In recent years, mortgage foreclosures in Minnesota have been on the rise. As a result, more than ever before, Minnesota property owners have a need to understand the foreclosure process.
1. How is a mortgage foreclosed in Minnesota?
In Minnesota there are essentially two ways that a mortgage can be foreclosed. The first way to foreclose is through the process of foreclosure by action. In this process, the mortgage holder files a lawsuit in district court against the homeowner and any others claiming an interest in the property. The matter will proceed with the timing of a normal lawsuit. If successful, the court will enter judgment of an amount due with costs and disbursements and order the sale of the property by the sheriff in order to satisfy this judgment. The sheriff will conduct a “sheriff’s sale" described below. Foreclosure by Advertisement. The second and most common way for a mortgagee to foreclose on a mortgage on Minnesota property is through the process referred to as foreclosure by advertisement. Essentially, foreclosure by advertisement allows the mortgagee to publish in a legal newspaper that the mortgage is in default and that a sale of the property subject to the mortgage will be held on a specific date. If the property owner fails to cure the default before the sale, the sheriff will conduct a “sheriff’s sale" described below
2. When is mortgage foreclosure by advertisement available?
A mortgagee may foreclose through the advertisement process if the mortgage contains a permission to foreclose by advertisement (most mortgages do) and there is a default in a condition of the mortgage. Additionally, the mortgage must have been recorded or duly registered. (Most are.) 3. What notice must be provided in order to foreclose by advertisement?
The mortgage holder must publish notice that the mortgage will be foreclosed by sale by providing six weeks published notice in a legal newspaper. Additionally, this notice must be served personally on the occupant of the property at least four weeks before the sale. The notice must contain the date of mortgage, when and where recorded or registered, the amount due on the mortgage, the time and place of sale, and time allowed for the property owner to redeem after the sale among other things.
4. What happens at a sale?
Essentially, the sheriff or deputy auctions the property being foreclosed to the highest bidder. The sheriff or deputy will deliver to the purchaser (usually the mortgage holder) a Certificate of Sale, which will be recorded within twenty days after the sale and operates as a conveyance of the foreclosed property after the property owner’s redemption period expires.
5. May the foreclosed property owner regain title to the property after the sale?
Yes. In most cases, the foreclosed property owner has six months to redeem the foreclosed property from the purchaser at the sale. To exercise their right to redeem the property, the foreclosed property owner must pay the purchaser the amount of the sale plus interest from the time of the sale. In some instances, this redemption period will extend up to one year after the sale of the property has occurred. Usually this redemption is completed by refinancing the property or by selling the property within the redemption period.
6. Does the property owner have the ability to reinstate the defaulted mortgage prior to the foreclosure sale?
Yes. In Minnesota a property owner has the right to pay the amount in default and resume to make the monthly payments (“reinstate"). To successfully reinstate, the property owner must pay the mortgage holder the amount in default, including insurance, delinquent taxes, interest, cost of publication and service, and attorney’s fees. (The amount of attorney’s fees is limited by law.) The effect of making this payment is that the mortgage is reinstated and foreclosure proceedings are abandoned.
This article was written by Attorney Mike Kallas of Kallas-Law in Minneapolis Minnesota. The Law Firm specializes in Business and Real Estate Law.
