Right Of Redemption Creates 6-Month Period Of Legal Limbo For Vacant Minnesota Foreclosures, Forcing Cities To Step In With Maintenance Effort

The Minneapolis Star Tribune reports:

• Redemption -- in Minnesota, usually a six-month period following a sheriff's sale during which the people who owned the house can buy it back -- poses a problem for cities. If a home winds up vacant or vandalized during that time, the homeowner and bank often deny responsibility, putting the burden of fixing it on the city. "It's essential for the city to [maintain a house], because in the period of exchanging ownership we have to," said Larry Lee, Bloomington's community development director. "We hire the contractor and bill the responsible owner." Then, he said, "If they do not pay, we get the money back as special assessments on property taxes."(1)

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• In Minneapolis, where thousands of homes have been moving through foreclosure over the past four years, the city has tried to minimize the threat to its housing stock by adding an array of stiff fees for violations. [...] Faraway banks "are draining city resources under the guise of being in the redemption period," [Minneapolis' manager of the problem property unit Tom] Deegan said. "The whole thing is to incentivize that bank to do something." Deegan hopes that the financial cost of letting a Minneapolis home linger in redemption will prompt more banks to use a new state law that allows them to petition courts for a five-week redemption period to speed along repossession of a house.

For more, see If no one owns the home, who's watching the house? (With foreclosure comes a six-month purgatory for some houses, and cities have to step in to keep them from becoming a nuisance).

(1) Michigan has a similar rule regarding a right of redemption after foreclosure sales, and probably has a similar problem.