How does foreclosure work in South Dakota?

Judicial or non-judicial?

Both exist. The lender picks the route, and the owner can push it into court.

By advertisement (non-judicial). “Every mortgage of real property containing therein a power of sale, upon default being made in the conditions of said mortgage, may be foreclosed by advertisement” (§ 21-48-1). The sale is a public auction run by the county sheriff or deputy (§ 21-48-10).

By action (judicial). Chapter 21-47 lets the lender sue. The court enters a judgment for the debt and orders the property sold (§ 21-47-13).

The owner can demand a court case. Once a foreclosure by advertisement starts, the mortgagor or anyone with a recorded interest may apply to a court to require foreclosure by action, “without necessity of stating any reasons.” The judge then enjoins the sale by advertisement (§ 21-48-9). The newspaper notice must tell the owner about this right (§ 21-48-6).

A rare third kind. A mortgage on 40 acres or less can opt into the “180 day redemption mortgage” chapter, if it carries a specific caption (§§ 21-49-11, 21-49-12). Check your mortgage.

Timeline step by step

1. Missed payments. Under federal servicing rules, a lender may not make the first notice or filing for foreclosure until the loan is more than 120 days delinquent, with exceptions such as a due-on-sale violation (12 CFR § 1024.41(f)).
2. Newspaper notice. Notice is published once a week for four successive weeks in a legal newspaper of the county. It must give the amount claimed, a description of the default, the time and place of sale and the owner’s right to demand a court action (§ 21-48-6).
3. Written notice. At least 21 days before the sale, the lender must serve a written copy on the mortgagor and any lienholder affected (§ 21-48-6.1).
4. The sale. A public auction between 9 a.m. and 5 p.m. in the county where the property sits (§ 21-48-10). It can be postponed by a published notice (§ 21-48-11). The lender may buy “fairly and in good faith” (§ 21-48-13).
5. Certificate of sale. The sheriff gives the buyer a certificate that must be recorded with the register of deeds within 10 days (§ 21-48-19).
6. Redemption. The redemption period runs after the sale (see below).

Right of redemption

South Dakota gives the owner a right to buy the home back after the sale. Redemption means repaying “the amount paid for real property” at a foreclosure sale (§ 21-52-1). The owner, the mortgagor, judgment debtors and junior lienholders may redeem (§ 21-52-5), and “all persons entitled to redeem shall in all cases have one year from the date of sale” (§ 21-52-11). The exception is a 180-day redemption mortgage.

To redeem, a person pays the sale price, plus taxes, insurance and payments on a prior lien that the buyer paid, with interest at the legal rate from § 54-3-5.1 (§ 21-52-14). The owner also has a “final right to redeem” within 15 days after all other redemption rights expire (§ 21-52-7).

During the period, the person in possession may keep using the property as before (§ 21-52-2). In a court foreclosure, the buyer cannot take possession before the redemption period ends (§ 21-47-13).

Deficiency judgments

If the sale does not cover the debt, the lender may seek the rest, but with limits.

• Foreclosure by action. The foreclosure “operates as a complete extinguishment, satisfaction and payment of the debt” (§ 21-47-17), except where § 21-47-16 applies. That section covers a lender that does not bid the full debt: it must prove the property’s fair and reasonable value, and the court may let it bid that value less prior liens. Any deficiency then needs an application to the court.
• Foreclosure by advertisement. If the lender buys the property at the sale, it must first prove the property sold for its true market value or more before getting a deficiency judgment. The court deducts any shortfall between market value and the sale price from the judgment (§ 21-48-14).

Surplus proceeds go to the clerk of the circuit court, and the sheriff notifies the mortgagor and junior lienholders by mail (§ 21-48-16).

Help for homeowners in default

• Your servicer. Call first. Federal rules say a servicer must generally pause the foreclosure referral if you submit a complete loss-mitigation application during the 120-day period (12 CFR § 1024.41(f)(2)).
• South Dakota Housing. Its Save My Home page lists HUD-approved counseling agencies for default and foreclosure counseling and links to free legal services for income-eligible people.
• HUD. HUD offers a foreclosure-avoidance page, FHA loss-mitigation programs and a way to find an approved counselor.
• A lawyer. See do you need a real estate attorney.

If you are buying a foreclosed home, note that the seller-disclosure law does not apply to foreclosure sales or to sales by a lender that took the home through foreclosure (§ 43-4-43). See seller disclosure.