HF 2081

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:58am

A bill for an act
relating to real property; modifying provisions governing use of foreclosure
proceedings to enforce homeowner association assessment liens; amending
Minnesota Statutes 2008, section 515B.3-116.

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

Section 1.

Minnesota Statutes 2008, section 515B.3-116, is amended to read:

515B.3-116 LIEN FOR ASSESSMENTS.

(a) The association has a lien on a unit for any assessment levied against that unit
from the time the assessment becomes due. If an assessment is payable in installments, the
full amount of the assessment is a lien from the time the first installment thereof becomes
due. Unless the declaration otherwise provides, fees, charges, late charges, fines and
interest charges pursuant to section 515B.3-102(a)(10), (11) and (12) are liens, and are
enforceable as assessments, under this section.

(b) A lien under this section is prior to all other liens and encumbrances on a unit
except (i) liens and encumbrances recorded before the declaration and, in a cooperative,
liens and encumbrances which the association creates, assumes, or takes subject to, (ii)
any first mortgage encumbering the fee simple interest in the unit, or, in a cooperative,
any first security interest encumbering only the unit owner's interest in the unit, (iii) liens
for real estate taxes and other governmental assessments or charges against the unit, and
(iv) a master association lien under section 515B.2-121(i). If a first mortgage on a unit
is foreclosed, the first mortgage was recorded after June 1, 1994, and no owner redeems
during the owner's period of redemption provided by chapter 580, 581, or 582, the holder
of the sheriff's certificate of sale from the foreclosure of the first mortgage shall take
title to the unit subject to a lien in favor of the association for unpaid assessments for
common expenses levied pursuant to section 515B.3-115(a), (e)(1) to (3), (f), and (i)
which became due, without acceleration, during the six months immediately preceding the
first day following the end of the owner's period of redemption. If a first security interest
encumbering a unit owner's interest in a cooperative unit which is personal property is
foreclosed, the secured party or the purchaser at the sale shall take title to the unit subject
to unpaid assessments for common expenses levied pursuant to section 515B.3-115(a),
(e)(1) to (3), (f), and (i) which became due, without acceleration, during the six months
immediately preceding the first day following either the disposition date pursuant to section
336.9-610 or the date on which the obligation of the unit owner is discharged pursuant to
section 336.9-622. This subsection shall not affect the priority of mechanics' liens.

(c) Recording of the declaration constitutes record notice and perfection of any lien
under this section, and no further recordation of any notice of or claim for the lien is
required.

(d) Proceedings to enforce an assessment lien shall be instituted within three years
after the last installment of the assessment becomes payable, or shall be barred.

(e) The unit owner of a unit at the time an assessment is due shall be personally
liable to the association for payment of the assessment levied against the unit. If there are
multiple owners of the unit, they shall be jointly and severally liable.

(f) This section does not prohibit actions to recover sums for which subsection (a)
creates a lien nor prohibit an association from taking a deed in lieu of foreclosure.

(g) The association shall furnish to a unit owner or the owner's authorized agent
upon written request of the unit owner or the authorized agent a statement setting forth
the amount of unpaid assessments currently levied against the owner's unit. If the unit
owner's interest is real estate, the statement shall be in recordable form. The statement
shall be furnished within ten business days after receipt of the request and is binding
on the association and every unit owner.

(h) new text begin Subject to paragraph (l), new text end the association's lien may be foreclosed as provided
in this subsection.

(1) In a condominium or planned community, the association's lien may be
foreclosed in a like manner as a mortgage containing a power of sale pursuant to chapter
580, or by action pursuant to chapter 581. The association shall have a power of sale to
foreclose the lien pursuant to chapter 580.

(2) In a cooperative whose unit owners' interests are real estate, the association's
lien shall be foreclosed in a like manner as a mortgage on real estate as provided in
paragraph (1).

