Minnesota Judge Halts Foreclosure; Says Publication Of Foreclosure Notice In Wrong Newspaper Fails To Give Notice To Those To Whom It Is Directed

In Olmstead County, Minnesota, the Post Bulletin reports:

• An Olmsted County District Court judge has ruled that a mortgage foreclosure sale notice published in an area newspaper was invalid because the notice wasn't in a legally recognized newspaper distributed in the area where the home is located.



• The ruling was in regard to a foreclosure case involving a house in northwest Rochester. The legal notice was published by the lender in the Stewartville Star, and the home owner argued that the weekly isn't regularly distributed in "the area of the property," as required by statute.



• Olmsted County District Judge Jodi Williamson agreed, granting a preliminary judgment Feb. 14. A declaratory judgment was entered June 8.

***

• In the ruling, Williamson says that "publication in a qualified newspaper is not sufficient by itself to provide notice to the public." The legal notice must be published in a newspaper "that is likely to give notice in the affected area or to whom it is directed," according to the ruling."

***

• The judge ordered the foreclosure process halted pending further proceedings or possible resolution by the parties.(1)

For more, see Foreclosure notice ruled invalid.

(1) Since no actual foreclosure sale took place in this case, and the rights of unwitting, 'downstream' 3rd party buyers (ie. potentially, buyers qualifying for protection as "bona fide purchasers") were not implicated, it was unnecessary for the court to determine whether the defect in the published notice would have rendered any resulting foreclosure judgment absolutely void/void ab initio (which would negatively impact on all 'downstream 3rd party purchasers), or merely voidable (which would not negatively impact on 'downstream' buyers if, and only if, they qualify for protection as bona fide purchasers - ie. did the downstream purchaser know, or should he have known, of the defect in the foreclosure notice?).

See, e.g. Harris v. Harris, 428 Pa. 473 (Pa. 1968), where the Pennsylvania Supreme Court made the following observation on this point (bold text is my emphasis):

• Whether title will pass at an execution sale depends upon the validity of the underlying judgment.
  
  If the execution sale was based upon a voidable judgment, a bona fide purchaser will be protected against actions seeking to recover the purchased property.
  
  On the other hand, where a void judgment is the basis for an execution sale, one who purchases property will not acquire title even if a bona fide purchaser for value. See 33 C.J.S., Execution §§ 6, 230, 299a (1942); Restatement, Judgments § 115, comment j (1942) and Pennsylvania Annotations; 3 and 4 American Law of Property §§ 13.1, 18.60 (1952).

See Straw, Ralph L. Jr., Off-Record Risks for Bona Fide Purchasers of Interests in Real Property, 72 Dick. L. Rev. 35 (1967-1968) for a general discussion of the various 'hidden hazards' that face bona fide purchasers of interests in real estate.