PRINTER'S NO. 1875
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1191
Session of
2015
INTRODUCED BY BLAKE, ARGALL, EICHELBERGER, TEPLITZ, FONTANA,
COSTA, YUDICHAK, RAFFERTY, SCHWANK AND MENSCH, JUNE 6, 2016
REFERRED TO BANKING AND INSURANCE, JUNE 6, 2016
AN ACT
Providing for the certification of mortgaged property as vacant
and abandoned in an action for mortgage foreclosure,
possession, quiet title or similar action to enforce an
obligation in a mortgaged property, for effect of
certification and for additional sheriffs' fees.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Vacant and
Abandoned Real Estate Foreclosure Act.
Section 2. Legislative findings and purpose.
The General Assembly finds and declares that:
(1) Vacant and abandoned real estate, coupled with a
default in the obligation to make mortgage payments secured
by that real estate, presents a danger to the health, safety
and welfare of a community.
(2) Vacant and abandoned real estate often is not
repaired, restored and returned to productive use until
either a creditor or municipality acquires title to the real
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estate.
(3) An accelerated procedure is needed to maintain the
due process rights of owners of real estate and to reduce
unnecessary delays in an action of mortgage foreclosure or an
action for possession or similar actions to recover real
estate that is vacant and abandoned.
Section 3. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Action for possession." An action in ejectment initiated by
a purchaser to take control of mortgaged property.
"Action to quiet title." An action to resolve claims to
title to a mortgaged property initiated by a creditor or
purchaser.
"Creditor." A person authorized to enforce an obligation
secured by a mortgage or an authorized agent of the creditor,
including a servicer.
"Foreclosure action." An action initiated by a creditor to
enforce a mortgage obligation.
"Mortgage." A consensual interest in real property that
secures an obligation.
"Mortgaged property." Real property that is subject to a
mortgage and improved with buildings or structures intended for
any type of human occupancy, including a formerly mortgaged
property conveyed to a purchaser at a sheriff's sale or pursuant
to a deed in lieu of foreclosure.
"Municipal board of appeals." The body designated to review
decisions of a municipal code enforcement officer pursuant to
the act of November 10, 1999 (P.L.491, No.45), known as the
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Pennsylvania Construction Code Act.
"Municipal code enforcement officer." The official
designated to administer and enforce building codes in a
municipality designated pursuant to section 501 of the act of
November 10, 1999 (P.L.491, No.45), known as the Pennsylvania
Construction Code Act.
"Municipality." A city, borough, township or incorporated
town.
"Obligation." A debt or other duty or liability of an
obligor secured by a mortgage.
"Obligor." A person that:
(1) owes payment or performance of an obligation;
(2) has signed a mortgage agreement with respect to
mortgaged property; or
(3) is otherwise accountable in whole or in part for
payment or performance of an obligation.
"Proceeding." A foreclosure action, an action for possession
or an action to quiet title.
"Property address." The address of a mortgaged property or
any other address provided by the owner or obligor in mortgage
documents or in subsequent correspondence sent by the owner or
obligor to change the address for notification specified for use
in mortgage documents.
"Purchaser." Any of the following:
(1) a person that acquires title to a mortgaged property
at a sheriff's sale conducted pursuant to a foreclosure or
similar action;
(2) an assignee of a purchaser who has paid settlement
funds and delivered required documentation to the sheriff to
obtain a sheriff's deed or the owner of a property under a
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recorded sheriff's deed to the property; or
(3) a person that takes title to a mortgage property
pursuant to a deed in lieu of foreclosure.
"Record." As a noun, the term means information that is
inscribed on a tangible medium or is stored in an electronic or
other medium and is retrievable in perceivable form.
"Residential mortgaged property." A mortgaged property
located within this Commonwealth containing two or fewer
residential units or on which two or fewer residential units are
to be constructed, including a residential condominium unit.
"Servicer." A person that is responsible for servicing an
obligation, including a person that holds or owns an obligation
or originates a mortgage loan if the person also services the
obligation.
"Vacant and abandoned property." Property that meets the
requirements for certification as provided in section 5.
