Blog, Community, Estate, Events, News
COVID-19: Does Your Family Have A Plan?
Everyone should have a durable health care power of attorney in place and a living will. The COVID-19 pandemic makes me anxious and when I’m anxious, I need to channel that anxiety into action. You probably do, too. Your first action, of course, should be to follow the advice of public health professionals. Diligently wash your hands, self-isolate as long as we’re under restrictions, and stay at least six feet away from others if you have to go out. This will greatly reduce your risk of contracting or spreading the COVID-19 virus, according to epidemiologists. But that doesn’t help you plan for unexpected outcomes and long-term issues that impact your finances and your family’s well-being. Think about the following: What would happen if you were unable to make or communicate financial and personal decisions for several weeks due to a critical illness? Are you the family’s bill-payer? Does anyone else know the log-in and password information for your on-line utility accounts, or your bank account, in case you’re incapacitated? If you became sick suddenly, and were away from your home for an extended period, who would take care of your child, pet, or mail? How would your bills get paid? One positive action you can take while you’re working from home is to plan and prepare for your family’s future by completing a few key estate planning documents. Having your wishes documented and creating a formal plan to manage family finances and everyday needs should be a crucial first step. Face it, most of us have put…
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Banking and Commercial Transactions, Blog, News, Real Estate
Notarize & Prove Recorded Documents in Indiana Effective July 1, 2020
Effective July 1, 2020 A recent change to Indiana Code section 32-21-2-3(a), which takes effect on Wednesday, July 1, requires all written instruments (such as deeds, mortgages, powers of attorney, affidavits, and any other documents that must be recorded in an Indiana county recorder’s office) to be both notarized and proved. Without going into the nitty gritty details (you can find those on the “directive” from the Indiana State Bar Association ), every recorded instrument must now include a witness statement to prove that the person whose signature is notarized signed and delivered the instrument in the witness’s presence (and the witness’s signature must also be notarized).
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Bankruptcy Law, Blog, Business
Small Business Reorganization Act (SBRA) of 2019 updates to Chapter 11
The Small Business Reorganization Act (SBRA) of 2019 added a new subchapter V to Chapter 11 of the Bankruptcy Code (11 U.S.C. §§ 1181-1195). It is applicable solely to “Small Business Debtors” who file a bankruptcy petition on or after February 19, 2020. For debtors who qualify, filing under the new subchapter is likely to be Quicker – statutory timelines are compressed. Cheaper – no UST fees, no committees, and shorter process Easier – can confirm without support from impaired classes and cram down certain secured claims. SBRA Qualification Who qualifies as a small business debtor under the statute? There are three requirements: First, 50 percent or more of the Debtor’s debt must have arisen from business or commercial activities (excluding single asset real estate businesses); Second, aggregate debts total $2,725,625 or less (that is, all non-contingent, liquidated, secured and unsecured debts together); Third, small business debtors must opt-in by checking a box on the voluntary petition form. SBRA Administration Administration of SBRA cases differs significantly from a traditional Chapter 11 case, blending concepts from current Chapter 12 and 13 cases. Primarily, in an SBRA case: the US Trustee must appoint a Standing Trustee in every case whose responsibility is to facilitate the small business debtor’s reorganization and oversee plan implementation over three to five years; within 45 days of the petition date, the small business debtor must file a report detailing its efforts to draft and implement a consensual plan of reorganization; within 60 days of the petition date, a mandatory status conference must be…
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Bankruptcy Law, Blog
Coulda, Shoulda, Woulda: Delay in Accelerating Note After Default Fatal
A lender that waited 16 years after default before invoking an optional acceleration clause in a promissory note was prohibited from collecting the unpaid balance and from foreclosing on the mortgage that secured the note. Borrowers Dean and Paula Blair borrowed $110,300 in 1992 from United Companies Lending Corporation (“UCLC”), and granted a mortgage to UCLC on two properties to secure repayment of the loan. Both the promissory note and the mortgage contained an acceleration clause, which permitted UCLC to require payment of the entire balance of the loan when the note or mortgage was breached. Less than a year later, in November 1993, the Blairs sued UCLC and its agent for breach of contract and various torts (the “Ash Suit”). The Blairs stopped making loan payments in June 1995 and filed a bankruptcy petition in August 1997. Although the bankruptcy court subsequently permitted UCLC to file a foreclosure action in state court by terminating the automatic stay, and the trial court in the Ash Suit entered an order in October 1998 permitting UCLC to file a counterclaim against the Blairs to foreclose the mortgage, UCLC did neither. Instead, UCLC filed its own bankruptcy petition in Delaware in March, 1999, and in July 2000, assigned the note and mortgage to EMC Mortgage (“EMC”). The Delaware bankruptcy court did not authorize the sale of UCLC’s assets until September, 2000. What followed was years of delay: October 2003 – the Blairs Chapter 13 bankruptcy discharge was entered March 2007 – the Blairs obtained judgment against the broker in…
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Uncategorized
Should non-dischargeability of student loan debt be subject to arbitration?
