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HF 3552

1st Engrossment - 90th Legislature (2017 - 2018) Posted on 05/14/2018 10:47am

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A bill for an act
relating to real property; modifying the definition of residential use under the
Minnesota Common Interest Ownership Act;amending Minnesota Statutes 2016,
sections 515B.1-102; 515B.1-106; 515B.2-113; 515B.4-111; Minnesota Statutes
2017 Supplement, section 515B.1-103.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 515B.1-102, is amended to read:


515B.1-102 APPLICABILITY.

(a) Except as provided in this section, this chapter, and not chapters 515 and 515A,
applies to all common interest communities created within this state on and after June 1,
1994.

(b) The applicability of this chapter to common interest communities created prior to
June 1, 1994, shall be as follows:

(1) This chapter shall apply to condominiums created under chapter 515A with respect
to events and circumstances occurring on and after June 1, 1994; provided (i) that this
chapter shall not invalidate the declarations, bylaws or condominium plats of those
condominiums, and (ii) that chapter 515A, and not this chapter, shall govern all rights and
obligations of a declarant of a condominium created under chapter 515A, and the rights and
claims of unit owners against that declarant.

(2) The following sections in this chapter apply to condominiums created under chapter
515: 515B.1-104 (Variation by Agreement); 515B.1-105 (Separate Titles and Taxation);
515B.1-106 (Applicability of Local Requirements); 515B.1-107 (Eminent Domain);
515B.1-108 (This Chapter Prevails; Supplemental Law); 515B.1-109 (Construction Against
Implicit Repeal); 515B.1-112 (Unconscionable Agreement or Term of Contract); 515B.1-113
(Obligation of Good Faith); 515B.1-114 (Remedies to be Liberally Administered);
515B.1-115 (Notice); 515B.1-116 (Recording); 515B.2-103 (Construction and Validity of
Declaration and Bylaws); 515B.2-104 (Description of Units); 515B.2-108(d) (Allocation
of Interests); 515B.2-109(f) (Common Elements and Limited Common Elements);
515B.2-112 (Subdivision, Combination, or Conversion of Units); 515B.2-113 (Alteration
of Units); 515B.2-114 (Relocation of Boundaries Between Adjoining Units); 515B.2-115
(Minor Variations in Boundaries); 515B.2-118 (Amendment of Declaration); 515B.2-119
(Termination of Common Interest Community); 515B.3-102 (Powers of Unit Owners'
Association); 515B.3-103(a), (b), and (g) (Board of Directors, Officers, and Declarant
Control); 515B.3-107 (Upkeep of Common Interest Community); 515B.3-108 (Meetings);
515B.3-109 (Quorums); 515B.3-110 (Voting; Proxies); 515B.3-111 (Tort and Contract
Liability); 515B.3-112 (Conveyance of, or Creation of Security Interests in, Common
Elements); 515B.3-113 (Insurance); 515B.3-114 (Replacement Reserves); 515B.3-115 (c),
(e), (f), (g), (h), and (i) (Assessments for Common Expenses); 515B.3-116 (Lien for
Assessments); 515B.3-117 (Other Liens); 515B.3-118 (Association Records); 515B.3-119
(Association as Trustee); 515B.3-121 (Accounting Controls); 515B.4-107 (Resale of Units);
515B.4-108 (Purchaser's Right to Cancel Resale); and 515B.4-116 (Rights of Action;
Attorney's Fees). Section 515B.1-103 (Definitions) shall apply to the extent necessary in
construing any of the sections referenced in this section. Sections 515B.1-105, 515B.1-106,
515B.1-107, 515B.1-116, 515B.2-103, 515B.2-104, 515B.2-118, 515B.3-102, 515B.3-110,
515B.3-111, 515B.3-113, 515B.3-116, 515B.3-117, 515B.3-118, 515B.3-121, 515B.4-107,
515B.4-108, and 515B.4-116 apply only with respect to events and circumstances occurring
on and after June 1, 1994. All other sections referenced in this section apply only with
respect to events and circumstances occurring after July 31, 1999. A section referenced in
this section does not invalidate the declarations, bylaws or condominium plats of
condominiums created before August 1, 1999. But all sections referenced in this section
prevail over the declarations, bylaws, CIC plats, rules and regulations under them, of
condominiums created before August 1, 1999, except to the extent that this chapter defers
to the declarations, bylaws, CIC plats, or rules and regulations issued under them.

