1.1                          A bill for an act 
  1.2             relating to real property; title insurance; modifying 
  1.3             mortgage release certificate language to include 
  1.4             assignment of rents and profits; modifying common 
  1.5             interest ownership resale disclosure certificate 
  1.6             requirements; amending Minnesota Statutes 1998, 
  1.7             sections 507.401, subdivisions 1, 3, 6, and 7; and 
  1.8             559.17, by adding a subdivision; Minnesota Statutes 
  1.9             1999 Supplement, section 515B.4-107. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1998, section 507.401, 
  1.12  subdivision 1, is amended to read: 
  1.13     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  1.14  subdivision apply to this section. 
  1.15     (b) "Assignment of rents and profits" means an assignment, 
  1.16  whether in a separate document or in a mortgage, of any of the 
  1.17  benefits accruing under a recorded or unrecorded lease or 
  1.18  tenancy existing, or subsequently created, on property 
  1.19  encumbered by a mortgage, which is given as additional security 
  1.20  for the debt secured by the mortgage. 
  1.21     (c) "Mortgage" means a mortgage or mortgage lien, including 
  1.22  any assignment of rents and profits given as additional security 
  1.23  for the debt secured by that lien, on an interest in real 
  1.24  property in this state given to secure a loan in the original 
  1.25  principal amount of $500,000 $1,500,000 or less. 
  1.26     (c) (d) "Mortgagee" means: 
  1.27     (1) the grantee of a mortgage; or 
  2.1      (2) if a mortgage has been assigned of record, the last 
  2.2   person to whom the mortgage has been assigned of record. 
  2.3      (d) (e) "Mortgage servicer" means the last person to whom a 
  2.4   mortgagor or the mortgagor's successor in interest has been 
  2.5   instructed by a mortgagee to send payments on a loan secured by 
  2.6   a mortgage.  A person transmitting a payoff statement is the 
  2.7   mortgage servicer for the mortgage described in the payment 
  2.8   payoff statement.  
  2.9      (e) (f) "Mortgagor" means the grantor of a mortgage. 
  2.10     (g) "Partial release" means the release of specified 
  2.11  parcels of land from a mortgage. 
  2.12     (f) (h) "Payoff statement" means a statement of the amount 
  2.13  of: 
  2.14     (1) the unpaid balance of a loan secured by a mortgage, 
  2.15  including principal, interest, and any other charges properly 
  2.16  due under or secured by the mortgage;, and 
  2.17     (2) interest on a per day basis for the unpaid balance; or 
  2.18     (2) the portion of the unpaid balance of the loan secured 
  2.19  by the mortgage required by the mortgagee or mortgage servicer 
  2.20  to be paid as a condition for the issuance of a partial release. 
  2.21     (g) (i) "Record" means to record with the county recorder 
  2.22  or file with the registrar of titles. 
  2.23     (h) (j) "Title insurance company" means a corporation or 
  2.24  other business entity authorized and licensed to transact the 
  2.25  business of insuring titles to interests in real property in 
  2.26  this state under chapter 68A. 
