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All articles by John D. Waller -
Do you know what "proceedings supplemental" are? If you are in the
business of collecting judgments in Indiana, and from time to time
virtually all secured lenders are, then the June 27, 2007 opinion
by the Indiana Supreme Court in Rose v. Mercantile National Bank,
2007 Ind. LEXIS 471 provides a great primer on the subject.
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The September 20, 2007 decision by Judge Barker of the United
States District Court for the Southern District of Indiana in
Midwest Lumber v. Branch Banking, 2007 U.S. Dist. LEXIS 69924 (S.D.
Ind. 2007) involves the dismissal of borrowers’ lender liability
claims, but it also specifically addresses a release provision in a
forbearance agreement. Even though lender liability is not my
primary focus, certainly forbearance agreements are pertinent. And
the workout industry should be aware of Judge Barker’s holding.
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Recently, I met with a commercial lender who mentioned a problem
with one of his projects. Construction had started, but the
developer hadn’t closed the construction loan. Thus the lender’s
mortgage hadn’t been recorded, but likely would be soon. He
wondered how the delay might affect the priority of his bank’s
mortgage lien. Attorneys representing secured lenders in commercial
foreclosure cases, or contractors in mechanic’s lien actions,
should be conversant with Indiana law in this area.
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If you’ve heard colleagues or your lawyer mention a “motion for
summary judgment” and wondered what exactly it was, allow me to
shed some light on the subject in the context of an Indiana
commercial foreclosure. A motion is a request by a party for the
trial judge to do something – in this case grant a summary
judgment. A summary judgment is an expedited final ruling by the
judge on a claim of a party.
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Do you work for a financial institution that collects debts? If so,
do you know whether the Fair Debt Collection Practices Act, 15
U.S.C. 1692 (the “Act”) (http://www.ftc.gov/os/statutes/fdcpa/fdcpact.htm)
regulates what you do? Do you fear that your collection practices
might subject you or your company to liability? Relax. The Act
generally does not apply to commercial foreclosures or the
collection of commercial debts. (See my 11-1-06 article “Just What
Is Commercial Foreclosure Law?” for more background.)
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Need a handle on how long it will take to liquidate your borrower’s
collateral in Indiana? Since the foreclosure process officially
starts with the filing of a complaint, my timelines start there. A
complaint cannot be filed until there has been a default under the
terms of the real estate mortgage or personal property security
agreement. Needless to say, many weeks if not months might pass
between the initial loan default and the decision to file suit.
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If you deal with receiverships, this case will be of interest to
you. A lender, a borrower and a court-appointed receiver have been
battling one another in an Indiana federal court in connection with
a failed construction project. Problems arose when a
partially-constructed apartment complex deteriorated so much during
a foreclosure suit that a judge condemned the property and ordered
it to be demolished, resulting in damages alleged by the borrower
of $4,167,881 (representing the purported value of the property
pre-suit minus the value of the foundations of the buildings after
demolition). In Judge Philip P. Simon’s words, “assessing who is at
fault for this mess is at the center of the action currently before
the Court.” In rulings filed September 18, 2006 and October 16,
2006, the Northern District’s Judge Simon brought some order to the
chaos in case no. 2:02cv368, Four Winds v. American Express Tax and
Consulting Services, et al. The cite to the September Opinion,
which relates to the borrower’s claims against the receiver, is
2006 U.S. Dist. LEXIS 71349. The October Opinion, which addresses
the receiver’s cause of action against the lender, can be found at
2006 U.S. Dist. LEXIS 75581.
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The cast of characters. Everyone knows what a bank is. Most of us
understand what a lender is – an institution from whom money is
borrowed. Adding the word “commercial” to describe a lender simply
means that the financial entity deals with businesses as opposed to
individuals. Black’s Law Dictionary defines “commercial loans” as:
“loans made to businesses as distinguished from personal-consumer
credit loans.” Although a lender could make both commercial and
consumer loans, this blog is dedicated primarily to commercial
matters.
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A statute is a law, or a set of laws, established by the
legislative branch of the government. In Indiana, the General
Assembly (http://www.in.gov/legislative/) is our state’s
legislature. Indiana’s statutes are contained in the Indiana Code
(http://www.state.in.us/legislative/ic/code/),
abbreviated as Ind. Code or I.C.
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Do you understand the difference between “case law” and “statutory
law”? Have you ever wondered what the term “common law” meant? If
you struggle with these legal terms, this article will help.
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