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

  

                         Laws of Minnesota 1992 

                        CHAPTER 555-S.F.No. 2662 
           An act relating to commerce; regulating real estate 
          brokers and salespersons and the real estate, 
          education, research, and recovery fund; temporarily 
          changing the interest rate required on a rental 
          deposit; amending Minnesota Statutes 1990, sections 
          82.19, by adding a subdivision; and 82.34, 
          subdivisions 3, 4, 7, 9, 11, 13, and 14; 504.20, 
          subdivision 2; Minnesota Statutes 1991 Supplement, 
          section 82.22, subdivision 13; proposing coding for 
          new law in Minnesota Statutes, chapter 80A; repealing 
          Minnesota Statutes 1990, section 82.34, subdivision 20.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1
    Section 1.  [80A.041] [EXEMPTION.] 
    A real estate broker or agent licensed under chapter 82 who 
arranges for the sale of a contract for deed is exempt from the 
license requirement of section 80A.04 if the real estate broker 
or agent receives no compensation in addition to the brokerage 
commission or fee and represents the seller, buyer, lessor, or 
lessee in the sale, lease, or exchange of the subject property. 
    Sec. 2.  Minnesota Statutes 1990, section 82.19, is amended 
by adding a subdivision to read: 
    Subd. 7.  [SECURITIES SOLD BY BUSINESSES OUTSIDE SCOPE OF 
LICENSING.] A license issued under this chapter does not allow a 
licensee to engage in the business of buying, selling, 
negotiating, brokering, or otherwise dealing in contracts for 
deed, mortgages, or other evidence of indebtedness regarding 
real estate, except that a licensee may, if there is no 
compensation in addition to the brokerage commission or fee, and 
if the licensee represents the seller, buyer, lessor, or lessee 
in the sale, lease, or exchange of real estate, arrange for the 
sale of a contract, mortgage, or similar evidence of 
indebtedness for the subject property. 
     Sec. 3.  Minnesota Statutes 1991 Supplement, section 82.22, 
subdivision 13, is amended to read: 
    Subd. 13.  [CONTINUING EDUCATION.] (a) After July 1, 1987, 
all real estate salespersons and all real estate brokers shall 
be required to successfully complete 15 hours of real estate 
education, either as a student or a lecturer, in courses of 
study approved by the commissioner, each year after their 
initial annual renewal date or after the expiration of their 
currently assigned three year continuing education due date.  
All salespersons and brokers shall report continuing education 
on an annual basis no later than June 30, 1990.  Hours in excess 
of 15 earned in any one year may be carried forward to the 
following year. 
    (b) The commissioner shall adopt rules defining the 
standards for course and instructor approval, and may adopt 
rules for the proper administration of this subdivision. 
    (c) Any program approved by Minnesota continuing legal 
education shall be approved by the commissioner of commerce for 
continuing education for real estate brokers and salespeople if 
the program or any part thereof relates to real estate.  
    (d) As part of the continuing education requirements of 
this section, the commissioner shall require that all real 
estate brokers and salespersons receive at least two hours of 
training every even-numbered year in courses in state and 
federal fair housing laws, regulations, and rules, or other 
anti-discrimination laws. 
    Sec. 4.  Minnesota Statutes 1990, section 82.34, 
subdivision 3, is amended to read: 
    Subd. 3.  Each real estate broker, real estate salesperson, 
and real estate closing agent entitled under this chapter to 
renew a license shall pay in addition to the appropriate renewal 
fee a further fee of $5 $25 which shall be credited to the real 
estate education, research, and recovery fund.  Any person who 
receives a license shall pay the fee of $40 $50 in addition to 
all other fees payable.  
    Sec. 5.  Minnesota Statutes 1990, section 82.34, 
subdivision 4, is amended to read: 
    Subd. 4.  No less than $400,000 of the fund shall be 
available for recovery purposes to satisfy all claims authorized 
for payment each calendar year.  This shall be designated as the 
recovery portion of the fund.  If the amount remaining in the 
fund after payment of all amounts authorized during the 
preceding calendar year for payment to claimants is at any time 
less than $400,000 plus the amount appropriated pursuant to 
subdivision 6, the commissioner believes is necessary to carry 
out the purposes of this section every licensee, when renewing a 
license, shall pay, in addition to the annual renewal fee and 
the $5 fee set forth in subdivision 3, a sum an assessment not 
to exceed $50 $100, said sum having been reasonably determined 
by the commissioner to be necessary to restore the a balance in 
the fund of an amount adequate to carry out the purposes of this 
section. 
