Abandoned, empty properties across the state of Minnesota have spurred a change in the Minnesota Foreclosure Laws. Changes affect homeowners who may now have the option to postpone foreclosure sales, lenders who are now required to protect vacant property and cities which are now able to secure abandoned buildings and reduce the redemption period.
Homeowners can now postpone foreclosure sales
A homeowner of a property that is classified as homestead and has one to four dwelling units can now postpone the foreclosure sale of the home to a date that is five months after the originally scheduled date of sale. Although this option may not be right for every homeowner facing an imminent foreclosure sale date, it does provide the homeowner with additional time to bring the mortgage current, rather than be forced to pay the entire balance of the loan at the end of the redemption period.
The Minnesota Foreclosure Laws changed on June 15, 2009, to allow a homeowner to postpone a foreclosure sale for five months provided the homeowner follows the requisite steps. Prior to this change in the law, only lenders could postpone a foreclosure sale.
The law was envisioned for homeowners who have been laid off in this faltering economy and as a result have missed some loan payments. The postponement allows these homeowners additional time to find employment, cure the delinquent payments, and thus save their home an option that would not be possible if they were forced to repay the entire loan six months after the sale.
In order to effectuate the postponement, the homeowner must accomplish the following at least 15 days prior to the scheduled sale date: 1) complete the affidavit of postponement; 2) record the affidavit in the relevant county; 3) file the affidavit with the sheriff conducting the sale; and 4) deliver the affidavit to the attorney foreclosing the mortgage. If the homeowner properly complies with these requirements, the sale is postponed for five months, but the redemption period is reduced to five weeks. Because the redemption period usually lasts until six months after the sale date, the homeowner’s newly gained right to postpone the sale does not lengthen the foreclosure process.
Lenders need not fear a homeowner may only postpone the sale once, regardless of whether the homeowner reinstates the mortgage prior to the postponed foreclosure sale. Moreover, a homeowner who exercises this option does not create additional work for the lender because the postponement does not require the lender to change the notice of sale, to re-serve the homeowner, or publish the postponement, assuming this was properly accomplished prior to the postponement. Essentially, after the homeowner properly achieves postponement, the sale date is moved to the first date five months after the originally scheduled date, provided that it is not a weekend day or legal holiday.
Lenders now have a duty to protect the premises
Lenders, who have a sheriff’s certificate and have sufficient evidence to establish in court that the property is abandoned, are required to enter upon a vacant or unoccupied property to protect the property from waste and trespass. Minnesota law used to provide lenders with the option to enter foreclosed properties to protect them from waste or trespass. As of August 1, 2009, lenders are required to enter the premises to make reasonable periodic inspections, install or change the locks, install locks on windows that do not have locks, and ensure existing window locks are properly functioning.
The recent change also now provides a lender with the option to board windows, doors, and other openings, install an alarm system, and otherwise prevent or minimize damage from the elements, vandalism, trespass, or other illegal activity. Once the lender changes the locks, the lender must deliver a key to the homeowner. All costs incurred by the lender to protect the premises from waste or trespass or from falling below minimum community standards for public safety may be added to the principal balance of the mortgage or the costs allowable upon redemption.
Cities gain rights to secure vacant buildings and reduce redemption period for abandoned properties
Cities gain rights to secure vacant buildings and reduce redemption period for abandoned properties If a building becomes vacant or unoccupied and is deemed hazardous because the building has not been secured, the city may order the building secured and shall serve notice of the order on the owner and the holder of the sheriff’s certificate. If the owner of a building or a holder of a sheriff’s certificate fails to comply or provide a plan to comply with the city’s order or fails to request a hearing on the order within 14 days after the order is served, the city can secure the building itself and assess the cost of securing the building against the real estate.
In a foreclosure by advertisement, the city can now initiate a proceeding in district court to reduce the homeowner’s redemption period to five weeks if the city can show that the property is ten acres or less, has a residential dwelling consisting of less than five units, is not used for agricultural production, and is abandoned.