582.32 VOLUNTARY FORECLOSURE; PROCEDURE.
Subdivision 1. Application.
This section applies to mortgages executed on or after August 1,
1993, under which there is a default and the mortgagor and mortgagee enter into an agreement for
voluntary foreclosure of the mortgage under this section. This section applies only to mortgages
on real estate no part of which is classified as a homestead under section
or in agricultural
use as defined in section
40A.02, subdivision 3
, as of the date of agreement.
Subd. 2. Definitions.
(a) As used in this section, the following terms have the meanings given:
(b) "Agreement" means the agreement for voluntary foreclosure described in subdivision 3.
(c) "Date of agreement" means the effective date of the agreement which shall not be sooner
than the date on which the agreement is executed and acknowledged by both the mortgagor
(d) "Junior lien" means a lien subordinate to the lien of the mortgage foreclosed under this
section, the holder of which has a redeemable interest in the real estate under section
(e) "Mortgage" means a recorded mortgage on real estate no part of which is classified
as a homestead under section
or is in agricultural use as defined in section
, as of the date of agreement.
(f) "Mortgagee" means the record holders of the mortgage, whether one or more.
(g) "Mortgagor" means the record holders, whether one or more, of the legal and equitable
interest in the real estate encumbered by the mortgage.
(h) "Real estate" means the real property encumbered by the mortgage.
Subd. 3. Procedure.
(a) Voluntary foreclosure may occur only in accordance with this
(b) The mortgagor and mortgagee shall enter into a written agreement for voluntary
foreclosure under this section only during the existence of a default under the mortgage. At least
one of the items constituting the default must have been in existence for at least one month on the
date of agreement. The agreement shall identify the mortgage by recording data and the real estate
by legal description, specify the date of the agreement and provide that:
(1) The mortgagor and mortgagee have agreed that the mortgage shall be voluntarily
foreclosed with the mortgagor's redemption period reduced to two months as provided in this
(2) The mortgagee waives any rights to a deficiency or other claim for personal liability
against the mortgagor arising from the mortgage or the debt secured by the mortgage. This does
not preclude an agreement between the mortgagor and mortgagee to a payment to the mortgagee
as part of the voluntary foreclosure, or collection from a guarantor.
(3) The mortgagor waives its right to surplus sale proceeds, to contest foreclosure, and to
rents and occupancy during the period from the date of agreement through the redemption period.
(4) The mortgagor consents to the appointment of a receiver for, or grants mortgagee
possession of, the real estate and all rights of possession of the real estate, including, but not
limited to operating, maintaining, and protecting the real estate, and the making of any additions
or betterments to the real estate.
(5) A default exists under the mortgage and on the date of agreement at least one of the items
constituting the default has been in existence for at least one month.
(c) Within seven days after the date of agreement, the mortgagee must record or file the
agreement with the county recorder or registrar of titles, as appropriate, in each county where
any part of the real estate is located. Filing or recording of a short form agreement signed by the
mortgagor and mortgagee containing the following information satisfies this requirement:
(1) the identity and mailing address of the mortgagor and mortgagee;
(2) the legal description of the real estate;
(3) the mortgage identified by recording data;
(4) a statement that an event of default under the mortgage has existed for at least one month
as of the date of agreement and foreclosure under this section has been agreed to by the parties; and
(5) the date of agreement.
(d) A certificate signed by the county or city assessor where the real estate is located, stating
that, as of the date of agreement, the real estate was not in agricultural use as defined in section
40A.02, subdivision 3
, and was not a homestead for property tax purposes under section
must be recorded before or with the certificate of sale in the office of the county recorder or
registrar of titles where the real estate is located, and shall be prima facie evidence of the facts
contained in the certificate.
(e) Within ten days of receipt of a written request for information from a holder of a junior
lien, the mortgagee, without charge, shall deliver or mail by first class mail postage prepaid, to the
address of the holder set forth in the request, either the agreement or a written statement of the
amount of money and the value or a detailed description of any property paid or transferred, or to
be paid or transferred, by the parties to the agreement under the terms of the agreement. Failure to
provide this information does not invalidate the foreclosure.
Subd. 4.[Repealed, 1993 c 40 s 11
Subd. 4a. No right of reinstatement.
There is no right of reinstatement pursuant to section
, of the mortgage after the date of agreement.
Subd. 5. Foreclosure procedure; notice to creditors.
(a) After the date of agreement,
the mortgagee may proceed to foreclose the mortgage in accordance with the laws generally
applicable to foreclosure by advertisement including this chapter and chapter 580, except as
otherwise provided in this section.
(b) At least 14 days before the date of sale, the mortgagee shall:
(1) serve the persons in possession of the real estate with notice of the voluntary foreclosure
sale under this section in the same manner as in a foreclosure by advertisement as provided in
(2) mail notice of the voluntary foreclosure sale under this section to each holder of a junior
lien who has filed or recorded a request for notice under section
(c) The mortgagee shall publish notice of the voluntary foreclosure sale under this section
in the same manner as in a foreclosure by advertisement as provided in section
consecutive weeks. The notice must include all information required under section
clauses (1) to (6), the date of agreement, and shall state that each holder of a junior lien may
redeem in the order and manner provided in subdivision 9, beginning after the expiration of the
mortgagor's redemption period under this section.
(d) The mortgagor's redemption period is two months from the date of sale, except that if the
real estate is subject to a federal tax lien under which the United States is entitled to a 120-day
redemption period under section 7425(d)(1) of the Internal Revenue Code, as amended, the
mortgagor's redemption period is 120 days from the date of sale. The certificate of sale must
indicate the redemption period applicable under this paragraph.
Subd. 6. Sale, how and by whom made.
Except as provided in this section, the foreclosure
sale must be conducted and the certificate of sale shall be made and recorded in accordance with
a foreclosure by advertisement as provided in chapter 580. The certificate of sale must be filed
or recorded within five days after the sale. Affidavits of service, mailing, publication, and other
affidavits or certificates permitted by chapter 580, must be recorded with the certificate of sale, or
within five days after the sale, in the office of the county recorder or registrar of titles where the
real estate is located, and when so recorded are prima facie evidence of the facts contained in them.
Subd. 7.[Repealed, 1993 c 40 s 11
Subd. 8.[Repealed, 1993 c 40 s 11
Subd. 9. Creditor redemption.
A person holding a junior lien upon the real estate or some
part of the real estate may redeem in the order and manner specified in sections
but only if before the end of the mortgagor's redemption period under this section the creditor files
with the county recorder or registrar of titles of each county where the real estate is located, a
notice of intention to redeem. If a junior creditor fails to timely file a notice of intention to redeem
as provided in this subdivision, or fails to redeem, its lien on the real estate is extinguished.
History: 1992 c 547 s 1; 1993 c 40 s 3-9; 1999 c 11 art 4 s 5