Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 309-S.F.No. 1000 
           An act relating to real estate; regulating fees, 
          licenses, and agreements; requiring certain 
          disclosures; providing for meetings of the real estate 
          appraiser advisory board; changing terms; regulating 
          fees and licenses; appropriating money; amending 
          Minnesota Statutes 1992, sections 82.17, subdivision 
          4, and by adding subdivisions; 82.19, subdivision 5, 
          and by adding subdivisions; 82.20, subdivision 15; 
          82.21, subdivision 1, and by adding a subdivision; 
          82.22, subdivisions 6 and 13; 82.24, subdivision 1; 
          82.27, subdivision 1; 82.33, subdivision 2, and by 
          adding subdivisions; 82.34, subdivisions 3 and 7; 
          82B.02, by adding a subdivision; 82B.035, by adding a 
          subdivision; 82B.05, subdivision 5; 82B.11; 82B.14; 
          82B.19, subdivision 2; and 507.45, subdivision 4; Laws 
          1992, chapter 555, article 1, section 12; proposing 
          coding for new law in Minnesota Statutes, chapter 82; 
          repealing Minnesota Statutes 1992, sections 82.22, 
          subdivision 7; and 462A.201, subdivision 5; Minnesota 
          Rules, part 2805.1200. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1992, section 82.17, 
subdivision 4, is amended to read: 
    Subd. 4.  "Real estate broker" or "broker" means any person 
who: 
    (a) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly lists, sells, exchanges, buys or 
rents, manages, or offers or attempts to negotiate a sale, 
option, exchange, purchase or rental of an interest or estate in 
real estate, or advertises or holds out as engaged in these 
activities; 
    (b) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly negotiates or offers or attempts 
to negotiate a loan, secured or to be secured by a mortgage or 
other encumbrance on real estate; 
     (c) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly lists, sells, exchanges, buys, 
rents, manages, offers or attempts to negotiate a sale, option, 
exchange, purchase or rental of any business opportunity or 
business, or its good will, inventory, or fixtures, or any 
interest therein; 
     (d) for another and for commission, fee or other valuable 
consideration or with the intention or expectation of receiving 
the same directly or indirectly offers, sells or attempts to 
negotiate the sale of property that is subject to the 
registration requirements of chapter 83, concerning subdivided 
land; 
    (e) engages in the business of charging an advance fee or 
contracting for collection of a fee in connection with any 
contract whereby the person undertakes to promote the sale of 
real estate through its listing in a publication issued 
primarily for this purpose; for another and for commission, fee, 
or other valuable consideration or with the intention or 
expectation of receiving the same, promotes the sale of real 
estate by advertising it in a publication issued primarily for 
this purpose, if the person:  
     (1) negotiates on behalf of any party to a transaction; 
     (2) disseminates any information regarding the property to 
any party or potential party to a transaction subsequent to the 
publication of the advertisement, except that in response to an 
initial inquiry from a potential purchaser, the person may 
forward additional written information regarding the property 
which has been prepared prior to the publication by the seller 
or broker or a representative of either; 
     (3) counsels, advises, or offers suggestions to the seller 
or a representative of the seller with regard to the marketing, 
offer, sale, or lease of the real estate, whether prior to or 
subsequent to the publication of the advertisement; 
     (4) counsels, advises, or offers suggestions to a potential 
buyer or a representative of the seller with regard to the 
purchase or rental of any advertised real estate; or 
     (5) engages in any other activity otherwise subject to 
licensure under this chapter; 
    (f) engages wholly or in part in the business of selling 
real estate to the extent that a pattern of real estate sales is 
established, whether or not the real estate is owned by the 
person.  A person shall be presumed to be engaged in the 
business of selling real estate if the person engages as 
principal in five or more transactions during any 12-month 
period, unless the person is represented by a licensed real 
estate broker or salesperson; 
    (g) offers or makes more than five loans secured by real 
estate during any 12-month period and who is not a bank, savings 
bank, mutual savings bank, building and loan association, or 
savings and loan association organized under the laws of this 
state or the United States, trust company, trust company acting 
as a fiduciary, or other financial institution subject to the 
supervision of the commissioner of commerce, or mortgagee or 
lender approved or certified by the secretary of housing and 
urban development or approved or certified by the administrator 
of veterans affairs, or approved or certified by the 
administrator of the Farmers Home Administration, or approved or 
certified by the Federal Home Loan Mortgage Corporation, or 
approved or certified by the Federal National Mortgage 
Association. 
    Sec. 2.  Minnesota Statutes 1992, section 82.17, is amended 
by adding a subdivision to read: 
    Subd. 11.  [DUAL AGENCY.] "Dual agency" means a situation 
in which a licensee owes a duty to more than one party to the 
transaction.  
    Circumstances which establish dual agency include the 
following:  
    (1) when one licensee represents both the buyer and the 
seller in a real estate transaction; or 
    (2) when two or more licensees, licensed to the same 
broker, each represent a party to the transaction. 
    Sec. 3.  Minnesota Statutes 1992, section 82.17, is amended 
by adding a subdivision to read: 
    Subd. 12.  [RESIDENTIAL REAL PROPERTY OR RESIDENTIAL REAL 
ESTATE.] "Residential real property" or "residential real 
estate" means property occupied by, or intended to be occupied 
by, one to four families as their residence. 
