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HF 367

2nd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 2nd Engrossment

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A bill for an act
relating to real property; providing for certain
defeasible estates; modifying residential purchase
agreement cancellations; amending the foreclosure
advice notice; modifying the description of land
deleted from the Mississippi Recreational River Land
Use District in Sherburne County; amending Minnesota
Statutes 2004, sections 500.20, subdivision 2a;
513.56, subdivision 3; 513.57, subdivision 2; 559.217;
580.041, by adding subdivisions; Laws 2005, chapter
30, section 1.

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

Section 1.

Minnesota Statutes 2004, section 500.20,
subdivision 2a, is amended to read:


Subd. 2a.

Restriction of duration of condition.

Except
for any right to reenter or to repossess as provided in
subdivision 3, all private covenants, conditions, or
restrictions created by which the title or use of real property
is affected, cease to be valid and operative 30 years after the
date of the deed, or other instrument, or the date of the
probate of the will, creating them, and may be disregarded.

This subdivision does not apply to covenants, conditions,
or restrictions:

(1) deleted text beginthat were created before August 1, 1988, by deed or
other instrument dated on or after August 1, 1982, or by will
the date of death of the testator of which was on or after
August 1, 1982;
deleted text end

deleted text begin (2) deleted text endthat were created before August 1, 1959, under which a
person who owns or has an interest in real property against
which the covenants, conditions, or restrictions have been filed
claims a benefit of the covenant, condition, or restriction if
the person records in the office of the county recorder or files
in the office of the registrar of titles in the county in which
the real estate affected is located, on or before March 30,
1989, a notice sworn to by the claimant or the claimant's agent
or attorney: setting forth the name of the claimant; describing
the real estate affected; describing the deed, instrument, or
will creating the covenant, condition, or restriction; and
stating that the covenant, condition, or restriction is not
nominal and may not be disregarded under subdivision 1;

deleted text begin (3) deleted text endnew text begin(2) new text endthat are created by the declaration, bylaws, floor
plans, or condominium plat of a condominium created before
August 1, 1980, under chapter 515, or created on or after August
1, 1980, under chapter 515A or 515B, or by any amendments of the
declaration, bylaws, floor plans, or condominium plat;

deleted text begin (4) deleted text endnew text begin(3) new text endthat are created by the articles of incorporation,
bylaws, or proprietary leases of a cooperative association
formed under chapter 308A;

deleted text begin (5) deleted text endnew text begin(4) new text endthat are created by a declaration or other
instrument that authorizes and empowers a corporation of which
the qualification for being a stockholder or member is ownership
of certain parcels of real estate, to hold title to common real
estate for the benefit of the parcels;

deleted text begin (6) deleted text endnew text begin(5) new text endthat are created by a deed, declaration,
reservation, or other instrument by which one or more portions
of a building, set of connecting or adjacent buildings, or
complex or project of related buildings and structures share
support, structural components, ingress and egress, or utility
access with another portion or portions;

deleted text begin (7) deleted text endnew text begin(6) new text endthat were created after July 31, 1959, deleted text beginand before
August 1, 1982,
deleted text endunder which a person who owns or has an interest
in real estate against which covenants, conditions, or
restrictions have been filed claims a benefit of the covenants,
conditions, or restrictions if the person records in the office
of the county recorder or files in the office of the registrar
of titles in the county in which the real estate affected is
located during the period commencing on the 28th anniversary of
the date of the deed or instrument, or the date of the probate
of the will, creating them and ending on the 30th anniversary, a
notice as described in clause deleted text begin(2) deleted text endnew text begin(1)new text end; or

deleted text begin (8) deleted text endnew text begin(7) new text endthat are created by a declaration or bylaws of a
common interest community created under or governed by chapter
515B, or by any amendments thereto.

A notice filed in accordance with clause deleted text begin(2) deleted text endnew text begin(1) new text endor deleted text begin(7) deleted text endnew text begin(6)
new text end delays application of this subdivision to the covenants,
conditions, or restrictions for a period ending on the later of
seven years after the date of filing of the notice, or until
final judgment is entered in an action to determine the validity
of the covenants, conditions, or restrictions, provided in the
case of an action the summons and complaint must be served and a
notice of lis pendens must be recorded in the office of the
county recorder or filed in the office of the registrar of
titles in each county in which the real estate affected is
located within seven years after the date of recording or filing
of the notice under clause deleted text begin(2) deleted text endnew text begin(1) new text endor deleted text begin(7) deleted text endnew text begin(6)new text end.