(3) In a cooperative whose unit owners' interests in the units are personal property,
the association's lien shall be foreclosed in a like manner as a security interest under
article 9 of chapter 336. In any disposition pursuant to section 336.9-610 or retention
pursuant to sections 336.9-620 to 336.9-622, the rights of the parties shall be the same as
those provided by law, except (i) notice of sale, disposition, or retention shall be served on
the unit owner 90 days prior to sale, disposition, or retention, (ii) the association shall be
entitled to its reasonable costs and attorney fees not exceeding the amount provided by
section 582.01, subdivision 1a, (iii) the amount of the association's lien shall be deemed to
be adequate consideration for the unit subject to disposition or retention, notwithstanding
the value of the unit, and (iv) the notice of sale, disposition, or retention shall contain the
following statement in capital letters with the name of the association or secured party
filled in:

"THIS IS TO INFORM YOU THAT BY THIS NOTICE (fill in name of association
or secured party) HAS BEGUN PROCEEDINGS UNDER MINNESOTA STATUTES,
CHAPTER 515B, TO FORECLOSE ON YOUR INTEREST IN YOUR UNIT FOR THE
REASON SPECIFIED IN THIS NOTICE. YOUR INTEREST IN YOUR UNIT WILL
TERMINATE 90 DAYS AFTER SERVICE OF THIS NOTICE ON YOU UNLESS
BEFORE THEN:

(a) THE PERSON AUTHORIZED BY (fill in the name of association or secured
party) AND DESCRIBED IN THIS NOTICE TO RECEIVE PAYMENTS RECEIVES
FROM YOU:

(1) THE AMOUNT THIS NOTICE SAYS YOU OWE; PLUS

(2) THE COSTS INCURRED TO SERVE THIS NOTICE ON YOU; PLUS

(3) $500 TO APPLY TO ATTORNEYS FEES ACTUALLY EXPENDED OR
INCURRED; PLUS

(4) ANY ADDITIONAL AMOUNTS FOR YOUR UNIT BECOMING DUE TO
(fill in name of association or secured party) AFTER THE DATE OF THIS NOTICE; OR

(b) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE
FORECLOSURE OF YOUR RIGHTS TO YOUR UNIT BE SUSPENDED UNTIL
YOUR CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL,
HEARING, OR SETTLEMENT. YOUR ACTION MUST SPECIFICALLY STATE
THOSE FACTS AND GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR
DEFENSES.

IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS WITHIN
THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR OWNERSHIP RIGHTS
IN YOUR UNIT WILL TERMINATE AT THE END OF THE PERIOD, YOU WILL
LOSE ALL THE MONEY YOU HAVE PAID FOR YOUR UNIT, YOU WILL LOSE
YOUR RIGHT TO POSSESSION OF YOUR UNIT, YOU MAY LOSE YOUR RIGHT
TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE, AND YOU
WILL BE EVICTED. IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE,
CONTACT AN ATTORNEY IMMEDIATELY."

(4) In any foreclosure pursuant to chapter 580, 581, or 582, the rights of the parties
shall be the same as those provided by law, except (i) the period of redemption for unit
owners shall be six months from the date of sale or a lesser period authorized by law, (ii)
in a foreclosure by advertisement under chapter 580, the foreclosing party shall be entitled
to costs and disbursements of foreclosure and attorneys fees authorized by the declaration
or bylaws, notwithstanding the provisions of section 582.01, subdivisions 1 and 1a, (iii) in
a foreclosure by action under chapter 581, the foreclosing party shall be entitled to costs
and disbursements of foreclosure and attorneys fees as the court shall determine, and (iv)
the amount of the association's lien shall be deemed to be adequate consideration for the
unit subject to foreclosure, notwithstanding the value of the unit.

(i) If a holder of a sheriff's certificate of sale, prior to the expiration of the period of
redemption, pays any past due or current assessments, or any other charges lienable as
assessments, with respect to the unit described in the sheriff's certificate, then the amount
paid shall be a part of the sum required to be paid to redeem under section 582.03.

(j) In a cooperative, if the unit owner fails to redeem before the expiration of the
redemption period in a foreclosure of the association's assessment lien, the association
may bring an action for eviction against the unit owner and any persons in possession of
the unit, and in that case section 504B.291 shall not apply.

(k) An association may assign its lien rights in the same manner as any other secured
party.

new text begin (l) Notwithstanding paragraph (h), this paragraph applies to debts for assessments
that arise on or after August 1, 2009. An association's lien under this section may not be
foreclosed in any manner or enforced as a security interest unless:
new text end

new text begin (1) the amount of the lien, excluding any late charges, fees and costs of collection,
attorney fees, or interest, is greater than $1,800; or
new text end

new text begin (2) the assessments secured by the lien are more than 12 months delinquent.
new text end

new text begin This paragraph does not prohibit an association from collecting past due assessments
or other amounts for which a lien exists through other legal processes, including a claim
in conciliation or district court.
new text end