    Sec. 4.  Minnesota Statutes 1992, section 82.19, is amended 
by adding a subdivision to read: 
    Subd. 4a.  [SELF-SERVING PROVISION PROHIBITED.] No purchase 
agreement, earnest money contract, or similar contract for the 
purchase, rental, or lease of real property may contain any hold 
harmless clause or arbitration clause which addresses the rights 
or liabilities of persons required to be licensed pursuant to 
this chapter unless the person required to be licensed is a 
principal in the transaction.  
    This does not prohibit separate and independent written 
agreements between any of the parties and persons required to be 
licensed pursuant to this chapter.  
    Sec. 5.  Minnesota Statutes 1992, section 82.19, 
subdivision 5, is amended to read: 
    Subd. 5.  [DISCLOSURE REGARDING REPRESENTATION OF PARTIES.] 
(a) No person licensed pursuant to this chapter or who otherwise 
acts as a real estate broker or salesperson shall represent any 
party or parties to a real estate transaction or otherwise act 
as a real estate broker or salesperson unless that person makes 
an affirmative written disclosure to all parties to the 
transaction as to which party that person represents in the 
transaction.  In a residential real property transaction, the 
disclosure must be made at the first substantive contact between 
the licensee and the party or potential party to the 
transaction.  The disclosure shall be printed in at least 
6-point bold type on the purchase agreement and acknowledged by 
separate signatures of the buyer and seller as a separate 
document, and acknowledged by the signature of the buyer, 
seller, or customer. 
    (b) The disclosure required by this subdivision must be 
made by the licensee prior to any offer being made to or 
accepted by the buyer.  A change in licensee's representation 
that makes the initial disclosure incomplete, misleading, or 
inaccurate requires that a new disclosure be made at once. with 
respect to any residential property transaction:  
    (1) when representing the seller, at the signing of a 
listing agreement; 
    (2) when representing the buyer, at the signing of a 
buyer's broker agreement; 
    (3) as to all other parties (potential buyers or sellers) 
who are not represented by the licensee, before discussion of 
financial information or the commencement of negotiations, which 
could affect that party's bargaining position in the transaction.
    A change in the licensee's representation, including dual 
agency, that makes the initial disclosure required by this 
paragraph incomplete, misleading, or inaccurate requires that a 
new disclosure be made at once. 
    (c) The seller may, in the listing agreement, authorize the 
seller's broker to disburse part of the broker's compensation to 
other brokers, including the buyer's brokers solely representing 
the buyer.  A broker representing a buyer shall make known to 
the seller or the seller's agent the fact of the agency 
relationship before any showing or negotiations are initiated. 
    Sec. 6.  Minnesota Statutes 1992, section 82.19, is amended 
by adding a subdivision to read: 
    Subd. 8.  [CLOSING SERVICES.] No real estate broker, 
salesperson, or closing agent shall require a person to use any 
particular lender, licensed attorney, real estate broker, real 
estate salesperson, real estate closing agent, or title company 
in connection with a residential real estate closing. 
    Sec. 7.  [82.195] [LISTING AGREEMENTS.] 
    Subdivision 1.  [REQUIREMENT.] Licensees shall obtain a 
signed listing agreement from the owner of real property or from 
another person authorized to offer the property for sale or 
lease before advertising to the general public that the real 
property is available for sale or lease.  
    For the purposes of this section "advertising" includes 
placing a sign on the owner's property that indicates that the 
property is being offered for sale or lease.  
    Subd. 2.  [CONTENTS.] All listing agreements must be in 
writing and must include:  
    (1) a definite expiration date; 
    (2) a description of the real property involved; 
    (3) the list price and any terms required by the seller; 
    (4) the amount of any compensation or commission or the 
basis for computing the commission; 
    (5) a clear statement explaining the events or conditions 
that will entitle a broker to a commission; 
    (6) information regarding an override clause, if 
applicable, including a statement to the effect that the 
override clause will not be effective unless the licensee 
supplies the seller with a protective list within 72 hours after 
the expiration of the listing agreement; 
    (7) the following notice in not less than ten point 
boldface type immediately preceding any provision of the listing 
agreement relating to compensation of the licensee:  
    "NOTICE:  THE COMMISSION RATE FOR THE SALE, LEASE, RENTAL, 
OR MANAGEMENT OF REAL PROPERTY SHALL BE DETERMINED BETWEEN EACH 
INDIVIDUAL BROKER AND ITS CLIENT."; 
    (8) if the broker chooses to represent both buyers and 
sellers in connection with residential property transactions, a 
"dual agency" disclosure statement; 
    (9) a notice requiring the seller to indicate in writing 
whether it is acceptable to the seller to have the licensee 
arrange for closing services or whether the seller wishes to 
arrange for others to conduct the closing.  The notice must also 
include the disclosure of any controlled business arrangement, 
as the term is defined in United States Code, title 12, section 
1602, between the licensee and the real estate closing agent 
through which the licensee proposes to arrange closing services; 
and 
    (10) for residential listings, a notice stating that after 
the expiration of the listing agreement, the seller will not be 
obligated to pay the licensee a fee or commission if the seller 
has executed another valid listing agreement pursuant to which 
the seller is obligated to pay a fee or commission to another 
licensee for the sale, lease, or exchange of the real property 
in question.  This notice may be used in the listing agreement 
for any other type of real estate.  
    Subd. 3.  [PROHIBITED PROVISIONS.] Except as otherwise 
provided in subdivision 4, paragraph (b), licensees shall not 
include in a listing agreement a holdover clause, automatic 
extension, or any similar provision, or an override clause the 
length of which is more than six months after the expiration of 
the listing agreement. 
    Subd. 4.  [OVERRIDE CLAUSES.] (a) Licensees shall not seek 
to enforce an override clause unless a protective list has been 
furnished to the seller within 72 hours after the expiration of 
the listing agreement.  