County recorders and registrars of titles shall accept for
recording or filing a notice conforming with this subdivision
and charge a fee corresponding with the fee charged for filing a
notice of lis pendens of similar length. The notice may be
discharged in the same manner as a notice of lis pendens and
when discharged, together with the information included with it,
ceases to constitute either actual or constructive notice.

Sec. 2.

Minnesota Statutes 2004, section 513.56,
subdivision 3, is amended to read:


Subd. 3.

Inspections.

(a) Except as provided in
paragraph (b), a seller is not required to disclose information
relating to the deleted text beginphysical condition of the deleted text endreal property if a
written report that discloses the information has been prepared
by a qualified third party and provided to the prospective
buyer. For purposes of this paragraph, "qualified third party"
means a federal, state, or local governmental agency, or any
person whom the seller, or prospective buyer, reasonably
believes has the expertise necessary to meet the industry
standards of practice for the type of inspection or
investigation that has been conducted by the third party in
order to prepare the written report.

(b) A seller shall disclose to the prospective buyer
material facts known by the seller that contradict any
information included in a written report under paragraph (a) if
a copy of the report is provided to the seller.

Sec. 3.

Minnesota Statutes 2004, section 513.57,
subdivision 2, is amended to read:


Subd. 2.

Liability.

A seller who fails to make a
disclosure as required by sections 513.52 to 513.60 and was
aware of deleted text beginthe condition of deleted text endnew text beginmaterial facts pertaining to new text endthe real
property is liable to the prospective buyer. A person injured
by a violation of this section may bring a civil action and
recover damages and receive other equitable relief as determined
by the court. An action under this subdivision must be
commenced within two years after the date on which the
prospective buyer closed the purchase or transfer of the real
property.

Sec. 4.

Minnesota Statutes 2004, section 559.217, is
amended to read:


559.217 deleted text beginDECLARATORY deleted text endCANCELLATION OF new text beginRESIDENTIAL new text endPURCHASE
AGREEMENT.

Subdivision 1.

Definitions.

(a) For purposes of this
section, the terms defined in this subdivision have the meanings
given.

(b) "Purchase agreement" means an earnest money contract,
purchase agreement, or exercised option deleted text beginthat could be canceled
under section 559.21, subdivision 4, paragraph (a)
deleted text endnew text beginwhether or
not the instrument is subject to section 559.21
new text end.

(c) "Residential real property" means real property,
including vacant land, occupied by, or intended to be occupied
by, new text beginin the aggregate,new text endone to four families as their residence.

new text begin (d) "Suspend" means to temporarily or permanently restrain
or enjoin a cancellation proceeding under subdivision 3 or 4
pursuant to the provisions of section 559.211.
new text end

Subd. 2.

Use of this section.

Either the purchaser or
the seller may cancel a purchase agreement for residential real
property under this section. If either a seller or purchaser
initiates a cancellation proceeding under this section and
before completion of the proceeding the other party new text beginto the
purchase agreement
new text endinitiates a cancellation proceeding under
this section, whether under subdivision 3 or 4, the purchase
agreement is deemed canceled as of the date the second
cancellation notice is served upon the other party new text beginto the
purchase agreement
new text endunder this section. Either party deleted text begincan deleted text endnew text beginmay
new text end later pursue legal remedies at law to recover the earnest
money. A court shall make a determination of which party is
entitled to the earnest money without regard to which party
first initiated the cancellation proceeding and may consider the
terms of the canceled purchase agreement in making its
determination.

Subd. 3.

Cancellation with right to cure.

(a) If a
default occurs or an unfulfilled condition exists after the date
specified for fulfillment in the terms of a purchase agreement
for the conveyance of residential real property, which does not
by its terms cancel the purchase agreement, the purchaser or the
seller may initiate a cancellation by serving upon the other
party to the purchase agreement and any third party that is
holding earnest money under the purchase agreement a notice:

(1) specifying the residential real property that is the
subject of the purchase agreement, including the legal
description;

(2) specifying the purchase agreement by date and names of
parties, and the unfulfilled condition or default; and

(3) stating that the purchase agreement will be canceled 15
days after service of the notice new text beginupon the other party to the
purchase agreement
new text endunless prior to the cancellation date the
party upon whom the notice is served complies with the
conditions in default and completes the unfulfilled conditions,
including, if applicable, completion of the purchase or sale of
the residential real property according to the terms of the
purchase agreement.

