Minnesota Legislature
SF 2327
as introduced - 89th Legislature (2015 - 2016) Posted on 03/15/2016 09:10am
Current Version - as introduced
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A bill for an act
relating to civil actions; clarifying certain provisions for receiverships and
assignments for the benefit of creditors; providing for a short form of assignment
for recording with a deed to transfer real property; amending Minnesota Statutes
2014, sections 559.17, subdivision 2; 576.22; 576.29, subdivision 1; 576.30;
576.45, subdivision 3; 576.47; 577.12; 577.15.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 559.17, subdivision 2, is amended to read:
Subd. 2.
Assignment; conditions.
A mortgagor may assign, as additional security
for the debt secured by the mortgage, the rents and profits from the mortgaged real
property, if the mortgage:
(1) was executed, modified or amended subsequent to August 1, 1977;
(2) secured an original principal amount of $100,000 or more or is a lien upon
residential real estate containing more than four dwelling units; and
(3) is not a lien upon property which was:
(i) entirely homesteaded as agricultural property; or
(ii) residential real estate containing four or fewer dwelling units where at least
one of the units is homesteaded. The assignment may be enforced, but only against the
nonhomestead portion of the mortgaged property, as follows:
(a) if, by the terms of an assignment, a receiver is to be appointed upon the
occurrence of some specified event, and a showing is made that the event has occurred,
the court shall, without regard to waste, adequacy of the security, or solvency of the
mortgagor, appoint a receiver who shall, with respect to the excess cash remaining after
application as provided in section 576.25, subdivision 5, apply it as prescribed by the
assignment. If the assignment so provides, the receiver shall apply the excess cash in the
manner set out herein from the date of appointment through the entire redemption period
from any foreclosure sale. Subject to the terms of the assignment, the receiver shall have
the powers and duties as set forth in section 576.25, subdivision 5; or
(b) if no provision is made for the appointment of a receiver in the assignment or if by
the terms of the assignment a receiver may be appointed, the assignment shall be binding
upon the assignor unless or until a receiver is appointed without regard to waste, adequacy
of the security or solvency of the mortgagor, but only in the event of default in the terms and
conditions of the mortgage, and only in the event the assignment requires the holder thereof
to deleted text begin firstdeleted text end apply the rents and profits received as provided in section 576.25, subdivision 5, new text begin or,
as to an assignment executed prior to August 1, 2012, as provided in Minnesota Statutes
2010, section 576.01, subdivision 2, new text end in which case the same shall operate against and be
binding upon the occupiers of the premises from the date of recording by the holder of the
assignment in the office of the county recorder or the office of the registrar of titles for the
county in which the property is located of a notice of default in the terms and conditions
of the mortgage and service of a copy of the notice upon the occupiers of the premises.
The holder of the assignment shall apply the rents and profits received in accordance with
the terms of the assignment, and, if the assignment so provides, for the entire redemption
period from any foreclosure sale. A holder of an assignment who enforces it in accordance
with this clause shall not be deemed to be a mortgagee in possession with attendant liability.
Nothing contained herein shall prohibit the right to reinstate the mortgage
debt granted pursuant to section 580.30, nor the right to redeem granted pursuant to
sections 580.23 and 581.10, and any excess cash, as that term is used herein, collected
by the receiver under clause (a), or any rents and profits taken by the holder of the
assignment under clause (b), shall be credited to the amount required to be paid to effect
a reinstatement or redemption.
Sec. 2.
