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Pennsylvania Supreme Court Reverses Lower Court on Act 91 Jurisdictional Issue

In prior client alerts, we advised you of the decision of the Pennsylvania Superior Court in Beneficial Consumer Discount Company v. Vukman, in which the court held that the trial court lacked jurisdiction over a mortgage foreclosure action as a result of a defective Act 91 Notice having been sent to a residential mortgagor prior to the commencement of a mortgage foreclosure action.  The Superior Court's holding that the trial court lacked jurisdiction resulted in the execution sale, the judgment upon which the sale was based, and the mortgage foreclosure action itself being declared void.

On September 25, 2013, the Pennsylvania Supreme Court rendered its opinion reversing the decision of the Superior Court.  The Pennsylvania Supreme Court held that a defective Act 91 notice does not strip the trial court of subject matter jurisdiction but, rather, Act 91 is a procedural requirement which impacts the power of a court to order a certain result in a mortgage foreclosure case.

In a case of first impression, the Court looked to a decision of the New Jersey Supreme Court that rejected a mortgagor's argument that a defect in a pre-foreclosure notice violated a jurisdictional pre-condition, thus rendering the resulting judgment void.  Likewise, in Vukman, the Pennsylvania Supreme Court rejected the mortgagor's argument that compliance with Act 91 is an element of a cause of action in mortgage foreclosure.  

The Vukman court held that the Act 91 notice requirement is a procedure which a mortgagee must follow prior to commencing a foreclosure action and does not implicate subject matter jurisdiction.  In reaching its conclusion, the Court also relied on the absence of explicit language in Act 91 prescribing that the requirements of the Act are jurisdictional.  The Court remanded the case to the trial court for further proceedings as to the effect of the defective Act 91 notice on the foreclosure action.

Justice Saylor issued a concurring Opinion, agreeing with the result reached by the majority, but reasoning that the notice that the lender sent to the mortgagor was not deficient in the first instance.  If you have any questions regarding the Beneficial Consumer Discount Company v. Vukman decision in particular, residential or commercial mortgage foreclosure in Pennsylvania in general, or any creditor/debtor matters, please contact Susan Fuhrer Reiter, Esq. at (814) 870-7760 or sreiter@mijb.com.