Winter 2005-10 Due process requirements for foreclosure notices

Number 58
Winter 2005

Due process requirements for foreclosure notices

The requirement of sending notices to the owners in foreclosure cases has become more strict. On December 15, 2004, the Supreme Court of Puerto Rico decided the case of R & G Mortgage Corporation v. Sustache, et.al. In this case, R & G had commenced proceedings to foreclose a mortgage on a property owned by Francisco Sustache and his wife. A default judgment was finally issued since the defendants failed to defend their case.

“Insufficient address”

The default judgment notice, sent to the defendant’s physical address, was returned by the post office with an “insufficient address” notice. However, R & G used this same address to notify defendants when the bid was to take place. Thereafter, the bid proceedings were held and R & G was awarded the property.

“Last known address”

The defendants requested the court to void the judgment alleging that R & G had not complied with Rule 51.8(a) of Civil Procedure, since they were not notified “at their last known address,” as specifically required by the rule in cases of default judgments. Such failure, they alleged, violated their constitutional rights to due process and were in clear violation of the notice requirements of Rule 51.8(a).

Void sale

The Court found that in fact R & G had not complied with Rule 51.08(a) and declared the sale in foreclosure void. The reason was that R & G knew that the judgment notice had not reached the defendants, and even though it knew their postal address (to which all other notices under the loan were made, including failure to pay notices), R & G had not used that address to try and contact the defendants. Thus, R & G had not sent the notice to the defendant’s “last known address” and had therefore failed to meet the standard of notice required by law.

Standard of notice

The standard of notice requires that notice be sent to an address that is reasonable under the circumstances, as one in which the defendant will be likely to receive the notice effectively. The standard of notice, however, does not require that plaintiff prove that defendant in fact received the notice. Nevertheless, if, as in this case, the notice is returned as not received and a secondary address is known, plaintiff must again notify defendant at its last known address or other address in the records of defendant that has been used previously to communicate with defendant, showing a reasonable minimum effort to contact the defendant.

If this standard is not met, the error of the notice is substantial and the sale in foreclosure is null for failure to comply with the due process requirements. ◙

© 2005 Goldman Antonetti