While it is possible to discharge student loan debt in a bankruptcy proceeding, a debtor seeking to do so has to show the Bankruptcy Court that repaying the loan would create “an undue hardship.” This can be a very big hurdle. And lenders are now attempting to create another impediment: mandatory arbitration provisions. Such provisions require the student loan borrower to submit any claim arising under the note to arbitration. Although some bankruptcy judges have been persuaded by the lenders’ claims that arbitration provisions are applicable to whether the debt is dischargeable under the Bankruptcy Code. Bankruptcy Judge Jeffrey J. Graham of the Southern District of Indiana Bankruptcy Court is not among them. Judge Graham recently denied a lender’s motion to compel arbitration as to whether a student loan was dischargeable as an undue hardship pursuant to 11 U.S.C. §523(a)(8). The order, entered on November 16, 2018 in In Re.: Mathew Richard Roth, Case 18-50087, articulated two reasons for the denial. First, compelling arbitration within a bankruptcy proceeding is contradictory to the Code, the primary purpose of which is to give the debtor a fresh start. “The primary tool for effectuating a debtor’s fresh start is the discharge.” Requiring arbitration would remove this “essential function of bankruptcy law from bankruptcy courts.” Permitting parties to opt out of the bankruptcy process would permit them “to contractually overrule the application of federal bankruptcy law”, and specifically the discharge provisions of the Code. Second, Judge Graham wrote that having all of a debtor’s obligations determined promptly and efficiently by the…
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Blog, Business Litigation, Environmental Law
Dismissal of Inverse Condemnation Pleadings Premature
A property owner’s inverse condemnation complaint against Duke Energy properly states a claim on its face, and the trial court’s dismissal pursuant to Indiana Trial Rule 12(B)(6) was erroneous, according to the Indiana Supreme Courts in Bellwether Properties, LLC v. Duke Energy Indiana, Inc. Plaintiff Bellwether owns real property in Bloomington on which Duke Energy has a recorded 10-foot wide utility easement. Bellwether filed an inverse condemnation claim against Duke in 2015, alleging Duke’s clearing and maintenance of a 23-foot wide swath of Bellwether’s property constituted an uncompensated taking for public use of the additional 13-foot wide portion of the property. Duke filed a motion to dismiss the claim under T.R. 12(B)(6), asserting that Duke was bound by a National Electrical Safety Code provision the Indiana Utility Regulatory Commission incorporated by reference in 2002. That safety code required the wider easement, and thus Duke asserted Bellwether’s 2015 claim was barred by the six year statute of limitations. The trial court granted Duke’s motion to dismiss on that basis, and Bellwether appealed. After the Indiana Court of Appeals reversed the trial court, Duke Energy sought transfer to the Indiana Supreme Court, which also reversed the trial court, but on other grounds. The Supreme Court noted dismissals based on a failure to state a claim must be based solely on the allegations contained in the complaint, and may not incorporate any defenses. The Court found Bellwether’s complaint on its face alleged only that Duke Energy “currently” uses a 23-foot easement, but not when that use started. As a…
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Blog, Business
Tax Deed Purchasers Beware: Due Diligence is Required
In a split decision, the Indiana Court of Appeals recently affirmed a trial courts’ decision to revoke a tax deed. In David L. Jenner and Vickie Jenner v. Bloomington Cellular Services, Inc. and Crown Castle South LLC, the majority of the Court determined that because the tax sale purchasers failed to notify interest holders outside the chain of title, they did not comply with the Indiana tax-sale statute, and were therefore not entitled to a tax deed for the property. The property at issue was acquired by Bloomington Cellular Services, Inc., in 1988, (“BCS”) and its title interest was properly recorded. BCS subsequently merged with Westel Indianapolis Company (“Westel”), but Westel’s name was never substituted on the property’s title. In 1999, Westel leased the operation and maintenance of a cell tower on the Property to Crown Castle South, LLC (“Crown Castle”) and in 2000, Crown Castle recorded a supplemental lease agreement outside the Property’s chain of title. Similarly, when Crown Castle subleased the cell tower to T-Mobile in 2009, the sublease agreement was also recorded outside the chain of title. Crown Castle installed a prominently-placed sign on the Property, including its name and contact information, identifying it as the operator of the cell tower. In 2014, the Property was included in Monroe County’s tax sale, and the Jenners purchased the tax sale certificate. As required by the tax sale statute, the Jenners conducted a title search and found only the interest of the original title owner, BCS. The Jenners provided notice of the tax sale to…
