Legal Memorandum: Refusal to Approve a Short Sale

Issue: Whether a mortgagee’s refusal to approve a short sale violates the mortgagee’s duty to act in good faith with respect to the mortgagor under Minnesota law.

Area of Law: Real Estate Law
Keywords: Mortgagee's duty; Good faith; Short sale
Jurisdiction: Minnesota
Cited Cases: None
Cited Statutes: Minn. Stat. § 580.11
Date: 08/01/2012

No cases were located that even remotely suggest that the refusal to approve a short sale violates the duty of good faith owed by the mortgagee.  The only reference to a duty of good faith by a mortgage is found in Scott v. Wells Fargo Bank, Civ. No. 10-3368 (MJD/AJB), 2011 U.S. Dist. LEXIS 10318 (D. Minn. Feb. 2, 2011), which briefly mentions the duty of good faith under Minn. Stat. § 580.11.  That statute requires that the “mortgagee, the mortgagee’s assignee, or the legal representative of either or both, may fairly and in good faith purchase the premises so advertised, or any part thereof, as such sale.” 


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