    (b) A listing agreement may contain an override clause of 
up to two years in length when used in conjunction with the 
purchase or sale of a business.  The length of the override 
clause must be negotiable between the licensee and the seller of 
the business.  The protective list provided in connection with 
the override clause must include the written acknowledgment of 
each party named on the protective list, that the business which 
is the subject of the listing agreement was presented to that 
party by the licensee. 
    Subd. 5.  [PROTECTIVE LISTS.] A broker or salesperson has 
the burden of demonstrating that each person on the protective 
list has, during the period of the listing agreement, either 
made an affirmative showing of interest in the property by 
responding to an advertisement or by contacting the broker or 
salesperson involved or has been physically shown the property 
by the broker or salesperson.  For the purpose of this section, 
the mere mailing or other distribution by a licensee of 
literature setting forth information about the property in 
question does not, of itself, constitute an affirmative showing 
of interest in the property on the part of a subsequent 
purchaser.  
    For listings of nonresidential real property which do not 
contain the notice described in subdivision 2, clause (10), the 
protective list must contain the following notice in boldface 
type: 
    "IF YOU RELIST WITH ANOTHER BROKER WITHIN THE OVERRIDE 
PERIOD AND THEN SELL YOUR PROPERTY TO ANYONE WHOSE NAME APPEARS 
ON THIS LIST, YOU COULD BE LIABLE FOR FULL COMMISSIONS TO BOTH 
BROKERS.  IF THIS NOTICE IS NOT FULLY UNDERSTOOD, SEEK COMPETENT 
ADVICE." 
    Sec. 8.  [82.196] [BUYER'S BROKER AGREEMENTS.] 
    Subdivision 1.  [REQUIREMENTS.] Licensees shall obtain a 
signed buyer's broker agreement from a buyer before performing 
any acts as a buyer's representative. 
    Subd. 2.  [CONTENTS.] All buyer's broker agreements must be 
in writing and must include:  
    (1) a definite expiration date; 
    (2) the amount of any compensation or commission, or the 
basis for computing the commission; 
    (3) a clear statement explaining the services to be 
provided to the buyer by the broker, and the events or 
conditions that will entitle a broker to a commission or other 
compensation; 
    (4) a provision for cancellation of the agreement by either 
party upon terms agreed upon by the parties; 
    (5) information regarding an override clause, if 
applicable, including a statement to the effect that the 
override clause will not be effective unless the licensee 
supplies the buyer with a protective list within 72 hours after 
the expiration of the buyer's broker agreement; 
    (6) the following notice in not less than ten point bold 
face type immediately preceding any provision of the buyer's 
broker agreement relating to compensation of the licensee: 
    "NOTICE:  THE COMMISSION RATE FOR THE PURCHASE, LEASE, 
RENTAL, OR MANAGEMENT OF REAL PROPERTY IS NEGOTIABLE AND SHALL 
BE DETERMINED BETWEEN EACH INDIVIDUAL BROKER AND ITS CLIENT."; 
    (7) if the broker chooses to represent both buyers and 
sellers, a "dual agency" disclosure statement; and 
    (8) for buyer's broker agreements which involve residential 
real property, a notice stating that after the expiration of the 
buyer's broker agreement, the buyer will not be obligated to pay 
the licensee a fee or commission if the buyer has executed 
another valid buyer's broker agreement pursuant to which the 
buyer is obligated to pay a fee or commission to another 
licensee for the purchase, lease, or exchange of real property. 
    Subd. 3.  [PROHIBITED PROVISIONS.] Licensees shall not 
include in a buyer's broker agreement a holdover clause, 
automatic extension, or any other similar provision, or an 
override clause the length of which is more than six months 
after the expiration of the buyer's broker agreement.  
    Subd. 4.  [OVERRIDE CLAUSES.] Licensees shall not seek to 
enforce an override clause unless a protective list has been 
furnished to the buyer within 72 hours after the expiration of 
the buyer's broker agreement.  
    Subd. 5.  [PROTECTIVE LISTS.] A licensee has the burden of 
demonstrating that each property on the protective list has been 
shown to the buyer, or specifically brought to the attention of 
the buyer, during the time the buyer's broker agreement was in 
effect.  
    Subd. 6.  [APPLICATION.] This section applies only to 
residential real property transactions. 
    Sec. 9.  [82.197] [DISCLOSURE REQUIREMENTS.] 
    Subdivision 1.  [AGENCY DISCLOSURE.] The listing agreement 
or a buyer's broker agreement must include a clear and complete 
explanation of how the broker will represent the interests of 
the seller or buyer, and, if the broker represents both sellers 
and buyers, state how that representation would be altered in a 
dual agency situation, and require the seller or buyer to choose 
whether to authorize the broker to initiate any transaction 
which would give rise to dual agency.  Disclosure to a customer 
of a licensee's agency relationship with other parties must be 
made at a time and in a manner sufficient to protect the 
customer's bargaining position. 
    Subd. 2.  [CREATION OF DUAL AGENCY.] If circumstances 
create a dual agency situation, the broker must make full 
disclosure to all parties to the transaction as to the change in 
relationship of the parties to the broker due to dual agency.  A 
broker, having made full disclosure, must obtain the consent of 
all parties to these circumstances before accepting the dual 
agency.  
    Subd. 3.  [SCOPE AND EFFECT.] The requirements for 
disclosure of agency relationships set forth in this chapter are 
intended only to establish a minimum standard for regulatory 
purposes, and are not intended to abrogate common law. 
