SENATE, No. 1574

 

STATE OF NEW JERSEY

 

INTRODUCED OCTOBER 3, 1996

 

 

By Senator INVERSO

 

 

An Act concerning non-judicial foreclosures of commercial mortgages and supplementing Title 2A of the New Jersey Statutes.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. This act shall be known and may be cited as the "Commercial Mortgage Non-Judicial Foreclosure Act."

 

    2. a. The purpose of this act is to provide holders of commercial mortgages with a process for non-judicial foreclosure as an alternative to the judicial foreclosure process.

    b. Nothing herein shall be deemed to limit or prevent judicial foreclosure in accordance with the procedures provided by applicable rules and statutes, at any time prior to the completion of any sale pursuant to this act. The commencement of any action by a lender under this act may, at the sole discretion of the lender, be discontinued by the lender at any time prior to the completion of any sale pursuant to this act, whereupon the lender shall thereafter be entitled to pursue any rights the lender may have under this act or under any other statute or other law, including the right to pursue foreclosure through the judicial foreclosure process.

    c. The exercise by the lender of its rights under this act shall not in any way limit any rights pursuant to any other statute or other law, including the right to pursue foreclosure through the judicial foreclosure process. No provision of this act shall be construed to require a lender to exercise its rights under this act prior to instituting an action against a mortgagor or any other party, including any guarantor, in order to exercise any right the lender may have against a mortgagor or any other party or guarantor, including an action on a promissory note, loan agreement guaranty, indemnification agreement or obligation of a mortgagor or guarantor.

 

    3. As used in this act:

    "Commercial mortgage" means a mortgage, security interest or other instrument which secures a loan made other than primarily for personal, family or household purposes, in which the security is real property located in this State, and which property, as of the execution of the mortgage, is other than a one, two, three or four-family unit dwelling in which at least one unit shall be, or is planned to be, occupied as a residence by the debtor who is a natural person or by the spouse, parent, brother, sister or child of the debtor or debtor's spouse.

    "Debtor" means the person or entity shown on the record of the commercial mortgage lender as being obligated to pay the note, or other evidence of an obligation, secured by the commercial mortgage.

    "Default" means the failure to comply with any obligation in the commercial mortgage, note, bond, or other loan agreement, with respect to payment of money to the lender, payment of real estate taxes, payment of premiums for required insurance, payment of governmental assessments or tax or other liens against the mortgaged property, payment of other specified amounts, or payment of funds into escrow for any of the items set forth.

    "Lender" or "mortgagee" means any person or entity which makes or holds a commercial mortgage and any person or entity to which a commercial mortgage is assigned or otherwise transferred and shall include duly authorized agents.

    "Mortgagor" means the debtor and shall also include the owner of the property being sold subject to the power of sale permitted pursuant to this act.

 

    4. A commercial mortgage may contain a provision for a power of sale which authorizes the lender upon default in the mortgage to foreclose the mortgage and sell the mortgaged property without instituting a foreclosure action through the judicial process. The power of sale shall be exercised in accordance with the provisions of this act.

 

    5. If a lender issues a commitment in a transaction to make a commercial mortgage loan, which loan is intended to contain a power of sale provision pursuant to this act, the lender shall indicate in the commitment that the mortgage will contain the power of sale provision.

 

    6. With respect to any commercial mortgage in which a power of sale is granted:

    a. The commercial mortgage shall state in bold and underlined language, substantially the following: "A power of sale has been granted in this commercial mortgage. A power of sale allows the mortgagee to take the mortgaged property and sell it, without instituting a judicial foreclosure action, upon default by the mortgagor under this commercial mortgage."

    b. A mortgagor shall not be liable for any deficiency in the amount due and owing a mortgagee after a sale pursuant to this act unless the mortgagor specifically agrees to be liable for the deficiency by signature separate from the signature on the commercial mortgage, which agreement and separate signature may either be on a separate document recorded with the commercial mortgage or in the commercial mortgage document. Failure to obtain the separate agreement and signature shall not limit a mortgagee's rights against any party or person in any way except to prevent the mortgagee from pursuing a deficiency judgment against the mortgagor after sale pursuant to this act. The amount of any deficiency shall be the difference between the amount obtained by the mortgagee from the sale of the mortgaged property and the total amount due under the mortgage loan documentation including principal, interest, late charges, default interest, and the reasonable costs and expenses of the sale, including the amount of attorney's fees fixed in the commercial mortgage by agreement, unless a portion of all of the fees are waived by the parties or the amount fixed is found by a court to be unconscionable. If such fees are found to be unconscionable or no fees are fixed in the commercial mortgage by agreement, a court may allow reasonable attorney's fees. If, in an action for a deficiency, the mortgagor shall establish that the fair market value of the property as of the date of the sale exceeded the sale price, then the deficiency otherwise obtainable under this subsection shall be reduced by the amount of the excess. Any action for a deficiency pursuant to the provisions of this subsection shall be commenced within 90 days after the date of the sale.

