d 154 (Ind. 2005) (Sees.pdf).  Somewhat amusingly, the Indiana Supreme Court itself struggled with the label: 

In the first reported opinion discussing the statute since its 2002 re-codification, the Court of Appeals refers to it as the “Indiana Lender Liability Act.”  . . .  Sees refers to the statute alternatively as the “Indiana Lender Liability Act” and the “Credit Agreement Statute.”  . . .  Bank One refers to the statute as the “Credit Agreement Statute of Frauds.”  . . .  We agree with the Court of Appeals’ designation and thus refer to the statute as the Indiana Lender Liability Act.

Lender liability, generally.  It is true that “lender liability” is a common phrase used to describe a borrower’s potential claims against a lender due to the conduct of the lender with regard to a particular loan relationship.  Capello & Komoroke, Lender Liability Litigation: Undue Control, 42 Am. Jur. Trials 419 § 1 (2005).  This body of law comprises a wide variety of both statutory and common law causes of action.  One of many examples is the Fair Debt Collection Practices Act.  There are, in fact, a multitude of federal and state laws that could form the basis of a lawsuit against a lender.  The ILLA is not one of those laws, however. 

The ILLA rule.  The essence of the ILLA can be found in section 4, which provides that “a [borrower] may assert a claim . . . arising from a [loan document] only if the [loan document] . . . [1] is in writing; [2] sets forth all material terms and conditions of the [loan document] . . . ; and [3] is signed by the [lender] and the [borrower].”  The ILLA effectively protects lenders from certain kinds of liability.  That’s why the label “Lender Liability Act” seemingly is inconsistent with the law’s true nature. 

Statute of frauds.  Sees provides an excellent discussion of the statute, its history and its policies.  In a broad sense, the legislative intent behind the statute is to protect lenders from lawsuits by borrowers (or guarantors) asserting fraudulent claims.  Hence the “in writing” requirement in the ILLA.  As such, the ILLA actually is a “statute of frauds,” which at its core is a procedural law about the exclusion of certain testimony of a witness at trial.  Black’s Law Dictionary defines “statute of frauds” as “. . . no suit or action shall be maintained on certain classes of contracts or engagements unless there shall be a note or memorandum thereof in writing signed by the party to be charged . . ..”  As noted by Judge Posner in Consolidated Services, Inc. v. KeyBank, 185 F.3d 817 (7th Cir. 1999):

 [T]he principle purpose of the statute of frauds is evidentiary.  It is to protect contracting or negotiating parties from the vagaries of the trial process.  A trier of fact may easily be fooled by plausible but false testimony to the existence of an oral contract.  This is not because judgment or jurors are particularly gullible, but because it is extremely difficult to determine whether a witness is testifying truthfully.  Much pious lore to the contrary notwithstanding, ‘demeanor’ is an unreliable guide to truthfulness.

Be a wise guy.  Next time someone asks you whether your commercial lending institution may have exposure to a lawsuit or a counterclaim based on Indiana’s Lender Liability Act, you can explain to them that the ILLA does not really articulate any theories of liability.  Rather, the ILLA limits breach of contract actions to the terms of the loan that are memorialized.  Again, this is not to say that there is no “lender liability” in Indiana.  The generic term “lender liability” is proper when referring to the many possible claims of wrongdoing that exist.  In short, lenders can be exposed to liability, but they shouldn’t be held liable in Indiana for any alleged violations of loan terms unless such terms (promises or duties) are in writing, signed by all parties. 

Do Borrowers Have A Right Of Redemption In Indiana?

If a borrower defaults, and if a secured lender exercises its rights under a mortgage or security agreement to foreclose, the borrower still is able to avoid losing the collateral.  This is because, in Indiana, borrowers have a right of redemption.  “Redeem” means “to buy back.  To free property from mortgage . . . by paying the debt for which it stood as security.”  Black’s Law Dictionary.  Redemption (basically, a payoff) is the way for a borrower to keep the property, end the lien enforcement litigation and free itself of the plaintiff/lender’s mortgage or security interest.  In Indiana, two main statutes cover redemption. 