    Subd. 4.  [AGENCY DISCLOSURE FORMS.] (a) Disclosures of 
agency relationships shall be made in substantially the form set 
forth in paragraphs (b) to (e): 
 (b) ADDENDUM TO LISTING AGREEMENT 
   ....(Broker).... will be representing you as your broker in 
the sale of your property located at ......................  
This relationship is called an agency.  As your agent, 
....(Broker).... owes you the duties of loyalty, obedience, 
disclosure, confidentiality, reasonable care and diligence, and 
full accounting.  However, ....(Broker).... also represents 
buyers looking for properties.  If a buyer represented by 
....(Broker).... becomes interested in your property, a dual 
agency will be created.  This means that ....(Broker).... will 
owe the same duties to the buyer that we owe to you.  This 
conflict of interest will prohibit ....(Broker).... from 
advocating exclusively on your behalf when attempting to effect 
the sale of your property.  Dual agency will limit the level of 
representation which ....(Broker).... can provide.  
    If a dual agency should arise, you will need to agree that 
confidential information about price, terms, and motivation will 
still be kept confidential unless you instruct ....(Broker).... 
in writing to disclose specific information about you or your 
property.  All other information will be shared.  Regardless of 
whether a dual agency occurs, ....(Broker).... must disclose to 
the buyer any material facts of which ....(Broker).... is aware 
that may adversely and significantly affect the buyer's use or 
enjoyment of the property.  In addition, ....(Broker).... must 
disclose to both parties any information of which 
....(Broker).... is aware that a party will not perform in 
accordance with the terms of the purchase agreement or similar 
written agreement to convey real estate. 
    ....(Broker).... cannot act as a dual agent unless both you 
and the buyer agree to the dual agency after it is disclosed to 
you.  By agreeing to a possible dual agency, you will be giving 
up the right to exclusive representation in an in-house 
transaction.  However, if you should decide not to agree to a 
possible dual agency, and you want ....(Broker).... to represent 
you, you may give up the opportunity to sell your property to 
buyers represented by ....(Broker).....  
 SELLER'S INSTRUCTIONS TO BROKER 
    Having read and understood this information about dual 
agency, you now instruct ....(Broker).... as follows:  
    .... Seller agrees to dual agency representation and will 
consider offers made by buyers represented by ....(Broker)..... 
    .... Seller does not agree to dual agency representation 
and will not consider offers made by buyers represented by 
....(Broker)..... 
..........................         ........................
Seller                             (Broker)
..........................    BY:  ........................
Seller                             Salesperson
Dated:  ..................
 (c) ADDENDUM TO BUYER REPRESENTATION AGREEMENT 
   ....(Broker).... will be representing you as your broker to 
assist you in finding and purchasing a property.  This 
relationship is called an agency.  As your agent, 
....(Broker).... owes you the duties of loyalty, obedience, 
disclosure, confidentiality, reasonable care and diligence, and 
full accounting.  However, ....(Broker).... also represents 
sellers by listing their property for sale.  If you become 
interested in a property listed by ....(Broker)...., a dual 
agency will be created.  This means that ....(Broker).... will 
owe the same duties to the seller that ....(Broker).... owes to 
you.  This conflict of interest will prohibit ....(Broker).... 
from advocating exclusively on your behalf when attempting to 
effect the purchase of the property.  Dual agency will limit the 
level of representation ....(Broker).... can provide.  
    If a dual agency should arise, you will need to agree that 
confidential information about price, terms, and motivation will 
still be kept confidential unless you instruct ....(Broker).... 
in writing to disclose specific information about you.  All 
other information will be shared.  Regardless of whether a dual 
agency occurs, ....(Broker).... must disclose to the buyer any 
material facts of which ....(Broker).... is aware that may 
adversely and significantly affect the buyer's use or enjoyment 
of the property.  In addition, ....(Broker).... must disclose to 
both parties any information of which ....(Broker).... is aware 
that a party will not perform in accordance with the terms of 
the purchase agreement or similar written agreement to convey 
real estate. 
    ....(Broker).... cannot act as a dual agent unless both you 
and the seller agree to the dual agency after it is disclosed to 
you.  By agreeing to a possible dual agency, you will be giving 
up the right to exclusive representation in an in-house 
transaction.  However, if you should decide not to agree to a 
possible dual agency, and you want ....(Broker).... to represent 
you, you may give up the opportunity to purchase the properties 
listed by ....(Broker).....  
 BUYER'S INSTRUCTIONS TO BROKER 
    Having read and understood this information about dual 
agency, you now instruct ....(Broker).... as follows:  
    .... Buyer will agree to a dual agency representation and 
will consider properties listed by ....(Broker).....  
    .... Buyer will not agree to a dual agency representation 
and will not consider properties listed by ....(Broker)..... 
..........................         ........................
Buyer                              (Broker)
..........................    BY:  ........................
Buyer                              Salesperson
Dated:  ..................
 (d) DISCLOSURE TO CUSTOMER 
    Before ....(Broker).... begins to assist you in finding and 
purchasing a property, we must disclose to you that 
....(Broker).... will be representing the seller in the 
transaction.  
    ....(Broker).... will disclose to you all material facts 
about the property of which ....(Broker).... is aware, that 
could adversely and significantly affect your use or enjoyment 
of the property.  ....(Broker).... will also assist you with the 
mechanics of the transaction.  
    When it comes to the price and terms of an offer, 
....(Broker).... will ask you to make the decision as to how 
much to offer for any property and upon what terms and 
conditions.  ....(Broker).... can explain your options to you, 
but the ultimate decision is yours.  ....(Broker).... will 
attempt to show you properties in the price range and category 
you desire so that you will have information on which to base 
your decision.  
