CHAPTER 12.5. COMMERCIAL REAL ESTATE BROKER LIENS
IC 32-28-12.5
Chapter 12.5. Commercial Real Estate Broker Liens
IC 32-28-12.5-1
"Commercial real estate"
Sec. 1. As used in this chapter, "commercial real estate" meansany real estate other than:
(1) real estate containing one (1) to four (4) residential units;
(2) real estate on which no buildings or structures are locatedand that is zoned for single family residential use; or
(3) single family residential units such as:
(A) condominiums;
(B) townhouses; or
(C) homes in a subdivision when sold, leased, or otherwiseconveyed on a unit-by-unit basis, even if those units are partof a larger building or parcel or real estate containing morethan four (4) residential units.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-2
"Fees or commissions"
Sec. 2. As used in this chapter, "fees or commissions" meanscompensation owed to a principal broker for performing servicesrequiring a license under IC 25-34.1-3-2.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-3
"Principal broker"
Sec. 3. As used in this chapter, "principal broker" has the meaningset forth in IC 25-34.1-1-2.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-4
"Real estate"
Sec. 4. As used in this chapter, "real estate" has the meaning setforth in IC 25-34.1-1-2.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-5
Principal broker's lien on commercial real estate; fees due underwritten agreement, contract, or instrument
Sec. 5. A principal broker may have a lien upon commercial realestate, or any interest in commercial real estate, that is the subject ofa purchase, a lease, or other conveyance to a buyer or tenant, in theamount that the principal broker is due for licensed services,including brokerage fees, consulting fees, and management fees duethe principal broker under a written agreement, a contract, or anotherwritten instrument:
(1) signed by:
(A) the owner of an interest in the commercial real estate or
by the owner's authorized agent; or
(B) a prospective buyer or prospective tenant, or by thebuyer's or tenant's authorized agent; and
(2) entered into after June 30, 2006.
A lien under this chapter is available to the principal broker namedin the written agreement, contract, or other written instrument signedby the owner, buyer, or tenant, or their respective agents, and not toan employee or independent contractor of the principal broker.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-6
Attachment of lien; notice of lien; date of recording
Sec. 6. (a) A lien under this chapter attaches to commercial realestate or an interest in commercial real estate upon:
(1) the principal broker being entitled to fees or commissionsunder a written agreement, a contract, or another instrumentsigned by the owner, buyer, or tenant of the commercial realestate, or by an authorized agent of the owner, buyer, or tenant;and
(2) except as provided in sections 8 and 9 of this chapter, theprincipal broker recording a notice of lien in the office of therecorder of the county in which the commercial real estate or aninterest in the commercial real estate is located:
(A) before the recording of the deed for the actualconveyance or transfer of the commercial real estate againstwhich the broker is claiming a lien, if the principal brokerclaims fees or commissions from the party conveying ortransferring an interest in the commercial real estate; or
(B) not later than ninety (90) days after the recording of thedeed or other instrument for the purchase or otherconveyance or transfer of the commercial real estate, if theprincipal broker claims fees or commissions from the partyreceiving a conveyance or transfer of an interest in thecommercial real estate.
(b) A lien under this chapter attaches on the date of the recordingof the notice of the lien under subsection (a)(2) and does not relateback to the date of the written agreement, contract, or other writteninstrument described in subsection (a)(1).
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-7
Sale of commercial real estate; notice of closing; preservation ofright to file lien; owner's certification at closing
Sec. 7. (a) This section does not apply:
(1) to fees or commissions that arise from a lease, includingfees or commissions for a sale of the property, lease expansions,or lease renewals;
(2) if a principal broker's fees or commissions have been paidin full; or
(3) if a principal broker waives the notice requirements of this
section in writing.
(b) Not later than ten (10) days before the planned closing of atransaction involving the sale of commercial real estate, the ownershall notify the following persons of the date of the closing, the timeof the closing, the address of the closing, and of the name of theclosing agent, title company, or title insurance agent:
(1) One (1) or more principal brokers to whom the owner owesfees or commissions.
(2) The closing agent, title company, or title insurance agentinvolved in the transaction.
Notice under this subsection shall be sent by registered or certifiedmail, return receipt requested, or by another means of serviceauthorized by the Indiana trial rules that provides proof that theaddressee has received the notice.
(c) To exercise its rights under this chapter to file a lien afterreceipt of the notice under subsection (b), the principal broker mustnotify the closing agent, title company, or title insurance agent at theaddress in the notice of the amount of the fees or commissions owedbefore the time of the closing stated in the notice.
