Minnesota Tenants Rights in Foreclosures
"In some communities," writes the Minnesota tenants advocacy group Homeline in reference to the mortgage crisis that began in 2008, "nearly half of those being affected by the mortgage crisis are renters." Due in part to the foreclosure process used in Minnesota and in part to state and federal laws directed to help tenants in foreclosed properties, Minnesota tenants at least have extensive warning before they get a post-foreclosure eviction notice.
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Notice Before Signing the Lease
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Under Minnesota state law since 2008, landlords who are midway or further along in the foreclosure process are not permitted to enter into a long-term lease. They may lease for periods of only two months or the remainder of the redemption period (usually six to 12 months). Any landlord who has received a foreclosure notice must disclose this fact to a prospective tenant before signing a lease. This puts tenants on notice right from the start so they understand a long-term tenancy at the property is unlikely.
Foreclosure Notice to Tenants
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Under Section 580.42 of Minnesota statutes, foreclosing lenders are required to provide tenants with notice regarding the foreclosure and also apprising them of their rights. In addition to explaining tenant rights in detail, the notice must also direct tenants to several tenant assistance organizations. In one Minnesota court case, an eviction action based on nonpayment of rent was invalidated because the landlord failed to provide the required notice.
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Redemption Period
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Under the foreclosure process used in Minnesota, owners who have been foreclosed upon have either six or 12 months to redeem the property. Although redemption generally does not occur, because the sum due usually exceeds the property's value, during the redemption period an owner of a rental property is allowed to continue to accept rents. If the tenant continues to live at the property, he must continue to pay the landlord rent. Under Minnesota law, tenants are permitted to use their security deposits as last month's rent during the last month of the redemption period.
Federal Eviction Protections
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The federal Protecting Tenants at Foreclosure Act requires foreclosing lenders to honor existing leases and provide at least 90 days notice to tenants before pursuing an eviction order in court. Because of Minnesota' redemption period after a foreclosure, the notice cannot be mailed until after the redemption period has expired.
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