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What's A "Praecipe"?

It's helpful for representatives of commercial lending institutions to know some "legalese" when dealing with their foreclosure counsel and the various governmental entities involved with the Indiana foreclosure process.  Today's vocabulary lesson surrounds what it means to "praecipe`" (pronounced "press-ah-pee") for a sheriff's sale of real estate loan collateral.

Trigger.  Once the secured lender and its counsel have received a judgment and foreclosure decree, and after observing the three-month waiting period (if applicable), it's time to sell the real estate for purposes of satisfying all or part of the judgment.  In Indiana, to trigger the sheriff's sale process, Ind. Code 32-29-7-3(b)requires the lender/mortgagee/plaintiff/judgment creditor to file a praecipe for sheriff's sale with the clerk of the court.  Upon the filing of a praecipe, the clerk "shall promptly issue and certify to the sheriff of that county a copy of the judgment and decree under the seal of the court."

Definition.  A praecipe is a fancy (actually, a Latin) word for a written request.  Black's Law Dictionary defines the term, in pertinent part, as follows:  "includes an order to the clerk of court to issue an execution on a judgment already rendered....  Also an order, written out and signed, addressed to the clerk of a court, and requesting him to issue a particular writ." 

Details vary.  The logistics of the praecipe for sheriff's sale may vary by county and will depend upon how a particular court, clerk or sheriff's office conducts its business.  For example, a separate writ of execution may need to be filed.  Or, the praecipe itself may need to attach copies of the judgment and/or involve the tender of sale fees in advance.  As written here before, I strongly advise contacting your civil sheriff's office to confirm the who, what, when, where, why and how of putting the sheriff's sale's wheels into motion.  

As an aside, I'd like to mention that the frequency of my posts has dipped this month due to some pre-planned time away from the office, as well as preparation for and participation in a five-day jury trial that concluded this past Monday.  I plan on getting back on track with weekly posts in September.  As always, thanks for reading, commenting and emailing....    

Contents of Indiana Foreclosure Judgment/Decree

Once a secured lender and its counsel have filed the complaint for foreclosure, and assuming service of process has been perfected on all parties, it’s time to reduce the lender’s claims to a judgment.  Indeed, that is the purpose of filing suit.

Three methods.  There are three basic ways to obtain a judgment:  (1) a default judgment, (2) a motion for summary judgment and (3) a trial.  I previously wrote about default judgments on August 2, 2007 and about summary judgments on November 28, 2006.  On June 18, 2008, I compared those two options and concluded that, in Indiana, a summary judgment is preferable to a default judgment.

Trial.  If motions for default and/or summary judgment are denied, the secured lender’s only recourse is to try the case (or settle).  Mortgage foreclosure actions are equitable and, as such, are tried to the bench (see my October 23, 2009 for more on that issue).  Normally, the need for a trial will stem from a common law contract defense or, more likely, a counterclaim asserted by a defendant.  Typically, straight forward commercial mortgage foreclosures are ready-made for motions for summary judgment, so trials are rare. 

Form of judgment.  Regardless of the type of judgment, ultimately you and your counsel will want to submit a proposed judgment to the court at the time of, or immediately after, the filing of a motion for default judgment, a motion for summary judgment or any trial of the action.  It is advisable to articulate findings of fact and conclusions of law upon which the judgment is based.  We always attach as an exhibit to the judgment/decree a legal description of the real estate, which will be used by the sheriff’s office and in connection with the sheriff’s sale process.   

One component to any Indiana foreclosure judgment will relate to the promissory note and personal liability for the debt, sometimes called an in personam judgment, to be collected from the borrower/mortgagor after the sheriff’s sale, assuming there is a deficiency.  (A deficiency is the amount of money still owed after the sheriff’s sale or, in other words, the result of subtracting the sheriff’s sale price from the judgment amount.)  A second component to any judgment will relate to the mortgage, sometimes called an in rem judgment, meaning that the judgment amount may be satisfied through the sale of the real estate. 

Priority.  The judgment will include a decree of foreclosure that details the rights and priorities of the parties to the real estate and orders the sheriff’s sale.  The priority, in turn, will dictate the order of payment of any proceeds from the sheriff’s sale, a topic I discussed on January 9, 2007.

Relevant statutes.  Here are some of the statutes that pertain to foreclosure judgments: 

• I.C. § 32-30-10-5 “Judgment of Foreclosure; Personal Judgment; Sale of Property”
• I.C.§ 32-30-12-1 and 2 “Final Judgment Given in First Instance” and “Sale of Mortgaged Property Ordered in all Cases”
• I.C.§ 34-54-1-1 “Execution”
• I.C.§ 34-54-10-2 “Mortgage Actions”

Again, on Indiana, the custom and practice is for lender’s counsel to prepare and submit the proposed judgment/decree for the court to execute and enter.  This is a critical part of the process and a necessary expense.  There is important language that should be included in every decree, so ensure that your counsel is familiar with the terms of the relief provided by your loan documents and Indiana law.

IndyStar: Indy Housing Developers Hit A Financial Wall

From today's Indianapolis Star, an article about how tight the lending environment still is:

Developers buying and rehabbing properties with those federal dollars, called the Neighborhood Stabilization Program, face the same conundrum in dozens of projects across Indianapolis. They're struggling to secure the funds to supplement NSP, which typically covers the price of buying a property and a sliver of its renovations.

Click here for the entire story.