By Laurie R. Hager
Published in the Daily Journal of Commerce
Oregon's construction lien statutes, ORS 87.001, et seq., require a lien claimant to send certain notices to any "mortgagee" that holds an interest in a mortgage or trust deed on real property that is subject to the claimant's construction lien. In some instances a material supplier must serve the "mortgagee" with a pre-lien notice under ORS 87.025 in order for the material supplier to maintain priority of its construction lien over the mortgagee's interest in the improvement. Further, under ORS 87.039 and 87.057, lien claimants must send the mortgagee (and owner) notice of filing and intent to foreclose the claim of lien in order to preserve the right to an award of attorney fees, costs, and disbursements.
Prior to January 1, 2012, the term "mortgagee" simply meant the person or entity who held a valid mortgage or trust deed of record securing a loan upon the subject land or improvement. The statutory mortgagee was often the lender identified as the holder of the mortgage or the beneficial interest under a trust deed recorded against the property. For some time, there has been a rise in lenders selling their interests in the loans. Thus, a loan may be sold, and its related mortgage or trust deed may be assigned, a number of times. To avoid the administrative burdens of recording multiple assignments of trust deeds, lenders often designate Mortgage Electronic Registration Systems, Inc. ("MERS") to act as the beneficiary under the trust deed, solely as the nominee for the lender and the lender's successors and assigns.
When MERS is identified in the public records as the trust deed beneficiary, the owner of the promissory note for the underlying loan may not be identified in the public records. Lien claimants did not always know whether providing notice to MERS, as the "mortgagee," satisfied the statutory requirements of ORS 87.001, et seq. Under those circumstances, and without knowing the identity of the promissory note holder, lien claimants were faced with a challenge to comply with the construction lien statutory notice requirements.
In 2011, the Oregon Legislature clarified the "mortgagee" notice requirements to meet the reality of MERS, thus alleviating these concerns. Oregon Laws 2011 Chapter 505 made changes to several statutes (including ORS 87.005 and ORS 87.018) to require that notices to the "mortgagee" under ORS 87.001 to 87.060 or 87.075 to 87.093 need only go to the person (or entity) whose name and address appear in the public records as the mortgagee, trust deed beneficiary, or the assignee. Thus, if MERS is the only trust deed beneficiary identified in the public records, the required statutory notices need only go to MERS.
Notwithstanding, if the lien claimant knows the identity of the current holder of the loan secured by the MERS mortgage or trust deed, it is good practice to send courtesy copies of the lien notices to such lender, as it may increase the chances of getting paid prior to foreclosing the lien claim.
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