Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 700-S.F.No. 1742 
           An act relating to agriculture; changing the 
          continuing effect of certain farmer-lender mediation 
          rules; regulating certain land transactions and 
          agricultural liens; repealing certain conflicting 
          language relating to food handler license fees; 
          amending Minnesota Statutes 1986, section 583.27, by 
          adding a subdivision; Minnesota Statutes 1987 
          Supplement, sections 500.24, subdivisions 6 and 7; 
          583.24, subdivision 4; Laws 1987, chapter 292, section 
          35; proposing coding for new law as Minnesota 
          Statutes, chapter 223A; repealing Laws 1987, chapter 
          358, section 85. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1987 Supplement, section 
500.24, subdivision 6, is amended to read:  
    Subd. 6.  [DISPOSAL OF LAND.] (a) A state or federal agency 
or a corporation, other than a family farm corporation or an 
authorized farm corporation, may not lease or sell agricultural 
land or a farm homestead that was acquired by enforcing a debt 
against the agricultural land or farm homestead, including 
foreclosure of a mortgage, accepting a deed in lieu of 
foreclosure, terminating a contract for deed, or accepting a 
deed in lieu of terminating a contract for deed, before offering 
or making a good faith effort to offer the land for sale or 
lease to the immediately preceding former owner at a price no 
higher than the highest price offered by a third party that is 
acceptable to the seller or lessor.  The offer must be made on 
the notice to offer form under subdivision 7.  Selling or 
leasing property to a third party at a price is prima facie 
evidence that the price is acceptable to the seller or 
lessor.  The seller must provide written notice to the 
immediately preceding former owner that the agricultural land or 
farm homestead will be offered for sale at least 14 days before 
the agricultural land or farm homestead is offered for sale.  
    (b) An immediately preceding former owner is the entity 
with record legal title to the agricultural land or farm 
homestead before acquisition by the state or federal agency or 
corporation except:  if the immediately preceding former owner 
is a bankruptcy estate, the debtor in bankruptcy is the 
immediately preceding former owner; and if the agricultural land 
or farm homestead was acquired by termination of a contract for 
deed or deed in lieu of termination of a contract for deed, the 
immediately preceding former owner is the purchaser under the 
contract for deed. 
    (c) An immediately preceding former owner may elect to 
purchase or lease the entire property or an agreed to portion of 
the property.  If the immediately preceding former owner elects 
to purchase or lease a portion of the property, the election 
must be reported in writing to the seller or lessor prior to the 
time the property is first offered for sale or lease.  If 
election is made to purchase or lease a portion of the property, 
the portion must be contiguous and compact so that it does not 
unreasonably reduce access to or the value of the remaining 
property. 
    (b) (d) For purposes of this subdivision, the term "a price 
no higher than the highest price offered by a third party" means 
the acceptable cash price offered by a third party or the 
acceptable time-price offer made by a third party.  A cash price 
offer is one that involves simultaneous transfer of title for 
payment of the entire amount of the offer.  If the acceptable 
offer made by a third party is a time-price offer, the seller or 
lessor must make the same time-price offer or an equivalent cash 
offer to the immediately preceding former owner.  An equivalent 
cash offer is equal to the total of the payments made over a 
period of the time-price offer discounted by yield curve of the 
United States treasury notes and bonds on the first business day 
of the month in which the offer is personally delivered or 
mailed for time periods similar to the time period covered by 
the time-price offer, plus 2.0 percent.  A time-price offer is 
an offer that defers payment of a portion of the price and does 
not involve a transfer of fee title until payment of the entire 
amount of the offer is made is financed entirely or partially by 
the seller and includes an offer to purchase under a contract 
for deed or mortgage.  An equivalent cash offer is not required 
to be made if the state participates in an offer to a third 
party through the rural finance authority. 
    (c) (e) This subdivision applies to a seller when the 
property is sold and to a lessor each time the property is 
leased, for five years after the agricultural land is acquired 
except:  
    (1) an offer to lease to the immediately preceding former 
owner is required only until the immediately preceding owner 
fails to accept an offer to lease the property or the property 
is sold; and 
    (2) an offer to sell to the immediately preceding former 
owner is required until the property is sold; and 
    (3) if the immediately preceding former owner elects to 
lease or purchase a portion of the property, this subdivision 
does not apply to the seller with regard to the balance of the 
property after the election is made under paragraph (c).  
