Office of the Revisor of Statutes
Minnesota Session Laws - 1996, Regular Session
Key: (1) language to be deleted (2) new language
KEY: stricken = old language to be removed
underscored = new language to be added
CHAPTER 439-S.F.No. 1915
An act relating to commerce; changing the enforcement
authority of the commissioner; providing continuing
education and reporting requirements for certain
licenses; regulating inspections of cosmetology salons
and schools; regulating disclosures of information and
data; regulating securities registrations and
exemptions; regulating franchise registrations and
definitions; regulating cancellations of membership
camping contracts; modifying the bond or insurance
requirements for abstractors; regulating residential
building contractors; regulating certain real estate
disclosures; regulating unclaimed properties and
notaries public; removing a certain licensing
exception; repealing an obsolete provision; amending
Minnesota Statutes 1994, sections 45.011, subdivision
1; 45.027, subdivision 7, and by adding subdivisions;
47.206, subdivision 1; 53A.081, subdivision 1; 60K.19,
subdivisions 7, 8, and 10; 80A.05, subdivision 1;
80A.06, subdivision 3; 80A.09, by adding a
subdivision; 80A.10, subdivision 4; 80A.11, by adding
a subdivision; 80A.14, by adding subdivisions; 80A.15,
subdivisions 2 and 3; 80C.01, by adding a subdivision;
80C.05, by adding a subdivision; 82.19, subdivision 5;
82.195, subdivision 2; 82.196, subdivisions 1 and 2;
82.197, subdivisions 1, 2, 3, and 4; 82.22,
subdivision 13; 82A.11, by adding a subdivision;
82B.19, by adding a subdivision; 155A.08, subdivision
3; 155A.09, subdivision 7; 155A.095; 326.37, by adding
a subdivision; 326.87, by adding a subdivision;
326.91, by adding subdivisions; 326.991; 332.34;
345.41; 345.42; 345.43, by adding a subdivision;
345.515; 359.01, subdivisions 1 and 2; 359.02; and
359.061; Minnesota Statutes 1995 Supplement, sections
16A.6701, subdivision 1; 80A.15, subdivision 1; 82.20,
subdivision 15; 82.34, subdivision 7; 83.26,
subdivision 2; and 386.66; proposing coding for new
law in Minnesota Statutes, chapters 45; and 332;
repealing Minnesota Statutes 1994, sections 80A.14,
subdivision 8; 326.95, subdivision 4; 326.97,
subdivision 3; 326.99; and 345.43, subdivisions 1 and
2.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
GENERAL ENFORCEMENT
Section 1. Minnesota Statutes 1995 Supplement, section
16A.6701, subdivision 1, is amended to read:
Subdivision 1. [STATE LICENSE AND SERVICE FEES.] For
purposes of section 16A.665, subdivision 3, and this section,
the term "state license and service fees" means, and refers to,
all license fees, service fees, and charges imposed by law and
collected by any state officer, agency, or employee, which are
listed below or which are defined as departmental earnings under
section 16A.1285, subdivision 1, and the use of which is not
otherwise restricted by law, and which are not required to be
credited or transferred to a fund other than the general fund:
Minnesota Statutes 1994, sections 3.9221; 5.12; 5.14; 5.16;
5A.04; 6.58; 13.03, subdivision 10; 16A.155; 16A.48; 16A.54;
16A.72; 16B.59; 16B.70; 17A.04; 18.51, subdivision 2; 18.53;
18.54; 18C.551; 19.58; 19.64; 27.041, subdivision 2, clauses (d)
and (e); 27.07, subdivision 5; 28A.08; 32.071; 32.075; 32.392;
35.71; 35.824; 35.95; 41C.12; 45.027, subdivisions 3 and 6;
46.041, subdivision 1; 46.131, subdivisions 2, 7, 8, 9, and 10;
47.101, subdivision 2; 47.54, subdivisions 1 and 4; 47.62,
subdivision 4; 47.65; 48.475, subdivision 1; 48.61, subdivision
7; 48.93; 49.36, subdivision 1; 52.01; 52.203; 53.03,
subdivisions 1, 5, and 6; 53.09, subdivision 1; 53A.03; 53A.05,
subdivision 1; 53A.081, subdivision 3; 54.294, subdivision 1;
55.04, subdivision 2; 55.095; 56.02; 56.04; 56.10; 59A.03,
subdivision 2; 59A.06, subdivision 3; 60A.14, subdivisions 1 and
2; 60A.23, subdivision 8; 60K.19, subdivision 5; 65B.48,
subdivision 3; 70A.14, subdivision 4; 72B.04, subdivision 10;
79.251, subdivision 5; 80A.28, subdivisions 1, 2, 3, 4, 5, 6, 7,
7a, 8, and 9; 80C.04, subdivision 1; 80C.07; 80C.08, subdivision
1; 80C.16, subdivisions 2 and 3; 80C.18, subdivision 2; 82.20,
subdivision 8 and 9; 82A.04, subdivision 1; 82A.08, subdivision
2; 82A.16, subdivisions 2 and 6; 82B.09, subdivision 1; 83.23,
subdivisions 2, 3, and 4; 83.25, subdivisions 1 and 2; 83.26,
subdivision 2; 83.30, subdivision 2; 83.31, subdivision 2;
83.38, subdivision 2; 85.052; 85.053; 85.055; 88.79, subdivision
2; 89.035; 89.21; 115.073; 115.77, subdivisions 1 and 2; 116.41,
subdivision 2; 116C.69; 116C.712; 116J.9673; 125.08; 136C.04,
subdivision 9; 155A.045; 155A.16; 168.27, subdivision 11;
168.33, subdivisions 3 and 7; 168.54; 168.67; 168.705; 168A.152;
168A.29; 169.345; 171.06, subdivision 2a; 171.29, subdivision 2;
176.102; 176.1351; 176.181, subdivision 2a; 177.30; 181A.12;
183.545; 183.57; 184.28; 184.29; 184A.09; 201.091, subdivision
5; 204B.11; 207A.02; 214.06; 216C.261; 221.0355; 239.101;
240.06; 240.07; 240.08; 240.09; 240.10; 246.51; 270.69,
subdivision 2; 270A.07; 272.484; 296.06; 296.12; 296.17; 297.04;
297.33; 299C.46; 299C.62; 299K.09; 299K.095; 299L.07; 299M.04;
300.49; 318.02; 323.44, subdivision 3; 325D.415; 326.22;
326.3331; 326.47; 326.50; 326.92, subdivisions 1 and 3; 327.33;
331A.02; 332.15, subdivisions 2 and 3; 332.17; 332.22,
subdivision 1; 332.33, subdivisions 3 and 4; 332.54, subdivision
7; 333.055; 333.20; 333.23; 336.9-413; 336A.04; 336A.05;
336A.09; 345.35; 345.43, subdivision 1 2a; 345.44; 345.55,
subdivision 3; 347.33; 349.151; 349.161; 349.162; 349.163;
349.164; 349.165; 349.166; 349.167; 357.08; 359.01, subdivision
3; 360.018; 360.63; 386.68; and 414.01, subdivision 11;
Minnesota Statutes 1994, chapters 154; 216B; 237; 302A; 303;
308A; 317A; 322A; and 322B; Laws 1990, chapter 593; Laws 1993,
chapter 254, section 7; and Laws 1994, chapter 573, section 4;
Minnesota Rules, parts 1800.0500; 1950.1070; 2100.9300;
7515.0210; and 9545.2000 to 9545.2040.
Sec. 2. Minnesota Statutes 1994, section 45.011,
subdivision 1, is amended to read:
Subdivision 1. [SCOPE.] As used in chapters 45 to 83,
155A, 309, 332, 345, and 359, and sections 326.83 to 326.98, and
386.61 to 386.78, unless the context indicates otherwise, the
terms defined in this section have the meanings given them.
Sec. 3. [45.016] [SERVICE OF ORDERS OR OTHER PAPERS.]
Service of orders or other papers required or permitted to
be issued by the commissioner related to the duties and
responsibilities entrusted to the commissioner may be by any of
the following methods:
(1) personal service consistent with requirements for
service of a summons or process under section 303.13 or 543.19,
or under rule 4.03 of the Minnesota Rules of Civil Procedure;
(2) first class United States mail, including certified
United States mail, or overnight express mail service, postage
prepaid and addressed to the party at the party's last known
address. Service by United States mail, including certified
mail, is complete upon placing the order or other paper in the
mail or otherwise delivering the order or other paper to the
United States mail service. Service by overnight express mail
service is complete upon delivering the order or other document
to an authorized agent of the express mail service; or
(3) any other method of service provided under the laws
relating to duties and responsibilities entrusted to the
commissioner.
Sec. 4. Minnesota Statutes 1994, section 45.027,
subdivision 7, is amended to read:
Subd. 7. [ACTIONS AGAINST LICENSEES.] In addition to any
other actions authorized by this section, the commissioner may,
by order, deny, suspend, or revoke the authority or license of a
person subject to the duties and responsibilities entrusted to
the commissioner, as described under section 45.011, subdivision
4, or censure that person if the commissioner finds that:
(1) the order is in the public interest; and
(2) the person has violated any law, rule, or order related
to the duties and responsibilities entrusted to the
commissioner; or
(3) the person has provided false, misleading, or
incomplete information to the commissioner or has refused to
allow a reasonable inspection of records or premises; or
(4) the person has engaged in an act or practice, whether
or not the act or practice directly involves the business for
which the person is licensed or authorized, which demonstrates
that the applicant or licensee is untrustworthy, financially
irresponsible, or otherwise incompetent or unqualified to act
under the authority or license granted by the commissioner.
