In a foreclosure setting, the mortgage holder needs to join or name all “necessary parties” to the foreclosure proceeding. A necessary party is basically any party that acquired a lease, lien, or easement after the mortgage was executed. This basically applies only to the mortgage for which the foreclosure proceedings apply to.
To understand this better, it helps to know that foreclosure is basically an attempt to sell the home or property in the condition it was before the mortgage was executed. This means that any party that obtained an interest in the property after the mortgage was taken out needs to be addressed before the sale of the property.
Necessary parties (sometimes called “indispensable parties”) can be joined or added to the foreclosure case without their consent. The court will then attempt to resolve the interests of the necessary parties prior to issuing a judicial sale for the property.
In contrast, a “proper” party is any party that can be helpful if joined to the case, but is not really necessary for the proceedings to be completed. Proper parties are generally those companies or individuals who acquired an interest before the mortgage in question was executed. Such parties generally wouldn’t be affected by the foreclosure, but are joined anyways in order to help provide some clarifications regarding the mortgage being foreclosed upon.
Proper parties are generally joined voluntarily, and they typically can’t be joined to the case without their consent. The rules defining necessary and proper parties to a foreclosure can vary somewhat from jurisdiction to jurisdiction.
Omission of a party to foreclosure occurs when the mortgage holder fails to join a necessary party to the lawsuit. This can have several negative consequences for all parties including:
- Delays in the overall proceedings;
- Court may need to re-analyze the case;
- The necessary party or parties not named may “come out of the woodwork” and challenge the case, often causing confusion for the proceedings
- Extra court costs due to the lengthening of the process
Again, proper parties are usually not required in order for the foreclosure proceeding to move forward. Thus, any mortgage holder needs to do their proper research to determine which parties are necessary and which parties are merely proper. Also, the debtor and their attorney should also conduct similar research, so that they understand exactly which parties may have a stake in their property.
It can often be difficult to tell which parties are all involved in any given foreclosure proceeding. You may wish to hire a qualified real estate attorney if you have any legal issues, questions, or disputes that involve parties to a foreclosure hearing. Your lawyer can provide you with sound research in terms of the history of the mortgage, and will be able to represent you in a court of law if necessary.