    (d) (f) The notice of an offer under subdivision 7 that is 
personally delivered with a signed receipt or sent by certified 
mail with a receipt of mailing to the immediately preceding 
former owner's last known address is a good faith offer.  
    (e) (g) This subdivision does not apply to a sale or lease 
that occurs after the seller or lessor has held the property for 
five years or longer.  
    (f) (h) For purposes of this subdivision, if the 
immediately preceding former owner is a bankruptcy estate the 
debtor in the bankruptcy is the immediately preceding owner.  
    (g) (i) The immediately preceding former owner must 
exercise the right to lease all or a portion of the agricultural 
land or a homestead located on agricultural land in writing 
within 15 days after an offer to lease under this subdivision is 
mailed with a receipt of mailing or personally delivered.  If 
election is made to lease only the homestead or a portion of the 
agricultural land, the portion to be leased must be clearly 
identified in writing.  The immediately preceding former owner 
must exercise the right to buy the agricultural land, a portion 
of the agricultural land, or a farm homestead located on 
agricultural land, in writing, within 65 days after an offer to 
buy under this subdivision is mailed with a receipt of mailing 
or is personally delivered.  Within ten days after exercising 
the right to lease or buy by accepting the offer, the 
immediately preceding owner must fully perform according to the 
terms of the offer including paying the amounts due.  A seller 
may sell and a lessor may lease the agricultural land or farm 
homestead subject to this subdivision to the third party in 
accordance with their lease or purchase agreement if: 
    (1) the immediately preceding former owner does not accept 
an offer to lease or buy before the offer terminates; or 
    (2) the immediately preceding former owner does not perform 
the obligations of the offer, including paying the amounts due, 
within ten days after accepting the offer. 
    (h) (j) A certificate indicating whether or not the 
property contains agricultural land or a farm homestead that is 
signed by the county assessor where the property is located and 
recorded in the office of the county recorder or the registrar 
of titles where the property is located is prima facie evidence 
of whether the property is agricultural land or a farm homestead.
    (i) (k) As prima facie evidence that an offer to sell or 
lease agricultural land or a farm homestead has terminated, a 
receipt of mailing the notice under subdivision 7 and an 
affidavit, signed by a person authorized to act on behalf of a 
state, federal agency, or corporation selling or leasing the 
agricultural land or a farm homestead may be filed in the office 
of the county recorder or registrar of titles of the county 
where the agricultural land or farm homestead is located.  The 
affidavit must state that: 
    (1) notice of an offer to buy or lease the agricultural 
land or farm homestead was provided to the immediately preceding 
former owner at a price not higher than the highest price 
offered by a third party that is acceptable; 
    (2) the time during which the immediately preceding former 
owner is required to exercise the right to buy or lease the 
agricultural land or farm homestead has expired; 
    (3) the immediately preceding former owner has not 
exercised the right to buy or lease the agricultural land or 
farm homestead as provided in this subdivision or has accepted 
an offer and has not fully performed according to the terms of 
the offer; and 
    (4) the offer to the immediately preceding former owner has 
terminated. 
    (j) (l) The right of an immediately preceding former owner 
to receive an offer to lease or purchase agricultural land under 
this subdivision or to lease or purchase at a price no higher 
than the highest price offered by a third party that is 
acceptable to the seller or lessor may be extinguished or 
limited by an express statement signed by the immediately 
preceding owner that complies with the plain language 
requirements of section 325G.31.  The right may not be 
extinguished or limited except by the: 
    (1) an express statement in a deed in lieu of 
foreclosure or of the agricultural land; 
    (2) an express statement in a deed in lieu of a termination 
of a contract for deed for the agricultural land;  
    (3) an express statement conveying the right to the state 
or federal agency or corporation owning the agricultural land 
that is required to make an offer under this subdivision, 
however, the preceding former owner may rescind the conveyance 
by notifying the state or federal agency or corporation in 
writing within 20 calendar days after signing the express 
statement; 
    (4) to cure a title defect, an express statement conveying 
the right may be made to a person to whom the agricultural land 
has been transferred by the state or federal agency or 
corporation; or 
    (5) an express statement conveying the right to a contract 
for deed vendee to whom the agricultural land or farm homestead 
was sold under a contract for deed by the immediately preceding 
former owner if the express statement and the contract for deed 
are recorded. 