Except for information classified as confidential under
sections 60A.03, subdivision 9; 60A.031; 60A.93; and 60D.22, the
commissioner may make any data otherwise classified as private
or confidential pursuant to this section accessible to an
appropriate person or agency if the commissioner determines that
the access will aid the law enforcement process, promote public
health or safety, or dispel widespread rumor or unrest. If the
commissioner determines that private or confidential information
should be disclosed, the commissioner shall notify the attorney
general as to the information to be disclosed, the purpose of
the disclosure, and the need for the disclosure. The attorney
general shall review the commissioner's determination. If the
attorney general believes that the commissioner's determination
does not satisfy the purpose and intent of this provision, the
attorney general shall advise the commissioner in writing that
the information may not be disclosed. If the attorney general
believes the commissioner's determination satisfies the purpose
and intent of this provision, the attorney general shall advise
the commissioner in writing, accordingly.
After disclosing information pursuant to this provision,
the commissioner shall advise the chairs of the senate and house
of representatives judiciary committees of the disclosure and
the basis for it.
Sec. 5. Minnesota Statutes 1994, section 45.027, is
amended by adding a subdivision to read:
Subd. 12. [CONDITIONS OF RELICENSURE.] A revocation of a
license prohibits the licensee from making a new application for
a license for at least two years from the effective date of the
revocation. The commissioner may, as a condition of
reapplication, require the applicant to obtain a bond or comply
with additional reasonable conditions of licensure the
commissioner considers necessary to protect the public.
Sec. 6. Minnesota Statutes 1994, section 53A.081,
subdivision 1, is amended to read:
Subdivision 1. [ANNUAL REPORT.] On or before March 1 April
30, a licensee shall file an annual report with the commissioner
for the previous calendar year. The report must contain
information that the commissioner may reasonably require
concerning, and for the purpose of examining, the business and
operations of each licensed currency exchange.
Sec. 7. Minnesota Statutes 1994, section 60K.19,
subdivision 7, is amended to read:
Subd. 7. [CRITERIA FOR COURSE ACCREDITATION.] (a) The
commissioner may accredit a course only to the extent it is
designed to impart substantive and procedural knowledge of the
insurance field. The burden of demonstrating that the course
satisfies this requirement is on the individual or organization
seeking accreditation. The commissioner shall approve any
educational program approved by Minnesota Continuing Legal
Education relating to the insurance field. The commissioner is
authorized to establish a procedure for renewal of course
accreditation.
(b) The commissioner shall approve or disapprove
professional designation examinations that are recommended for
approval by the advisory task force. In order for an agent to
receive full continuing education credit for a professional
designation examination, the agent must pass the examination.
An agent may not receive credit for classroom instruction
preparing for the professional designation examination and also
receive continuing education credit for passing the professional
designation examination.
(c) The commissioner may not accredit a course:
(1) that is designed to prepare students for a license
examination;
(2) in mechanical office or business skills, including
typing, speedreading, use of calculators, or other machines or
equipment;
(3) in sales promotion, including meetings held in
conjunction with the general business of the licensed agent;
(4) in motivation, the art of selling, psychology, or time
management; or
(5) which can be completed by the student at home or
outside the classroom without the supervision of an instructor
approved by the department of commerce, except that home-study
courses may be accredited by the commissioner if the student is
a nonresident agent residing in a state which is not contiguous
to Minnesota.
Sec. 8. Minnesota Statutes 1994, section 60K.19,
subdivision 8, is amended to read:
Subd. 8. [MINIMUM EDUCATION REQUIREMENT.] Each person
subject to this section shall complete a minimum of 30 credit
hours of courses accredited by the commissioner during each
24-month licensing period after the expiration of his or her
initial licensing period. At least 15 of the 30 credit hours
must be completed during the first 12 months of the 24-month
licensing period. Any person whose initial licensing period
extends more than six months shall complete 15 hours of courses
accredited by the commissioner during the initial license
period. Any person teaching or lecturing at an accredited
course qualifies for 1-1/2 times the number of credit hours that
would be granted to a person completing the accredited course.
No more than 15 credit hours per licensing period may be
credited to a person for courses sponsored by, offered by, or
affiliated with an insurance company or its agents. Continuing
education must be earned no later than September 30 of the
renewal year. Courses sponsored by, offered by, or affiliated
with an insurance company or agent may restrict its students to
agents of the company or agency.
Sec. 9. Minnesota Statutes 1994, section 60K.19,
subdivision 10, is amended to read:
Subd. 10. [REPORTING.] (a) After completing the minimum
education requirement, each person subject to this section shall
file or cause to be filed a compliance report in accordance with
the procedures adopted by the commissioner. The compliance
report must not claim credit for continuing education not
actually completed at the date of filing the report.
(b) An institution offering an accredited course shall
comply with the procedure for reporting compliance adopted by
the commissioner.
(c) If a person subject to this section completes a
nonaccredited course, that person may submit a written report to
the advisory committee accompanied by a fee of not more than $10
payable to the state of Minnesota for deposit in the general
fund. This report must be accompanied by proof satisfactory to
the commissioner that the person has completed the minimum
education requirement for the annual period during which the
nonaccredited course was completed. Upon the recommendation of
the advisory committee that the course satisfies the criteria
for course accreditation, the commissioner may approve the
nonaccredited course and shall so inform the person. If the
nonaccredited course is approved by the commissioner, it may be
used to satisfy the minimum education requirement for the
person's next annual compliance period.
Sec. 10. Minnesota Statutes 1995 Supplement, 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 insurance company
authorized to do business in this state, or a direct employee of
a title company, or a person who has an agency agreement with
a title insurance company or a title company in which the agent
agrees to perform closing services on the title insurance
company's or title company's behalf and the title insurance
company or title company assumes responsibility for the actions
of the agent as if the agent were a direct employee of the title
insurance company or 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 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; and
(6) a title insurance company authorized to do business in
this state or a title company which is the appointed agent of a
title insurance company authorized to do business in this state.
Sec. 11. Minnesota Statutes 1995 Supplement, 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. 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 does not
include a government agency, financial institution, or other
entity that purchases, guarantees, or insures a loan secured by
real estate, and does 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. 12. Minnesota Statutes 1995 Supplement, 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, provided that no subdivider may make an offer or sale
of subdivided land pursuant to this exemption more than once
during any period of 12 consecutive months;
(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. 13. Minnesota Statutes 1994, section 155A.08,
subdivision 3, is amended to read:
Subd. 3. [HEALTH AND SANITARY STANDARDS.] Minimum health
and sanitary standards for the operation of a salon shall be
established by rule. A salon shall not be located in a room
used for residential purposes. If a salon is in the residence
of a person practicing cosmetology, the rooms used for the
practice of cosmetology shall be completely partitioned off from
the living quarters. There shall be an inspection at least
annually The salon may be inspected as often as the commissioner
considers necessary to affirm compliance.
Sec. 14. Minnesota Statutes 1994, section 155A.09,
subdivision 7, is amended to read:
Subd. 7. [INSPECTIONS.] All schools shall may be inspected
at least once a year as often as the commissioner considers
necessary to affirm compliance. The commissioner shall have the
authority to assess the cost of the inspection to the school.
Sec. 15. Minnesota Statutes 1994, section 155A.095, is
amended to read:
155A.095 [INSPECTIONS.]
The commissioner is responsible for inspecting salons and
schools licensed pursuant to this chapter to assure compliance
with the requirements of this chapter. The commissioner shall
direct department resources first to the inspection of those
licensees who fail to meet the requirements of law, have
indicated that they present a greater risk to the public, or
have otherwise, in the opinion of the commissioner, demonstrated
that they require a greater degree of regulatory attention. In
no event shall a salon or school be inspected less often than
once each year.
Sec. 16. Minnesota Statutes 1994, section 332.34, is
amended to read:
332.34 [BOND.]
The commissioner of commerce shall require each collection
agency licensee to annually file and maintain in force a
corporate surety bond, in a form to be prescribed by, and
acceptable to, the commissioner, and in the sum of $20,000. An
applicant for a new or renewal license may request that the
amount of the bond be reduced to an amount not less than
$5,000. This request may be granted upon a showing that the
total dollar amount received from debtors by the collection
agency in the preceding fiscal year did not exceed $30,000. A
collection agency may deposit cash in and with a depository
acceptable to the commissioner in an amount and in the manner
prescribed and approved by the commissioner in lieu of a bond.
Sec. 17. [332.395] [COMMISSIONER'S POWER OVER INEFFECTIVE
LICENSES.]
If a license lapses, is surrendered, withdrawn, terminated,
or otherwise becomes ineffective, the commissioner of commerce
may do either or both of the following: (1) institute a
proceeding under section 45.027 within two years after the
license was last effective and enter a revocation or suspension
order as of the last date on which the license was in effect;
(2) impose a civil penalty as provided for in section 45.027,
subdivision 6.
