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Judicial foreclosure available: Yes
Non-Judicial foreclosure available: No
Maine offers several methods of foreclosure. Most
residential mortgage foreclosures are done by filing a lawsuit in the District
or Superior Court. On the other hand, a foreclosure against a corporation may
be done by a power of sale procedure. Otherwise, Maine still maintains the
common-law strict foreclosure doctrine in which the lender owns the property
and the borrower loses any rights to the property by breaking a condition in
the mortgage, such as failing to make the loan payment. Although Maine is a
strict foreclosure state, it nevertheless permits a lawsuit to be filed along
the form of a bill in equity, which would ask the court to cut off any further
rights the borrower had to the property. This would be done only in special
cases. Generally, foreclosures in Maine are by strict foreclosure, which, for
convenience, can be divided into those circumstances in which the lender seeks
possession as part of the foreclosure, and those situations where the lender
does not seek possession as part of the foreclosure.
Strict Foreclosure with Possession
In Maine, the lender may want to take over the
borrower's old property. After regaining title by legal means, the lender could
sell the property at a later date, without giving the borrower the benefit of
any excess the lender gets out of the sale over and above what the borrower
owed on the old loan. Alternatively, the lender could simply keep the property
and rent it out. In sum, strict foreclosure allows the lender to become the
owner, pure and simple. To become the owner through strict foreclosure,
however, the lender must follow some specialized procedures. In particular, the
lender must obtain possession of the property and hold it throughout the
redemption period, which is one year on pre-1975 mortgages and three months on
post-1975 mortgages.
In Maine, there are three methods for the lender to
regain possession as part of the strict foreclosure process:
- A lender can obtain a writ of possession (which
authorizes the sheriff to throw the borrower out) from a court by filing a
lawsuit that asks for the writ as part of a conditional judgment.
- The lender can enter the property and take possession
if the borrower consented to it writing.
- The lender may enter the premises peacefully,
openly and without opposition, in the presence of two witnesses.
Strict Foreclosure Without Possession
In Maine, a lender can foreclose the borrower's rights
to the property without regaining possession at the time of foreclosure by
arranging to sell the borrower's property. Initially, the lender files a
lawsuit and wins a judgment that the borrower owes the money; then the lender
must wait until the end of the redemption period, as described previously. At
the end of the redemption period, the lender will sell the property by a
special procedure.
The procedure is to publish public notice of the
impending foreclosure for three successive weeks in a newspaper of general
circulation in the county where the land is located. The notice should state
that the lender is claiming the property due to a breach of the mortgage
conditions (such as nonpayment of the loan) and give a description of the
property, the date of the mortgage and the nature of the breach. A copy
of the printed notice and the name and date of the newspaper in which it was
last published must be recorded within 30 days of the last publication of the
notice. Alternatively, an attested (sworn) copy of the printed notice may be
served on the borrower by the sheriff, and a copy of the notice and the
sheriff's return (indicating that it was served) may be recorded within 30 days
after service.
The foreclosure sale must take place no less than 30
days and no more than 45 days after the initial publication of notice. The
property must be sold at public sale to the highest bidder, which may be the
lender or anyone else. At the end of the sale, the sales costs are deducted and
the lender must disburse the remaining money in accordance with the foreclosure
judgment. Junior lien holders should already have been joined when the
foreclosure suit was first filed, so they may get some part of the proceeds.
Any surplus proceeds from the sale must be paid to the borrower. The borrower
may contest the accounting within 30 days after the sale, but the high bidder
at the foreclosure sale will still retain title.
Deficiency
Any deficiency based on the foreclosure sale is limited
to the difference between the fair market value of the property at the time of
the foreclosure, as established by an appraisal, and the amount of money the
court found the lender was still owed on the loan, as set forth in the court's
final judgment.
Redemption
Maine offers the borrower a fairly powerful right of
redemption, which is the right to get the property back after foreclosure by
coming up with the loan money. There are two redemption time periods:
- Pro-October 1, 1975, mortgages: one year
- Post-October 1, 1975, mortgages: three
months
The time period begins once the lender wins a judgment
in the foreclosure lawsuit. The borrower may redeem the property by paying off
the loan. The Maine statutes cannot shorten the one-year time period on
pre-1975 mortgages be cause to do so would violate the Maine State Constitution
by impairing the existing provisions of a contract.
Waiver
Maine has a waiver procedure that can be deadly to the
lender and helpful to the borrower. If the lender accepts money or anything of
value on the mortgage debt after the foreclosure has begun and before the
redemption time period has expired, then the lender waives the foreclosure
procedure. However, the lender may receive income from the property after
properly taking possession without triggering a waiver. |
