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HF 536

2nd Engrossment - 88th Legislature (2013 - 2014) Posted on 03/20/2013 03:30pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/13/2013
1st Engrossment Posted on 03/13/2013
2nd Engrossment Posted on 03/20/2013

Current Version - 2nd Engrossment

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A bill for an act
relating to real property; establishing notice for contracts for deed involving
residential property; providing remedies; amending Minnesota Statutes 2012,
sections 507.235, subdivision 2; 559.211, subdivision 2; proposing coding for
new law in Minnesota Statutes, chapter 559; repealing Minnesota Statutes 2012,
section 507.235, subdivision 4.

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

Section 1.

Minnesota Statutes 2012, section 507.235, subdivision 2, is amended to read:


Subd. 2.

Penalty for failure to file.

(a) A vendee who fails to record a contract for
deed, as required by subdivision 1, is subject to a civil penalty, payable under subdivision
5, equal to two percent of the principal amount of the contract debtnew text begin , unless the vendee
has not received a copy of the contract for deed in recordable form, as required under
subdivision 1a
new text end . Payments of the penalty shall be deposited in the general fund of the
county. The penalty may be enforced as a lien against the vendee's interest in the property.

(b) A person receiving an assignment of a vendee's interest in a contract for deed
who fails to record the assignment as required by subdivision 1 is subject to a civil penalty,
payable under subdivision 5, equal to two percent of the original principal amount of the
contract debt. Payments of the penalty must be deposited in the general fund of the county.
The penalty may be enforced as a lien against the vendee's interest in the property.

Sec. 2.

new text begin [559.201] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin The definitions in this section apply to section 559.202.
new text end

new text begin Subd. 2. new text end

new text begin Business day. new text end

new text begin "Business day" means any day other than a Saturday,
Sunday, or holiday as defined in section 645.44, subdivision 5.
new text end

new text begin Subd. 3. new text end

new text begin Family farm security loan. new text end

new text begin "Family farm security loan" has the meaning
given in Minnesota Statutes 2008, section 41.52, subdivision 5.
new text end

new text begin Subd. 4. new text end

new text begin Multiple seller. new text end

new text begin "Multiple seller" means a person that has acted as the
seller during the 12-month period that precedes either: (1) the date on which the purchaser
executes a purchase agreement under section 559.202; or (2) if there is no purchase
agreement, the date on which the purchaser executes a contract for deed under section
559.202.
new text end

new text begin Subd. 5. new text end

new text begin Person. new text end

new text begin "Person" means a natural person, partnership, corporation, limited
liability company, association, trust, or other legal entity, however organized.
new text end

new text begin Subd. 6. new text end

new text begin Purchase agreement. new text end

new text begin "Purchase agreement" means a purchase agreement
for a contract for deed, an earnest money contract, or an executed option contemplating
that, at closing, the seller and the purchaser will enter into a contract for deed.
new text end

new text begin Subd. 7. new text end

new text begin Purchaser. new text end

new text begin "Purchaser" means a natural person who enters into a contract
for deed to purchase residential real property. Purchaser includes all purchasers who enter
into the same contract for deed to purchase residential real property.
new text end

new text begin Subd. 8. new text end

new text begin Residential real property. new text end

new text begin "Residential real property" means real property
improved or intended to be improved by a structure designed principally for the occupancy
of one to four families, whether or not the owner occupies the real property. Residential
real property does not include property subject to sections 583.20 to 583.32.
new text end

Sec. 3.

new text begin [559.202] CONTRACTS FOR DEED INVOLVING RESIDENTIAL
PROPERTY.
new text end

new text begin Subdivision 1. new text end

new text begin Notice required. new text end

new text begin (a) A multiple seller must deliver the notice
specified under subdivision 3 to a prospective purchaser as provided under this subdivision.
new text end

new text begin (b) If there is a purchase agreement, the notice required by subdivision 2 must be
affixed to the front of the purchase agreement. A contract for deed for which notice is
required under this subdivision may not be executed for five business days following
the execution of the purchase agreement and delivery of the notice and instructions for
cancellation.
new text end

new text begin (c) If there is no purchase agreement, a multiple seller must deliver the notice in a
document separate from any other document or writing to a prospective purchaser no less
than five business days before the prospective purchaser executes the contract for deed.
new text end

new text begin (d) The notice must be:
new text end

new text begin (1) written in at least 12-point type; and
new text end

new text begin (2) signed and dated by the purchaser.
new text end

new text begin (e) If a dispute arises concerning whether or when the notice required by this
subdivision was provided to the purchaser, there is a rebuttable presumption that the notice
was not provided unless the original executed contract for deed contains the following
statement: "By initialing here ....... purchaser acknowledges receipt at least five business
days before signing this contract for deed of the disclosure statement entitled "Important
Information About Contracts for Deed" required by Minnesota Statutes, section 559.202,
subdivision 3."
new text end

new text begin Subd. 2. new text end

new text begin Exception. new text end

new text begin This section does not apply if the purchaser is represented
throughout the transaction by either:
new text end

new text begin (1) a person licensed to practice law in this state; or
new text end

new text begin (2) a person licensed as a real estate broker or salesperson under chapter 82,
provided that the representation does not create a dual agency, as that term is defined
in section 82.55, subdivision 6.
new text end

new text begin Subd. 3. new text end

new text begin Content of the notice. new text end

new text begin The notice must contain the following verbatim
language:
new text end

new text begin "IMPORTANT INFORMATION ABOUT CONTRACTS FOR DEED
new text end

new text begin Know What You Are Getting Into
new text end

new text begin (1) A contract for deed is a complex legal agreement. You are NOT a tenant. The
foreclosure laws don't apply.
new text end

