1.1                          A bill for an act 
  1.2             relating to real property; modifying requirements for 
  1.3             recording contracts for deed; specifying minimum 
  1.4             contents of contracts for deed; establishing a civil 
  1.5             cause of action; providing for preparation of a sample 
  1.6             form and educational materials; appropriating money; 
  1.7             amending Minnesota Statutes 1998, section 507.235, 
  1.8             subdivisions 1 and 2; proposing coding for new law in 
  1.9             Minnesota Statutes, chapter 559. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1998, section 507.235, 
  1.12  subdivision 1, is amended to read: 
  1.13     Subdivision 1.  [FILING REQUIRED.] All contracts for 
  1.14  deed executed on or after January 1, 1984, shall be recorded by 
  1.15  the vendee vendor within four months in the office of the county 
  1.16  recorder or registrar of titles in the county in which the land 
  1.17  is located.  Any other person may record the contract.  This 
  1.18  filing period may be extended if failure to pay the property tax 
  1.19  due in the current year on a parcel as required in section 
  1.20  272.121 has prevented filing and recording of the contract.  In 
  1.21  the case of a parcel that was divided and classified under 
  1.22  section 273.13 as class 1a or 1b, the period may be extended to 
  1.23  October 31 of the year in which the sale occurred, and in the 
  1.24  case of a parcel that was divided and classified under section 
  1.25  273.13 as class 2a, the period may be extended to November 30 of 
  1.26  the year in which the sale occurred. 
  1.27     A person receiving an assignment of a vendee who assigns 
  2.1   the vendee's interest in a contract for deed that is transferred 
  2.2   on or after January 1, 1989, shall record the assignment within 
  2.3   four months of the date of transfer in the office of the county 
  2.4   recorder or registrar of titles in the county in which the land 
  2.5   is located.  For the purpose of this section, "assignment" means 
  2.6   an assignment or other transfer of all or part of a vendee's 
  2.7   interest in a contract for deed.  Any other person may record an 
  2.8   assignment.  
  2.9      Sec. 2.  Minnesota Statutes 1998, section 507.235, 
  2.10  subdivision 2, is amended to read: 
  2.11     Subd. 2.  [PENALTY FOR FAILURE TO FILE.] (a) A vendee 
  2.12  person who fails to record a contract for deed or assignment of 
  2.13  a vendee's interest in a contract for deed, as required by 
  2.14  subdivision 1, is subject to a civil penalty, payable under 
  2.15  subdivision 5, equal to two percent of the principal amount of 
  2.16  the contract debt.  Payments of the penalty shall be deposited 
  2.17  in the general fund of the county.  The penalty may be enforced 
  2.18  as a lien against the vendee's interest in the property.  If a 
  2.19  vendor fails to record the contract for deed as required by 
  2.20  subdivision 1, the vendee has an unconditional right to cancel 
  2.21  the contract and receive an immediate refund of all payments and 
  2.22  deposits made on account of or in contemplation of the contract, 
  2.23  if the vendee exercises the right to cancel before the vendor 
  2.24  records the contract.  Notwithstanding section 559.21, 
  2.25  subdivision 2a, if the vendor fails to record the contract for 
  2.26  deed as required by subdivision 1, the termination period for 
  2.27  the contract will be six months. 
  2.28     (b) A person receiving an assignment of a vendee's interest 
  2.29  in a contract for deed who fails to record the assignment as 
  2.30  required by subdivision 1 is subject to a civil penalty, payable 
  2.31  under subdivision 5, equal to two percent of the original 
  2.32  principal amount of the contract debt.  Payments of the penalty 
  2.33  must be deposited in the general fund of the county.  The 
  2.34  penalty may be enforced as a lien against the vendee's interest 
  2.35  in the property. 