(d) If the principal broker does not attend the closing of atransaction involving the sale of commercial real estate, the ownershall certify in writing at the closing, under the penalties of perjury:
(1) that:
(A) the owner has notified the principal broker in accordancewith subsection (b); and
(B) the principal broker received the notice; or
(2) that the principal broker has been paid in full.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-8
Installment payments; recording notice of lien; single claim forlien; partial releases
Sec. 8. (a) This section applies to a transaction involving theconveyance or transfer of commercial real estate in which:
(1) payment to a principal broker is due in installments; and
(2) a part of the installment payments is due only after theconveyance or transfer of the commercial real estate involvedin the transaction.
(b) Subject to subsection (c), the principal broker may record anotice of lien for those payments described in subsection (a)(2) atany time after the transfer or conveyance, but not later than ninety(90) days after the date on which the payment is due. A notice of lienunder this section is effective as a lien against the transferor's interestin the commercial real estate only to the extent consideration is stillowed to the transferor by the transferee. However, the lien iseffective against the transferee's interest in the commercial real estatewithout the limitation described in this subsection.
(c) A single claim for a lien recorded:
(1) before the transfer or conveyance of the commercial realestate; and (2) with respect to all payments due in installments;
is valid and enforceable with respect to payments due after thetransfer or conveyance. However, as payments or partial paymentsof fees or commissions are received by the principal broker, theprincipal broker shall, by providing partial releases with respect tothose payments, reduce the amount due the principal broker underthe notice of lien described in this subsection.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-9
Lease of commercial real estate; recording of notice of lien; futurefees or commissions; memorandum of lien; action to foreclose; saleor conveyance before fees become due
Sec. 9. (a) Subject to subsection (b), in the case of a lease ofcommercial real estate, including a sublease or an assignment of alease, the notice of a lien under this chapter must be recorded notlater than ninety (90) days after the tenant takes possession of theleased premises. However, if:
(1) the transferor personally serves, on the principal brokerentitled to claim a lien, written notice of the intended executionof the lease; and
(2) the notice described in subdivision (1) is served not laterthan ten (10) days before the date of the intended execution ofthe lease;
the principal broker's notice of lien must be recorded before the dateindicated in the notice described in subdivision (1) for the executionof the lease. The lien attaches on the recording of the notice of lienand does not relate back to the date of the written agreement,contract, or written instrument under which the principal broker isentitled to fees or commissions.
(b) As used in this subsection, "future fees or commissions" refersto fees or commissions:
(1) other than those fees or commissions due to a principalbroker upon the execution of a lease under subsection (a); or
(2) due to the principal broker upon the exercise of an option to:
(A) expand the leased premises;
(B) renew or extend a lease; or
(C) purchase the commercial real estate;
under a written agreement, a contract, or another written instrumentsigned by the owner or tenant of the commercial real estate. Theprincipal broker may record a memorandum of lien at any time afterexecution of the lease or other written agreement, contract, or writteninstrument that contains rights to future fees or commissions. Theprincipal broker shall record a notice of lien no later than ninety (90)days after the occurrence of a condition for which future fees orcommissions are claimed, but may not file a notice of lien against anowner's property if the tenant is the sole party liable for payment ofthe future fees or commissions. Except as provided in section 11(a)or 13(b) of this chapter, an action to foreclose a lien to collect futurefees or commissions must be commenced not later than one (1) year
after the recording of the notice of the lien. A memorandum of lienrecorded under this chapter must meet the requirements of section12(1)(A), 12(1)(B), 12(1)(C), 12(1)(E), 12(2), 12(3), and 12(4) ofthis chapter. A memorandum of lien shall not constitute a lien againstthe real estate but shall provide notice of the right to future fees orcommissions.
(c) If:
(1) commercial real estate is sold or otherwise conveyed beforethe date on which future fees or commissions are due; and
(2) the principal broker has recorded a valid memorandum oflien or notice of lien before the sale or other conveyance of thecommercial real estate;
the purchaser or transferee is considered to have notice of and takestitle to the commercial real estate subject to the right to future feesor commissions and, if applicable, notice of lien. However, if aprincipal broker claiming future fees or commissions fails to recorda memorandum of lien or notice of lien for the future fees orcommissions before the recording of a deed conveying legal title tothe commercial real estate to the purchaser or transferee, theprincipal broker may not claim a lien on the commercial real estate.This subsection does not limit or otherwise affect claims or defensesa principal broker or owner or any other party may have in law orequity.