Real estate.  I.C. § 32-29-7-7 “Redemption by owner before sheriff’s sale” states:

  Before the [sheriff’s] sale under this chapter, any owner or part owner of the real
  estate may redeem the real estate from the judgment by payment to the:

   (1)  clerk before the issuance to the sheriff of the judgment and decree; or
   (2)  sheriff after the issuance to the sheriff of the judgment and decree;

  of the amount of the judgment, interest, and costs for the payment or satisfaction
  of which the sale was ordered.  If the owner or part owner redeems the real estate
  under this section, process for the sale of the real estate under judgment may not
  be issued or executed, and the officer receiving the redemption payment shall
  satisfy the judgment and vacate order of sale . . ..

Personal property.  Indiana provides for the right to redeem non-real estate collateral in its UCC statute, I.C. § 26-1-9.1-623:

  (a)  A debtor, any secondary obligor, or any other secured party or lienholder may
  redeem collateral.
  (b)  To redeem collateral, a person shall tender:

   (1)  fulfillment of all obligations secured by the collateral; and
   (2)  the reasonable expenses and attorney’s fees described in IC 26-1-9.1-
   615(a)(1).

  (c)  A redemption may occur at any time before a secured party:

   (1)  has collected collateral under IC 26-1-9.1-607;
   (2)  has disposed of collateral or entered into a contract for its disposition
    under IC 26-1-9.1-610; or
   (3)  has accepted collateral in full or partial satisfaction of the obligation it
  secures under IC 26-1-9.1-622.

(Click here for I.C. § 26-1-9.1). The rights and time period parallel those associated with mortgages/real estate.  The full amount due must be submitted before repossession or disposition of the property.

Timing.  Under Indiana law, the right to redeem the property from the foreclosure judgment terminates with the sheriff’s sale.  In Re Collins, 2005 Bankr. LEXIS 1800 (S.D. Bankr. 2005).  “Once a sheriff’s sale takes place, a mortgage-debtor is no longer the title holder . . ..”  Id.  Judge Coachys concluded, in Collins, that a sheriff’s sale is complete when the hammer falls and that the actual delivery of the sheriff’s deed is purely ministerial.  Id.  Upon a sale, title is transferred, and the loan is terminated.  To avoid losing the property, the borrower/owner must pay the entire debt (usually, the accelerated amount) before the sale or disposition of the property.  Otherwise, the party’s over. 

What Is Indiana's Post-Judgment Interest Rate?

General rule.  Indiana Code 24-4.6-1-101, sometimes called the "Post-Judgment Interest Statute," generally provides for a post-judgment interest rate of eight percent (8%) per annum (the annual rate).  The statute applies to money judgments, including in personam (personal) judgments entered in favor of lenders in commercial foreclosure actions.  The rate runs from the date of the Court finding (judgment) until the date the defendant (borrower/guarantor) satisfies the judgment.

Exception.  8% actually is a statutory cap.  The rate can be less if the original contract sued upon, such as a promissory note, provides for a lesser rate.  In other words, the loan documents will control the post-judgment interest rate if the negotiated rate is less than 8%.  See, I.C. 24-4.6-1-101(1).  Otherwise, the statutory rate of 8% per annum will apply. 

6 Steps To Enforce A Non-Indiana Judgment In Indiana

If you hold a judgment entered in a state other than Indiana, and if you believe the judgment debtor has assets in Indiana that could satisfy the judgment, then keep reading.  The hoops through which you must jump to reach those assets are outlined in Indiana Code § 34-54-11 “Enforcement of Foreign Judgments.” 

I.C. § 34-54-11.  Enacted in 2003, this Indiana statute tells you just about everything you need to know.  Here are the six major steps:

1. Wait at least twenty-one days after the entry of the judgment in the original (non-Indiana) court.

2. File a certified and exemplified copy of the foreign judgment in the clerk’s office of the Indiana county where the debtor resides or owns property. 

