Minnesota Foreclosure Laws

Minnesota foreclosures are either judicial or non-judicial. Foreclosure process is determined by the Power of Sale clause in mortgage agreement. Mortgage is the Instrument of Security. Typical foreclosure timeline is 4 months excluding redemption period.

Judicial And Non-Judicial Foreclosure Information

In Minnesota, majority of foreclosures use the non-judicial proceedings. Out-of-court foreclosure takes place when the mortgage agreement between the borrower and lender has a Power of Sale clause. This provision, which is signed by the borrower, authorizes the lender to pursue a foreclosure sale on a distressed property. This will only happen if the borrower has defaulted on payments. With non-judicial foreclosure, it is not necessary for the lender to consult a state court about foreclosing a property.

Under the Minnesota foreclosure laws, judicial foreclosure requires the lender to file a complaint against the borrower in court. This legal action is also known as lis pendens which indicates an impending foreclosure on a property. During this period, the borrower or homeowner is given time to respond to the complaint. If the homeowner does not respond nor contest the complaint, the court can favor the lender; hence, a foreclosure sale will be scheduled.

To stop the foreclosure, the borrower or homeowner has to pay off the defaulted payments plus additional fees/costs until the date of the foreclosure sale.

As per foreclosure laws in Minnesota, a statutory right of redemption is allowed. This would enable the borrower or homeowner to reclaim ownership of a foreclosed property. To redeem a property, a full payment of the unpaid loan plus applicable costs should be made by borrower to the lender. Redemption period depends on property type and mortgage. Typical redemption period is 6 months while other allows 12 months.

A lender may obtain deficiency judgment against the borrower. When this happens, the borrower owes the lender for the difference between the amount of the property sold and the amount of the original loan and should pay it off. Deficiency occurs when the property in foreclosure is sold for less than amount of the mortgage loan.

The foreclosure sale, which is similar to that of a public auction, is usually held at the Sheriff’s office and conducted by the Sheriff him/herself. The highest bidder wins and acquires the property. A Certificate of Sale will be presented to the winning bidder. Transfer of ownership takes effect once the redemption period expires.

Notice Of Sale

The Notice of Sale is indispensable and should include the following: location and date of the foreclosure sale, borrower’s name, original amount of loan, date of mortgage, property description, amount due on the mortgage loan, and redemption period.