<a id="pl.1.3"></a><var>1.3</var>foreclosure;amending Minnesota Statutes 2006, sections 504B.151; 504B.178, <br/>
<a id="pl.1.4"></a><var>1.4</var>subdivision 8; 504B.285, subdivision 1.<br/>
<a id="pl.1.5"></a><var>1.5</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.0.1.0"></a><a id="pl.1.6"></a><var>1.6</var>    Section 1. Minnesota Statutes 2006, section 504B.151, is amended to read:<br/>
<a id="pl.1.7"></a><var>1.7</var><b>504B.151 RESTRICTION ON RESIDENTIAL LEASE TERMS FOR </b><br/>
<a id="pl.1.8"></a><var>1.8</var><b>BUILDINGS IN FINANCIAL DISTRESS</b><b>; REQUIRED NOTICE OF PENDING </b><br/>
<a id="pl.1.9"></a><var>1.9</var><b>FORECLOSURE</b><b>.</b><br/>
<a id="pl.1.10"></a><var>1.10</var>    Subdivision 1. <b>Limitation on lease and notice to tenant.</b> (a) Once a landlord <br/>
<a id="pl.1.11"></a><var>1.11</var>has received notice of a contract for deed cancellation under section 
         <statute_ref>559.21</statute_ref> or notice of <br/>
<a id="pl.1.12"></a><var>1.12</var>a mortgage foreclosure sale under chapter 580 or 582, the landlord may only enter into <br/>
<a id="pl.1.13"></a><var>1.13</var>(i) a periodic residential lease agreement with a term of not more than two months or <br/>
<a id="pl.1.14"></a><var>1.14</var>the time remaining in the contract cancellation period or the mortgagor's redemption <br/>
<a id="pl.1.15"></a><var>1.15</var>period, whichever is less or (ii) a fixed term residential tenancy not extending beyond the <br/>
<a id="pl.1.16"></a><var>1.16</var>cancellation period or the landlord's period of redemption until: <br/>
<a id="pl.1.17"></a><var>1.17</var>(1) the contract for deed has been reinstated or paid in full;<br/>
<a id="pl.1.18"></a><var>1.18</var>(2) the mortgage default has been cured and the mortgage reinstated;<br/>
<a id="pl.1.19"></a><var>1.19</var>(3) the mortgage has been satisfied;<br/>
<a id="pl.1.20"></a><var>1.20</var>(4) the property has been redeemed from a foreclosure sale; or<br/>
<a id="pl.1.21"></a><var>1.21</var>(5) a receiver has been appointed.<br/>
<a id="pl.1.22"></a><var>1.22</var>(b) Before entering into a lease under this section and accepting any rent or security <br/>
<a id="pl.1.23"></a><var>1.23</var>deposit from a tenant, the landlord must notify the prospective tenant in writing that the <br/>
<a id="pl.1.24"></a><var>1.24</var>landlord has received notice of a contract for deed cancellation or notice of a mortgage <br/>
<a id="pl.2.1"></a><var>2.1</var>foreclosure sale as appropriate, and the date on which the contract cancellation period or <br/>
<a id="pl.2.2"></a><var>2.2</var>the mortgagor's redemption period ends.<br/>
<a id="pl.2.3"></a><var>2.3</var>(c) This section does not apply to a manufactured home park as defined in section <br/>
<statute_ref><a id="pl.2.4"></a><var>2.4</var>327C.01, subdivision 5
         </statute_ref>. <br/>
<a id="pl.2.5"></a><var>2.5</var>    Subd. 2. <b>Exception allowing a longer term lease.</b> This section does not apply if:<br/>
<a id="pl.2.6"></a><var>2.6</var>(1) the holder or the mortgagee agrees not to terminate the tenant's lease other than <br/>
<a id="pl.2.7"></a><var>2.7</var>for lease violations for at least one year from the commencement of the tenancy; and<br/>
<a id="pl.2.8"></a><var>2.8</var>(2) the lease does not require the tenant to prepay rent for any month commencing <br/>
<a id="pl.2.9"></a><var>2.9</var>after the end of the cancellation or redemption period, so that the rent payment would be <br/>
<a id="pl.2.10"></a><var>2.10</var>due prior to the end of the cancellation or redemption period.<br/>
