MONTANA

By Charles J. Peterson
Mackoff Kellogg Law Firm

STATUTE OF LIMITATIONS

A mortgage is valid from the time of recording until eight years after the debt matures unless an affidavit is filed to extend for an additional eight years. [MCA 71-1-210] Pursuant to MCA 71-1-305, a Trust Indenture (deed of trust) is treated as a mortgage.

DOCUMENTS NEEDED TO COMMENCE FORECLOSURE
An original signed substitution of trustee naming counsel and copies of the trust indenture, note, all assignments, title policy, intervening deeds and loans status information. The substitution of trustee and any assignments must be recorded prior to or at the same time as the notice of trustee’s sale.

BREACH LETTERS
Montana law does not contain specific requirements beyond the security documents regarding the sending of breach letters prior to foreclosure.

FORECLOSURE SYNOPSIS
Statutory authority is stated in 71-1-301, et esq., Montana Code Annotated, titled the Small Tract Financing Act of Montana, which permitted the use of Trust Indentures (deed of trust) in the place of mortgage instruments when securing a lien on real property, provided the financial tract of land was not more than 40 acres.

A trust indenture executed in conformity may be foreclosed by advertisement and sale by the trustee or successor or at the option of the beneficiary by judicial procedure as a mortgage. The trustee or successor must either be a licensed attorney, a bank, trust company, title company, or title insurance agency authorized to conduct business in Montana.

If foreclosed nonjudicially, the action generally takes approximately 160 to 170 days to complete. A Notice of Sale is recorded in the office of the Clerk and Recorder in each county where the real property, or some part thereof, is located. The notice must include the names of the original grantor, trustee and beneficiary in the Trust Indenture, a description of the real property, the recording information of the Trust Indenture, the default for which the foreclosure is made, the sums owing, the trustee’s or beneficiary’s election to sell the property to satisfy the obligation, the date and time of the sale, which shall not be less than 120 days subsequent to the date of recording the Notice of Sale, and place of the sale, which may be the courthouse of the county where the property is located. A copy of the recorded notice must be forwarded by registered or certified mail to the grantor and all other persons having an interest or lien on the property at least 120 days before the date fixed for the sale.

A copy of the notice must be published in a newspaper of general circulation published in the county in which the property is located, once a week for three successive weeks. The date of final publication must be at least 20 days prior to the sale date. A copy of the notice must also be posted in a conspicuous place on the property to be sold at least 20 days prior to the sale date. Affidavits of compliance as to mailing, posting and publication must be recorded with the county clerk and recorder prior to the sale.

The person making the sale may, for any cause she so deems expedient, postpone the sale for a period not to exceed 15 days, by public proclamation at the time and place fixed for the sale.

If a scheduled sale cannot be held by reason of an automatic-stay provision of the U.S. Bankruptcy Code, or a stay order issued by the court, the sale may be postponed by public proclamation for periods not to exceed 30 days, or in aggregate, not to exceed 120 days.

The property may be sold in one parcel or in separate parcels. Any person, including the beneficiary, but excluding the trustee, may bid at the sale. The property is sold to the highest bidder, with the bid due and payable in cash on the sale date. The purchaser is provided with a trustee’s deed and is entitled to possession of the property 10 days following the sale date. Any person remaining on the property after that date is deemed a tenant at will.

The sale proceeds are applied first to the costs of exercising the power of sale, including a reasonable trustee/attorney fee; next to the obligation secured by the Trust Indenture; and any surplus to the persons legally entitled thereto. The trustee may deposit such surplus with the county clerk and recorder for disbursement subject to order of the district court.

POST-SALE/CONVEYANCE AFTER FORECLOSURE
Trustee’s Deed

REINSTATEMENTS
The trust indenture can be reinstated at any time prior to the time fixed for the sale. [MCA 71-1-312]

ATTORNEYS’ FEES
If reinstatement occurs prior to the sale, the fees shall not exceed the lesser of $1,000 or one percent of the unpaid balance including interest at the time of default. All costs and fees must be reasonable and no trustee’s fees or attorneys’ fees may be charged on account of any services rendered prior to the commencement of foreclosure. If the sale is completed, the reasonable trustee/attorney fee shall not exceed five percent of the amount due on the obligation at the time of the sale. [MCA 71-1-320]

DEFICIENCY JUDGMENTS
When a trust indenture is foreclosed by advertisement and sale, no further action, suit or proceeding shall be taken or any judgment entered for any deficiency against the grantor, his surety, guarantor or successor, or on the note, or obligation secured by the Trust Indenture. If the foreclosure is judicial, a deficiency may be pursued, however such action may not be practical since the grantor is entitled to a one-year right of redemption following the foreclosure sale during which time the grantor is entitled to possession, rent and profits. In addition, if the Trust Indenture is for the purchase price of such real property, the Trust Indenture holder shall not be entitled to a deficiency judgment. [MCA 71-1-317]

EVICTION PROCESS
Statutory authority is found in Section 70-27-101 et seq., Montana Code Annotated, which provides for an action for unlawful. detainer in the event a tenant continues in possession after receiving a 30-day notice of termination.

With regard to property obtained by trustee’s deed following foreclosure, right to possession in 10 days following the trustee’s sale. Then a 30-day notice of eviction must be served followed by a three-day notice to quit prior to commencing an action. Action for eviction is then filed in Justice Court with a summons issued to be served not less than four days, or more than 12 days before a scheduled hearing. The action can include a request for treble rent value if holdover following required notice.