Title Mark provides title services for Minnesota and Western Wisconsin.
 

Petition of Crabflex, Inc.

March 9, 2009

 

Dear Real Estate Associate:

The Minnesota Court of Appeals recently decided a case of significant interest to all people in the real estate industry, lenders and title insurers in particular. 

In the Matter of the Petition of Crablex, Inc. In Relation to Certificate of Title No. 1091583, the Minnesota Court of Appeals changed how title searches are done for foreclosures and the procedures attorneys will follow to complete foreclosures.  The decision was filed on February 10, 2009.

Historically, a party foreclosing a mortgage would order an Owners and Encumbrances (O and E) report.  The report would include only the owner and financial lien holders. The foreclosing attorney would service parties required by law, and only serve junior interest (mortgage, easement, covenants, or other interests) if the junior party filed to receive notice under the law. 

In Crablex, the Court of Appeals said that easement holders had to be served with the notice of foreclosure, or their interest would not be extinguishing in the foreclosure.  The Court’s theory is the junior easement holder should have the right to redeem to protect their interest.

As a result, on new foreclosure files, attorneys will request a new format for the O and E reports.  The attorney will ask for entries of, and copies of, all junior interests which remain outstanding.  The foreclosing attorney will have to make a determination if the junior interests need to be ignored and stay encumbering the property or if the junior interests need to be foreclosed out and eliminated.  Adding them to the notice list will increase costs.

Lenders, talk to your attorney about this issue on all foreclosures, even foreclosures currently in process.  Attorneys, bring this issue up with the title agent doing your O and E searches.  Many title companies will take some time to understand the changes in the O and E format.

We would suggest the title agent specifically make a representation about junior interests of record, in addition to financial lien holders.  You will see this on all new O and E reports from Title Mark, LLCwhich will be used for foreclosure actions.

 

 

Title Mark, LLC’s goal is to pass on real estate news to our business associates to be sure everyone has the most current information available.  More importantly, we want to share how this information may affect our daily practices.  We hope you find it helpful.  If you have any questions regarding this information, please contact me at 952-442-7766 or bsolheim@titlemark.com.

Respectfully submitted,

 

Bradley W. Solheim
MSBA Board Certified
Real Property Law Specialist
Direct Dial 952-442-7766
Direct Fax 952-442-7740
bsolheim@titlemark.com

 
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