 

    7. Nothing in this act shall be construed to impair the right of any person who has a right to redeem the property from redeeming prior to the execution and delivery of a deed pursuant to section 13 of this act, upon payment of the amount owed, including all expenses.

 

    8. a. If the commercial mortgage authorizes a mortgagee to exercise a power of sale, the mortgagee, after default by a mortgagor and before exercising a power of sale, shall send the mortgagor a notice of default.

    b. A notice of default shall be sent by certified mail, return receipt requested, to the mortgagor at the mortgagor's address specified in the commercial mortgage as the place to which notices are to be sent, or if no address is specified for receipt of notices, to the address of the mortgagor as set forth in the mortgage and if changed, to the address specified in a written notice of a new address received by the mortgagee prior to the date of the notice of default. Notice pursuant to this subsection b. shall be considered to have been given to a mortgagor if it is sent by certified mail, return receipt requested, to the address as set forth herein or if served in the manner of service of the notice of sale as set forth in section 10 of this act.

    c. The notice shall state, in a manner reasonably calculated to make the mortgagor aware of the situation:

    (1) the particular commercial mortgage under which the mortgagee intends to exercise a power of sale;

    (2) the nature of the default claimed;

    (3) that the mortgagee has accelerated the maturity of the debt, if that is the case;

    (4) any right the mortgagor has to cure the default, including the amount to be paid or other action necessary to cure, and the time within which the cure shall take place in order to prevent the mortgagee's exercise of its right of sale;

    (5) that the mortgagor's ownership may be terminated by a sale of the property pursuant to this act;

    (6) if the commercial mortgage specifically permits transfer of the mortgaged property subject to the commercial mortgage, the transferee's right, if any, to succeed to the rights of the mortgagor in curing the default;

    (7) that the mortgagor's right to possession will be terminated effective upon delivery by the mortgagee of the deed pursuant to section 13 of this act, and that upon such termination , the mortgagor may be evicted from the mortgaged property; and

    (8) the right of the mortgagor to any surplus from the sale.

    d. A mortgagor, or any one authorized to act on behalf of the mortgagor, shall have the right at any time, up to the date and time of sale as set forth in the notice of sale pursuant to subsection b. of section 9 of this act, to cure the default, de-accelerate and reinstate the commercial mortgage by tendering the amount or performance specified in subsection e. of this section. The payment or tender shall be made to the lender, holder or servicing agent. Provided, however, that if a mortgagee can establish in a court of competent jurisdiction that the mortgagor has a pattern of waiting until more than 30 days after receipt of notice of default to cure the default pursuant to subsection e. of this section, or can establish that the mortgagor is not using the right to cure in good faith, the court shall, if there is no other basis for delay of the sale, order the sale of the mortgaged premises no sooner than 30 days after a notice is published pursuant to subsection c. of section 10 of this act.

    e. To cure a default under this section, a mortgagor shall:

    (1) pay or tender to the person whose name, address and phone number is given in the notice of default, in the form of cash, cashier's check, or certified check, all sums due as set forth in the notice of default and all other sums due which have accrued after the date of the notice of default and up to the time of payment or tender, including the total amount due under the commercial mortgage loan documentation including past-due principal payments, interest, late charges, default interest, any other sum of money that is due under the commercial mortgage loan documentation, and the reasonable costs and expenses of collection of the foregoing, including the amount of attorney's fees fixed in the commercial mortgage by agreement, unless a portion of all of the attorneys's fees are waived by the parties or the amount fixed for attorney's fees is found by a court to be unconscionable. If the attorney's fees are found to be unconscionable or no attorney's fees are fixed in the commercial mortgage by agreement, a court may allow reasonable attorney's fees; and

    (2) perform any other obligation which the mortgagor was bound to perform under the commercial mortgage.

    f. To cure a default under this section, a mortgagor shall not be required to pay any charge, fee or penalty attributable solely to the exercise of the right to cure a default as provided for in this act.

    g. Cure of default reinstates the mortgagor, for the purposes of this act, to the same position as if the cured default had not occurred. It nullifies, as of the date of cure, any acceleration of any obligation under the mortgage, note or bond arising from the default which was cured.

    h. The right to cure a default under this section is independent of any right of redemption or any other right or remedy under the common law, principles of equity, State or federal statute, or rule of court.