(b) The notice must be served in the manner provided in
section 559.21, subdivision 4, paragraphs (a) and (b). new text beginThe
notice required by this subdivision must be given
notwithstanding any provisions in the purchase agreement to the
contrary.
new text end

(c) The purchase agreement is canceled unless, within 15
days after the service of the notice new text beginupon the other party to the
purchase agreement
new text end, the party upon whom the notice was served
fully complies with the conditions in default and completes the
unfulfilled conditions or secures from a court an order
suspending the cancellation.

Subd. 4.

Declaratory cancellation.

(a) If deleted text begina default
occurs or
deleted text endan unfulfilled condition exists after the date
specified for fulfillment in the terms of a purchase agreement
for the conveyance of residential real property, which by the
terms of the purchase agreement cancels the purchase agreement,
either the purchaser or the seller may confirm the cancellation
by serving upon the other party new text beginto the purchase agreement new text endand
any third party that is holding earnest money under the purchase
agreement a notice:

(1) specifying the residential real property that is the
subject of the purchase agreement, including the legal
description;

(2) specifying the purchase agreement by date and names of
parties, and the unfulfilled condition deleted text beginor defaultdeleted text end; and

(3) stating that the purchase agreement has been canceled.

(b) The notice must be served in the manner provided in
section 559.21, subdivision 4, paragraphs (a) and (b).

(c) The cancellation of the purchase agreement is complete,
unless, within 15 days after the service of the notice new text beginupon the
other party to the purchase agreement
new text end, the party upon whom the
notice was served secures from a court an order suspending the
cancellation.

Subd. 5.

Form of notice of cancellation.

(a) For
purposes of subdivision 3, the term "notice" means a writing
stating the information required in subdivision 3, paragraph
(a), stating the name, address, and telephone number of that
party serving the notice or of an attorney authorized by such
party to serve the notice, and including the following
information in 12-point or larger underlined uppercase type, or
8-point type if publisheddeleted text begin, or in large legible handwritten
letters
deleted text end:

"THIS NOTICE IS TO INFORM YOU THAT BY THIS NOTICE THE
(SELLER) (PURCHASER) (STRIKE ONE) HAS BEGUN PROCEEDINGS UNDER
MINNESOTA STATUTES, SECTION 559.217, TO CANCEL YOUR PURCHASE
AGREEMENT FOR THE (PURCHASE) (SALE) (STRIKE ONE) OF THE ABOVE
PROPERTY FOR THE REASONS SPECIFIED IN THIS NOTICE. THE PURCHASE
AGREEMENT WILL BE CANCELED ... DAYS AFTER (SERVICE OF THIS
NOTICE UPON YOU) (THE FIRST DAY OF PUBLICATION OF THIS NOTICE)
(STRIKE ONE) UNLESS BEFORE THEN:

(A) YOU HAVE FULLY COMPLIED WITH ALL OF YOUR OBLIGATIONS
UNDER THE PURCHASE AGREEMENT THAT WERE REQUIRED TO BE PERFORMED
AS OF THE DATE OF SERVICE OF THIS NOTICEdeleted text begin,deleted text endINCLUDINGnew text begin,new text endWITHOUT
LIMITATION, THE ITEMS OF DEFAULT SPECIFIED IN THIS NOTICEdeleted text begin;
OR
deleted text endnew text beginAND THE UNFULFILLED CONDITIONS SPECIFIED IN THIS NOTICE ARE
COMPLETED, INCLUDING, IF APPLICABLE, COMPLETION OF THE PURCHASE
OR SALE OF THE RESIDENTIAL REAL PROPERTY ACCORDING TO THE TERMS
OF THE PURCHASE AGREEMENT; OR
new text end

(B) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE
TERMINATION OF THE PURCHASE AGREEMENT BE SUSPENDED UNTIL YOUR
CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING, OR
SETTLEMENT. YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND
GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES.

IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS
WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR PURCHASE
AGREEMENT WILL BE CANCELED AT THE END OF THE PERIOD (AND YOU
WILL LOSE ALL EARNEST MONEY YOU HAVE PAID ON THE PURCHASE
AGREEMENT) (STRIKE IF NOT APPLICABLE); AND YOU MAY LOSE YOUR
RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE.

new text begin HOWEVER, IF WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE
YOU SERVE YOUR OWN NOTICE UNDER MINNESOTA STATUTES, SECTION
559.217, YOUR PURCHASE AGREEMENT WILL BE IMMEDIATELY CANCELED,
BUT YOUR ENTITLEMENT TO EARNEST MONEY MUST BE DETERMINED BY A
COURT OR DETERMINED BY ARBITRATION IF AGREED TO BY THE PARTIES.
new text end

IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, CONTACT AN
ATTORNEY IMMEDIATELY."