  2.36     Sec. 3.  [559.2095] [CONTENTS OF CONTRACT FOR DEED; CIVIL 
  3.1   ACTION.] 
  3.2      Subdivision 1.  [MINIMUM CONTENTS.] A contract for the 
  3.3   conveyance of real estate or an interest in real estate executed 
  3.4   on or after August 1, 1999, must be executed in duplicate and a 
  3.5   copy must be provided to the vendor and vendee.  The contract 
  3.6   must contain the following provisions: 
  3.7      (1) the full names and post office addresses of all the 
  3.8   parties to the contract; 
  3.9      (2) the date the contract is signed by each party; 
  3.10     (3) a legal description of the property conveyed; 
  3.11     (4) the sales price of the property conveyed; 
  3.12     (5) any charges or fees for services included in the 
  3.13  contract separate from the sales price; 
  3.14     (6) the amount of the vendee's down payment; 
  3.15     (7) the principal balance owed by the vendee, which is the 
  3.16  sum of the amounts described in clauses (4) and (5), less the 
  3.17  amount described in clause (6); 
  3.18     (8) the amount and due date of each installment payment and 
  3.19  the total number of installment payments; 
  3.20     (9) the interest rate on the unpaid balance and the method 
  3.21  of determining the interest rate; 
  3.22     (10) a conspicuous statement of any encumbrances against 
  3.23  the property, including a statement of any pending order of any 
  3.24  public agency or other matters of public record affecting the 
  3.25  property; 
  3.26     (11) a statement that explains that the contract is not a 
  3.27  mortgage and that the vendee does not obtain title to the 
  3.28  property until the purchase price is paid in full; 
  3.29     (12) a statement of the rights of the vendee to cure a 
  3.30  default by the vendee; 
  3.31     (13) a provision that the vendor provide evidence of title 
  3.32  by copy of a deed, or other evidence, at the time of the 
  3.33  execution of the agreement and, if the vendor is not prepared to 
  3.34  deliver a full warranty deed on completion of the contract, a 
  3.35  description of the deed that the vendor will deliver on 
  3.36  completion; 
  4.1      (14) a provision that, if the vendor defaults on any 
  4.2   mortgage on the property, the vendee may pay on the mortgage and 
  4.3   receive credit on the contract; 
  4.4      (15) a provision that the vendee has the right to 
  4.5   accelerate or prepay any installment payments without penalty, 
  4.6   unless agreed to the contrary; 
  4.7      (16) a clear and conspicuous provision above the place for 
  4.8   the signature of the vendee that acknowledges receipt by the 
  4.9   vendee of a copy of the contract signed by the vendor; 
  4.10     (17) a disclosure, with respect to the six-month period 
  4.11  prior to the date of the contract, of every transfer of title to 
  4.12  the property, the sale price of each transfer, and the 
  4.13  substantiated cost to the vendor of repairs or improvements; 
  4.14     (18) provisions stating clearly: 
  4.15     (i) any collateral security taken for the vendee's 
  4.16  obligation under the contract; and 
  4.17     (ii) whether the vendor has received any written notice 
  4.18  from any public agency requiring any repairs or improvements to 
  4.19  be made to the property described in the contract; 
  4.20     (19) a disclosure of any major structural defect, immediate 
  4.21  hazard to health or safety, or violation of any minimum housing 
  4.22  code or standard under law of which the vendor has, or 
  4.23  reasonably should have, knowledge; 
  4.24     (20) a disclosure of the vendee's right to obtain, at the 
  4.25  vendee's expense, an independent appraisal of the real estate 
  4.26  that is the subject of the sale; 
  4.27     (21) a disclosure of the vendor's duty to record the 
  4.28  contract under state law and of the vendee's rights if the 
  4.29  contract is not recorded by the vendor as required by law; 
  4.30     (22) a disclosure of any delinquent taxes owed on the 
  4.31  property, along with the current assessed valuation for tax 
  4.32  purposes; and 
  4.33     (23) a notice to the vendee that the property may be 
  4.34  entitled to a homestead tax rate if the contract is recorded. 
  4.35     Subd. 2.  [CIVIL CAUSE OF ACTION.] A vendee under a 
  4.36  contract for the conveyance of real estate or an interest in 
  5.1   real estate has a civil cause of action against a vendor if the 
  5.2   contract does not comply with subdivision 1 or if the vendor 
  5.3   fails to comply with section 507.235 or other law applicable to 
  5.4   the contract.  The vendee is entitled to damages, costs, and 
  5.5   attorney fees and may request recission of the contract. 
  5.6      Subd. 3.  [SAMPLE CONTRACT AND EDUCATIONAL MATERIALS.] The 
  5.7   attorney general may approve a sample contract for deed form and 
  5.8   educational materials for vendors and vendees, informing them in 
  5.9   plain English of the requirements of state law affecting 
  5.10  contracts for deed.  The attorney general shall approve a sample 
  5.11  contract for deed form and educational materials if they comply 
  5.12  with state law and are prepared with input from a variety of 
  5.13  interest groups, including real estate attorneys, attorneys who 
  5.14  represent low-income individuals, realtors, and housing 
  5.15  organizations. 
  5.16     Sec. 4.  [APPROPRIATION.] 
  5.17     $....... is appropriated from the general fund to the 
  5.18  attorney general for purposes of printing and distributing 
  5.19  sample contracts for deed and educational materials under 
  5.20  section 3. 
  5.21     Sec. 5.  [APPLICATION.] 
  5.22     Sections 1 to 3 apply to contracts for deed executed on or 
  5.23  after August 1, 1999.