"Vacant property." Mortgaged property with respect to which
the owner and all persons claiming through the owner, including
tenants, have relinquished possession. The term does not include
unoccupied mortgaged property that is:
(1) undergoing construction, renovation or
rehabilitation and that is proceeding with reasonable
diligence to completion;
(2) physically secured and used or held for use by the
homeowner as a vacation or seasonal home; or
(3) physically secured and the subject of a probate
action or other litigation in which ownership is contested.
Section 4. Certification of vacant and abandoned mortgaged
property.
(a) General rule.--After a creditor gives notice to an
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obligor of a delinquency or other default with respect to an
obligation secured by a mortgage or initiates a foreclosure
action or action for possession or to quiet title, a mortgaged
property for which the notice is given or proceedings are
initiated shall be certified as vacant and abandoned if:
(1) a creditor or purchaser has been designated as a
conservator of the mortgaged property under section 5 of the
act of November 26, 2008 (P.L.1672, No.135), known as the
Abandoned and Blighted Property Conservatorship Act;
(2) the mortgaged property is certified as vacant and
abandoned by the municipality in which the mortgaged property
is located in the manner provided by subsection (b); or
(3) the mortgaged property is certified as vacant and
abandoned in a proceeding in the manner provided by
subsection (c).
(b) Municipal certification.--A mortgaged property shall be
deemed vacant and abandoned by the municipality in which the
mortgaged property is located if:
(1) A creditor requests that the municipal code
enforcement officer for the municipality make a determination
that the mortgaged property is vacant and abandoned.
(2) The municipal code enforcement officer inspects the
mortgaged property, determines that the mortgaged property is
vacant and abandoned pursuant to the requirements of section
5 and gives notice of any such determination in the manner
otherwise provided by law for the giving notice of municipal
code violations.
(3) The creditor pays or agrees to pay a fee not to
exceed 110% of the reasonable costs for the municipal code
inspection officer to conduct an inspection of the mortgaged
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property, to prepare a report of the inspection, to give
notice of the results of the inspection to the creditor and
the obligor and to participate in any appeals of a
determination that the mortgaged property is vacant and
abandoned.
(4) The owner of the mortgaged property fails to seek
review of a determination that the mortgaged property is
vacant and abandoned by the municipal board of appeals within
30 days or, if a timely request for review is filed, a final
determination is made that the mortgaged property is vacant
and abandoned.
(c) Judicial certification.--A mortgaged property shall be
deemed certified in a proceeding as follows:
(1) In a proceeding, a creditor or purchaser may file a
request with the prothonotary to issue a rule to show cause
why the mortgaged property should not be certified as vacant
and abandoned by submitting an affidavit:
(i) supported as appropriate by images or other
appropriate evidence, alleging that the mortgaged
property qualifies for certification as vacant and
abandoned pursuant to the requirements of section 5; and
(ii) submitted subject to the penalties for false
swearing under 18 Pa.C.S. § 4903 (relating to false
swearing).
The request may be filed together with the original complaint
in the proceeding or at any time during the course of the
proceeding.
(2) The affidavit that the mortgaged property is vacant
and abandoned may be provided by a municipal code enforcement
officer, the creditor or purchaser or by any competent adult
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who has personal knowledge of the condition of the mortgaged
property, including a property inspector or agent retained by
a creditor.
(3) A request for a rule to show cause need not be
served on the owner of the mortgaged property or any obligor
other than the owner, but the rule issued by the prothonotary
shall be served on the owner or obligor in the manner
provided by paragraph (5).
(4) Within 10 business days of receipt of the request
for a rule to show cause, the prothonotary shall provide a
rule to show cause to the creditor or purchaser if the
affidavit contains assertions of fact that comply with the
requirements for certification as vacant and abandoned as
provided by section 5.
(5) The rule to show cause shall be served on the owner
and any obligor other than the owner by the creditor or
purchaser as follows:
(i) If the owner or any obligor other than the owner
is represented by counsel in a proceeding in which the
rule to show cause is issued, the rule may be served by
delivery of the rule to show cause to counsel for the
owner or obligor.
