Indiana Senate Bill 415
On May 6th, 2015, Indiana Senate Bill 415 was signed into law. The bill attempts to accelerate the liquidation of vacant and abandoned properties by creating a procedure through which they can be sold at a tax sale with no opportunity for owners or lenders to redeem. This is a different tax sale procedure which is entirely new to Indiana and will limit the time lenders have to react before their mortgage interests are extinguished.
Under SB 415, a mortgagee will receive two notices prior to the tax sale:
- A Petition filed by the county executive or enforcement authority will seek declare a property to be vacant or abandoned. This finding can also be requested in the context of a Petition to establish a code violation under the Unsafe Building Law. The Petition would be served on the record mortgagee (and other parties with an interest in the real estate) under Trial Rule 4. This will typically be by certified mail. The Petition will indicate that if the property is found to be abandoned, it may be sold at a tax sale with no right of redemption.
- The Court will then issue an Order to Show Cause, which will set a hearing on the code violation and/or abandonment issue. The Order will also be served under Trial Rule 4 and will indicate that if the property is found to be vacant or abandoned, the property may be sold by the County Auditor at a tax sale with no right of redemption. If the Court finds the property to be vacant or abandoned, it would be sent to the County Auditor to determine whether it is eligible for tax sale.
After determining which properties are eligible for sale, the Auditor must wait at least 30 days after the Order to comply with new requirements for the posting of notice. Most importantly, the Auditor would not be required to send any notice to the mortgagee to specifically advise it of the time and date of the sale. Depending on the speed of the docket and the hearing availability in a specific county, it is conceivable that a tax deed could be issued in as little as 60-90 days following the filing of the initial Petition. The result of the sale would be an immediate fee simple deed to the purchaser, extinguishing all record interests.
Title insurance companies need to be aware of this new bill and ensure that agents and searchers understand that code violation and abandonment petitions can ultimately ripen into tax deeds.
Staff and attorneys at Doyle Legal Corporation are aware of the impact of the new law and we are adjusting our procedures for processing Indiana foreclosures to emphasize the importance of these new types of actions. We are communicating with our title vendors to ensure they are aware of this important new law as well.