As added by P.L.78-2006, SEC.1. Amended by P.L.1-2007, SEC.212.
IC 32-28-12.5-10
Notice of lien; service on owner; mailing or personal service
Sec. 10. A principal broker shall, not later than ten (10) days afterrecording a notice of lien under this chapter, personally serve ormail, by registered or certified mail, a copy of the notice of lien tothe owner of record of the commercial real estate, or to the agent ofthe owner of record, at the address of the owner stated in the writtenagreement, contract, or other written instrument on which the claimfor the lien is based. If the address of the owner or the owner's agentis not stated, the principal broker shall personally serve or mail, byregistered or certified mail, a copy of the notice of the lien to theaddress where real estate taxes are sent for the commercial real estateon which the claim of lien is based. Mailing of the copy of the noticeof lien is effective when deposited in the United States mail withpostage prepaid. Personal service of the notice of the lien is effectiveupon receipt by the owner or the agent of the owner of record. Aprincipal broker's lien is unenforceable if mailing or service of thecopy of notice of lien does not occur at the time and in the mannerrequired by this section.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-11
Foreclosure of lien; procedures; contents of complaint
Sec. 11. (a) The principal broker claiming the lien shall, not laterthan one (1) year after recording the notice of the lien, commence
proceedings to foreclose the lien. However, for future fees orcommissions payable over a period in excess of one (1) year from theoccurrence of a condition for which such future fees or commissionsare claimed, the commencement of the suit must be within one (1)year of the latest date for which future fees or commissions are due.A principal broker's failure to commence proceedings within the timeprescribed by this subsection extinguishes the lien and a subsequentnotice of lien may not be given for the same claim, nor may thatclaim be asserted in any other proceedings under this chapter.
(b) A principal broker claiming a lien based upon an option orother right to purchase or lease commercial real estate shall, not laterthan one (1) year after recording the notice of the lien, commenceproceedings to foreclose the lien. A principal broker's failure tocommence proceedings within the time prescribed by this subsectionextinguishes the lien and a subsequent notice of lien may not begiven for the same claim, nor may that claim be asserted in any otherproceedings under this chapter.
(c) The foreclosure of a lien recorded under this chapter shall beconducted under the same rules and same procedures applicable tothe foreclosure of mortgages upon real estate. A complaint under thissection must contain:
(1) a brief statement of the written agreement, contract, or otherwritten instrument that is the basis for the lien;
(2) the date when the written agreement, contract, or otherwritten instrument was made;
(3) a description of the services performed by the principalbroker;
(4) the amount due and unpaid for the services described insubdivision (3);
(5) a description of the commercial real estate subject to thenotice of lien; and
(6) other facts reasonably necessary to describe the rights of theparties.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-12
Notice of lien; contents; signature; verification
Sec. 12. A notice of lien recorded under this chapter must:
(1) state:
(A) the name of the claimant;
(B) the name of the owner of the commercial real estateupon which the lien is claimed;
(C) a legal description of the commercial real estate uponwhich the lien is claimed;
(D) the amount for which the lien is claimed; and
(E) the license number of the principal broker's license underIC 25-34.1;
(2) contain a statement that the information contained in thenotice is true and accurate to the knowledge of the signatory;
(3) be signed by the principal broker or by a person authorized
to sign on behalf of the principal broker; and
(4) be verified.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-13
Release or satisfaction of memorandum or notice of lien; demandto bring suit or file answer
Sec. 13. (a) If:
(1) a memorandum of lien or notice of lien has been recordedwith the office of the recorder of the appropriate county; and
(2) a condition occurs that would preclude the principal brokerfrom receiving fees or commissions under the terms of thewritten agreement, contract, or other written instrument uponwhich the lien is based;
the principal broker shall provide to the owner of record of thecommercial real estate, not later than ten (10) days after writtendemand by the owner of record, a written release or satisfaction ofthe memorandum of lien or notice of lien.
(b) Upon written demand:
(1) served by the owner, buyer, or tenant described in section 5of this chapter, or the authorized agent of the owner, buyer, ortenant described in section 5 of this chapter, on the principalbroker claiming a lien under this chapter; and
(2) requiring the principal broker to:
(A) bring a suit to enforce the lien; or
(B) file an answer in a pending suit;
the principal broker shall bring a suit or file an answer not later thanthirty (30) days after service of the demand. If the principal brokerdoes not bring a suit or file an answer within the time prescribed bythis subsection, the lien is extinguished. The service of a writtendemand under this subsection may be made by registered or certifiedmail, return receipt requested, or by personal service.