    (k) (m) The right of an immediately preceding former owner 
to receive an offer to lease or purchase agricultural land under 
this subdivision may not be assigned or transferred except as 
provided in paragraph (l), but may be inherited.  
    (n) An immediately preceding former owner, except a former 
owner who is actively engaged in farming as defined in section 
500.24, subdivision 2, paragraph (a), and who agrees to remain 
actively engaged in farming on a portion of the agricultural 
land or farm homestead for at least one year after accepting an 
offer under this subdivision, may not sell agricultural land 
acquired by accepting an offer under this subdivision if the 
arrangement of the sale was negotiated or agreed to prior to the 
former owner accepting the offer under this subdivision.  A 
person who sells property in violation of this paragraph is 
liable for damages plus reasonable attorney fees to a person who 
is damaged by a sale in violation of this paragraph.  There is a 
rebuttable presumption that a sale by an immediately preceding 
former owner is in violation of this paragraph if the sale takes 
place within 180 days of the former owner accepting the offer 
under this subdivision.  This paragraph does not apply to a sale 
by an immediately preceding former owner to the owner's spouse, 
the owner's parents, the owner's sisters and brothers, the 
owner's spouse's sisters and brothers, or the owner's children. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
500.24, subdivision 7, is amended to read:  
    Subd. 7.  [NOTICE OF OFFER.] (a) The state, a federal 
agency, or a corporation subject to subdivision 6 must provide a 
notice of an offer to sell or lease agricultural land 
substantially as follows, after inserting the appropriate terms 
within the parentheses:  

           "NOTICE OF OFFER TO (LEASE, BUY) AGRICULTURAL LAND 
TO:    (...Immediately preceding former owner...) 
FROM:  (...The state, federal agency, or corporation 
       subject to subdivision 6...) 
DATE: (...date notice is mailed or personally delivered...) 
    (...The state, federal agency, or corporation...) HAS 
ACQUIRED THE AGRICULTURAL LAND DESCRIBED BELOW AND HAS RECEIVED 
AN ACCEPTABLE OFFER TO (LEASE, SELL) THE AGRICULTURAL LAND FROM 
ANOTHER PARTY.  UNDER MINNESOTA STATUTES, SECTION 500.24, 
SUBDIVISION 6, AN OFFER FROM (...the state, federal agency, or 
corporation...) MUST BE MADE TO YOU AT A PRICE NO HIGHER THAN 
THE HIGHEST OFFER MADE BY ANOTHER PARTY.  
    THE AGRICULTURAL LAND BEING OFFERED CONTAINS APPROXIMATELY 
(...approximate number of acres...) ACRES AND IS INFORMALLY 
DESCRIBED AS FOLLOWS: 
 (Informal description of the agricultural land being 
offered that reasonably describes the land.  This 
description does not need to be a legal description.) 
    (...The state, federal agency, or corporation...) OFFERS TO 
(SELL, LEASE) THE AGRICULTURAL LAND DESCRIBED ABOVE FOR A CASH 
PRICE OF $(...cash price or equivalent cash price for lease and 
lease period, or cash price or equivalent cash price for sale of 
land...), WHICH IS NOT HIGHER THAN THE PRICE OFFERED BY ANOTHER 
PARTY.  THE PRICE IS OFFERED ON THE FOLLOWING TERMS:  

                 (Terms, if any, of acceptable offer)  
    IF YOU WANT TO ACCEPT THIS OFFER YOU MUST NOTIFY (...the 
state, federal agency, or corporation...) IN WRITING THAT YOU 
ACCEPT THE OFFER OR SIGN UNDERNEATH THE FOLLOWING PARAGRAPH AND 
RETURN A COPY OF THIS NOTICE BY (15 for a lease, 65 for a sale) 
DAYS AFTER THIS NOTICE IS PERSONALLY DELIVERED OR MAILED TO 
YOU.  THE OFFER IN THIS NOTICE TERMINATES ON (...date of 
termination - 15 days for lease and 65 days for sale after date 
of mailing or personal delivery...). 

