If you’re behind on your mortgage payments and you live in South Dakota, you might be wondering what happens during a foreclosure in your state. South Dakota foreclosures can be nonjudicial (without court supervision), but the homeowner can force the lender to foreclosure though the state court system. This process is called a “judicial foreclosure.”
In this article, you’ll learn about South Dakota foreclosure procedures and get information about your rights under federal and state law, as well as learn about coverting a nonjudicial foreclosure into a judicial one.
Under federal law, in most cases, a loan servicer must wait until you're over 120 days' delinquent before officially starting the foreclosure process. (12 C.F.R. § 1024.41). This preforeclosure period is an excellent time to submit an application to your servicer asking for an alternative to foreclosure. You might be able to stay in your home by working out a repayment plan or modification, for example, or give it up without going through a foreclosure in a short sale or deed in lieu of foreclosure.
Federal law also provides some other protections to homeowners facing a foreclosure.
Again, Foreclosures in South Dakota can be nonjudicial, which means they happen outside of court. In a South Dakota nonjudicial foreclosure, the foreclosing party must serve the borrower a notice of sale at least 21 days before the sale date. (S.D. Codified Laws § 21-48-6.1). The foreclosing party must also publish the notice in a newspaper. (S.D. Codified Laws § 21-48-6).
Even if the lender starts a nonjudicial foreclosure, the borrower can require the lender to foreclose judicially through the court system by making an application in the appropriate court. (S.D. Codified Laws § 21-48-9). (To learn the process and deadline for converting a nonjudicial foreclosure into a judicial one, talk to a local attorney.) Or, the lender might opt to foreclose judicially from the beginning.
South Dakota also permits “voluntary” foreclosures. In this type of foreclosure, the lender and borrower mutually agree that the lender may take immediate possession of the property. The borrower agrees to forfeit the right to redeem the property and the lender agrees to forfeit the right to go after the borrower for a deficiency judgment. (S.D. Codified Laws § 21-48A-1).
“Reinstating” is when you catch up on the defaulted mortgage's missed payments, plus fees and costs, to stop a foreclosure.
Right to reinstate in a nonjudicial foreclosure. South Dakota law doesn’t provide a borrower with the right to cure the default and reinstate the loan before the foreclosure sale in a nonjudicial foreclosure. But the mortgage contract might provide the borrower with the right to reinstate. If you’re facing a nonjudicial foreclosure, check the mortgage that you signed when you took out the home loan to find out if it gives you a right to reinstate, and, if so, how long you have in which to do so.
Right to reinstate in a judicial foreclosure. The borrower does get the right to reinstate the mortgage loan before the sale in a judicial foreclosure. If you’re facing a judicial foreclosure, there’s a good reason to reinstate sooner rather than later: If you pay the reinstatement amount before the court enters a judgment, the court will dismiss the foreclosure action. But if you reinstate after judgment (but before the sale), the court will stay (postpone) the foreclosure action. If you default again, the foreclosure can continue. (S.D. Codified Laws §§ 21-47-8, 21-47-10).
Some states allow the borrower to redeem the home within a specific period after a foreclosure. Under South Dakota law, you’ll get one year, 180 days, or 60 days to redeem the home after the foreclosure, depending on the circumstances.
In general, the borrower gets one year to redeem the home after the foreclosure sale. (S.D. Codified Laws § 21-52-11). But if the mortgage is a short-term redemption mortgage, the redemption period is 180 days after the purchaser from the foreclosure sale records a certificate of sale in the land records. (S.D. Codified Laws § 21-49-30, § 21-52-11). If the homeowner abandons the home (leaves the property for good), the purchaser can ask the court to reduce the redemption period to 60 days. (S.D. Codified Laws § 21-49-13(8), § 21-49-38).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a deficiency. Some states allow the lender to seek a personal judgment—called a deficiency judgment—against the borrower for this amount. Other states prohibit deficiency judgments with anti-deficiency laws.
Nonjudicial foreclosures. South Dakota law allows the lender to get a deficiency judgment after a nonjudicial foreclosure. If the lender purchases the property, the amount of the deficiency is limited to the difference between the total debt and the property’s fair market value. (S.D. Codified Laws § 21-48-14).
Judicial foreclosures. Deficiency judgments are also allowed in judicial foreclosures. The deficiency judgment amount will generally be the total debt minus the foreclosure sale price, though the court will consider the property’s value when setting the amount of the deficiency. (S.D. Codified Laws § 21-47-16).
If you want to learn more about the foreclosure process in South Dakota or want to find out if you have any potential defenses to a foreclosure, consider talking to a lawyer.
It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation options.