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Ownership Estates and Methods of Ownership
We often counsel consumer and commercial clients on property rights. Often, those discussions begin with a primer on property law. This blog entry breaks down the types of ownership estates as well as the method of ownership. In subsequent weeks we will post entries on forms of deeds, mortgage rights and responsibilities, mechanic’s liens, construction projects and surety bonds. If you find these articles helpful, or if you have additional questions, please don’t hesitate to contact us. A. Ownership estates of real property 1. Freehold Estates a. Fee Simple Fee simple estate is the most common type of ownership and grants a complete interest in land for use. Indiana recognizes five subsets of fee simple estates: i. Fee Simple Absolute: An estate in fee simple absolute is the owner’s to do with as wished and cannot be revoked. However, the land is subject to seizure due to non-ownership issues, such as taxes, settlement of a judgment, and the like. ii. Fee Simple Determinable: An ownership interest that reverts to the grantor upon the happening of a stated event. A fee simple determinable is also known as a “determinable fee.” Commonly created with deeds that include words of limitation like “as long as,” “so long as,” “while,” “during,” or “until.” Once the stated event occurs, or ceases to occur, the interest automatically reverts to the grantor. As an example, a deed that conveys property to a church so long as the property is used for church purposes, is a fee simple determinable. If the property ceases to be…
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Lender Beware: The Unintended Consequence of Loan Modifications
The Indiana Court of Appeals recently affirmed a trial court order releasing a surety’s property from the lien of a mortgage, because the Lender and borrower modified secured obligation without the surety’s consent. As an initial matter, a surety is a person who pledges collateral to a lender to secure repayment of a loan to another. Like a guarantor, a surety does not receive the loan proceeds, and may not receive any direct benefit from the loan. First Federal Bank of the Midwest v. Greenwalt, ___F.3d___, 2015 WL 4538515 (Ind.Ct.App. 2015) involved a surety and a lender’s attempt to enforce its remedies against every bit of collateral available. First Federal Bank of the Midwest (“First Federal”) extended a single $300,000 open-ended line of credit to a company (“Borrower”) solely owned by David Greenwalt (“David”). As consideration for the loan, David provided First Federal a guaranty, and David and his then wife Karen Greenwalt (“Greenwalt”) executed a mortgage in favor of First Federal on a 121 acre parcel of land (“Tract One”) and a 40 acre parcel of land (“Tract Two”). The Mortgage explicitly stated it secured a maximum $300,000 line of credit to Borrower. In the subsequent divorce proceedings, Greenwalt was awarded Tract One, and David was awarded Tract Two. Over the next seven years, First Federal extended the maturity of the line of credit via a series of renewal notes, and extended an additional $161,000 of credit to Borrower. In 2009, First Federal converted the line of credit to a “closed end LOC”. Instead of…
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How long does it take to foreclose a commercial mortgage in Indiana?
The timing of the foreclosure process primarily depends upon whether and to what extent the borrower/mortgagor contests the proceeding. Obviously, this is difficult to predict. But in very general terms, a contested foreclosure takes 6 to 9 months at a minimum to complete, from the date the Complaint is filed to the date of the sheriff sale. Step by step, the process is: 1. Commence the foreclosure with a Complaint. Indiana is a judicial foreclosure state, so the foreclosure process officially starts with the filing of a complaint, which must allege the existence of a promissory note or other obligation payable to the plaintiff, a mortgage that secures its repayment, and that the mortgagor has defaulted. McEntee v. Wells Fargo Bank, N.A., 970 N.E.2d 178, 182 (Ind. App. 2012), citing Ind. Code § 32-30-10-3(a). In addition to the borrower/mortgagor, all other defendants who may have an interest in the mortgaged property must be named. 2. Service of process: issued by the clerk of the court. If process is by certified mail, process server, or sheriff, service is typically completed 5-10 days after the Complaint is filed. Service by publication takes at least 30 days, and must be supported by affidavit. See generally Indiana Trial Rule 4. 3. Appearance of counsel: a notice of appearance for mortgagor/borrower (and any other defendants) must be filed 20-23 days after service of process, and will typically be accompanied by an initial 30-day extensions of time to respond to the Complaint. In some counties, the first 30-day extension is granted automatically…
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