Sec. 18. Minnesota Statutes 1994, section 345.41, is
amended to read:
345.41 [REPORT OF ABANDONED PROPERTY.]
(a) Every person holding funds or other property, tangible
or intangible, presumed abandoned under sections 345.31 to
345.60 shall report annually to the commissioner with respect to
the property as hereinafter provided.
(b) The report shall be verified and shall include:
(1) except with respect to traveler's checks and money
orders, the name, if known, and last known address, if any, of
each person appearing from the records of the holder to be the
owner of any property of the value of $100 or more presumed
abandoned under sections 345.31 to 345.60;
(2) in case of unclaimed funds of life insurance
corporations, the full name of the policyholder, insured or
annuitant and that person's last known address according to the
life insurance corporation's records;
(3) the nature and identifying number, if any, or
description of the property and the amount appearing from the
records to be due, except that items of value under $100 each
may be reported in aggregate;
(4) the date when the property became payable, demandable
or returnable, and the date of the last transaction with the
owner with respect to the property; and
(5) other information which the commissioner prescribes by
rule as necessary for the administration of sections 345.31 to
345.60.
(c) If the person holding property presumed abandoned is a
successor to other persons who previously held the property for
the owner, or if the holder has changed a name while holding the
property, the holder shall file with the report all prior known
names and addresses of each holder of the property.
(d) The report shall be filed before November 1 of each
year as of June 30 next preceding, but the report of life
insurance corporations shall be filed before October 1 of each
year as of December 31 next preceding. The commissioner may
postpone the reporting date upon written request by any person
required to file a report.
(e) If the holder of property presumed abandoned under
sections 345.31 to 345.60 knows the whereabouts of the owner and
if the owner's claim has not been barred by the statute of
limitations, the holder shall, before filing the annual report,
inform the owner of the steps necessary to prevent abandonment
from being presumed. Not more than 120 days before filing the
report required by this section, the holder in possession of
property abandoned and subject to custody as unclaimed property
under this chapter shall send written notice to the presumed
owner at that owner's last known address informing the owner
that the holder is in possession of property subject to this
chapter and advising the owner of the steps necessary to prevent
abandonment if:
(1) the holder has in its records an address for the
presumed owner that the holder's records do not disclose to be
inaccurate;
(2) the claim of the apparent owner is not barred by the
statute of limitations; and
(3) the property has a value of $100 or more.
(f) Verification, if made by a partnership, shall be
executed by a partner; if made by an unincorporated association
or private corporation, by an officer, and if made by a public
corporation, by its chief fiscal officer.
(g) Holders of property described in section 345.32 shall
not impose any charges against property which is described in
section 345.32, clause (a), (b) or (c).
(h) Any person who has possession of property which the
person has reason to believe will be reportable in the future as
unclaimed property may, with the permission of the commissioner,
report and deliver such property prior to the date required for
reporting in accordance with this section.
Sec. 19. Minnesota Statutes 1994, section 345.42, is
amended to read:
345.42 [NOTICE AND PUBLICATION OF LISTS OF ABANDONED
PROPERTY.]
Subdivision 1. On or before April 1 of each year Within
the calendar year next following the year in which abandoned
property has been paid or delivered to the commissioner, the
commissioner shall cause notice to be published at least once
but not more than twice in an English language newspaper of
general circulation in the county in this state in which is
located the last known address of any person to be named in the
notice. If no address is listed or if the address is outside
this state, the notice shall be published in the county in which
the holder of the abandoned property has a principal place of
business within this state.
Subd. 2. The published notice shall be entitled "notice of
names of persons appearing to be owners of abandoned property,"
and shall contain:
(a) the names in alphabetical order and last known
addresses, if any, of persons listed in the report and entitled
to notice within the county as hereinbefore specified;
(b) a statement that information concerning the amount or
description of the property and the name and address of the
holder may be obtained by any persons possessing an interest in
the property by addressing an inquiry to the
commissioner explaining that property of the owner has been
presumed to be abandoned and has been taken into the protective
custody of the commissioner; and
(c) a statement that if proof of claim is not presented by
the owner to the holder and if the owner's right to receive the
property is not established to the holder's satisfaction within
65 days from the date of the second published notice, the
abandoned property will be placed not later than 85 days after
such publication date in the custody of the commissioner to whom
all further claims must thereafter be directed information about
the abandoned property and its return to the apparent owner may
be obtained at any time by a person having a legal or beneficial
interest in that property by making an inquiry to the
commissioner.
The commissioner is not required to publish in such notice
any item of less than $100 unless the commissioner deems such
publication to be in the public interest.
Subd. 3. On or before April 1 of each year Within the
calendar year next following the year in which abandoned
property has been paid or delivered to the commissioner, the
commissioner may mail a notice to each person having an address
listed therein who appears to be entitled to property of the
value of $100 or more presumed abandoned under sections 345.31
to 345.60. Said notice shall contain:
(a) a statement that, according to a report filed with the
commissioner, property is being held to which the addressee
appears entitled;
(b) the name and address of the person holding the property
and any necessary information regarding changes of name and
address of the holder a statement explaining that property of
the owner has been presumed to be abandoned and has been taken
into the protective custody of the commissioner; and
(c) a statement that, if satisfactory proof of claim is not
presented by the owner to the holder by the date specified in
the published notice, the property will be placed in the custody
of the commissioner to whom all further claims must be directed
information about the abandoned property and its return to the
apparent owner may be obtained at any time by a person having a
legal or beneficial interest in that property by making an
inquiry to the commissioner.
Subd. 4. This section is not applicable to sums payable on
traveler's checks or money orders presumed abandoned under
section 345.32.
Sec. 20. Minnesota Statutes 1994, section 345.43, is
amended by adding a subdivision to read:
Subd. 2a. [HOLDER'S OBLIGATIONS.] At the time of the
filing of the report required under section 345.41 and with that
report, the holder reporting property presumed abandoned and
subject to custody as unclaimed property shall pay or deliver to
the commissioner all of the property shown on the report and
remaining unclaimed by the apparent owner.
Upon written request showing good cause, the commissioner
may postpone the payment or delivery upon the terms or
conditions the commissioner considers necessary and appropriate.
The property paid or delivered to the commissioner shall
include all interest, dividends, increments, and accretions due,
payable, or distributable on the property on November 1, or
October 1 for a life insurance company. If payment or delivery
is postponed, the property paid or delivered to the commissioner
shall include accretions due, payable, or distributable on the
day that the property is paid or delivered to the commissioner.
Sec. 21. Minnesota Statutes 1994, section 345.515, is
amended to read:
345.515 [AGREEMENTS TO LOCATE REPORTED PROPERTY.]
It is unlawful for a person to seek or receive from another
person or contract with a person for a fee or compensation for
locating property knowing it to have been reported or paid or
delivered to the commissioner pursuant to chapter 345 prior to
seven months after the date of delivery of the property by the
holder to published notice by the commissioner as required by
section 345.43 345.42.
No agreement entered into after seven months from the date
of delivery of the property by the holder to published notice by
the commissioner is valid if a person thereby undertakes to
locate property included in a report for a fee or other
compensation exceeding ten percent of the value of the
recoverable property unless the agreement is in writing and
signed by the owner and discloses the nature and value of the
property and the name and address of the holder thereof as such
facts have been reported. Nothing in this section shall be
construed to prevent an owner from asserting at any time that an
agreement to locate property is based upon an excessive or
unjust consideration.
Sec. 22. Minnesota Statutes 1994, section 359.01,
subdivision 1, is amended to read:
Subdivision 1. [RESIDENT NOTARIES.] The governor may
appoint and commission as notaries public, by and with the
advice and consent of the senate, as many citizens of this state
or resident aliens, over the age of 18 years, as the governor
considers necessary. The commissioner of commerce shall perform
all duties necessary to appoint and commission notaries public
under this section on the governor's behalf.
Sec. 23. Minnesota Statutes 1994, section 359.01,
subdivision 2, is amended to read:
Subd. 2. [NONRESIDENT NOTARIES.] Notwithstanding the
provisions of subdivision 1, The governor may appoint as notary
public or the commissioner of commerce, acting on the governor's
behalf, by and with the advice and consent of the senate, may
appoint as notary public a person who is not a resident of this
state if:
(1) the person is a resident of Wisconsin, Iowa, North
Dakota, or South Dakota, and of a county that shares a boundary
with this state;
(2) the person designates the commissioner as agent for the
service of process for all purposes relating to notarial acts
and for receipt of all correspondence relating to notarial acts.
Sec. 24. Minnesota Statutes 1994, section 359.02, is
amended to read:
359.02 [TERM.]
A notary commissioned under section 359.01 holds office for
five years, unless sooner removed by the governor or the
district court, or by action of the commissioner. Within 30
days before the expiration of the commission a notary may be
reappointed for a new term to commence and to be designated in
the new commission as beginning upon the day immediately
following the date of the expiration. The reappointment takes
effect and is valid although the appointing governor may not be
in the office of governor on the effective day.
(a) All notary commissions issued before January 31, 1995,
will expire on January 31, 1995.
(b) All notary commissions issued after January 31, 1995,
will expire at the end of the licensing period, which will end
every fifth year following January 31, 1995.
(c) All notary commissions issued during a licensing period
expire at the end of that period as set forth in this section.
