1.1                          A bill for an act
  1.2             relating to real estate; requiring 60 days' notice of 
  1.3             default on a real estate mortgage, notice of 
  1.4             termination of a real estate contract for deed, and 
  1.5             eight weeks' notice of commencement of a sale and 
  1.6             foreclosure proceeding; providing that a court may 
  1.7             order a delay in a foreclosure sale or contract 
  1.8             termination under certain circumstances; limiting the 
  1.9             right to maintain actions for deficiency judgments; 
  1.10            amending Minnesota Statutes 1996, sections 47.20, by 
  1.11            adding a subdivision; and 559.21, by adding a 
  1.12            subdivision; proposing coding for new law in Minnesota 
  1.13            Statutes, chapter 580; proposing coding for new law as 
  1.14            Minnesota Statutes, chapter 584. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  Minnesota Statutes 1996, section 47.20, is 
  1.17  amended by adding a subdivision to read: 
  1.18     Subd. 16.  Notwithstanding any other law to the contrary, 
  1.19  any notice of default on real estate as defined in section 
  1.20  584.02, mailed after the effective date of this section and 
  1.21  before May 1, 1998, shall indicate that the borrower has 60 days 
  1.22  from the date the notice is mailed in which to cure the default. 
  1.23     Sec. 2.  Minnesota Statutes 1996, section 559.21, is 
  1.24  amended by adding a subdivision to read: 
  1.25     Subd. 6.  [TEMPORARY MINIMUM NOTICE.] Notwithstanding any 
  1.26  other law to the contrary, no contract for conveyance of real 
  1.27  estate, as defined in section 584.02, shall terminate until 60 
  1.28  days after service of notice if the notice is served after the 
  1.29  effective date of this section and before May 1, 1998, or 90 
  1.30  days after service of notice if the contract was entered into 
  2.1   after May 1, 1994, and the contract vendee has paid 25 percent 
  2.2   or more of the purchase price.  The notice must specify this 60- 
  2.3   or 90-day period.  This section does not apply to earnest money 
  2.4   contracts, purchase agreements, or exercised options.  
  2.5      Sec. 3.  [580.0311] [TEMPORARY MINIMUM NOTICE.] 
  2.6      Notwithstanding any other law to the contrary, eight weeks' 
  2.7   published notice must be given before the foreclosure sale of 
  2.8   real estate, as defined in section 584.02, if the notice is 
  2.9   published for the first time after the effective date of this 
  2.10  section and before May 1, 1998.  The notice must contain the 
  2.11  information specified in section 580.04.  At least four weeks 
  2.12  before the appointed time of sale, a copy of the notice must be 
  2.13  served upon the person in possession of the mortgaged premises, 
  2.14  if the premises are actually occupied.  
  2.15     Sec. 4.  [584.01] [LEGISLATIVE FINDINGS.] 
  2.16     The legislature finds that the recent severe winter storms, 
  2.17  snow melt, flooding, high winds, rain, and ice have caused 
  2.18  unprecedented loss and damage to property and displaced, and 
  2.19  otherwise significantly disrupted the lives of, thousands of 
  2.20  citizens of this state; and that by reason of these conditions 
  2.21  many of the citizens of this state will be unable for extended 
  2.22  periods of time to meet payments of taxes, interest, and 
  2.23  principal of mortgages on their properties and are, therefore, 
  2.24  threatened with loss of their real property through mortgage 
  2.25  foreclosure, contract termination, and judicial sales.  The 
  2.26  legislature further finds that these conditions have resulted in 
  2.27  an emergency of a nature that justifies and validates 
  2.28  legislation for the extension of the time prior to foreclosure 
  2.29  and execution sales and for other relief.  
  2.30     Sec. 5.  [584.02] [DEFINITIONS.] 
  2.31     As used in sections 584.01 to 584.12, the term "real estate"
  2.32  means real estate, a portion or all of which is located in a 
  2.33  county designated by the Federal Emergency Management Agency for 
  2.34  federal aid for flooding or severe winter storms, snow melt, 
  2.35  high winds, rain, and ice if the damage occurred on or after 
  2.36  March 21, 1997, but before June 1, 1997.  
  3.1      Sec. 6.  [584.03] [APPLICATION.] 
  3.2      Subdivision 1.  [PROPERTY COVERED.] This act applies to 
  3.3   first mortgages secured by and contracts for deed conveying, 
  3.4   real estate within the meaning of section 584.02, including:  
  3.5      (1) mortgages held by the United States or by any agency, 
  3.6   department, bureau, or instrumentality of the United States, as 
  3.7   security or pledge of the mortgagor, its successors or assigns; 
  3.8   and 
  3.9      (2) mortgages held as security or pledge to secure payment 
  3.10  of a public debt or to secure payment of the deposit of public 
  3.11  funds.  
