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Office of the Revisor of Statutes

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

                             CHAPTER 68-H.F.No. 457 
                  An act relating to commerce; real estate; regulating 
                  certain licensees and registrants and recovery fund 
                  actions; amending Minnesota Statutes 1994, sections 
                  82.18; 82.19, subdivision 7; 82.195, subdivision 1; 
                  82.20, subdivision 13; 82.34, subdivision 7; 82A.11, 
                  subdivision 3; 83.26, subdivision 2; 83.28, 
                  subdivision 5; 386.65, subdivision 1; 386.66; 386.67; 
                  386.68; and 386.69. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 82.18, is 
        amended to read: 
           82.18 [EXCEPTIONS.] 
           Unless a person is licensed or otherwise required to be 
        licensed under this chapter, the term real estate broker does 
        not include: 
           (a) a licensed practicing attorney if the attorney complies 
        in all respects with the trust account provisions of this 
        chapter; 
           (b) a receiver, trustee, administrator, guardian, executor, 
        or other person appointed by or acting under the judgment or 
        order of any court; 
           (c) any person owning and operating a cemetery and selling 
        lots therein solely for use as burial plots; 
           (d) any custodian, janitor, or employee of the owner or 
        manager of a residential building who leases residential units 
        in the building; 
           (e) any bank, trust company, savings and loan association, 
        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 business within the 
        scope of its corporate powers as provided by law; 
           (f) public officers while performing their official duties; 
           (g) employees of persons enumerated in clauses (b), (e), 
        and (f), when engaged in the specific performance of their 
        duties; 
           (h) any person who acts as an auctioneer bonded in 
        conformity with section 330.02, when that person is engaged in 
        the specific performance of duties as an auctioneer, and when 
        that person has been employed to auction real estate by a person 
        licensed under this chapter or when the auctioneer has engaged a 
        licensed attorney to supervise the real estate transaction; 
           (i) any person who acquires real estate for the purpose of 
        engaging in and does engage in, or who is engaged in the 
        business of constructing residential, commercial or industrial 
        buildings for the purpose of resale if no more than 25 such 
        transactions occur in any 12-month period and the person 
        complies with section 82.24; 
           (j) any person who is licensed as a securities 
        broker-dealer or is licensed as a securities agent representing 
        a broker-dealer pursuant to chapter 80A and who offers to sell 
        or sells an interest or estate in real estate which is a 
        security as defined in section 80A.14, subdivision 18, and is 
        registered or exempt from registration or part of a transaction 
        exempt from registration pursuant to chapter 80A, when acting 
        solely as an incident to the sale of these securities; 
           (k) any person who offers to sell or sells a business 
        opportunity which is a franchise registered pursuant to chapter 
        80C, when acting solely to sell the franchise; 
           (l) any person who contracts with or solicits on behalf of 
        a provider a contract with a resident or prospective resident to 
        provide continuing care in a facility, pursuant to the 
        Continuing Care Facility Disclosure and Rehabilitation Act 
        (chapter 80D), when acting solely as incident to the contract; 
           (m) any broker-dealer or agent of a broker-dealer when 
        participating in a transaction in which all or part of a 
        business opportunity or business, including any interest 
        therein, is conveyed or acquired pursuant to an asset purchase, 
        merger, exchange of securities, or other business combination, 
        if the agent or broker-dealer is licensed pursuant to chapter 
        80A; 
           (n) an accountant acting incident to the practice of the 
        accounting profession if the accountant complies in all respects 
        with the trust account provisions of this chapter; 
           (o) a person who negotiates mortgage loans as described in 
        section 82.17, subdivision 4, clause (b), if the person is the 
        actual lender on at least 80 percent of all mortgage lending and 
        brokering transactions conducted by the person and if the person 
        is also a lender:  (1) approved or certified by the secretary of 
        housing and urban development; (2) approved or certified by the 
        administrator of Veterans Affairs; (3) approved or certified by 
        the Administrator of the Farmers Home Administration; (4) 
        approved or certified by the Federal Home Loan Mortgage 
        Corporation; or (5) approved or certified by the Federal 
        National Mortgage Association. 
