Property Mortgage Laws in Indiana

Indiana functions using lien theory, wherein the property stays as guaranty for the said home-loan. The document through which the lien is placed on properties is referred to as a mortgage. The provision of power-of-sale does not exist in Indiana.

Lenders in Indiana follow a judicial foreclosure procedure that is pursued through the court and the final verdict on the foreclosure is prepared by the court. The sale of the property occurs through a publicly notified sale. A complaint, with a lis pendens (a document which is made use of to provide notice to the public about the property in foreclosure) has to be filed in the court. In order to carry out the foreclosure complaint, the lender generally has to wait for three months. This period is extended for some mortgages depending on when the mortgage was executed.

The notice’s copy then must be advertised in a general circulation newspaper by the sheriff, for a period of three weeks in a row. The first of these publications has to be made no later than 30 days prior to the scheduled sale date. The borrower has to be served according to the Indiana Rules of Trial Procedure which govern personal service, when the first publication takes place. The sheriff’s sale has to take place in between 10:00am and 04:00pm on any week day besides Sunday. Properties which are abandoned need to be possessed by the lender immediately.

LEGAL INSTRUMENTS

The legal documents are generally referred to as the mortgage or note, and when commercial transactions are involved, a security agreement. The security agreement is, from time to time, merged with the mortgage. A mortgage needs be filed to authenticate the original loan and its repayment terms, which exist within the note.

TIME PERIOD

It commonly takes about 150 to 200 days to bring into effect a foreclosure that hasn’t been contested; this does depend on the mortgage document’s age and the schedule of the court. If the action is contested in the court by the borrower and if the hearing is sought to be postponed or adjourned, or if bankruptcy is filed for by the borrower, the process can be slowed down.

RIGHT OF REDEMPTION

A statutory right for redemption does not exist in Indiana wherein a party can reclaim a foreclosed property by paying completely, the balance left on the loan and the costs. However, after the judgment is issued, a right of pre-sale redemption is in place.

DEFICIENCY JUDGMENTS

If a foreclosure property sells for lesser than the amount secured by the primary loan, a deficiency judgment can be obtained. The borrower, in this case, still needs to pay the difference between the original amount on the loan and the price that the property sells for at the public auction to the lender.

STATUTES

Foreclosures in Indiana are governed by laws that are part of the Indiana Code, Article 29 (Mortgages), Chapter 7 (Foreclosure, Sale, Redemption and Right to Retain Possession).