HF 3786

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 05/05/2010 01:20pm

A bill for an act
relating to state regulation; prohibiting real property private transfer fees;
modifying effective date of certain child support provisions; amending Laws
2010, chapter 238, section 7; proposing coding for new law in Minnesota
Statutes, chapter 513.

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

Section 1.

new text begin [513.73] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin As used in sections 513.73 to 513.76, the following
terms have the meanings given in this section.
new text end

new text begin Subd. 2. new text end

new text begin Transfer. new text end

new text begin "Transfer" means the sale, grant, gift, conveyance, assignment,
inheritance, or other transfer of an ownership interest in real property located in this state.
new text end

new text begin Subd. 3. new text end

new text begin Private transfer fee. new text end

new text begin "Private transfer fee" means a fee or charge required
by a private transfer fee obligation and payable upon the transfer of an interest in real
property, or payable for the right to make or accept the transfer, regardless of whether
the fee or charge is a fixed amount or is determined as a percentage of the value of the
property, the purchase price, or other consideration given for the transfer. The following
are not private transfer fees for purposes of this section:
new text end

new text begin (1) consideration payable by the grantee to the grantor for the interest in real
property being transferred, including any subsequent additional consideration for the
property payable by the grantee based upon any subsequent appreciation, development, or
sale of the property, provided that the additional consideration is payable on a onetime
basis only, and the obligation to make the payment does not bind successors in title to
the property. For the purposes of this clause, an interest in real property may include a
separate mineral estate and its appurtenant surface access rights;
new text end

new text begin (2) commission payable to a licensed real estate broker for the transfer of real
property pursuant to an agreement between the broker and the grantor or the grantee,
including any subsequent additional commission for that transfer payable by the grantor or
the grantee based upon any subsequent appreciation, development, or sale of the property;
new text end

new text begin (3) interest, charges, fees, or other amounts payable by a borrower to a lender
pursuant to a loan secured by a mortgage against real property, including but not limited
to a fee payable to the lender for consenting to an assumption of the loan or a transfer
of the real property subject to the mortgage, fees, or charges payable to the lender for
estoppel letters or certificates, and shared appreciation interest or profit participation or
other consideration and payable to the lender in connection with the loan;
new text end

new text begin (4) rent, reimbursement, charge, fee, or other amount payable by a lessee to a lessor
under a lease, including but not limited to a fee payable to the lessor for consenting to an
assignment, subletting, encumbrance, or transfer of the lease;
new text end

new text begin (5) consideration payable to the holder of an option to purchase an interest in real
property or the holder of a right of first refusal or first offer to purchase an interest in real
property for waiving, releasing, or not exercising the option or right upon the transfer of
the property to another person;
new text end

new text begin (6) consideration payable by a contract for deed vendee to the vendor pursuant to the
terms of a recorded contract for deed, including any subsequent additional consideration
for the property payable by the vendee based upon any subsequent appreciation,
development, or sale of the property;
new text end

new text begin (7) a tax, fee, charge, assessment, fine, or other amount payable to or imposed by a
governmental authority;
new text end

new text begin (8) a fee, charge, assessment, fine, or other amount payable to a homeowner's
condominium, cooperative, mobile home, or property owner's association pursuant to a
declaration or covenant or law applicable to the association, including but not limited
to fees or charges payable for estoppel letters or certificates issued by the association
or its authorized agent;
new text end

new text begin (9) a fee, a charge, an assessment, dues, a contribution, or other amount pertaining
to the purchase or transfer of a club membership relating to real property owned by the
member, including but not limited to any amount determined by reference to the value,
purchase price, or other consideration given for the transfer of the real property; and
new text end

new text begin (10) a mortgage from the purchaser of real property granted to the seller or to a
licensed real estate broker.
new text end

new text begin Subd. 4. new text end

new text begin Private transfer fee obligation. new text end

new text begin "Private transfer fee obligation" means a
declaration or covenant recorded or filed against the title to real property, or any other
contractual agreement or promise, whether or not recorded or filed, that requires or
purports to require the payment of a private transfer fee to the declarant or other person
specified in the declaration, covenant, or agreement, or to their successors or assigns, upon
a subsequent transfer of an interest in the real property.
new text end

Sec. 2.

new text begin [513.74] PROHIBITION.
new text end

new text begin A private transfer fee obligation recorded, filed, or entered into in this state on or
after the effective date of this section does not run with the title to real property and is not
binding on or enforceable at law or in equity against any subsequent owner, purchaser,
or mortgagee of any interest in real property as an equitable servitude or otherwise. Any
private transfer fee obligation that is recorded, filed, or entered into in this state on or
after the effective date of this section is void and unenforceable. This section does not
require that a private transfer fee obligation recorded, filed, or entered into in this state
before the effective date of this section is presumed valid and enforceable. It is the public
policy of this state that no private transfer fee obligation should be valid or enforceable
whenever entered into, recorded, or filed.
new text end

Sec. 3.

