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Lender Permitted To Praecipe For Sheriff’s Sale 12 Years Post-Judgment

Lesson. Sheriff’s sales can occur even after an Indiana judgment lien expires.

Case cite. U.S. Bank Tr. Bank Tr. Nat'l Ass'n v. Dugger, 193 N.E.3d 1015 (Ind. Ct. App. 2022).

Legal issue. Whether a mortgage lender’s right to a sheriff’s sale ceased to exist ten years after the entry of judgment.

Vital facts. Original lender obtained a foreclosure decree against Joshua Dugger (“Joshua”) in 2009. Three subsequent sheriff’s sales were cancelled. In 2010, Joshua filed a Chapter 7 bankruptcy and received a discharge in January 2011. Joshua transferred the mortgaged property to Steven Dugger (“Steven”) in 2016. Later, the Baldridges (“Owners”) purchased the real estate from Steven. Apparently nothing of any significance occurred in the foreclosure case until 2021, at which point the current lender (“Lender”) acquired the original lender’s interest in the mortgage, appeared in the action, and asked the court for permission to praecipe for a sheriff’s sale. Notably, Lender’s initiative in 2021 occurred over ten years after the entry of judgment in 2009.

Procedural history. The trial court denied Lender’s motion for leave to file a praecipe for a sheriff’s sale.

Key rules.

Indiana Code 34-55-9-2 states that final judgments for money create a lien that exists for ten years. Importantly, however, “although the judgment lien expires after ten years, [the] judgment still exists for at least another ten years.”

I.C. 34-55-1-2(a) essentially provides that execution on a judgment over ten years old can occur but only “on leave of court” (i.e., a judge’s permission). The court’s ruling on such a motion is discretionary. The Court in Dugger explained:

[A] creditor holding a judgment that is more than ten years old may, only with leave of court, execute the judgment against the debtor's real estate during the remainder of the life of the judgment. See, e.g., Ind. Code § 34-55-1-3(1) (1998) (one of three kinds of execution of judgments is execution against property of judgment debtor).

Here is a reminder of the dual nature of most mortgage foreclosure judgments:

    “A mortgage is an interest in real property that secures a creditor’s right to repayment.” As such, a party’s action to foreclose a mortgage is, by definition, an in rem (i.e. against the property) proceeding.

    Creditors also may pursue a debtor’s in personam (i.e. personal) liability for under a promissory note or credit agreement. This includes the enforcement of a judgment against the debtor’s personal property assets.

    A debtor may protect herself from this personal liability only by obtaining a Chapter 7 bankruptcy discharge. A mortgage lien, which is a right against real estate, survives and remains enforceable, however.

Holding. The Indiana Court of Appeals reversed the trial court, paving the way for a sheriff’s sale.

Policy/rationale. Owners first contended that Lender’s judgment ceased to exist because Lender did not “renew” the lien before the ten-year deadline. The Court reasoned that, while a judgment may be renewed, there is no legal requirement to do so. Lender’s course of action in Dugger was thus appropriate.

Owners’ second allegation was deception on the part of Lender when it requested the court to convert the 2009 judgment into an in rem judgment. However, the judgment had both in personam and in rem elements. When Joshua received his Ch. 7 BK discharge, the law eliminated only his personal liability under the loan. Lender’s right to collect against the mortgaged real estate still was enforceable. As such, Lender’s request to amend the judgment - which in my opinion probably was unnecessary - nevertheless did not constitute deception.

Related posts.

I represent parties involved in disputes arising out of loans that are in default. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.