1.1 	A bill for an act
1.2 	relating to real estate; clarifying and supplementing prohibitions on certain 
1.3 	disclosure requirements in the sale of residential real estate; providing 
1.4 	requirements for home inspectors;amending Minnesota Statutes 2006, sections 
1.5 	82.41, subdivision 13; 513.55; 513.57, subdivision 2; Minnesota Statutes 2007 
1.6 	Supplement, section 82.22, subdivision 8; proposing coding for new law as 
1.7 	Minnesota Statutes, chapter 82C.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2007 Supplement, section 82.22, subdivision 8, is 
1.10 	amended to read:
1.11 		Subd. 8.Material facts. (a) Licensees shall disclose to any prospective purchaser 
1.12 	all material facts of which the licensees are aware, which could adversely and significantly 
1.13 	affect an ordinary purchaser's use or enjoyment of the property, or any intended use of the 
1.14 	property of which the licensees are aware.
1.15 	(b) It is not a material fact relating to real property offered for sale the fact or 
1.16 	suspicion that the property:
1.17 	(1) is or was occupied by an owner or occupant who is or was suspected 
1.18 	to be infected with human immunodeficiency virus or diagnosed with acquired 
1.19 	immunodeficiency syndrome;
1.20 	(2) was the site of a suicide, accidental death, natural death, or perceived paranormal 
1.21 	activity; or
1.22 	(3) is located in a neighborhood containing any adult family home, community-based 
1.23 	residential facility, or nursing home.
1.24 	(c) A licensee or employee of the licensee has no duty to disclose information 
1.25 	regarding an offender who is required to register under section 243.166, or about whom 
2.1 	notification is made under that section, if the broker or salesperson, in a timely manner, 
2.2 	provides a written notice that information about the predatory offender registry and 
2.3 	persons registered with the registry may be obtained by contacting local law enforcement 
2.4 	where the property is located or the Department of Corrections.
2.5 	(d) A licensee or employee of the licensee has no duty to disclose information 
2.6 	regarding airport zoning regulations if the broker or salesperson, in a timely manner, 
2.7 	provides a written notice that a copy of the airport zoning regulations as adopted can be 
2.8 	reviewed or obtained at the office of the county recorder where the zoned area is located.
2.9 	(e) A licensee is not required to disclose, except as otherwise provided in paragraph 
2.10 	(f), information relating to the physical condition of the property or any other information 
2.11 	relating to the real estate transaction, if a written report that discloses the information has 
2.12 	been prepared by a qualified third party and provided to the person. For the purposes of 
2.13 	this paragraph, "qualified third party" means a federal, state, or local governmental agency, 
2.14 	or any person whom the broker, salesperson, or a party to the real estate transaction 
2.15 	reasonably believes has the expertise necessary to meet the industry standards of practice 
2.16 	for the type of inspection or investigation that has been conducted by the third party 
2.17 	in order to prepare the written report and who is acceptable to the person to whom the 
2.18 	disclosure is being made.
2.19 	 (f) A licensee shall disclose to the parties to a real estate transaction any facts known 
2.20 	by the broker or salesperson that contradict any information included in a written report, if 
2.21 	a copy of the report is provided to the licensee, described in paragraph (e).
2.22 	 (g) The limitation on disclosures set forth in paragraphs (b) and (c) shall modify any 
2.23 	common law duties with respect to disclosure of material facts.
2.24 	(h) A licensee or employee of a licensee shall disclose in writing to a purchaser at the 
2.25 	closing any homeowner's insurance claims, liability claims, or other claims with respect to 
2.26 	damage or loss to the property, known to the licensee or employee of the licensee, made 
2.27 	by the seller or any other person within the 12 months prior to the closing and the status 
2.28 	of any such claims, including whether the damage or loss related to the claims has been 
2.29 	repaired, replaced, or otherwise remedied.
2.30 	(i) A purchaser who incurs loss as a result of a purposeful violation of this 
2.31 	subdivision has a cause of action against the licensee or employee of the licensee for 
2.32 	damages; equitable relief as determined by the court; reasonable attorney fees; costs and 
2.33 	disbursements; and a civil penalty determined by the court in an amount not to exceed 50 
2.34 	percent of the damages.

2.35 	EFFECTIVE DATE. This section is effective August 1, 2008, and applies to 
2.36 	purchases resulting from purchase agreements entered into on or after that date.

