Minnesota Foreclosure Process

Link to Minnesota Foreclosure Laws

the majority of Minnesota foreclosures are handled out of court.

Minnesota Foreclosure Overview

In a Minnesota Foreclosure both in-court (judicial), and out-of-court (non-judicial) foreclosure proceedings are used. The basic timeline for a Minnesota foreclosure is about four months; however, that does not include the redemption period

Pre-foreclosure Period

In Minnesota, a court foreclosure begins when a lender serves the borrower a Notice of Default (NOD). The lender then files a court action against the borrower. If the court rules against the borrower, which it typically does if the borrower is in default, a sale is scheduled.

That said, the majority of Minnesota foreclosures are handled out of court. This is done through a Power of Sale clause contained in the mortgage, which grants the lender the power to foreclose without a court case. Under most mortgages, a lender must mail a Notice of Default to the borrower before scheduling the sale; however, this is a matter of the mortgage not the law.

With both types of foreclosure proceedings, the borrower can stop the foreclosure any time before the foreclosure sale simply by paying the default amount, plus fees and various allowable costs.

Under Minnesota law, a borrower may choose to postpone the foreclosure sale if the property:

  • is classified as a homestead
  • is occupied by the owner as a homestead, and
  • contains between one and four dwelling units.

To get a postponement, the borrower must complete a series of steps. After the Notice of Foreclosure Sale is published, but a minimum of 15 days prior to the scheduled sale date specified in the notice, the borrower must execute and record a sworn affidavit with the county, as well as file a copy with the sheriff who’s conducting the sale and deliver a copy to the lender’s attorney. The copies must show the required proof listed above, the recording date and the county recorder’s office in which the affidavit was recorded.

Depending on the situation, the postponement can last for five months up to 11 months.

 

Notice of Sale & Auction

The Notice of Sale, (NOS), must include the name of the borrower, the name of the owner if different from the borrower, and lender names; as well as the original loan amount, the mortgage date, recording information, the default amount due, a property description, the time and location of the sale, and the redemption period.

The notice is required to be published for six weeks in a local newspaper, and the occupants of the property must be given the notice in person at least four weeks prior to the sale.

The county sheriff conducts the foreclosure sale between 9:00 a.m. and sundown on any normal business day at a public place, usually the sheriff’s office. Anyone may bid at the sale. The property is sold to the highest bidder.

If not the lender, the winning bidder must be prepared to pay the full amount in cash or cashier’s check at the time of sale. The sheriff may postpone the sale for a variety of reasons, by publishing a notice in the newspaper where the original notice of sale was published. After the sale, the sheriff gives a Certificate of Sale to the winning bidder. The Certificate of Sale effectively transfers ownership and possession rights to the winning bidder after the redemption period. Note that this is NOT a warranty deed, and the certificate may not convey clear title.

In Minnesota, a borrower usually has a six-month redemption period. Some property types and mortgages allow for a 12-month redemption period. During the redemption period, the borrower can redeem the property by paying the total amount of the highest bid plus applicable interest and any costs.

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