Erik borrowed $200,000 to purchase a home in Minnesota. Over the life of the loan, he paid down only $40,000 of the original principal before defaulting. His lender proceeds with a non-judicial Chapter 580 foreclosure. What redemption period does Erik qualify for, and why?
Correct Answer
D) 12 months, because Erik paid less than one-third of the original principal balance
Under Minn. Stat. § 580.23, one of the conditions that triggers the extended 12-month redemption period is when less than one-third of the original principal debt has been paid before the foreclosure. Erik borrowed $200,000, and one-third of that amount is approximately $66,667. Because Erik only paid $40,000 — which is less than one-third of the original $200,000 principal — he qualifies for the 12-month extended redemption period.
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