Why Minnesota Mortgages Contain Maturity Dates

With many Wisconsin institutions extending credit into the Twin Cities, we have received questions regarding Minnesota mortgages. Unlike Wisconsin, most Minnesota mortgages contain maturity dates. Lenders are questioning why Minnesota mortgages contain maturity dates, what the purpose of the mortgage maturity date might be, and how extensions of these maturity dates should be addressed.

Maturity dates in Minnesota mortgages are necessary as a result of Minnesota’s statute of limitations for foreclosing on a mortgage. Minnesota law provides the foreclosure of a mortgage must be commenced within 15 years from the maturity of the whole of the debt secured by the mortgage. The time within which such action may be commenced begins to run from the date of the mortgage, unless the time of the maturity of the debt of obligation secured by the mortgage is clearly stated in the mortgage. The maturity date within the mortgage can always be extended by a written modification provided the modification of mortgage is recorded.

Accordingly, the maturity date of the mortgage should be clearly stated in Minnesota mortgages (as opposed to a maturity date that is referenced only in the promissory note). If there is no clearly stated maturity date in a mortgage, the 15 year statute of limitations on the right to foreclose the mortgage will begin to run on the date of the mortgage.

Take, for example, a financial institution which holds a promissory note from a borrower providing for payment over a 25-year period, beginning January 1, 2010. The promissory note is secured by a mortgage executed on the same date – January 1, 2010. If the mortgage does not clearly provide that the mortgage also matures at the end of the 25-year period, a title examiner can disregard the mortgage and the borrower has a statute of limitations defense to the foreclosure if it is not enforced on or before January 1, 2025 even if there are 10 years worth of payments remaining. If the January 1, 2035 maturity date had been clearly stated in this Minnesota mortgage, the statute of limitations on its foreclosure would not expire until January 1, 2050 (15 years after the maturity date).

Please review your Minnesota mortgages to ensure compliance and to avoid being barred from utilizing foreclosure as a remedy beyond the 15th year of a promissory note secured by a Minnesota mortgage without a maturity date.


questions?

If you have questions about this or other Banking & Finance topics please email or call Nick Vivian at 715-386-3733 to discuss in more detail.

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