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Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1989 

                        CHAPTER 273-S.F.No. 104 
           An act relating to agriculture; making changes in the 
          rural finance authority loan program; amending 
          Minnesota Statutes 1988, sections 41B.02, subdivisions 
          12, 15, and 18; 41B.03, subdivision 3, and by adding a 
          subdivision; 41B.039, subdivision 1; proposing coding 
          for new law in Minnesota Statutes, chapter 41B; 
          repealing Minnesota Statutes 1988, sections 41B.03, 
          subdivision 4; and 41B.039, subdivisions 3, 4, and 5.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1988, section 41B.02, 
subdivision 12, is amended to read: 
    Subd. 12.  [PRIMARY PRINCIPAL.] "Primary principal" means 
that portion of the outstanding balance on a loan covered 
by sections 41B.01 to 41B.23 section 41B.04 that is equal to the 
current market value of the property secured by the loan.  
    Sec. 2.  Minnesota Statutes 1988, section 41B.02, 
subdivision 15, is amended to read: 
    Subd. 15.  [SECONDARY PRINCIPAL.] "Secondary principal" 
means that portion of the principal outstanding on balance of a 
restructured loan covered by sections 41B.01 to 41B.23 section 
41B.04 that is in excess of the current market value of the 
property secured by the loan.  
    Sec. 3.  Minnesota Statutes 1988, section 41B.02, 
subdivision 18, is amended to read: 
    Subd. 18.  [SELLER-SPONSORED LOAN.] "Seller-sponsored loan" 
means a loan in which part or all of the price of a farm is 
financed by a loan from the seller of the farm who is a natural 
person, a partnership, or a family farm corporation as defined 
in section 500.24, located in Minnesota.  The loan must be 
secured by a real estate mortgage evidenced by one or more notes 
that may carry different interest rates or by a contract for 
deed.  The definition of a seller-sponsored loan under this 
subdivision does not include a loan between persons within the 
second degree of kindred according to common law.  A 
seller-sponsored loan may not be made to a person who has 
previously defaulted on a state loan or state guarantee of a 
loan. 
    Sec. 4.  Minnesota Statutes 1988, section 41B.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [ELIGIBILITY FOR BEGINNING FARMER LOANS.] In 
addition to the requirements under subdivision 1, a prospective 
borrower for a beginning farm loan, including a seller-sponsored 
loan, in which the authority holds an interest, must:  
    (1) have sufficient education, training, or experience in 
the type of farming for which the loan is desired; 
    (2) have a total net worth, including assets and 
liabilities of the borrower's spouse and dependents, of less 
than $100,000; 
    (3) demonstrate a need for the loan; 
    (4) demonstrate an ability to repay the loan; 
    (5) demonstrate certify that the agricultural land to be 
purchased will be used by the borrower for agricultural 
purposes; and 
    (6) demonstrate certify that farming will be the principal 
occupation of the borrower.; 
    (7) agree to participate in a farm management program 
approved by the commissioner of agriculture for at least the 
first five years of the loan, if an approved program is 
available within 45 miles from the borrower's residence; and 
    (8) agree to file an approved soil and water conservation 
plan with the soil conservation service office in the county 
where the land is located.  
    Sec. 5.  Minnesota Statutes 1988, section 41B.03, is 
amended by adding a subdivision to read: 
    Subd. 5.  [ELIGIBILITY FOR SELLER-SPONSORED LOANS.] In 
addition to the requirements under subdivision 1, a prospective 
borrower under the seller-sponsored loan program must either 
meet the conditions of subdivision 3 if the person is a 
beginning farmer, or other conditions the authority prescribes 
if the person is reentering farming through the seller-sponsored 
loan program.  
    Sec. 6.  Minnesota Statutes 1988, section 41B.039, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTABLISHMENT.] The authority may 
establish, develop criteria, and implement a beginning farmer 
program.  The program may include assistance for persons 
entering or reentering farming through the use of 
seller-sponsored loans. 
    Sec. 7.  [41B.042] [SELLER-SPONSORED PROGRAM.] 
    Subdivision 1.  [ESTABLISHMENT.] The authority must, within 
120 days after the effective date of this act, establish, 
develop criteria, and implement a seller-sponsored loan 
participation program to assist persons entering or reentering 
farming.  The authority must conduct a study on the feasibility 
of implementing a program for assistance to persons entering or 
reentering farming through seller-participation contracts for 
deed and report to the legislature by January 15, 1990.  
    Subd. 2.  [SECURITY.] Seller-sponsored loans in which the 
authority holds an interest must be secured by a real estate 
mortgage evidenced by one or more notes that may carry different 
interest rates.  
    Subd. 3.  [PROHIBITED PARTICIPATION.] The authority may not 
participate in seller-sponsored loans if the buyer or seller has 
previously participated in a family farm security loan or a 
seller-sponsored loan under chapter 41.  Unless the loan is 
partially financed by an eligible lender, the authority may not 
participate in loans between persons that are related to each 
other as parent and child, brother and sister, grandparent and 
grandchild, uncle or aunt and niece or nephew, or first cousins. 
    Subd. 4.  [PARTICIPATION LIMIT; INTEREST.] The authority 
may participate in new seller-sponsored loans to the extent of 
35 percent of the principal amount of the loan or $50,000, 
whichever is less.  The interest rates and repayment terms of 
the authority's participation interest may be different than the 
interest rates and repayment terms of the seller's retained 
portion of the loan.  
    Sec. 8.  [REPEALER.] 
    Minnesota Statutes 1988, sections 41B.03, subdivision 4; 
and 41B.039, subdivisions 3, 4, and 5, are repealed. 
    Presented to the governor May 23, 1989 
    Signed by the governor May 26, 1989, 4:47 p.m.