HF 51

as introduced - 88th Legislature (2013 - 2014) Posted on 01/10/2013 12:15pm

A bill for an act
relating to mortgage foreclosures; regulating lender sale of a foreclosed property
to a person who has an unremedied local housing code violation; proposing
coding for new law in Minnesota Statutes, chapter 582.

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

Section 1.

new text begin [582.034] FORECLOSED PROPERTIES; SALE TO PERSONS WITH
UNREMEDIED HOUSING CODE VIOLATION PROHIBITED.
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 terms defined in
this subdivision have the meanings given.
new text end

new text begin (b) "Foreclosed property" means real property owned by a mortgage lender that has
acquired the real property through foreclosure of a mortgage secured by the real property.
new text end

new text begin (c) "Mortgage lender" means an individual or entity that regularly makes, purchases,
or owns loans secured by a mortgage on real property.
new text end

new text begin (d) "Unremedied property code violation" means a violation of a local government
housing code that has not been corrected or for which a fine or other penalty imposed as a
result of the violation has not been paid.
new text end

new text begin Subd. 2. new text end

new text begin Prohibition; sale to person with unremedied property code violation.
new text end

new text begin (a) A mortgage lender that owns a foreclosed property shall not sell or otherwise transfer
to an individual or entity title to the foreclosed property that has an unremedied property
code violation in the local governmental jurisdiction in which the property is located.
new text end

new text begin (b) A mortgage lender that violates paragraph (a) shall, no later than 30 days
after the transfer of title, remedy all unremedied housing code violations for which the
purchaser is responsible in the local governmental jurisdiction in which the property is
located, including payment of any outstanding fines. This requirement applies to all
unremedied violations and unpaid fines regarding all properties owned or formerly owned
by the purchaser, for which the purchaser is responsible.
new text end

new text begin (c) Upon compliance with paragraph (b), the mortgage lender has a cause of action
against the purchaser for the cost incurred by the mortgage lender under paragraph (b),
plus interest at twice the applicable judgment rate and the mortgage lender's reasonable
attorney fees, costs, and disbursements incurred in pursuing the course of action.
new text end

new text begin Subd. 3. new text end

new text begin Request to local jurisdiction for information. new text end

new text begin (a) A mortgage lender
may, prior to its transfer of ownership of a foreclosed property, submit a written request to
any local governmental unit in which the foreclosed property is located for information
regarding any unremedied property code violations or unpaid fines for which the
prospective purchaser is responsible to that local governmental unit.
new text end

new text begin (b) If the local governmental unit states to the mortgage lender in writing that the
prospective purchaser has no unremedied violations or unpaid fines, or fails to respond in
writing to the written request within ten business days, the mortgage lender may transfer
the property to the prospective purchaser without any liability to the local governmental
unit under subdivision 2, paragraph (b).
new text end

new text begin Subd. 4. new text end

new text begin Mortgage lender's right to terminate purchase agreement. new text end

new text begin If a
mortgage lender learns, through the process described in subdivision 3 or otherwise, that
the prospective purchaser has unremedied property code violations or unpaid fines in the
local governmental jurisdiction in which the property is located, the mortgage lender may,
at any time before the transfer of ownership of the property, unilaterally terminate the
purchase agreement regardless of whether the purchase agreement provides the mortgage
lender the right to terminate the agreement upon that contingency.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for sales of foreclosed property that
occur on or after August 1, 2013.
new text end