           Sec. 2.  Minnesota Statutes 1994, section 82.19, 
        subdivision 7, is amended 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 vendor's 
        interests in contracts for deed, mortgagee's interests in 
        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 1994, section 82.195, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENT.] Licensees shall obtain a 
        signed listing agreement or other signed written authorization 
        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.  
           Sec. 4.  Minnesota Statutes 1994, section 82.20, 
        subdivision 13, is amended to read: 
           Subd. 13.  [LIMITED BROKER'S LICENSE.] The commissioner 
        shall have the authority to issue a limited real estate broker's 
        license authorizing the licensee to engage in transactions as 
        principal only.  Such license shall be issued only after receipt 
        of the application described in subdivision 3 and payment of the 
        fee prescribed by section 82.21, subdivision 1.  No salesperson 
        may be licensed to act on behalf of an individual holding a 
        limited broker's license.  An officer of a corporation or 
        partner of a partnership licensed as a limited broker may act on 
        behalf of that corporation or partnership without being subject 
        to the licensing requirements.  A limited broker's license shall 
        also authorize the licensee to engage in negotiation of mortgage 
        loans as described in section 82.17, subdivision 4, clause (b). 
           Sec. 5.  Minnesota Statutes 1994, 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.  The application shall state with specificity 
        the grounds upon which the application seeks to recover from the 
        fund, and request 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. 6.  Minnesota Statutes 1994, section 82A.11, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RIGHT OF RESCISSION.] A purchaser has an 
        unconditional right to rescind any membership camping contract, 
        or revoke any offer, at any time prior to or within three five 
        business days after the date the purchaser actually receives a 
        legible copy of the binding contract.  Predating of a document 
        does not affect the time in which the right to rescind may be 
        exercised. 
           Sec. 7.  Minnesota Statutes 1994, section 83.26, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GENERALLY; TRANSACTIONS.] Unless the method of 
        offer or sale is adopted for the purpose of evasion of sections 
        83.20 to 83.42, 83.43 and 83.44, the following transactions are 
        exempt from sections 83.23, 83.24, 83.25, 83.28, 83.29, and 
        83.30:  
           (a) the offer or sale of an interest in subdivided land by 
        an owner, other than the subdivider, acting as principal in a 
        single or isolated transaction; 
           (b) the offer or sale of all of the subdivided lands within 
        a subdivision in a single transaction to any person; 
           (c) the offer or sale of subdivided land pursuant to an 
        order of competent jurisdiction, other than a court of 
        bankruptcy; 
           (d) the offer or sale of subdivided land consisting of not 
        more than ten separate lots, units, parcels, or interests in the 
        aggregate; 
           (e) the offer or sale of subdivided lands which have been 
        registered under section 83.23, subdivision 2, if there are no 
        more than ten separate lots, units, parcels, or interests 
        remaining to be sold and no material change has occurred in the 
        information on file with the commissioner; 
           (f) the offer and sale of subdivided land located within 
        the corporate limits of a municipality as defined in section 
        462.352, subdivision 2, which municipality has adopted 
        subdivision regulations as defined in section 462.352, except 
        those lands described in section 83.20, subdivision 13; 
           (g) the offer and sale of apartments or condominium units 
        as defined in chapters 515 and 515A, and units in common 
        interest communities as defined in chapter 515B; 
           (h) the offer and sale of subdivided lands used primarily 
        for agricultural purposes provided each parcel is at least ten 
        acres in size; 
           (i) the offer or sale of improved lots if:  
           (1) the subdivider has filed with the commissioner, no 
        later than ten business days prior to the date of the first 
        sale, a written notice of its intention to offer or sell 
        improved lots, which notice shall be accompanied by a fee of 
        $50, together with a copy of the public offering statement 
        accepted by the situs state and the standard purchase agreement 
        which documents are required to be supplied by the subdivider to 
        the purchaser; and 
           (2) the subdivider deposits all downpayments in an escrow 
        account until all obligations of the subdivider to the 
        purchaser, which are pursuant to the terms of the purchase 
        agreement to be performed prior to the closing, have been 
        performed.  The subdivider shall provide the purchaser with a 
        purchase receipt for the downpayment paid, a copy of the escrow 
        agreement and the name, address, and telephone number of the 
        escrow agent.  The escrow agent shall be a bank located in 
        Minnesota.  All downpayments shall be deposited in the escrow 
        account within two business days after receipt; and 
           (j) the offer of sale of subdivided lands by a subdivider 
        that has been granted an exemption from registration by the 
        federal Department of Housing and Urban Development under the 
        multiple site subdivision exemption, if the subdivider provides 
        a written notice of the offer of sale to the commissioner before 
        any offers or sale commence. 
