Montana Foreclosure Laws

Montana foreclosure laws allow for both in court and out of court foreclosure proceedings, although non-judicial foreclosures are more common. The type of foreclosure proceeding depends on whether a power of sale clause is included in the deed of trust or mortgage. Most Montana foreclosures take between five and six months.

Pre-Foreclosure

If a mortgage or deed of trust does not have a power of sale clause, the lender begins the pre-foreclosure stage by appealing to a court. The court judges the default amount and allows the debtor a specific amount of time to repay the amount. If the default is not paid, the lender can set an auction date.

Most Montana mortgages and deeds of trust do have a power of sale clause, however, and this means that most foreclosures in the state are out of court. This is because the clause specifically gives the lender the power to sell the property without court help in the event of a default. In a non-judicial foreclosure, the lender begins the process of foreclosure by having a notice of sale filed with the county recorder. This notice must be filed at least 120 days before the auction date - this is the pre-foreclosure period in a non-judicial foreclosure in Montana. Unless the mortgage or deed of trust specifically requires it, the lender does not need to mail a notice of default to the debtor before filing the notice of sale.

The pre-foreclosure stage lasts until the public auction. At any point during this stage, the debtor can stop foreclosure by paying the default as well as any costs the lender has acquired in the foreclosure.

Notice of Auction

Before a non-judicial foreclosure can take place in Montana, the notice of sale must be posted at the property for at least twenty days prior to the auction. The notice must also be mailed to the debtor at least 120 days before the sale takes place. As well, the notice must be published in a local newspaper once per week for three successive weeks.

Foreclosure auctions in Montana are public and the winning bidder receives the deed that transfers ownership. Most foreclosure sales take place at the courthouse between 9:00amd and 4:00pm. The winning bidder can take possession of the property ten days after the auction because the debtor has no redemption rights after the sale. The lender also has no right to seek a deficiency judgment against the debtor after the foreclosure auction.