    Sec. 6.  Minnesota Statutes 1990, section 82.34, 
subdivision 7, is amended to read: 
    Subd. 7.  When any aggrieved person obtains a final 
judgment in any court of competent jurisdiction regardless of 
whether the judgment has been discharged by a bankruptcy court 
against an individual licensed under this chapter, on grounds of 
fraudulent, deceptive, or dishonest practices, or conversion of 
trust funds arising directly out of any transaction when the 
judgment debtor was licensed and performed acts for which a 
license is required under this chapter, or performed acts 
permitted by section 327B.04, subdivision 5, and which cause of 
action occurred on or after July 1, 1973, the aggrieved person 
may, upon the judgment becoming final, and upon termination of 
all proceedings, including reviews and appeals, file a verified 
application in the court in which the judgment was entered for 
an order directing payment out of the recovery portion of the 
fund of the amount of actual and direct out of pocket loss in 
the transaction, but excluding any attorney's fees, interest on 
the loss and on any judgment obtained as a result of the loss, 
up to the sum of $150,000 of the amount unpaid upon the 
judgment, provided that nothing in this chapter shall be 
construed to obligate the fund for more than $150,000 per 
claimant, per transaction, subject to the limitations set forth 
in subdivision 14, regardless of the number of persons aggrieved 
or parcels of real estate involved in the transaction, provided 
that regardless of the number of claims against a licensee, 
nothing in this chapter may obligate the fund for more than 
$250,000 per licensee per year.  An aggrieved person who has a 
cause of action under section 80A.23 shall first seek recovery 
as provided in section 80A.05, subdivision 5, before the 
commissioner may order payment from the recovery fund.  For 
purposes of this section, persons who are joint tenants or 
tenants in common are deemed to be a single claimant.  A copy of 
the verified application shall be served upon the commissioner 
and upon the judgment debtor, and a certificate or affidavit of 
service filed with the court.  For the purpose of this section, 
"aggrieved person" shall not include a licensee unless (1) the 
licensee is acting in the capacity of principal in the sale of 
interests in real property owned by the licensee; or (2) the 
licensee is acting in the capacity of principal in the purchase 
of interests in real property to be owned by the licensee.  
Under no circumstances shall a licensee be entitled to payment 
under this section for the loss of a commission or similar fee.  
    Sec. 7.  Minnesota Statutes 1990, section 82.34, 
subdivision 9, is amended to read: 
    Subd. 9.  Whenever the court proceeds upon an application 
as set forth in subdivision 7, it shall order payment out of the 
recovery portion of the fund only upon a determination that the 
aggrieved party has a valid cause of action within the purview 
of subdivision 7 and has complied with the provisions of 
subdivision 8.  The judgment shall be only prima facie evidence 
of such cause of action and for the purposes of this section 
shall not be conclusive.  The commissioner may defend any such 
action on behalf of the fund and shall have recourse to all 
appropriate means of defense and review including examination of 
witnesses.  The commissioner may move the court at any time to 
dismiss the application when it appears there are no triable 
issues and the petition is without merit.  The motion may be 
supported by affidavit of any person or persons having knowledge 
of the facts, and may be made on the basis that the petition, 
and the judgment referred to therein, does not form the basis 
for a meritorious recovery claim within the purview of 
subdivision 7; provided, however, the commissioner shall give 
written notice at least ten days before such motion.  The 
commissioner may, subject to court approval, compromise a claim 
based upon the application of an aggrieved party but shall not 
be bound by any prior compromise or stipulation of the judgment 
debtor. 
    Sec. 8.  Minnesota Statutes 1990, section 82.34, 
subdivision 11, is amended to read: 
    Subd. 11.  If the court finds after the hearing that said 
claim should be levied against the recovery portion of the fund, 
the court shall enter an order directed to the commissioner 
requiring payment from the recovery portion of the fund of 
whatever sum it shall find to be payable upon the claim pursuant 
to the provisions of and in accordance with the limitations 
contained in this section. 
