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The legislature of Minnesota takes very seriously the foreclosing of property, whether it is commercial property or personal property. There are statutes and rules of law that govern how property is dealt with if it goes into default. To begin with, the documents that entitle a borrower and lender to make a joint agreement for personal property are known as a mortgage or deed of trust. For commercial property they are known as security agreements. Sometimes the two are combined but not often. The document is filed to make known that a binding contract has been entered into and that repayment will be made at certain times; this is called the note.
In Minnesota, lenders may foreclose on deeds of trusts or mortgages that are in default by using either of the following:
A judicial foreclosure involves filing a lawsuit that allows the court to order the foreclosure. This is typically used when there is no power for the lender to sell listed in the mortgage or deed of trust. After the judicial foreclosure has occurred the sale of your property occurs and that involves an auction.
The non-judicial foreclosure process is often used when there is a power of sale section in the mortgage or deed of trust. A power of sale clause is the section of the mortgage or deed of trust that gives the lender the pre-authorization to sell the property to pay off whatever balance is on the loan in case the owner/borrower defaults of his or her loan. If a power of sale is listed in the mortgage or deed of trust, the lender can legally sell the property through a trustee who acts as the representative of the lender.
When the deed of trust or mortgage has a power of sale clause that directly specifies the time, location and terms of the sale in case of default and foreclosure, the exact procedures must be followed. What sets Minnesota apart from the other states in American is that a non-judicial foreclosure can occur only if the following takes place:
When these conditions are fully in place the foreclosure occurs as such:
Notice of the sale that lists the owner/borrower's and the lender's names, what the original loan amount is and also what the current amount of the default is, a full description of the property and the time, place and date of the foreclosure sale.
This must be recorded in the county in which the property is located.
The sheriff of the county in which the property resides may conduct the sale on the date that is listed in the notice of sale. At any time during the sale, the sheriff has to read an itemized statement that was filed by the lender that tells those in attendance the exact amount due at the time of this sale. The property is then sold to the highest bidder who receives, at that time, a certificate of sale.
A lender can request a deficiency judgment but this is limited to only the amount of the fair market value of the home or property along with the unpaid balance of the loan. The borrower/owner of the property has a full year to redeem the property by paying the full amount due on the loan.
Getting foreclosed on is a process that you may want to consult an attorney about to make sure that you have every opportunity to redeem the property.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified foreclosure lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local foreclosure attorney to discuss your specific legal situation.