HF 685

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/11/2024 04:42pm

A bill for an act
relating to housing; restricting residential rentals by corporate home owners;
proposing coding for new law in Minnesota Statutes, chapter 500.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [500.35] SINGLE-FAMILY HOME RENTALS; CORPORATE
RESTRICTIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Corporate owner" includes any person, partnership, company, corporation, or
organization. Corporate owner does not include an individual who is a natural person, a
married couple, or a trust for the benefit of a natural person, married couple, or a trust where
the majority of the beneficiaries are related by law.
new text end

new text begin (c) "Residential tenant" has the meaning given in section 504B.001, subdivision 12.
new text end

new text begin Subd. 2. new text end

new text begin Single-family home rentals restricted. new text end

new text begin (a) The owner of a single-family home
is prohibited from renting the home out to a residential tenant when:
new text end

new text begin (1) the owner has a property interest in ten or more single-family nonhomestead properties
that have a current residential tenant, or are available for rent or have been rented within
the last 12 months by a residential tenant; and
new text end

new text begin (2) the owner is not a named exception to this restriction under subdivision 3.
new text end

new text begin (b) "Homestead" has the meaning given in chapter 273. A property that is classified as
class 1a under section 273.13, subdivision 22, is an exempt property and should not be
counted as a property under paragraph (a), clause (1).
new text end

new text begin Subd. 3. new text end

new text begin Exceptions; exemptions. new text end

new text begin (a) The owner of a single-family home is exempt
from the residential rental restriction in subdivision 1, if the owner is:
new text end

new text begin (1) a local, state, or federal unit of government, including a state or federal agency;
new text end

new text begin (2) a land trust as defined by section 462A.31;
new text end

new text begin (3) a nonprofit as defined by chapter 317A;
new text end

new text begin (4) a corporation primarily engaged in housing development through the construction
and rehabilitation of single-family residences; or
new text end

new text begin (5) a mortgage note holder that owns the single-family residences through foreclosure.
new text end

new text begin (b) If a person who is renting a single-family home as a short-term rental for less than
30 days and is in compliance with any state and local regulations governing short-term
rentals, then that home is not considered a residential tenancy for the purposes of this section.
new text end

new text begin (c) A corporate owner may apply for an exemption from subdivision 2 with the
commissioner of the Housing Finance Agency. The commissioner may issue an exemption
if the exemption to the corporate owner would not have an impact upon the availability of
affordable housing. The commissioner shall have 60 days from the time an application for
exemption is filed to determine if the exemption shall be granted. The corporate owner may
make a request for reconsideration if the application has been denied and the commissioner
or their appointee must meet with the corporate owner within ten days of the request for
reconsideration and make a determination on that request within 20 days of the request. The
commissioner shall review annually each corporate owner that is issued an exemption under
this paragraph to ensure that owner continues to meet the criteria. If a corporate owner fails
to meet the criteria, the commissioner shall withdraw the exemption and the corporate owner
is subject to enforcement proceedings under subdivision 4. The commissioner shall submit
a report with a list of each corporate owner that is issued an exemption under this paragraph
to the chairs and ranking minority members of the senate and house of representatives
housing policy committees by October 1 of each year.
new text end

new text begin Subd. 4. new text end

new text begin Enforcement. new text end

new text begin (a) If the attorney general or a local government has reason to
believe that a corporate owner has violated this section, or has taken substantial steps to
purchase real property with the intent to rent that property in violation of subdivision 2,
then the attorney general shall commence an action in the district court in which any real
property related to the violation is situated. The attorney general or local government shall
file for record with the county recorder or the registrar of titles of each county in which any
portion of said property is located a notice of the pendency of the action as provided in
section 557.02.
new text end

new text begin (b) If the court finds that the business entity violated subdivision 2, it shall enter an order
for injunctive relief, declaratory relief, damages, and when reasonable, court costs and
attorney fees.
new text end

new text begin (c) The parties may agree to a settlement that allows the sale of an earlier acquired rental
property owned by a corporate owner in violation of this section and the agreement shall
require the corporate owner to follow the divestment requirements of this section including
the opportunity to purchase requirements in subdivision 5.
new text end

new text begin (d) A corporate owner found to have violated this section by a court must first provide
notice of sale to the current renters and an opportunity to purchase consistent with subdivision
5. The corporate owners shall have one year from the date of the entry of judgment to divest
itself of the property unless a purchase agreement with the renters is in place. The business
entity must cease the rental of the real property within one year of the entry of judgment
unless the tenant's lease at the time of the entry for judgment provides for a longer rental
period, the rental period is extended to prevent hardship to the tenant, or there is a purchase
agreement with the current renter under subdivision 5 in place. In no instance shall the real
property be rented more than two years after the entry of judgment.
new text end

new text begin (e) If the real property is not divested as required within the time prescribed, then the
attorney general or local government may begin a condemnation proceeding on the real
property consistent with chapter 117. Real property subject to a civil action under this section
must be sold to an owner who will occupy the home consistent with the law in this section.
If a corporate owner failed to provide the current tenant of the property with an opportunity
to purchase under subdivision 5, the attorney general shall follow the requirements of
subdivision 5 prior to a sale under chapter 117.
new text end

new text begin Subd. 5. new text end

new text begin Divestment purchase option. new text end

new text begin (a) No corporate owner may accept any offer
for the sale, lease, or transfer of a property found to be in violation of this section without
first giving 60 days' written notice by certified mail, return receipt requested, of the proposed
sale to each resident of the single-family home. The corporate owner must in good faith
consider the offer of a residential tenant prior to listing the property for sale.
new text end

new text begin (b) The notice required under this subdivision must be dated and indicate the price,
terms, and conditions of an acceptable offer to sell, lease, or transfer the single-family home.
The notice must include the following verbatim statement:
new text end

new text begin "The owner is required to sell this home consistent with Minnesota Statutes, section
500.35. The price, terms, and conditions of the offer are listed below. The owner will consider
in good faith any offer submitted within 60 days of the date of this notice by a resident
before listing the property for sale to the public. The owner will negotiate in good faith with
any residents of the property. [List of price, terms, and conditions.]"
new text end

new text begin (c) Nothing in this section prevents a residential tenant from making an offer on the
property or purchasing the home after the home has been listed for sale to the public.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2024. Corporate owners who
own more than ten residential rental properties shall have two years to divest of properties
in violation of this section from the date of enactment.
new text end