1.1                          A bill for an act 
  1.2             relating to agriculture; requiring certain disclosures 
  1.3             to a third party signer of a debt instrument; defining 
  1.4             terms; providing a remedy; proposing coding for new 
  1.5             law in Minnesota Statutes, chapter 47. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [47.22] [REQUIRED DISCLOSURE TO THIRD-PARTY 
  1.8   DEBTORS.] 
  1.9      Subdivision 1.  [WRITTEN DISCLOSURE REQUIRED.] A financial 
  1.10  institution may not obtain the signature of a third party on a 
  1.11  debt instrument relating to farm real estate, farm equipment, 
  1.12  farm supplies, or a farm operating loan without first giving the 
  1.13  third party a clear written disclosure of the nature and extent 
  1.14  of the obligations that the third party would be assuming by 
  1.15  signing the debt instrument. 
  1.16     Subd. 2.  [REMEDY.] A financial institution or its assignee 
  1.17  or successor may not enforce a debt instrument against a third 
  1.18  party whose signature was obtained in violation of subdivision 1.
  1.19     Subd. 3.  [DEFINITIONS.] (a) The definitions in this 
  1.20  subdivision apply to this section. 
  1.21     (b) "Debt instrument" means a promissory note, mortgage, 
  1.22  security agreement, bond, or guaranty. 
  1.23     (c) "Farm loan" means a loan for the purpose of financing 
  1.24  or refinancing the purchase of a farm or for farm operating 
  1.25  expenses made to a borrower engaged in farming as defined in 
  2.1   section 500.24, subdivision 2, or the raising of poultry, 
  2.2   whether the borrower is a family farm, family farm corporation, 
  2.3   authorized farm corporation, authorized livestock farm 
  2.4   corporation, family farm partnership, or authorized farm 
  2.5   partnership, as those terms are defined in section 500.24, 
  2.6   subdivision 2. 
  2.7      (d) "Financial institution" means a bank, bank and trust, 
  2.8   trust company with banking powers, savings bank, savings 
  2.9   association, or credit union organized under the laws of this 
  2.10  state or the United States; a Minnesota host state branch of an 
  2.11  out-of-state state-chartered bank as provided for in section 
  2.12  49.411; an industrial loan and thrift under chapter 53; a 
  2.13  regulated lender under chapter 56; an insurance company; the 
  2.14  rural finance authority; a federal farm service agency; a farm 
  2.15  implement dealer; a grain elevator; a supplier of farm-related 
  2.16  building and other supplies; a supplier of feed, seed, or 
  2.17  fertilizer; a mortgage banker; farm credit services; or any 
  2.18  other entity extending credit for farm-related purposes. 
  2.19     (e) "Clear written disclosure of the nature and extent of 
  2.20  the obligations" means the "notice to guarantor" required for 
  2.21  certain loans under Federal Reserve Board Regulation AA, Code of 
  2.22  Federal Regulations, title 12, section 227, provided in a manner 
  2.23  that complies with that regulation.  A financial institution 
  2.24  other than a bank may replace the word "bank" in the notice with 
  2.25  a term appropriate to that financial institution.