Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 695-H.F.No. 2526 
           An act relating to consumer protection; regulating the 
          provision of real estate closing services; amending 
          Minnesota Statutes 1986, sections 82.17, by adding a 
          subdivision; and 481.02, by adding subdivisions; 
          Minnesota Statutes 1987 Supplement, section 481.02, 
          subdivision 3; proposing coding for new law in 
          Minnesota Statutes, chapter 507. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [POLICY STATEMENT; LEGISLATIVE FINDINGS.] 
    Since 1931 the expressed policy of the state of Minnesota, 
stated by law in Minnesota Statutes, section 481.02, subdivision 
3, clause (3), has been that real estate brokers and salespeople 
may provide drafting services incident to real estate closings.  
The legislature continues to find that the public interest will 
be served by permitting the provision of those services by 
brokers, salespeople, and closing agents with or without 
compensation.  The legislature also finds it appropriate, and it 
is the purpose of this act, to provide clarification of the role 
of real estate brokers, salespeople, and closing agents. 
    Sec. 2.  Minnesota Statutes 1986, section 82.17, is amended 
by adding a subdivision to read:  
    Subd. 10.  "Closing agent" or "real estate closing agent" 
means any person acting as an agent for a title company, a 
licensed attorney, real estate broker, or real estate 
salesperson, who for another and with or without a commission, 
fee, or other valuable consideration or with or without the 
intention or expectation of receiving a commission, fee, or 
other valuable consideration, directly or indirectly provides 
closing services incident to the sale, trade, lease, or loan of 
residential real estate, including drawing or assisting in 
drawing papers incident to the sale, trade, lease, or loan, or 
advertises or claims to be engaged in these activities.  
    Sec. 3.  Minnesota Statutes 1987 Supplement, section 
481.02, subdivision 3, is amended to read:  
    Subd. 3.  [PERMITTED ACTIONS.] The provisions of this 
section shall not prohibit:  
    (1) any person from drawing, without charge, any document 
to which the person, an employer of the person, a firm of which 
the person is a member, or a corporation whose officer or 
employee the person is, is a party, except another's will or 
testamentary disposition or instrument of trust serving purposes 
similar to those of a will; 
    (2) a person from drawing a will for another in an 
emergency if the imminence of death leaves insufficient time to 
have it drawn and its execution supervised by a licensed 
attorney-at-law; 
    (3) any one, acting as broker for the parties or agent of 
one of the parties to a sale or trade or lease of property or to 
a loan, from drawing or assisting in drawing, with or without 
charge, papers incident to the sale, trade, lease, or loan; 
    (4) any insurance company from causing to be defended, or 
from offering to cause to be defended through lawyers of its 
selection, the insureds in policies issued or to be issued by 
it, in accordance with the terms of the policies; 
    (5) (4) a licensed attorney-at-law from acting for several 
common-carrier corporations or any of its subsidiaries pursuant 
to arrangement between the corporations; 
    (6) (5) any bona fide labor organization from giving legal 
advice to its members in matters arising out of their employment;
    (7) (6) any person from conferring or cooperating with a 
licensed attorney-at-law of another in preparing any legal 
document, if the attorney is not, directly or indirectly, in the 
employ of the person or of any person, firm, or corporation 
represented by the person; 
    (8) (7) any licensed attorney-at-law of Minnesota, who is 
an officer or employee of a corporation, from drawing, for or 
without compensation, any document to which the corporation is a 
party or in which it is interested personally or in a 
representative capacity, except wills or testamentary 
dispositions or instruments of trust serving purposes similar to 
those of a will, but any charge made for the legal work 
connected with preparing and drawing the document shall not 
exceed the amount paid to and received and retained by the 
attorney, and the attorney shall not, directly or indirectly, 
rebate the fee to or divide the fee with the corporation; 
    (9) (8) any person or corporation from drawing, for or 
without a fee, farm or house leases, notes, mortgages, chattel 
mortgages, bills of sale, deeds, assignments, satisfactions, or 
any other conveyances except testamentary dispositions and 
instruments of trust; 
    (10) (9) a licensed attorney-at-law of Minnesota from 
rendering to a corporation legal services to itself at the 
expense of one or more of its bona fide principal stockholders 
by whom the attorney is employed and by whom no compensation is, 
directly or indirectly, received for the services; 
    (11) (10) any person or corporation engaged in the business 
of making collections from engaging or turning over to an 
attorney-at-law for the purpose of instituting and conducting 
