ILNews

7th Circuit: amendment applies to all mortgages

Back to TopCommentsE-mailPrintBookmark and Share

A 2007 amendment allowing recorded mortgages with certain technical defects to provide constructive notice, as if the mortgages were properly recorded and acknowledged, applies to all mortgages regardless of when they were recorded, the 7th Circuit Court of Appeals ruled Friday.

In what Circuit Judge Richard Cudahy described as "a puzzle of statutory interpretation," the 7th Circuit Court of Appeals affirmed the U.S. District Court's reversal of the bankruptcy court ruling that held a 2007 amendment to Indiana's recording statute only applied to mortgages recorded after the amendment's effective date of July 1, 2007. A 2008 amendment added language that Indiana Code Section 32-21-4-1(c) applied regardless of when a mortgage was recorded, language that was missing in the 2007 amendment.

In dispute in the instant case is a mortgage provided by LaSalle Bank National Association's predecessor that was recorded in May 2001 but had a technical defect because it didn't identify the people who appeared before the notary and executed the mortgage document. After the debtors filed a voluntary petition for relief under Chapter 13 in March 2008, trustee Debra Miller brought an adversary proceeding to avoid LaSalle's mortgage lien.

At issue in Debra L. Miller, trustee v. LaSalle Bank National Association, No. 09-3013, is whether before the 2008 amendment took effect, the 2007 amendment applied to purchasers of properties encumbered by certain technically deficient mortgages recorded prior to July 1, 2007.

The 7th Circuit Court of Appeals examined Indiana law on statutory interpretation and the language of the statute, and found the 2007 amendment to be ambiguous and not have a retroactive effect. It did agree with LaSalle that the relevant "retroactivity event" in this case is the attachment of the bona fide purchaser's rights.

"We do not agree with the Trustee that debtors had vested rights to the effect of technical defects at the time the mortgage was recorded. The rights of the bank and the debtors (here represented by the Trustee) vis-a-vis other creditors were determined at the time the Trustee's strong-arm powers arose," wrote Judge Cudahy. "The 2007 Amendment does change the rights of (bona fide purchasers) for purchases made after July 2007 - but that effect is clearly prospective."

Given the obvious ambiguity in the 2007 amendment and the apparent activity of the bankruptcy trustees in aggressively seeking to avoid mortgages on technical grounds even after that amendment, the 2008 amendment merely clarified the legislature's intent in 2007 that it was supposed to apply to all mortgages, whenever filed, the Circuit Court concluded.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I will be filing a lawsuit in Tippecanoe County for so many violations in a case we became involved in, including failure to contact through mail, Violation of 4th Amendment rights, Violation of Civil Rights, and so on. Even the Indiana Ombudsmen Bureau found violations and I have now received the report and they are demanding further training in Tippecanoe County. I am going to make sure they follow through!!!

  2. ?????????? ???? ?????? ??? ?????? ???????! ??????? ??? ??? ?? ???????? ???? ?????? ????????? ??? ??????? ????? ??????? ? ????? ?? ??????, ?? ???????, ?? ???????, ?? ??????, ?? ???? ? ?? ????? ??????? ??? ????? ??????. ???? ???????? ????????????? ??? ??????? ?????? - ??? ?? ????? ?????? ????????. ???????? ????? ????? ???????, ?????????? ????????? ????????, ????????? >>>> ?????? ????? http://xurl.es/PR0DAWEZ

  3. I thought the purpose of the criminal justice center was to consolidate all the criminal services and get them out of downtown to clean up the place. Why in the HELL are the civil courts moving? What a burden to all the downtown law firms. Now we all get to work downtown, but then have to get in a car and COMMUTE to court? Who approved this idiocy?

  4. I drive through the neighborhood whenever I go to the City-County Building or the Federal Courthouse. The surrounding streets are all two way with only two lanes of traffic, and traffic is very slow during rush hour. I hope that enough money has been allocated to allow for improvement of the surrounding streets.

  5. I have had an ongoing custody case for 6 yrs. I should have been the sole legal custodial parent but was a victim of a vindictive ex and the system biasedly supported him. He is an alcoholic and doesn't even have a license for two yrs now after his 2nd DUI. Fast frwd 6 yrs later my kids are suffering poor nutritional health, psychological issues, failing in school, have NO MD and the GAL could care less, DCS doesn't care. The child isn't getting his ADHD med he needs and will not succeed in life living this way. NO one will HELP our family.I tried for over 6 yrs. The judge called me an idiot for not knowing how to enter evidence and the last hearing was 8 mths ago. That in itself is unjust! The kids want to be with their Mother! They are being alienated from her and fed lies by their Father! I was hit in a car accident 3 yrs ago and am declared handicapped myself. Poor poor way to treat the indigent in Indiana!

ADVERTISEMENT