An Act Regarding Maine's Power of Sale Foreclosure Law

Sec. 1. 14 MRSA §6203-A,  as repealed and replaced by PL 2009, c. 476, Pt. B, §3 and affected by §9, is amended to read:

§ 6203-A. Power of sale; procedure; notice; form

Sec. 2. 14 MRSA §6203-B,  as amended by PL 2009, c. 476, Pt. B, §4 and affected by §9, is further amended to read:

§ 6203-B. Copy of notice; affidavit; recording; evidence

The person selling mortgagee or its agent shall, within 30 days after the sale date of the delivery of the deed to the purchaser or the purchaser's agent, cause a copy of the notice as published and the person's an affidavit, fully and particularly stating the person's mortgagee's acts, or the acts of the person's principal or ward mortgagee's agent, along with a copy of the foreclosure notice as published, to be recorded in the registry of deeds for the county where the land lies. The affidavit must identify the mortgagee and mortgagor and include the street address, if any, of the real estate encumbered by the mortgage; a description of the real estate encumbered by the mortgage, which may be incorporated by reference to the book and page number of an instrument of record containing an adequate legal description of the real estate; the book and page number, if any, of the mortgage; the dates of publication and the name of the publishing entity of the public notice required by section 6203-A, subsection 1; the recipients and mailing or service dates of notices provided pursuant to section 6203-A, subsections 1 and 1-A and section 6203-E; the final purchaser under the agreement described in section 6203-A, subsection 5; and the date of delivery of the deed to the purchaser or the purchaser's agent. If the affidavit shows that the requirements of the power of sale and section 6203-A , subsection 1 have in all respects been complied with, the affidavit or a certified copy of the record thereof must be admitted as evidence that the power of sale was duly executed. In case of an error or omission in the affidavit recorded as aforesaid, the Superior Court, on petition and after such notice as it may order may, if it determines proper, authorize the recording of an affidavit amending, correcting or in substitution for an affidavit so recorded, and the affidavit so authorized to be recorded or a certified copy of the record thereof must have mortgagee or its agent shall record an amended affidavit correcting the error or omission and the amended affidavit so recorded has the same effect and must be admitted in evidence, as if it had been recorded within said 30 days, but such subsequent affidavit does not prejudicially affect any title or interest in land that may have arisen or have been created between the recording of the original and of the subsequent affidavit.

Sec. 3. 14 MRSA §6203-D,  as enacted by PL 1967, c. 424, §2, is amended to read:

§ 6203-D. Limitation of actions

Actions on mortgage notes, whether witnessed or not, or on other obligations to pay a debt secured by a mortgage of real estate, to recover judgments for deficiencies after foreclosure by sale under a power contained in the mortgage, and actions on such notes or other obligations which that are subject to a prior mortgage, to recover the amount due thereon after the foreclosure sale of such prior mortgage under the power contained therein, shall must, except as otherwise provided, be commenced within 2 years after the date of the foreclosure sale delivery of the deed to the purchaser or the purchaser's agent or, if the principal of the note or other obligation does not become payable until after the foreclosure sale date of delivery of the deed to the purchaser or the purchaser's agent, then within 2 years after the time when the cause of action for the principal accrues.

Sec. 4. 14 MRSA §6203-E,  as amended by PL 1987, c. 736, §17, is further amended to read:

§ 6203-E. Liability for deficiency on sale; necessity of notice; form; affidavit

No action for a deficiency shall may be brought by the holder of the mortgage note or other obligation secured by mortgage of real estate after foreclosure by exercise of the power of sale, unless a notice in writing of the mortgagee's intention to foreclose the mortgage shall have has been served on the mortgagor or its representative in interest or the same has been sent by registered or certified mail with return receipt requested at its last address then known to the mortgagee, to such address as may be agreed upon in said the mortgage, together with a naming of liability for the deficiency, in substantially the form below, at least 21 days before the date of the sale under the power in the mortgage, and an affidavit has been signed and sworn to, within 30 days after the foreclosure sale date of delivery of the deed to the purchaser or purchaser's agent, of the mailing of such the notice. A notice mailed as aforesaid shall be is a sufficient notice, and such an affidavit made within the time specified shall be is prima facie evidence in such action of the mailing of such notice.

The following form of notice and affidavit may be used and may be altered as circumstances require; but nothing herein shall may be construed to prevent the use of other forms:

To: A. B. of .............................. Street, Town of ........................ County of ............................. and State of ...............................

You are hereby notified in accordance with the statute, of my intention, on ......................... (date of sale), to foreclose by sale under the Power of Sale for breach of condition, the Mortgage held by me on property located on ....................... Street, Town of ........................., County of ....................... and State of ............... dated ......................... and recorded in the ..................... County Registry of Deeds, Book ............................., Page .................., to secure a note (or other obligation) signed by you, for the whole, or any part, of which you may be liable to me and in case of a deficiency in the proceeds of the Foreclosure Sale to hold you liable for the whole or any part thereof still remaining unpaid.

I hereby certify on oath that on the ...................... day of .......................... 19 20...................., I mailed by registered or certified mail with return receipt requested, the notice a copy of which is hereinabove set forth, direct to such person or persons at the address therein named which that was the last address of such person known to me at the time of mailing or to such person or persons at the address therein named which that was the person and the address agreed upon in said Mortgage.

Subscribed and sworn to before me this ...................... day of .......................... 19 20.................. .

In the event that the mortgagee is the purchaser at the public sale, any deficiency is limited to the difference between the fair market value of the premises at the time of the sale, as established by an independent appraisal, and the sum due the mortgagee with interest plus the expenses incurred in making the sale.