Sec. 25. Minnesota Statutes 1994, section 359.061, is
amended to read:
359.061 [RECORD OF COMMISSION; CERTIFICATE.]
The commission of every notary shall be recorded in the
office of the court administrator of the district court of the
notary's county of appointment residence, in a record kept for
that purpose. The court administrator, when requested, shall
certify to official acts in the manner and for the fees
prescribed by statute or court rule.
Sec. 26. [UNCLAIMED PROPERTY STUDY.]
The attorney general, in consultation with the department
of commerce, shall study unclaimed property laws and make
recommendations to the legislature by December 1, 1996, with
respect to legal strategies and improved enforcement tools that
the program could implement as a means to maximize the program's
ability to collect and return unclaimed property to its proper
owners in Minnesota.
Sec. 27. [REPEALER.]
Minnesota Statutes 1994, section 345.43, subdivisions 1 and
2, are repealed.
Sec. 28. [EFFECTIVE DATES.]
Sections 7, 10 to 12, and 26 are effective the day
following final enactment.
ARTICLE 2
SECURITIES
Section 1. Minnesota Statutes 1994, section 45.027, is
amended by adding a subdivision to read:
Subd. 7a. [AUTHORIZED DISCLOSURES OF INFORMATION AND
DATA.] The commissioner may release and disclose any active or
inactive investigative information and data on licensees to any
national securities exchange or national securities association
registered under the Securities Exchange Act of 1934 when
necessary for the requesting agency in initiating, furthering,
or completing an investigation.
Sec. 2. Minnesota Statutes 1994, section 80A.05,
subdivision 1, is amended to read:
Subdivision 1. A broker-dealer, agent or investment
adviser may obtain an initial or renewal license by filing with
the commissioner or a designee an application together with a
consent to service of process pursuant to section 80A.27,
subdivision 7. The application shall be on a form prescribed by
the commissioner and shall contain whatever information the
commissioner requires concerning such matters as the applicant's
form and place of organization, proposed method of doing
business and financial condition, the qualifications and
experience of the applicant, including, in the case of a
broker-dealer or investment adviser, the qualifications and
experience of any partner, officer, director or controlling
person, any injunction or administrative order or conviction of
a misdemeanor involving securities and any conviction of a
felony. The commissioner may by order, with respect to any
particular application, require the submission of information
concerning any other matters which the commissioner determines
are relevant to the application. The commissioner may by rule
or order require an applicant for an initial license to publish
an announcement of the application in one or more specified
newspapers published in this state.
If no denial order is in effect, no proceeding is pending
under section 80A.07, and all of the requirements of this
subdivision and subdivision 3 have been complied with, the
licensing becomes effective 30 days after an application is
filed. The commissioner may by rule or order specify an earlier
effective date, and may by order defer the effective date until
30 days after the filing of any amendment.
An application that is incomplete will be considered
withdrawn if no activity occurs with respect to the application
for a period of 120 days. Notwithstanding section 80A.28,
subdivision 1, paragraph (c), no part of the filing fee shall be
returned if a registration statement is withdrawn according to
this subdivision.
Sec. 3. Minnesota Statutes 1994, section 80A.06,
subdivision 3, is amended to read:
Subd. 3. If the information contained in any document
filed with the commissioner is or becomes inaccurate or
incomplete in any material respect, the licensee shall
promptly within 30 days file a correcting amendment unless
notification of the correction has been given under section
80A.04, subdivision 2.
Sec. 4. Minnesota Statutes 1994, section 80A.09, is
amended by adding a subdivision to read:
Subd. 5. [WITHDRAWAL.] A registration statement that is
incomplete will be considered withdrawn if no activity occurs
with respect to the application for a period of 120 days.
Notwithstanding section 80A.28, subdivision 1, paragraph (c), no
part of the filing fee shall be returned if a registration
statement is withdrawn according to this subdivision.
Sec. 5. Minnesota Statutes 1994, section 80A.10,
subdivision 4, is amended to read:
Subd. 4. [WITHDRAWAL.] A registration statement that has
been on file with the commissioner for a period of nine months
and has not become effective is considered to have been
withdrawn. If the registration statement has been amended, the
nine-month period must be computed from the date of the latest
amendment. is pending effectiveness will be considered withdrawn
if no activity occurs with respect to the application for a
period of 120 days. Notwithstanding the provisions of section
80A.28, subdivision 1, paragraph (c), no part of the filing fee
shall be returned if a registration statement is
withdrawn pursuant according to this subdivision.
Sec. 6. Minnesota Statutes 1994, section 80A.11, is
amended by adding a subdivision to read:
Subd. 5. [WITHDRAWAL.] A registration statement that is
pending effectiveness will be considered withdrawn if no
activity occurs with respect to the application for a period of
120 days. Notwithstanding section 80A.28, subdivision 1,
paragraph (c), no part of the filing fee shall be returned if a
registration statement is withdrawn according to this
subdivision.
Sec. 7. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 20. [QUALIFIED CHARITY.] "Qualified charity" means
an organization that is described in section 501(c)(3) of the
Internal Revenue Code and that is not a private foundation as
described in section 509 of the Internal Revenue Code.
Sec. 8. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 21. [INTERNAL REVENUE CODE.] "Internal Revenue Code"
means the Internal Revenue Code of 1986, as amended, United
States Code, title 26, section 1 et seq.
Sec. 9. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 22. [POOLED INCOME FUND.] "Pooled income fund" means
a trust that meets the requirements of a pooled income fund as
defined in section 642(C)(5) of the Internal Revenue Code,
provided that the remainder beneficiary is a qualified charity.
Sec. 10. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 23. [CHARITABLE REMAINDER TRUST.] "Charitable
remainder trust" means a trust that meets the requirements of
either a charitable remainder annuity trust or a charitable
remainder unitrust as defined in section 664 of the Internal
Revenue Code, provided that the remainder beneficiary is a
qualified charity.
Sec. 11. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 24. [CHARITABLE LEAD TRUST.] "Charitable lead trust"
means a trust that meets the requirements of a charitable lead
trust as described in section 170(F)(2) of the Internal Revenue
Code, provided that the lead beneficiary is a qualified charity.
Sec. 12. Minnesota Statutes 1994, section 80A.14, is
amended by adding a subdivision to read:
Subd. 25. [CHARITABLE GIFT ANNUITY.] "Charitable gift
annuity" means an annuity that meets the requirements of a
charitable gift annuity as defined in section 501(m)(5) of the
Internal Revenue Code.
Sec. 13. Minnesota Statutes 1995 Supplement, section
80A.15, subdivision 1, is amended to read:
Subdivision 1. The following securities are exempted from
sections 80A.08 and 80A.16:
(a) Any security, including a revenue obligation,
guaranteed by the United States, any state, any political
subdivision of a state or any corporate or other instrumentality
of one or more of the foregoing; but this exemption shall not
include any industrial revenue bond. Pursuant to section 106(c)
of the Secondary Mortgage Market Enhancement Act of 1984, Public
Law Number 98-440, this exemption does not apply to a security
that is offered or sold pursuant to section 106(a)(1) or (2) of
that act.
(b) Any security issued or guaranteed by Canada, any
Canadian province, any political subdivision of any province,
any agency or corporate or other instrumentality of one or more
of the foregoing, if the security is recognized as a valid
obligation by the issuer or guarantor; but this exemption shall
not include any revenue obligation payable solely from payments
to be made in respect of property or money used under a lease,
sale or loan arrangement by or for a nongovernmental industrial
or commercial enterprise.
(c) Any security issued by and representing an interest in
or a debt of, or guaranteed by, any bank organized under the
laws of the United States, or any bank, savings institution or
trust company organized under the laws of any state and subject
to regulation in respect of the issuance or guarantee of its
securities by a governmental authority of that state.
(d) Any security issued by and representing an interest in
or a debt of, or guaranteed by, any federal savings association,
or any savings association or similar association organized
under the laws of any state and authorized to do business in
this state.
(e) Any security issued or guaranteed by any federal credit
union or any credit union, or similar association organized and
supervised under the laws of this state.
(f) Any security listed or approved for listing upon notice
of issuance on the New York Stock Exchange, the American Stock
Exchange, the Midwest Stock Exchange, the Pacific Stock
Exchange, or the Chicago Board Options Exchange; any other
security of the same issuer which is of senior or substantially
equal rank; any security called for by subscription rights or
warrants so listed or approved; or any warrant or right to
purchase or subscribe to any of the foregoing. This exemption
does not apply to second tier listings on any of the exchanges
in this paragraph.
(g) Any commercial paper which arises out of a current
transaction or the proceeds of which have been or are to be used
for current transactions, and which evidences an obligation to
pay cash within nine months of the date of issuance, exclusive
of days of grace, or any renewal of the paper which is likewise
limited, or any guarantee of the paper or of any renewal which
are not advertised for sale to the general public in newspapers
or other publications of general circulation or otherwise, or by
radio, television or direct mailing.
(h) Any interest in any employee's savings, stock purchase,
pension, profit sharing or similar benefit plan, or a
self-employed person's retirement plan.
(i) Any security issued or guaranteed by any railroad,
other common carrier or public utility which is subject to
regulation in respect to the issuance or guarantee of its
securities by a governmental authority of the United States.