  3.12     Subd. 2.  [GENERAL EXCLUSION.] This act does not apply to 
  3.13  mortgages or contracts for deed made after the effective date of 
  3.14  this act, nor to mortgages or contracts for deed made before the 
  3.15  effective date of this act, that are renewed or extended after 
  3.16  the effective date of this act for a period longer than one 
  3.17  year, nor to mortgages, judgments, or contracts for deed, 
  3.18  regardless of when made, if a second or subsequent mortgage is 
  3.19  made against the property after the effective date of this act.  
  3.20  No court shall allow a stay, postponement, or extension of time 
  3.21  that would cause any right to be lost or adversely affected by 
  3.22  any statute of limitation.  
  3.23     Sec. 7.  [584.04] [MORTGAGOR MAY APPLY TO DISTRICT COURT 
  3.24  FOR RELIEF.] 
  3.25     A mortgagor, or owner in possession of the mortgaged 
  3.26  premises, or anyone claiming under the mortgage, or anyone 
  3.27  liable for the mortgage debt, may at any time after the issuance 
  3.28  of the notice of the foreclosure proceedings and before the 
  3.29  sale, petition the district court of the county where the 
  3.30  foreclosure proceedings are pending, serving a summons and 
  3.31  verified complaint requesting that the sale in foreclosure be 
  3.32  postponed for up to six months.  A contract for deed vendee or 
  3.33  anyone claiming under the contract or liable for the contract 
  3.34  payment, in any case where the contract has not yet been 
  3.35  terminated as of the effective date of sections 584.01 to 
  3.36  584.12, may petition the district court in the same manner, 
  4.1   requesting that the contract termination be delayed for up to 90 
  4.2   days.  Upon receiving the petition, the court shall order a stay 
  4.3   in the foreclosure proceedings until after the hearing on the 
  4.4   petition.  As a condition precedent to the postponement of the 
  4.5   foreclosure sale, the party serving the verified complaint shall 
  4.6   file it and pay to the clerk for the person foreclosing the 
  4.7   mortgage the actual costs incurred, including attorney's fees, 
  4.8   in the foreclosure proceeding before postponement.  As a 
  4.9   condition precedent to delay of the contract termination, the 
  4.10  party seeking relief shall file the verified complaint and pay 
  4.11  to the clerk for the person canceling the contract, the actual 
  4.12  costs, including attorney's fees incurred in the cancellation.  
  4.13  If payment is made by other than cash or certified check, the 
  4.14  order postponing the sale or termination is not final until 
  4.15  after the check or other negotiable instrument has been paid.  
  4.16     Sec. 8.  [584.05] [COURT MAY ORDER DELAY IN SALE; 
  4.17  FINDINGS.] 
  4.18     The court may consider the following criteria in 
  4.19  determining whether or not to order a delay in the sale or 
  4.20  contract termination:  
  4.21     (1) that the petitioner has suffered damage on property 
  4.22  within the coverage of section 584.03, subdivision 1, and the 
  4.23  property is located in a county designated by the Federal 
  4.24  Emergency Management Agency for federal aid due to flooding or 
  4.25  severe winter storms, snow melt, high winds, rain, and ice if 
  4.26  the damage occurred on or after March 21, 1997, but before June 
  4.27  1, 1997; and 
  4.28     (2) that the petitioner has an inability to make payments 
  4.29  on the mortgage or contract for deed.  
  4.30     If the court grants or denies a delay in the sale, the 
  4.31  mortgagee shall publish notice of the new sale date as provided 
  4.32  in section 580.03.  Section 580.07 does not apply to foreclosure 
  4.33  sales postponed by a court pursuant to sections 584.01 to 584.12.
  4.34     Sec. 9.  [584.06] [COMPROMISES.] 
  4.35     If the parties to a foreclosure action agree in writing to 
  4.36  a compromise settlement thereof, or of composition of the 
  5.1   mortgage indebtedness, or both, the court shall have 
  5.2   jurisdiction and may by its order confirm and approve the 
  5.3   settlement or composition, or both, as the case may be.  
