Chapter 13 : Foreclosure and Judicial Proceedings

• Library: Standards for Examination of Real Estate Titles in Arkansas (2021 Ed.)

CHAPTER 13: FORECLOSURE AND JUDICIAL PROCEEDINGS

Standard 13.1 Implied Power of Sale for Non-Judicial Foreclosure

A power of sale is implied in every mortgage properly acknowledged and recorded in Arkansas¹⁶⁹ except for mortgages or deeds of trust encumbering properties used primarily for agricultural purposes.¹⁷⁰

Standard 13.2 Appointment of Trustee or Attorney-in-Fact for Non-Judicial Foreclosure

The beneficiary of a deed of trust may appoint a successor trustee, or an attorney-in-fact in the case of a mortgage, to conduct a statutory foreclosure. The appointee must be an Arkansas licensed attorney who maintains an office within the state, is accessible to the public during regular business hours, and has the ability to accept funds to reinstate or pay off a mortgage or deed of trust.¹⁷¹ The Appointment of Successor Trustee ("AOST") or Power of Attorney ("POA") must be recorded prior to the trustee's or mortgagee's deed¹⁷² and may ratify actions taken prior to its recording.¹⁷³ The AOST or POA must identify the security instrument by stating the names of the original parties and recording information, shall state the name of the new trustee, and must be executed and acknowledged by the current beneficiary.¹⁷⁴

Standard 13.3 Non-Judicial Pre-foreclosure Notice

At least 10 days prior to initiating foreclosure, the current beneficiary of the security instrument must provide certain documents and notices to the debtor, including true and correct copies of the note and security instrument, the name of the holder and physical location of the original note, loss mitigation information, and a payment history when the default is due to failure to make payments.¹⁷⁵ This duty cannot be delegated to the appointed trustee or attorney-in-fact.¹⁷⁶

Standard 13.4 Non-Judicial Foreclosure Notice of Default and Intention to Sell

At least 60 days prior to the sale, an acknowledged Notice of Default and Intention to Sell ("NOD") must be recorded in the property records at the appropriate recorder's office based on the location of the foreclosed prop-erty.¹⁷⁷ The notice must include the following information:

1. The parties to the mortgage or deed of trust;
2. Legal description and street address of the property;
3. Book/page or instrument number of the mortgage or deed of trust;
4. The reason for default;¹⁷⁸
5. A clear statement of the intention to sell the property;
6. The words "YOU MAY LOSE YOUR PROPERTY IF YOU DO NOT take IMMEDIATE ACTION.";
7. Time, date, and place of sale; and
8. Name, address, and phone number of the party initiating the foreclosure.¹⁷⁹

The filing of the NOD has the same force and effect as a lis pendens.¹⁸⁰

A copy of the NOD must be posted by a third party at the county courthouse and on the internet. The NOD must also be published in a newspaper once a week for four weeks prior to the sale with the final publication being within 10 days of the sale.¹⁸¹

A copy of the NOD must also be mailed by certified and regular mail to the following parties:

1. Mortgagor, grantor, and obligor of the security instrument;
2. Successors of interest to the mortgagor or grantor if the foreclosing party has actual or record notice;
3. Junior lienholder or interest holders to which the foreclosing party has actual or record notice; and
4. Any parties that request notice.¹⁸²

Standard 13.5 Disability, Incapacity, or Death of Party Entitled to Notice in Non-Judicial Foreclosures

The disability, incapacity, or death of a party entitled to receive notice of the sale shall not delay the foreclosure sale. Notice should be provided to the guardian, conservator, administrator, or executor, as applicable.¹⁸³

Standard 13.6 Affidavit of Mailing and Publication for Non-Judicial Foreclosure

An affidavit must be filed prior to the sale attesting that the NOD was properly mailed to the required parties and was properly published.¹⁸⁴

Standard 13.7 Non-Judicial Foreclosure Sale

The foreclosure sale must be held on a weekday between 9:00 a.m. and 4:00 p.m. at the subject property or at the front door of the county courthouse. A foreclosure sale must not be held on a legal holiday.¹⁸⁵

The sale date may be postponed by announcing the postponement at the date and time of the originally scheduled sale or by posting written notice at the sale location.¹⁸⁶ If the sale is postponed for more than 30 days, notice of the new sale date must be mailed by certified and regular mail to all parties entitled to receive the NOD.¹⁸⁷

The sale must be conducted by a third party who is both a licensed real estate agent and licensed auctioneer.¹⁸⁸

Bids must be accepted from any party and must be at least 2/3 of the entire indebtedness due at the time of sale.¹⁸⁹ Any funds exceeding the foreclosure costs and the indebtedness owed must be paid to any parties with junior liens in the order of priority.¹⁹⁰

Standard 13.8 Rescinding the...