On April 16, 2021, Albertelli Law advised our clients of the recent legislative developments in Arkansas involving AR Senate Bill 673. We would like to now alert and update our clients that the bill became AR Act 1108 on May 3, 2021. Act 1108 amends the statutory foreclosure act in Arkansas and is intended to resolve and limit potential issues following a foreclosure sale. Please note that Act 1108 is not immediately effective as the Governor did not sign the legislation, but rather the Bill passed due to the non-action by the Governor. When such occurs in Arkansas, an act does not become effective for ninety (90) days. However, once Act 1108 does become effective, it is retroactive to March 31, 2011, based on the language in the Act.
Since the Davis v. PennyMac decision at the beginning of 2020, the status of REO properties where the notice of default did not strictly comply with the statutory foreclosure act has been thrown into question. Act 1108 amends A.C.A §18-50-116 to provide clarity and finality to foreclosures conducted in Arkansas since the implementation of the current iteration of the Act in 2011. The key changes include:
- Clarifying the limitation of actions to ensure most claims must be asserted prior to the foreclosure sale;
- Requiring that any claims for failure to strictly comply with the Act be asserted within 30 days of the foreclosure sale (currently there is no time limit);
- Further clarifying that subsequent purchasers for value of properties sold at foreclosure shall not be subject to any claims; and
- Making the changes to the statutory foreclosure act retroactive to March 31, 2011.
Act 1108 provides a great deal of clarity and resolution to the turmoil in the REO market in Arkansas. Primarily, lenders can be assured that foreclosures are complete with no claims allowed challenging the foreclosure process (absent an allegation of fraud) thirty (30) days after the foreclosure sale date. Additionally, since the substantive changes in Act 1108 are retroactive, title to currently impacted REO properties can likely be conveyed upon the effective date of Act 1108. Prior to proceeding with a conveyance of an impacted REO property, please make sure to consult with your Arkansas attorney on each file to determine the applicability of Act 1108 to the specific file.
We at ALAW are happy to discuss with you the specifics of individual cases or files where you believe Act 1108 may apply.
If you have any questions or concerns about Act 1108, or if you wish to discuss anything else that we may be able to assist you with, please feel free to contact James McPherson, [email protected].