3. File an affidavit, signed by the judgment creditor, that states:
a. the name/address of the judgment debtor; and
b. the name/address of the judgment creditor.

4. In accordance with Trial Rules 4 through 4.17, serve upon the judgment debtor a notice of the filing of the foreign judgment (like you’re serving a summons and complaint). This notice must contain: 
a. the name/address of the judgment creditor;
b. the name/address of the judgment creditor’s attorney, if any; and
c. the nature/amount of the claim under the foreign judgment.

5. Pay a filing fee, which is $133.00 currently.

6. Wait at least twenty-one days after the date the judgment debtor is served with the notice.  (See below).

Once the filing and service requirements have been met, and twenty-one days have passed with no action by the judgment debtor, the judgment creditor is free to proceed as if it holds an Indiana judgment.  In other words, you may begin to enforce the judgment by execution or other process.

21-day grace period.  My understanding always has been that, in cases of domesticating foreign judgments in Indiana, the judgment debtor’s (the defendant’s) only defense relates to jurisdiction.  In other words, the judgment debtor only can attack the validity of the judgment (halt enforcement) by establishing that the original court did not have the power to enter the judgment in the first place – an unlikely scenario.  Otherwise, the judgment essentially is presumed to be valid, and the underlying case will not be re-litigated in Indiana.  The other potential barrier is if the defendant files an appeal in the original case.  An appeal generally will stay the enforcement of the foreign judgment in Indiana until the underlying case concludes. 

Indiana Code §§  34-54-11-2(e)(i) and 4 address these two “defenses.”  The judgment debtor has twenty-one days to file a notice with the Indiana court asserting reasons (jurisdiction/appeal) that would prohibit the judgment creditor from enforcing the foreign judgment.  If filed, the enforcement of the judgment is stayed pending a ruling by the Indiana court.  (It should be noted, however, that a creditor filing a foreign judgment still is entitled to Indiana prejudgment remedies during the pendency of the stay, such as prejudgment attachment or garnishment.)

Old school.  I.C. § 34-54-11-5 states that the statute “does not impair” the right to bring an action to enforce a foreign judgment by other means.  Before the enactment of the statute, it was common to file a complaint to domesticate (certify) the non-Indiana judgment and to follow all the normal rules and procedures applicable to new lawsuits.  I no longer see a benefit to this course of action.  The new statute now allows the judgment creditor, initially, to bypass the judge because a separate Indiana court order domesticating or certifying the foreign judgment is not required, unless the debtor files a notice under Sections 2 or 4.  The statutory formula should result in the enforcement of a foreign judgment more quickly and, therefore, more inexpensively.

If as an out-of-state judgment creditor you need to pursue the assets of a judgment debtor that are located in Indiana, please contact me or another Indiana lawyer to assist with the process.  I.C. § 34-54-11, the relatively new “Enforcement of Foreign Judgments” statute, is your ticket to an expeditious and cost-effective enforcement of your lien.

LIEN PRIORITY FOLLOW-UP: The Operative Statutes

Following-up my July 3 post concerning a potential priority dispute between a construction lender and a contractor, I thought it might be beneficial to set out the key statutes in full.  Here are the provisions, both of which are in Indiana's mechanic's lien statute.   

IC 32-28-3-2
"Extent of lien; leased or mortgaged land"
    Sec 2. (a) The entire land upon which the building, erection, or other improvement is situated, including the part of the land not occupied by the building, erection, or improvement, is subject to a lien to the extent of the right, title, and interest of the owner for whose immediate use of benefit the labor was done or material furnished.
    (b) If:
        (1) the owner has only a leasehold interest; or
        (2) the land is encumbered by mortgage;
the lien, so far as concerns the buildings erected by the lienholder, is not impaired by forfeiture of the lease for rent or foreclosure of mortgage. The buildings may be sold to satisfy the lien and may be removed not later than ninety (90) days after the sale by the purchaser.

