During this time of military action, it is advisable to revisit the Soldiers' and Sailors' Civil Relief Act and other laws designed to protect our nation's service men and women. Due to the nature of military service, the federal government has enacted laws to ensure that the people who protect our country are not negatively affected by financial or other legal difficulties while performing their duties.
Soldiers' and Sailors' Civil Relief Act
The Soldiers' and Sailors' Civil Relief Act (the “Act”) was enacted in 1940 and has periodically been amended throughout the years. The Act's purpose is to enable active military personnel to give their entire focus to the military effort of the United States without being distracted by domestic burdens on the homefront. 50 U.S.C.S. Appx. § 510.
One of the Act's primary features protects service men and women from mortgage foreclosure. In order for military personnel to qualify for such mortgage foreclosure protection, the service member must demonstrate that:
- He/she owned the property before beginning active military service;
- He/she placed a mortgage or security agreement on the property before entry into military service; and
- Military service materially affects his/her ability to pay.
Unless the court is of the opinion that the service member's ability to comply with the mortgage is not materially affected because of his or her military service, the court either shall stay the foreclosure proceedings, or it shall make an equitable solution for all the parties' interests. No foreclosure shall be valid if made during a period of military service or within three (3) months after such military service, with the exception of the following situations:
- Execution by the service member of an agreement during or after military service to waive such protection of the Act; or
- Entry of a court order allowing the foreclosure to occur. 50 U.S.C.S. Appx. § 532.
In any foreclosure action, if there is a non-appearance by the defendant owner/mortgagor, the plaintiff shall file an affidavit setting forth facts showing that the defendant is not in military service before a judgment may be entered. If an affidavit showing that the defendant is not in military service is not filed, then no judgment shall be entered without first securing a court order authorizing such judgment. No such court order shall be issued if the defendant is in military service until the court has appointed an attorney to represent the defendant and protect his interest.
The court may also require that the plaintiff secure a bond to indemnify the defendant service person against any loss or damage that he or she may suffer as a result of any judgment. If judgment is rendered by the court in a foreclosure action against any person in military service during the period of his or her service, or within thirty (30) days thereafter, and it appears that, such service person prejudiced because of his or her military service, was unable to make an adequate defense, the judgment may be reopened upon application by such service person or his representative no later than ninety (90) days after the termination of the military service. Note that the vacation or reversal of any judgment pursuant to this provision of the Act shall not impair any right or title acquired by any bona fide purchaser for value under such judgment. 50 U.S.C.S. Appx. § 520.
Another protective provision for persons in military service in the Act concerns the statute of limitations calculation. The period of military service may not be included when computing any statute of limitations period; in particular, the period of military service may not be used when computing the period provided by law for the redemption of real property sold to enforce any obligation, tax or assessment. 50 U.S.C.S. Appx. § 525.
The penalty for knowingly allowing any sale, foreclosure, or seizure of property of a military person who qualifies under the safeguard provisions of the Act is a fine and/or imprisonment for a term not to exceed one (1) year. 50 U.S.C.S. Appx. § 532.
Underwriting for Foreclosures affected by the Act
Investors Title Insurance Company (the “Company”) has developed procedures for underwriting mortgage foreclosures for military personnel in the General Underwriting Principles Manual (see “Soldiers and Sailors Civil Relief Act of 1940”). The following is an excerpt from such procedures:
It is the Company's position that a mortgage foreclosure cannot be validly conducted against a borrower who is currently on active military duty, unless:
- The loan for which foreclosure has been undertaken was made after the borrower entered military service;
- The borrower entered into a written agreement after he entered military service wherein he agrees to waive the protection of the act; or
- There is a court order entered in the foreclosure action allowing the foreclosure.
If the examiner can certify that any of the conditions in (1), (2), or (3) above exist, then the underwriter can issue a policy to insure the title out of a foreclosure against a borrower who is a military serviceperson. If none of the conditions above can be met, then exception should be taken for the outstanding interest of the borrower.
|Military-Int||Subject to the outstanding interest of ^, who is a military serviceperson.|
Military Power of Attorney
A military power of attorney is defined as any general or special power of attorney containing the requisite provisions that is appropriately notarized. In order to be considered appropriately notarized, the military power of attorney shall be notarized by one of the following:
- A judge advocate;
- A civilian attorney serving as a legal assistance attorney;
- An adjutant;
- Any other member of the armed services; or
- For notarial acts performed outside of the United States, any employee of a military department or the Coast Guard who is designated to so act.
The above notaries may not receive a fee for their notarial act services. The signature of any such person acting as notary, along with his or her official title, is prima facie evidence that the signature is genuine, that the person holds the designated title, and that the person is authorized to perform the notarial act. 10 U.S.C.S. § 1044a.
A military power of attorney is exempt from any state law requirements for powers of attorney, such as form, substance, formality, or recording. In addition, a military power of attorney has the same legal effect as a power of attorney executed in accordance with state law.
Furthermore, in order to be effective, the military power of attorney must contain a statement reflecting both its exemption from any state law format and recording requirements and its legal parity with a power of attorney executed pursuant to state law. 10 U.S.C.S. § 1044b.
When dealing with real property transactions involving military personnel who are in active service, be cognizant of the federal government's interest in protecting the service men and women who are protecting the country. Their importance and sacrifice in service to our country cannot be undervalued – accordingly, a soldier's domestic life should not be unnecessarily impaired. Protection against mortgage foreclosure and the broad ability to execute a valid power of attorney are valued assistance for soldiers far from home to keep the home fires burning.