                          ACCEPTANCE OF OFFER 
    I ACCEPT THE OFFER TO (BUY, LEASE) THE AGRICULTURAL LAND 
DESCRIBED ABOVE AT THE PRICE OFFERED TO ME IN THIS NOTICE.  AS 
PART OF ACCEPTING THIS OFFER I WILL PERFORM ACCORDING TO THE 
TERMS OF THE OFFER, INCLUDING MAKING PAYMENTS DUE UNDER THE 
OFFER, WITHIN TEN DAYS AFTER THE DATE I ACCEPT THIS OFFER.  I 
UNDERSTAND THAT NEGOTIATING OR AGREEING TO AN ARRANGEMENT TO 
SELL THE AGRICULTURAL LAND TO ANOTHER PERSON PRIOR TO ACCEPTING 
THIS OFFER MAY BE A VIOLATION OF LAW AND I MAY BE LIABLE TO A 
PERSON DAMAGED BY THE SALE. 

                    ......................................... 
                    Signature of Former Owner Accepting Offer 
                    .........................................  
                    Date"
    (b) For an offer to sell, a copy of the purchase agreement 
containing the price and terms of the highest offer made by a 
third party that is acceptable to the seller and a signed 
affidavit by the seller affirming that the purchase agreement is 
true, accurate, and made in good faith must be included with the 
notice under this subdivision.  At the seller's discretion, 
reference to the third party's identity may be deleted from the 
copy of the purchase agreement. 
    (c) For an offer to lease, a copy of the lease containing 
the price and terms of the highest offer made by a third party 
that is acceptable to the lessor and a signed affidavit by the 
lessor affirming that the lease is true, accurate, and made in 
good faith must be included with the notice under this 
subdivision.  At the lessor's discretion, reference to the third 
party's identity may be deleted from the copy of the lease 
agreement.  
    (d) The affidavit under paragraphs (b) and (c) is subject 
to section 609.48.  
    Sec. 3.  Minnesota Statutes 1987 Supplement, section 
583.24, subdivision 4, is amended to read: 
    Subd. 4.  [DEBTS.] (a) The farmer-lender mediation act does 
not apply to a debt: 
    (1) for which a proof of claim form has been filed in 
bankruptcy by a creditor or that was listed as a scheduled debt, 
of a debtor who has filed a petition in bankruptcy after the 
effective date of Laws 1987, chapter 292 July 1, 1987, under 
United States Code, title 11, chapter 7, 11, 12, or 13; 
    (2) if the debt was in default when the creditor received a 
mediation proceeding notice under the farmer-lender mediation 
act and the creditor filed a claim form, the debt was mediated 
during the mediation period under section 583.26, subdivision 8, 
and (i) the mediation was unresolved; or (ii) a mediation 
agreement with respect to that debt was signed; 
    (3) for which the creditor has served a mediation notice, 
the debtor has failed to make a timely request for mediation, 
and within 30 days after the debtor failed to make a timely 
request the creditor began a proceeding to enforce the debt 
against the agricultural property of the debtor; 
    (4) for which a creditor has received a mediation 
proceeding notice and the creditor and debtor have restructured 
the debt and have signed a separate mediation agreement with 
respect to that debt; or 
    (5) for which there is a lien for rental value of farm 
machinery under section 514.661 or a lien for rental value 
relating to a contract for deed subject to the farmer-lender 
mediation act under section 559.2091.  
    (b) For purposes of paragraph (a), clause (3), providing a 
copy of a forbearance policy is considered beginning a 
proceeding to enforce a debt if the board of an institution has 
adopted a forbearance policy that provides for deferring or 
rescheduling payments of principal or interest, renewal or 
extension of loan terms, reduction in the amount or rate of 
principal or interest due on a loan, or other similar actions, 
and requires that the debtor must receive a copy of the policy 
at least 20 days prior to loan acceleration or debt collection 
proceedings. 
    Sec. 4.  Laws 1987, chapter 292, section 35, is amended to 
read: 
    Sec. 35.  [CONTINUING EFFECT OF RULES.] 
