Effective Date: August 4, 2025

​Statute:
18-50-118. Recovery of fees.

• (a) A mortgagor may recover reasonable attorney's fees under this subchapter if a court sets aside the statutory foreclosure sale due to a mortgagee’s failure to strictly comply with any provision of § 18-50-101 et seq., under § 18-50-116(d)(2)(B)(ii).
• (b) A mortgagor shall not be awarded attorney's fees under subsection (a) of this section if the:
  1. Mortgagor and mortgagee reach a mutual resolution of the debt and corresponding foreclosure;
  2. Mortgagor files a petition for bankruptcy while the foreclosure or any related litigation is pending;
  3. Mortgagee instituted the statutory foreclosure while in good faith relying on a policy of title insurance that was subsequently found to be in error;
  4. Mortgagee instituted the statutory foreclosure in good faith without knowledge of unrecorded debt on the subject property;
  5. Mortgagee instituted the statutory foreclosure in good faith without knowledge of assessments, taxes, or liens filed against the subject property subsequent to the final policy of title insurance being issued; or
  6. Mortgage is reinstated under § 18-50-114.

Implications:
The Act 306 amends the Arkansas Code concerning statutory foreclosures by introducing a new section that allows a mortgagor to recover reasonable attorney's fees under specific circumstances. According to the new provision, a mortgagor can seek these fees if a court sets aside a statutory foreclosure sale due to the mortgagee's failure to comply with relevant legal provisions.

The new legal language added to the Arkansas Code includes the specific criteria for fee recovery and the exceptions that would prevent such recovery. This amendment aims to clarify the rights of mortgagors in foreclosure situations and provides a means to recover legal costs when appropriate.However, the Act also provides important protections for mortgagees. Attorney’s fees cannot be awarded if the mortgagor and mortgagee reach a mutual resolution, if the mortgagor files for bankruptcy during the foreclosure process, or if the mortgagee acted in good faith—for instance, by relying on title insurance or lacking knowledge of specific liens or debts, or if the mortgagor reinstates.
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The statute specifically sets out that the fees are permissive, not mandatory, by statute. It would be within a Court’s discretion as to whether to award said fees to the mortgagor(s). We encourage a review of internal and external processes for compliance with the provisions of AR Code § 18-50-101 et seq., AR Code § 18-50-117 to avoid an award of attorney’s fees under the new statute.

​Questions? Contact [email protected]

​Questions? Contact [email protected]

On April 10, 2025, the United States Bankruptcy Court for the Southern District of Florida held that “the notice” in Rule 3002(c)(7) means the actual notice of the deadline to file a proof of claim and not notice in general of the case. In re Aguilar and Maldonado, 0:24-bk-21304 ECF No. 42 (Bankr S.D. Fla. April 10, 2024).
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In October 2022, husband Yasmani Figueredo Aguilar and wife Farideth Aimee Maldonado each took out separate unsecured personal loans from Primis Bank—$40,000 for Yasmani and $55,000 for Farideth. Primis assigned both loans to Cadles of West Virginia LLC on June 5, 2024, and Cadles (through its servicing affiliate, The Cadle Company) sent debt-ownership and collection notices to the couple that August and again in September.

Hello, future homeowners and real estate enthusiasts!

Ever wondered what really goes on behind the scenes of a real estate closing? Spoiler alert: It’s not just a high-five and a handshake! It’s a finely tuned, well-oiled process of paperwork, coordination, and yes, a little bit of magic to make sure everything goes off without a hitch.
Enter me, the Real Estate Closing Assistant and my trusty partner, the Real Estate Closing Officer, here at Padgett Law Group. Together, we’re the dynamic duo of the real estate world. While the world watches closings happen smoothly, we’re the ones working behind the scenes to ensure that when it’s time to sign, everything’s picture-perfect!

In the case of Nguyen v. Quality Loan Service Corp., 562 P.3d 384 (attached), the Washington Court of Appeals determined that a debtor's bankruptcy filing does not provide immunity from Rule 11 sanctions. 

Nguyen initiated a baseless lawsuit to prevent foreclosure, despite having previously faced a dismissal with prejudice. In response, the loan servicer requested sanctions, which the court approved, resulting in the award of attorneys' fees. 

On appeal, Nguyen contended that the sanctions infringed upon the automatic bankruptcy stay; however, the court identified an exception under 11 U.S.C. § 362(b)(4), which permits the enforcement of regulatory authority. 

This decision underscores that bankruptcy protections do not serve as a defense against bad-faith litigation, at least within the jurisdiction of Washington.

This post was prepared by Hadi Seyed-Ali, Esq.