new text begin (2) You should know ALL of your obligations and rights before you sign a purchase
agreement or contract for deed.
new text end

new text begin (3) You (seller must circle one):
new text end

new text begin (a)
new text end
new text begin DO
new text end
new text begin DO NOT
new text end
new text begin have to pay homeowner's insurance.
new text end
new text begin (b)
new text end
new text begin DO
new text end
new text begin DO NOT
new text end
new text begin have to pay property taxes.
new text end
new text begin (c)
new text end
new text begin DO
new text end
new text begin DO NOT
new text end
new text begin have to make and pay for some or all of the repairs or
maintenance.
new text end

new text begin (4) After some time, you may need to make a large lump sum payment (called a "balloon
payment"). Know when it is due and how much it will be. You'll probably need to get a
new mortgage from a bank at that time.
new text end

new text begin (5) If you miss just a single payment or can't make the balloon payment, the seller can
cancel your contract. You will likely lose all the money you have already paid. You will
likely lose your ability to purchase the home. The seller can begin an eviction action
against you in just a few months.
new text end

new text begin Key Things to Do Before You Sign
new text end

new text begin (1) Get advice from a lawyer or the Minnesota Home Ownership Center at
1-866-462-6466. To find a lawyer through the Minnesota State Bar Association, go to
www.mnfindalawyer.com.
new text end

new text begin (2) Get an independent, professional appraisal of the property to learn what it is worth.
new text end

new text begin (3) Get an independent, professional inspection of the property.
new text end

new text begin (4) Buy title insurance or ask a real estate lawyer for a "title opinion."
new text end

new text begin (5) Check with the city or county to find out if there are inspection reports or unpaid
utility bills.
new text end

new text begin (6) Check with a title company or the county where the property is located to find out if
there is a mortgage or other lien on the property and if the property taxes have been paid.
new text end

new text begin If You Are Entering into a Purchase Agreement
new text end

new text begin (1) If you haven't already signed the contract for deed, you can cancel the purchase
agreement (and get all your money back) if you do so within five business days after
getting this notice.
new text end

new text begin (2) To cancel the purchase agreement, you must follow the provisions of Minnesota
Statutes, section 559.217, subdivision 4. Ask a lawyer for help."
new text end

new text begin Subd. 4. new text end

new text begin Right to cancel purchase agreement. new text end

new text begin (a) A prospective purchaser may
cancel a purchase agreement within five business days after actually receiving the notice
required under subdivision 1 if a multiple seller fails to timely deliver the notice, provided
that the contract for deed has not been executed by all parties.
new text end

new text begin (b) A prospective purchaser may cancel the purchase agreement in accordance with
the provisions of section 559.217, subdivision 4.
new text end

new text begin (c) In the event of cancellation, the multiple seller may not impose a penalty and must
promptly refund all payments made by the prospective purchaser prior to cancellation.
new text end

new text begin Subd. 5. new text end

new text begin Remedies for failure to timely deliver notices. new text end

new text begin (a) Notwithstanding
any contrary provision in the purchase agreement or contract for deed, a purchaser has
a private right of action against a multiple seller who fails to timely deliver the notice
required under subdivision 1. The multiple seller is liable to the purchaser for:
new text end

new text begin (1) the greater of actual damages or statutory damages of $2,500; and
new text end

new text begin (2) reasonable attorney fees and court costs.
new text end

new text begin (b) At the purchaser's option an amount not to exceed $2,500 may be applied
to offset outstanding contract installment payments past due or next due under the
contract for deed. The right to offset expires upon cancellation of the contract for deed in
accordance with applicable law. Recording of the documents specified in section 559.213
constitutes prima facie evidence that any right to offset under this subdivision has expired.
new text end

new text begin (c) A multiple seller who knowingly fails to timely deliver the notice required
under subdivision 1 is liable to the purchaser for triple the actual or statutory damages
available under paragraph (a), whichever is greater, provided that the purchaser must elect
the remedy provided under either paragraph (b) or this paragraph and may not recover
damages under both paragraphs.
new text end

new text begin (d) The rights and remedies provided in this subdivision are cumulative to, and not
a limitation of, any other rights and remedies provided under law. Any action brought
pursuant to this subdivision must be commenced within four years from the date of the
alleged violation.
new text end

new text begin Subd. 6. new text end

new text begin Duty of multiple seller to account. new text end

new text begin Upon reasonable request by the
purchaser and no more than once every 12-month period, a multiple seller must provide an
accounting of all payments made pursuant to the contract for deed, the amount of interest
paid, and the amount remaining to satisfy the principal balance under the contract.
new text end

new text begin Subd. 7. new text end

new text begin No waiver. new text end

new text begin The provisions of this section may not be waived.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2013, and applies to
transactions in which the contract for deed and the purchase agreement for the contract
for deed, if any, were both executed on or after that date.
new text end

Sec. 4.

Minnesota Statutes 2012, section 559.211, subdivision 2, is amended to read:


Subd. 2.

Remedies additional.

The remedies provided in this section are in
addition to and do not limit other rights or remedies available to purchasers or vendors of
real estate.new text begin Subject to the provisions of sections 559.213 and 559.217, subdivision 7, this
section shall not be construed to bar a court from determining the validity, effectiveness,
or consequences of proceeding under section 559.21 or 559.217, or granting other relief in
connection therewith, by reason of the failure of a purchaser to seek or obtain relief under
this section prior to the purported effective date of the termination of the contract.
new text end

Sec. 5. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, section 507.235, subdivision 4, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end