1.1 	A bill for an act
1.2 	relating to mortgage foreclosures; regulating lender sale of a foreclosed property 
1.3 	to a person who has an unremedied local housing code violation;proposing 
1.4 	coding for new law in Minnesota Statutes, chapter 582.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [582.034] FORECLOSED PROPERTIES; SALE TO PERSONS WITH 
1.7 	UNREMEDIED HOUSING CODE VIOLATION PROHIBITED.
1.8 		Subdivision 1.Definitions. (a) For purposes of this section, the terms defined in 
1.9 	this subdivision have the meanings given.
1.10 	(b) "Foreclosed property" means real property owned by a mortgage lender that has 
1.11 	acquired the real property through foreclosure of a mortgage secured by the real property.
1.12 	(c) "Mortgage lender" means an individual or entity that regularly makes, purchases, 
1.13 	or owns loans secured by a mortgage on real property.
1.14 	(d) "Unremedied property code violation" means a violation of a local government 
1.15 	housing code that has not been corrected or for which a fine or other penalty imposed as a 
1.16 	result of the violation has not been paid.
1.17 		Subd. 2.Prohibition; sale to person with unremedied property code violation.
 1.18 	(a) A mortgage lender that owns a foreclosed property shall not sell or otherwise transfer 
1.19 	to an individual or entity title to the foreclosed property that has an unremedied property 
1.20 	code violation in the local governmental jurisdiction in which the property is located.
1.21 	(b) A mortgage lender that violates paragraph (a) shall, no later than 30 days 
1.22 	after the transfer of title, remedy all unremedied housing code violations for which the 
1.23 	purchaser is responsible in the local governmental jurisdiction in which the property is 
1.24 	located, including payment of any outstanding fines. This requirement applies to all 
2.1 	unremedied violations and unpaid fines regarding all properties owned or formerly owned 
2.2 	by the purchaser, for which the purchaser is responsible.
2.3 	(c) Upon compliance with paragraph (b), the mortgage lender has a cause of action 
2.4 	against the purchaser for the cost incurred by the mortgage lender under paragraph (b), 
2.5 	plus interest at twice the applicable judgment rate and the mortgage lender's reasonable 
2.6 	attorney fees, costs, and disbursements incurred in pursuing the course of action.
2.7 		Subd. 3.Request to local jurisdiction for information. (a) A mortgage lender 
2.8 	may, prior to its transfer of ownership of a foreclosed property, submit a written request to 
2.9 	any local governmental unit in which the foreclosed property is located for information 
2.10 	regarding any unremedied property code violations or unpaid fines for which the 
2.11 	prospective purchaser is responsible to that local governmental unit.
2.12 	(b) If the local governmental unit states to the mortgage lender in writing that the 
2.13 	prospective purchaser has no unremedied violations or unpaid fines, or fails to respond in 
2.14 	writing to the written request within ten business days, the mortgage lender may transfer 
2.15 	the property to the prospective purchaser without any liability to the local governmental 
2.16 	unit under subdivision 2, paragraph (b).
2.17 		Subd. 4.Mortgage lender's right to terminate purchase agreement. If a 
2.18 	mortgage lender learns, through the process described in subdivision 3 or otherwise, that 
2.19 	the prospective purchaser has unremedied property code violations or unpaid fines in the 
2.20 	local governmental jurisdiction in which the property is located, the mortgage lender may, 
2.21 	at any time before the transfer of ownership of the property, unilaterally terminate the 
2.22 	purchase agreement regardless of whether the purchase agreement provides the mortgage 
2.23 	lender the right to terminate the agreement upon that contingency.

2.24 	EFFECTIVE DATE. This section is effective for sales of foreclosed property that 
2.25 	occur on or after August 1, 2013.