Overview
Missouri recognizes three forms of foreclosure: Judicial, Non-Judicial, and Equitable. Missouri recognizes the use of both Deeds of Trust and Mortgages, but also allows Mortgages to contain a Power of Sale clause. Non-Judicial foreclosure is only available for Security Instruments that contain Power of Sale clauses. Judicial foreclosure is used when the Security Instrument being foreclosed lacks a Power of Sale clause. It is also used to fix other problems that prevent a Security Instrument from being foreclosed Non-Judicially. Judicial foreclosure must also be used for Mortgages that contain a Power of Sale clause if the lender intends to purchase the asset at the foreclosure sale. Equitable Foreclosure refers to the power of the Circuit Court's ability to foreclose a property when sitting in Equity.
Available Methods
The most common form of foreclosure in Missouri by far is Non-Judicial. Non-Judicial foreclosure is available for Security Instruments that contain Power of Sale clauses, which can include both Deeds of Trust, by far the most common form, as well as Mortgages. Judicial foreclosure is not common and is used primarily to fix problems associated with the Security Instrument being foreclosed or because of a lack of a Power of Sale clause. Equitable Foreclosure is rarely, if ever, used.
| Foreclosure Type | Judicial | Non-Judicial | Other |
|---|---|---|---|
| Availability | Yes | Yes | Yes [2] |
| Security Instrument | Mortgage | Deed of Trust | |
| Public Records Notice | None | None | |
| Foreclosure Deed | Sheriff’s Deed | Trustee’s Deed | |
| Redemption Rights | None | Yes [1] |
- [1] Borrowers have an optional 1-year right of redemption, but they must file a notice of intent to redeem and provide a security deposit with the court to reserve the right.
- [2] Other extremely rare forms of foreclosure have been recognized but are almost never used.
Non-Judicial
Assignments of Security Instruments
The chain of title for security instruments should be verified during examination to ensure that the proper party has the rights to satisfy, release, or foreclose on a given security instrument. All assignments must be recorded prior to the commencement of foreclosure. A sale by a lender who was not the owner of the debt is void. Although it is not an absolute requirement that the ownership be properly documented in the public records, the lack of a complete chain of title poses a risk of the validity of the foreclosure.
Recorded Foreclosure Notice
There is no filed or recorded foreclosure notice in Non-Judicial foreclosures in Missouri. For Non-Judicial foreclosures, the Foreclosure Deed, which is usually titled as a Trustee's Deed, is typically the first publicly recorded document.
Foreclosure Process
Non-Judicial foreclosures in Missouri are commenced outside of the Public Records. Upon completion of the foreclosure, all junior liens including other security instruments, except as noted below, are discharged from the property so long as the lien holders that were properly served with notice of the foreclosure. Parties other than the owners or occupants of the property that are entitled to receive notice of the foreclosure are limited to branches of the federal government and any lien holder that recorded a request for notice of foreclosure in the Public Records.
- MO Rev Stat § 443.410 - Notice to Borrowers
- MO Rev Stat § 443.325 - Notice to those who requests it by recording a "Request for Notice" at least 40 days prior to the scheduled date of sale.
- Note: Some DOT forms from other states commonly incorporate language requiring notice of foreclosure by any senior liens. While this is not likely enforceable in Missouri, it is prudent to require such notice until such time as the courts have determined the demand is ineffective.
- 26 U.S.C. 7425 - Notice to the USA/IRS for Federal Tax Liens
- Note: 28 U.S.C. 2410 only allows the joining of the USA and its various branches for judicial foreclosures. Liens held by the USA, other than Federal Tax Liens, cannot be discharged by non-judicial foreclosure and can only be released by following the procedure outlined in 28 U.S.C. 2410(e).
Attachment of Liens after Commencement
There are no recorded documents or other events in a Non-Judicial foreclosure in Missouri that bar any liens from attaching to the subject property. Any in personam liens filed or recorded up until the Date of Sale attach to the property.
Liens not Discharged in Foreclosure
Real Property Taxes and Municipal Liens, including Water and Sewer Liens, are not discharged by foreclosure in Missouri. The IRS must be noticed in accordance with the federal rules regarding service for a non-judicial foreclosure. Failure to properly notice the IRS in accordance with those rules will result in the lien surviving the foreclosure. Any other lien for which the lien holder recorded a request for notice of foreclosure but was not noticed properly during the foreclosure will survive the foreclosure. Liens held by the USA and its various branches, other than federal tax liens, cannot be discharged by non-judicial foreclosure and can only be discharged by petition to the USA after the completion of foreclosure.
Foreclosure Deed
The most common form of foreclosure deed is called a Trustee's Deed. It is not required or common that it is accompanied by an Affidavit of Publication or similar document that indicates who was served with notice of the foreclosure. In cases where this information is not included with the Trustee's Deed, the trustee that conducted the sale should be contacted to obtain the Notice of Trustee's Sale along with any proof of mailing of the Notice as well as proof of the publication of the general notice of the sale in any newspapers and legal publications.
Borrower Redemption Rights
The borrower may redeem the property prior to the sale. MO Rev Stat § 443.400. When this is done a certificate will be recorded at the recorder of deeds office that will have the same effect as a Deed of Release. Id.
After a sale has occurred in a Non-Judicial Foreclosure, there is a 1-year right of redemption in favor of the borrower from the Date of Sale of the property at foreclosure. MO Rev Stat § 443.410. The borrower must send notice of an intent to redeem at least ten (10) days before the first advertised Date of Sale to the person making the sale in order to exercise this right of redemption. Id. In addition, within twenty (20) days of the Date of Sale, the borrower must pay a security deposit into the Circuit Court. MO Rev Stat § 443.420.
Third Party Redemption Rights
There are no redemption rights in favor of third parties other than junior liens held by the IRS or other branches of the Federal Government.
Judicial
- Mo. Ann. Stat. § 443.190