suit or making proof of claim of a creditor in any case in which 
the attorney-at-law receives the entire compensation for the 
work; 
    (12) (11) any regularly established farm journal or 
newspaper, devoted to general news, from publishing a department 
of legal questions and answers to them, made by a licensed 
attorney-at-law, if no answer is accompanied or at any time 
preceded or followed by any charge for it, any disclosure of any 
name of the maker of any answer, any recommendation of or 
reference to any one to furnish legal advice or services, or by 
any legal advice or service for the periodical or any one 
connected with it or suggested by it, directly or indirectly;  
    (13) (12) any authorized management agent of an owner of 
rental property used for residential purposes, whether the 
management agent is a natural person, corporation, partnership, 
limited partnership, or any other business entity, from 
commencing, maintaining, conducting, or defending in its own 
behalf any action in any court in this state to recover or 
retain possession of the property, except that the provision of 
this clause does not authorize a person who is not a licensed 
attorney-at-law to conduct a jury trial or to appear before a 
district court or the court of appeals or supreme court pursuant 
to an appeal; and 
    (14) (13) any person from commencing, maintaining, 
conducting, or defending on behalf of the plaintiff or defendant 
any action in any court of this state pursuant to the provisions 
of section 566.175 or sections 566.18 to 566.33 or from 
commencing, maintaining, conducting, or defending on behalf of 
the plaintiff or defendant any action in any court of this state 
for the recovery of rental property used for residential 
purposes pursuant to the provisions of section 566.02 or 566.03, 
subdivision 1, except that the provision of this clause does not 
authorize a person who is not a licensed attorney-at-law to 
conduct a jury trial or to appear before a district court or the 
court of appeals or supreme court pursuant to an appeal, and 
provided that, except for a nonprofit corporation, a person who 
is not a licensed attorney-at-law shall not charge or collect a 
separate fee for services rendered pursuant to this clause. 
    Sec. 4.  Minnesota Statutes 1986, section 481.02, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [REAL ESTATE CLOSING SERVICES.] Nothing in this 
section shall be construed to prevent a real estate broker, a 
real estate salesperson, or a real estate closing agent, as 
defined in section 82.17, from drawing or assisting in drawing 
papers incident to the sale, trade, lease, or loan of property, 
or from charging for drawing or assisting in drawing them, 
except as hereafter provided by the supreme court. 
    Sec. 5.  Minnesota Statutes 1986, section 481.02, is 
amended by adding a subdivision to read: 
    Subd. 9.  Nothing in section 4 shall be construed to allow 
a person other than a licensed attorney to perform or provide 
the services of an attorney or be construed to otherwise 
conflict with section 481.02. 
    Sec. 6.  [507.45] [RESIDENTIAL REAL ESTATE CLOSINGS.] 
    Subdivision 1.  Residential real estate closing services 
may be provided and a fee charged by a licensed attorney, real 
estate broker, real estate salesperson, and real estate closing 
agent. 
    Subd. 2.  No charge, except a charge required to be 
disclosed by Regulation Z, Code of Federal Regulations, title 
12, section 226, may be made by a closing agent unless the party 
to be charged is informed of the charge in writing at least five 
business days before the closing by the party charging for the 
closing services. 
    Subd. 3.  If the closing services are to be provided by a 
real estate broker, real estate salesperson, or real estate 
closing agent, the following regulations shall apply. 
    (a) The written contract for closing services shall state 
in at least 10-point type that the real estate broker, real 
estate salesperson, or real estate closing agent has not and, 
under applicable state law, may not express opinions regarding 
the legal effect of the closing documents or of the closing 
itself. 
    (b) No closing fee may be charged if a closing is performed 
without either a mortgagee's or owner's title insurance 
commitment or a legal opinion regarding the status of title. 
     Subd. 4.  No financial institution or other person making a 
mortgage loan may require a borrower to use any particular 
licensed attorney, real estate broker, real estate salesperson, 
or real estate closing agent in connection with a residential 
real estate closing. 
    Sec. 7.  [CONSTRUCTION.] 
    Nothing in this act shall be construed to imply that fees 
charged for closing services before its enactment constituted 
the unauthorized practice of law. 
    Sec. 8.  [NONSEVERABILITY.] 
    If section 4 or section 6, subdivision 1, is found to be 
unconstitutional or otherwise inoperative, the entire act shall 
be void and without effect. 
    Sec. 9.  [EFFECTIVE DATES.] 
    Sections 2, 3, 4, 5 and 6, subdivision 1, take effect the 
day after final enactment.  The other sections and subdivisions 
take effect January 1, 1989. 
    Approved April 28, 1988