(3) This chapter shall not apply to cooperatives and planned communities created prior
to June 1, 1994, or to planned communities that were created on or after June 1, 1994, and
before August 1, 2006, and that consist of more than two but fewer than 13 units; except
by election pursuant to subsection (d), and except that sections 515B.1-116, subsections
(a), (c), (d), and (e), 515B.4-107, and 515B.4-108, apply to all planned communities and
cooperatives regardless of when they are created, unless they are exempt under subsection
(e).

(c) This chapter shall not invalidate any amendment to the declaration, bylaws or
condominium plat of any condominium created under chapter 515 or 515A if the amendment
was recorded before June 1, 1994. Any amendment recorded on or after June 1, 1994, shall
be adopted in conformity with the procedures and requirements specified by those instruments
and by this chapter. If the amendment grants to any person any rights, powers or privileges
permitted by this chapter, all correlative obligations, liabilities and restrictions contained
in this chapter shall also apply to that person.

(d) Any condominium created under chapter 515, any planned community or cooperative
which would be exempt from this chapter under subsection (e), or any planned community
or cooperative created prior to June 1, 1994, or any planned community that was created
on or after June 1, 1994, and prior to August 1, 2006, and that consists of more than two
but fewer than 13 units, may elect to be subject to this chapter, as follows:

(1) The election shall be accomplished by recording a declaration or amended declaration,
and a new or amended CIC plat where required, and by approving bylaws or amended
bylaws, which conform to the requirements of this chapter, and which, in the case of
amendments, are adopted in conformity with the procedures and requirements specified by
the existing declaration and bylaws of the common interest community, and by any applicable
statutes.

(2) In a condominium, the preexisting condominium plat shall be the CIC plat and an
amended CIC plat shall be required only if the amended declaration or bylaws contain
provisions inconsistent with the preexisting condominium plat. The condominium's CIC
number shall be the apartment ownership number or condominium number originally
assigned to it by the recording officer. In a cooperative in which the unit owners' interests
are characterized as real estate, a CIC plat shall be required. In a planned community, the
preexisting plat or registered land survey recorded pursuant to chapter 505, 508, or 508A,
or the part of the plat or registered land survey upon which the common interest community
is located, shall be the CIC plat.

(3) The amendment shall comply with section 515B.2-118(a)(3) and (c); except that the
unanimous consent of the unit owners shall not be required for (i) a clarification of the unit
boundary description if the clarified boundary description is substantially consistent with
the preexisting CIC plat, or (ii) changes from common elements to limited common elements
that occur by operation of section 515B.2-109(c) and (d).

(4) Except as permitted by paragraph (3), no declarant, affiliate of declarant, association,
master association nor unit owner may acquire, increase, waive, reduce or revoke any
previously existing warranty rights or causes of action that one of said persons has against
any other of said persons by reason of exercising the right of election under this subsection.

(5) A common interest community which elects to be subject to this chapter may, as a
part of the election process, change its form of ownership by complying with section
515B.2-123.

(e) Except as otherwise provided in this subsection, this chapter shall not apply, except
by election pursuant to subsection (d), to the following:

(1) a planned community which consists of two units, which utilizes a CIC plat complying
with section 515B.2-110(d)(1) and (2), or section 515B.2-1101(d)(1) and (2), which is not
subject to any rights to subdivide or convert units or to add additional real estate, and which
is not subject to a master association;

(2) a common interest community that consists solely of platted lots or other separate
parcels of real estate designed or utilized for detached single family dwellings or agricultural
purposes, with or without common property, where no association or master association
has an obligation to maintain any building containing a dwelling or any agricultural building
located or to be located on such platted lots or parcels; except that section 515B.4-101(e)
shall apply to the sale of such platted lots or parcels of real estate if the common interest
community is or will be subject to a master declaration;

(3) a cooperative where, at the time of creation of the cooperative, the unit owners'
interests in the dwellings as described in the declaration consist solely of proprietary leases
having an unexpired term of fewer than 20 years, including renewal options;

(4) planned communities utilizing a CIC plat complying with section 515B.2-110(d)(1)
and (2), or section 515B.2-1101(d)(1) and (2), and cooperatives, which are limited by the
declaration to nonresidential uses alone or in combination with residential rental uses in
which individual dwellings do not constitute units or other separate parcels of real estate
;
or

(5) real estate subject only to an instrument or instruments filed primarily for the purpose
of creating or modifying rights with respect to access, utilities, parking, ditches, drainage,
or irrigation.

