Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                         CHAPTER 40-H.F.No. 552 
           An act relating to real estate; modifying provisions 
          for voluntary foreclosure of mortgages; modifying 
          criminal liability for defeating security on realty; 
          amending Minnesota Statutes 1992, sections 580.032, 
          subdivision 1, as amended; 580.23, subdivision 1; 
          582.32, subdivisions 1, 2, 3, 5, 6, 9, and by adding a 
          subdivision; and 609.615; repealing Minnesota Statutes 
          1992, section 582.32, subdivisions 4, 7, and 8. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 580.032, 
subdivision 1, as amended by Laws 1993, chapter 6, section 3, is 
amended to read: 
    Subdivision 1.  [FILING REQUEST FOR NOTICE.] A person 
having a redeemable interest in real property under section 
580.23 or 580.24, may file for record a request for notice of a 
mortgage foreclosure by advertisement with the county recorder 
or registrar of titles of the county where the property is 
located.  To be effective for purposes of this section, a 
request for notice must be filed for record as a separate and 
distinct document, or may be incorporated in except a mechanic's 
lien statement filed for record pursuant to section 514.08, also 
constitutes a request for notice if the mechanic's lien 
statement includes a request for notice and includes legal 
description of the real property and the name and mailing 
address of the person requesting notice mechanic's lien claimant.
    Sec. 2.  Minnesota Statutes 1992, section 580.23, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SIX-MONTH REDEMPTION PERIOD.] When lands 
have been sold in conformity with the preceding sections of this 
chapter the mortgagor, the mortgagor's personal representatives 
or assigns, within six months after such sale, except as 
otherwise provided in subdivision 2 or section 582.032 or 
582.32, may redeem such lands, as hereinafter provided, by 
paying the sum of money for which the same were sold, with 
interest from the time of sale at the rate provided to be paid 
on the mortgage debt and, if no rate be provided in the mortgage 
note, at the rate of six percent per annum, together with any 
further sums which may be payable as provided in sections 582.03 
and 582.031.  
    Sec. 3.  Minnesota Statutes 1992, section 582.32, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION.] This section applies to 
mortgages executed on or after August 1, 1993, under which there 
has been is a default and where the mortgagor and mortgagee 
enter into a written an agreement for voluntary foreclosure of 
the mortgaged real estate mortgage under this section.  This 
section applies only to mortgages on real estate no part of 
which is classified as a homestead under section 273.124 or in 
agricultural property use as defined in section 40A.02, 
subdivision 3, as of the date of agreement. 
    Sec. 4.  Minnesota Statutes 1992, section 582.32, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] (a) As used in this section, the 
following terms have the meanings given:  
    (b) "Agreement" means the agreement for voluntary 
foreclosure described in subdivision 3.  
    (c) "Date of agreement" means the effective date of the 
agreement which shall not be sooner than the date on which the 
agreement is executed and acknowledged by both the mortgagor and 
mortgagee. 
    (d) "Junior lien" means a lien with a redeemable interest 
in the real estate under section 580.23 or 580.24 subordinate to 
the lien of the mortgage foreclosed under this section, the 
holder of which has a redeemable interest in the real estate 
under section 580.24.  
    (e) "Mortgage" means a recorded mortgage on real estate no 
part of which is classified as a homestead as defined in section 
510.01 under section 273.124 or is in agricultural use as 
defined in section 40A.02, subdivision 3, as of the date of 
agreement. 
    (f) "Mortgagee" means the record holders of the mortgage, 
whether one or more. 
    (g) "Mortgagor" means the record holders, whether one or 
more, of the legal and equitable interest in the real estate 
encumbered by the mortgage. 
    (h) "Real estate" means the real property encumbered by the 
mortgage and, where applicable, fixtures, equipment, 
furnishings, and other personalty related to the real property 
and encumbered by the mortgage.  
    Sec. 5.  Minnesota Statutes 1992, section 582.32, 
subdivision 3, is amended to read: 
    Subd. 3.  [PROCEDURE.] (a) Voluntary foreclosure may occur 
only in accordance with this section.  