(b) For purposes of subdivision 4, the term "notice" means
a writing stating the information required in subdivision 4,
paragraph (a), stating the name, address, and telephone number
of the party serving the notice or of an attorney authorized by
deleted text begin that deleted text endnew text beginsuch new text endparty to serve the notice, and including the following
information in 12-point or larger underlined uppercase type, or
8-point type if publisheddeleted text begin, or in large legible handwritten
letters
deleted text end:

"THIS NOTICE IS PURSUANT TO MINNESOTA STATUTES, SECTION
559.217, TO INFORM YOU THAT YOUR PURCHASE AGREEMENT FOR THE
(PURCHASE) (SALE) (STRIKE ONE) OF THE ABOVE PROPERTY HAS BEEN
CANCELED FOR THE REASONS SPECIFIED IN THIS NOTICE. THE
CANCELLATION WILL BE CONFIRMED ... DAYS AFTER (SERVICE OF THIS
NOTICE UPON YOU) (THE FIRST DAY OF PUBLICATION OF THIS NOTICE)
(STRIKE ONE) UNLESS BEFORE THEN YOU SECURE FROM A DISTRICT COURT
AN ORDER THAT THE CONFIRMATION OF CANCELLATION OF THE PURCHASE
AGREEMENT BE SUSPENDED UNTIL YOUR CLAIMS OR DEFENSES ARE FINALLY
DISPOSED OF BY TRIAL, HEARING, OR SETTLEMENT. YOUR ACTION MUST
SPECIFICALLY STATE THOSE FACTS AND GROUNDS THAT DEMONSTRATE YOUR
CLAIMS OR DEFENSES.

IF YOU DO NOT OBTAIN SUCH A COURT ORDER WITHIN THE TIME
PERIOD SPECIFIED IN THIS NOTICE, THE CONFIRMATION OF
CANCELLATION OF YOUR PURCHASE AGREEMENT WILL BE FINAL AT THE END
OF THE PERIOD (AND YOU WILL LOSE ALL EARNEST MONEY YOU HAVE PAID
ON THE PURCHASE AGREEMENT) (STRIKE IF NOT APPLICABLE); AND YOU
MAY LOSE YOUR RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU
MIGHT HAVE.

new text begin HOWEVER, IF WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE
YOU SERVE YOUR OWN NOTICE UNDER MINNESOTA STATUTES, SECTION
559.217, YOUR PURCHASE AGREEMENT WILL BE IMMEDIATELY CANCELED,
BUT YOUR ENTITLEMENT TO EARNEST MONEY MUST BE DETERMINED BY A
COURT OR DETERMINED BY ARBITRATION IF AGREED TO BY THE PARTIES.
new text end

IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, CONTACT AN
ATTORNEY IMMEDIATELY."

Subd. 6.

new text beginsuspension of cancellation,new text endattorney fees, court
fees, and costs of service.

deleted text beginIf the party deleted text endnew text beginA seller or a
purchaser
new text endupon whom the notice is served deleted text begincommences deleted text endnew text beginmay commence
new text end a proceeding new text beginunder section 559.211 new text endto obtain a court order to
suspend the cancellation of a purchase agreement under this
section, new text beginand in the proceeding new text endthe court deleted text beginshall deleted text endnew text beginmay new text endaward court
filing fees, attorney fees, and costs of service actually
expended to the prevailing party in an amount not to exceed
$3,000.

Subd. 7.

Affidavit of cancellation.

(a) After a
cancellation under subdivision 3 or a confirmation of
cancellation under subdivision 4, the purchase agreement is void
and of no further force or effect, and, except as provided in
subdivision 2, any earnest money held under the purchase
agreement must be distributed to, and become the sole property
of, the party completing the cancellation of the purchase
agreement.

(b) When a cancellation under this section has been
completed, the party who served the notice, or that party's
attorney, may execute an affidavit stating that the party caused
a notice of cancellation to be served upon the other party, that
the other party neither complied with the actions required in
the notice, if applicable, nor obtained a court order suspending
the cancellation, and that the property is residential real
property.

(c) A copy of the affidavit of cancellation, when attached
to a copy of the notice, is prima facie evidence of the facts
therein stated.

(d) Except as provided in subdivision 2, the affidavit of
cancellation, when delivered to a deleted text beginperson deleted text endnew text beginthird party new text endholding
earnest money under the purchase agreement, is a sufficient
basis for that person to release the earnest money to the party
initiating new text beginand completing new text endthe cancellation.