(f) Section 515B.4-101(e) applies to any platted lot or other parcel of real estate that is
subject to a master declaration and is not subject to or is exempt from this chapter.

(g) Section 515B.1-106 shall apply to all common interest communities.

(h) Sections 515B.1-103(33a), 515B.2-110, 515B.3-105, 515B.3-115, 515B.4-102, and
515B.4-115 apply only to common interest communities created before August 1, 2010.
Sections 515B.1-103(33b), 515B.2-1101, 515B.3-1051, 515B.3-1151, 515B.4-1021, and
515B.4-1151 apply only to common interest communities created on or after August 1,
2010.

(i) Section 515B.3-114 applies to common interest communities only for the association's
fiscal years commencing before January 1, 2012. Section 515B.3-1141 applies to common
interest communities only for the association's fiscal years commencing on or after January
1, 2012.

(j) Section 515B.3-104 applies only to transfers of special declarant rights that are
effective before August 1, 2010. Section 515B.3-1041, subsections (a) through (i), apply
only to transfers of special declarant rights that are effective on or after August 1, 2010.
Section 515B.3-1041, subsections (j) and (k), apply only to special declarant rights reserved
in a declaration that is first recorded on or after August 1, 2010.

Sec. 2.

Minnesota Statutes 2017 Supplement, section 515B.1-103, is amended to read:


515B.1-103 DEFINITIONS.

In the declaration and bylaws, unless specifically provided otherwise or the context
otherwise requires, and in this chapter:

(1) "Additional real estate" means real estate that may be added to a flexible common
interest community.

(2) "Affiliate of a declarant" means any person who controls, is controlled by, or is under
common control with a declarant.

(A) A person "controls" a declarant if the person (i) is a general partner, officer, director,
or employer of the declarant, (ii) directly or indirectly or acting in concert with one or more
other persons, or through one or more subsidiaries, owns, controls, holds with power to
vote, or holds proxies representing, more than 20 percent of the voting interest in the
declarant, (iii) controls in any manner the election of a majority of the directors of the
declarant, or (iv) has contributed more than 20 percent of the capital of the declarant.

(B) A person "is controlled by" a declarant if the declarant (i) is a general partner, officer,
director, or employer of the person, (ii) directly or indirectly or acting in concert with one
or more other persons, or through one or more subsidiaries, owns, controls, holds with
power to vote, or holds proxies representing, more than 20 percent of the voting interest in
the person, (iii) controls in any manner the election of a majority of the directors of the
person, or (iv) has contributed more than 20 percent of the capital of the person.

(C) Control does not exist if the powers described in this subsection are held solely as
a security interest and have not been exercised.

(3) "Allocated interests" means the following interests allocated to each unit: (i) in a
condominium, the undivided interest in the common elements, the common expense liability,
and votes in the association; (ii) in a cooperative, the common expense liability and the
ownership interest and votes in the association; and (iii) in a planned community, the common
expense liability and votes in the association.

(4) "Association" means the unit owners' association organized under section 515B.3-101.

(5) "Board" means the body, regardless of name, designated in the articles of
incorporation, bylaws or declaration to act on behalf of the association, or on behalf of a
master association when so identified.

(6) "CIC plat" means a common interest community plat described in section 515B.2-110.

(7) "Common elements" means all portions of the common interest community other
than the units.

(8) "Common expenses" means expenditures made or liabilities incurred by or on behalf
of the association, or master association when so identified, together with any allocations
to reserves.

(9) "Common expense liability" means the liability for common expenses allocated to
each unit pursuant to section 515B.2-108.