IC 32-28-3-5
"Recording notice; priority of lien"
    Sec. 5. (a) As used in this section, "lender" refers to:
        (1) an individual;
        (2) a supervised financial organization (as defined in IC 24-4.5-1-301);
        (3) an insurance company or a pension fund; or
        (4) any other entity that has the authority to make loans.
    (b) The recorder shall record the statement and notice of intention to hold a lien when presented under section 3 of this chapter in the miscellaneous record book. The recorder shall charge a fee for recording the statement and notice in accordance with IC 36-2-7-10. When the statement and notice of intention to hold a lien is recorded, the lien is created. The recorded lien relates back to the date the mechanic or other person began to perform the labor or furnish the materials or machinery. Except as provided in subsections (c) and (d), a lien created under this chapter has priority over a lien created after it.
    (c) The lien of a mechanic or materialman does not have priority over the lien of another mechanic or materialman.
    (d) The mortgage of a lender has priority over all liens created under this chapter that are recorded after the date the mortgage was recorded, to the extent of the funds actually owed to the lender for the specific project to which the lien rights relate. This subsection does not apply to a lien that relates to a construction contract for the development, construction, alteration, or repair of the following:
        (1) A Class 2 structure (as defined in IC 22-12-1-5).
        (2) An improvement on the same real estate auxiliary to a Class 2 structure (as defined in IC 22-12-1-5).
        (3) Property that is:
            (A) owned, operated, managed, or controlled by:
                (i) a public utility (as defined in IC 8-1-2-1);
                (ii) a municipally owned utility (as defined in IC 8-1-2-1);
                (iii) a joint agency (as defined in IC 8-1-2.2-2);
                (iv) a rural electric membership corporation formed under IC 8-1-13-4;
                (v) a rural telephone cooperative corporation formed under IC 8-1-17; or
                (vi) a not-for-profit utility (as defined in IC 8-1-2-125);
            regulated under IC 8; and
            (B) intended to be used and useful for the production, transmission, delivery, or furnishing of heat, light, water, telecommunications services, or power to the public.

(Remember that, as to mortgages, Indiana is a "first to file" state.  I.C. 32-21-4-1(b) provides that a "mortgage ... takes priority according to the time of its filing" in the recorder's office.)

My partner Tom Hanahan, who often represents lenders on the front end of construction deals, informs me that title companies in Indiana usually will not insure absolute priority over mechanic's liens, where construction has commenced before recording of the mortgage, without securing indemnity from the principals of the borrower.  In speaking with Tom, I gather that the title lawyers have noted the potentially-inconsistent language in Ind. Code 32-28-3-5 and 32-28-3-2, about which I discussed in my prior post.  I highlighted the areas of potential conflict.  Judge for yourself. 

IN AN INDIANA SHERIFF'S SALE, CONSIDER THE OPTION OF USING A PRIVATE AUCTIONEER

In Indiana, mortgage foreclosures must be judicial (through the court system).  As a general proposition, real estate collateral must be sold, pursuant to a judge's decree, by the county civil sheriff's office. 

An alternative.  Although not commonly utilized, Indiana has a statute giving parties the option, in mortgage foreclosure actions, to conduct sheriff's sales through a private auctioneer.  In other words, an outside auctioneer can hold the sheriff's sale on the sheriff's behalf.  The statute is Indiana Code 32-30-10-9(b), which states that either the debtor or a creditor may petition the court to require the property to be sold "by the sheriff through the services of an auctioneer" if: (1) the court determines a sale is economically feasible OR (2) all creditors agree to both the sale method and the auctioneer's compensation.  Even if you can't get all the creditors to consent to the method, I think most courts would permit the use of a private auctioneer absent unique, compelling reasons to the contrary. 

