1.1                          A bill for an act 
  1.2             relating to real property; establishing disclosure 
  1.3             requirements for sellers of residential real estate; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 513. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [513.60] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For purposes of sections 513.60 to 
  1.9   513.68, the terms defined in this section have the meanings 
  1.10  given them.  
  1.11     Subd. 2.  [PROSPECTIVE BUYER.] "Prospective buyer" means a 
  1.12  person negotiating or offering to acquire for value legal or 
  1.13  equitable title, or the right to acquire legal or equitable 
  1.14  title, to residential real property.  
  1.15     Subd. 3.  [REAL ESTATE LICENSEE.] "Real estate licensee" 
  1.16  means a person licensed under chapter 82.  
  1.17     Subd. 4.  [RESIDENTIAL REAL PROPERTY OR RESIDENTIAL REAL 
  1.18  ESTATE.] "Residential real property" or "residential real 
  1.19  estate" means property occupied as, or intended to be occupied 
  1.20  as, a single-family residence, including a unit in a common 
  1.21  interest community as defined in section 515B.1-103, clause 
  1.22  (10), regardless of whether the unit is in a common interest 
  1.23  community not subject to chapter 515B.  
  1.24     Subd. 5.  [SELLER.] "Seller" means a person who owns legal 
  1.25  or equitable title to residential real property.  
  2.1      Sec. 2.  [513.61] [APPLICABILITY.] 
  2.2      The seller disclosure requirements in sections 513.60 to 
  2.3   513.68 apply to the transfer of any interest in residential real 
  2.4   estate, whether by sale, exchange, deed, contract for deed, 
  2.5   lease with an option to purchase, or any other option.  
  2.6      Sec. 3.  [513.62] [EXCEPTIONS.] 
  2.7      The seller disclosure requirements in sections 513.60 to 
  2.8   513.68 do not apply to any of the following: 
  2.9      (1) real property that is not residential real property; 
  2.10     (2) a gratuitous transfer; 
  2.11     (3) a transfer pursuant to a court order; 
  2.12     (4) a transfer to a government or governmental agency; 
  2.13     (5) a transfer by foreclosure or deed in lieu of 
  2.14  foreclosure; 
  2.15     (6) a transfer to heirs or devisees of a decedent; 
  2.16     (7) a transfer from a cotenant to one or more other 
  2.17  cotenants; 
  2.18     (8) a transfer made to a spouse, parent, grandparent, 
  2.19  child, or grandchild of the seller; 
  2.20     (9) a transfer between spouses resulting from a decree of 
  2.21  marriage dissolution or from a property settlement agreement 
  2.22  incidental to that decree; 
  2.23     (10) a transfer of newly constructed residential property 
  2.24  that has not been inhabited; 
  2.25     (11) an option to purchase a unit in a common interest 
  2.26  community, until exercised; 
  2.27     (12) a transfer to a person who controls or is controlled 
  2.28  by the grantor as those terms are defined with respect to a 
  2.29  declarant under section 515B.1-103, clause (2); 
  2.30     (13) a transfer to a tenant who is in possession of the 
  2.31  residential real property; or 
  2.32     (14) a transfer of special declarant rights under section 
  2.33  515B.3-104.  
  2.34     Sec.  4.  [513.63] [GENERAL DISCLOSURE REQUIREMENTS.] 
  2.35     Subdivision 1.  [CONTENTS.] (a) Before signing an agreement 
  2.36  to sell or transfer residential real property, the seller shall 
  3.1   make a written disclosure to the prospective buyer.  The 
  3.2   disclosure must include all material facts pertaining to adverse 
  3.3   physical conditions in the property of which the seller is aware 
  3.4   that could adversely and significantly affect: 
  3.5      (1) an ordinary buyer's use and enjoyment of the property; 
  3.6   or 
  3.7      (2) any intended use of the property of which the seller is 
  3.8   aware.  
  3.9      (b) The disclosure must be made in good faith and based 
  3.10  upon the best of the seller's knowledge at the time of the 
  3.11  disclosure.  
  3.12     Subd. 2.  [DISCLOSURE TO LICENSEE.] A seller may provide 
  3.13  the written disclosure required under sections 513.60 to 513.68 
  3.14  to a real estate licensee representing or assisting the 
  3.15  prospective buyer.  The written disclosure provided to the real 
  3.16  estate licensee representing or assisting the prospective buyer 
  3.17  is considered to have been provided to the prospective buyer.  
  3.18  If the written disclosure is provided to the real estate 
  3.19  licensee representing or assisting the prospective buyer, the 
  3.20  real estate licensee shall provide a copy to the prospective 
  3.21  buyer.  
  3.22     Sec. 5.  [513.64] [DISCLOSURE NOT REQUIRED.] 
  3.23     Subdivision 1.  [GENERAL.] Section 513.63 does not create a 
  3.24  duty to disclose the fact that residential property:  
  3.25     (1) is or was occupied by an owner or occupant who is or 
  3.26  was suspected to be infected with human immunodeficiency virus 
  3.27  or diagnosed with acquired immunodeficiency syndrome; 
  3.28     (2) was the site of a suicide, accidental death, natural 
  3.29  death, or perceived paranormal activity; or 
  3.30     (3) is located in a neighborhood containing any adult 
  3.31  family home, community-based residential facility, or nursing 
  3.32  home.  
