Tax Deeds 1, Adverse Possession 0

Tax Deeds 1, Adverse Possession 0 A recent Indiana Supreme Court decision decided the relative rights of a tax deed purchaser versus a party with an adverse possession claim against real estate.  The result: tax deeds defeat adverse possession claims. In Bonnell v. Cotner et al, a 35 foot wide strip of land was sold at tax sales in 1993 and 2011.  The Pulaski County Board of Commissioners purchased the parcel at the second tax sale, then sold the property to Bonnell.  Bonnell believed that the 35 foot wide strip of land ran along adjacent farmland to the east of an old fence.  However, a survey revealed that the strip of land was actually on the west side of the fence.  The property owners to the west of the strip of land, including Cotner, believed that their properties extended east to the fence line and had treated the 35 foot strip of land as their own property since the 1960s. Under Indiana common law, the doctrine of adverse possession permits a party to take title to a property that the party has treated as its own despite not having held legal title to the property.  In order to take title, the party must demonstrate that (i) it has had control of the property, (i) it has had an intent to own the property, (iii) others had notice of the intent to take ownership of the property, and (iv) the possession has been for a sufficient duration of time.  In Bonnell, it was undisputed that all of these common law requirements were satisfied.  In addition to the common law requirements,...

Priority of Purchase-Money Mortgage

Priority of Purchase-Money Mortgage Under Indiana law, a “purchase-money mortgage” is given as security for a loan used by the mortgagor (buyer) to acquire legal title to a property.  Indiana Code § 32-29-1-4 provides that “[a] mortgage granted by a purchaser to secure purchase-money has priority over a prior judgment against the purchaser.”  Therefore, if a mortgage is considered a purchase-money mortgage, it has priority over a previously recorded judgment lien. This issue was recently addressed by the Indiana Court of Appeals. In Amici Resources, LLC; et al. v. The Alan D. Nelson Living Trust; et al. (http://www.in.gov/judiciary/opinions/pdf/01191602cjb.pdf), Sabine Matthies (“Matthies”) obtained a judgment against Solid Foundation Investment Properties, Inc. (“SFIP”) in December 2012.  In April 2013, SFIP purchased real estate in Indianapolis.  SFIP financed the purchase of the property through a loan from The Alan D. Nelson Living Trust (the “Trust”), and SFIP executed a promissory note and mortgage in favor of the Trust to evidence and secure repayment of that loan.  At the time of the closing, SFIP also entered into an agreement with Amici Resources, LLC (“Amici”) whereby Amici agreed to finance renovations and improvements to the property with a loan to be secured by a second mortgage against the property. Matthies brought an action to enforce her judgment lien, and argued that her judgment lien should be deemed “senior”, or “first”, among all of the liens. Matthies argued that the Trust’s mortgage was not a purchase-money mortgage because it was signed the day before SFIP closed on the purchase of the real estate.  If the Court had agreed with Mattheis, her lien would have been...

Understanding Bank Garnishments under Indiana Law

Understanding Bank Garnishments under Indiana Law Once you have obtained a money judgment against a party, Indiana law provides a number of different methods for collecting that judgment.  While many of these collection options involve selling garnishable real estate and/or personal property that can take time and involve expenses such as auction costs, the most efficient means of collection involves assets that are already liquid, including amounts held in checking and savings accounts at financial institutions such as banks or credit unions. The first step for garnishing deposit accounts is determining where the debtor has (or may have) deposit accounts.  Examining prior financial statements and cancelled checks from the debtor is likely to provide this information, to the extent that such documents are available.  The judgment creditor can also determine the location of bank accounts by serving written discovery requests on the debtor or orally examining the debtor at a proceedings supplemental hearing.  It can also be beneficial to just “go fishing” and send bank interrogatories to a number of financial institutions at which it is conceivable that the debtor maintains an account.  The expense of such a fishing expedition is minimal ($5.00 per judgment debtor per financial institution) while the benefit of finding an account can be substantial.  Focusing on financial institutions with locations near the judgment debtor’s residence or place of business or that otherwise have a significant presence in a particular community should provide a reasonable likelihood of success for the judgment creditor. Once the judgment holder determines the financial institutions that may have deposit accounts for the debtor, the judgment holder must send garnishment interrogatories...

Indiana Judgment Liens against Real Estate

Indiana Judgment Liens against Real Estate In Indiana, when a judgment for monetary damages is entered in favor of a plaintiff, that judgment automatically becomes a lien for the judgment amount upon any and all real estate owned by the judgment defendant in the county where the judgment was entered.  See, Ind. Code § 34-55-9-2.  If the plaintiff knows or has reason to suspect that the judgment defendant owns real estate in any other Indiana county, the plaintiff can have the judgment indexed in such other county by delivering or mailing a certified copy of the judgment to the clerk of such county.  See, Ind. Code § 33-32-3-2(d).  Indexing the judgment in another Indiana county only costs $3 per county.  To obtain a judgment lien against non-Indiana real estate, the plaintiff will need to consult the laws of the applicable State because each State has its own procedure for domesticating foreign judgments. The judgment lien against real estate becomes effective automatically upon indexing of the judgment and remains effective for 10 years.  See, Ind. Code § 34-55-9-2.  A judgment lien takes priority as of the time of its indexing in the same manner that any other lien takes priority.  Therefore, liens already existing when the judgment is indexed will have priority over the judgment lien, while the judgment lien will have priority over any subsequently recorded liens against the property, including any subsequently recorded mortgage liens. Even if the plaintiff takes no action to enforce the judgment lien during the 10 years that it is effective, the lien can still benefit the plaintiff.  If the judgment defendant attempts to...

Understanding Title Commitments

Understanding Title Commitments If you have ever had any involvement in a real estate transaction, including the sale or purchase of a home, you were likely aware that a title company was involved in the transaction, although you may have been confused regarding the title company’s exact role.  Title companies perform a variety of functions including: (i) acting as a third party escrow agent (holding earnest money until closing), (ii) preparing documents required to convey title to real estate in your State (deed, vendors affidavit, sales disclosure forms, etc), (iii) preparing the settlement statement that details the various closing costs and credits and the amount of money that must be paid by the buyer at the closing, (iv) conducting the closing itself, and (v) issuing title insurance. While each of these functions are important, this blog will concentrate on the means by which a title company issues title insurance.  Title insurance comes in two forms, owner’s policies and lender’s policies.  An owner’s policy is issued to the owner of the property and insures that no interests in the property exist when the buyer takes ownership of the property.  A lender’s policy is issued to the owner’s lender that financed the acquisition of the real estate and insures the priority of the lender’s mortgage lien as of the recording of the mortgage. It is critical that the buyer and the buyer’s lender understand the condition of the title of real estate before closing on a purchase.  Other interests in the real estate can significantly decrease, or even eliminate, the value of property.  Fortunately, the title company will provide a preview...
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