(10) "Common interest community" or "CIC" means contiguous or noncontiguous real
estate within Minnesota that is subject to an instrument which obligates persons owning a
separately described parcel of the real estate, or occupying a part of the real estate pursuant
to a proprietary lease, by reason of their ownership or occupancy, to pay for (i) real estate
taxes levied against; (ii) insurance premiums payable with respect to; (iii) maintenance of;
or (iv) construction, maintenance, repair or replacement of improvements located on, one
or more parcels or parts of the real estate other than the parcel or part that the person owns
or occupies. Real estate which satisfies the definition of a common interest community is
a common interest community whether or not it is subject to this chapter. Real estate subject
to a master declaration, regardless of when the master declaration was recorded, shall not
collectively constitute a separate common interest community unless so stated in the master
declaration.

(11) "Condominium" means a common interest community in which (i) portions of the
real estate are designated as units, (ii) the remainder of the real estate is designated for
common ownership solely by the owners of the units, and (iii) undivided interests in the
common elements are vested in the unit owners.

(11a) "Construction defect claim" means a civil action or an arbitration proceeding based
on any legal theory including, but not limited to, claims under chapter 327A for damages,
indemnity, or contribution brought against a development party to assert a claim,
counterclaim, cross-claim, or third-party claim for damages or loss to, or the loss of use of,
real or personal property caused by a defect in the initial design or construction of an
improvement to real property that is part of a common interest community, including an
improvement that is constructed on additional real estate pursuant to section 515B.2-111.
"Construction defect claim" does not include claims related to subsequent maintenance,
repairs, alterations, or modifications to, or the addition of, improvements that are part of
the common interest community, and that are contracted for by the association or a unit
owner.

(12) "Conversion property" means real estate on which is located a building that at any
time within two years before creation of the common interest community was occupied, in
whole or in part,
for (i) residential use wholly or partially or (ii) for residential rental purposes
by persons other than purchasers and persons who occupy with the consent of purchasers.

(13) "Cooperative" means a common interest community in which the real estate is
owned by an association, each of whose members is entitled to a proprietary lease by virtue
of the member's ownership interest in the association.

(14) "Dealer" means a person in the business of selling units for the person's own account.

(15) "Declarant" means:

(i) if the common interest community has been created, (A) any person who has executed
a declaration, or a supplemental declaration or amendment to a declaration adding additional
real estate, except secured parties, a spouse holding only an inchoate interest, persons whose
interests in the real estate will not be transferred to unit owners, or, in the case of a leasehold
common interest community, a lessor who possesses no special declarant rights and who
is not an affiliate of a declarant who possesses special declarant rights, or (B) any person
who reserves, or succeeds under section 515B.3-104 to any special declarant rights; or

(ii) any person or persons acting in concert who have offered prior to creation of the
common interest community to transfer their interest in a unit to be created and not previously
transferred.; or

(iii) if (A) a unit has been restricted to nonresidential use and sold to a purchaser who
has agreed to modify or waive, in whole or in part, sections 515B.4-101 to 515B.4-118, and
(B) the restriction expires or is modified or terminated such that residential use of the unit
is permitted, the unit owner at the time the restriction expires or is so modified or terminated
is a declarant with respect to that unit and any improvements subject to use rights by a
purchaser of the unit.

(16) "Declaration" means any instrument, however denominated, that creates a common
interest community.

(16a) "Development party" means an architect, contractor, construction manager,
subcontractor, developer, declarant, engineer, or private inspector performing or furnishing
the design, supervision, inspection, construction, coordination, or observation of the
construction of any improvement to real property that is part of a common interest
community, or any of the person's affiliates, officers, directors, shareholders, members, or
employees.

(17) "Dispose" or "disposition" means a voluntary transfer to a purchaser of any legal
or equitable interest in the common interest community, but the term does not include the
transfer or release of a security interest.

(18) "Flexible common interest community" means a common interest community to
which additional real estate may be added.

(19) "Leasehold common interest community" means a common interest community in
which all or a portion of the real estate is subject to a lease the expiration or termination of
which will terminate the common interest community or reduce its size.

(20) "Limited common element" means a portion of the common elements allocated by
the declaration or by operation of section 515B.2-109(c) or (d) for the exclusive use of one
or more but fewer than all of the units.

