A Minnesota real estate licensee tells a client: 'Minnesota uses a deed of trust as its primary security instrument, so when a borrower defaults, the trustee can conduct a trustee's sale quickly without any post-sale redemption period.' Which part of this statement is accurate under Minnesota law?
Correct Answer
D) Neither part is accurate — Minnesota uses mortgages, not deeds of trust, and provides a statutory post-sale redemption period
Neither part of the licensee's statement is accurate under Minnesota law. First, Minnesota uses the MORTGAGE (not a deed of trust) as its primary security instrument. In a mortgage state, the lender does not hold title during the loan — the borrower retains title and the lender holds a lien. Second, Minnesota expressly provides a statutory post-sale redemption period under Minn. Stat. § 580.23, giving the mortgagor (and junior lienholders) the right to redeem the property after the foreclosure sale. Trustee's sales are a mechanism used in deed-of-trust states (such as California or Texas) and are not available in Minnesota. The licensee's statement contains two fundamental errors about Minnesota's financing and foreclosure system.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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