    ....(Broker).... will present to the seller any written 
offer that you ask ....(Broker).... to present.  
....(Broker).... asks you to keep to yourself any information 
about the price or terms of your offer, or your motivation for 
making an offer, that you do not want the seller to know.  
....(Broker).... would be required, as the seller's agent, to 
disclose this information to the seller.  You should carefully 
consider sharing any information with ....(Broker).... that you 
do not want disclosed to the seller. 
..........................         ........................
Customer                           (Broker)
..........................    BY:  ........................
Customer                           Salesperson
Dated:  ..................   
 (e) DISCLOSURE TO BUYER AND SELLER AT TIME 
OF OFFER TO PURCHASE
    ....(Broker).... represents the seller at the property 
located at 
.................................................................
    ....(Broker).... also represents a buyer who offered to 
purchase the seller's property.  
    When ....(Broker).... represents both the buyer and the 
seller in a transaction, a dual agency is created.  This means 
that ....(Broker).... and its agents owe a fiduciary duty to 
both buyer and seller.  Because buyer and seller may have 
conflicting interests, ....(Broker).... and its agents are 
prohibited from advocating exclusively for either party. 
    ....(Broker).... cannot represent both the buyer and seller 
in this transaction unless both the buyer and seller agree to 
this dual agency.  
    Buyer and seller acknowledge and agree that:  
    1.  Confidential information communicated to 
....(Broker).... which regards price, terms, or motivation to 
buy or sell will remain confidential unless buyer or seller 
instructs ....(Broker).... in writing to disclose this 
information about the buyer or seller.  Other information will 
be shared.  
    2.  ....(Broker).... and its salespersons will disclose to 
buyer all material facts of which they are aware which could 
adversely and significantly affect the buyer's use or enjoyment 
of the property or any intended use of the property of which 
....(Broker).... or its salespersons are aware (this disclosure 
is required by law whether or not a dual agency is involved). 
    3.  ....(Broker).... and its salespersons will disclose to 
both parties all information of which they are aware that either 
party will not perform in accordance with the terms of the 
purchase agreement or other written agreement to convey real 
estate (this disclosure is required by law whether or not a dual 
agency is involved).  
    4.  ....(Broker).... and its salespersons will not 
represent the interests of either party to the detriment of the 
other.  
    5.  Within the limits of dual agency, ....(Broker).... and 
its salespersons will work diligently to facilitate the 
mechanics of the sale.  
    With the knowledge and understanding of the explanation 
above, buyer and seller authorize and instruct ....(Broker).... 
and its salespersons to act as dual agents in this transaction. 
..........................              ........................
Buyer                                   Seller
..........................              ........................
Buyer                                   Seller
Date:  ...................              Date:  ................. 
    Subd. 5.  [APPLICATION.] The disclosures required by 
subdivision 4 apply only to residential real property 
transactions. 
    Sec. 10.  Minnesota Statutes 1992, section 82.20, 
subdivision 15, is amended to read: 
    Subd. 15.  [EXEMPTION.] The following persons, when acting 
as closing agents, are exempt from the requirements of sections 
82.19 and 82.24 unless otherwise required in this section or 
chapter: 
    (1) a direct employee of a title company, or a person who 
has an agency agreement with a title company in which the agent 
agrees to perform closing services on the title company's behalf 
and the title company assumes responsibility for the actions of 
the agent as if the agent were a direct employee of the title 
company; 
    (2) a licensed attorney or a direct employee of a licensed 
attorney; 
    (3) a licensed real estate broker or salesperson; 
    (4) a direct employee of a licensed real estate broker if 
the broker maintains all funds received in connection with the 
closing services in the broker's trust account; and 
    (5) any bank, trust company, savings and loan association, 
credit union, industrial loan and thrift company, regulated 
lender under chapter 56, public utility, or land mortgage or 
farm loan association organized under the laws of this state or 
the United States, when engaged in the transaction of businesses 
within the scope of its corporate powers as provided by law. 
    Sec. 11.  Minnesota Statutes 1992, section 82.21, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AMOUNTS.] The following fees shall be paid 
to the commissioner: 
    (a) A fee of $100 per year for each initial individual 
broker's license, and a fee of $50 per year for each annual 
renewal thereof; 
    (b) A fee of $50 per year for each initial salesperson's 
license, and a fee of $20 per year for each annual renewal 
thereof; 
    (c) A fee of $55 per year for each initial real estate 
closing agent license, and a fee of $30 per year for each annual 
renewal; 
    (d) A fee of $100 per year for each initial corporate or 
partnership license, and a fee of $50 per year for each annual 
renewal thereof; 
    (e) A fee not to exceed of $40 per year for payment to the 
education, research and recovery fund in accordance with section 
82.34; 
    (f) A fee of $20 for each transfer; 
    (g) A fee of $50 for a corporation or partnership name 
change; 
    (h) A fee of $10 for an agent name change; 
    (i) A fee of $20 for a license history; 
    (j) A fee of $10 for a duplicate license; 
    (k) A fee of $50 for license reinstatement; 
    (l) A fee of $20 for reactivating a corporate or 
partnership license without land; 
    (m) A fee of $100 for course coordinator approval; and 
    (n) A fee of $10 $20 for each hour or fraction of one hour 
of course approval sought. 