  2.27     Sec. 2.  Minnesota Statutes 1998, section 507.401, 
  2.28  subdivision 3, is amended to read: 
  2.29     Subd. 3.  [CONTENTS.] A certificate of release executed 
  2.30  under this section must contain substantially all of the 
  2.31  following: 
  2.32     (1) the name of the mortgagor, the name of the original 
  2.33  mortgagee, and, if applicable, the mortgage servicer, the date 
  2.34  of the mortgage, the date of recording, and volume and page or 
  2.35  document number in the real property records where the mortgage 
  2.36  is recorded, together with similar information for the last 
  3.1   recorded assignment of the mortgage; 
  3.2      (2) if applicable, the date of any assignment of rents and 
  3.3   profits, the date of its recording, and its volume and page or 
  3.4   document number in the real property records where it has been 
  3.5   recorded or filed, together with similar information for the 
  3.6   last recorded assignment thereof; 
  3.7      (3) a statement that the mortgage was in the original 
  3.8   principal amount of $500,000 $1,500,000 or less; 
  3.9      (3) (4) a statement that the person executing the 
  3.10  certificate of release is an officer or a duly appointed agent 
  3.11  of a title insurance company authorized and licensed to transact 
  3.12  the business of insuring titles to interests in real property in 
  3.13  this state under chapter 68A; 
  3.14     (4) (5) a statement that the certificate of release is made 
  3.15  on behalf of the mortgagor or a person who acquired title from 
  3.16  the mortgagor to all or a part of the property described in the 
  3.17  mortgage; 
  3.18     (5) (6) a statement that the mortgagee or mortgage servicer 
  3.19  provided a payoff statement which was used to make full or 
  3.20  partial payment in full of the unpaid balance of the loan 
  3.21  secured by the mortgage; and 
  3.22     (6) (7) a statement that full or partial payment in full of 
  3.23  the unpaid balance of the loan secured by the mortgage was made 
  3.24  in accordance with the written or verbal payoff statement; and 
  3.25     (8) where the certificate of release affects only a portion 
  3.26  of the land encumbered by the mortgage, a legal description of 
  3.27  the portion being released. 
  3.28     Sec. 3.  Minnesota Statutes 1998, section 507.401, 
  3.29  subdivision 6, is amended to read: 
  3.30     Subd. 6.  [RECORDING.] If a mortgage is recorded in more 
  3.31  than one county and a certificate of release is recorded in one 
  3.32  of them, a certified copy of the certificate of release may be 
  3.33  recorded in another county with the same effect as the 
  3.34  original.  In all cases, the certificate of release shall be 
  3.35  entered and indexed as satisfactions of mortgage and releases of 
  3.36  assignments of rents and profits are entered and indexed. 
  4.1      Sec. 4.  Minnesota Statutes 1998, section 507.401, 
  4.2   subdivision 7, is amended to read: 
  4.3      Subd. 7.  [APPLICATION.] This section applies only to a 
  4.4   mortgage in the original principal amount of $500,000 $1,500,000 
  4.5   or less. 
  4.6      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
  4.7   515B.4-107, is amended to read: 
  4.8      515B.4-107 [RESALE OF UNITS.] 
  4.9      (a) In the event of a resale of a unit by a unit owner 
  4.10  other than a declarant, unless exempt under section 
  4.11  515B.4-101(c), the unit owner shall furnish to a purchaser, 
  4.12  before execution of any purchase agreement for a unit or 
  4.13  otherwise before conveyance, the following documents relating to 
  4.14  the association or to the master association, if applicable: 
  4.15     (1) copies of the declaration (other than any CIC plat), 
  4.16  the articles of incorporation and bylaws, any rules and 
  4.17  regulations, and any amendments thereto; 
  4.18     (2) the organizational and operating documents relating to 
  4.19  the master association, if any; and 
  4.20     (3) a resale disclosure certificate from the association 
  4.21  dated not more than 90 days prior to the date of the purchase 
  4.22  agreement or the date of conveyance, whichever is earlier, 
  4.23  containing the information set forth in subsection (b). 