    Emergency farmer-lender mediation rules adopted or amended 
by the state court administrator's office and published in the 
State Register on August 18, 1986, in volume 11, pages 302 to 
307 the commissioner of agriculture, are effective until June 
30, 1989, unless the rules are amended or superseded by rules 
adopted by the commissioner of agriculture or the rules are 
inconsistent with this act. 
     Sec. 5.  [223A.02] [DEFINITIONS.] 
    Subdivision 1.  [BUYER.] "Buyer" means a person purchasing 
farm products.  
    Subd. 2.  [COMMISSION MERCHANT.] "Commission merchant" has 
the meaning given in United States Code, title 7, section 
1631(c)(3).  
    Subd. 3.  [FARM PRODUCTS.] "Farm products" has the meaning 
given in United States Code, title 7, section 1631(c)(5).  
    Subd. 4.  [FARM PRODUCTS STATUTORY LIEN.] "Farm products 
statutory lien" means a consensual or nonconsensual lien on farm 
products but does not include a landlord's lien under section 
514.960 or security interest created in a security agreement 
that is subject to article 9 of the Uniform Commercial Code, 
sections 336.9-101 to 336.9-508.  
    Subd. 5.  [LIENHOLDER.] "Lienholder" means a person 
entitled to a farm products statutory lien.  
    Subd. 6.  [PERFECTED.] "Perfected" means that the 
conditions have been satisfied to enforce the farm products 
statutory lien against third parties as provided by the law 
creating or authorizing the farm products statutory lien.  
    Subd. 7.  [PERSON.] "Person" has the meaning given in 
United States Code, title 7, section 1631(c)(10), and also 
includes the federal government and its agencies, the state, 
political subdivisions, and other governmental entities.  
    Subd. 8.  [RECEIVE.] "Receive" means actual delivery with 
signed receipt or mailing with signed receipt of the addressee.  
    Subd. 9.  [SELLING AGENT.] "Selling agent" has the meaning 
given in United States Code, title 7, section 1631(c)(8).  
    Sec. 6.  [223A.03] [BUYERS TAKING FREE OF AND SUBJECT TO 
FARM PRODUCTS STATUTORY LIEN.] 
    Subdivision 1.  [TAKING FREE OF LIEN.] Except as provided 
in subdivision 2, and notwithstanding any other law, a buyer who 
buys farm products from a seller engaged in farming operations 
shall take free of a farm products statutory lien even though 
the farm products statutory lien is perfected and the buyer 
knows the lien exists.  
    Subd. 2.  [TAKING SUBJECT TO LIEN.] A buyer of farm 
products takes subject to a farm products statutory lien if: 
    (1) the lienholder has perfected the farm products 
statutory lien; 
    (2) within one year before the sale of the farm products, 
the buyer has received a lien notice as provided in section 8 
from the lienholder or from the seller; and 
    (3) the buyer has failed to perform the payment obligations 
as provided in the notice under section 8. 
    Sec. 7.  [223A.04] [COMMISSION MERCHANTS AND SELLING AGENTS 
SUBJECT TO FARM PRODUCTS STATUTORY LIEN.] 
    Subdivision 1.  [SELLING NOT SUBJECT TO LIEN.] Except as 
provided in subdivision 2, and notwithstanding any other law, a 
commission merchant or selling agent who sells a farm product 
for others is not subject to a farm products statutory lien even 
though the farm product statutory lien is perfected and the 
commission merchant or selling agent knows the lien exists.  
    Subd. 2.  [SELLING SUBJECT TO LIEN.] A commission merchant 
or selling agent selling farm products for another person is 
subject to a farm products statutory lien in the farm products 
if:  
    (1) the lienholder has perfected the farm products 
statutory lien; 
    (2) the commission merchant or selling agent has received a 
lien notice as provided in section 8 from the lienholder or 
seller; and 
    (3) the commission merchant or selling agent has failed to 
perform the payment obligations.  
    Sec. 8.  [223A.05] [LIEN NOTICE.] 
