Public Law 130-2012 (IN)

P.L. 130-2012; S.E.A. 298; Effective July 1, 2012

This Act adds language to articles 28 and 29 of Title 32 on Property in the Indiana Code. The language throughout these articles was updated to reflect a decreased statutory period for which a lien will remain actionable. A lien upon real estate expires ten years, reduced from 20 years, after the last installment of the debt secured by the lien becomes due, however, it does not expire as long as an action to foreclose is brought within ten years from the date the last installment is due. The Act specifies that where the record of a mortgage does not contain the date the debt or the last installment is due, the lien expires ten years (instead of 20 years), from the date of execution. Where the date of execution is omitted, the lien expires ten years after the date on which the mortgage or vendor’s lien is recorded unless an action to foreclose is brought or maintained within ten years of the mortgage or vendor’s lien was recorded.

This Act added an entirely new section, Indiana Code Section 32-29-8-4, which was effective upon passage, March 19, 2012. This section defines who constitutes an “interested party” and who constitutes an “omitted party” with respect to an action to foreclose a mortgage on real property in Indiana. This section also specifies the conditions, under which an interested or omitted party may bring a civil action for the purposes of determining the extent of, or to terminate the interest of, an omitted party in the property subject to the sale.

Subsections (d) through (h) provide the circumstances and relief that may be available and how the court is to make the determination. Subsection (d) guides the court’s evaluation of what redemption rights may be available to omitted parties and whether omitted parties have a right to receive proceeds paid at the judicial sale. In the event that the court determines that an omitted party is entitled to redemption, subsection (f) provides the considerations a court should give to the circumstances for determining the terms of redemption.

If the court deems it equitable to grant redemption rights pursuant to subsections (d) and (f), the rights will be subject to the two restrictions found in subsection (g), which require first, that the payment for redemption to be the sale price resulting from foreclosure plus interest at the statutory judgment rate; and second, the payment of redemption may not exceed ninety (90) days.

Subsection (h) states that senior lien which is the basis for the foreclosure action does not extinguish through the conveyance of a sheriff’s deed until the interest of any omitted party is terminated through either an action brought under this section, Section 32-29-8-4, or by operation of law. Until such termination, the holder of the deed is the equitable owner and holds the same rights against omitted parties as the senior lien had before the judicial sale.

The inclusion of subsection (i) requires interested parties to bring action pursuant to this section of the code in order to terminate an omitted party’s interest in the real property. Because interested parties cannot terminate the interest of an omitted party except by taking action under this section, subsection (i) also expresses that an interested party’s rights may not be denied. The statute gives four types of conduct which will not cause an interested party’s rights to be denied which broadly cover the interested parties’ conduct. They are:

  1. Had actual or constructive notice of the omitted party’s interest in the property;
  2. Was negligent in examine county records;
  3. Was engaged in the business of lending; or
  4. Obtained a title search or commitment or a title insurance policy

Presumably, allowing an interested party to take action despite the occurrence of any or all of these scenarios, means that an interested party will always be allowed to take action to terminate an omitted party’s interest because the only way to do so is through action under this section.

IC 32-28-4; 32-29-7-13; IC 32-29-8, including New Section IC 32-29-8-4
Bill Number: 
S.E.A. 298
Public Act or Public Law Number: 
By: ATG Underwriting Department | Posted on: Wed, 10/10/2012 - 9:31am