 

    9. a. If, upon default by a mortgagor, a mortgagee elects to use a power of sale granted in the commercial mortgage, it shall execute a notice of sale in written form directed to the mortgagor, any holder of a commercial mortgage or other lien of record, which is subordinate to the mortgagee's interest, and any other person having an interest, claim or lien of record in the mortgaged property whose interest, claim or lien the mortgagee seeks to foreclose by the exercise of its power of sale.

    b. The notice of sale shall state the name of the mortgagor, the occurrence of a default, the general description of the default such as "failure to make a payment due," "failure to pay taxes," or other similar terms, the election to use the power of sale, the date, time and place when the mortgaged property will be sold, the legal description of the mortgaged property as it appears in the commercial mortgage and any street address of that property, which appears in the commercial mortgage, and as reasonably determined by the lender by title search or otherwise, any holder of a prior commercial mortgage or other lien of record, and any person having an interest, claim or lien of record in the mortgaged property whose interest, claim or lien the mortgagee seeks to foreclose by the exercise of its power of sale, and shall designate the person or persons whose unknown successors are being served. The notice shall state any terms and conditions applicable to the sale, including whether the mortgaged property may be sold in separate lots or parcels.

    c. The notice shall advise the mortgagor of the mortgagor's right, pursuant to this act, to redeem the mortgaged property from foreclosure by paying to the mortgagee the total amount due under the commercial mortgage loan documentation including: principal; interest; late charges; default interest; prepayment fee, charge, penalty or similar payment; any other sum of money due under the commercial mortgage loan documents and the reasonable costs and expenses of a sale including the amount of attorney's fees fixed in the commercial mortgage by agreement, unless a portion of all of the attorney's fees are waived by the parties or the amount of the attorney's fees is found by a court to be unconscionable, prior to the execution and delivery of a deed pursuant to section 13 of this act, and shall advise all other persons claiming an interest in that property that the property will be sold subject to their claims unless they elect to join the exercise of the power of sale or that the mortgagee claims an interest superior to the claims of such persons and that their interests shall be terminated by the sale unless they take appropriate legal action.

    d. (1) The date of sale specified in the notice of sale shall be at least 30 days from the date the notice is served, mailed or posted pursuant to section 10 of this act, as applicable, and also shall be at least 120 days after the date a notice of default is mailed or served by the mortgagee to the mortgagor pursuant to subsection b. of section 8 of this act.

    (2) If the default by the mortgagor is due to the loss of a tenant or tenants in the property subject to the commercial mortgage and less than 50% of the total rentable square footage in the mortgaged property is rented at the time of a default, the mortgagor may request and shall be entitled to an extension of the date of sale for a period of up to 60 days. Any such request shall be made in writing and shall be sent certified mail, return receipt requested, to the mortgagee or its agent, at least 15 days prior to the first scheduled date of sale. A mortgagor shall be entitled to only one such extension.

 

    10. a. The notice of sale shall be personally served by the mortgagee's attorney or the attorney's agent or any other competent adult not having a direct interest in the mortgaged property being foreclosed. Service shall be made as follows:

    (1) (a) Upon an individual other than a minor under 14 years of age or an incompetent person, by delivering a copy of the notice to the individual personally; or by leaving a copy thereof at the dwelling house or usual place of abode with a competent member of the household of the age of 14 years or over then residing therein; or by delivering a copy thereof to a person authorized by appointment or by law to receive service of process on the individual's behalf;

    (b) Upon a minor under 14 years of age, by delivering a copy of the notice personally to the minor's father, mother or guardian of the person or a competent adult member of the household with whom the minor resides;

    (c) Upon an incompetent person, by delivering a copy of the notice personally to the guardian of the person or a competent adult member of the household with whom the incompetent resides; or, if the incompetent is living in an institution, then to the director or chief executive officer of the institution;

     (2) Upon a domestic or foreign corporation, by serving, in the manner prescribed in subsection a. of this section, either an officer, director, trustee, or managing or general agent; or any person authorized by appointment or by law to receive service of process on behalf of the corporation; or the person at the registered office of the corporation in charge thereof. If service cannot be made upon any of the foregoing, then it may be made upon the person at the principal place of business of the corporation in this State in charge thereof, or if there is no place of business in this State, then upon any servant of the corporation within this State acting in the discharge of his duties. If it appears by affidavit of mortgagee's attorney or of any person having knowledge of the facts that after diligent inquiry and effort, personal service cannot be made upon any of the foregoing and if the corporation is a foreign corporation, then, consistent with due process of law, service may be made by mailing, by registered or certified mail, return receipt requested, a copy of the notice to a registered agent of service, or to its principal place of business, or to its registered office.