(ii) If the owner or any obligor other than the
owner is not represented by counsel in the proceeding,
the creditor shall make at least two attempts to
personally serve the rule to show cause. Attempts at
personal service may occur at the property address and
the address specified in the county tax assessor's office
for the delivery of property tax bills for the mortgaged
property. The attempts shall be at least 72 hours apart
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at reasonable times. If the creditor cannot complete
personal service on any party, service may be completed
by delivery of notice by first class mail to the
addresses at which personal service may be made and by
posting of the property in a conspicuous manner.
(iii) A rule to show cause may be served on the
owner or any obligor other than the owner in the manner
provided by this paragraph regardless of whether service
of a complaint in a proceeding has been completed.
(6) A copy of the rule to show cause shall be delivered
by the creditor or purchaser by first class mail to the
municipal code enforcement officer for the municipality in
which the mortgaged property is located.
(7) If a response to the rule to show cause is not filed
within 20 days, the court shall render an order certifying
the mortgaged property as vacant and abandoned.
(8) If a timely response to the rule to show cause is
filed, the court shall schedule a hearing to determine if
credible evidence exists to certify the mortgaged property as
vacant and abandoned within not fewer than 20 nor more than
30 days after proof of service of the rule to show cause in
the manner provided by paragraph (5).
Section 5. Requirements to certify mortgaged property as vacant
and abandoned.
(a) General rule.--A mortgaged property may be certified as
vacant and abandoned by a municipal code enforcement officer
under section 4(b) or in a judicial proceeding under section
4(c) if the mortgaged property is vacant and satisfies at least
two of following indicia of abandonment:
(1) Multiple windows, doors or entrances on the property
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are boarded up, unhinged, closed off, smashed in or are
continuously unlocked.
(2) The mortgaged property has been stripped of copper
or other metals.
(3) Interior furnishings, personal items, appliances or
fixtures have been removed from the mortgaged property,
including window treatments, such as blinds, curtains or
shutters.
(4) Gas, electric, water or sewer utility services have
been terminated to the mortgaged property or are established
in the name of the creditor to preserve the mortgaged
property.
(5) Newspapers, circulars, flyers or mail have
accumulated on the mortgaged property or the United States
Postal Service has discontinued delivery to the mortgaged
property.
(6) Rubbish, trash, debris, neglected vegetation or
natural overgrowth has accumulated on the mortgaged property.
(7) Multiple municipal building or housing code
violations exist for the mortgaged property, which violations
have been documented as being uncorrected during the
preceding year.
(8) Written and signed statements have been issued by
the mortgaged property's adjoining neighbors, adjacent
neighbors, delivery persons or a municipal code enforcement
officer indicating that the mortgaged property is vacant and
abandoned.
(9) Hazardous, noxious or unhealthy substances or
materials have accumulated on the mortgaged property.
(10) Other credible evidence exists indicating the
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intent of the owner or obligor to vacate and abandon the
mortgaged property.
(b) Determining vacancy.--Any competent evidence may be
relied on to determine that a mortgaged property is vacant,
including evidence that:
(1) The mortgaged property was found to be vacant at the
time of two inspections occurring at least 30 days apart.
(2) After the first inspection the mortgaged property
was posted with a notice advising any occupant of the
mortgaged property to immediately contact the person who
conducted the inspection and advising that failure to do so
may have adverse legal consequences.
(3) There was no response to the notice posted after the
first inspection was received from a person legally entitled
to occupy the mortgaged property prior to the second
inspection.
(c) Corrective action by creditor or purchaser.--The
remediation of conditions that provide evidence of abandonment
under subsection (b) by the creditor or purchaser or corrective
action taken by a municipality or other person to protect the
public health and welfare shall not prevent a mortgaged property
from meeting the requirements to be certified as vacant and
abandoned.
Section 6. Effect of certification of vacancy and abandonment.
(a) Foreclosure action.--In a foreclosure action, a
mortgaged property certified as vacant and abandoned shall not
be subject to mediation, conciliation, diversion or other
program established by a local court to encourage resolution of
owner-occupied residential mortgage foreclosures.
(b) Service and notification.--Following a certification
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that a mortgaged property is vacant and abandoned, any
subsequent documents required to be served on and any notices
required to be delivered to the owner and any obligor other than
the owner may be exclusively served and delivered by first class
mail to an address specified by the owner or obligor for the
receipt of communications relating to the property or, if no
such address is specified, by delivery to the address of the
mortgaged property and by posting of notice in a conspicuous
location on the mortgaged property.