<a id="pl.2.11"></a><var>2.11</var>For the purposes of this section, a holder means a contract for deed vendor or a <br/>
<a id="pl.2.12"></a><var>2.12</var>holder of the sheriff's certificate of sale or any assignee of the contract for deed vendor or <br/>
<a id="pl.2.13"></a><var>2.13</var>of the holder of the sheriff's certificate of sale.<br/>
<a id="pl.2.14"></a><var>2.14</var>    Subd. 3. <b>Transfer of tenancy by operation of law.</b> (a) A tenant who enters into a <br/>
<a id="pl.2.15"></a><var>2.15</var>lease under subdivision 2 is:<br/>
<a id="pl.2.16"></a><var>2.16</var>(1) deemed by operation of law to become the tenant of the holder immediately upon <br/>
<a id="pl.2.17"></a><var>2.17</var>the holder succeeding to the interest of the landlord under the lease; and<br/>
<a id="pl.2.18"></a><var>2.18</var>(2) bound to the holder under all the provisions of the lease for either the balance of <br/>
<a id="pl.2.19"></a><var>2.19</var>the lease term or for one year after the start of the tenancy, whichever occurs first.<br/>
<a id="pl.2.20"></a><var>2.20</var>(b) A tenant who becomes the tenant of the holder under this subdivision is not <br/>
<a id="pl.2.21"></a><var>2.21</var>obligated to pay rent to the holder until the holder mails, by first class mail to the tenant at <br/>
<a id="pl.2.22"></a><var>2.22</var>the property address, written notice that the holder has succeeded to the interest of the <br/>
<a id="pl.2.23"></a><var>2.23</var>landlord. A letter from the holder to the tenant to that effect is prima facie evidence that <br/>
<a id="pl.2.24"></a><var>2.24</var>the holder has succeeded to the interest of the landlord.<br/>
<a id="pl.2.25"></a><var>2.25</var>    Subd. 4. <b>Holder not bound by certain acts.</b> A holder succeeding to an interest in a <br/>
<a id="pl.2.26"></a><var>2.26</var>lease lawfully entered into under subdivision 2 is not: (1) liable for any act or omission <br/>
<a id="pl.2.27"></a><var>2.27</var>of any prior landlord; (2) subject to any offset or defense which the tenant had against <br/>
<a id="pl.2.28"></a><var>2.28</var>any prior landlord; or (3) bound by any modification of the lease entered into under <br/>
<a id="pl.2.29"></a><var>2.29</var>subdivision 2, unless the modification is made with the holder's consent.<br/>
<br/>
<a id="bill.0.2.0"></a><a id="pl.2.30"></a><var>2.30</var>    Sec. 2. Minnesota Statutes 2006, section 504B.178, subdivision 8, is amended to read:<br/>
<a id="pl.2.31"></a><var>2.31</var>    Subd. 8. <b>Withholding rent.</b> No tenant may withhold payment of all or any portion <br/>
<a id="pl.2.32"></a><var>2.32</var>of rent for the last payment period of a residential rental agreement, except an oral or <br/>
<a id="pl.2.33"></a><var>2.33</var>written month to month residential rental agreement concerning which neither the tenant <br/>
<a id="pl.2.34"></a><var>2.34</var>nor landlord has served a notice to quit, or for the last month of a contract for deed <br/>
<a id="pl.2.35"></a><var>2.35</var>cancellation period under section 559.21 or a mortgage foreclosure redemption period <br/>
<a id="pl.3.1"></a><var>3.1</var>under chapter 580 or 582, on the grounds that the deposit should serve as payment for the <br/>
<a id="pl.3.2"></a><var>3.2</var>rent. Withholding all or any portion of rent for the last payment period of the residential <br/>
<a id="pl.3.3"></a><var>3.3</var>rental agreement creates a rebuttable presumption that the tenant withheld the last payment <br/>
<a id="pl.3.4"></a><var>3.4</var>on the grounds that the deposit should serve as payment for the rent. Any tenant who <br/>
<a id="pl.3.5"></a><var>3.5</var>remains in violation of this subdivision after written demand and notice of this subdivision <br/>
