January 5, 2016
by Samuel Jackson
Wilson & Associates, PLLC – USFN Member (Arkansas, Tennessee)
Last year the Arkansas General Assembly passed Act 1139/A.C.A. 18-27-103, a bill that offers guidance on the treatment of personal property after a foreclosure sale. Act 1139 is a welcome regulation for the mortgage foreclosure industry because it shields purchasers from liability for disposing of property without having first completed a full eviction. Before the bill’s passage, a purchaser at foreclosure sale was required to make a judgment call: proceed with the expense of a full lawsuit, or take a risk and dispose of personal property with the hope that it was, in fact, abandoned. Purchasers can now rest more easily when removing personal property from the vacant premises.
As stated above, Act 1139 classifies some personal property as abandoned, relieving the purchaser from liability for disposing of it. The Act provides guidelines for disposing of personal property on vacant foreclosed property, and shields the purchaser from liability when either of the two avenues provided in the text are fulfilled. A.C.A. 18-27-103 states that “all personal property remaining on the land or in a structure on the land shall be considered abandoned if the owner of the personal property has received notice of the sale of the land.” The personal property is considered abandoned and liability will not attach if the owner has not removed the personal property within thirty days of the recording of the deed commemorating the sale.
The other leg of the statute classifies personal property as abandoned if the purchaser mails notice of the sale to the last-known mailing address of all previous occupants, and posts notice of the sale of the land. The personal property is abandoned if the owner has not removed the items or notified the purchaser in writing of the owner’s claim to the personal property within thirty days. So long as the notice is mailed and posted in accordance with this requirement, the property will be considered abandoned after thirty days regardless of whether the occupants actually received notice. The notice must be dated, mailed by certified mail, and posted conspicuously on the land; plus it has to contain a statement that the personal property must be removed or claimed within thirty days.
18-27-103(c) states that “[a] purchaser of land that disposes of personal property that is considered abandoned under this section is not subject to liability or suit.” If either of these requirements is met, the property is considered abandoned and may be disposed of as needed. This relieves the purchaser from liability for disposing of the personal property as well as the expense of proceeding with the full eviction lawsuit to ensure that a property is vacant.
However, in the event that the owner of the personal property wants the personal property, the Act provides further guidance. If the owner does not remove the personal property within thirty days, but gives the purchaser written notice of his or her claim, the purchaser may remove the personal property and store it at the owner’s expense for up to thirty days. The owner must remove the personal property from storage and pay the reasonable expense of storage within thirty days; otherwise the personal property is considered abandoned. There are also some limitations to the Act, in that mobile homes and/or abandoned personal property on which a creditor holds a lien or security interest may not be considered abandoned under the section.
This statute is very new and has yet to be debated in the courts, but it offers clear guidance for purchasers at foreclosure sale to obtain possession of property more cheaply and efficiently. The practice should provide significantly faster turnover of possession post-foreclosure, easing the costs of managing properties and reducing the risks and costs of upkeep on a property that is not yet available for marketing and sale.
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