Sec. 5. 14 MRSA §6203-G  is enacted to read:

§ 6203-G.  Assignment of mortgage

The assignment of a mortgage by a foreclosing mortgagee at any time during the foreclosure process does not affect the validity of the foreclosure. Upon the recording of the assignment of mortgage in the registry of deeds where the land lies, the assignee of the mortgage may complete the foreclosure.

Sec. 6. 32 MRSA §286, sub-§5,  as enacted by PL 1999, c. 146, §5, is amended to read:

Sec. 7. 33 MRSA §501-A,  as amended by PL 1995, c. 106, §2, is further amended to read:

§ 501-A. "Power of sale"

The following "power" is known as "The Statutory Power of Sale" and may be included in any mortgage or incorporated by reference in any mortgage granted by a corporation, partnership, including a limited partnership or a limited liability partnership, limited liability company or trustee of a trust and, if included in the mortgage, the mortgage may be foreclosed pursuant to Title 14, section 6203-A. The power of sale may not be used to foreclose a mortgage deed granted by a trustee of a trust if at the time the mortgage deed is given the real estate is used exclusively for residential purposes, the real estate has 4 or fewer residential units and one of the units is the principal residence of the owner of at least 1/2 of the beneficial interest in the trust. If the mortgage deed contains a statement that at the time the mortgage deed is given the real estate encumbered by the mortgage deed is not used exclusively for residential purposes, that the real estate has more than 4 residential units or that none of the residential units is the principal residence of the owner of at least 1/2 of the beneficial interest in the trust, the statement conclusively establishes these facts and the mortgage deed may be foreclosed by the power of sale.

But upon Upon any default in the performance or the observance of the foregoing or other condition, the mortgagee or his the mortgagee's executors, administrators, successors or assigns, his or their the agent or attorney of the mortgagee or the mortgagee's executors, administrators, successors or assigns, may sell the mortgaged premises or such portion thereof as may remain subject to the mortgage in case of any partial release thereof, either as a whole or in parcels, together with all improvements that may be thereon, by a public sale on or near the premises in the county where the real estate then subject to the mortgage is situated, or, if more than one parcel is then subject thereto, then on or near in the county where one of said parcels is situated, or at such place as may be designated for the purpose in the mortgage, first complying with the terms of the mortgage and the statutes relating to the foreclosure of mortgage by the exercise of a power of sale, and he or they the mortgagee or the mortgagee's executors, administrators, successors or assigns or the agent or attorney of the mortgagee or the mortgagee's executors, administrators, successors or assigns may convey the same by proper deed or deeds to the purchaser or purchasers absolutely and in fee simple; and such sale shall forever bar bars the mortgagor and all persons claiming under it from all right and interest in the mortgaged premises, whether at law or in equity.

SUMMARY

This bill makes several changes to the power of sale mortgage foreclosure law in order to clarify certain provisions, improve notice to interested parties and ensure the marketability of titles. The bill makes the following changes to the power of sale mortgage foreclosure law.

1. It clarifies that the statutory power of sale applies to a mortgage granted by a limited liability partnership.

2. It provides cross-references between the power of sale laws in the Maine Revised Statutes, Title 14 and those in Title 33.

3. It requires that written notice of sale be sent to all parties in interest, not just the mortgagor.

4. It provides that a written foreclosure notice may be given to the mortgagor at an address provided in writing by the mortgagor to the mortgagee.

5. It defines "parties in interest."

6. It clarifies that written foreclosure notices may be delivered to the mortgagor by certified mail in addition to registered mail.

7. It provides that a copy of a notice of foreclosure may be provided to a residential tenant by posting the notice conspicuously at each entrance to the mortgaged premises.

8. It clarifies the information that must be included in a foreclosure notice of sale.

9. It provides that property may be sold free and clear of the interests of the mortgagor and other junior parties in interest who have been sent a foreclosure notice of sale, but specifies that parties in interest having a superior priority are not affected by the foreclosure.

10. It requires a foreclosing mortgagee to execute a purchase and sale agreement with the highest bidder at a public sale and provides that, if the highest bidder fails to perform on the agreement, the foreclosing mortgagee may execute an agreement with the next highest bidder.

11. It provides that a foreclosure sale may be adjourned for up to 30 days and from time to time until a sale is made.

12. It clarifies the information relating to a foreclosure that must be included in the recorded foreclosure affidavit.

13. It provides that a foreclosure affidavit must be recorded within 30 days after the date of delivery of the deed to the purchaser at the foreclosure sale rather than 30 days after the date of the sale.

14. It requires a mortgagee to correct an error in a recorded foreclosure affidavit. Current law provides for such an error to be corrected by the Superior Court. The bill retains the provision of current law that provides that the amended affidavit does not prejudicially affect any title or interest in land that may have arisen or have been created between the recording of the original and the amended affidavits.

15. It provides that, if a mortgagee is the purchaser at a public sale, any deficiency is limited to the difference between the fair market value of the premises at the time of the sale, as established by an independent appraisal, and the sum due the mortgagee with interest plus the expenses incurred in making the sale.

16. It provides that the assignment of a mortgage during the foreclosure process does not affect the validity of the foreclosure and, upon the recording of the assignment of mortgage, the assignee of the mortgage may complete the foreclosure.

17. It exempts individuals conducting mortgage foreclosure sales from auctioneer licensing requirements of Title 32. Current law exempts only individuals conducting foreclosure sales pursuant to a court order.

18. It provides that a public foreclosure sale must be held in the county where the real estate is situated rather than on or near the premises.