Costs.  The auctioneer's fee must be reasonable and stated in the court's order.  In the unlikely event such a sale occurs without the consent of all creditors, and if the sale price is less than the judgment, then the auctioneer only is entitled to $100 in fees plus any out-of-pocket advertising expenses.  Amounts due the auctioneer (fees and expenses) must be paid as a cost of the sale from the proceeds before the payment of any other payments.  So, as a practical matter, the auctioneer is paid by the senior lien holder.  This is perhaps the major, if not only, downside to a privately-conducted sale - the fees of the auctioneer.  So, be sure to explore the cost issue before even requesting such relief from the court.  Although civil sheriff's fees may vary from county to county, generally speaking an auction conducted by a sheriff is going to be cheaper than one conducted by a private auctioneer.  Needless to say, a lender's valuation of the collateral will play a significant factor in the decision to pursue the course of action afforded by I.C. 32-30-10-9. 

A potentially good thing.  I.C. 32-30-10-9(b) is a nice option for lenders foreclosing on commercial real estate collateral in Indiana.  Some Indiana counties may not hold regular sheriff's sales, or their civil sheriff's offices may not be well-equipped to, or particularly interested in, conducting sophisticated sales of commercial real estate.  Or, a private firm may be in a better position to market the collateral before the auction.  Indeed there are a multitude of factors that may go into a lender's decision to utilize a private auctioneer versus a civil sheriff.  The option should be analyzed on a case-by-case basis.  As a lender seeking to squeeze as much cash as possible out of an Indiana sheriff's sale of commercial property, you should be mindful of your right to choose a private auctioneer and conduct a cost/benefit analysis accordingly.      

STATUTORY DISPOSITION OF FORECLOSURE SALE PROCEEDS

When foreclosing on a borrower’s loan collateral, it’s no secret that banks and commercial lending institutions ultimately are seeking money.  Normally, they hope to dispose of the collateral and, ideally, become whole from the proceeds of the sale.  A senior lien holder will obtain most, but not all, of any such proceeds.  In Indiana, statutes govern specifically who gets the cash.

Mortgages.  Ind. Code § 32-30-10 outlines the procedures for mortgage foreclosure actions.  The distribution of proceeds from a judicial sale are statutorily mandated.  First Federal Savings Bank v. Hartley, 799 N.E.2d 36, 40 (Ind. Ct. App. 2003).  According to I.C. § 32-30-10-14, which should be used as a template when preparing the section of any proposed foreclosure decree/order dealing with the disposition of sheriff’s sale proceeds, the money must be applied as follows:

1.  Sale expenses.  The first payout is to the civil sheriff for its fees and notice/advertising costs.  A sheriff’s sale in Indiana costs a few hundred dollars.  Under certain circumstances, Indiana law allows a mortgage foreclosure sale to be conducted by a private auctioneer, and the fees of the auctioneer would be a part of this payout.

2.  Property taxes.  Second, real estate taxes that are due and owing for the property being sold must be paid.  The sheriff is required to transfer the amounts collected to the county treasurer ten days after the sale.  This eliminates the need to name the county or the county treasurer in the foreclosure suit.  (If there are other tax-related liens on the property, the taxing authority must be named as a defendant so that it can answer as to its interests.)  When assessing what might be recovered after a sale, pay attention to what the title work says about delinquent real estate taxes. 

3.  The Debt.  The payment of the outstanding principal, interest and costs to the senior lien holder comes third.  This almost always will be the full, accelerated debt as articulated in the judgment.

4.  Junior Liens.  Any payments of amounts owed to any junior lien holders are next, in accordance with their legal priority.

5.  Borrower.  Lastly, if any sale proceeds remain, that surplus must be paid to the Clerk of the Court to be transferred as the Court directs, usually back to the borrower. 

