Indiana Mortgages to Expire 10 Years After Maturity or Execution

An existing Indiana law was recently amended to provide that mortgages encumbering Indiana property shall automatically expire on the tenth (10th) anniversary of the stated maturity date of the last installment of debt secured thereby, unless a foreclosure action is initiated before such anniversary. (Ind. Pub. L. 130-2012, amending Ind. Code § 32-28-4-1.) Mortgages encumbering Indiana property that do not state a maturity date will expire automatically on the tenth (10th) anniversary of the execution date thereof (or, if no execution date is stated, the recording date thereof), unless a foreclosure action is initiated before such anniversary, or an affidavit is recorded by the mortgage lender stating a maturity date later than the execution date (or, if applicable, the recording date).

If a recorded mortgage does not state the applicable maturity date, the mortgage lender may unilaterally execute and record in the public records an affidavit that states the maturity date, without requiring any action on the part of the borrower. The affidavit will take effect as if the maturity date was stated in the original mortgage when recorded, and will constitute prima facie evidence of the maturity date stated therein. The mortgage will then automatically expire on the tenth (10th) anniversary of the maturity date stated in the recorded affidavit.

The Indiana law makes it clear that the automatic expiration date is determined with reference to the maturity date (or, as applicable, the execution date or recording date) that is stated in the public record. Therefore, any conflicting maturity dates contained in other loan documents, such as promissory notes, that are not recorded in the public records will most likely be considered inapplicable and of no effect in this context.

The new act does not expressly limit the ability of lenders and borrowers to state, extend, or otherwise amend the maturity date in a traditional two-party mortgage amendment. Provided such amendments are recorded prior to the automatic expiration date of the mortgage and otherwise satisfy applicable law, we expect that their purported effect on the maturity date will be upheld, without requiring a separate affidavit to be recorded.

Should you have any questions, please feel free to contact Dykema attorneys Michael D. Rothstein at 312-627-2280, or Bethany N. Bonner at 312-627-5679.

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