The Importance of Filing a Request for Notice of Mortgage Foreclosure by Advertisement

26 Mar

 

Associations, as creditors with an interest in real property should file a Request for Notice of Mortgage Foreclosure by Advertisement and Reduction of Redemption Period (“Request for Notice”) against the units/lots located in their Association.  In the atmosphere where mortgage foreclosures are rampant, recording a Request for Notice will help conserve the Association’s resources, and, in some instances, afford the Association the opportunity to replenish its resources through redemption as a junior lien creditor.

 

If the Request for Notice is recorded prior to a mortgage company recording its Notice of Pendency and Power of Attorney to Foreclose its mortgage by advertisement, Minn. Stat. §580.032 requires said mortgagee to provide written notice of its foreclosure sale to the Association.   If the Association is in the process of foreclosing its own lien, or pursuing other collection remedies, receiving such a notice may prompt it to discontinue those efforts and save valuable resources.  

 

In addition, knowing that a mortgage foreclosure sale has occurred also affords the Association an opportunity to track the sale, determine what was paid at the sale and, determine whether it should redeem as a junior lien creditor.  If the amount bid at the sale is less than the value of the property, redeeming as a junior lien creditor could allow the association to recoup its losses for the unpaid dues, or, in some instances, make a healthy profit.  

 

Finally, Minnesota’s weather makes knowing about foreclosures vital defensive information.  With subzero weather, knowing that a unit/lot will be going through foreclosure will allow an association either to make sure the unit/lot is winterized, or, to coordinate having this done, but at the mortgagee’s expense.  Unless the Association is aware that a property is in foreclosure, it often discovers the information when it is too late to act.

        

The current $46 filing fee for recording a Request for Notice far outweigh the benefits to be derived from doing so.   Thomsen & Nybeck, P.A., recommends associations file a Request for Notice against all properties, regardless of whether the account is current or delinquent.  With abstract property, often times one Request can be filed against multiple properties and paying only one filing fee.  If the property is Torrens, the Association will be required to pay the filing fee for each unit/lot against which a Request is recorded.  

 

Entry by: Gretchen Schellhas.  Gretchen is a shareholder at Thomsen & Nybeck, P.A. and Chief Executive Officer of the firm.  She practices primarily in the areas of real estate, collections, community association law and family law.

 

 

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