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Real estate may be foreclosed on by filing a lawsuit or
by conducting a non-judicial private foreclosure sale in compliance with
Montana law. Montana has some unusual mortgage provisions that have been
largely replaced by the Small Tract Financing Act of Montana for homesteads and
small business real estate. If the tract of land is 15 acres or less, then the
lender may use a trust deed that provides for a relatively quick and
inexpensive foreclosure procedure. Unless the Small Tract Financing Act
applies, then the lender must foreclose either by filing a lawsuit and seeking
an order of sale, or else following a special foreclosure procedure.
Under Montana's special foreclosure procedures, if
applicable, the lender or person conducting the foreclosure sale must publish,
post and serve a foreclosure notice at least 30 days in advance of the
foreclosure sale. The notices must be advertised in a newspaper where the real
estate is located, and if there is no newspaper, then by posting the notices in
five conspicuous places in the county. Two other notices must be posted in
conspicuous places in the township in which the land is situated, and one such
notice must be in such a conspicuous place as will be most likely to give
notice to all persons of the sale, and one must be posted at the front door of
the county courthouse. The notice of sale must be further served on the
occupant of the property to be foreclosed on and upon every person claiming an
interest in the property who may be found in the state of Montana.
Small Tract Financing Act Foreclosure
Procedure
If the tract of land is less than 15 acres, then the
Small Tract Financing Act applies to the foreclosure under the power sale
provisions of a deed of trust. If there is a default on ' loan obligation
secured by the deed of trust, and then recorded a notice of sale, duly executed
and acknowledge by the trustee named in the deed of trust, which sets forth l
proper information, then the foreclosure may be done out court. The contents of
the foreclosure notice must include:
- The names of the borrower, lender and trustee.
- A description of the property in foreclosure.
- A description of the default causing the
foreclosure.
- The book and page where the trust deed is
recorded.
- The sum owing on the defaulted loan.
- The trustee's or lender's intention to sell the
property I pay off the debt.
- The date of the sale, which shall be not less than
120 days subsequent to the date the foreclosure notice is filed for
record.
- The time of the sale, which shall be between the
hours of 9 A.M. and 4 P.M., mountain standard time.
- The place of the sale, which shall be at the
courthouse in the county in which the property is located, or at the office or
usual place of business of the trustee if it's within the county in which the
property is located.
Mailing of Foreclosure Notices
The trustee, at least 120 days before the date fixed for
the foreclosure sale, must mail foreclosure notices by registered or certified
mail to the following persons:
- The borrower, at the borrower's last known
address
- Any person who recorded a request for notice
- Any record title owner as of the notice filing
date
Posting
At least 20 days before the date fixed for the trustee's
sale, a copy of the recorded notice of sale must be posted in a conspicuous
place on the property to be sold. The trustee may request the sheriff or
constable of the county to post the notice. A copy of the notice shall be
published in a newspaper of general circulation in the county in which the
property is located once per week for three successive weeks. The posting and
the last publication shall be made at least 20 days before the date fixed for
the trustee's sale.
Recording
On or before the date of the sale the trustee must
record an affidavit staling that the requirements of mailing, posting and
publication have been met.
Sale Procedures
At the date, time and place specified for foreclosure in
the notice of sale, the trustee or his or her attorney shall sell the property
at public auction to the highest bidder. The sale may be postponed up to 15
days by a proclamation made the time the foreclosure sale would otherwise have
taken place. The purchaser must pay the high bid price in cash. In return, the
purchaser will receive a trustee's deed. If the purchaser fails to pay, then
the trustee can resell the proper at any time to the highest bidder. The
trustee may reject any further bidding by a bidder who fails to produce cash in
response to winning a bid.
Redemption
Although the old statutes provided for a one year right
of redemption, the Small Tract Financing Act eliminates the borrower's right to
redeem after a properly conducted foreclosure sale.
Deficiency
Montana does not allow a deficiency judgment unless the
foreclosure was done by filing a lawsuit and the sale proceeds were
insufficient to pay the judgment. Small Tract Financing Act foreclosures done
out of court by advertisement do not give the lender any right to collect a
deficiency from the borrower.
Possession
The lender may obtain possession on the tenth day
following the sale. Any person still in the house or property is to be treated
as a tenant at will (a nonpaying tenant). |
