Fall 2006-06 Published Opinion United States v. Vlez Vlez, 772 F. Supp. 56, (1991).

newsletter header


Number 65
Fall 2006
from our archives: 1991

Junior lien cancelled without notice

Junior liens not recorded in the Registry of Property at the time that a mortgage foreclosure complaint is filed may be cancelled without notice of the public auction, the United States District Court for the District of Puerto Rico ruled in United States v. Vélez Vélez, 772 F. Supp. 56, (1991).

The facts

The Small Business Administration commenced foreclosure proceedings against Carmelo Vélez Vélez and Nereida Huertas Fress. Although another mortgage had been executed over the same property, this one in favor of Eulogio Colón Díaz, the same was presented for recordation after the filing of the S.B.A. foreclosure complaint. After judgment, the court ordered the public auction of the property, which S.B.A. did not notify to Colón, although his mortgage was already in the Registry. Colón opposed S.B.A.'s motion that his mortgage be cancelled as a junior lien, based on the lack of notice.

The ruling

The court was not impressed by Colón's claims, and ordered the cancellation. That Colón did not receive notice was due to his failure to file the mortgage at an earlier date, the court said. "As the various provisions of the previous and current Mortgage Act clearly establish . . ., a foreclosure need only notify the holders of subsequent credits appearing in the Registry when it begins the judicial action."

‡‡ Note:

Article 149 of the Mortgage Act (30 P.R. Laws Ann. § 2473) reads as follows:

"In cases of mortgage foreclosures, those who have recorded or noted their rights after the mortgage and prior to the notation of a lawsuit, must be notified of the auction in accordance with the procedural law in force in the defendant's case, without which the court cannot order the cancellation of these entries."

The published opinion does not clarify if S.B.A. noted in the Registry the filing of its lawsuit and if Colón's mortgage was presented for recordation subsequent thereto. In Retirement System v. El Registrador de la Propiedad, 104 D.P.R. 791 (1976), the Supreme Court of Puerto Rico said that a junior lien may be cancelled without notice if recorded subsequent to the Registry noting of the filing of the foreclosure suit.


© 2006 Goldman Antonetti & Cordova, LLC