    (b) The mortgagor and mortgagee shall enter into a written 
agreement for voluntary foreclosure under this section only 
after during the existence of a default under the mortgage.  At 
least one of the items constituting the default must have been 
in existence for at least one month on the date of agreement.  
The agreement shall identify the mortgage by recording data and 
the real estate by legal description, specify the date of the 
agreement and provide that: 
    (1) The mortgagor and mortgagee have agreed that the 
mortgage shall be voluntarily foreclosed with a shortened the 
mortgagor's redemption period under reduced to two months as 
provided in this section. 
    (2) The mortgagee waives any rights to a deficiency or 
other claim for personal liability against the mortgagor arising 
from the mortgage or the debt secured by the mortgage.  This 
does not preclude an agreement between the mortgagor and 
mortgagee to a stipulated payment to the mortgagee as part of 
the voluntary foreclosure, or collection from a guarantor. 
    (3) The mortgagor waives its right of reinstatement, to 
excess surplus sale proceeds, to contest foreclosure, and to 
rents and occupancy during the period before sale and during 
from the date of agreement through the redemption period.  
    (4) The mortgagor consents to the appointment of a receiver 
for, or grants mortgagee possession of, the real estate as of 
the date of agreement, for the purposes of and all rights of 
possession of the real estate, including, but not limited to 
operating, maintaining, and protecting the real estate, and the 
making of any additions or betterments to the real estate.  
    (5) A default exists under the mortgage and on the date of 
agreement at least one of the items constituting the default has 
been in existence for at least one month. 
    (c) Within seven days after the date of agreement, the 
mortgagee must record or file the agreement with the county 
recorder or registrar of titles, as appropriate, in the each 
county where any part of the real estate is located.  Filing or 
recording of a short form agreement signed by the mortgagor and 
mortgagee containing the following information satisfies this 
requirement: 
    (1) the identity and mailing address of the mortgagor and 
mortgagee; 
    (2) the legal description of the real estate; 
    (3) the mortgage identified by recording data; 
    (4) a statement that an event of default under the mortgage 
has existed for at least one month as of the date of agreement 
and foreclosure under this section has been agreed to by the 
parties; and 
    (5) the date of agreement. 
    (d) A certificate signed by the county or city assessor 
where the real estate is located, stating that, as of the date 
of agreement, the real estate is was not in agricultural use as 
defined in section 40A.02, subdivision 3, and is was not a 
homestead as defined in section 510.01, as the date of 
agreement, for property tax purposes under section 273.124, must 
be recorded before or with the certificate of sale in the office 
of the county recorder or registrar of titles where the real 
estate is located, and shall be prima facie evidence of the 
facts contained in the certificate. 
    (e) Within ten days of receipt of a written request for 
information from a holder of a junior lien, the mortgagee, 
without charge, shall deliver or mail by first class mail 
postage prepaid, to the address of the holder set forth in the 
request, either the agreement or a written statement of the 
amount of money and the value or a detailed description of any 
property paid or transferred, or to be paid or transferred, by 
the parties to the agreement under the terms of the agreement.  
Failure to provide this information does not invalidate the 
foreclosure. 
    Sec. 6.  Minnesota Statutes 1992, section 582.32, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [NO RIGHT OF REINSTATEMENT.] There is no right 
of reinstatement pursuant to section 580.30, of the mortgage 
after the date of agreement. 
    Sec. 7.  Minnesota Statutes 1992, section 582.32, 
subdivision 5, is amended to read: 
    Subd. 5.  [FORECLOSURE PROCEDURE; NOTICE TO CREDITORS.] (a) 
After the date of agreement, the mortgagee may proceed to 
foreclose the mortgage in accordance with the laws generally 
applicable to foreclosure by advertisement including chapters 
580 and 582, except as otherwise provided in this section.  
    (b) At least 14 days before the date of sale, the mortgagee 
shall:  
    (1) serve the person persons in possession of the mortgaged 
real estate with notice of the voluntary foreclosure sale under 
this section in the same manner as in a foreclosure by 
advertisement as provided in section 580.03; and 
    (2) send by certified mail a notice of the voluntary 
foreclosure sale under this section to all each holder of a 
junior lien holders of record upon the real estate or some part 
of the real estate who have has filed or recorded a request for 
this notice under subdivision 3 section 580.032.  