<a id="pl.3.6"></a><var>3.6</var>shall be liable to the landlord for the following:<br/>
<a id="pl.3.7"></a><var>3.7</var>(1) a penalty in an amount equal to the portion of the deposit which the landlord <br/>
<a id="pl.3.8"></a><var>3.8</var>is entitled to withhold under subdivision 3 other than to remedy the tenant's default in <br/>
<a id="pl.3.9"></a><var>3.9</var>the payment of rent; and<br/>
<a id="pl.3.10"></a><var>3.10</var>(2) interest on the whole deposit as provided in subdivision 2, in addition to the <br/>
<a id="pl.3.11"></a><var>3.11</var>amount of rent withheld by the tenant in violation of this subdivision.<br/>
<br/>
<a id="bill.0.3.0"></a><a id="pl.3.12"></a><var>3.12</var>    Sec. 3. Minnesota Statutes 2006, section 504B.285, subdivision 1, is amended to read:<br/>
<a id="pl.3.13"></a><var>3.13</var>    Subdivision 1. <b>Grounds.</b> The person entitled to the premises may recover <br/>
<a id="pl.3.14"></a><var>3.14</var>possession by eviction when:<br/>
<a id="pl.3.15"></a><var>3.15</var>(1) any person holds over real property:<br/>
<a id="pl.3.16"></a><var>3.16</var>(i) after a sale of the property on an execution or judgment; or<br/>
<a id="pl.3.17"></a><var>3.17</var>(ii) on foreclosure of a mortgage and after the expiration of the time for redemption; <br/>
<a id="pl.3.18"></a><var>3.18</var>on foreclosure of a mortgage, or<br/>
<a id="pl.3.19"></a><var>3.19</var>(iii) after termination of contract to convey the property, provided that if the person <br/>
<a id="pl.3.20"></a><var>3.20</var>holding the real property after the expiration of the time for redemption or termination <br/>
<a id="pl.3.21"></a><var>3.21</var>is was a tenant during the redemption or termination period, the person entered into the <br/>
<a id="pl.3.22"></a><var>3.22</var>lease of any duration after the date of the notice of mortgage foreclosure or contract for <br/>
<a id="pl.3.23"></a><var>3.23</var>deed cancellation and prior to the expiration of the time for redemption or termination, <br/>
<a id="pl.3.24"></a><var>3.24</var>and the person has received:<br/>
<a id="pl.3.25"></a><var>3.25</var>(A) at least one month's two months' written notice to vacate no sooner than one <br/>
<a id="pl.3.26"></a><var>3.26</var>month after the expiration of the time for redemption or termination, provided that the <br/>
<a id="pl.3.27"></a><var>3.27</var>tenant pays the rent and abides by all terms of the lease; or<br/>
<a id="pl.3.28"></a><var>3.28</var>(B) at least one month's two months' written notice to vacate no later than the date of <br/>
<a id="pl.3.29"></a><var>3.29</var>the expiration of the time for redemption or termination, which notice shall also state that <br/>
<a id="pl.3.30"></a><var>3.30</var>the sender will hold the tenant harmless for breaching the lease by vacating the premises <br/>
<a id="pl.3.31"></a><var>3.31</var>if the mortgage is redeemed or the contract is reinstated;<br/>
<a id="pl.3.32"></a><var>3.32</var>(2) any person holds over real property after termination of the time for which <br/>
<a id="pl.3.33"></a><var>3.33</var>it is demised or leased to that person or to the persons under whom that person holds <br/>
<a id="pl.3.34"></a><var>3.34</var>possession, contrary to the conditions or covenants of the lease or agreement under which <br/>
<a id="pl.4.1"></a><var>4.1</var>that person holds, or after any rent becomes due according to the terms of such lease or <br/>
<a id="pl.4.2"></a><var>4.2</var>agreement; or<br/>
<a id="pl.4.3"></a><var>4.3</var>(3) any tenant at will holds over after the termination of the tenancy by notice to quit.<br/>