Obtaining Clear Title to Torrens Property Post-Foreclosure




One of the unique characteristics of real estate law in Minnesota is the fact that Minnesota maintains two separate and distinct systems of registration.  The abstract system, administered through the recorder’s office of each county, is the system which most people are familiar with.  The second system, known as the “Torrens” system, involves a certificate of title which is issued to the property owner and which evidences all of the interests – fee title, mortgages, liens, and easements – which exist with respect to the property.  The Torrens system is used most heavily in Hennepin, Ramsey and St. Louis Counties and is administered by a separate recording office known as the “Registrar of Titles”, which office is overseen by an Examiner of Titles.


In the event of a foreclosure involving a Torrens property, if the original owner does not redeem, the party which ends up owning the property must obtain a new certificate of title in order to convey clear title to the property.  The process for obtaining a new certificate following a foreclosure is known as a proceeding subsequent to initial registration.  Also known as a “proceeding subsequent” or “pro sub”, this procedure involves a quasi-judicial proceeding with the Examiner of Titles.  The proceeding subsequent starts with the filing of a Petition.  The Examiner (or more typically, a Deputy Examiner) researches the title and then issues a Report of Examiner which identifies the issues which the Petitioner must prove via evidentiary submission in order to obtain a new certificate of title. 


The Examiner’s Report also identifies that parties whom the Petitioner is required to serve notice of the hearing on the matter, which is known as an “Order to Show Cause” hearing.  All interested parties are given notice of the hearing and an opportunity to object to the issuance of the new certificate of title in the name of the Petitioner (or, as is the case many times, in the name of the party who has purchased the property from the Petitioner).  If no party appears at the hearing to object, the Examiner issues the new certificate to the Petitioner or the Petitioner’s subsequent transferee.


A proceeding subsequent is a highly technical proceeding and it is recommended that the Petitioner utilize the services of a real estate attorney.  Most title companies will accept a letter of undertaking from an attorney to complete the proceeding subsequent post-closing in order to not delay a closing of a Torrens property sale, given that the process takes several months to complete, especially in today’s foreclosure market.


 

Posted in Blog, Real Estate Law