  4.24     (b) The resale disclosure certificate shall contain the 
  4.25  following information must be in substantially the following 
  4.26  form: 
  4.27     (1) a statement disclosing any right of first refusal or 
  4.28  other restraint on the free alienability of the unit contained 
  4.29  in the declaration, articles of incorporation, bylaws, rules and 
  4.30  regulations, or any amendment thereof; 
  4.31     (2) a statement setting forth:  
  4.32     (i) the installments of annual common expense assessments 
  4.33  payable with respect to the unit, and the payment schedule; 
  4.34     (ii) the installments of special common expense 
  4.35  assessments, if any, payable with respect to the unit, and the 
  4.36  payment schedule; and 
  5.1      (iii) any plan approved by the association for levying 
  5.2   certain common expense assessments against fewer than all the 
  5.3   units pursuant to section 515B.3-115, subsection (h), and the 
  5.4   amount and payment schedule for any such common expenses payable 
  5.5   with respect to the unit; 
  5.6      (3) a statement of any fees or charges other than 
  5.7   assessments payable by unit owners; 
  5.8      (4) a statement of any extraordinary expenditures approved 
  5.9   by the association, and not yet assessed, for the current and 
  5.10  two succeeding fiscal years; 
  5.11     (5) a statement of the amount of any reserves for 
  5.12  maintenance, repair or replacement and of any portions of those 
  5.13  reserves designated by the association for any specified 
  5.14  projects or uses; 
  5.15     (6) the most recent regularly prepared balance sheet and 
  5.16  income and expense statement of the association; 
  5.17     (7) the current budget of the association; 
  5.18     (8) a statement of any unsatisfied judgments against the 
  5.19  association and the status of any pending suits in which the 
  5.20  association is party; 
  5.21     (9) a detailed description of the insurance coverage 
  5.22  provided for the benefit of unit owners, including a statement 
  5.23  as to which, if any, of the items referred to in section 
  5.24  515B.3-113, subsection (b), are insured by the association; 
  5.25     (10) a statement as to whether the board has notified the 
  5.26  unit owner (i) that any alterations or improvements to the unit 
  5.27  or to the limited common elements assigned thereto violate any 
  5.28  provision of the declaration or (ii) that the unit is in 
  5.29  violation of any governmental statute, ordinance, code or 
  5.30  regulation; 
  5.31     (11) a statement of the remaining term of any leasehold 
  5.32  estate affecting the common interest community and the 
  5.33  provisions governing any extension or renewal thereof; and 
  5.34     (12) any other matters affecting the unit or the unit 
  5.35  owner's obligations with respect to the unit which the 
  5.36  association deems material. 
  6.1                     COMMON INTEREST COMMUNITY
  6.2                   RESALE DISCLOSURE CERTIFICATE
  6.3   Name of Common Interest Community:.............................. 
  6.4   Name of Association:............................................ 
  6.5   Address of Association:......................................... 
  6.6   Unit Number(s) (include principal unit and any garage, storage, 
  6.7   or other auxiliary unit(s)):.....................................
  6.8      The following information is furnished by the association 
  6.9   named above according to Minnesota Statutes, section 515B.4-107. 
  6.10     1.  There is no right of first refusal or other restraint 
  6.11  on the free alienability of the above unit(s) contained in the 
  6.12  declaration, bylaws, rules and regulations, or any amendment to 
  6.13  them, except as follows:........................................ 
  6.14  ................................................................
  6.15  ................................................................
  6.16  ................................................................
  6.17     2.  The following periodic installments of common expense 
  6.18  assessments and special assessments are payable with respect to 
  6.19  the above unit(s): 
  6.20       a.  Annual assessment 
  6.21           installments:      $.......   Due: .............
  6.22       b.  Special assessment
  6.23           installments:      $.......   Due: .............
  6.24       c.  Unpaid assessments, fines, or other charges:
  6.25             (1)   Annual          $.......
  6.26             (2)   Special         $.......
  6.27             (3)   Fines           $.......
  6.28             (4)   Other Charges   $.......
  6.29       d.  The association has/has not (strike one) approved
  6.30           a plan for levying certain common expense
  6.31           assessments against fewer than all the units
  6.32           according to Minnesota Statutes, section 515B.3-115,
  6.33           subsection (e).  If a plan is approved, a description
  6.34           of the plan is attached to this certificate.
  6.35     3.  In addition to the amounts due under paragraph 2, the 
  6.36  following additional fees or charges other than assessments are 
  7.1   payable by unit owners (include late payment charges, user fees, 
  7.2   etc.):..........................................................
  7.3   ................................................................