    (3) Upon an unincorporated association which is subject to suit under a recognized name and upon a partnership, a limited liability partnership or a limited liability company by serving, in the manner prescribed in subsection a. of this section, an officer, a managing or general agent, or, in the case of a partnership, a partner, or, if it appears that after diligent inquiry and effort, service cannot be made upon any of the foregoing, then, consistent with due process of law, by mailing, by registered or certified mail, return receipt requested, a copy of the notice of sale to a registered agent for service, or to its principal place of business, or to its registered office.

    (4) Upon the State of New Jersey, by registered, certified or ordinary mail or by delivering a copy of the notice personally to the Attorney General or to any person in his office designated by him in writing filed with the Clerk of the Superior Court.

    (5) Upon any county, municipality, or other public body, by delivering a copy of the notice personally to the presiding officer or to the clerk or secretary thereof.

    b. Notice of sale shall be mailed by the mortgagee, if by due diligence, personal service cannot be made on an individual pursuant to paragraph (1) of subsection a. of this section, within seven days of the publication required by subsection c. of this section, to the residence or place where the party to be served usually receives mail, unless it shall appear after due diligence that such residence or place cannot be ascertained after inquiry; and then the publication pursuant to subsection c. of this section shall be deemed sufficient.

    c. A notice of sale shall be published once in a newspaper which is published in the county in which the property is located, or, if there is none, in a newspaper published in this State circulating in that county. In any instance when personal service has not been able to be made on all parties pursuant to subsections a. and b. of this section, a copy of the notice of sale shall be posted upon the property to be sold within seven days after publication. The notice shall be published at least 30 days before the date appointed for selling the property.

     d. A notice of sale shall be recorded in the office of the county clerk or register of deeds of each county wherein the mortgaged property is situated within 30 days after compliance with the provisions of subsection c. of this section. The recording of the notice of sale pursuant to this subsection shall serve as notice of the pendency of the procedure to any person acquiring a subsequent interest in the property. To verify compliance with the notice provisions of section 9 of this act and subsections a., b. and c. of this section, proof of receipt, return of service or affidavit in lieu of personal service, or copies thereof and proof of publication of the notice of sale shall be recorded in the office of the county clerk or register of deeds of each county wherein the mortgaged property is situated any time before the recording of the mortgagee's deed executed pursuant to the sale under this act.

 

    11. The sale shall be held in any county where part of the mortgaged property to be sold is situated at the time designated in the notice of sale, or a date to which the sale has been continued as provided by this act, on a day other than a Saturday, Sunday or legal holiday, between the hours of nine o'clock a.m. and five o'clock p.m. at a specified place on that property, at the courthouse or at another specified place in the county.

 

    12. a. On the date and at the time and place designated in the notice of sale, the mortgagee exercising the power of sale shall cause the mortgaged property to be sold at public auction to the highest bidder. If the mortgaged property is legally divisible into separate lots or parcels, conditional bids shall be received for each and every separate lot or parcel and for the entire property as a whole. The mortgagee shall determine which conditional sale or sales result in the highest total price bid for all of that property. An attorney or other agent for the mortgagee may conduct the sale, and act at the sale as the auctioneer for the mortgagee. Any person, including the mortgagee or mortgagor may bid at the sale. Every bid shall be deemed an irrevocable offer, until the sale is completed and the sale shall not be deemed completed until the purchaser pays the price bid in a form satisfactory to the mortgagee. If a purchaser other than the mortgagee, when required by the mortgagee, fails to post cash or certified funds equal to 15% of the amount bid for the mortgaged property, the mortgagee may proceed with the sale and may accept the next highest bid. The party that fails to make the payment shall be liable to any person who suffers loss or expenses, including attorney's fees, occasioned thereby and the mortgagee may thereafter in any sale of the mortgaged property reject any bid of that person. The 15% deposit shall be placed and held in escrow by the mortgagee pending completion of the sale. In the event a purchaser fails to complete the transaction of sale within 30 days of the sale or a longer reasonable time permitted by the mortgagee in writing, any deposit shall be applied first to the expenses of the sale and the balance to the debt, and the purchaser shall be liable to any person who suffers loss or expenses, including attorney's fees, occasioned by the resale of the mortgaged property.