Minnesota Statutes 2014, section 576.22, is amended to read:
576.22 APPLICABILITY OF CHAPTER AND OF COMMON LAW.
(a) This chapter applies to receiverships provided for in section 576.25, subdivisions
2 to 6, and to receiverships:
(1) pursuant to section 193.147, in connection with a mortgage on an armory;
(2) pursuant to section 223.17, subdivision 8, paragraph (b), in connection with
a defaulting grain buyer;
(3) pursuant to section 232.22, subdivision 7, paragraph (c), in connection with a
defaulting public grain warehouse;
(4) pursuant to section 296A.22, in connection with nonpayment of tax;
(5) pursuant to deleted text begin sectiondeleted text end new text begin sections 302A.751,new text end 302A.753, new text begin 308A.941, new text end 308A.945,
new text begin 308B.931, new text end 308B.935, new text begin 317A.751, new text end 317A.753, deleted text begin ordeleted text end new text begin 322B.833, andnew text end 322B.836, new text begin or new text end in an action
relating to the dissolution of deleted text begin andeleted text end new text begin a foreignnew text end entity deleted text begin and relating to, in like cases,deleted text end new text begin withnew text end property
within the state deleted text begin of foreign entitiesdeleted text end ;
(6) pursuant to section 321.0703, in connection with the rights of a creditor of a
partner or transferee;
(7) pursuant to section 322.22, in connection with the rights of creditors of limited
partners;
(8) pursuant to section 323A.0504, in connection with a partner's transferable interest;
(9) pursuant to section 453.55, in connection with bonds and notes;
(10) pursuant to section 453A.05, in connection with bonds and notes;
(11) pursuant to section 513.47, in connection with a proceeding for relief with
respect to a transfer fraudulent as to a creditor or creditors;
(12) pursuant to section 514.06, in connection with the severance of a building
and resale;
(13) pursuant to section 515.23, in connection with an action by a unit owners'
association to foreclose a lien for nonpayment of delinquent assessments against
condominium units;
(14) pursuant to section 518A.71, in connection with the failure to pay, or to provide
security for, maintenance or support payments;
(15) pursuant to section 559.17, in connection with assignments of rents; however,
any receiver appointed under section 559.17 shall be a limited receiver, and the court shall
apply the provisions of this chapter to the extent not inconsistent with section 559.17;
(16) pursuant to section 571.84, in connection with a garnishee in possession of
property subject to a garnishment proceeding;
(17) pursuant to section 575.05, in connection with property applied to judgment;
(18) pursuant to section 575.06, in connection with adverse claimants;
(19) pursuant to sections 582.05 to 582.10, in connection with mortgage
foreclosures; however, any receiver appointed under sections 582.05 to 582.10 shall be a
limited receiver, and the court shall apply the provisions of this chapter to the extent not
inconsistent with sections 582.05 to 582.10;
(20) pursuant to section 609.904, in connection with criminal penalties; or
(21) pursuant to section 609.907, in connection with preservation of property
subject to forfeiture.
(b) This chapter does not apply to any receivership in which the receiver is a state
agency or in which the receiver is appointed, controlled, or regulated by a state agency
unless otherwise provided by law.
(c) In receiverships not specifically referenced in paragraph (a) or (b), the court, in
its discretion, may apply provisions of this chapter to the extent not inconsistent with
the statutes establishing the receiverships.
(d) Unless explicitly displaced by this chapter, the provisions of other statutory law
and the principles of common law remain in full force and effect and supplement the
provisions of this chapter.
Sec. 3.
Minnesota Statutes 2014, section 576.29, subdivision 1, is amended to read:
Subdivision 1.
Powers.
(a) A receiver, whether general or limited, shall have the
following powers in addition to those specifically conferred by this chapter or otherwise
by statute, rule, or order of the court:
(1) the power to collect, control, manage, conserve, and protect receivership property;
(2) the power to incur and pay expenses incidental to the receiver's exercise of the
powers or otherwise in the performance of the receiver's duties;
(3) the power to assert rights, claims, causes of action, or defenses that relate to
receivership property; and
(4) the power to seek and obtain instruction from the court with respect to any
matter relating to the receivership property, the exercise of the receiver's powers, or the
performance of the receiver's duties.