  3.33     Subd. 2.  [OFFENDERS.] Section 513.63 does not create a 
  3.34  duty to disclose information regarding an offender who is 
  3.35  required to register under section 243.166, or about whom 
  3.36  notification is made under that section, if the seller, in a 
  4.1   timely manner, provides a written notice that information about 
  4.2   the predatory offender registry and persons registered with the 
  4.3   registry may be obtained by contacting the local law enforcement 
  4.4   agency where the property is located or the department of 
  4.5   corrections.  
  4.6   This section does not create a duty to disclose any facts 
  4.7   described in subdivision 1 and this subdivision for property 
  4.8   that is not residential real property.  
  4.9      Subd. 3.  [INSPECTIONS.] (a) Except as provided in 
  4.10  paragraph (b), a seller is not required to disclose information 
  4.11  relating to the physical condition of the real property if a 
  4.12  written report that discloses the information has been prepared 
  4.13  by a qualified third party and provided to the prospective 
  4.14  buyer.  For purposes of this paragraph, "qualified third party" 
  4.15  means a federal, state, or local governmental agency, or any 
  4.16  person whom the seller, or prospective buyer, reasonably 
  4.17  believes has the expertise necessary to meet the industry 
  4.18  standards of practice for the type of inspection or 
  4.19  investigation that has been conducted by the third party in 
  4.20  order to prepare the written report.  
  4.21     (b) A seller shall disclose to the prospective buyer 
  4.22  material facts known by the seller that contradict any 
  4.23  information included in a written report under paragraph (a) if 
  4.24  a copy of the report is provided to the seller.  
  4.25     Sec. 6.  [513.65] [LIABILITY FOR ERROR, INACCURACY, OR 
  4.26  OMISSION.] 
  4.27     Subdivision 1.  [NO LIABILITY.] Unless the prospective 
  4.28  buyer and seller agree to the contrary in writing, a seller is 
  4.29  not liable for any error, inaccuracy, or omission of any 
  4.30  information delivered under sections 513.60 to 513.68 if the 
  4.31  error, inaccuracy, or omission was not within the personal 
  4.32  knowledge of the seller, or was based entirely on information 
  4.33  provided by other persons as specified in section 513.64, 
  4.34  subdivision 3, and ordinary care was exercised in transmitting 
  4.35  the information.  It is not a violation of sections 513.60 to 
  4.36  513.68 if the seller fails to disclose information that could be 
  5.1   obtained only through inspection or observation of inaccessible 
  5.2   portions of the real estate or could be discovered only by a 
  5.3   person with expertise in a science or trade beyond the knowledge 
  5.4   of the seller.  
  5.5      Subd. 2.  [LIABILITY.] A seller who fails to make a 
  5.6   disclosure as required by sections 513.60 to 513.68 and was 
  5.7   aware of the condition of the real property is liable to the 
  5.8   prospective buyer.  A person injured by a violation of this 
  5.9   section may bring a civil action and recover damages and receive 
  5.10  other equitable relief as determined by the court.  An action 
  5.11  under this subdivision must be commenced within two years after 
  5.12  the date on which the prospective buyer closed the purchase or 
  5.13  transfer of the real property. 
  5.14     Subd. 3.  [OTHER ACTIONS.] Nothing in sections 513.60 to 
  5.15  513.68 precludes liability for an action based on fraud, 
  5.16  negligent misrepresentation, or other actions allowed by law. 
  5.17     Sec. 7.  [513.66] [AMENDMENT TO DISCLOSURE.] 
  5.18     Subdivision 1.  [NOTICE.] A seller must notify the 
  5.19  prospective buyer in writing as soon as reasonably possible, but 
  5.20  in any event before closing, if the seller learns that the 
  5.21  seller's disclosure required by section 513.63 was inaccurate or 
  5.22  if there is any loss or damage to the residential real property 
  5.23  between the date of disclosure and the date of closing.  
  5.24     Subd. 2.  [FAILURE TO NOTIFY; LIABILITY.] A seller who 
  5.25  fails to notify the prospective buyer of any amendments to the 
  5.26  initial disclosure required under subdivision 1 is liable to the 
  5.27  prospective buyer as provided in section 513.65.  
  5.28     Sec. 8.  [513.67] [TRANSFER NOT INVALIDATED.] 
  5.29     A transfer subject to sections 513.60 to 513.68 is not 
  5.30  invalidated solely because of the failure of any person to 
  5.31  comply with a provision of those sections.  This section does 
  5.32  not prevent a court from ordering a rescission of the transfer.  
  5.33     Sec. 9.  [513.68] [WAIVER.] 
  5.34     The written disclosure required under sections 513.60 to 
  5.35  513.68 may be waived if the seller and the prospective buyer 
  5.36  agree in writing.  Waiver of the disclosure required under 
  6.1   sections 513.60 to 513.68 does not waive, limit, or abridge any 
  6.2   obligation for seller disclosure created by any other law. 
  6.3      Sec. 10.  [EFFECTIVE DATE.] 
  6.4      This act is effective January 1, 2003, and applies to 
  6.5   purchase agreements entered into on or after that date.