There are two types of foreclosure in Minnesota, judicial and non-judicial. A judicial foreclosure involves obtaining a court order from a lawsuit, while a non-judicial foreclosure does not require court proceedings. Both involve foreclosure resulting from debtor default on deeds of trusts or mortgages.
After a mortgage or deed of trust is defaulted on, the lender may obtain a right to judicial foreclosure by filing a lawsuit to receive a court order that allows them to foreclose on the property. After it is foreclosed, a property is oftentimes auctioned off to the highest bidder. However, in Minnesota, a lender may also foreclose on a property though a non-judicial means. This is possible when a power of sale clause is included in the mortgage or deed of trust. In this clause the person borrowing the money gives the lender the right to sell the property to pay off the balance of the loan if it is in default. There are three guidelines that must be followed:
1. There cannot be an ongoing lawsuit to receive payment on the mortgage;
2. The mortgage must be recorded, as well as any other transfers of the mortgage to other lenders; and
3. Eight weeks notice needs to be given before a property is foreclosed on.