3.1 	Sec. 2. Minnesota Statutes 2006, section 82.41, subdivision 13, is amended to read:
3.2 		Subd. 13.Fraudulent, deceptive, and dishonest practices. (a) Prohibitions. For 
3.3 	the purposes of section 82.35, subdivision 1, clause (b), the following acts and practices 
3.4 	constitute fraudulent, deceptive, or dishonest practices:
3.5 	(1) act on behalf of more than one party to a transaction without the knowledge 
3.6 	and consent of all parties;
3.7 	(2) act in the dual capacity of licensee and undisclosed principal in any transaction;
3.8 	(3) receive funds while acting as principal which funds would constitute trust funds 
3.9 	if received by a licensee acting as an agent, unless the funds are placed in a trust account. 
3.10 	Funds need not be placed in a trust account if a written agreement signed by all parties to 
3.11 	the transaction specifies a different disposition of the funds, in accordance with section 
3.12 	82.35, subdivision 1;
3.13 	(4) violate any state or federal law concerning discrimination intended to protect the 
3.14 	rights of purchasers or renters of real estate;
3.15 	(5) make a material misstatement in an application for a license or in any information 
3.16 	furnished to the commissioner;
3.17 	(6) procure or attempt to procure a real estate license for himself or herself or any 
3.18 	person by fraud, misrepresentation, or deceit;
3.19 	(7) represent membership in any real estate-related organization in which the 
3.20 	licensee is not a member;
3.21 	(8) advertise in any manner that is misleading or inaccurate with respect to 
3.22 	properties, terms, values, policies, or services conducted by the licensee;
3.23 	(9) make any material misrepresentation or permit or allow another to make any 
3.24 	material misrepresentation;
3.25 	(10) make any false or misleading statements, or permit or allow another to make 
3.26 	any false or misleading statements, of a character likely to influence, persuade, or induce 
3.27 	the consummation of a transaction contemplated by this chapter;
3.28 	(11) fail within a reasonable time to account for or remit any money coming into the 
3.29 	licensee's possession which belongs to another;
3.30 	(12) commingle with his or her own money or property trust funds or any other 
3.31 	money or property of another held by the licensee;
3.32 	(13) demand from a seller a commission to compensation which the licensee is not 
3.33 	entitled, knowing that he or she is not entitled to the commission compensation;
3.34 	(14) pay or give money or goods of value to an unlicensed person for any assistance 
3.35 	or information relating to the procurement by a licensee of a listing of a property or of a 
4.1 	prospective buyer of a property (this item does not apply to money or goods paid or given 
4.2 	to the parties to the transaction);
4.3 	(15) fail to maintain a trust account at all times, as provided by law;
4.4 	(16) engage, with respect to the offer, sale, or rental of real estate, in an 
4.5 	anticompetitive activity;
4.6 	(17) represent on advertisements, cards, signs, circulars, letterheads, or in any other 
4.7 	manner, that he or she is engaged in the business of financial planning unless he or 
4.8 	she provides a disclosure document to the client. The document must be signed by the 
4.9 	client and a copy must be left with the client. The disclosure document must contain 
4.10 	the following:
4.11 	(i) the basis of fees, commissions, or other compensation received by him or her 
4.12 	in connection with rendering of financial planning services or financial counseling or 
4.13 	advice in the following language:
4.14 	"My compensation may be based on the following:
4.15 	(a) ... commissions generated from the products I sell you;
4.16 	(b) ... fees; or
4.17 	(c) ... a combination of (a) and (b). [Comments]";
4.18 	(ii) the name and address of any company or firm that supplies the financial services 
4.19 	or products offered or sold by him or her in the following language:
4.20 	"I am authorized to offer or sell products and/or services issued by or through the 
4.21 	following firm(s):
4.22 	[List]
4.23 	The products will be traded, distributed, or placed through the clearing/trading 
4.24 	firm(s) of:
4.25 	[List]";
4.26 	(iii) the license(s) held by the person under this chapter or chapter 60A or 80A in 
4.27 	the following language:
4.28 	"I am licensed in Minnesota as a(n):
4.29 	(a) ... insurance agent;
4.30 	(b) ... securities agent or broker/dealer;
4.31 	(c) ... real estate broker or salesperson;
4.32 	(d) ... investment adviser"; and
4.33 	(iv) the specific identity of any financial products or services, by category, for 
4.34 	example mutual funds, stocks, or limited partnerships, the person is authorized to offer 
4.35 	or sell in the following language:
4.36 	"The license(s) entitles me to offer and sell the following products and/or services:
5.1 	(a) ... securities, specifically the following: [List];
5.2 	(b) ... real property;
5.3 	(c) ... insurance; and
5.4 	(d) ... other: [List]~~.~~";
5.5 	(18) advise the seller to settle an insurance or liability claim for past damage to the 
5.6 	property prior to or after the closing without applying the amount received to repairing the 
5.7 	damage that generated the claim;
5.8 	(19) advise any other person to violate, or assist any other person in violating, any 
5.9 	other provision of this paragraph.
5.10 	(b) Determining violation. A licensee shall be deemed to have violated this section 
5.11 	if the licensee has been found to have violated sections 325D.49 to 325D.66, by a final 
5.12 	decision or order of a court of competent jurisdiction.
5.13 	(c) Commissioner's authority. Nothing in this section limits the authority of the 
5.14 	commissioner to take actions against a licensee for fraudulent, deceptive, or dishonest 
5.15 	practices not specifically described in this section.

5.16 	EFFECTIVE DATE. This section is effective August 1, 2008.

5.17 	Sec. 3. [82C.01] DEFINITIONS.
5.18 		Subdivision 1.Applicability. For purposes of this chapter, the terms defined in this 
5.19 	section have the meanings given.
5.20 		Subd. 2.Home inspector. "Home inspector" or "inspector" means a person who, 
5.21 	for compensation, inspects a residential dwelling for the purpose of providing expert 
5.22 	advice to a prospective purchaser of the residential dwelling regarding the condition of the 
5.23 	structural, mechanical, electrical, and other functional aspects of the dwelling. The term 
5.24 	does not include a person who performs inspections as an employee of, or under contract 
5.25 	with, the state or one of its political subdivisions.

