Lenders foreclosing by advertisement in Minnesota must comply with many technical requirements. One requirement is "that the mortgage has been recorded and, if it has been assigned, that all assignments thereof have been recorded[.]"  Minn. Stat. § 580.02(3).  In other words, the mortgage and all assignments must be recorded before the mortgagee may begin the foreclosure process. In a recent case decided by the Minnesota Supreme Court, this seemingly simple requirement led to years of litigation that culminated in the Court's holding that the lender's foreclosure was void because the lender filed its assignment of mortgage on the same day it commenced publishing the notice of foreclosure, instead of the day before the lender began the foreclosure process. See Ruiz v. 1st Fidelity Loan Servicing, LLC, A11-1028, -- N.W.2d -- (Minn. Apr. 17, 2013). In concluding that the foreclosure was void, the Minnesota Supreme Court focused on the "precise language of the statutory provisions governing the foreclosure by advertisement process" and concluded that the statute mandates strict compliance. As a result, a small mistake caused significant negative consequences to the foreclosing lender.

Foreclosure by advertisement should be a faster and more efficient remedy that allows a lender to foreclose without judicial proceedings and supervision.  But to take advantage of this remedy, Minnesota courts have consistently required strict compliance with the technical requirements of the statutes.  If a lender does not strictly comply with the technical requirements, it risks having the sale rendered void by the courts-often after years of litigation, expense and delay.

If you have questions, contact one of Winthrop & Weinstine’s attorneys practicing in the areas of Creditors’ Remedies and Bankruptcy Law; Commercial Lending; or Community Banking.