HP1039, LD 1426, item 1, An Act To Increase Protections for Land Installment Contracts

An Act To Increase Protections for Land Installment Contracts

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 14 MRSA §6203-F, as repealed and replaced by PL 1991, c. 707, §2, is repealed and the following enacted in its place:

§ 6203-F. Foreclosure of residential land installment contracts

1. Foreclosure procedure. Notwithstanding any other provision of this chapter, if the purchaser of real estate under a residential land installment contract who is in possession or intends to take possession of the real estate is in default of any of the terms of that contract, the seller or the seller's heirs or assigns may foreclose the rights of the purchaser in the contract. For purposes of this section, "land installment contract" has the same meaning as in Title 33, section 481, subsection 2.

2. Redemption period. A judgment for foreclosure under this section must contain a 90-day redemption period. Within the redemption period, the purchaser or a person claiming under the purchaser may apply to any Justice of the Supreme Judicial Court or Superior Court for an extension of time to redeem, and after such notice as the court may order, for good cause shown, the court may extend the redemption period to a maximum of one year. An extension order is not binding against any person without actual notice of the order unless, within the 90-day period, a written notice describing the land, identifying the instrument under which foreclosure proceedings have been brought and setting forth the fact that application for extension of the redemption period has been made is recorded in the registry of deeds in the county in which the land is located. This section may not be construed to extend the life of options with an ascertainable time of termination.

3. Foreclosing party as mortgagee. A seller or other foreclosing party under this section is subject to the requirements imposed upon a mortgagee under sections 6101, 6111, 6321, 6321-A, 6321-B, 6322 and 6322-A.

Sec. 2. 33 MRSA §481, sub-§2, as enacted by PL 1983, c. 368, is amended to read:

2. Land installment contract. "Land installment contract" means an agreement under which the vendor agrees to sell an interest in property to the purchaser and the purchaser agrees to pay the purchase price in 5 or more subsequent payments exclusive of the down payment, if any, and the vendor retains title to the property as security for the purchaser's obligation under the agreement. Land installment contracts include a bond for deed, a contract for the sale of real estate, option contracts for the purchase of real property, an agreement for the occupancy of residential real estate in which the occupant is required to make an initial payment in excess of 4 times the periodic monthly payments required to occupy the premises and an agreement in which a person is induced to occupy a property as a primary residence by a promise or offer to grant ownership of the property to the person at a future date. Land installment contracts do not include option contracts for the purchase of real property or purchase and sale agreements entered into with the good faith expectation of a separate transaction in which a 3rd party or the seller agrees to finance the purchase price in a single installment.

Sec. 3. 33 MRSA §482, sub-§1, ¶¶P and Q, as enacted by PL 1983, c. 368, are amended to read:

P. A provision that the purchaser has the right to accelerate or prepay any installment payments without penalty, unless agreed to the contrary; and

Q. A clear and conspicuous provision above the place for the signature of the purchaser which that acknowledges receipt by the purchaser of a copy of the land installment contract signed by the vendor . ; and

Sec. 4. 33 MRSA §482, sub-§1, ¶R is enacted to read:

R. A statement that the vendor has inspected the property to be conveyed and certifies that the property is in compliance with Title 14, sections 6021 and 6021-A.

Sec. 5. 33 MRSA §482, sub-§2, as enacted by PL 1983, c. 368, is amended to read:

2. Recordation. Within 20 days after the contract has been signed by both the vendor and the purchaser, the vendor shall cause a copy of the contract or a memorandum of the contract to be recorded at the purchaser's expense in the registry of deeds in the county where the property sold under the contract is located. If a memorandum of the contract is recorded, it shall must be entitled "Memorandum of a Land Installment Contract" and shall must contain, as at a minimum, the names of the parties, the signatures of the parties, a description of the property and applicable time periods. A person other than a vendor and purchaser may rely on the recorded materials in determining whether the requirements of this subsection have been met. If a contract is not recorded pursuant to this subsection, the vendor may not enforce the contract.

Sec. 6. 33 MRSA §482, sub-§§4 and 5 are enacted to read:

4. Vendor is creditor. A vendor in a land installment contract is a creditor under Title 9-A, section 1-301, subsection 17.

5. Violations. A violation of this chapter is a violation of the Maine Unfair Trade Practices Act. In addition to any other rights and remedies a purchaser may have in the law, upon a finding that a violation of this chapter by a vendor has occurred, a court shall find one or both of the following:

A. The purchaser is entitled to recover all actual damages or $1,000, whichever is greater; and

B. The purchaser is entitled to recover the aggregate amount of costs, expenses and attorney's fees determined by the court to have reasonably been incurred on the purchaser's behalf in connection with the prosecution or defense of the matter.

Sec. 7. 33 MRSA §483 is enacted to read:

§ 483. Prohibited acts

1. Bad faith avoidance. A person may not in bad faith attempt to avoid the application of this chapter including engaging in subterfuge or designing or structuring a transaction with the purpose of evading the provisions of this chapter.

2. Survival of foreclosure. A land installment contract may not require a purchaser to enter into a promissory note or any other financial instrument or obligation that survives the foreclosure of the purchaser's interest in the real estate.

summary

This bill expands the definition of "land installment contracts," creates foreclosure procedures for residential land installment contracts that include a 90-day redemption period and removes the right to cure of the purchaser and imposes mortgagee requirements on the foreclosing party. This bill also requires the vendor of a land installment contract to certify that the property meets the warranty of habitability under state law, makes the vendor of a land installment contract a creditor under the Maine Consumer Credit Code and, along with other remedies, makes a violation of the provisions regarding land installment contracts a violation under the Maine Unfair Trade Practices Act.

HP1039 LD 1426	Session - 129th Maine Legislature		LR 1767 Item 1
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