Since March 13, 2020, a peacetime emergency has been declared in Minnesota with respect to the COVID-19 pandemic. Following the declaration of the peacetime emergency, Governor Tim Walz issued various executive orders which limit, restrict, or otherwise modify certain rights of creditors and landlords in the State of Minnesota. Similarly, through the enactment of the CARES Act and subsequent amendments, Congress and Federal agencies have taken steps to provide relief to certain debtors/tenants.
Given the ever-changing landscape of permissible enforcement rights, there is a common misperception that ALL foreclosures and ALL evictions are prohibited in Minnesota. However, this is not accurate. Whether a property owner can evict a tenant, or a lender can foreclose its mortgage is more nuanced and depends upon the specific circumstances.
Evictions
Depending on the type of lease/use of property and the reason for the eviction, a property owner may commence an eviction in Minnesota. In general, evictions of residential tenants are largely prohibited. However, additional factors dictate whether a property owner can pursue eviction. As of the date of this article, click the link below for a summary outlining the current factors to consider with respect to the restrictions in effect pursuant to Executive Order 20-79, relating to residential properties and residential tenants. In any instance where eviction is permitted, property owners need to provide a written notice of intent to file an eviction at least 7 days before filing the eviction action, or longer if required by the lease.
Click Here for a Flowchart Outlining Current Factors for Residential Tenant Evictions
The Centers for Disease Control and Prevention (“CDC”) also imposed an eviction moratorium for residential tenants, which is less preclusive than imposed by Executive Order 20-79. The CDC moratorium was recently vacated by the United States District Court for the District of Columbia, which order has been appealed and the ruling has been stayed pending such appeal. Therefore, the CDC moratorium currently remains in place.
While determining the ability to evict a residential tenant may be quite convoluted, the ability to evict a commercial tenant is not impacted by Executive Order 20-79, as commercial landlords retain their rights to pursue eviction, irrespective of the type of breach.
Foreclosures
There is a misperception that foreclosures are prohibited by Executive Order in Minnesota; there is no such prohibition in place. However, other preclusions may dictate whether a lender can foreclose its mortgage in Minnesota. Generally, that relates to a prohibition imposed by Federal agencies against the foreclosure of a mortgage which secures a federally-backed loan.
The basic framework on whether a foreclosure of a mortgage, whether against commercial or residential property, is allowed in Minnesota is fairly straight forward: Is the mortgage securing a Federally-backed loan? If the answer is yes, the foreclosure is not permitted. If the answer is no, the foreclosure is permitted.
The Federal preclusions against mortgage foreclosures are currently due to expire on June 30, 2021. However, there have been numerous reports that Federal agencies may extend the prohibition through 2021.
It’s anticipated there will continue to be further guidance issued which we will continue to provide updates once available. If you have questions about actions available with evictions and foreclosures, please contact Your Legal Department® at Questions@JellumLaw.com.