SF 4138

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/26/2024 10:05am

A bill for an act
relating to commerce; establishing consumer protections with respect to residential
real estate; requiring background checks for a residential loan originator; requiring
financial institution information be kept confidential; amending Minnesota Statutes
2022, sections 45.011, subdivision 1; 58.06, by adding a subdivision; proposing
coding for new law in Minnesota Statutes, chapters 65A; 332; 513; proposing
coding for new law as Minnesota Statutes, chapter 46A; repealing Minnesota
Statutes 2022, section 332.3351.

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

Section 1.

Minnesota Statutes 2022, section 45.011, subdivision 1, is amended to read:

Subdivision 1.

Scope.

As used in chapters 45 to 80C, 80E to 83, 155A, 216C, 332, 332A,
332B, 345, and 359, and sections 81A.22 to 81A.37; 123A.21, subdivision 7, paragraph
(a), clause (23); 123A.25; 325D.30 to 325D.42; 326B.802 to 326B.885; 386.62 to 386.78;
471.617; deleted text begin and deleted text end 471.982 deleted text begin , deleted text end new text begin ; and 513.80, new text end unless the context indicates otherwise, the terms defined
in this section have the meanings given them.

Sec. 2.

new text begin [46A.08] CONFIDENTIALITY.
new text end

new text begin Subdivision 1. new text end

new text begin Financial institution information. new text end

new text begin (a) Any documents, materials, or
other information in the control or possession of the department that are furnished by a
licensee or a licensee's employee or agent acting on behalf of a financial institution pursuant
to section 46A.06 or that are obtained by the commissioner in an investigation or examination
pursuant to section 46A.07: (1) are classified as confidential, protected nonpublic, or both;
(2) are not subject to subpoena; and (3) are not subject to discovery or admissible in evidence
in any private civil action.
new text end

new text begin (b) Notwithstanding paragraph (a), clauses (1) to (3), the commissioner is authorized to
use the documents, materials, or other information in the furtherance of any regulatory or
legal action brought as a part of the commissioner's duties.
new text end

new text begin Subd. 2. new text end

new text begin Certain testimony prohibited. new text end

new text begin Neither the commissioner nor any person who
received documents, materials, or other information while acting under the authority of the
commissioner is permitted or required to testify in a private civil action concerning
confidential documents, materials, or information subject to subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Information sharing. new text end

new text begin In order to assist in the performance of the commissioner's
duties under sections 46A.01 to 46A.08, the commissioner may:
new text end

new text begin (1) share documents, materials, or other information, including the confidential and
privileged documents, materials, or information subject to subdivision 1, with other state,
federal, and international regulatory agencies, with the Conference of State Bank Supervisors,
the Conference of State Bank Supervisors' affiliates or subsidiaries, and with state, federal,
and international law enforcement authorities, provided that the recipient agrees in writing
to maintain the confidentiality and privileged status of the document, material, or other
information;
new text end

new text begin (2) receive documents, materials, or information, including otherwise confidential and
privileged documents, materials, or information, from the Conference of State Bank
Supervisors, the Conference of State Bank Supervisors' affiliates or subsidiaries, and from
regulatory and law enforcement officials of other foreign or domestic jurisdictions, and
must maintain as confidential or privileged any document, material, or information received
with notice or the understanding that the document, material, or information is confidential
or privileged under the laws of the jurisdiction that is the source of the document, material,
or information;
new text end

new text begin (3) share documents, materials, or other information subject to subdivision 1 with a
third-party consultant or vendor, provided the consultant agrees in writing to maintain the
confidentiality and privileged status of the document, material, or other information; and
new text end

new text begin (4) enter into agreements governing the sharing and use of information that are consistent
with this subdivision.
new text end

new text begin Subd. 4. new text end

new text begin No waiver of privilege or confidentiality; information retention. new text end

new text begin (a) The
disclosure of documents, materials, or information to the commissioner under this section
or as a result of sharing as authorized in subdivision 3 does not result in a waiver of any
applicable privilege or claim of confidentiality in the documents, materials, or information.
new text end

new text begin (b) A document, material, or information disclosed to the commissioner under this section
about a cybersecurity event must be retained and preserved by the financial institution for
five years.
new text end

new text begin Subd. 5. new text end

new text begin Certain actions public. new text end

new text begin Nothing in sections 46A.01 to 46A.08 prohibits the
commissioner from releasing final, adjudicated actions that are open to public inspection
pursuant to chapter 13 to a database or other clearinghouse service maintained by the
Conference of State Bank Supervisors, the Conference of State Bank Supervisors' affiliates,
or the Conference of State Bank Supervisors' subsidiaries.
new text end

new text begin Subd. 6. new text end

new text begin Classification, protection, and use of information by others. new text end

new text begin Documents,
materials, or other information in the possession or control of the Conference of State Bank
Supervisors or a third-party consultant pursuant to sections 46A.01 to 46A.08: (1) are
classified as confidential, protected nonpublic, and privileged; (2) are not subject to subpoena;
and (3) are not subject to discovery or admissible in evidence in a private civil action.
new text end

Sec. 3.

