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2009 Real Estate Laws of Interest
Real Estate Matters and IDEM
HEA 1162 includes several provisions that may impact real estate development efforts. First, in an effort to ensure that all local approvals are obtained prior to constructing certain projects that require approval by the Indiana Department of Environmental Management (“IDEM”), HEA 1162 requires that all necessary local approvals, required at the time the application is submitted to the IDEM, be obtained before construction of the project can commence. This change was made to clarify that an IDEM approval does not supersede any local approvals that be required. Further, it is now a violation of state law for the applicant to fail to obtain the required local approvals. Second, HEA 1162 includes several provisions that seek to shorten the length of time it takes to obtain IDEM approval on remediation of contaminated properties. HEA 1162 limits IDEM’s review and approval of environmental restrictive covenants (“ERCs”). ERCs often prohibit certain land uses in return for IDEM allowing some contaminants to remain at the contaminated property. IDEM no longer has to approve ERCs. Rather, the law now states that IDEM may only approve the activities and land-use restrictions that are proposed as part of a cleanup effort. The law also gives IDEM the authority to take appropriate legal actions to enforce such restrictions. IDEM must also consider and give effect to ERCs when it is evaluating risk-based remediation proposals. This language will allow owners of contaminated sites to show that an ERC limits or eliminates an exposure pathway (the potential path contaminants may take to reach a receptor – generally humans, but sometimes fish and wildlife) and develop a risk-based cleanup objective accordingly. Finally, HEA 1162 contains a provision that makes it less difficult to obtain a covenant not to sue, which IDEM issues when a contaminated property has been remediated to its satisfaction. HEA 1162 allows IDEM to issue covenants not to sue that include conditions that must be performed or maintained after issuance of the covenant. This provision reverses IDEM’s previous position that a site cannot receive a covenant not to sue until all remediation has been completed at the site.

Residential Loan Brokers
HEA 1646 changed many of the laws regulating loan brokers to facilitate compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act). The laws only apply to residential loan brokers. Additionally, residential loan brokers are required to be licensed, not registered, by the Securities Commissioner (“SECCOM”). The criminal penalty for violation of the loan broker statute was also increased to a Class C felony. Furthermore, licensed loan brokers must maintain a report of all residential loans they have originated (including pending loans and loans that were not closed), and if a person acts solely as a loan processor or underwriter, he or she cannot represent to the public that he or she can or will perform mortgage origination activities. Changes were also made to the loan broker licensure requirements, including a requirement that certain individuals submit fingerprints to SECCOM every three years and licenses be renewed annually instead of biennial.

Residential Mortgage Lending
HEA 1176 contained several changes that affect residential mortgage lending practices. First, a creditor cannot require a borrower to pay prepayment fees or penalties if the mortgage is the first mortgage on the home and the mortgage has an interest rate that is subject to change during the term of the loan. A creditor must also provide notice to prospective borrowers within three days of a loan application of their rights to inspect the HUD-1 or HUD-1A settlement statement the business day before settlement. Penalties and enforcement procedures were also added for the violations of the real estate appraisal requirements. HEA 1176 also contained licensure provisions. If a licensed individual is sanctioned, the individual may be required to pay the costs of a real estate review appraisal that was obtained in conjunction with the disciplinary proceedings. Further, additional sanctions may be imposed on a licensed real estate salesperson or broker if the person violates any of the laws concerning credit service organizations and Mortgage Rescue Protection Fraud. Last, if the Attorney General's office has filed an administrative complaint concerning a practitioner's license, the licensing board cannot approve a surrender of that individual's license.

Residential Mortgage Foreclosures
SEA 492 addressed the rising number of residential mortgage foreclosures. First, creditors must provide notice to debtors at least 30 days before a foreclosure action is filed. The notice's content must (1) inform the debtor that the debtor is in default, (2) encourage the debtor to obtain assistance from a mortgage foreclosure counselor, and (3) provide contact information for the Indiana Foreclosure Prevention Network. Notice requirements are also required when the creditor serves the debtor with the foreclosure action complaint. The creditor must include notice informing the debtor about the availability of a settlement conference when the creditor serves a copy of the complaint to the debtor. A court cannot issue a judgment unless the debtor was provided this notice. Participation in a settlement conference satisfies any court rules requiring mediation or alternative dispute resolution. The legislation also requires foreclosure consultants to keep all records and documents related to services provided to homeowners for at least three years after the consultant's contract is concluded or terminated. Additionally, foreclosure actions filed between June 30, 2009 and January 1, 2013 will be charged a $50 court fee, which will be deposited into the home ownership education account.

Vacant or Abandoned Property
Several changes were made to the laws affecting vacant or abandoned property in HEA 1358. First, restrictions were applied on purchasing real property at a tax sale to a person who owns a fee interest, a life estate interest, or the equitable interest of a contract purchaser in a vacant or abandoned structure, if the property is subject to an enforcement order concerning a nuisance or an unsafe building (with some exceptions). Additionally, under certain circumstances, a person may be subject to criminal trespass charges if the person knowingly and intentionally enters vacant or abandoned property and does not have a contractual interest in the property. Furthermore, the owner of vacant or abandoned property may be liable for civil penalties imposed by municipalities if the owner fails to change the property's status as vacant or abandoned. The term “continuous enforcement order” was also defined.

New Property Tax Appeal Statute Favors Taxpayers
Effective July 1, 2009, the following provision was added to the property tax appeal statutes as I.C. 6-1.1-15-1(p):

"This subsection applies if the assessment for which a notice of review is filed increased the assessed value of the assessed property by more than five percent (5%) over the assessed value finally determined for the immediately preceding assessment date. The county assessor or township assessor making the assessment has the burden of proving that the assessment is correct."

For those assessments that have increased by more than 5% from the prior assessment date, this is a significant change in tax appeal procedure. Previously, the assessment was always presumed to be correct and it was the taxpayer's burden to prove otherwise. There are opportunities to apply this statute to assessment appeals that were filed before July 1, 2009, although the new statute does not specifically address this point.

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