(21) "Master association" means an entity created on or after June 1, 1994, that directly
or indirectly exercises any of the powers set forth in section 515B.3-102 on behalf of one
or more members described in section 515B.2-121(b), (i), (ii) or (iii), whether or not it also
exercises those powers on behalf of one or more property owners' associations described
in section 515B.2-121 (b)(iv). A person (i) hired by an association to perform maintenance,
repair, accounting, bookkeeping or management services, or (ii) granted authority under an
instrument recorded primarily for the purpose of creating rights or obligations with respect
to utilities, access, drainage, or recreational amenities, is not, solely by reason of that
relationship, a master association.

(22) "Master declaration" means a written instrument, however named, (i) recorded on
or after June 1, 1994, and (ii) complying with section 515B.2-121, subsection (e).

(23) "Master developer" means a person who is designated in the master declaration as
a master developer or, in the absence of such a designation, the owner or owners of the real
estate subject to the master declaration at the time the master declaration is recorded, except
(i) secured parties and (ii) a spouse holding only an inchoate interest. A master developer
is not a declarant unless the master declaration states that the real estate subject to the master
declaration collectively is or collectively will be a separate common interest community.

(24) "Period of declarant control" means the time period provided for in section
515B.3-103(c) during which the declarant may appoint and remove officers and directors
of the association.

(25) "Person" means an individual, corporation, limited liability company, partnership,
trustee under a trust, personal representative, guardian, conservator, government,
governmental subdivision or agency, or other legal or commercial entity capable of holding
title to real estate.

(26) "Planned community" means a common interest community that is not a
condominium or a cooperative. A condominium or cooperative may be a part of a planned
community.

(27) "Proprietary lease" means an agreement with a cooperative association whereby a
member of the association is entitled to exclusive possession of a unit in the cooperative.

(28) "Purchaser" means a person, other than a declarant, who by means of a voluntary
transfer acquires a legal or equitable interest in a unit other than (i) a leasehold interest of
less than 20 years, including renewal options, or (ii) a security interest.

(29) "Real estate" means any fee simple, leasehold or other estate or interest in, over,
or under land, including structures, fixtures, and other improvements and interests that by
custom, usage, or law pass with a conveyance of land though not described in the contract
of sale or instrument of conveyance. "Real estate" may include spaces with or without upper
or lower boundaries, or spaces without physical boundaries.

(30) "Residential use" means use as a dwelling, whether primary, secondary or seasonal,
but not (i) transient use such as hotels or motels., (ii) use for residential rental purposes if
the individual dwellings are not separate units or if the individual dwellings are not located
on separate parcels of real estate. For purposes of this chapter, a unit is restricted to
nonresidential use if the unit is subject to a restriction that prohibits residential use as defined
in this section whether or not the restriction also prohibits the uses described in this paragraph.

(31) "Secured party" means the person owning a security interest as defined in paragraph
(32).

(32) "Security interest" means a perfected interest in real estate or personal property,
created by contract or conveyance, which secures payment or performance of an obligation.
The term includes a mortgagee's interest in a mortgage, a vendor's interest in a contract for
deed, a lessor's interest in a lease intended as security, a holder's interest in a sheriff's
certificate of sale during the period of redemption, an assignee's interest in an assignment
of leases or rents intended as security, in a cooperative, a lender's interest in a member's
ownership interest in the association, a pledgee's interest in the pledge of an ownership
interest, or any other interest intended as security for an obligation under a written agreement.

(33a) This definition of special declarant rights applies only to common interest
communities created before August 1, 2010. "Special declarant rights" means rights reserved
in the declaration for the benefit of a declarant to:

(i) complete improvements indicated on the CIC plat, planned by the declarant consistent
with the disclosure statement or authorized by the municipality in which the CIC is located;

(ii) add additional real estate to a common interest community;

(iii) subdivide or combine units, or convert units into common elements, limited common
elements, or units;

(iv) maintain sales offices, management offices, signs advertising the common interest
community, and models;

(v) use easements through the common elements for the purpose of making improvements
within the common interest community or any additional real estate;

(vi) create a master association and provide for the exercise of authority by the master
association over the common interest community or its unit owners;

(vii) merge or consolidate a common interest community with another common interest
community of the same form of ownership; or

(viii) appoint or remove any officer or director of the association, or the master association
where applicable, during any period of declarant control.