Minnesota Statutes 2022, section 58.06, is amended by adding a subdivision to
read:

new text begin Subd. 5. new text end

new text begin Background checks. new text end

new text begin In connection with an application for a residential mortgage
loan originator or servicer license, any person in control of an applicant must, at a minimum,
provide the Nationwide Multistate Licensing System and Registry information concerning
the person's identity, including:
new text end

new text begin (1) fingerprints for submission to the Federal Bureau of Investigation and a governmental
agency or entity authorized to receive the information for a state, national, and international
criminal history background check; and
new text end

new text begin (2) personal history and experience in a form prescribed by the Nationwide Multistate
Licensing System and Registry, including the submission of authorization for the Nationwide
Multistate Licensing System and Registry and the commissioner to obtain:
new text end

new text begin (i) an independent credit report obtained from a consumer reporting agency described
in United States Code, title 15, section 1681a(p); and
new text end

new text begin (ii) information related to administrative, civil, or criminal findings by a governmental
jurisdiction.
new text end

Sec. 4.

new text begin [65A.3025] CONDOMINIUM AND TOWNHOUSE POLICIES;
COORDINATION OF BENEFITS FOR LOSS ASSESSMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section the following terms have
the meanings given.
new text end

new text begin (b) "Association" has the meaning given in section 515B.1-103, clause (4).
new text end

new text begin (c) "Unit owner" has the meaning given in section 515B.1-103, clause (37).
new text end

new text begin Subd. 2. new text end

new text begin Loss assessment. new text end

new text begin (a) If a loss assessment is charged by an association to an
individual unit owner the insurance policy in force at the time of the assessable loss must
pay the loss assessment, up to the limits provided in the policy, notwithstanding any policy
provisions regarding when loss assessment coverage accrues, and subject to any other terms,
conditions, and exclusions in the policy, if the following conditions are met:
new text end

new text begin (1) the unit owner at the time of the assessable loss is the owner of the property listed
on the policy at the time the loss assessment is charged; and
new text end

new text begin (2) if the insurance policy in force at the time of the assessable loss provides loss
assessment coverage.
new text end

new text begin (b) If a loss assessment is charged by an association to an individual unit owner the
insurance policy in force at the time the loss assessment is charged must pay the assessment,
up to the limits provided in the policy, notwithstanding any policy provisions regarding
when loss assessment coverage accrues, and subject to any other terms, conditions, and
exclusions in the policy, if the following conditions are met:
new text end

new text begin (1) the unit owner at the time of the loss assessment is charged is different than the unit
owner at the time of the assessable loss; and
new text end

new text begin (2) the insurance policy in force at the time the loss assessment is charged provides loss
assessment coverage.
new text end

new text begin (c) For a loss assessment under paragraph (b), an insurer may require evidence
documenting that the transfer of ownership occurred prior to the assessment before the
insurer affords coverage.
new text end

Sec. 5.

new text begin [332.3352] WAIVER OF LICENSING AND REGISTRATION.
new text end

new text begin The commissioner of commerce may, by order, waive the licensing and registration
requirements of this chapter for a nonresident collection agency and its affiliated collectors
if: (1) a written reciprocal licensing agreement is in effect between the commissioner and
the licensing officials of the collection agency's home state; and (2) the collection agency
is licensed in good standing in that state.
new text end

Sec. 6.

new text begin [513.80] RESIDENTIAL REAL ESTATE SERVICE AGREEMENTS;
UNFAIR SERVICE AGREEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "County recorder" has the meaning given in section 13.045, subdivision 1.
new text end

new text begin (c) "Person" means natural persons, corporations both foreign and domestic, trusts,
partnerships both limited and general, incorporated or unincorporated associations,
companies, business entities, and any other legal entity or any other group associated in fact
although not a legal entity or any agent, assignee, heir, employee, representative, or servant
thereof.
new text end

new text begin (d) "Record" or "recording" means placement of a document or instrument in the official
county public land records.
new text end

new text begin (e) "Residential real property" means real property that is located in Minnesota occupied,
or intended to be occupied, by one to four families as their residence.
new text end

new text begin (f) "Service agreement" means a contract under which a person agrees to provide real
estate broker services as defined in section 82.55, subdivision 19, in connection with the
purchase or sale of residential real property.
new text end

new text begin (g) "Service provider" means an individual or entity that provides services to a person
pursuant to a service agreement.
new text end

new text begin Subd. 2. new text end

new text begin Unfair service agreements; prohibition. new text end

new text begin (a) A service agreement subject to
this section is unfair and prohibited if any part of the agreement provides an exclusive right
to a service provider for a term in excess of one year after the time the service agreement
is entered into and:
new text end

