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.
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. The specific code is provided below:
18-50-118. Recovery of fees.