Security Interests.  The disposition of collateral under Indiana’s UCC, Article 9.1 (Secured Transactions), is slightly different and will depend upon the nature of the collateral.  Article 9.1 should be reviewed in detail for each specific case and the particular collateral in question, because there are many different rules that could apply.  With certain collateral (accounts receivable, for instance), disposition by sale normally will not occur.  On the other hand, sales of tangible personal property collateral, like inventory or equipment, are common.  I.C. § 26-1-9.1-610 speaks to disposing of collateral after default.  Unlike with mortgages, in Indiana a judicial sale of personal property collateral is not required.  Lenders may choose to conduct the sale privately, although it may make sense to group the personal property with any real estate that is being sold at a sheriff’s sale.  I.C. § 26-1-9.1-615 governs how to apply the proceeds: 

1.  Sale Expenses.  First, proceeds are applied to the reasonable expenses of retaking, holding, preparing for disposition and reasonable attorney’s fees and expenses incurred by the secured party.  This would include payment of the sheriff’s fees if the civil sheriff is conducting the sale, or to private auctioneers upon a private sale.

2.  The Debt.  Second, payment goes to the satisfaction of the obligation secured by the security interest.

3.  Junior Liens.  The third payment, if any, would be for the satisfaction of the obligation secured by any subordinate security interest.

4.  Debtor.  Finally, any remaining proceeds go to the debtor.

So, if and to the extent there are cash proceeds from an Indiana foreclosure sale of loan collateral, the debt of the plaintiff lender will not be satisfied until after the sale-related expenses are reimbursed and, in cases of a mortgage, any real estate taxes due and owing are paid.  Also, lenders never will receive a windfall from a sale because the debtor generally receives any surplus, which is a remote possibility anyway.    

WORRIED ABOUT THE FAIR DEBT COLLECTION PRACTICES ACT?

Do you work for a financial institution that collects debts?  If so, do you know whether the Fair Debt Collection Practices Act, 15 U.S.C. 1692 (the “Act”), regulates what you do?  Do you fear that your collection practices might subject you or your company to liability?  Relax.  The Act generally does not apply to commercial foreclosures or the collection of commercial debts.  (See my 11-1-06 article “Just What Is Commercial Foreclosure Law?” for more background.)

Personal, Family or Household Purposes.  The Act focuses on obligations arising from consumer transactions.  Bass v. Stolper, et al., 111 F.3d 1322 (7th Cir. 1997).   “Debt,” for purposes of the Act, is defined as an obligation to pay money arising out of a transaction that is “primarily for personal, family, or household purposes…” 15 U.S.C. 1692a(5).  A nice article in the American Law Reports Federal explains the concept in detail: “What Constitutes ‘Debt’ for Purposes of Fair Debt Collection?”  159 A.L.R. FED. 121 (2000).  Even individual guarantors of an obligation do not fall within the scope of the Act if the guaranty is part of a commercial transaction.  See the Federal Trade Commission’s website for more discussion.  My practice and blog are dedicated primarily to commercial deals, not consumer loans.  If you’re in the same boat, then essentially all you need to know about the Act is (1) it’s out there, (2) a violation of it is a bad thing, but (3) it generally doesn’t apply to you. 

Behave Appropriately. The legal industry has some very creative attorneys, as well as judges inclined to protect debtors.  There are gray areas in the law.  Legal principles evolve, as can the interpretation of statutes like the Act.   For instance, the ALR article cites a case from Mississippi in which a commercial debt essentially was transformed into a consumer debt covered by the Act when the debt collector made “harsh, abusive, foul, obscene, indecent, uncouth, violent, threatening, intimidating, and harassing” phone calls to the debtor.  So don’t be reckless.  Be mindful of the spirit of the Act, which Congress designed to eliminate abusive, deceptive, and unfair debt collection practices.   

As a general proposition, however, you need not sweat the details of the Act if you’re confident that you’re dealing with a commercial transaction.  When in doubt, however, follow the Act.  Or, contact your lawyer for advice.  In the past few years, there has been plenty of litigation involving the application and enforcement of the Act, so recent case law exists to help you or your lawyer determine whether your actions may be regulated. 

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.