(33b) This definition of special declarant rights applies only to common interest
communities created on or after August 1, 2010. "Special declarant rights" means rights
reserved in the declaration for the benefit of a declarant and expressly identified in the
declaration as special declarant rights. Such special declarant rights may include but are not
limited to the following:

(i) to complete improvements indicated on the CIC plat, planned by the declarant
consistent with the disclosure statement or authorized by the municipality in which the
common interest community is located, and to have and use easements for itself and its
employees, agents, and contractors through the common elements for such purposes;

(ii) to add additional real estate to a common interest community;

(iii) to subdivide or combine units, or convert units into common elements, limited
common elements and/or units, pursuant to section 515B.2-112;

(iv) to maintain and use sales offices, management offices, signs advertising the common
interest community, and models, and to have and use easements for itself and its employees,
agents, and invitees through the common elements for such purposes;

(v) to appoint or remove any officer or director of the association during any period of
declarant control;

(vi) to utilize an alternate common expense plan as provided in section 515B.3-115(a)(2);

(vii) to grant common element licenses as provided in section 515B.2-109(e); or

(viii) to review, and approve or disapprove, the exterior design, materials, size, site
location, and other exterior features of buildings and other structures, landscaping and other
exterior improvements, located within the common interest community, and any
modifications or alterations thereto.

Special declarant rights shall not be reserved or utilized for the purpose of evading any
limitation or obligation imposed on declarants by this chapter.

(34) "Time share" means a right to occupy a unit or any of several units during three or
more separate time periods over a period of at least three years, including renewal options,
whether or not coupled with a fee title interest in the common interest community or a
specified portion thereof.

(35) "Unit" means a portion of a common interest community the boundaries of which
are described in the common interest community's declaration and which is intended for
separate ownership, or separate occupancy pursuant to a proprietary lease.

(36) "Unit identifier" means English letters or Arabic numerals, or a combination thereof,
which identify only one unit in a common interest community and which meet the
requirements of section 515B.2-104.

(37) "Unit owner" means a declarant or other person who owns a unit, a lessee under a
proprietary lease, or a lessee of a unit in a leasehold common interest community whose
lease expires simultaneously with any lease the expiration or termination of which will
remove the unit from the common interest community, but does not include a secured party.
In a common interest community, the declarant is the unit owner of a unit until that unit has
been conveyed to another person.

Sec. 3.

Minnesota Statutes 2016, section 515B.1-106, is amended to read:


515B.1-106 APPLICABILITY OF LOCAL REQUIREMENTS.

(a) Except as provided in subsections (b) and (c), a zoning, subdivision, building code,
or other real estate use law, ordinance, charter provision, or regulation may not directly or
indirectly prohibit the common interest community form of ownership or impose any
requirement upon a common interest community, upon the creation or disposition of a
common interest community or upon any part of the common interest community conversion
process which it would not impose upon a physically similar development under a different
form of ownership. Otherwise, no provision of this chapter invalidates or modifies any
provision of any zoning, subdivision, building code, or other real estate use law, ordinance,
charter provision, or regulation.

(b) Subsection (a) shall not apply to any ordinance, rule, regulation, charter provision
or contract provision relating to the financing of housing construction, rehabilitation, or
purchases provided by or through a housing finance program established and operated
pursuant to state or federal law by a state or local agency or local unit of government.

(c) A statutory or home rule charter city, pursuant to an ordinance or charter provision
establishing standards to be applied uniformly within its jurisdiction, may prohibit or impose
reasonable conditions upon the conversion of buildings occupied wholly or partially for (i)
residential use or (ii) residential rental purposes to the common interest community form
of ownership only if there exists within the city a significant shortage of suitable rental
dwellings available to low and moderate income individuals or families or to establish or
maintain the city's eligibility for any federal or state program providing direct or indirect
financial assistance for housing to the city. Prior to the adoption of an ordinance pursuant
to the authority granted in this subsection, the city shall conduct a public hearing. Any
ordinance or charter provision adopted pursuant to this subsection shall not apply to any
existing or proposed conversion common interest community (i) for which a bona fide loan
commitment for a consideration has been issued by a lender and is in effect on the date of
adoption of the ordinance or charter provision, or (ii) for which a notice of conversion or
intent to convert required by section 515B.4-111, containing a termination of tenancy, has
been given to at least 75 percent of the tenants and subtenants in possession prior to the date
of adoption of the ordinance or charter provision.