    Sec. 12.  Minnesota Statutes 1992, section 82.21, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [BROKER PAYMENT CONSOLIDATION.] For all license 
renewal fees, recovery fund renewal fees, and recovery fund 
assessments pursuant to this section and section 82.34, the 
broker must remit the fees or assessments for the company, 
broker, and all salespersons licensed to the broker, in the form 
of a single check. 
    Sec. 13.  Minnesota Statutes 1992, section 82.22, 
subdivision 6, is amended to read: 
    Subd. 6.  [INSTRUCTION; NEW LICENSES.] (a) After January 1, 
1987, Every applicant for a salesperson's license shall be 
required to successfully complete a course of study in the real 
estate field consisting of 30 hours of instruction approved by 
the commissioner before taking the examination specified in 
subdivision 1.  After January 1, 1987, Every applicant for a 
salesperson's license shall be required to successfully complete 
an additional course of study in the real estate field 
consisting of 60 hours of instruction approved by the 
commissioner, of which three hours shall consist of training in 
state and federal fair housing laws, regulations, and rules, 
before filing an application for the license.  Every salesperson 
licensed after January 1, 1987, shall, within one year of 
licensure, be required to successfully complete a course of 
study in the real estate field consisting of 30 hours of 
instruction approved by the commissioner. 
    (b) After December 31, 1983, and before January 1, 1987, 
every applicant for a salesperson's license shall be required to 
successfully complete a course of study in the real estate field 
consisting of 30 hours of instruction approved by the 
commissioner before taking the examination specified in 
subdivision 1.  After December 31, 1983, and before January 1, 
1987, every applicant for a salesperson's license shall be 
required to successfully complete an additional course of study 
in the real estate field consisting of 30 hours of instruction 
approved by the commissioner before filing an application for 
the license.  Every salesperson licensed after December 31, 
1983, and before January 1, 1987, shall, within one year of the 
date a license was first issued, be required to successfully 
complete a course of study in the real estate field consisting 
of 30 hours of instruction approved by the commissioner.  
    (c) The commissioner may approve courses of study in the 
real estate field offered in educational institutions of higher 
learning in this state or courses of study in the real estate 
field developed by and offered under the auspices of the 
national association of realtors, its affiliates, or private 
real estate schools.  The commissioner shall not approve any 
course offered by, sponsored by, or affiliated with any person 
or company licensed to engage in the real estate business.  The 
commissioner may by rule prescribe the curriculum and 
qualification of those employed as instructors. 
    (d) After January 1, 1988, (c) An applicant for a broker's 
license must successfully complete a course of study in the real 
estate field consisting of 30 hours of instruction approved by 
the commissioner, of which three hours shall consist of training 
in state and federal fair housing laws, regulations, and rules.  
The course must have been completed within six months prior to 
the date of application for the broker's license. 
    (e) After August 1, 1989, (d) An applicant for a real 
estate closing agent's license must successfully complete a 
course of study relating to closing services consisting of eight 
hours of instruction approved by the commissioner. 
    Sec. 14.  Minnesota Statutes 1992, 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 May 31.  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: 
    (1) at least two hours of training every year in courses in 
laws or regulations on agency representation and disclosure; and 
    (2) at least two hours of training every even-numbered year 
in courses in state and federal fair housing laws, regulations, 
and rules, or other antidiscrimination laws. 
     Clause (1) does not apply to real estate salespersons and 
real estate brokers engaged solely in the commercial real estate 
business who file with the commissioner a verification of this 
status on an annual basis no later than May 31 as part of the 
annual report under paragraph (a). 
    Sec. 15.  Minnesota Statutes 1992, section 82.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] (a) All trust funds received 
by a broker or the broker's salespeople or closing agents shall 
be deposited forthwith upon receipt in a trust account, 
maintained by the broker for such purpose in a bank, savings and 
loan association, credit union, or an industrial loan and thrift 
company with deposit liabilities designated by the broker or 
closing agent, except as such money may be paid to one of the 
parties pursuant to express written agreement between the 
parties to a transaction.  The depository bank shall be a 
Minnesota bank or trust company or any foreign bank and shall 
authorize the commissioner to examine its records of such 
deposits upon demand by the commissioner.  The industrial loan 
and thrift company shall be organized under chapter 53.  The 
savings and loan association or credit union shall be organized 
under the laws of any state or the United States. 
    (b) All trust accounts opened or maintained pursuant to 
requirements of paragraph (a) must be established through the 
use of an employer identification number.  Any trust account 
currently identified with a broker's personal social security 
number must be changed to reflect the broker's employer's 
identification number rather than the broker's personal social 
security number. 
    Sec. 16.  Minnesota Statutes 1992, section 82.27, 
subdivision 1, is amended to read: 
    Subdivision 1.  The commissioner may by order deny, suspend 
or revoke any license or may censure a licensee if the 
commissioner finds (1) that the order is in the public interest, 
and (2) that the applicant or licensee or, in the case of a 
broker, any officer, director, partner, employee or agent or any 
person occupying a similar status or performing similar 
functions, or any person directly or indirectly controlling the 
broker or closing agent or controlled by the broker or closing 
agent: 
    (a) has filed an application for a license which is 
incomplete in any material respect or contains any statement 
which, in light of the circumstances under which it is made, is 
false or misleading with respect to any material fact; 
    (b) has engaged in a fraudulent, deceptive, or dishonest 
practice; 
    (c) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the real estate 
business; 
    (d) has failed to reasonably supervise brokers, 
salespersons, or closing agents so as to cause injury or harm to 
the public; 
    (e) has violated or failed to comply with any provision of 
this chapter or any rule or order under this chapter; or 
    (f) has, in the conduct of the licensee's affairs under the 
license, been shown to be incompetent, untrustworthy, or 
financially irresponsible; or 
    (g) has acted on behalf of any party to a transaction, 
where the licensee has a conflict of interest that may affect 
the licensee's ability to represent that party, without the 
knowledge and consent of the party. 
