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Pennsylvania: State Supreme Court Rules on Act 91 Notice

by Lisa A. Lee and Michael T. McKeever
KML Law Group, P.C. – USFN Member (PA)

On September 25, the Supreme Court of Pennsylvania issued its opinion in the case of Beneficial Consumer Discount Company v. Vukman. The concurrence opinion is also provided for convenient reference.

The Superior Court opinion in the Vukman matter, affirming the order of the Court of Common Pleas of Allegheny County, held that the uniform Act 91 Notice prescribed by the Pennsylvania Housing Finance Agency, and in effect prior to September 8, 2008, was deficient and, as a result, the court lacked jurisdiction over the mortgage foreclosure action. This opinion had potentially wide-ranging effects because of the impact of the decision that the provision of the Act 91 Notice was a jurisdictional requirement.

The Pennsylvania Supreme Court has now laid this issue to rest, holding that the Act 91 Notice is not a jurisdictional requirement in a mortgage foreclosure action.

This means that, consistent with the Homeowner Assistance Settlement Act (Pa. Act 70), any challenge to an Act 91 Notice must be raised prior to the delivery of the sheriff’s deed in the foreclosure action. If it is raised, the homeowners must also prove that they were actually harmed by the defect (if any) in the notice. Once the sheriff’s deed is delivered to the lender or recorder of deeds, the right of the homeowners to object to lack of proper notice is theoretically terminated. Pa. Act 70 further provides that the failure of a lender to strictly comply with Act 91 does not necessarily result in the dismissal of the foreclosure action, and the court has jurisdiction over the matter even if the notice contains a defect. Additionally, in any completed cases where the notice was sent that may not have strictly complied with the law, this alone does not create a cloud on title, protecting title insurers who had relied on the state of the law prior to the Vukman decision. Pa. Act 70 covers all notices sent since June 5, 1999.

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