Minnesota Foreclosure Laws: Process, Timeline and Your Rights

Both. A mortgage that contains a power of sale may be foreclosed "by advertisement" (a sheriff's sale without a court case) after a default, as long as no lawsuit to collect the debt is pending and the mortgage and all assignments are recorded. Mortgages may also be foreclosed by court action under Chapter 581. In either case, the homeowner generally keeps a redemption period after the sheriff's sale.

For an owner-occupied home of 1 to 4 units, before the foreclosure is started (before the notice of pendency or lis pendens is recorded) the lender must give the homeowner a notice that free foreclosure prevention counseling is available and that the homeowner's contact information will be sent to an approved counseling agency. For a foreclosure by advertisement, six weeks' published notice of the sale is required, and a copy must be served on the occupant, like a court summons, at least 4 weeks before the sale. The notice must state the amount claimed due, the time and place of sale, the redemption period, and, for an owner-occupied single-family home, the date the owner must move out if the mortgage is not reinstated or the property redeemed. Owner-occupants of 1 to 4 unit homes must also be given a separate "Help For Homeowners in Foreclosure" advice notice and a notice of redemption rights with the foreclosure notice.

For a foreclosure by advertisement, the statute requires six weeks' published notice before the sale and personal service on the occupant at least 4 weeks before the sale. For an owner-occupied home of 1 to 4 units, a servicer generally may not refer the loan to an attorney for foreclosure, or hold the sale, while a timely loss-mitigation application is pending (small servicers are mostly exempt). A homestead owner may postpone the sale once — for 5 months if the redemption period is 6 months, or 11 months if it is 12 months — by recording an affidavit at least 15 days before the sale, which shortens the redemption period to five weeks. After the sale, the redemption period (usually 6 months) runs before the owner must leave.

Yes. In a foreclosure by advertisement or by court action, the mortgage is fully reinstated and the foreclosure must stop if, at any time before the sale, the homeowner (or a junior lienholder or anyone on their behalf) pays the amount actually in default when the foreclosure began, plus insurance, delinquent taxes, interest, publication and service costs, limited attorney's fees (not more than $150 or half of the fees allowed by Minn. Stat. § 582.01, whichever is greater) and other lawful costs. The lender must tell the homeowner the reinstatement amount within three days of a request, but does not have to postpone the sale for a request made less than three days before the sale.

Yes. After a sheriff's sale, the homeowner may redeem by paying the sale price plus interest at the mortgage rate (6% if no rate is stated in the certificate of sale) and certain other allowed amounts. The usual period is 6 months after the sale. It is 12 months in listed situations, including when the amount claimed due at the notice of sale was less than 66-2/3% of the original principal, for certain larger or agricultural parcels, for mortgages signed before July 1, 1967, and for reverse mortgages. It can be shortened to five weeks if the homeowner postpones the sale under § 580.07 or a court finds the property abandoned. The owner can stay in the home during the redemption period.

A deficiency judgment is not allowed when a mortgage is foreclosed by advertisement and the redemption period is 6 months or five weeks. Otherwise, a lender may get a deficiency judgment, limited to the difference between the sale proceeds (after expenses and costs) and the amount owed or the court judgment. For agricultural property, the lender must file a deficiency action within 90 days after the sale, and the deficiency is limited to the difference between the debt and the property's fair market value, determined by a jury unless waived.

Minnesota does not have a general court mediation program for home foreclosures in the statutes read, but state law requires pre-foreclosure counseling notices and loss-mitigation review for owner-occupied homes of 1 to 4 units. Before starting the foreclosure, the lender must tell the homeowner about free foreclosure prevention counseling and send the homeowner's contact information to an approved counseling agency within a week. Once a counseling agency notifies the lender, the lender must, within 15 days, name an agent authorized to discuss the mortgage terms and negotiate a resolution of the default (though the lender is not required to reach a resolution). Servicers must offer and review loss-mitigation options (such as modifications, forbearance or repayment plans) and generally may not proceed with the foreclosure while a timely application is pending.

A tenant whose lease began after the mortgage was signed and before the redemption period ended must get at least 90 days' written notice to vacate, given no sooner than the end of the redemption period, as long as the tenant pays rent and follows the lease. If a bona fide lease runs more than 90 days past the end of the redemption period, the new owner must let the tenant stay until the lease ends (with at least 90 days' notice), unless the new owner or a later buyer will live in the unit, in which case the 90-day notice rule applies. Section 8 tenancies get similar protection. A lease is "bona fide" only if the tenant is not the borrower or the borrower's child, spouse or parent, it was an arm's-length deal, and the rent is not substantially below market (unless subsidized).

Yes. In a common interest community (condominium, planned community or real-estate cooperative), the association has a lien for assessments, which may also include fees, late charges, fines and interest unless the declaration says otherwise. It may foreclose the lien like a mortgage, by advertisement (power of sale) or by court action. Attorney fees and costs cannot be included in the amount the owner must pay to reinstate. The owner's redemption period is 6 months from the sale or a shorter period allowed by law. The lien ranks behind a first mortgage, but if the first mortgage is foreclosed, the buyer takes the unit subject to up to 6 months of unpaid regular assessments. Lien enforcement must begin within 3 years after the last installment of the assessment comes due.

Yes. Before signing an agreement to sell residential real property, the seller must give the prospective buyer a written disclosure of all material facts the seller knows of that could adversely and significantly affect an ordinary buyer's use and enjoyment of the property or any intended use the seller knows about. The statute does not prescribe a state form. Sellers need not disclose certain facts, such as that the home was the site of a death or that an occupant had HIV/AIDS, and may rely on a qualified third party's written inspection report given to the buyer.

Land with delinquent property taxes is sold to the State of Minnesota at a tax judgment sale. The usual redemption period is three years from the sale to the state; it is one year for non-homestead land in a designated targeted community, and can be shortened in some cases under §§ 281.173 and 281.174. To redeem, the owner pays the county the amount the land was bid in for plus all later delinquent taxes, penalties, costs and interest. The land stays redeemable until the redemption time runs out after the required notice of expiration; then absolute title vests in the state.

Minnesota Housing (the state housing finance agency) tells homeowners having trouble with mortgage payments to contact their loan servicer about options and to contact a certified counseling agency for free advice from a foreclosure prevention advisor; one way to find one is through the Minnesota Homeownership Center, a separate nonprofit. State law requires foreclosure notices to homeowners to list the Minnesota Home Ownership Center (651-659-9336 or 866-462-6466, www.hocmn.org) and HUD's counselor referral line (1-800-569-4287).