South Dakota Foreclosure Laws

Answers

How are mortgage liens treated in South Dakota?

South Dakota is generally known as a title theory state where the property title remains “in trust” until payment in full occurs for the underlying loan. The document that secures the title is usually called a mortgage and in South Dakota the mortgage serves the same purpose and generally contains the same terms as a deed of trust and serves the same function in a non-judicial foreclosure.

How are South Dakota deeds foreclosed?

The primary method of foreclosure in South Dakota involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly called foreclosure by advertisement. When the mortgage is initially signed it will usually contain a provision called a power of sale clause which upon default allows an attorney to foreclose on the property in order to satisfy the underlying defaulted loan. Auctions are conducted by the Sheriff. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. Prior to initiating a foreclosure there must be the publication of the notice of foreclosure. The lender through must then publish a notice of foreclosure sale date for four (4) successive weeks in a newspaper of general circulation in the county in which the property is located.
2. Notice of foreclosure as described above must be served on the property being foreclosed upon at least 21 days prior to the foreclosure sale. Homestead properties require eight (8) weeks notice before sale.
3. The sheriff will auction the property to the highest bidder including the lender. Sales usually occur between 9AM and 5PM. The foreclosure sale may be postponed by the sheriff by posting a notice of postponement in the newspaper where the sale was originally advertised.

In South Dakota, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. This process is called foreclosure by action. The property is then sold as part of a publicly noticed sale by the sheriff. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a South Dakota mortgage?

The documents are known as the mortgage or in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement.  A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in South Dakota?

Depending on the timing of the various required notices, it usually takes approximately 90-150 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy.

Is there a right of redemption in South Dakota?

South Dakota has a statutory right of redemption, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs within one (1) year of the sale. In certain special situations the redemption right is shortened to 180 days unless the property is vacant at which point the right of redemption is shortened to two (2) months.

Are deficiency judgments permitted in South Dakota?

Yes. A deficiency judgment may generally be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. Credit must be given for the fair market value of the property.

What statutes govern South Dakota foreclosures?

The laws that govern South Dakota non-judicial foreclosures are found in South Dakota Codified Laws, Chapter 21-48 et. seq. (Foreclosure of Real Property Mortgage by Advertisement).