    Sec. 17.  Minnesota Statutes 1992, section 82.33, 
subdivision 2, is amended to read: 
    Subd. 2.  No person required by this chapter to be licensed 
shall be entitled to or may bring or maintain any action in the 
courts for any commission, fee or other compensation with 
respect to the purchase, sale, lease or other disposition or 
conveyance of real property, or with respect to the negotiation 
or attempt to negotiate any sale, lease or other disposition or 
conveyance of real property unless there is a written agreement 
with the person bringing or maintaining the action required to 
be licensed. 
    Sec. 18.  Minnesota Statutes 1992, section 82.33, is 
amended by adding a subdivision to read: 
    Subd. 3.  No person required by this chapter to be licensed 
shall be entitled to bring any action to recover any commission, 
fee, or other compensation with respect to the purchase, sale, 
lease, or other disposition or conveyance of residential real 
property, or with respect to the negotiation or attempt to 
negotiate any sale, lease, or other disposition or conveyance of 
residential real property unless the person's agency 
relationships have been disclosed to the parties to the 
transaction in accordance with the requirements of this chapter. 
    Sec. 19.  Minnesota Statutes 1992, section 82.33, is 
amended by adding a subdivision to read: 
    Subd. 4.  No person required to be licensed by this chapter 
may maintain an action in the courts of this state to enforce 
any provision of a purchase agreement, earnest money contract, 
or similar contract for the purchase, rental, or lease of real 
property if the provision to be enforced violates section 82.19, 
subdivision 4a. 
    Sec. 20.  Minnesota Statutes 1992, section 82.34, 
subdivision 3, is amended to read: 
    Subd. 3.  [FEE FOR REAL ESTATE FUND.] 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 $25 per 
year which shall be credited to the real estate education, 
research, and recovery fund.  Any person who receives a an 
initial license shall pay the fee of $50 in addition to all 
other fees payable.  
    Sec. 21.  Minnesota Statutes 1992, 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, 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 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.  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.  
    For the purposes of this section, recovery is limited to 
transactions where the property involved is intended for the 
direct personal habitation or commercial use of the buyer. 
    Except for securities permitted to be sold by a licensee 
pursuant to section 82.19, subdivision 7, for any action 
commenced after July 1, 1993, recovery under this section is not 
available where the buyer's participation is for investment 
purposes only, and is limited to providing capital to fund the 
transaction. 
    Sec. 22.  Minnesota Statutes 1992, section 82B.02, is 
amended by adding a subdivision to read: 
    Subd. 14.  [TRANSACTION VALUE.] "Transaction value" means: 
    (1) for loans or other extensions of credit, the amount of 
the loan or extension of credit; 
    (2) for sales, leases, purchases, and investments in or 
exchanges of real property, the market value of the real 
property interest involved; and 
    (3) for the pooling of loans or interests in real property 
for resale or purchase, the amount of the loan or market value 
of the real property calculated with respect to each such loan 
or interest in real property. 
     Sec. 23.  Minnesota Statutes 1992, section 82B.035, is 
amended by adding a subdivision to read: 
    Subd. 3.  [GEOLOGISTS OR ENGINEERS.] This chapter does not 
apply to an appraisal, analysis, opinion, or conclusion as to 
the value of oil, gas, coal, and other mineral resources 
performed by an engineer registered as provided in sections 
326.01 to 326.15 or by a certified professional geologist, 
unless the appraisal, analysis, opinion, or conclusion of value 
is performed in connection with a federally related transaction 
subject to the requirements of United States Code, title 12, 
section 3331, et seq., the federal Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989. 
    Sec. 24.  Minnesota Statutes 1992, section 82B.05, 
subdivision 5, is amended to read: 
    Subd. 5.  [CONDUCT OF MEETINGS.] Places of regular board 
meetings must be decided by the vote of members.  Written notice 
must be given to each member of the time and place of each 
meeting of the board at least ten days before the scheduled date 
of regular board meetings.  The board shall establish procedures 
for emergency board meetings and other operational procedures, 
subject to the approval of the commissioner.  
    The members of the board shall elect a chair from among the 
members to preside at board meetings. 
    A quorum of the board is eight members.  
    The board shall meet at least quarterly, except that a 
meeting may be canceled, subject to the approval by the 
commissioner if as determined by a majority vote of the 
members determine that the meeting is not necessary or a call of 
the commissioner. 
    The commissioner or a majority of the members may schedule 
additional meetings as necessary. 
    Sec. 25.  Minnesota Statutes 1992, section 82B.11, is 
amended to read: 
    82B.11 [CLASSES OF LICENSE.] 
    Subdivision 1.  [GENERALLY.] There are five classes of 
license for real estate appraisers. 
    Subd. 2.  [STATE REGISTERED REAL PROPERTY APPRAISER.] When 
a net income capitalization analysis is not required by the 
uniform standards of professional appraisal practice, a state 
registered real property appraiser may appraise residential real 
property or agricultural property. 
    Subd. 3.  [FEDERAL RESIDENTIAL LICENSED REAL PROPERTY 
APPRAISER.] A federal residential licensed real property 
appraiser may appraise noncomplex one to four residential units 
property or agricultural property having a transaction value 
less than $1,000,000 and complex one to four residential units 
or agricultural property having a transaction value less than 
$250,000. 