(d) For purposes of providing marketable title, a statement in the declaration that the
common interest community is not subject to an ordinance or that any conditions required
under an ordinance have been complied with shall be prima facie evidence that the common
interest community was not created in violation of the ordinance.

(e) A violation of an ordinance or charter provision adopted pursuant to the provisions
of subsection (b) or (c) shall not affect the validity of a common interest community. This
subsection shall not be construed to in any way limit the power of a city to enforce the
provisions of an ordinance or charter provision adopted pursuant to subsection (b) or (c).

(f) Any ordinance or charter provision enacted hereunder that prohibits the conversion
of buildings to the common interest community form of ownership shall not be effective
for a period exceeding 18 months.

Sec. 4.

Minnesota Statutes 2016, section 515B.2-113, is amended to read:


515B.2-113 ALTERATION OF UNITS.

(a) Subject to the provisions of the declaration and applicable law, a unit owner may, at
the unit owner's expense, make any improvements or alterations to the unit, provided: (i)
that they do not impair the structural integrity or mechanical systems, affect the common
elements, or impair the support of any portion of the common interest community; (ii) that
prior arrangements are made with the association to ensure that other unit owners are not
disturbed; (iii) that the common elements are not damaged; and (iv) that the common
elements and other units are protected against mechanics' liens.

(b) Subject to the provisions of applicable law, a unit owner of a unit in residential use
that is used as a dwelling, whether primary, secondary, or seasonal, may, at the unit owner's
expense, make improvements or alterations to the unit as necessary for the full enjoyment
of the unit by any person residing in the unit who has a disability, as provided in the Fair
Housing Amendments Act, United States Code, title 42, section 3601, et seq., and the
Minnesota Human Rights Act, chapter 363A, and any amendments to those acts. This
subsection applies to all common interest communities subject to this chapter, chapter 515,
or 515A, notwithstanding any contrary provision of section 515B.1-102.

(c) The declaration, bylaws, rules, and regulations, or agreements with the association
may not prohibit the improvements or alterations referred to in subsection (b), but may
reasonably regulate the type, style, and quality of the improvements or alterations, as they
relate to health, safety, and architectural standards. In addition, improvements or alterations
made pursuant to subsection (b) must comply with subsection (a)(i), (ii), (iii), and (iv).

(d) The unit owner's rights under this section may not be waived.

(e) Subsection (b) does not apply to restrictions on improvements or alterations imposed
by statute, rule, or ordinance.

(f) Subject to the provisions of the declaration and applicable law, a unit owner may, at
the unit owner's expense, after acquiring title to an adjoining unit or an adjoining part of an
adjoining unit, with the prior written approval of the association and first mortgagees of the
affected units, remove or alter any intervening partition or create apertures therein, even if
the partition is part of the common elements, if those acts do not impair the structural
integrity or mechanical systems or lessen the support of any portion of the common interest
community. The adjoining unit owners shall have the exclusive license to use the space
occupied by the removed partition, but the use shall not create an easement or vested right.
Removal of partitions or creation of apertures under this subsection is not an alteration of
boundaries. The association may require that the owner or owners of units affected replace
or restore any removed partition, that the unit owner comply with subsection (a)(i), (ii) and
(iii), and that the unit owner pay all fees and costs incurred by the association in connection
with the alteration.

Sec. 5.

Minnesota Statutes 2016, section 515B.4-111, is amended to read:


515B.4-111 CONVERSION PROPERTY.

(a) A unit owner of a unit occupied for residential use in a common interest community
containing conversion property shall not, for a period of one year following the recording
of the declaration creating the common interest community, require any occupant of the
unit
who was residing in the unit at the time the declaration was recorded to vacate the unit
unless the unit owner gives notice to the occupant in the manner described in this section.
The notice shall be given no later than 120 days before the occupant is required to vacate
the unit. The notice shall be sufficient as to all occupants of a unit if it is hand delivered or
mailed to the unit to be vacated, addressed to the occupants thereof. If the holder of the
lessee's interest in the unit has given the unit owner an address different than that of the
unit, then the notice shall also be given to the holder of the lessee's interest at the designated
address. The notice shall comply with the following requirements:

(1) The notice shall set forth generally the rights conferred by this section.

