Wells Fargo Ignores Mail Loses Security Interests

Originally Published on forbes.com on November 28th,2011

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I recently wrote about the rather distasteful topic of Indiana tax deeds.  As I noted in a previous post, several states including Florida have a similar system.  The latest case on the topic in Indiana Wells  Fargo versus Allen County emphasizes a point that  John Waller ,who blogs on commercial foreclosure, made.  He pointed out that the system presents a hazard to secured lenders, since the tax deed obliterates all existing liens and the rules about providing notice to secured lenders are a little sketchy.  That’s what brought Wells Fargo into the Indiana Appeals Court on two properties that went to tax deeds.  Wells Fargo claimed that they did not receive proper notice.

In June 2010, Allen County sent by certified letter, return receipt requested, the Notice of the Right of Redemption required by Indiana Code section 6-1.1-25-4.5(a)(3) to the properties’ owners and to Wells Fargo. The notices were mailed to “Wells Fargo Bank NA, 111 E. Wayne St., Fort Wayne, IN 46802” (“111 E. Wayne St. address”) and to “Wells Fargo Bank NA, P. O. Box 5137, Des Moines, IA 50306,” (“P.O. Box 5137 address”) which was the address set forth in the mortgage documents.

Here is how the people at Wells Fargo should have viewed those letters:

Instead they apparently did not react.  They did react several months later:

On November 3, 2010, Allen County moved the trial court for an order authorizing it to issue tax deeds for the various properties sold at the October 2009 tax sale that had not already been redeemed, including theReal Estate. On December 3, 2010, Wells Fargo filed an objection to the petition for issuance of a tax deed as to the Real Estate. A hearing was held on Wells Fargo’s objection, and on December 17, 2010, the trial court issued an order overruling the objection and authorizing the issuance of tax deeds for the Real Estate. Wells Fargo now appeals.

Too late:

Wells Fargo argued that the county should have made service on an executive officer or an appointed agent. The Court was not buying it:

Nowhere in the statute does it require compliance with Trial Rule 4.6 when sending tax sale notices. In the present case, Allen County sent both of the tax sale notices at issue by certified mail, return receipt requested, to the address listed in the mortgage document and to another local address. Therefore, as the tax sale notices were sent in accordance with the statutoryrequirements, we conclude that they comported with due process requirements. The trial court did not err in overruling Wells Fargo’s objections to the issuance of the tax deeds for the Real Estate because Allen County properly served the tax sale notices on Wells Fargo.

So Wells Fargo no longer has a security interest in two properties because it was not monitoring its mail well enough.  I can’t say that this one upsets me that much, although it is exactly what John Waller was writing about.  Lenders in Indiana really need to make sure that property taxes are being  paid.