    Subd. 4.  [CERTIFIED FEDERAL RESIDENTIAL REAL PROPERTY 
APPRAISER.] A certified federal residential real property 
appraiser may appraise one to four residential units property or 
agricultural property without regard to transaction value or 
complexity. 
    Subd. 5.  [CERTIFIED FEDERAL GENERAL REAL PROPERTY 
APPRAISER.] A certified federal general real property appraiser 
may appraise all types of real property. 
    Subd. 6.  [TEMPORARY PRACTICE.] The commissioner shall 
issue a license for temporary practice as a real estate 
appraiser under subdivision 3, 4, or 5 to a person certified or 
licensed by another state if: 
    (1) the property to be appraised is part of a 
federally-related transaction and the person is licensed to 
appraise property limited to the same transaction value or 
complexity provided in subdivision 3, 4, or 5; 
    (2) the appraiser's business is of a temporary nature; and 
    (3) the appraiser registers with the commissioner to obtain 
a temporary license prior to before conducting appraisals within 
the state. 
    Sec. 26.  Minnesota Statutes 1992, section 82B.14, is 
amended to read: 
    82B.14 [EXPERIENCE REQUIREMENT.] 
    (a) A license under section 82B.11, subdivision 3, 4, or 5, 
may not be issued to a person who does not have the equivalent 
of two years of experience in real property appraisal supported 
by adequate written reports or file memoranda.  
    (b) Each applicant for license under section 82B.11, 
subdivision 3, 4, or 5, shall give under oath a detailed listing 
of the real estate appraisal reports or file memoranda for each 
year for which experience is claimed by the applicant.  Upon 
request, the applicant shall make available to the commissioner 
for examination, a sample of appraisal reports that the 
applicant has prepared in the course of appraisal practice. 
    (c) Applicants may not receive credit for experience 
accumulated while unlicensed, if the experience is based on 
activities which required a license under this section. 
    Sec. 27.  Minnesota Statutes 1992, section 82B.19, 
subdivision 2, is amended to read: 
    Subd. 2.  [RULES.] (a) The commissioner may adopt rules to 
assure that persons renewing their licenses as licensed real 
estate appraisers have current knowledge of real property 
appraisal theories, practices, and techniques that will provide 
a high degree of service and protection to those members of the 
public with whom they deal in a professional relationship under 
authority of their license.  The rules must include the 
following: 
    (1) policies and procedures for obtaining approval of 
courses of instruction; 
    (2) standards, monitoring methods, and systems for 
recording attendance to be employed by course sponsors as a 
prerequisite to approval of courses for credit; and 
    (3) coordination with real estate continuing education 
requirements so that as the commissioner considers courses or 
parts of courses appropriate they may be used to satisfy both 
real estate and appraiser continuing education requirements. 
    (b) To the extent the commissioner considers it 
appropriate, courses or parts of courses may be considered to 
satisfy both continuing education requirements under this 
section and continuing real estate education requirements. 
    (c) As a prerequisite for course approval, sponsors shall 
submit proposed monitoring methods, and systems for recording 
attendance sufficient to ensure that participants receive course 
credit only for portions actually attended. 
    Sec. 28.  Minnesota Statutes 1992, section 507.45, 
subdivision 4, is amended to read: 
    Subd. 4.  [CHOICE OF CLOSING AGENT; LISTING NOTICE; RULES.] 
(a) No real estate salesperson, broker, attorney, auctioneer, 
builder, title company, financial institution, or other person 
making a mortgage loan may require a person 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. 
    (b) All listing agreements must include a notice informing 
sellers of their rights under this subdivision.  The notice must 
require the seller to indicate in writing whether it is 
acceptable to the seller to have the licensee arrange for 
closing services or whether the seller wishes to arrange for 
others to conduct the closing.  The notice must also include the 
disclosure of any controlled business arrangement, as the term 
is defined in United States Code, title 12, section 1602, 
between the licensee and the real estate closing agent through 
which the licensee proposes to arrange closing services. 
    (c) The commissioner of commerce may adopt rules under 
chapter 14 to implement, administer, and enforce this 
subdivision. 
    Sec. 29.  Laws 1992, chapter 555, article 1, section 12, is 
amended to read:  
    Sec. 12.  [PENDING CLAIMS.] 
    The change in the per year limit contained in section 6 
does not apply to a cause of action civil or administrative 
proceeding that was commenced before August 1, 1992. 
     Sec. 30.  [APPROPRIATION.] 
    $27,000 for fiscal year 1994 and $27,000 for fiscal year 
1995 are appropriated from the general fund to the commissioner 
of commerce for implementation of sections 1 to 29. 
    Sec. 31.  [REVISOR INSTRUCTION.] 
    The revisor shall change terms in Minnesota Statutes and 
Minnesota Rules to reflect the changes in the names of the five 
classes of licenses for real estate appraisers made in section 
25. 
    Sec. 32.  [REPEALER.] 
    (a) Minnesota Statutes 1992, sections 82.22, subdivision 7; 
and 462A.201, subdivision 5, are repealed. 
    (b) Minnesota Rules, part 2805.1200, is repealed. 
    Sec. 33.  [EFFECTIVE DATE.] 
    Sections 1 to 9, 18, 19, and 32 are effective October 1, 
1993. 
    Sections 10 to 17, 20 to 28, and 31 are effective July 1, 
1993. 
    Section 29 is effective retroactive to the effective date 
of the section being amended. 
    Presented to the governor May 17, 1993 
    Signed by the governor May 20, 1993, 2:13 p.m.