Court Clarifies Its Reasoning In CitiMortgage/Redemption Case - Did It Help?
November 01, 2011
On August 2nd, I discussed how the Indiana Court of Appeals precluded MERS and its assignee from asserting an interest in the mortgaged property due to timeliness issues. Here's my post: Senior Mortgagee Time Barred. The outcome of the decision rested in part on Ind. Code 32-29-8-3 and a mysterious (to me) post-sheriff's sale right of redemption.
Correction. On rehearing, the Court, on October 20th, issued an opinion in the case that, in part, cleared up the statutory redemption issue:
We agree that the correct interpretation of the statute is that the one-year redemption period begins after the sale of the property [the sheriff's sale], not after Citi first acquired an interest in the property.
Nevertheless, the decision against the senior mortgagee remained the same. As noted in my August 2nd post, the concept of redemption as it might apply to the CitiMortgage case was admittedly confusing and surprising to me. And I'm not sure the opinion on rehearing helped too much, other than to clarify the date upon which the clock should start ticking.
Application. I conducted some limited research for case law on this statutory section and found very little decisional law interpreting it. All I can conclude is that there may be a limited, extraordinary post-sheriff's sale right of redemption for assignees of mortgages whose assignments were not recorded before the filing of the foreclosure complaint. The redemption right clearly does not apply to borrowers or mortgagors.
Know it's there. I welcome emails or comments about CitiMortgage or Ind. Code 32-29-8-3. The point for secured lenders - specifically, assignees of mortgages - is that an unknown foreclosure sale may not be immediately fatal to your mortgage interest if the assignment wasn't recorded. On the flip side, sheriff's sale purchasers - thinking they hold title free and clear of all liens - could under narrow circumstances be in for a surprise. My head starts to spin when I consider all the logistics that could come in to play. Lesson: always buy an owner's policy of title insurance....
NOTE: See my March 29, 2012 post re: new legislation amending Section 3 and my 4-21-12 post noting that transfer has been granted by the Supreme Court. On 10-4-12, the Supreme Court reversed the trial court.