Pub. 4 2013 Issue 2

www.wvbankers.org 24 David M. Thomas is a Partner in Dinsmore & Shohl’s Morgantown office. He focuses his practice on banking law, bankruptcy and commercial transactions. He can be reached at (304) 225-1422 or via email at david.thomas@dinsmore.com. Michael R. Proctor is an attorneys practicing in Dinsmore & Shohl’s Morgantown office. He counsels clients on finance and restructuring matters. He can be reached at (304) 225-1449 or via email at michael.proctor@dinsmore.com. the goal of not taking the property into OREO) consider plac- ing a separate retail advertisement to draw more attention to the sale. In certain situations, it may be worth hiring an auc- tioneer to assist with the foreclosure process. While there are costs associated with running commercial ads and/or hiring an auctioneer, those investments may pay off if they produce a qualified third-party buyer. Day of Sale Considerations Bidder Sign-Up Sheet On the date of the sale, it is prudent to have a bank representa- tive present at the sale to not only make bidding decisions but to also meet other parties who may be interested in the proper- ty. Also, it is a good idea to have a bidder sign-up sheet at the foreclosure sale where the names and contact information for parties interested in the property can be obtained. Oftentimes potential buyers are not inclined to bid at the foreclosure sale but may be willing to discuss a purchase after the bank takes the property into OREO. Having the names and numbers of parties who showed interest may prove useful when you are trying to sell the property post-foreclosure. Memorandum of Sale You should make sure that your trustee intends to have the buyer execute a memorandum of sale (ie purchase agreement) immediately after the sale. This contract should set forth the basic terms of the sale including the buyer, property descrip- tion, purchase price, deposit amount and deadline for closing. This memorandum not only confirms the buyer’s obligation to purchase the property but can also be beneficial in trying to help avoid a borrower’s attempt to have a foreclosure sale set aside in the event of a bankruptcy. In the case of In Re Bardell (Bk. Case No. 05-06808), a debtor asked the Bankruptcy Court for the Northern District of West Virginia to set aside a foreclosure sale where the debtor filed bankruptcy soon after the sale but before the trustee’s deed was executed. The Court denied the debtor’s request based, in part, upon the fact that a memorandum of sale had been executed between the buyer and the trustee following the foreclosure sale. Based upon the Bardell decision, a trustee should have the buyer execute a memorandum of sale immediately after the sale to avoid at- tempts to set the sale aside in a bankruptcy, including the bank if it is the purchaser at the foreclosure sale. Conclusion Hopefully this article has provided some practical tips that will assist banks in dealing with OREO properties up to the date of the sale. In part two of this article, which will be published in the fall edition of the West Virginia Banker magazine, we will address post-sale considerations, such as how to deal with tenants residing in the property, personal property left behind at the property and the like. Q Live Seminars and Schools July 23&24 Dodd Frank Update! Reg Z, B & RESPA (Co-Sponsored with PBS) 25 HMDA (Co-Sponsored with PBS) September 10 FDIC Credit Workshop 12&13 CEO Forum 17 New Accounts Documentation and Compliance 18&19 Branch Management School 22–27 GSB Financial Managers School 22–27 ABA National Trust School 23– 26 Compliance School 25 Disaster Preparedness Forum October 9 Dodd Frank Update 16&17 Internal Audit School 19–25 ABA National Compliance School 20–25 ABA Graduate School of Compliance Risk Management 23&24 Consumer Lending School November 4&5 BSA/AML School 13&14 CFO Conference 19 Compliance Management Webinars — Live and Recorded Visit our website www.wvbankers.org as dates and topics are announced . Graduate School of Banking Online Senior Management Seminars Visit www.gsb.org or our website as updates are added. Calendar of Events Register online at www.wvbankers.org Q OREO Properties — continued from page 23