new text begin (1) purports to run with the land or to be binding on future owners of interests in the real
property;
new text end

new text begin (2) allows for assignment of the right to provide service without notice to and consent
of the residential real property's owner, including a contract for deed vendee;
new text end

new text begin (3) is recorded or purports to create a lien, encumbrance, or other real property security
interest; or
new text end

new text begin (4) contains a provision that purports to automatically renew the agreement upon its
expiration.
new text end

new text begin (b) The following are not unfair service agreements under this section:
new text end

new text begin (1) a home warranty or similar product that covers the cost of maintaining a major home
system or appliance for a fixed period;
new text end

new text begin (2) an insurance contract;
new text end

new text begin (3) a mortgage loan or a commitment to make or receive a mortgage loan;
new text end

new text begin (4) an option or right of refusal to purchase a residential real property;
new text end

new text begin (5) a declaration of any covenants, conditions, or restrictions created in the formation
of a homeowners association, a group of condominium owners, or other common interest
community or an amendment to the covenants, conditions, or restrictions;
new text end

new text begin (6) a maintenance or service agreement entered by a homeowners association in a
common interest community;
new text end

new text begin (7) a security agreement governed by chapter 336 that relates to the sale or rental of
personal property or fixtures; or
new text end

new text begin (8) a contract with a gas, water, sewer, electric, telephone, cable, or other utility service
provider.
new text end

new text begin (c) This section does not impair any lien right granted under Minnesota law or that is
judicially imposed.
new text end

new text begin Subd. 3. new text end

new text begin Recording prohibited. new text end

new text begin (a) A person is prohibited from:
new text end

new text begin (1) presenting or sending an unfair service agreement or notice or memorandum of an
unfair service agreement to any county recorder to record; or
new text end

new text begin (2) causing an unfair service agreement or notice or memorandum of an unfair service
agreement to be recorded by a county recorder.
new text end

new text begin (b) If a county recorder records an unfair service agreement, the county recorder does
not incur liability.
new text end

new text begin (c) If an unfair service agreement is recorded, the recording does not create a lien or
provide constructive notice to any third party, bona fide purchaser, or creditor.
new text end

new text begin Subd. 4. new text end

new text begin Unfair service agreements unenforceable. new text end

new text begin A service agreement that is unfair
under this section is unenforceable and does not create a contractual obligation or relationship.
Any waiver of a consumer right, including a right to trial by jury, in an unfair service
agreement is void.
new text end

new text begin Subd. 5. new text end

new text begin Unfair service agreements; solicitation. new text end

new text begin Encouraging any consumer to enter
into an unfair service agreement by any service provider constitutes:
new text end

new text begin (1) an unfair method of competition; and
new text end

new text begin (2) an unfair or deceptive act or practice under section 82.81, subdivision 12, paragraph
(c), and section 325F.69.
new text end

new text begin Subd. 6. new text end

new text begin Enforcement authority. new text end

new text begin (a) This section may be enforced by the attorney
general under section 8.31, except that any private cause of action brought under subdivision
7 is subject to the limitation under subdivision 7, paragraph (d).
new text end

new text begin (b) The commissioner of commerce may enforce this section with respect to a service
provider's real estate license.
new text end

new text begin Subd. 7. new text end

new text begin Remedies. new text end

new text begin (a) A consumer that is party to an unfair service agreement related
to residential real property or a person with an interest in the property that is the subject of
that agreement may bring an action under section 8.31 or 325F.70 in district court in the
county where the property is located.
new text end

new text begin (b) If an unfair service agreement or a notice or memorandum of an unfair service
agreement is recorded against any residential real property, any judgment obtained under
this section, after being certified by the clerk having custody of the unfair service agreement
or notice or memorandum of the unfair service agreement, may be recorded and indexed
against the real property encumbered or clouded by the unfair service agreement.
new text end

new text begin (c) The remedies provided under this section are not exclusive and do not reduce any
other rights or remedies a party may have in equity or in law.
new text end

new text begin (d) No private action may be brought under this section more than six years after the
date the term printed in the unfair service agreement expires.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2022, section 332.3351, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: S4138-1

332.3351 EXEMPTION FROM LICENSURE.

A collection agency shall be exempt from the licensing and registration requirements of this chapter if all of the following conditions are met:

(1) the agency is located in another state that regulates and licenses collection agencies, but does not require a Minnesota collection agency to obtain a license to collect debts in the agency's state if the agency's collection activities are limited in the same manner;

(2) the agency's collection activities are limited to collecting debts not incurred in this state from consumers located in this state; and

(3) the agency's collection activities in Minnesota are conducted by means of interstate communications, including telephone, mail, electronic mail, or facsimile transmission.