  7.4   ................................................................
  7.5      4.  There are no extraordinary expenditures approved by the 
  7.6   association, and not yet assessed, for the current and two 
  7.7   succeeding fiscal years, except as follows:..................... 
  7.8   ................................................................
  7.9   ................................................................
  7.10     5.  The association has reserved the following amounts for 
  7.11  maintenance, repair, or replacement:............................ 
  7.12  ................................................................
  7.13  ................................................................
  7.14  The following portions of these reserves are designated for the 
  7.15  following specified projects or uses:........................... 
  7.16  ................................................................ 
  7.17     6.  The following documents are furnished with this 
  7.18  certificate according to statute: 
  7.19       a.  The most recent regularly prepared balance sheet and
  7.20           income and expense statement of the association.
  7.21       b.  The current budget of the association.
  7.22     7.  There are no unsatisfied judgments against the 
  7.23  association, except as follows (identify creditor and amount):.. 
  7.24  ................................................................
  7.25  ................................................................
  7.26     8.  There are no pending lawsuits to which the association 
  7.27  is a party, except as follows (identify and summarize status):.. 
  7.28  ................................................................ 
  7.29  ................................................................
  7.30  ................................................................
  7.31     9.  Description of insurance coverages: 
  7.32     a.  The association provides the following insurance 
  7.33  coverage for the benefit of unit owners:  (Reference may be made 
  7.34  to applicable sections of the declaration or bylaws; however, 
  7.35  any additional coverages should be described in this space) 
  7.36  ................................................................
  8.1   ................................................................
  8.2   ................................................................
  8.3      b.  The following described fixtures, decorating items, or 
  8.4   construction items within the unit referred to in Minnesota 
  8.5   Statutes, section 515B.3-113, subsection (b), are insured by the 
  8.6   association (check as applicable):  
  8.7   ..._____Ceiling or wall finishing materials                     
  8.8   ..._____Floor coverings                                         
  8.9   ..._____Cabinetry                                               
  8.10  ..._____Finished millwork                                       
  8.11  ..._____Electrical or plumbing fixtures serving a single unit   
  8.12  ..._____Built-in appliances                                     
  8.13  ..._____Improvements and betterments as originally constructed  
  8.14  ..._____Additional improvements and betterments installed by
  8.15             unit owners                                          
  8.16     10.  The board of directors of the association has not 
  8.17  notified the unit owner (i) that any alterations or improvements 
  8.18  to the unit or to the limited common elements assigned to it 
  8.19  violate any provision of the declaration; or (ii) that the unit 
  8.20  is in violation of any governmental statute, ordinance, code, or 
  8.21  regulation, except as follows:...................................
  8.22  .................................................................
  8.23     11.  The remaining term of any leasehold estate affecting 
  8.24  the common interest community and the premises governing any 
  8.25  extension or renewal of it are as follows:...................... 
  8.26  ................................................................
  8.27  ................................................................
  8.28     12.  In addition to the above, the following matters 
  8.29  affecting the unit or the unit owner's obligations with respect 
  8.30  to the unit are deemed material. 
  8.31       I hereby certify that the foregoing information and
  8.32  statements are true and correct as of .............
  8.33                                          (Date)
  8.34                                      By:  .......................
  8.35                                      Title: .....................
  8.36                                      (Association representative)
  9.1                                       Address:....................
  9.2                                       Phone Number:...............
  9.3                              RECEIPT 
  9.4   In addition to the foregoing information furnished by the 
  9.5   association, the unit owner is obligated to furnish to the 
  9.6   purchaser before execution of any purchase agreement for a unit 
  9.7   or otherwise before conveyance, copies of the following 
  9.8   documents relating to the association or to the master 
  9.9   association (as applicable):  the declaration (other than any 
  9.10  common interest community plat), articles of incorporation, 
  9.11  bylaws, rules and regulations (if any), and any amendments to 
  9.12  these documents.  Receipt of the foregoing documents, and the 
  9.13  resale disclosure certificate, is acknowledged by the 
  9.14  undersigned buyer(s). 
