## Facts

- Harbor Funding Corporation financed Litchfield Square Associates (LSA), a general partnership, to purchase real property located in Wells, Maine, and took a mortgage on the property as security.
- James T. Kavanagh, an LSA partner, signed the promissory note as a general partner and also as an individual guarantor; he signed the mortgage as a general partner.
- The mortgage stated it would be “governed, construed and enforced” under Massachusetts law and referred to Massachusetts “STATUTORY POWER OF SALE.”
- The parties later executed an allonge and loan modification agreement discharging all other makers and co-makers from liability on the note except Kavanagh.
- After default, Harbor Funding filed a judicial foreclosure action in Maine under Maine’s foreclosure statute rather than pursuing a Massachusetts power-of-sale foreclosure.
- The Superior Court entered summary judgment for Harbor Funding and ordered foreclosure under Maine law; Kavanagh appealed.

## Issues

1. Whether a mortgage clause selecting Massachusetts law and referencing the Massachusetts statutory power of sale requires Massachusetts foreclosure procedures for Maine real property.
2. Whether Maine’s foreclosure statute applies to foreclosure of Maine land notwithstanding the contract’s choice-of-law language.

## Decision

- The Supreme Judicial Court of Maine affirmed the summary judgment and foreclosure decree.
- The court held that foreclosure of real property located in Maine is governed by Maine law as the law of the situs.
- The Massachusetts choice-of-law and power-of-sale language did not displace Maine’s statutory foreclosure process or limit the mortgagee to Massachusetts procedures.

## Legal Principles

- The law of the state where real property is located governs foreclosure remedies and procedures affecting that property.
- Contractual choice-of-law provisions may govern contractual rights and obligations, but they do not control mandatory local rules governing foreclosure of in-state land.
- A mortgage’s reference to an out-of-state statutory power of sale does not bar a mortgagee from electing a judicial foreclosure remedy authorized by the situs state.

## Conclusion

Because the property was located in Maine, Maine law controlled the foreclosure remedy, and the mortgage’s Massachusetts choice-of-law and power-of-sale provisions did not require Massachusetts foreclosure procedures or prevent judicial foreclosure under Maine’s statute.


Harbor Funding Corp. v. Kavanagh, 666 A.2d 498 (Me. 1995)