(b) In addition to the powers provided in paragraph (a), a general receiver shall
have the power:
(1) to (i) assertnew text begin , or when authorized by the court, to release,new text end any rights, claims, causes
of action, or defenses of the respondent to the extent any rights, claims, causes of action,
or defenses are receivership property; (ii) maintain in the receiver's name or in the name of
the respondent any action to enforce any right, claim, cause of action, or defense; and (iii)
intervene in actions in which the respondent is a party for the purpose of exercising the
powers under this clause or requesting transfer of venue of the action to the court;
(2) to pursue any claim or remedy that may be asserted by a creditor of the
respondent under sections 513.41 to 513.51;
(3) to compel any person, including the respondent, and any party, by subpoena
pursuant to Rule 45 of the Minnesota Rules of Civil Procedure, to give testimony or to
produce and permit inspection and copying of designated books, documents, electronically
stored information, or tangible things with respect to receivership property or any other
matter that may affect the administration of the receivership;
(4) to operate any business constituting receivership property in the ordinary course
of the business, including deleted text begin the use, sale,deleted text end new text begin using, selling,new text end or deleted text begin lease ofdeleted text end new text begin leasing new text end property of the
business or otherwise constituting receivership propertydeleted text begin , and thedeleted text end new text begin ;new text end incurring and payment
of expenses of the business or other receivership propertynew text begin ; and hiring employees and
appointing officers to act on behalf of the businessnew text end ;
(5) if authorized by an order of the court following notice and a hearing, to use,
improve, sell, or lease receivership property other than in the ordinary course of business;
and
(6) if appointed pursuant to section 302A.753, 308A.945, 308B.935, 317A.753, or
322B.836, to exercise all of the powers and authority provided by the section or order of
the court.
Sec. 4.
Minnesota Statutes 2014, section 576.30, is amended to read:
576.30 RECEIVER AS LIEN CREDITOR; REAL deleted text begin ESTATEdeleted text end new text begin PROPERTY
new text end RECORDING; SUBSEQUENT SALES OF REAL deleted text begin ESTATEdeleted text end new text begin PROPERTYnew text end .
Subdivision 1.
Receiver as lien creditor.
As of the time of appointment, the
receiver shall have the powers and priority as if it were a creditor that obtained a judicial
lien at the time of appointment pursuant to sections 548.09 and 550.10 on all of the
receivership property, subject to satisfying the recording requirements as to real property
described in subdivision 2.
Subd. 2.
Real deleted text begin estatedeleted text end new text begin propertynew text end recording.
If any interest in real deleted text begin estatedeleted text end new text begin propertynew text end is
included in the receivership property, a notice of lis pendens shall be recorded as soon as
practicable with the county recorder or registrar of titles, as appropriate, of the county
in which the real property is located. The priority of the receiver as lien creditor against
real property shall be from the time of recording of the notice of lis pendens, except as to
persons with actual or implied knowledge of the appointment under section 507.34.
Subd. 3.
Subsequent sales of real deleted text begin estatedeleted text end new text begin propertynew text end .
new text begin
The following documents are
prima facie evidence of the authority to sell and convey the real property:
new text end
new text begin (1) new text end the notice of lis pendensdeleted text begin ,deleted text end new text begin ;
new text end
new text begin (2)new text end a court order deleted text begin authorizing the receiver to sell real propertydeleted text end certified by the court
administratordeleted text begin , and a deed executed by the receiver recorded with the county recorder or
registrar of titles, as appropriate, of the county in which the real property is located, and
upon execution of the deed by the receiver shall be prima facie evidence of the authority
ofdeleted text end new text begin authorizingnew text end the receiver to sell deleted text begin and conveydeleted text end new text begin , or causenew text end thenew text begin respondent to sell,new text end real property
deleted text begin described in the deed.deleted text end new text begin ; and
new text end
new text begin (3) a deed executed by the receiver, or by the respondent if authorized by the court.new text end
The court may also require a motion for an order for sale of the real property or a
motion for an order confirming sale of the real property.
Sec. 5.
Minnesota Statutes 2014, section 576.45, subdivision 3, is amended to read:
Subd. 3.
Termination by receiver.