     b. The person conducting the sale, for any cause deemed in the interest of the mortgagee, the mortgagor, or both, may postpone or continue the sale or change the place of the sale to another location permitted by law, by giving notice, including the new time and place, by public declaration at the time and place last appointed for the sale and in any other manner reasonable under the circumstances which shall include publication one time at least 10 days prior thereto of a notice of the new date, time and place of sale, such notice to be directed to the same persons as the original notice of sale, and proof of publication then to be filed in the office of the county clerk of each county wherein the mortgaged property to be sold is situated any time before the recording of the mortgagee's deed executed pursuant to the sale under this act. No other notice of the postponed, continued, changed or relocated sale is required.

 

    13. a. The sale shall be closed at a time and under reasonable conditions determined and specified by the mortgagee at the time of the sale. Upon receipt of payment in form satisfactory to the mortgagee, the mortgagee shall execute and deliver a deed, without warranty or covenants to the purchaser, except as specifically set forth in this act, and which identifies the mortgagee's and other interests foreclosed and the parties involved and indicates where the documents evidencing those interests are recorded, recites the amount of the successful bid, and recites that the deed is executed by the mortgagee exercising a power of sale after a breach or default and sale under this act. Signature and title or authority of the person signing the deed as grantor is sufficient proof of the signer's authority to sign. Further proof is not required even though the signer is also named as grantee in the deed. The mortgagee's deed shall raise a presumption of compliance with the requirements of this act regarding the exercise of the power of sale and the sale of the mortgaged property, including the giving of the notice of default and of sale and the conduct of sale. Such deed shall constitute conclusive evidence of the meeting of such requirements in favor of purchasers for value and without actual notice so long as the failure to meet those requirements would otherwise render the sale only voidable and, even if the sale is void, the deed shall constitute conclusive evidence of the meeting of the requirements in favor of purchasers for value and without actual notice after the passage of two years from the date of the recording of the deed, unless a contrary determination is made within such two-year period by a court of competent jurisdiction.

    b. The mortgagee's deed, pursuant to compliance with the provisions of this act, shall have the same effect as delivery of a valid sheriff's deed in a judicial foreclosure process and shall operate to convey to the purchaser the title, interest and claim of the mortgagee and of the mortgagor and their respective successors in interest, and of all persons claiming an interest in the property sold which was acquired subsequent to the recording of the commercial mortgage pursuant to which the power of sale is exercised and prior to delivery of the mortgagee's deed. Such conveyance shall be absolute, without right of redemption and clear of all liens, claims, or interests to the extent provided in this section, if the record shows that all necessary parties were duly notified or served with process as required pursuant to this act and except for any statutory right of redemption which may be held by the United States of America under authority of 28 U.S.C.§ 2410.

 

     14. a. The mortgagee shall apply the proceeds of the sale of the mortgaged property as follows:

    (1) To the reasonable costs and expenses of exercising the power of sale and of the sale, including the payment of reasonable attorney's fees actually incurred; and

    (2) Unless otherwise required by law, to the payment of the contract or indebtedness secured by the commercial mortgage, the payment of all other obligations provided in or secured by the commercial mortgage, and the obligations of any junior lienholders or encumbrancers, in order of their priority as otherwise provided for by law. After payment in full to all junior lienholders and encumbrancers, payment shall be made to the party who is the owner of the property immediately preceding the sale.

    b. In lieu of making payments to subordinate lienholders or encumbrancers or the mortgagor, the mortgagee may elect to deposit all or any part of the sale proceeds which exceed the amount due to the mortgagee with the clerk of the Superior Court subject to order of the Superior Court upon the application of any interested party. Upon deposit of such monies together with a legal description of the property whose sale produced the proceeds, the mortgagee shall be discharged from all responsibility for acts performed in good faith according to the provisions of this act.

 

    15. a. A mortgagor who claims not to be in default or claims any other valid defense to the non-judicial foreclosure by power of sale may commence a summary proceeding in Superior Court to contest the proposed sale.

    b. Nothing herein shall be deemed to affect any right of possession a mortgagee may have to the property prior to the completion of the sale or to limit the equitable jurisdiction of the courts with respect to mortgages or with respect to the provisions of this act.

