After identifying a growing area of litigation challenging foreclosures in Minnesota, Usset, Weingarden & Liebo, PLLP proactively reached out to the Minnesota Bar Association and the Minnesota Bankers Association to advocate for a necessary change to the legal publications statutes. Fortunately, these efforts were fruitful, and the Minnesota legislature passed a clarifying law this session under Bills HF953 and SF1147 that should help parties seeking to foreclose mortgages.
Governed by a provision under Chapter 580 of Minnesota’s Foreclosure by Advertisement statutes, notices of sheriff’s sales must be published for six weeks prior to sheriff’s sales in Minnesota in qualified newspapers. For over a century, it has been the accepted custom and practice in Minnesota to publish those notices in any qualified newspapers located in the same county as the mortgaged property. Using a county-wide standard, the newspaper selection could be made based on the best quality and pricing among a larger pool of newspapers than if a narrower standard was used. Consistent with this practice, the Minnesota Secretary of State maintains a list of qualified legal publishers in Minnesota arranged by county, as the first category on its list.
However, in the past few years, aggressive borrowers’ attorneys have been bringing court actions challenging foreclosures to promote using a narrower standard for selecting newspapers than a county-wide standard. They have been exploiting vague and undefined terms in related publication statutes to tie up properties in litigation. For example, one applicable statute, Minnesota Statutes Section 331A.03, requires that public notices be published in newspapers likely to give notice in the “affected area” or “to whom it is directed.” Unfortunately, neither of these terms is defined in any Minnesota statute or case law. The “affected area” for a foreclosure notice could be just the mortgaged parcel, its neighborhood, the city in which the mortgaged parcel is located, or its county. Also the “persons to whom foreclosure notices are directed” could be construed as just the borrowers, potential bidders, sheriffs conducting the sales, etc.
Borrowers seeking to challenge foreclosures have been arguing that the newspaper selection standard should be closer to a city-based standard rather than county-based standard, even if that would reduce competition by narrowing the selection of available legal publishers and therefore increase pricing that mortgage servicers and reinstating borrowers would have to pay. Under the narrower standard, if a small, outstate city has just one qualified newspaper in it, that newspaper could charge whatever it wanted for publishing legal notices, since it would have a monopoly and there is no Minnesota statute capping what newspapers can charge for such publications.
After strong prompting by Usset, Weingarden & Liebo, PLLP, bills were introduced in the Minnesota legislature to fix the growing problem with the publication statutes. This new law, to be codified as Minnesota Statutes Section 580.033, now explicitly provides that a county-based standard for selecting newspapers for publishing foreclosure notices is proper. The new statute now clearly provides that “publication of the notice of sale shall be sufficient if it occurs in a qualified newspaper having its known office of issue located in the county where the mortgaged premises, or some part thereof, are located.” This new statute even allows a foreclosing party to publish in a qualified newspaper having its known office of issue located in an adjoining county, but it has a higher standard to meet because that newspaper must also establish that a “substantial portion of the newspaper’s circulation is in the county where the mortgage premises, or some part thereof, are located.”
This new statute allows foreclosing parties to now avoid having to deal with the vague standards of Section 331A.03 and provides greater certainty and predictability in selecting appropriate newspapers to publish foreclosure notices. It should also help avoid litigation that resulted from the past applicability of that vague Section to mortgage foreclosure.
As an added bonus, the Minnesota legislature also accepted Usset, Weingarden & Liebo, PLLP’s proposal to also add a curative statute under Minnesota Statutes Section 582.25 related to foreclosure notice publications. These statutes cause various errors to automatically “cure” with the passing of time, so the issues can no longer be raised to overturn a completed foreclosure. In this case, any errors made by a foreclosing party in complying with the new publication statute will automatically “cure” after one year has passed from the date of the expiration of the redemption period.
The new laws will be effective for all cases where the Notices of Pendency for Foreclose are recorded on or after July 1, 2015. Notices of Pendency are recorded prior the time of the commencement of the foreclosure proceedings, which is the date of first publication.
The new publications statute will benefit parties seeking to foreclose mortgages by advertisement, as well as title companies insuring such transactions, since it creates more certainty in the laws governing such proceedings. By assuring a broader standard for selecting qualified newspapers, the new publication statute also helps ensure that newspapers publishing legal notices will operate in a competitive environment, so that foreclosing parties can select qualified newspapers not only by location, but also by factoring in pricing and quality of product among a larger pool of qualified newspapers.