    Subdivision 1.  [CONTENTS.] A lien notice must be an 
original or reproduced copy of a written notice of the farm 
products statutory lien organized according to farm products 
containing: 
    (1) the name, signature, and address of the lienholder; 
    (2) the name and address of the debtor; 
    (3) the social security number of the debtor, if available; 
or in the case of a debtor doing business other than as an 
individual, the Internal Revenue Service taxpayer identification 
number of the debtor, if available; 
    (4) a description of the farm products subject to the farm 
products statutory lien, including the amount of the products 
and, if applicable, the crop year, county where the products are 
located or growing, and a reasonable description of the real 
property where the farm products are located or are growing; and 
    (5) any payment obligations imposed on the buyer, 
commission merchant, or selling agent as a condition for waiver 
or release of the security interest.  
    Subd. 2.  [AMENDMENTS.] A lien notice must be amended in 
writing to reflect material changes and signed and transmitted 
in the same manner as the lien notice within three months after 
the material changes occur. 
    Subd. 3.  [EFFECTIVE PERIOD.] (a) A lien notice is 
effective for a five-year period after the date the lien notice 
is received by the buyer, commission merchant, or selling agent 
and may be extended for five years if the buyer, commission 
merchant, or selling agent is notified within six months of the 
expiration of the initial five-year period.  
    (b) A lien notice lapses on the expiration period of the 
lien notice or the transmission of a notice signed by the 
lienholder that the lien notice has lapsed, whichever occurs 
first.  
    Sec. 9.  [223A.06] [PROCEEDS FROM FARM PRODUCTS SUBJECT TO 
LIEN.] 
    A lienholder has a claim to the proceeds received from the 
sale, exchange, or other disposition of farm products subject to 
a farm products statutory lien, unless otherwise specifically 
provided by law.  
    Sec. 10.  [223A.07] [FORMS.] 
    The secretary of state may adopt forms by rule to 
facilitate the procedures under sections 5 to 8.  The forms must 
be provided to county recorders and made available to the public.
     Sec. 11.  Minnesota Statutes 1986, section 583.27 is 
amended by adding a subdivision to read: 
    Subd. 8.  [MARKET VALUE OF REAL PROPERTY; HOW ESTABLISHED 
IF IN DISPUTE.] In case of a dispute between the debtor and 
creditors concerning the market value of real property involved 
in mediation, the true and acceptable market value must be 
determined by appraisal as provided in this subdivision.  The 
appraisal to determine true market value must be performed by an 
accredited appraiser and made within 45 days of the date of the 
dispute.  The accredited appraiser shall be selected as follows: 
    (1) the mediator shall submit the names of three accredited 
appraisers to the principal creditor and debtor; 
    (2) the principal creditor and the debtor may each, within 
a time determined by the mediator, strike the name of one of the 
appraisers submitted by the mediator; 
    (3) the accredited appraiser whose name is not stricken by 
either the principal creditor or the debtor shall perform an 
appraisal which shall be the true market value accepted by all 
parties to the dispute. 
    The cost of the appraisal shall be divided equally between 
the principal creditor and debtor. 
    Sec. 12.  [REPEALER.] 
    Laws 1987, chapter 358, section 85, is repealed. 
    Sec. 13.  [EFFECTIVE DATE.] 
    Section 1 is effective the day after final enactment except 
that the notice that the agricultural land or the farm homestead 
will be offered for sale under section 500.24, subdivision 6, 
paragraph (a), must be provided as follows: 
     (1) for property that has been offered for sale before the 
eighth day after final enactment, but not sold, and the 
immediately preceding former owner has not received written 
notice that the property will be offered for sale, written 
notice must be provided to the preceding former owner before the 
eighth day after final enactment; and 
    (2) section 500.24, subdivision 6, paragraph (n), does not 
apply to a sale relating to an offer made to an immediately 
preceding former owner before final enactment. 
    Section 2 applies to notices given after the 14th day after 
final enactment. 
    Sections 3, 4, and 12 are effective the day after final 
enactment. 
    Sections 5 to 10 are effective July 1, 1988, for farm 
products and apply to statutory liens perfected after June 30, 
1988.  
    Section 11 is effective June 1, 1988, for mediation 
proceedings for which a mediation notice is issued after May 31, 
1988. 
    Approved April 28, 1988