  5.4      Sec. 10.  [584.07] [REDUCTION OF REDEMPTION PERIOD.] 
  5.5      If the court grants a delay in the foreclosure sale 
  5.6   pursuant to sections 584.01 to 584.12, the redemption period 
  5.7   pursuant to section 580.23 shall be reduced by an equivalent 
  5.8   period of time.  In no event must the redemption period be less 
  5.9   than 30 days.  If the court does not grant a delay in the 
  5.10  foreclosure sale, the redemption period is as provided in 
  5.11  section 580.23.  
  5.12     Sec. 11.  [584.08] [PARTIAL PAYMENT.] 
  5.13     The petition must also request the court to determine the 
  5.14  reasonable value of the income on the property, or, if the 
  5.15  property has no income, then the reasonable rental value of the 
  5.16  property subject to the contract for deed or mortgage and must 
  5.17  direct the contract vendee or mortgagor to pay all or a 
  5.18  reasonable part of the income or rental value for the payment of 
  5.19  taxes, insurance, interest or principal at the times and in the 
  5.20  manner determined by the court.  In determining the amount of 
  5.21  income or rental value to be paid, the court may consider the 
  5.22  relative financial conditions and resources of the parties and 
  5.23  the ability of the mortgagor or contract vendee to pay.  The 
  5.24  court shall hear the petition and after the hearing shall make 
  5.25  and file its order directing the payment by the contract vendee 
  5.26  or mortgagor of an amount at the times and in the manner that 
  5.27  the court determines just and equitable.  In the case of 
  5.28  contracts for deed, the court shall insure that the payment 
  5.29  required by the contract vendee is sufficient to adequately 
  5.30  maintain the vendor's standard of living.  If the mortgagor or 
  5.31  contract vendee defaults in the payments ordered, the mortgagee 
  5.32  may immediately commence foreclosure proceedings as provided in 
  5.33  section 580.03, and the contract vendor may terminate the 
  5.34  contract 30 days after the default.  If default is claimed 
  5.35  because of waste, the mortgagee or contract vendor may commence 
  5.36  foreclosure proceedings or terminate the contract immediately 
  6.1   after the filing of an order of the court finding the waste.  No 
  6.2   action shall be maintained for a deficiency judgment until the 
  6.3   period of redemption as allowed by section 580.23, or by 
  6.4   sections 584.01 to 584.12, has expired.  
  6.5      Sec. 12.  [584.09] [COURT MAY REVISE AND ALTER TERMS.] 
  6.6      Upon the application of either party before the expiration 
  6.7   of the extended period before the sale or contract termination 
  6.8   and upon the presentation of evidence that the terms for partial 
  6.9   payment fixed by the court are no longer just and reasonable, 
  6.10  the court may revise and alter the terms, in the manner the 
  6.11  changed circumstances and conditions require.  
  6.12     Sec. 13.  [584.10] [HEARING TO BE HELD WITHIN 30 DAYS.] 
  6.13     The hearing on the petition must be held within 30 days 
  6.14  after the filing of the petition.  The order therein must be 
  6.15  made and filed within five days after the hearing.  Review by 
  6.16  the supreme court may be had by certiorari, if application for 
  6.17  the writ is made within 15 days after notice of the order.  The 
  6.18  writ is returnable within 30 days after the filing of the order. 
  6.19     Sec. 14.  [584.11] [LIMITATIONS.] 
  6.20     No postponement or extension shall be ordered under 
  6.21  conditions which would substantially diminish or impair the 
  6.22  value of the contract or obligation of the person against whom 
  6.23  the relief is sought without reasonable allowance to justify the 
  6.24  exercise of the police power authorized in sections 584.01 to 
  6.25  584.12, or which would cause irreparable harm or undue hardship 
  6.26  to any mortgagee, contract vendor, judgment creditor, or their 
  6.27  successors or assigns.  The remedy authorized by sections 584.01 
  6.28  to 584.12 shall be available to a mortgagor or contract vendee 
  6.29  only one time on any piece of property.  
  6.30     Sec. 15.  [584.12] [INCONSISTENT LAWS SUSPENDED.] 
  6.31     Every law, to the extent that it is inconsistent with 
  6.32  sections 584.01 to 584.12 is suspended during the effective 
  6.33  period of sections 584.01 to 584.12.  
  6.34     Sec. 16.  [REPEALER.] 
  6.35     Sections 1 to 15 are repealed effective July 1, 1998, but 
  6.36  any postponement or other relief ordered by a court continues to 
  7.1   be valid for the period ordered by the court.  
  7.2      Sec. 17.  [EFFECTIVE DATE.] 
  7.3      Sections 1 to 15 are effective the day following final 
  7.4   enactment.  Section 16 is effective July 1, 1998.