 

    16. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill provides a lender who makes commercial mortgage loans the authority to include a power of sale provision in a commercial mortgage and the holder of a commercial mortgage containing such a provision the authority to exercise this power of sale upon default by the mortgagor. The use of power of sale mortgages is consistent with the common law relating to mortgage foreclosures. In addition, in a transaction in which the lender intends to include a power of sale provision in a commercial mortgage, the lender is required to indicate this intent in the commitment as well as specifically inform the borrower of the conditions under which the borrower may be liable for a deficiency under a power of sale agreement.

    Upon the default by the mortgagor and before exercising a power of sale, the mortgagee is required to mail a notice of default to the mortgagor, by certified mail, return receipt requested, by which notice the mortgagor is informed of the default and is provided with the following information: the particular commercial mortgage under which the mortgagee intends to exercise a power of sale; the nature of the default claimed; that the mortgagee has accelerated the maturity of the debt, if that is the case; the right of the debtor to cure the default, the amount to be paid or other actions necessary to cure and the time by which such cure must take place; the methods by which the mortgagor's ownership of the mortgaged property may be terminated; any right to transfer the mortgaged property and the transferee's rights, if any, to cure; the circumstances under which the mortgagor's right to possession will be terminated and the consequences of such termination; and the right of the debtor to any surplus from the sale.

     The bill provides that a mortgagor may cure a default up to the date and time of the sale. This right is unlimited, except that the mortgagee has the right to take action in a court of competent jurisdiction to seek to establish that the mortgagor is abusing that right. If the mortgagee establishes that the mortgagor is abusing the right to cure and there is no other basis for delay, the court is required to order the sale of the mortgaged premises no sooner than 30 days after publication of a notice of sale, if there is no other basis for delay. If the mortgagee executes a notice of sale, the mortgagee is required to serve the mortgagor and other parties in interest with the notice, publish the notice in a paper with circulation in the county in which the property is located at least 30 days before the date of the sale and record the notice in the county recorder's office. The date of the sale specified in the notice of sale must be not sooner than 120 days after a notice of default is mailed by a mortgagee to a mortgagor.

    Under the bill, if the default by the mortgagor is due to the loss of a tenant or tenants in the property subject to the mortgage and less than 50% of the total rentable square footage in the mortgaged premises is rented, the mortgagor may request, and is entitled to, an extension of the date of sale for a period of up to 60 days. This request has to be made in writing and sent certified mail, return receipt requested, at least 15 days before the first scheduled date of sale. A mortgagor is entitled to only one such extension.

    The sale shall take place in any county in which part of the property to be sold is situated, on the date and at the time and specific place designated in the notice of sale. The sale may be conducted by an agent of the mortgagee. Any person, including the mortgagee and mortgagor, may bid at the sale. The mortgagee may require a purchaser, other than the mortgagee, to post cash or certified funds equal to 15% of the amount bid for the property. If the purchaser fails to post the required amount, the mortgagee may continue the sale and may accept the next highest bid. The purchaser has 30 days, or a longer period of time as agreed to by the mortgagee, to complete the sale by submitting an amount necessary to pay the full amount bid.

    Upon completion of the sale, the mortgagee is to execute and deliver a deed, without warranty, to the purchaser. This deed operates to convey to the purchaser the title, interest and claim of the mortgagee, the mortgagor and their respective successors in interest and of all persons claiming an interest in the property sold. Under the bill, if the record shows that all necessary parties were duly notified or served with process, this conveyance is absolute, without right of redemption and clear of all liens, claims, or interests.

    Under the bill, a mortgagor has the right to redeem by paying all principal, interest and other sums secured by the commercial mortgage prior to the execution and delivery of the deed. The execution and delivery of a deed can take place at any time up to 30 days, or a longer period of time agreed to by the mortgagee, after closing the sale. In addition, if the mortgagor has specifically agreed in a separate document recorded with the mortgage or on the mortgage agreement, he is also liable for any deficiency between the amount obtained by the mortgagee from the sale and the amount of the indebtedness, interest and the reasonable costs and expenses of the sale. However, if the amount obtained from the sale is less than the current fair market price, the deficiency will be reduced by the amount by which the fair market price exceeds the sale price.

 

 

                             

 

Provides for non-judicial foreclosure of commercial mortgages.