(c) Scheduling of sheriff's sale.--
(1) If a mortgaged property is certified as vacant and
abandoned, the sheriff on receipt of an accelerated sale fee
of $500 shall schedule a sale of the mortgaged property
within 60 days following the filing of the writ of execution
and the sheriff's deed must be recorded no later than 30 days
following the sale.
(2) The accelerated sale fee shall be payable at the
time of the filing of the writ of execution and shall be
immediately refunded if:
(i) the time frames specified in this subsection are
not complied with; or
(ii) if the expedited sale date is postponed or
continued by any party other than the creditor.
(d) Scheduling of execution of writ of possession.--
(1) If a mortgaged property is certified as vacant and
abandoned, the sheriff on the receipt of an additional fee of
$250 shall accelerate the scheduling of execution of a writ
of possession.
(2) In order to impose the additional fee, the sheriff
must schedule the removal of a former owner's personal
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property from the mortgaged property and the securing of the
personal property within 30 days or less following the filing
of the writ of execution.
(3) The additional fee shall be immediately refunded if:
(i) the time frames set forth above are not complied
with; or
(ii) the expedited execution is postponed or
continued by any party other than the purchaser.
(e) Possession of mortgaged property pending foreclosure.--
If a mortgaged property is certified as vacant and abandoned or
with the consent of the owner or any obligor other than the
owner, the creditor may enter the mortgaged property peacefully
for the purpose of inspecting, maintaining and repairing the
mortgaged property and shall not be liable to the owner for
trespass or for damage to the property resulting from a cause
other than the creditor's gross negligence or willful
misconduct.
(f) Property maintenance.--
(1) The maintenance obligations of a creditor that
exercises the right to possession pending foreclosure are
limited to compliance with property maintenance requirements
of the Federal Housing Administration for loans insured by
the administration or of Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation for
mortgages held by either respective entity.
(2) For other creditors, the mortgaged property
maintenance obligations of a creditor that exercises its
right to possession pending foreclosure shall be limited to:
(i) Care for the yard and exterior of a building on
vacant and abandoned mortgaged property, including
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removing excessive foliage growth that diminishes the
value of surrounding properties.
(ii) Measures reasonably necessary to prevent
trespassers from remaining on the mortgaged property.
(iii) Preventing mosquito larvae from growing in
standing water on the mortgaged property and infestations
by other vermin and insects.
(iv) Taking other actions needed to prevent
conditions on the mortgaged property that create a
serious and imminent hazard to public health or safety.
Section 7. Post-sheriff's sale possessory action, effect of
certification of vacancy and abandonment in action
for possession and disposition of abandoned personal
property.
(a) Removal of personal property by former owner.--
(1) When a former owner relinquishes possession of
mortgaged property certified as vacant and abandoned, the
former owner shall remove from the mortgaged property all
items of personal property.
(2) For the purposes of this section, a former owner
shall be deemed to have relinquished possession when the
former owner has:
(i) physically vacated the premises;
(ii) removed substantially all of the former owner's
personal property; or
(iii) provided a forwarding address or written
notice stating that the former owner has vacated the
premises or otherwise communicated to the creditor that
the former owner has relinquished possession of the
mortgaged property.
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(b) Removal of personal property by purchaser.--If the
former owner fails to remove personal property from mortgaged
property certified as vacant and abandoned after delivery of a
sheriff's deed or a deed in lieu of foreclosure, concurrent with
the filing of an action for possession or at any time after the
action is filed, the purchaser may remove the remaining personal
property of the former owner in the following manner:
(1) The purchaser shall serve notice of intent to remove
personal property from the mortgaged property on the owner in
the manner provided by section 6(b).
(2) The purchaser shall conspicuously post a personal
property removal notice that includes:
(i) the date the notice was posted;
(ii) the address of the mortgaged property;
(iii) the date of the sheriff's sale or the date the
title was acquired by the purchaser;
(iv) a notice that personal property that remains on
the mortgaged property must be retrieved by the former
owner;
(v) a statement that:
(A) The former owner has 10 days from the date
of the notice to notify the purchaser that the former
owner will be retrieving the personal property.