For good cause, the court may authorize the
receiver to terminate an executory contract. The receiver's right to possess or use property
new text begin or receive services new text end pursuant to the executory contract shall terminate at the termination of
the executory contract. Except as to the claim against the receivership under subdivision 1,
new text begin if a termination of an executory contract constitutes a breach of the executory contract, new text end the
termination shall create a claim equal to the damages, if any, for deleted text begin adeleted text end breach of new text begin the new text end contract as
if the breach of contract had occurred immediately before the time of appointment. Any
claim arising under this section for termination of an executory contract shall be presented
or filed in the same manner as other claims in the receivership no later than the later of:
(1) the time set for filing of claims in the receivership; or (2) 28 days after the notice by
the receiver of the termination of the executory contract.
Sec. 6.
Minnesota Statutes 2014, section 576.47, is amended to read:
576.47 ABANDONMENT OF PROPERTY.
The court may authorize the receiver to abandon new text begin to the respondent new text end any receivership
property that is burdensome or is not of material value to the receivership. deleted text begin Property that is
abandoned is no longer receivership property.
deleted text end
Sec. 7.
Minnesota Statutes 2014, section 577.12, is amended to read:
577.12 REQUISITES.
A person may execute a written assignment of property to one or more assignees for
the benefit of creditors in conformity with the provisions of this chapter. Every assignment
for the benefit of creditors subject to this chapter made by an assignor of the whole or any
part of the assignor's property, real or personal, for the benefit of creditors, shall be: (1) to
a deleted text begin resident of the statedeleted text end new text begin personnew text end eligible to be a receiver under section 576.26, in writing,
subscribed and acknowledged by the assignor, and (2) filed by the assignor or the assignee
with the court administrator of the district court of the county in which the assignor, or
one of the assignors if there is more than one, resides, or in which the principal place
of business of an assignor engaged in business is located. The district court shall have
supervision over the assignment property and of all proceedings under this chapter.new text begin The
assignee shall be deemed to have submitted to the jurisdiction of the district court.
new text end
Sec. 8.
Minnesota Statutes 2014, section 577.15, is amended to read:
577.15 ASSIGNEE AS LIEN CREDITOR; REAL deleted text begin ESTATEdeleted text end new text begin PROPERTY
new text end RECORDING.
Subdivision 1.
Assignee as lien creditor.
As of the filing of the assignment, the
assignee shall have the powers and priority of a creditor that obtained a judicial lien at
the time of assignment pursuant to sections 548.09 and 550.10 on all of the assignment
property subject to satisfying the recording requirements as to real property described in
subdivision 2.
Subd. 2.
Real deleted text begin estatedeleted text end new text begin propertynew text end recording.
If any interest in real deleted text begin estatedeleted text end new text begin propertynew text end is
included in the assignment property, the assignment shall be effective as a deeddeleted text begin , anddeleted text end new text begin .new text end A
notice of deleted text begin adeleted text end lis pendens shall be recorded as soon as practicable with the county recorder
or registrar of titles, as appropriate, of the county in which the real property is located.
The priority of the assignee as lien creditor against real property shall be from the time
of recording of the notice of lis pendens, except as to persons with actual or implied
knowledge of the assignment under section 507.34. new text begin A short form of new text end the assignment
deleted text begin executeddeleted text end new text begin acknowledgednew text end by the assignor and deleted text begin certified by the court administratordeleted text end new text begin assignee
new text end and a deed executed by the assignee shall be recorded with the county recorder or registrar
of titles, as appropriate, of the county in which the real property is located, and upon
execution of the deed by the assignee shall be prima facie evidence of the authority of
the assignee to convey the real property described in the assignment.new text begin The short form of
the assignment shall contain the following information:
new text end
new text begin
(1) the identity of the assignor and assignee;
new text end
new text begin
(2) the legal description of the real property;
new text end
new text begin
(3) the date of the assignment; and
new text end
new text begin
(4) a statement that the assignor has made an assignment under this chapter, and that
the assignment has been accepted by the assignee.
new text end