    (c) The mortgagee shall publish notice of the voluntary 
foreclosure sale under this section in the same manner as in a 
foreclosure by advertisement as provided in section 580.03 for 
four consecutive weeks.  The notice must include all information 
required under section 580.04, clauses (1) to (6), the date 
of the agreement, and shall state that each holder of a junior 
lien may redeem in the order and manner provided in subdivision 
9, beginning one month after the foreclosure sale expiration of 
the mortgagor's two-month redemption period under this section.  
Provided, if the real estate is subject to a federal tax lien 
entitled to the preemptive 120-day redemption period under 
section 7425(d)(1) of the Internal Revenue Code, as amended, the 
notice shall provide that the date of redemption for the first 
federal tax lien and all other liens junior thereto shall begin 
four months after the date of the foreclosure sale.  Affidavits 
of service, mailing, publication, and other affidavits or 
certificates permitted by chapter 580, must be recorded with the 
certificate of sale, or within five days after the sale, in the 
office of the county recorder or registrar of titles where the 
real estate is located.  These affidavits and certificates are 
prima facie evidence of the facts contained in them. 
    (d) The mortgagor's redemption period is two months from 
the date of sale, except that if the real estate is subject to a 
federal tax lien under which the United States is entitled to a 
120-day redemption period under section 7425(d)(1) of the 
Internal Revenue Code, as amended, the mortgagor's redemption 
period is 120 days from the date of sale.  The certificate of 
sale must indicate the redemption period applicable under this 
paragraph. 
    Sec. 8.  Minnesota Statutes 1992, section 582.32, 
subdivision 6, is amended to read: 
    Subd. 6.  [SALE, HOW AND BY WHOM MADE.] Except as provided 
in this section, the foreclosure sale must be conducted and the 
certificate of sale shall be made in the same manner as and 
recorded in accordance with a foreclosure by advertisement as 
provided in chapter 580.  The certificate of sale must be filed 
or recorded within five days after the sale.  Affidavits of 
service, mailing, publication, and other affidavits or 
certificates permitted by chapter 580, must be recorded with the 
certificate of sale, or within five days after the sale, in the 
office of the county recorder or registrar of titles where the 
real estate is located, and when so recorded are prima facie 
evidence of the facts contained in them. 
    Sec. 9.  Minnesota Statutes 1992, section 582.32, 
subdivision 9, is amended to read: 
    Subd. 9.  [CREDITOR REDEMPTION.] A subsequent creditor 
having person holding a junior lien upon the real estate or some 
part of the real estate may redeem in the order and manner 
specified in sections 580.24 and 580.25, but only if before the 
end of the mortgagor's redemption period under this section the 
creditor files with the county recorder or registrar of titles 
of each county where the mortgaged real estate is located, a 
notice of intention to redeem.  If a junior creditor fails 
to timely file a notice of intention to redeem as provided in 
this subdivision, or fails to redeem as provided in this 
subdivision, its lien on the real estate is extinguished on the 
real estate.  
    Sec. 10.  Minnesota Statutes 1992, section 609.615, is 
amended to read: 
    609.615 [DEFEATING SECURITY ON REALTY.] 
    Whoever removes or damages real property which is subject 
to a mortgage, mechanic's lien, or contract for deed, including 
during the period of time allowed for redemption, with intent to 
impair the value of the security property, without the consent 
of the security holder, may be sentenced as follows: 
    (1) If the value of the property is impaired by $300 or 
less, to imprisonment for not more than 90 days or to payment of 
a fine of not more than $700, or both; or 
    (2) If the value of the property is impaired by more than 
$300, to imprisonment for not more than five years or to payment 
of a fine of not more than $10,000, or both. 
    Sec. 11.  [REPEALER.] 
    Minnesota Statutes 1992, section 582.32, subdivisions 4, 7, 
and 8, are repealed. 
     Sec. 12.  [EFFECTIVE DATE.] 
    Section 10 is effective August 1, 1993, and applies to 
crimes committed on or after that date. 
    Presented to the governor April 21, 1993 
    Signed by the governor April 21, 1993, 3:56 p.m.