(e) If either a seller or purchaser commences a
cancellation proceeding under this section and before completion
of the first proceeding the other party initiates a cancellation
proceeding under this section, either party or that party's
attorney may execute an affidavit stating that both parties
caused the notice of cancellation to be served upon the other
party and further specifying the date the second notice of
cancellation was served upon the other party. A copy of the
affidavit of cancellation, when attached to copies of both
notices of cancellation, is prima facie evidence of the
cancellation of the purchase agreement and of the effective date
of the cancellation of the purchase agreement.

Subd. 8.

Attorney as agent for service.

Any attorney
authorized to serve the notice of cancellation by a party
initiating a cancellation under this section is designated as
the attorney who may receive service as agent for the party
initiating the cancellation of all summons, complaints, orders,
and motions made in connection with an action by the party upon
whom the notice is served to restrain the cancellation. Service
in the action may be made upon the party initiating the
cancellation by mailing a copy of the process to such party or
to such party's attorney, by first class mail, postage prepaid,
to the address stated in the notice.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2005,
and applies to purchase agreements entered into on or after that
date.
new text end

Sec. 5.

Minnesota Statutes 2004, section 580.041, is
amended by adding a subdivision to read:


new text begin Subd. 1a. new text end

new text begin Applicability. new text end

new text begin This section applies to
foreclosure of mortgages under this chapter on property
consisting of one to four family dwelling units, one of which
the owner occupies as the owner's principal place of residency
on the date of service of the notice of sale on the owner.
new text end

Sec. 6.

Minnesota Statutes 2004, section 580.041, is
amended by adding a subdivision to read:


new text begin Subd. 3. new text end

new text begin Affidavit. new text end

new text begin Any person may establish compliance
with or inapplicability of this section by recording, with the
county recorder or registrar of titles, an affidavit by a person
having knowledge of the facts, stating that the notice required
by this section has been delivered in compliance with this
section or that this section is not applicable because the
property described in the notice of foreclosure did not consist
of one to four family dwelling units, one of which was occupied
by the owner as the owner's principal place of residency. The
affidavit and a certified copy of a recorded affidavit shall be
prima facie evidence of the facts stated in the affidavit. The
affidavit may be recorded regarding any foreclosure sale,
including foreclosure sales which occurred prior to the
effective date of this section, and may be recorded separately
or as part of the record of a foreclosure.
new text end

Sec. 7.

Minnesota Statutes 2004, section 580.041, is
amended by adding a subdivision to read:


new text begin Subd. 4. new text end

new text begin Validation of foreclosure sales. new text end

new text begin No mortgage
foreclosure sale under this chapter shall be invalid because of
failure to comply with this section unless an action to
invalidate the sale is commenced and a notice of lis pendens is
filed with the county recorder or registrar of titles within one
year after the last day of the redemption period of the
mortgagor, the mortgagor's personal representatives, or assigns.
This subdivision shall not affect any action or proceeding
pending on August 1, 2005, or which is commenced before February
1, 2006, in any court of this state, provided a notice of lis
pendens of the action is filed with the county recorder or
registrar of titles before February 1, 2006.
new text end

Sec. 8.

Laws 2005, chapter 30, section 1, is amended to
read:


Section 1.

Deletion from mississippi recreational river
land use district in wright and sherburne counties.


(a) The following area is deleted from the Mississippi
Recreational River Land Use District in Wright County: That
part of government lots 3 and 4 located in Section 26, Township
121 North, Range 23 West, lying south and west of Wright County
State-Aid Highway Number 42.

(b) The following area is deleted from the Mississippi
Recreational River Land Use District in Sherburne County: deleted text beginThat
part of government lots 1, 2, and 3 in Section 35, Township 33
North, Range 28 West, lying north and east of Sherburne County
Road Number 14; and that part of government lot 2 of Section 36,
Township 33 North, Range 28 West, lying north and east of
Sherburne County Road Number 14
deleted text endnew text beginThat part of Government Lots 1
and 2 in Section 35, Township 33 North, Range 28 West, Sherburne
County, Minnesota, lying north and east of the centerline of
County State Aid Highway No. 14 and that part of said Government
Lot 2 and that part of Government Lot 3, said Section 35 lying
north and east of County State Aid Highway No. 11. Together
with that part of Government Lot 2, Section 36, said Township 33
North, Range 28 West, lying north and east of said centerline of
County State Aid Highway No. 14
new text end.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day
following final enactment.
new text end

Sec. 9. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall renumber Minnesota Statutes,
section 580.041, subdivision 1, as subdivision 1b.
new text end