Foreclosure Laws in Missouri

Missouri is a state that insists on making sure that foreclosure of any type of property, be it commercial or private, is done by the book and that the borrower/owner is protected as much as possible. Traditionally, the Missouri legislature has dealt more than fairly with both the lender and the borrower. Missouri is a “title theory” state and this means that the property will remain in trust until the final payment on the property occurs on the loan.

Types of Foreclosures

There are basically two types of foreclosures that can occur in this state and they are:

• Judicial Foreclosure
• Non-Judicial Foreclosure

Foreclosing on a property through the judicial foreclosure method involves filing a lawsuit by the lender against the borrower/owner who has fallen into default. The lender must receive a court order to foreclose on the property. This is generally used when the mortgage or deed of sale does not have a “power of sale” clause. When the foreclosure has been approved by the judge, the property, usually a home, will be sold to the highest bidder.

Using the non-judicial method of foreclosure in Missouri means that the mortgage or deed of sale is inclusive of a “power of sale” provision or clause in the document itself. This means that the borrower/owner has signed a pre-authorization giving the ability to the lender to sell the property in order to pay off the remaining balance of the loan in case the borrower/owner has defaulted on the loan. There are requirements that will be addressed later.

Typically, in a non-judicial foreclosure, the lender has an agent, representative or a trustee that does the actual selling of the property. The mortgage will list the actual clause that authorizes the trustee or representative to sell the property.

Power of Sale Foreclosure

When the non-judicial method of sale is used and the power of sale is included in the mortgage or deed of sale there are different actions that must be taken and adhered to for the sale of the property to take place. These are the following:

• A notice of sale must be sent through the mail to the borrow/owner at his last known address at least twenty days in advance of the sale that is scheduled to occur.
• A newspaper announcement must also be placed in a local newspaper that has its coverage in the county in which the property is located. The notice of foreclosure has to be published twenty times and has to continue through the day of the sale if the property is located in a city of at least 500,000 residents. In other smaller towns the publication must take place for four successive weeks with the fourth one taking place a week from the date of the sale.

At this point the trustee or representative can conduct the sale of the property. Another unique aspect of foreclosure that Missouri has is that the sale must be cash, not a loan. Other states allow for a loan to be taken out to cover the cost of the property. Any person may bid on the property and that includes the lender. In case the lender is the one who wins the bid, Missouri allows the borrower a full year to pay the lender the amount owed and to redeem the property.

If you are facing foreclosure, you may want to contact an attorney who knows the laws and rules of the state of Missouri to guide you and answer your questions.