Judicial/ Non-Judicial Foreclosure: Available/ Available
Right of Redemption / Deficiency Judgment: Yes / Yes
Timeline: 60 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Deed of Trust, Mortgage
Both Judicial and Non-Judicial foreclosure processes can be followed in Minnesota.
Judicial/ Foreclosure process:
If a power of sale clause is not present in the deed of trust/ mortgage documents, the Judicial foreclosure process is followed. Judicial foreclosure process involves the lender filing a lawsuit in the court requesting for a foreclosure order. The court then determines if the borrower has defaulted on the loan and gives a court order authorizing the foreclosure sale if it finds that the borrower has defaulted. The property is then sold off to the highest bidder in a public auction.
Non-Judicial Foreclosure process:
If a power of sale clause is present in the deed of trust/ mortgage documents, the Non-Judicial foreclosure process is followed. The power of sale authorizes the lender to foreclose on the mortgage property if the borrower happens to default on the loan. The foreclosure proceedings can be carried out by the lender or their authorized representative, referred to as Trustee. The following guidelines are followed for a Non-Judicial foreclosure process.
If the power of sale contains the time, venue and other terms of the foreclosure sale, the same is required to be followed. In Minnesota, the following three conditions need to be fulfilled for a Non-Judicial foreclosure to take place.
There should not be a lawsuit to collect the mortgage already, the assignments of mortgage to new lenders (if any) should have been recorded and a notice needs to be given at least eight weeks prior to the actual sale/auction date.
A notice of sale is then recorded in the recorders office of the county where the property is located. The notice of sale should contain all the correspondence details of the borrower/lender, location and other details of the property, date/time/venue of the auction and the terms of foreclosure sale.
During the actual date, a public auction is held and the foreclosure proceedings are carried out by the sheriff. The sheriff is also required to read an itemized statement on the default loan value on that day. The property is then sold off to the highest bidder in the auction and they receive a certificate of sale.
In Minnesota, the borrowers have a right of redemption for up to one year after the date of sale, during which they can pay up their dues and reclaim the property. The lender can file for deficiency judgment if the value offered by the highest bidder is lesser than the amount owed by the borrower. But the value they can claim from the borrower in this case is restricted to the difference of the amount owed by the borrower and the fair price of the property.