(B) If the intent to retrieve is conveyed to the
purchaser, the personal property shall be retained by
the purchaser at the mortgaged property or a site of
the purchaser's choosing for 30 days from the date of
the notice.
(C) If no communication is made to purchaser
within 10 days, the personal property may be disposed
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of at the discretion of the purchaser; and
(vi) a telephone number, e-mail or facsimile number
and address for the purchaser or its agent where they can
be contacted and the location where the personal property
can be retrieved, if not at the mortgaged property, and a
statement that retrieval of the personal property after
10 days will require the former owner to pay for costs
related to the storage of the personal property.
(3) At all times between posting of the personal
property removal notice and the expiration of the 10-day
period, the purchaser shall exercise ordinary care with
regard to any personal property that the former owner left in
or on the mortgaged property.
(4) At the expiration of the 10-day period, the
purchaser shall owe no duty to the former owner with regard
to caring for the personal property and may, in the
purchaser's discretion, dispose of the personal property
subject to the following:
(i) If the personal property is sold and proceeds
exceed any outstanding obligations owed to the owner or
obligor, the proceeds shall be forwarded to the former
owner by certified mail.
(ii) If no forwarding address has been provided to
the purchaser by the former owner, the owner shall hold
the proceeds for 30 days and, if unclaimed, may retain
the proceeds.
(5) If the purchaser has issued a personal property
removal notice to the former owner, the purchaser may store
the former owner's personal property at another location
within reasonable proximity to the mortgaged property subject
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to the following:
(i) If the purchaser stores the personal property at
another location, the purchaser may remove the personal
property from the mortgaged property by any means
reasonably calculated to safeguard the personal property
for the time period required under this section.
(ii) A former owner shall not be required to pay any
costs related to the removal or storage of personal
property by the purchaser if the former owner retrieves
the personal property within 10 days of the date of the
notice.
(6) If the former owner or occupant retrieves the
personal property after 10 days of the date of the notice but
before 30 days, the former owner shall pay any reasonable and
actual costs related to the removal or storage of the
personal property by the purchaser for that time period.
Section 8. Sheriff's commission and creditor's attorney fees.
(a) When commission payable.--
(1) With respect to a mortgaged property, the commission
payable to the sheriff provided by section 4(b) of the act of
July 6, 1984 (P.L.614, No.127), known as the Sheriff Fee Act,
shall not be due unless the mortgaged property is sold at the
execution sale conducted by the sheriff.
(2) If the execution sale of the property is stayed,
canceled, withdrawn or postponed due to bankruptcy,
reinstatement of the loan, payoff of the loan, a loan
modification or other resolution or for any other reason, the
sheriff shall not be entitled to the commission.
(b) Limitation on creditor's attorney fees.--
(1) A creditor that incurs attorney fees related to a
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delinquency or event of default may include the amount of the
attorney fees in the mortgage obligations, provided the fees:
(i) Are reasonable and do not exceed 0.3% of the
amount of the "base figure" as provided by section 101 of
the act of January 30, 1974 (P.L.13, No.6), referred to
as the Loan Interest and Protection Law.
(ii) Are not incurred prior to the 30-day notice
period provided in section 403 of the Loan Interest
Protection Law.
(2) The attorney fee limitation provided in this
subsection shall be adjusted annually as the base figure is
adjusted by the Department of Banking and Securities under
section 101 of the Loan Interest and Protection Act and the
resulting limitation shall be published as a notice in the
Pennsylvania Bulletin by the Department of Banking and
Securities.
Section 9. Construction.
Nothing is this act shall be construed to limit or restrict
in any manner any other remedies available at law or in equity
to a creditor or purchaser in a proceeding.
Section 10. Inconsistent repeals.
The following parts of acts are repealed to the extent of any
inconsistency with this act:
(1) Section 406(3) of the act of January 30, 1974
(P.L.13, No.6), referred to as the Loan Interest and
Protection Law.
(2) Section 7 of the act of July 6, 1984 (P.L.614,
No.127), known as the Sheriff Fee Act.
Section 11. Applicability.
This act shall apply to proceedings commenced before, on or
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after the effective date of this section.
Section 12. Effective date.
This act shall take effect in 90 days.
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