           The written notice must include the name of the 
        subdivision, the county and state in which the subdivision is 
        located, and the number of lots in the subdivision, and a 
        notarized affidavit that all proposed improvements have been 
        completed and the costs of all the improvements have been fully 
        paid, or that the cost of any uncompleted road construction or 
        survey expenses are covered by a bond or escrow account payable 
        to the entities responsible for providing or completing the 
        roads or surveys.  The escrow account must be with an 
        independent escrow agent. 
           The subdivider must also provide to the commissioner a copy 
        of the federal Housing and Urban Development exemption order and 
        the most recent annual confirmation letter which indicates that 
        the order is still in effect. 
           If the closing services are provided by the subdivider or 
        an affiliate of the subdivider, purchasers must manually initial 
        in the Housing and Urban Development Lot Information Statement 
        both the disclosure on all the liens, reservations, taxes, 
        assessments, easements, and restrictions applicable to the lot 
        purchased and the disclosure on the risks of not obtaining clear 
        title. 
           The commissioner may, by rule or order, suspend, revoke, or 
        further condition the exemptions contained in clauses (f), (g), 
        (h), (i), and (j), or may require such further information as 
        may be necessary for the protection of purchasers. 
           The commissioner may by rule or order suspend, revoke, or 
        further condition the exemptions contained in clauses (f), (g), 
        (h), and (i) or may require such further information as may be 
        necessary for the protection of purchasers.  
           The rulemaking authority in this subdivision does not 
        include emergency rulemaking authority pursuant to chapter 14. 
           Sec. 8.  Minnesota Statutes 1994, section 83.28, 
        subdivision 5, is amended to read: 
           Subd. 5.  [NOTICE TO PURCHASER.] The first contract, 
        agreement, or other evidence of indebtedness shall prominently 
        contain upon its face the following notice in bold type, which 
        shall be at least 4 point type larger than the body of the 
        document, stating, in one of the following forms: 
           (a) Registration by notification:  "Notice to Purchaser" -- 
        "You are entitled to rescind this agreement for any reason 
        within five days from the date you actually received a legible 
        copy of this document signed by all parties.  The rescission 
        must be in writing and mailed to the subdivider or subdivider's 
        agent or the lender at the address stated in this document.  
        Upon rescission you will receive a refund of all money 
        paid within 30 days after the subdivider receives notice of your 
        rescission." or; 
           (b) Registration by qualification:  "Notice to Purchaser" 
        -- "You are entitled to rescind this agreement for any reason 
        within five days from the date you actually received a legible 
        copy of this document signed by all parties and a public 
        offering statement.  The rescission must be in writing and 
        mailed to the subdivider or subdivider's agent or the lender at 
        the address stated in this document.  Upon rescission you will 
        receive a refund of all money paid within 30 days after the 
        subdivider receives notice of your rescission."  
           The contract, agreement, or other evidence of indebtedness 
        shall contain sufficient space upon its face in immediate 
        proximity to the above notice for the signature of each 
        purchaser obligated under such instrument, acknowledging that 
        such purchaser has read the notice.  
           Sec. 9.  Minnesota Statutes 1994, section 386.65, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Applications for a license shall be made to 
        the commissioner and shall be upon a form to be prepared by the 
        commissioner and contain such information as may be required by 
        it.  Upon receiving such application, the commissioner shall fix 
        a time and place for the examination of such applicant.  Notice 
        of such examination shall be given to the applicant by certified 
        mail, who shall thereon take the examination pursuant to such 
        notice.  The examination shall be conducted by the commissioner 
        under such rules as the commissioner may prescribe, and such 
        rules shall prescribe that the applicant must show qualification 
        by experience, education or training to qualify as being Each 
        applicant must pass an examination approved for use by the 
        commissioner.  The examination must be of sufficient scope to 
        establish the applicant as capable of performing the duties of 
        an abstracter whose work will be for the use and protection of 
        the public.  If application is made by a firm or corporation, 
        one of the members or managing officials thereof shall take such 
        examination.  If the applicant successfully passes the 
        examination and complies with all the provisions of sections 
        386.61 to 386.76, the commissioner shall issue a license to the 
        applicant. 