(j) Any interest in a common trust fund or similar fund
maintained by a state bank or trust company organized and
operating under the laws of Minnesota, or a national bank
wherever located, for the collective investment and reinvestment
of funds contributed thereto by the bank or trust company in its
capacity as trustee, executor, administrator, or guardian; and
any interest in a collective investment fund or similar fund
maintained by the bank or trust company, or in a separate
account maintained by an insurance company, for the collective
investment and reinvestment of funds contributed thereto by the
bank, trust company or insurance company in its capacity as
trustee or agent, which interest is issued in connection with an
employee's savings, pension, profit sharing or similar benefit
plan, or a self-employed person's retirement plan.
(k) Any security which meets all of the following
conditions:
(1) If the issuer is not organized under the laws of the
United States or a state, it has appointed a duly authorized
agent in the United States for service of process and has set
forth the name and address of the agent in its prospectus;
(2) A class of the issuer's securities is required to be
and is registered under section 12 of the Securities Exchange
Act of 1934, and has been so registered for the three years
immediately preceding the offering date;
(3) Neither the issuer nor a significant subsidiary has had
a material default during the last seven years, or for the
period of the issuer's existence if less than seven years, in
the payment of (i) principal, interest, dividend, or sinking
fund installment on preferred stock or indebtedness for borrowed
money, or (ii) rentals under leases with terms of three years or
more;
(4) The issuer has had consolidated net income, before
extraordinary items and the cumulative effect of accounting
changes, of at least $1,000,000 in four of its last five fiscal
years including its last fiscal year; and if the offering is of
interest bearing securities, has had for its last fiscal year,
net income, before deduction for income taxes and depreciation,
of at least 1-1/2 times the issuer's annual interest expense,
giving effect to the proposed offering and the intended use of
the proceeds. For the purposes of this clause "last fiscal
year" means the most recent year for which audited financial
statements are available, provided that such statements cover a
fiscal period ended not more than 15 months from the
commencement of the offering;
(5) If the offering is of stock or shares other than
preferred stock or shares, the securities have voting rights and
the rights include (i) the right to have at least as many votes
per share, and (ii) the right to vote on at least as many
general corporate decisions, as each of the issuer's outstanding
classes of stock or shares, except as otherwise required by law;
and
(6) If the offering is of stock or shares, other than
preferred stock or shares, the securities are owned beneficially
or of record, on any date within six months prior to the
commencement of the offering, by at least 1,200 persons, and on
that date there are at least 750,000 such shares outstanding
with an aggregate market value, based on the average bid price
for that day, of at least $3,750,000. In connection with the
determination of the number of persons who are beneficial owners
of the stock or shares of an issuer, the issuer or broker-dealer
may rely in good faith for the purposes of this clause upon
written information furnished by the record owners.
(l) Any certificate of indebtedness sold or issued for
investment, other than a certificate of indebtedness pledged as
a security for a loan made contemporaneously therewith, and any
savings account or savings deposit issued, by an industrial loan
and thrift company.
(m) Any security designated or approved for designation
upon notice of issuance on the NASDAQ/National Market System;
any other security of the same issuer that is of senior or
substantially equal rank; any security called for by
subscription rights or warrants so designated or approved; or
any warrant or right to purchase or subscribe to any of the
securities referred to in this paragraph; provided that the
National Market System provides the commissioner with notice of
any material change in its designation requirements. The
commissioner may revoke this exemption if the commissioner
determines that the designation requirements are not enforced or
are amended in a manner that lessens protection to investors.
Sec. 14. Minnesota Statutes 1994, section 80A.15,
subdivision 2, is amended to read:
Subd. 2. The following transactions are exempted from
sections 80A.08 and 80A.16:
(a) Any sales, whether or not effected through a
broker-dealer, provided that:
(1) no person shall make more than ten sales of securities
of the same issuer pursuant to this exemption, exclusive of
sales according to clause (2), during any period of 12
consecutive months; provided further, that in the case of sales
by an issuer, except sales of securities registered under the
Securities Act of 1933 or exempted by section 3(b) of that
act, (1) (i) the seller reasonably believes that all buyers are
purchasing for investment, and (2) (ii) the securities are not
advertised for sale to the general public in newspapers or other
publications of general circulation or otherwise, or by radio,
television, electronic means or similar communications media, or
through a program of general solicitation by means of mail or
telephone.; and
(2) no issuer shall make more than 25 sales of its
securities according to this exemption, exclusive of sales
pursuant to clause (1), during any period of 12 consecutive
months; provided further, that the issuer meets the conditions
in clause (1) and, in addition meets the following additional
conditions: (i) files with the commissioner, ten days before a
sale according to this clause, a statement of issuer on a form
prescribed by the commissioner; and (ii) no commission or other
remuneration is paid or given directly or indirectly for
soliciting any prospective buyers in this state in connection
with a sale according to this clause except reasonable and
customary commissions paid by the issuer to a broker-dealer
licensed under this chapter.
(b) Any nonissuer distribution of an outstanding security
if (1) either Moody's, Fitch's, or Standard & Poor's Securities
Manuals, or other recognized manuals approved by the
commissioner contains the names of the issuer's officers and
directors, a balance sheet of the issuer as of a date not more
than 18 months prior to the date of the sale, and a profit and
loss statement for the fiscal year preceding the date of the
balance sheet, and (2) the issuer or its predecessor has been in
active, continuous business operation for the five-year period
next preceding the date of sale, and (3) if the security has a
fixed maturity or fixed interest or dividend provision, the
issuer has not, within the three preceding fiscal years,
defaulted in payment of principal, interest, or dividends on the
securities.
(c) The execution of any orders by a licensed broker-dealer
for the purchase or sale of any security, pursuant to an
unsolicited offer to purchase or sell; provided that the
broker-dealer acts as agent for the purchaser or seller, and has
no direct material interest in the sale or distribution of the
security, receives no commission, profit, or other compensation
from any source other than the purchaser and seller and delivers
to the purchaser and seller written confirmation of the
transaction which clearly itemizes the commission, or other
compensation.
(d) Any nonissuer sale of notes or bonds secured by a
mortgage lien if the entire mortgage, together with all notes or
bonds secured thereby, is sold to a single purchaser at a single
sale.
(e) Any judicial sale, exchange, or issuance of securities
made pursuant to an order of a court of competent jurisdiction.
(f) The sale, by a pledge holder, of a security pledged in
good faith as collateral for a bona fide debt.
(g) Any offer or sale to a bank, savings institution, trust
company, insurance company, investment company as defined in the
Investment Company Act of 1940, pension or profit sharing trust,
or other financial institution or institutional buyer, or to a
broker-dealer, whether the purchaser is acting for itself or in
some fiduciary capacity.
(h) Any sales by an issuer to the number of persons that
shall not exceed 25 persons in this state, or 35 persons if the
sales are made in compliance with Regulation D promulgated by
the Securities and Exchange Commission, Code of Federal
Regulations, title 17, sections 230.501 to 230.506, (other than
those designated in paragraph (a) or (g)), whether or not any of
the purchasers is then present in this state, if (1) the issuer
reasonably believes that all of the buyers in this state (other
than those designated in clause (g)) are purchasing for
investment, and (2) no commission or other remuneration is paid
or given directly or indirectly for soliciting any prospective
buyer in this state (other than those designated in clause (g)),
except reasonable and customary commissions paid by the issuer
to a broker-dealer licensed under this chapter, and (3) the
issuer has, ten days prior to any sale pursuant to this
paragraph, supplied the commissioner with a statement of issuer
on forms prescribed by the commissioner, containing the
following information: (i) the name and address of the issuer,
and the date and state of its organization; (ii) the number of
units, price per unit, and a description of the securities to be
sold; (iii) the amount of commissions to be paid and the persons
to whom they will be paid; (iv) the names of all officers,
directors and persons owning five percent or more of the equity
of the issuer; (v) a brief description of the intended use of
proceeds; (vi) a description of all sales of securities made by
the issuer within the six-month period next preceding the date
of filing; and (vii) a copy of the investment letter, if any,
intended to be used in connection with any sale. Sales that are
made more than six months before the start of an offering made
pursuant to this exemption or are made more than six months
after completion of an offering made pursuant to this exemption
will not be considered part of the offering, so long as during
those six-month periods there are no sales of unregistered
securities (other than those made pursuant to paragraph (a) or
(g)) by or for the issuer that are of the same or similar class
as those sold under this exemption. The commissioner may by
rule or order as to any security or transaction or any type of
security or transaction, withdraw or further condition this
exemption, or increase the number of offers and sales permitted,
or waive the conditions in clause (1), (2), or (3) with or
without the substitution of a limitation or remuneration. An
offer or sale of securities by an issuer made in reliance on the
exemptions provided by Rule 505 or 506 of Regulation D
promulgated by the Securities and Exchange Commission, Code of
Federal Regulations, title 17, sections 230.501 to 230.508,
subject to the conditions and definitions provided by Rules 501
to 503 of Regulation D, if the offer and sale also satisfies the
conditions and limitations in clauses (1) to (10).