    Sec. 9.  Minnesota Statutes 1990, section 82.34, 
subdivision 13, is amended to read: 
    Subd. 13.  Should the commissioner pay from the recovery 
portion of the fund any amount in settlement of a claim or 
toward satisfaction of a judgment against a licensee, the 
license shall be automatically suspended upon the effective date 
of an order by the court as set forth herein authorizing payment 
from the recovery portion of the fund.  No broker, salesperson, 
or closing agent shall be granted reinstatement until the person 
has repaid in full, plus interest at the rate of 12 percent a 
year, twice the amount paid from the recovery portion of the 
fund on the person's account, and has obtained a surety bond 
issued by an insurer authorized to transact business in this 
state in the amount of $40,000.  The bond shall be filed with 
the commissioner, with the state of Minnesota as obligee, 
conditioned for the prompt payment to any aggrieved person 
entitled thereto, of any amounts received by the real estate 
broker, salesperson, or closing agent or to protect any 
aggrieved person from loss resulting from fraudulent, deceptive, 
or dishonest practices or conversion of trust funds arising out 
of any transaction when the real estate broker or salesperson 
was licensed and performed acts for which a license is required 
under this chapter.  The bond shall remain operative for as long 
as that real estate broker, salesperson, or closing agent is 
licensed.  No payment shall be made from the recovery portion of 
the fund based upon claims against any broker, salesperson, or 
closing agent who is granted reinstatement pursuant to this 
subdivision.  A discharge in bankruptcy shall not relieve a 
person from the penalties and disabilities provided in this 
section. 
    Sec. 10.  Minnesota Statutes 1990, section 82.34, 
subdivision 14, is amended to read: 
    Subd. 14.  The commissioner shall satisfy all claims 
against licensees for which an order pursuant to subdivision 11 
directing payment from the recovery portion of the fund has 
become final during the calendar year.  Each claim shall be 
satisfied by the commissioner in not less than 30 and not more 
than 90 days following the end by July 15 of the calendar year 
after the year in which the order directing payment of the claim 
becomes final, commencing with calendar year 1981 subject to the 
limitations of this section.  If, at the end of any calendar 
year, the commissioner determines that the courts have issued 
orders that have become final during the year directing payment 
out of the recovery portion of the fund in a total amount in 
excess of the funds available for recovery purposes, the 
commissioner shall allocate the funds available for recovery 
purposes among all claimants in the ratio that the amount 
ordered paid to each claimant bears to the aggregate of all 
amounts ordered paid.  The commissioner shall mail notice of the 
allocation to all claimants not less than 45 days following the 
end of the calendar year.  Any claimant who objects to the plan 
of allocation shall file a petition in the district court of 
Ramsey or Hennepin county within 20 days of the mailing of 
notice setting forth the grounds for objection.  Upon motion of 
the commissioner, the court shall summarily dismiss the petition 
and order distribution in accordance with the proposed plan of 
allocation unless it finds substantial reason to believe that 
the distribution would be in violation of the provisions of this 
section.  If a petition is filed, no distribution shall be made 
except in accordance with a final order of the court.  In the 
event no petition is filed within 20 days of the mailing of 
notice, the commissioner shall make a distribution in accordance 
with the plan of allocation.  Any distribution made by the 
commissioner in accordance with this subdivision shall be deemed 
to satisfy and extinguish the claims of any claimant receiving a 
distribution against the recovery portion of the fund.  
    Sec. 11.  [TEMPORARY ASSESSMENT.] 
    The commissioner may assess licensees pursuant to Minnesota 
Statutes, section 82.34, to pay those claims which are payable 
in 1992 but for which the money in the fund is insufficient to 
satisfy. 
    Sec. 12.  [PENDING CLAIMS.] 
    The change in the per year limit contained in section 6 
does not apply to a cause of action that was commenced before 
August 1, 1992. 
    Sec. 13.  [REPEALER.] 
    Minnesota Statutes 1990, section 82.34, subdivision 20, is 
repealed. 
    Sec. 14.  [EFFECTIVE DATE.] 
    Sections 1 to 13 are effective the day following final 
enactment. 

                                ARTICLE 2
    Section 1.  Minnesota Statutes 1990, section 504.20, 
subdivision 2, is amended to read: 
    Subd. 2.  Any deposit of money shall not be considered 
received in a fiduciary capacity within the meaning of section 
82.17, subdivision 7, but shall be held by the landlord for the 
tenant who is party to the agreement and shall bear simple 
noncompounded interest at the rate of 5-1/2 four percent per 
annum noncompounded until May 1, 1997, and 5-1/2 percent per 
annum thereafter, computed from the first day of the next month 
following the full payment of the deposit to the last day of the 
month in which the landlord, in good faith, complies with the 
requirements of subdivision 3 or to the date upon which judgment 
is entered in any civil action involving the landlord's 
liability for the deposit, whichever date is earlier.  Any 
interest amount less than $1 shall be excluded from the 
provisions of this section. 
    Sec. 2.  [REVIEW.] 
    The reversion of the interest rate to 5-1/2 percent in 
section 1 is subject to review by the legislature in the 1996 
session. 
    Sec. 3.  [EFFECTIVE DATE.] 
    Section 1 is effective the day following final enactment. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 27, 1992, 2:04 p.m.