(c) If:
(1) a memorandum of lien or notice of lien under this chapterhas been filed with the office of the recorder and the fees orcommissions upon which the lien is based have been paid to theprincipal broker claiming the lien; or
(2) the principal broker fails to institute a suit to enforce the lienwithin the time prescribed by this chapter;
the principal broker shall, not later than five (5) days after receipt ofa written demand from the owner, buyer, or tenant described insection 5 of this chapter for a release or an acknowledgment ofsatisfaction of the memorandum or lien, acknowledge satisfaction orrelease of the memorandum or lien in writing.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-14
Alternative dispute resolution; forum; judgment; stay offoreclosure proceeding
Sec. 14. If the principal broker and the party from whom fees or
commissions are claimed under this chapter agree to alternativedispute resolution, any claim under this chapter must be heard andresolved in the forum agreed to by the parties. The court beforewhich a lien foreclosure proceeding is brought under this chapterretains jurisdiction to enter judgment on the award or other resultmade or reached under alternative dispute resolution proceedingswith respect to all parties to the foreclosure. The principal broker'snotice of lien remains of record and the foreclosure proceeding shallbe stayed during the pendency of the alternative dispute resolutionproceedings.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-15
Cost of proceedings; apportionment
Sec. 15. The cost of proceedings brought under this chapter,including reasonable attorney's fees, costs, and prejudgment interestdue to the prevailing party, shall be borne by the nonprevailing party.If more than one (1) party is responsible for costs, fees, andprejudgment interest, the costs, fees, and prejudgment interest shallbe equitably apportioned by the court or alternative disputeresolution tribunal among the responsible parties.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-16
Waiver of right to lien void
Sec. 16. Except for a waiver or release of a memorandum or lienprovided in consideration of payment of the fees or commissionsclaimed by a principal broker under this chapter, or except asotherwise provided in section 13 of this chapter, any waiver of aprincipal broker's right to a lien on commercial property under thischapter is void.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-17
Prior recorded liens, mortgages, and encumbrances; priority
Sec. 17. Valid recorded liens, mortgages, and other encumbrancesthat are recorded before a principal broker's notice of lien under thischapter have priority over a principal broker's lien under this chapter.Prior recorded liens, mortgages, and encumbrances that have priorityunder this section include:
(1) a valid mechanic's lien that is recorded after a principalbroker's notice of lien under this chapter, but that relates backto a date before the recording date of the principal broker'snotice of lien; and
(2) prior recorded liens securing revolving credit and futureadvances of construction loans.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-18
Lien on funds in escrow account Sec. 18. If:
(1) a claim for a lien under this chapter has been filed with theoffice of the recorder of the county in which commercial realestate or any interest in commercial real estate is located; and
(2) an escrow account is established among:
(A) the one (1) or more parties allegedly responsible forpayment of the fees or commissions on which the lien isbased;
(B) the principal broker that filed the lien; and
(C) an independent third party as escrowee;
from the proceeds of the conveyance, or from any other sourceof funds, in an amount that is at least one hundred ten percent(110%) of the amount of the lien claimed under this chapter;
the lien against the real estate is extinguished and becomes a lien onthe funds contained in the escrow account. The establishment of anescrow account described in this section does not constitute cause forany party to refuse to close the transaction.
As added by P.L.78-2006, SEC.1.
IC 32-28-12.5-19
Owner not providing required notice or certification at closing;civil action; damages; defenses
Sec. 19. (a) If any party, including a principal broker, buyer, orbuyer's mortgagee suffers a pecuniary loss as the result of an owner'sviolation of the notice or certification provisions described in section7 of this chapter, the party may bring a civil action against the ownerfor the following:
(1) Actual damages.
(2) The costs of the action.
(3) Reasonable attorney's fees.
However, if the party establishes that the owner's violation of thenotice or certification provisions was fraudulent, a court may awardthe party damages that do not exceed three (3) times actual damages.
(b) It is a defense to an action brought under this section that themost recent address provided by the principal broker to the owner inthe agreement, contract, or other written instrument, including awritten instrument described in section 5 of this chapter, wasincorrect, and as a result of the incorrect address, the principal brokerdid not receive the owner's notice described in section 7(b) of thischapter, and as a result the principal broker failed to provide thenotice as required in section 7(c) of this chapter.
As added by P.L.78-2006, SEC.1.