new text begin [513.75] LIABILITY FOR VIOLATION.
new text end

new text begin A person who records or files or enters into an agreement imposing a private transfer
fee obligation in the person's favor after the effective date of this section shall be liable for
(1) any and all damages resulting from the imposition of the transfer fee obligation on
the transfer of an interest in the real property, including, without limitation, the amount
of any transfer fee paid by a party to the transfer, and (2) all attorney fees, expenses,
and costs incurred by a party to the transfer or mortgagee of the real property to recover
the transfer fee paid or in connection with an action to quiet title or register the title or
a proceeding subsequent to initial registration. If an agent acts on behalf of a principal
to record or file or secure a private transfer fee obligation, liability shall be assessed to
the principal, but not to the agent.
new text end

Sec. 4.

new text begin [513.76] NOTICE REQUIREMENTS FOR EXISTING TRANSFER FEE
OBLIGATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Prior obligations. new text end

new text begin For a private transfer fee obligation imposed prior
to the effective date of this section, the receiver of the fee shall record or file, prior to
December 31, 2010, against the real property subject to the private transfer fee obligation
a separate document with the county recorder or registrar of titles of the county in which
the real property is located that meets all of the following requirements:
new text end

new text begin (1) the title of the document shall be "Notice of Private Transfer Fee Obligation" in
at least 14-point boldface type;
new text end

new text begin (2) the amount, if the fee is a flat amount, or the percentage of the sales price
constituting the cost of the transfer fee, or any other basis by which the transfer fee is to
be calculated;
new text end

new text begin (3) the date or circumstances under which the private transfer fee obligation expires,
if any;
new text end

new text begin (4) the purpose for which the funds from the private transfer fee obligation will
be used;
new text end

new text begin (5) the name of the person or entity to which funds are to be paid and specific contact
information regarding where the funds are to be sent;
new text end

new text begin (6) the acknowledged signature of the payee; and
new text end

new text begin (7) the legal description of the real property burdened by the private transfer fee
obligation.
new text end

new text begin Subd. 2. new text end

new text begin Amendments. new text end

new text begin The person or entity to which the transfer fee is to be paid
may record or file an amendment to the notice of transfer fee containing new contact
information, but the amendment must contain the information of the notice of transfer fee
that it amends and the legal description of the property burdened by the private transfer
fee obligation.
new text end

new text begin Subd. 3. new text end

new text begin Results of noncompliance. new text end

new text begin (a) If the payee fails to comply fully with
subdivision 1, the grantor of any real property burdened by the private transfer fee
obligation may proceed with the conveyance of any interest in the real property to any
grantee. The grantor shall be deemed to have acted in good faith and shall not be subject
to any obligations under the private transfer fee obligation, and the real property thereafter
shall be conveyed free and clear of the transfer fee and private transfer fee obligation.
new text end

new text begin (b) If the payee fails to provide a written statement of the transfer fee payable within
30 days of the date of a written request for the statement sent to the address shown in the
notice of transfer fee, then the grantor, on recording or filing of the affidavit required
under subdivision 4, may convey any interest in the real property to any grantee without
payment of the transfer fee and shall not be subject to any further obligations under the
private transfer fee obligation. The real property shall be conveyed free and clear of the
transfer fee and private transfer fee obligation.
new text end

new text begin Subd. 4. new text end

new text begin Affidavit requirement. new text end

new text begin (a) An affidavit stating the facts enumerated under
paragraph (b) must be recorded or filed with the county recorder or registrar of titles in the
county in which the real property is located prior to or simultaneously with a conveyance
pursuant to subdivision 3, paragraph (a), of real property unburdened by a private transfer
fee obligation. An affidavit filed under this paragraph must state that the affiant has actual
knowledge of the facts in the affidavit and must include the legal description of the real
property burdened by the private transfer fee obligation, the name of the person appearing
by the record to be the owner of the real property at the time of the signing of the affidavit,
and a reference by recording or filing information to the instrument of record containing
the private transfer fee obligation.
new text end

new text begin (b) When recorded or filed, an affidavit as described in paragraph (a) constitutes
prima facie evidence that:
new text end

new text begin (1) a request for the written statement of the transfer fee payable in order to obtain a
release of the fee imposed by the private transfer fee obligation was sent to the address
shown in the notification; and
new text end

new text begin (2) the entity listed on the notice of transfer fee failed to provide the written
statement of the transfer fee payable within 30 days of the date of the notice sent to the
address shown in the notification.
new text end

Sec. 5.

Laws 2010, chapter 238, section 7, is amended to read:

Sec. 7. EFFECTIVE DATE; APPLICATION.

deleted text begin Sections 2 to 6 are effective January 1, 2011. Sections 4 to 6 apply retroactively to
child support judgments, including judgments by operation of law, that have not expired
before January 1, 2011. deleted text end new text begin Sections 2, 3, 5, and 6 are effective January 1, 2011. Sections 5
and 6 apply retroactively to child support judgments, including judgments by operation of
law, that have not expired before January 1, 2011. Section 4 is effective July 1, 2011, and
applies retroactively to child support judgments, including judgments by operation of law,
that have not expired before July 1, 2011.
new text end

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 4 are effective the day following final enactment.
new text end