  9.15       Dated:  ............        .........................
  9.16                                   (Buyer)
  9.17                                   .........................
  9.18                                   (Buyer)
  9.19     (c) If the association is subject to a master association 
  9.20  to which has been delegated the association's powers under 
  9.21  section 515B.3-102(a)(2), then the financial information 
  9.22  required to be disclosed under subsection (b) may be disclosed 
  9.23  on a consolidated basis. 
  9.24     (d) The association, within ten days after a request by a 
  9.25  unit owner, or the unit owner's authorized representative, shall 
  9.26  furnish the certificate required in subsection (a).  The 
  9.27  association may charge a reasonable fee for furnishing the 
  9.28  certificate and any association documents related thereto.  A 
  9.29  unit owner providing a certificate pursuant to subsection (a) is 
  9.30  not liable to the purchaser for any erroneous information 
  9.31  provided by the association and included in the certificate. 
  9.32     (e) A purchaser is not liable for any unpaid common expense 
  9.33  assessments, including special assessments, if any, not set 
  9.34  forth in the certificate required in subsection (a).  A 
  9.35  purchaser is not liable for the amount by which the annual or 
  9.36  special assessments exceed the amount of annual or special 
 10.1   assessments stated in the certificate for assessments payable in 
 10.2   the year in which the certificate was given, except to the 
 10.3   extent of any increases subsequently approved in accordance with 
 10.4   the declaration or bylaws.  A unit owner is not liable to a 
 10.5   purchaser for the failure of the association to provide the 
 10.6   certificate, or a delay by the association in providing the 
 10.7   certificate in a timely manner. 
 10.8      Sec. 6.  Minnesota Statutes 1998, section 559.17, is 
 10.9   amended by adding a subdivision to read: 
 10.10     Subd. 3.  [SATISFACTION, RELEASE, AND ASSIGNMENT.] (a) An 
 10.11  assignment of rents and profits under this section, whether in 
 10.12  the mortgage or in a separate instrument, shall expire: 
 10.13     (1) with respect to the rents and profits from all of the 
 10.14  mortgaged property, upon recording in the office of the county 
 10.15  recorder or filing in the office of the registrar of titles of 
 10.16  the county where the mortgaged property is located, of a 
 10.17  satisfaction of the mortgage or a certificate of release 
 10.18  complying with section 507.401 in lieu of a satisfaction of the 
 10.19  mortgage; or 
 10.20     (2) with respect to the rents and profits from a portion of 
 10.21  the mortgaged property, upon recording in the office of the 
 10.22  county recorder or filing in the office of the registrar of 
 10.23  titles of the county where that portion of the mortgaged 
 10.24  property is located, of a release of that portion of the 
 10.25  mortgaged property from the lien of the mortgage, or a 
 10.26  certificate of release complying with section 507.401 in lieu of 
 10.27  a release of that portion of the mortgaged property. 
 10.28  No separate reassignment of the rents and profits or 
 10.29  satisfaction or release of the assignment is required. 
 10.30     (b) An assignment of a mortgage, whether or not the 
 10.31  mortgage mentions an assignment of rents and profits, is 
 10.32  sufficient to assign both the mortgage and the assignment of 
 10.33  rents and profits permitted by this subdivision which secures 
 10.34  the debt secured by the mortgage, and no separate assignment of 
 10.35  the assignment of rents and profits shall be required. 
 10.36     Sec. 7.  [APPLICATION.] 
 11.1      Sections 1, 2, 3, 4, and 6 apply to all mortgages and 
 11.2   assignments of rents and profits, whenever executed, except as 
 11.3   to those mortgages and assignments of rents and profits, the 
 11.4   rights to which have been fully adjudicated or which are the 
 11.5   subject of pending litigation as of the effective date of this 
 11.6   act.