(1) The exemption under this paragraph is not available for
the securities of an issuer if any of the persons described in
Rule 252(c) to (f) of Regulation A promulgated by the Securities
and Exchange Commission, Code of Federal Regulations, title 17,
sections 230.251 to 230.263:
(i) has filed a registration statement that is the subject
of a currently effective order entered against the issuer, its
officers, directors, general partners, controlling persons, or
affiliates, according to any state's law within five years
before the filing of the notice required under clause (5),
denying effectiveness to, or suspending or revoking the
effectiveness of, the registration statement;
(ii) has been convicted, within five years before the
filing of the notice required under clause (5), of a felony or
misdemeanor in connection with the offer, sale, or purchase of a
security or franchise, or a felony involving fraud or deceit,
including but not limited to forgery, embezzlement, obtaining
money under false pretenses, larceny, or conspiracy to defraud;
(iii) is subject to an effective administrative order or
judgment entered by a state securities administrator within five
years before the filing of the notice required under clause (5),
that prohibits, denies, or revokes the use of an exemption from
securities registration, that prohibits the transaction of
business by the person as a broker-dealer or agent, or that is
based on fraud, deceit, an untrue statement of a material fact,
or an omission to state a material fact; or
(iv) is subject to an order, judgment, or decree of a court
entered within five years before the filing of the notice
required under clause (5), temporarily, preliminarily, or
permanently restraining or enjoining the person from engaging in
or continuing any conduct or practice in connection with the
offer, sale, or purchase of a security, or the making of a false
filing with a state.
A disqualification under paragraph (h) involving a
broker-dealer or agent is waived if the broker-dealer or agent
is or continues to be licensed in the state in which the
administrative order or judgment was entered against the person
or if the broker-dealer or agent is or continues to be licensed
in this state as a broker-dealer or agent after notifying the
commissioner of the act or event causing disqualification.
The commissioner may waive a disqualification under
paragraph (h) upon a showing of good cause that it is not
necessary under the circumstances that use of the exemption be
denied.
A disqualification under paragraph (h) may be waived if the
state securities administrator or agency of the state that
created the basis for disqualification has determined, upon a
showing of good cause, that it is not necessary under the
circumstances that an exemption from registration of securities
under the state's laws be denied.
It is a defense to a violation of paragraph (h) based upon
a disqualification if the issuer sustains the burden of proof to
establish that the issuer did not know, and in the exercise of
reasonable care could not have known, that a disqualification
under paragraph (h) existed.
(2) This exemption must not be available to an issuer with
respect to a transaction that, although in technical compliance
with this exemption, is part of a plan or scheme to evade
registration or the conditions or limitations explicitly stated
in paragraph (h).
(3) No commission, finder's fee, or other remuneration
shall be paid or given, directly or indirectly, for soliciting a
prospective purchaser, unless the recipient is appropriately
registered, or exempt from registration, in this state as a
broker-dealer.
(4) Nothing in this exemption is intended to or should be
in any way construed as relieving issuers or persons acting on
behalf of issuers from providing disclosure to prospective
investors adequate to satisfy the antifraud provisions of the
securities law of Minnesota.
(5) The issuer shall file with commissioner a notice on
form D as adopted by the Securities and Exchange Commission
according to Regulation D, Code of Federal Regulations, title
17, section 230.502. The notice must be filed not later than 15
days after the first sale in this state of securities in an
offering under this exemption. Every notice on form D must be
manually signed by a person duly authorized by the issuer and
must be accompanied by a consent to service of process on a form
prescribed by the commissioner.
(6) A failure to comply with a term, condition, or
requirement of paragraph (h) will not result in loss of the
exemption for an offer or sale to a particular individual or
entity if the person relying on the exemption shows that: (i)
the failure to comply did not pertain to a term, condition, or
requirement directly intended to protect that particular
individual or entity, and the failure to comply was
insignificant with respect to the offering as a whole; and (ii)
a good faith and reasonable attempt was made to comply with all
applicable terms, conditions, and requirements of paragraph (h),
except that, where an exemption is established only through
reliance upon this provision, the failure to comply shall
nonetheless constitute a violation of section 80A.08 and be
actionable by the commissioner.
(7) The issuer, upon request by the commissioner, shall,
within ten days of the request, furnish to the commissioner a
copy of any and all information, documents, or materials
furnished to investors or offerees in connection with the offer
and sale according to paragraph (h).
(8) Neither compliance nor attempted compliance with the
exemption provided by paragraph (h), nor the absence of an
objection or order by the commissioner with respect to an offer
or sale of securities undertaken according to this exemption,
shall be considered to be a waiver of a condition of the
exemption or considered to be a confirmation by the commissioner
of the availability of this exemption.
(9) The commissioner may, by rule or order, increase the
number of purchasers or waive any other condition of this
exemption.
(10) The determination whether offers and sales made in
reliance on the exemption set forth in paragraph (h) shall be
integrated with offers and sales according to other paragraphs
of this subdivision shall be made according to the integration
standard set forth in Rule 502 of Regulation D promulgated by
the Securities and Exchange Commission, Code of Federal
Regulations, title 17, section 230.502. If not subject to
integration according to that rule, offers and sales according
to paragraph (h) shall not otherwise be integrated with offers
and sales according to other exemptions set forth in this
subdivision.
(i) Any offer (but not a sale) of a security for which a
registration statement has been filed under sections 80A.01 to
80A.31, if no stop order or refusal order is in effect and no
public proceeding or examination looking toward an order is
pending; and any offer of a security if the sale of the security
is or would be exempt under this section. The commissioner may
by rule exempt offers (but not sales) of securities for which a
registration statement has been filed as the commissioner deems
appropriate, consistent with the purposes of sections 80A.01 to
80A.31.
(j) The offer and sale by a cooperative organized under
chapter 308A or under the laws of another state, of its
securities when the securities are offered and sold only to its
members, or when the purchase of the securities is necessary or
incidental to establishing membership in the cooperative, or
when such securities are issued as patronage dividends. This
paragraph applies to a cooperative organized under the laws of
another state only if the cooperative has filed with the
commissioner a consent to service of process under section
80A.27, subdivision 7, and has, not less than ten days prior to
the issuance or delivery, furnished the commissioner with a
written general description of the transaction and any other
information that the commissioner requires by rule or otherwise.
(l) The issuance and delivery of any securities of one
corporation to another corporation or its security holders in
connection with a merger, exchange of shares, or transfer of
assets whereby the approval of stockholders of the other
corporation is required to be obtained, provided, that the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
by rule prescribes not less than ten days prior to the issuance
and delivery.
(m) Any transaction between the issuer or other person on
whose behalf the offering is made and an underwriter or among
underwriters.
(n) The distribution by a corporation of its or other
securities to its own security holders as a stock dividend or as
a dividend from earnings or surplus or as a liquidating
distribution; or upon conversion of an outstanding convertible
security; or pursuant to a stock split or reverse stock split.
(o) Any offer or sale of securities by an affiliate of the
issuer thereof if: (1) a registration statement is in effect
with respect to securities of the same class of the issuer and
(2) the offer or sale has been exempted from registration by
rule or order of the commissioner.
(p) Any transaction pursuant to an offer to existing
security holders of the issuer, including persons who at the
time of the transaction are holders of convertible securities,
nontransferable warrants, or transferable warrants exercisable
within not more than 90 days of their issuance, if: (1) no
commission or other remuneration (other than a standby
commission) is paid or given directly or indirectly for
soliciting any security holder in this state; and (2) the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
may by rule prescribe no less than ten days prior to the
transaction.
(q) Any nonissuer sales of any security, including a
revenue obligation, issued by the state of Minnesota or any of
its political or governmental subdivisions, municipalities,
governmental agencies, or instrumentalities.
(r) Any transaction as to which the commissioner by rule or
order finds that registration is not necessary in the public
interest and for the protection of investors.
(s) An offer or sale of a security issued in connection
with an employee's stock purchase, savings, option, profit
sharing, pension, or similar employee benefit plan, if the
following conditions are met:
(1) the issuer, its parent corporation or any of its
majority-owned subsidiaries offers or sells the security
according to a written benefit plan or written contract relating
to the compensation of the purchaser; and
(2) the class of securities offered according to the plan
or contract, or if an option or right to purchase a security,
the class of securities to be issued upon the exercise of the
option or right, is registered under section 12 of the
Securities Exchange Act of 1934, or is a class of securities
with respect to which the issuer files reports according to
section 15(d) of the Securities Exchange Act of 1934; or
(3) the issuer fully complies with the provisions of Rule
701 as adopted by the Securities and Exchange Commission, Code
of Federal Regulations, title 12, section 230.701.
The issuer shall file not less than ten days before the
transaction, a general description of the transaction and any
other information that the commissioner requires by rule or
otherwise or, if applicable, a Securities and Exchange Form S-8.
Annually, within 90 days after the end of the issuer's fiscal
year, the issuer shall file a notice as provided with the
commissioner.
(t) Any sale of a security of an issuer that is a pooled
income fund, a charitable remainder trust, or a charitable lead
trust that has a qualified charity as the only charitable
beneficiary.
(u) Any sale by a qualified charity of a security that is a
charitable gift annuity if the issuer has a net worth, otherwise
defined as unrestricted fund balance, of not less than $300,000
and either: (1) has been in continuous operation for not less
than three years; or (2) is a successor or affiliate of a
qualified charity that has been in continuous operation for not
less than three years.
