12
Aug 2014
PA Civil Procedure New Rule Changing Insurability issues with Sheriff Deeds
By admin

Issuing PA Title Insurance via a sheriff’s deed has always been challenging.  However, one of the largest issues has been dealt with via a new amendment to PA Civil Procedure. Pennsylvania Rule of Civil Procedure 3135 (c) has been amended and it provides a new way to correct a failure to provide 3129 notice to a junior lien holder of a foreclosure action. This amendment became effective in April of this year (2014).

Before this change, in a situation where notice was not provided to a junior lien holder, the most common means to correct the mistake was to complete a new sale. This remedy requires duplication of effort and resources in holding another sale for the same property which has already been sold at a sheriff sale. Typically, also, the junior lien holder has no interest in purchasing the property at the first or second sale.

The amendment to Rule 3135 (c) allows for a plaintiff or the purchaser at the previously held sheriff’s sale to file a petition with the rule to show cause requesting that (1) the lien held by the junior lienholder be divested. The petition may also request (2) another sale where the junior lienholder may be the only other bidder other than the senior lienholder who acquired the property at the first sheriff’s sale. Additionally, the petition may also request (3) other relief approved by the court.sheriff sale

These three options under Rule 3135 (c) are the three ways in which the failure to notify a junior lienholder under 3129 should be remedied after the enactment of the amendment.

A PA title company can now merely point out the missed lien holder when it comes to a defective 3129 notice and have the owner file a petition to have the prior lien properly divested.

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