(2) The notice shall have attached a form of purchase agreement setting forth the proposed
terms of sale of the unit to the holder of the lessee's interest as contemplated by subsection
(d) and a statement of any significant restrictions imposed by the declaration on the use and
occupancy of the unit.

(3) The notice shall state that the occupants of the residential unit may demand to be
given 60 additional days before being required to vacate, if any of them, or any person
residing with them, is (i) 62 years of age or older, (ii) a person with a disability as defined
in section 268A.01, or (iii) a minor child on the date the notice is given. This demand must
be in writing, contain reasonable proof of qualification, and be given to the declarant within
30 days after the notice of conversion is delivered or mailed.

(4) The notice shall be contained in an envelope upon which the following shall be boldly
printed: "Notice of Conversion."

(b) Notwithstanding subsection (a), an occupant may be required to vacate a unit upon
less than 120 days' notice by reason of nonpayment of rent, utilities or other monetary
obligations, violations of law, waste, or conduct that disturbs other occupants' peaceful
enjoyment of the premises. The terms of the tenancy may not be altered during the notice
period, except that the holder of the lessee's interest or other party in possession may vacate
and terminate the tenancy upon one month's written notice to the declarant. Nothing in this
section prevents the unit owner and any occupant from agreeing to a right of occupancy on
a month-to-month basis beyond the 120-day notice period, or to an earlier termination of
the right of occupancy.

(c) No repair work or remodeling may be commenced or undertaken in the occupied
units or common areas of the building during the notice period, unless reasonable precautions
are taken to ensure the safety and security of the occupants.

(d) For 60 days after delivery or mailing of the notice described in subsection (a), the
holder of the lessee's interest in the unit on the date the notice is mailed or delivered shall
have an option to purchase that unit on the terms set forth in the purchase agreement attached
to the notice. The purchase agreement shall contain no terms or provisions which violate
any state or federal law relating to discrimination in housing. If the holder of the lessee's
interest fails to sign a binding purchase agreement for the unit during that 60-day period,
the unit owner may not offer to dispose of an interest in that unit during the following 180
days at a price or on terms more favorable to the offeree than the price or terms offered to
the holder. This subsection and subsection (a)(2) do not apply to any unit in a conversion
property if that unit will be restricted exclusively to nonresidential use or if the boundaries
of the converted unit do not substantially conform to the boundaries of the residential unit
before conversion.

(e) If a unit owner, in violation of subsection (b), conveys a unit to a purchaser for value
who has no knowledge of the violation, the recording of the deed conveying the unit or, in
a cooperative, the conveyance of the right to possession of the unit, extinguishes any right
a holder of a lessee's interest who is not in possession of the unit may have under subsection
(d) to purchase that unit, but the conveyance does not affect the right of the holder to recover
damages from the unit owner for a violation of subsection (d).

(f) If a notice described in subsection (a) specifies a date by which a unit or proposed
unit must be vacated or otherwise complies with the provisions of chapter 504B, the notice
also constitutes a notice to vacate specified by that statute.

(g) An occupant of residing in space for residential use in a conversion property shall
not have any of the rights set out in this section or under any municipal ordinance if the
holder of the lessee's interest in the space received written notice of intent to convert to a
common interest community (i) before signing a lease or a lease renewal or before occupying
the space and (ii) less than two years before the common interest community is created.

(h) A notice of intent to convert to a common interest community shall identify the
conversion property by both legal description and street address and state that (i) the declarant
intends to convert the property to a planned community, condominium, or cooperative form
of common interest community, specifying the intended form, and (ii) persons entering into
leases subsequent to the receipt of the notice of intent to convert will not have the rights
available to an occupant or a person holding the lessee's interest under this section.

(i) Nothing in this section permits a unit owner to terminate a lease in violation of its
terms.

(j) Failure to give notice as required by subsection (a) is a defense to an action for
possession.

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700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569