Sec. 15. Minnesota Statutes 1994, section 80A.15,
subdivision 3, is amended to read:
Subd. 3. The commissioner may issue an order requiring any
person who claims the benefit of an exemption with respect to a
specific security or transaction, to show cause why the
exemption should not be revoked. The order shall be calculated
to give reasonable notice of the time and place for hearing
thereon, and shall state the reasons for the entry of the
order. The commissioner may by order summarily suspend an
exemption pending final determination of any order to show
cause. If an exemption is suspended pending final determination
of an order to show cause, a hearing on the merits shall be held
within 30 days of the issuance of the order of suspension. All
hearings shall be conducted in accordance with the provisions of
chapter 14. After the hearing, the commissioner shall enter an
order making such disposition of the matter as the facts
require. If the person claiming the benefit of the exemption
fails to appear at a hearing of which the person has been duly
notified, such person shall be deemed in default, and the
proceeding may be determined against the person upon
consideration of the order to show cause, the allegations of
which may be deemed to be true. The commissioner may adopt
rules of procedure concerning all proceedings conducted pursuant
to this subdivision.
A notice filing that is incomplete is considered withdrawn
if no activity occurs with respect to the notice filing for a
period of 120 days.
Sec. 16. Minnesota Statutes 1994, section 80C.01, is
amended by adding a subdivision to read:
Subd. 19. [ASSIST THE PURCHASER IN FINDING
LOCATIONS.] "Assist the purchaser in finding locations" means to
directly assist the purchaser in finding locations, or to refer
the purchaser to any resource which assists in finding locations
and is affiliated with the seller through common ownership,
common control, a referral fee arrangement, or any other
business relationship. "Assist the purchaser in finding
locations" does not include providing to the purchaser a written
list of resources which assist in finding locations, provided
that none of the resources on the list are affiliated with the
seller in any way.
Sec. 17. Minnesota Statutes 1994, section 80C.05, is
amended by adding a subdivision to read:
Subd. 4. An application for registration that has not
become effective will be considered withdrawn if no activity
occurs with respect to the application for a period of 120 days.
Sec. 18. [REPEALER.]
Minnesota Statutes 1994, section 80A.14, subdivision 8, is
repealed.
ARTICLE 3
REAL ESTATE
Section 1. Minnesota Statutes 1994, 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 to a real estate transaction or otherwise act as a real
estate broker or salesperson unless that person makes an
affirmative written disclosure 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 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 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 fail to provide at the first
substantive contact with a consumer in a residential real
property transaction an agency disclosure form as set forth in
section 82.197.
(c) (b) 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. 2. Minnesota Statutes 1994, section 82.195,
subdivision 2, is amended to read:
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
for residential property listings, the following "dual agency"
disclosure statement:
If a buyer represented by broker wishes to buy your
property, a dual agency will be created. This means that broker
will represent both you and the buyer(s), and owe the same
duties to the buyer(s) that broker owes to you. This conflict
of interest will prohibit broker from advocating exclusively on
your behalf. 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. Broker cannot
act as a dual agent unless both you and the buyer(s) agree to
it. 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, seller(s) now instructs broker as follows:
....... Seller(s) will agree to a dual agency
representation and will consider offers made
by buyers represented by broker.
....... Seller will not agree to a dual agency
representation and will not consider offers
made by buyers represented by broker.
......................... .........................
Seller Broker
......................... By: ....................
Seller Salesperson
Date: ..................;
(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
2602, 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.
Sec. 3. Minnesota Statutes 1994, section 82.196,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS.] Licensees shall obtain a
signed buyer's broker agreement from a buyer before performing
any acts as a buyer's representative and before a purchase
agreement is signed.
Sec. 4. Minnesota Statutes 1994, section 82.196,
subdivision 2, is amended to read:
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 the following "dual agency" disclosure statement:
If you choose to purchase a property listed by broker, a
dual agency will be created. This means that broker will
represent both you and the seller(s), and owe the same duties to
the seller(s) that broker owes to you. This conflict of
interest will prohibit broker from advocating exclusively on
your behalf. 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. Broker cannot
act as a dual agent unless both you and the seller(s) agree to
it. 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
....... Buyer(s) 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
Date: ...................; 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.
Sec. 5. Minnesota Statutes 1994, section 82.197,
subdivision 1, is amended to read:
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 A real estate broker or
salesperson shall provide to a consumer in a residential real
property transaction at the first substantive contact with the
consumer an agency disclosure form in substantially the form set
forth in subdivision 4. The agency disclosure form shall be
intended to provide a description of available options for
agency and nonagency relationships, and a description of the
role of a licensee under each option. The agency disclosure
form shall provide a signature line for acknowledgment of
receipt by the consumer.
Sec. 6. Minnesota Statutes 1994, section 82.197,
subdivision 2, is amended to read:
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. in residential real property transactions in the
purchase agreement in the form set forth below which shall be
set off in a boxed format to draw attention to it:
Broker represents both the seller(s) and the buyer(s) of
the property involved in this transaction, which creates a dual
agency. This means that broker and its salespersons owe
fiduciary duties to both seller(s) and buyer(s). Because the
parties may have conflicting interests, broker and its
salespersons are prohibited from advocating exclusively for
either party. Broker cannot act as a dual agent in this
transaction without the consent of both seller(s) and buyer(s).
Seller(s) and buyer(s) acknowledge that:
(1) confidential information communicated to broker which
regards price, terms, or motivation to buy or sell will remain
confidential unless seller(s) or buyer(s) instructs broker in
writing to disclose this information. Other information will be
shared;
(2) broker and its salespersons will not represent the
interests of either party to the detriment of the other; and
(3) 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, seller(s) and buyer(s) authorize and instruct broker and
its salespersons to act as dual agents in this transaction.
........................... ...........................
Seller Buyer
........................... ...........................
Seller Buyer
........................... ...........................
Date Date
Sec. 7. Minnesota Statutes 1994, section 82.197,
subdivision 3, is amended to read:
Subd. 3. [SCOPE AND EFFECT.] Disclosures made in
accordance with the requirements for disclosure of agency
relationships set forth in this chapter are sufficient to
satisfy common law disclosure requirements. In addition, when a
principal in the transaction is a licensee or a relative or
business associate of the licensee, that fact must be disclosed
in writing in addition to any other required disclosures. The
commissioner, in consultation with representatives of the real
estate industry, consumer groups, the attorney general's office,
and any other group deemed appropriate by the commissioner,
shall study current required disclosure forms and recommend any
additions that may be necessary to ensure that consumers are
informed of the various agency relations and how they affect the
consumer. The commissioner shall prepare legislation for the
1995 session which incorporates those recommendations.
Sec. 8. Minnesota Statutes 1994, section 82.197,
subdivision 4, is amended to read:
Subd. 4. [AGENCY DISCLOSURE FORMS FORM.] (a) Disclosures
of agency relationships The agency disclosure form shall be made
in substantially the form set forth in paragraphs (b) to
(e) below:
(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: .................
AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS
Minnesota law requires that early in any relationship, real
estate brokers or salespersons discuss with consumers what type
of agency representation or relationship they desire.(1) The
available options are listed below. This is not a contract.
This is an agency disclosure form only. If you desire
representation, you must enter into a written contract according
to state law (a listing contract or a buyer representation
contract). Until such time as you choose to enter into a
written contract for representation or assistance, you will be
treated as a customer of the broker or salesperson and not
represented by the brokerage. The broker or salesperson would
then be acting as a Seller's broker (see paragraph I below), or
as a nonagent (see paragraph IV below).
I.
Seller's Broker: A broker who lists a property, or a
salesperson who is licensed to the listing broker,
represents the Seller and acts on behalf of the Seller. A
broker or salesperson working with a Buyer may also act as
a subagent of the Seller, in which case the Buyer is the
broker's customer and is not represented by that broker. A
Seller's broker owes to the Seller the fiduciary duties
described below.(2) The broker must also disclose to the
Buyer any material facts of which the broker is aware that
could adversely and significantly affect the Buyer's use or
enjoyment of the property. If a broker or salesperson
working with a Buyer as a customer is representing the
Seller, he or she must act in the Seller(s)' interests and
must tell the Seller(s) any information disclosed to
him/her. In that case, the Buyer will not be represented
and will not receive advice and counsel from the broker or
salesperson.
II.
Buyer's Broker: A Buyer may enter into an agreement for
the broker or salesperson to represent and act on behalf of
the Buyer. The broker may represent the Buyer only, and
not the Seller, even if s/he is being paid in whole or in
part by the Seller. A Buyer's broker owes to the Buyer the
fiduciary duties described below.(2) The broker must
disclose to the Buyer any material facts of which the
broker is aware that could adversely and significantly
affect the Buyer's use or enjoyment of the property.
III.
Dual Agency-Broker Representing both Seller and Buyer:
Dual agency occurs when one broker or salesperson
represents both parties to a transaction, or when two
salespersons licensed to the same broker each represent a
party to the transaction. Dual agency requires the
informed consent of all parties, and means that the broker
and salesperson owe the same duties to the Seller and the
Buyer. This role limits the level of representation the
broker and salespersons can provide, and prohibits them
from acting exclusively for either party. In a dual
agency, confidential information about price, terms, and
motivation for pursuing a transaction will be kept
confidential unless one party instructs the broker or
salesperson in writing to disclose specific information
about him or her. Other information will be shared. Dual
agents may not advocate for one party to the detriment of
the other.(3)
Within the limitations described above, dual agents owe to
both Seller and Buyer the fiduciary duties described
below.(2) Dual agents must disclose to Buyers any material
facts of which the broker is aware that could adversely and
significantly affect the Buyer's use or enjoyment of the
property.