5.26 	EFFECTIVE DATE. This section is effective August 1, 2008, and applies to 
5.27 	inspections performed on or after that date.

5.28 	Sec. 4. [82C.02] HOME INSPECTORS; REQUIREMENTS.
5.29 		Subdivision 1.Written contract. A home inspector shall not inspect a residential 
5.30 	dwelling unless the home inspector has entered into a written contract with the customer 
5.31 	for that purpose. The contract must specify the services to be provided and the amount to 
5.32 	be charged for them. The contract must require that the inspector provide to the customer 
5.33 	a detailed written report of the inspection, signed and dated by the inspector.
6.1 		Subd. 2.Bonding. Prior to entering into a contract to perform an inspection, 
6.2 	the home inspector must have in force a corporate surety bond, for the benefit of the 
6.3 	inspector's customers, from a company authorized to issue the bond in this state, in the 
6.4 	amount of at least $100,000, conditioned upon the home inspector performing home 
6.5 	inspections in a manner consistent with generally accepted standards for home inspections 
6.6 	in the community in which the inspection is performed. The name and address of the 
6.7 	bonding company must be included in the written contract required under subdivision 1.
6.8 		Subd. 3.Limit on liability prohibited. A written contract required under this 
6.9 	section must not include a limit on the home inspector's liability for damages incurred by 
6.10 	the customer as a result of the inspector's failure to perform the inspection in a manner 
6.11 	consistent with generally accepted standards for home inspections in the community in 
6.12 	which the inspection is performed.

6.13 	EFFECTIVE DATE. This section is effective August 1, 2008, and applies to 
6.14 	inspections performed on or after that date.

6.15 	Sec. 5. Minnesota Statutes 2006, section 513.55, is amended to read:
6.16 	513.55 GENERAL DISCLOSURE REQUIREMENTS.
6.17 		Subdivision 1.Contents. (a) Before signing an agreement to sell or transfer 
6.18 	residential real property, the seller shall make a written disclosure to the prospective 
6.19 	buyer. The disclosure must include all material facts of which the seller is aware that 
6.20 	could adversely and significantly affect:
6.21 	(1) an ordinary buyer's use and enjoyment of the property; or
6.22 	(2) any intended use of the property of which the seller is aware.
6.23 	(b) The disclosure must be made in good faith and based upon the best of the seller's 
6.24 	knowledge at the time of the disclosure.
6.25 	(c) The disclosure required under paragraph (a) must include any past or present 
6.26 	water damage or water intrusion of which the seller is aware, regardless of whether the 
6.27 	seller considers it to be material or likely to affect the ordinary buyer's use, enjoyment, 
6.28 	or intended use of the property.
6.29 		Subd. 2.Disclosure to licensee. A seller may provide the written disclosure 
6.30 	required under sections 513.52 to 513.60 to a real estate licensee representing or assisting 
6.31 	the prospective buyer. The written disclosure provided to the real estate licensee 
6.32 	representing or assisting the prospective buyer is considered to have been provided to 
6.33 	the prospective buyer. If the written disclosure is provided to the real estate licensee 
7.1 	representing or assisting the prospective buyer, the real estate licensee shall provide 
7.2 	a copy to the prospective buyer. 
7.3 		Subd. 3.Disclosure of insurance and liability claims. In addition to the other 
7.4 	disclosures required under sections 513.52 to 513.60, a seller shall disclose in writing at 
7.5 	the closing any homeowner's insurance claims, liability claims, or other claims made by 
7.6 	the seller or known to the seller within the 12 months prior to the closing with respect to 
7.7 	damage to the property and the status of any such claims, including whether the damage or 
7.8 	loss related to the claims has been repaired, replaced, or otherwise remedied.

7.9 	EFFECTIVE DATE. This section is effective August 1, 2008, and applies to 
7.10 	purchases resulting from purchase agreements entered into on or after that date.

7.11 	Sec. 6. Minnesota Statutes 2006, section 513.57, subdivision 2, is amended to read:
7.12 		Subd. 2.Liability. A seller who fails to make a disclosure as required by sections 
7.13 	513.52 to 513.60 and was aware of material facts pertaining to the real property is liable 
7.14 	to the prospective buyer. A person injured by a violation of this section may bring a 
7.15 	civil action and recover damages ~~and receive other~~; equitable relief as determined by the 
7.16 	court; reasonable attorney fees; costs and disbursements; and a civil penalty determined 
7.17 	by the court in an amount not to exceed 50 percent of the damages. An action under this 
7.18 	subdivision must be commenced within two years after the date on which the prospective 
7.19 	buyer closed the purchase or transfer of the real property.

7.20 	EFFECTIVE DATE. This section is effective August 1, 2008, and applies to 
7.21 	purchases resulting from purchase agreements entered into on or after that date.