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Minnesota
Judicial foreclosure available: Yes
Non-Judicial foreclosure available: Yes
Minnesota allows foreclosure in two ways: by
advertisement and by court action. If court action is selected, the lender must
file a lawsuit and obtain a judgment for the amount due and a court order
commanding the property to be sold. Prior to attempting any foreclosure, the
lender should give at least 30 days' notice of the existence of a default. For
agricultural property, complex mandatory mediation procedures must be
followed.
Non-judicial Sale by Advertisement
If the mortgage contains a power of sale clause, it may
be foreclosed by advertisement. However, a number of conditions must be met
before sale by advertisement can be undertaken.
- There must be a default on the mortgage,
- no lawsuit to collect on the mortgage may be
underway,
- the mortgage itself and any assignments of the
mortgage to new lenders must have been recorded and
- the notice must be given eight weeks before
foreclosure on a homestead.
If an attorney is involved in the foreclosure, the
attorney's authority must be shown by a power of attorney that has been
properly recorded. Attorney's fees are set by statute for foreclosure sales.
Hence, the borrower cannot be billed indiscriminately for attorney's fees
during the foreclosure process.
Certificate of Sale
After the sale, the sheriff will prepare a certificate
showing the amount of the sale and the amount left unpaid on the loan.
Special Procedure - Right of First Refusal
Borrowers have a complex right of first refusal when
land is acquired by a state agency, a federal agency, a limited partnership or
a corporation (other than a family farm corporation). Once the agency or
business acquires land by foreclosure, it will ultimately try to resell it.
When it tries to resell, the old owner who lost the property in foreclosure
must be offered the property in preference to any other purchaser at the price
and terms an outside buyer is willing to accept for the property. The lender
must make a good-faith effort to let the old owner buy it first, hence the term
right of first refusal. The law applies for the first five years after the
property was foreclosed on. The right of first refusal may not be waived or
assigned, except to family members by inheritance.
Deficiency
Any deficiency is limited to the difference between the
fair market value of the property, as determined by a jury, and the unpaid
balance remaining on the old loan. To recover a deficiency judgment against the
borrower, the lender must file a lawsuit against the borrower. If the lender
already seeks foreclosure by a lawsuit, then all the lender has to do is add a
claim to the existing lawsuit. However, when the foreclosure is by
advertisement, then an independent lawsuit must be filed to recover a
deficiency.
Redemption
Redemption is unusual in Minnesota. The borrower or a
junior lien holder has up to one year after the foreclosure to redeem the
property by making all the past due payments rather than the entire loan
balance after acceleration.
Preliminary Notices
Contents
The foreclosure notice must name the borrower the
original lender, any takeover lender, the original loan amount, the date of the
mortgage, recording information, the amount currently due on the loan including
back taxes and unpaid insurance, a property description, the time and place of
the impending foreclosure sale and the time allowed by law for the borrower to
redeem the property.
Sale Procedures
Documentation
Before the sale, the lender must file a verified,
itemized statement with the sheriff showing the amount due. This statement must
be read during the sale b the sheriff.
Time and Place
The time, place and date of the foreclosure are set
forth in the foreclosure notice.
Manner
In Minnesota, the actual foreclosure sale must be
conducted by public auction. The sale is to the highest bidder. |