           Sec. 10.  Minnesota Statutes 1994, section 386.66, is 
        amended to read: 
           386.66 [BOND OR ABSTRACTER'S LIABILITY INSURANCE POLICY.] 
           Before a license shall be issued, the applicant shall file 
        with the commissioner a bond or abstracter's liability insurance 
        policy to be approved by the commissioner, running to the state 
        of Minnesota in the penal sum of at least $100,000 conditioned 
        for the payment by such abstracter of any damages that may be 
        sustained by or accrue to any person by reason of or on account 
        of any error, deficiency or mistake arising wrongfully or 
        negligently in any abstract, or continuation thereof, or in any 
        certificate showing ownership of, or interest in, or liens upon 
        any lands in the state of Minnesota, whether registered or not, 
        made by and issued by such abstracter, provided however, that 
        the aggregate liability of the surety to all persons under such 
        bond shall in no event exceed the amount of such bond.  If the 
        applicant intends to engage in the business of abstracting in 
        any county having more than 200,000 inhabitants, the bond or 
        insurance policy required herein shall be in the penal sum of at 
        least $250,000.  Applicants that are title insurance companies 
        regulated by chapter 68A and licensed pursuant to sections 
        60A.02 and 60A.06, subdivision 1, clause (7), and their 
        employees or those having cash or securities on deposit with the 
        state of Minnesota in an amount equal to the said bond or 
        insurance policy shall be exempt from furnishing the bond or an 
        insurance policy herein required but shall be liable to the same 
        extent as if a bond or insurance policy has been given and 
        filed.  The bond or insurance policy required hereunder shall be 
        written by some surety or other company authorized to do 
        business in this state issuing bonds or abstracter's liability 
        insurance policies and shall be issued for a period of one or 
        more years, and renewed for one or more years at the date of 
        expiration as principal continues in business.  The aggregate 
        liability of such surety on such bond or insurance policy for 
        all damages shall, in no event, exceed the sum of said bond or 
        insurance policy. 
           Sec. 11.  Minnesota Statutes 1994, section 386.67, is 
        amended to read: 
           386.67 [LICENSED ABSTRACTER, SEAL.] 
           A licensed abstracter furnishing abstracts of title to real 
        property under the provisions hereof shall provide a seal, which 
        seal shall show the name of such licensed abstracter, and shall 
        file with the commissioner an impression of or copy made by such 
        seal and the signatures of persons authorized to sign 
        certificates on abstracts and continuations of abstracts and 
        certificates showing ownership of, or interest in, or liens upon 
        any lands in the state of Minnesota, whether registered or not, 
        issued by such licensed abstracter. 
           Sec. 12.  Minnesota Statutes 1994, section 386.68, is 
        amended to read: 
           386.68 [FEES.] 
           The following fees must be paid to the commissioner:  an 
        examination fee of $25; an initial licensing fee of $50; and a 
        license renewal fee of $40. 
           Sec. 13.  Minnesota Statutes 1994, section 386.69, is 
        amended to read: 
           386.69 [LICENSES.] 
           Licenses issued by the commissioner under the provisions 
        hereof shall recite that such bond or insurance policy has been 
        duly filed and approved, and the license shall authorize the 
        official, person, firm or corporation named in it to engage in 
        and carry on the business of an abstracter of real estate titles 
        in the county in which said official, person, firm or 
        corporation is authorized to make abstracts state of Minnesota.  
        The license shall be issued for a period as determined by the 
        commissioner, and shall thereafter be renewed upon conditions 
        prescribed by the commissioner. 
           Sec. 14.  [EFFECTIVE DATE.] 
           Sections 1 to 13 are effective the day following final 
        enactment. 
           Presented to the governor April 18, 1995 
           Signed by the governor April 20, 1995, 2:20 p.m.