IV.
Nonagent: A broker or salesperson may perform services for
either party as a nonagent, if that party signs a nonagency
services agreement. As a nonagent the broker or
salesperson facilitates the transaction, but does not act
on behalf of either party. THE NONAGENT BROKER OR
SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY
DUTIES LISTED BELOW, UNLESS THOSE DUTIES ARE INCLUDED IN
THE WRITTEN NONAGENCY SERVICES AGREEMENT. The nonagent
broker or salesperson owes only those duties required by
law or contained in the written nonagency services
agreement.
ACKNOWLEDGMENT: I/We acknowledge that I/We have been presented
with the above-described options. I/We understand that Buyers
who have not signed a Buyer representation contract or nonagency
services agreement are not represented by the broker/salesperson
and information given to the broker/salesperson will be
disclosed to the Seller. I/We understand that written consent
is required for a dual agency relationship. This is a
disclosure only, NOT a contract for representation.
......................... ........................
Seller Date Buyer Date
......................... ........................
Seller Date Buyer Date
****************************************************************
(1) This disclosure is required by law in any transaction
involving property occupied or intended to be occupied by one to
four families as their residence.
(2) The fiduciary duties mentioned above are listed below
and have the following meanings:
Loyalty-broker/salesperson will act only in client(s)' best
interest.
Obedience-broker/salesperson will carry out all client(s)'
lawful instructions.
Disclosure-broker/salesperson will disclose to client(s)
all material facts of which broker/salesperson has knowledge
which might reasonably affect the client's rights and interests.
Confidentiality-broker/salesperson will keep client(s)'
confidences unless required by law to disclose specific
information (such as disclosure of material facts to Buyers).
Reasonable Care-broker/salesperson will use reasonable care
in performing duties as an agent.
Accounting-broker/salesperson will account to client(s) for
all client(s)' money and property received as agent.
(3) If Seller(s) decides not to agree to a dual agency
relationship, Seller(s) may give up the opportunity to sell the
property to Buyers represented by the broker/salesperson. If
Buyer(s) decides not to agree to a dual agency relationship,
Buyer(s) may give up the opportunity to purchase properties
listed by the broker.
Sec. 9. Minnesota Statutes 1994, section 82.22,
subdivision 13, is amended to read:
Subd. 13. [CONTINUING EDUCATION.] (a) After their first
renewal date, all real estate salespersons and all real estate
brokers shall be required to successfully complete 30 hours of
real estate continuing education, either as a student or a
lecturer, in courses of study approved by the commissioner,
during each 24-month license period. At least 15 of the 30
credit hours must be completed during the first 12 months of the
24-month licensing period. Salespersons and brokers whose
initial license period extends more than 12 months are required
to complete 15 hours of real estate continuing education during
the initial license period. All continuing education must be
earned no later than May 31 of the renewal year. Those
licensees who will receive a 12-month license on July 1, 1995,
because of the staggered implementation schedule must complete
15 hours of real estate continuing education as a requirement
for renewal on July 1, 1996. Licensees may not claim credit for
continuing education not actually completed as of the date their
report of continuing education compliance is filed.
(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 during each license
period in courses in laws or regulations on agency
representation and disclosure; and
(2) at least two hours of training during each license
period 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 along with the continuing education report required under
paragraph (a).
(e) The commissioner is authorized to establish a procedure
for renewal of course accreditation.
Sec. 10. Minnesota Statutes 1994, section 82A.11, is
amended by adding a subdivision to read:
Subd. 8. [CANCELLATION BY HEIR.] A membership camping
contract that may be transferred by descent or devise must
provide that the heir or devisee may cancel the contract.
Cancellation of the contract relieves the heir or devisee of any
further obligations under the contract.
Sec. 11. Minnesota Statutes 1994, section 82B.19, is
amended by adding a subdivision to read:
Subd. 4. [RENEWAL OF ACCREDITATION.] The commissioner is
authorized to establish a procedure for renewal of course
accreditation.
Sec. 12. Minnesota Statutes 1995 Supplement, 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 an annual bond or abstracter's liability
insurance policy for each license year, 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 year 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. 13. [EFFECTIVE DATES.]
Sections 1 to 8 are effective October 1, 1996. Sections 9
and 11 are effective the day following final enactment.
ARTICLE 4
BUILDING CONTRACTORS
Section 1. Minnesota Statutes 1994, section 326.37, is
amended by adding a subdivision to read:
Subd. 3. [EXEMPTION.] No license authorized by this
section shall be required of any contractor or employee engaged
in the work or business of pipe laying outside of buildings if
such person is engaged in a business or trade which has
traditionally performed such work within the state prior to
January 1, 1994.
Sec. 2. Minnesota Statutes 1994, section 326.87, is
amended by adding a subdivision to read:
Subd. 4. [RENEWAL OF ACCREDITATION.] The commissioner is
authorized to establish a procedure for renewal of course
accreditation.
Sec. 3. Minnesota Statutes 1994, section 326.91, is
amended by adding a subdivision to read:
Subd. 3. [CERTIFICATE OF EXEMPTION HOLDERS.] For cause
shown under subdivision 1 or 2, the commissioner may deny,
suspend, or revoke a certificate of exemption issued under
section 326.84, subdivision 3, clause (5), in the same manner as
a license.
Sec. 4. Minnesota Statutes 1994, section 326.91, is
amended by adding a subdivision to read:
Subd. 4. [ACTION AGAINST UNLICENSED PERSONS.] Nothing in
this section prevents the commissioner from taking actions,
including cease and desist actions, against persons required to
be licensed under sections 326.83 to 326.991, based on conduct
that would provide grounds for administrative action against a
licensee under this section.
Sec. 5. Minnesota Statutes 1994, section 326.991, is
amended to read:
326.991 [EXCEPTION.]
Subdivision 1. The license requirement under section
326.84 does not apply to a residential building contractor,
residential remodeler, or specialty contractor licensed by the
city of St. Paul or the city of Minneapolis and who is
performing work within the legal boundaries of one of those
municipalities that municipality.
This subdivision expires March 31, 2000.
Subd. 2. The commissioner may contract with the city of
Minneapolis and the city of St. Paul to administer this
licensing program.
Sec. 6. [REPEALER.]
Minnesota Statutes 1994, sections 326.95, subdivision 4;
326.97, subdivision 3; and 326.99, are repealed.
Sec. 7. [EFFECTIVE DATES.]
Sections 1 to 4 and 6 are effective the day following final
enactment.
Section 5 is effective April 1, 1996.
ARTICLE 5
MISCELLANEOUS
Section 1. Minnesota Statutes 1994, section 47.206,
subdivision 1, is amended to read:
47.206 [INTEREST RATE OR DISCOUNT POINT AGREEMENTS.]
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(a) "Lender" means a person or entity referred to in
section 47.20, subdivision 1, a credit union, or a person making
a conventional loan as defined under section 47.20, subdivision
2, clause (3), or cooperative apartment loan as defined under
section 47.20, subdivision 2, clause (4), except that
conventional loans or cooperative apartment loans include any
loan or advance of credit in an original principal balance of
less than $200,000. "Lender" also means a mortgage broker as
defined in paragraph (e).
(b) "Loan" means loans and advances of credit authorized
under section 47.20, subdivision 1, clauses (1) to (4), and
conventional loans as defined under section 47.20, subdivision
2, clause (3), or cooperative apartment loans as defined under
section 47.20, subdivision 2, clause (4), except that
conventional loans or cooperative apartment loans also include
all loans and advances of credit in an original principal
balance of less than $200,000. "Loan" does not include a loan
or advance of credit secured by a mortgage upon real property
containing more than one residential unit or secured by a
security interest in shares of more than one residential unit in
a building owned or leased by a cooperative apartment
corporation.
(c) "Borrower" means a natural person who has submitted an
application for a loan to a lender.
(d) "Interest rate or discount point agreement" or
"agreement" means a contract between a lender and a borrower
under which the lender agrees, subject to the lender's
underwriting and approval requirements, to make a loan at a
specified interest rate or number of discount points, or both,
and the borrower agrees to make a loan on those terms. The term
also includes an offer by a lender that is accepted by a
borrower under which the lender promises to guarantee or lock in
an interest rate or number of discount points, or both, for a
specific period of time.
(e) "Mortgage broker" includes:
(1) a person who negotiates mortgage loans as described in
section 82.17, subdivision 4, clause (b), if the person does not
qualify for the exception set forth in section 82.18, clause
(o);
(2) the employees of the person; or
(3) any person or firm which holds itself out to the public
as a mortgage broker, regardless of whether the person or firm
holds a limited broker's license pursuant to section 82.20,
subdivision 13.
Sec. 2. [EFFECTIVE DATE.]
Section 1 is effective on the day following final enactment.
Presented to the governor April 4, 1996
Signed by the governor April 11, 1996, 11:50 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes