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Office of the Revisor of Statutes

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

                            CHAPTER 450-H.F.No. 3047 
                  An act relating to real property; title insurance; 
                  modifying mortgage release certificate language to 
                  include assignment of rents and profits; modifying 
                  common interest ownership resale disclosure 
                  certificate requirements; amending Minnesota Statutes 
                  1998, sections 507.401, subdivisions 1, 3, 6, and 7; 
                  and 559.17, by adding a subdivision; Minnesota 
                  Statutes 1999 Supplement, section 515B.4-107. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 507.401, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
        subdivision apply to this section. 
           (b) "Assignment of rents and profits" means an assignment, 
        whether in a separate document or in a mortgage, of any of the 
        benefits accruing under a recorded or unrecorded lease or 
        tenancy existing, or subsequently created, on property 
        encumbered by a mortgage, which is given as additional security 
        for the debt secured by the mortgage. 
           (c) "Mortgage" means a mortgage or mortgage lien, including 
        any assignment of rents and profits given as additional security 
        for the debt secured by that lien, on an interest in real 
        property in this state given to secure a loan in the original 
        principal amount of $500,000 $1,500,000 or less. 
           (c) (d) "Mortgagee" means: 
           (1) the grantee of a mortgage; or 
           (2) if a mortgage has been assigned of record, the last 
        person to whom the mortgage has been assigned of record. 
           (d) (e) "Mortgage servicer" means the last person to whom a 
        mortgagor or the mortgagor's successor in interest has been 
        instructed by a mortgagee to send payments on a loan secured by 
        a mortgage.  A person transmitting a payoff statement is the 
        mortgage servicer for the mortgage described in the payment 
        payoff statement.  
           (e) (f) "Mortgagor" means the grantor of a mortgage. 
           (g) "Partial release" means the release of specified 
        parcels of land from a mortgage. 
           (f) (h) "Payoff statement" means a statement of the amount 
        of: 
           (1) the unpaid balance of a loan secured by a mortgage, 
        including principal, interest, and any other charges properly 
        due under or secured by the mortgage;, and 
           (2) interest on a per day basis for the unpaid balance; or 
           (2) the portion of the unpaid balance of the loan secured 
        by the mortgage required by the mortgagee or mortgage servicer 
        to be paid as a condition for the issuance of a partial release. 
           (g) (i) "Record" means to record with the county recorder 
        or file with the registrar of titles. 
           (h) (j) "Title insurance company" means a corporation or 
        other business entity authorized and licensed to transact the 
        business of insuring titles to interests in real property in 
        this state under chapter 68A. 
           Sec. 2.  Minnesota Statutes 1998, section 507.401, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONTENTS.] A certificate of release executed 
        under this section must contain substantially all of the 
        following: 
           (1) the name of the mortgagor, the name of the original 
        mortgagee, and, if applicable, the mortgage servicer, the date 
        of the mortgage, the date of recording, and volume and page or 
        document number in the real property records where the mortgage 
        is recorded, together with similar information for the last 
        recorded assignment of the mortgage; 
           (2) if applicable, the date of any assignment of rents and 
        profits, the date of its recording, and its volume and page or 
        document number in the real property records where it has been 
        recorded or filed, together with similar information for the 
        last recorded assignment thereof; 
           (3) a statement that the mortgage was in the original 
        principal amount of $500,000 $1,500,000 or less; 
           (3) (4) a statement that the person executing the 
        certificate of release is an officer or a duly appointed agent 
        of a title insurance company authorized and licensed to transact 
        the business of insuring titles to interests in real property in 
        this state under chapter 68A; 
           (4) (5) a statement that the certificate of release is made 
        on behalf of the mortgagor or a person who acquired title from 
        the mortgagor to all or a part of the property described in the 
        mortgage; 
           (5) (6) a statement that the mortgagee or mortgage servicer 
        provided a payoff statement which was used to make full or 
        partial payment in full of the unpaid balance of the loan 
        secured by the mortgage; and 
           (6) (7) a statement that full or partial payment in full of 
        the unpaid balance of the loan secured by the mortgage was made 
        in accordance with the written or verbal payoff statement; and 
           (8) where the certificate of release affects only a portion 
        of the land encumbered by the mortgage, a legal description of 
        the portion being released. 
           Sec. 3.  Minnesota Statutes 1998, section 507.401, 
        subdivision 6, is amended to read: 
           Subd. 6.  [RECORDING.] If a mortgage is recorded in more 
        than one county and a certificate of release is recorded in one 
        of them, a certified copy of the certificate of release may be 
        recorded in another county with the same effect as the 
        original.  In all cases, the certificate of release shall be 
        entered and indexed as satisfactions of mortgage and releases of 
        assignments of rents and profits are entered and indexed. 
           Sec. 4.  Minnesota Statutes 1998, section 507.401, 
        subdivision 7, is amended to read: 
           Subd. 7.  [APPLICATION.] This section applies only to a 
        mortgage in the original principal amount of $500,000 $1,500,000 
        or less. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        515B.4-107, is amended to read: 
           515B.4-107 [RESALE OF UNITS.] 
           (a) In the event of a resale of a unit by a unit owner 
        other than a declarant, unless exempt under section 
        515B.4-101(c), the unit owner shall furnish to a purchaser, 
        before execution of any purchase agreement for a unit or 
        otherwise before conveyance, the following documents relating to 
        the association or to the master association, if applicable: 
           (1) copies of the declaration (other than any CIC plat), 
        the articles of incorporation and bylaws, any rules and 
        regulations, and any amendments thereto; 
           (2) the organizational and operating documents relating to 
        the master association, if any; and 
           (3) a resale disclosure certificate from the association 
        dated not more than 90 days prior to the date of the purchase 
        agreement or the date of conveyance, whichever is earlier, 
        containing the information set forth in subsection (b). 
           (b) The resale disclosure certificate shall contain the 
        following information must be in substantially the following 
        form: 
           (1) a statement disclosing any right of first refusal or 
        other restraint on the free alienability of the unit contained 
        in the declaration, articles of incorporation, bylaws, rules and 
        regulations, or any amendment thereof; 
           (2) a statement setting forth:  
           (i) the installments of annual common expense assessments 
        payable with respect to the unit, and the payment schedule; 
           (ii) the installments of special common expense 
        assessments, if any, payable with respect to the unit, and the 
        payment schedule; and 
           (iii) any plan approved by the association for levying 
        certain common expense assessments against fewer than all the 
        units pursuant to section 515B.3-115, subsection (h), and the 
        amount and payment schedule for any such common expenses payable 
        with respect to the unit; 
           (3) a statement of any fees or charges other than 
        assessments payable by unit owners; 
           (4) a statement of any extraordinary expenditures approved 
        by the association, and not yet assessed, for the current and 
        two succeeding fiscal years; 
           (5) a statement of the amount of any reserves for 
        maintenance, repair or replacement and of any portions of those 
        reserves designated by the association for any specified 
        projects or uses; 
           (6) the most recent regularly prepared balance sheet and 
        income and expense statement of the association; 
           (7) the current budget of the association; 
           (8) a statement of any unsatisfied judgments against the 
        association and the status of any pending suits in which the 
        association is party; 
           (9) a detailed description of the insurance coverage 
        provided for the benefit of unit owners, including a statement 
        as to which, if any, of the items referred to in section 
        515B.3-113, subsection (b), are insured by the association; 
           (10) a statement as to whether the board has notified the 
        unit owner (i) that any alterations or improvements to the unit 
        or to the limited common elements assigned thereto violate any 
        provision of the declaration or (ii) that the unit is in 
        violation of any governmental statute, ordinance, code or 
        regulation; 
           (11) a statement of the remaining term of any leasehold 
        estate affecting the common interest community and the 
        provisions governing any extension or renewal thereof; and 
           (12) any other matters affecting the unit or the unit 
        owner's obligations with respect to the unit which the 
        association deems material. 
                          COMMON INTEREST COMMUNITY
                         RESALE DISCLOSURE CERTIFICATE
        Name of Common Interest Community:.............................. 
        Name of Association:............................................ 
        Address of Association:......................................... 
        Unit Number(s) (include principal unit and any garage, storage, 
        or other auxiliary unit(s)):.....................................
           The following information is furnished by the association 
        named above according to Minnesota Statutes, section 515B.4-107. 
           1.  There is no right of first refusal or other restraint 
        on the free alienability of the above unit(s) contained in the 
        declaration, bylaws, rules and regulations, or any amendment to 
        them, except as follows:........................................ 
        ................................................................
        ................................................................
        ................................................................
           2.  The following periodic installments of common expense 
        assessments and special assessments are payable with respect to 
        the above unit(s): 
             a.  Annual assessment 
                 installments:      $.......   Due: .............
             b.  Special assessment
                 installments:      $.......   Due: .............
             c.  Unpaid assessments, fines, or other charges:
                   (1)   Annual          $.......
                   (2)   Special         $.......
                   (3)   Fines           $.......
                   (4)   Other Charges   $.......
             d.  The association has/has not (strike one) approved
                 a plan for levying certain common expense
                 assessments against fewer than all the units
                 according to Minnesota Statutes, section 515B.3-115,
                 subsection (e).  If a plan is approved, a description
                 of the plan is attached to this certificate.
           3.  In addition to the amounts due under paragraph 2, the 
        following additional fees or charges other than assessments are 
        payable by unit owners (include late payment charges, user fees, 
        etc.):..........................................................
        ................................................................
        ................................................................
           4.  There are no extraordinary expenditures approved by the 
        association, and not yet assessed, for the current and two 
        succeeding fiscal years, except as follows:..................... 
        ................................................................
        ................................................................
           5.  The association has reserved the following amounts for 
        maintenance, repair, or replacement:............................ 
        ................................................................
        ................................................................
        The following portions of these reserves are designated for the 
        following specified projects or uses:........................... 
        ................................................................ 
           6.  The following documents are furnished with this 
        certificate according to statute: 
             a.  The most recent regularly prepared balance sheet and
                 income and expense statement of the association.
             b.  The current budget of the association.
           7.  There are no unsatisfied judgments against the 
        association, except as follows (identify creditor and amount):.. 
        ................................................................
        ................................................................
           8.  There are no pending lawsuits to which the association 
        is a party, except as follows (identify and summarize status):.. 
        ................................................................ 
        ................................................................
        ................................................................
           9.  Description of insurance coverages: 
           a.  The association provides the following insurance 
        coverage for the benefit of unit owners:  (Reference may be made 
        to applicable sections of the declaration or bylaws; however, 
        any additional coverages should be described in this space) 
        ................................................................
        ................................................................
        ................................................................
           b.  The following described fixtures, decorating items, or 
        construction items within the unit referred to in Minnesota 
        Statutes, section 515B.3-113, subsection (b), are insured by the 
        association (check as applicable):  
        ..._____Ceiling or wall finishing materials                     
        ..._____Floor coverings                                         
        ..._____Cabinetry                                               
        ..._____Finished millwork                                       
        ..._____Electrical or plumbing fixtures serving a single unit   
        ..._____Built-in appliances                                     
        ..._____Improvements and betterments as originally constructed  
        ..._____Additional improvements and betterments installed by
                   unit owners                                          
           10.  The board of directors of the association has not 
        notified the unit owner (i) that any alterations or improvements 
        to the unit or to the limited common elements assigned to it 
        violate any provision of the declaration; or (ii) that the unit 
        is in violation of any governmental statute, ordinance, code, or 
        regulation, except as follows:...................................
        .................................................................
           11.  The remaining term of any leasehold estate affecting 
        the common interest community and the premises governing any 
        extension or renewal of it are as follows:...................... 
        ................................................................
        ................................................................
           12.  In addition to the above, the following matters 
        affecting the unit or the unit owner's obligations with respect 
        to the unit are deemed material. 
             I hereby certify that the foregoing information and
        statements are true and correct as of .............
                                                (Date)
                                            By:  .......................
                                            Title: .....................
                                            (Association representative)
                                            Address:....................
                                            Phone Number:...............
                                   RECEIPT 
        In addition to the foregoing information furnished by the 
        association, the unit owner is obligated to furnish to the 
        purchaser before execution of any purchase agreement for a unit 
        or otherwise before conveyance, copies of the following 
        documents relating to the association or to the master 
        association (as applicable):  the declaration (other than any 
        common interest community plat), articles of incorporation, 
        bylaws, rules and regulations (if any), and any amendments to 
        these documents.  Receipt of the foregoing documents, and the 
        resale disclosure certificate, is acknowledged by the 
        undersigned buyer(s). 
             Dated:  ............        .........................
                                         (Buyer)
                                         .........................
                                         (Buyer)
           (c) If the association is subject to a master association 
        to which has been delegated the association's powers under 
        section 515B.3-102(a)(2), then the financial information 
        required to be disclosed under subsection (b) may be disclosed 
        on a consolidated basis. 
           (d) The association, within ten days after a request by a 
        unit owner, or the unit owner's authorized representative, shall 
        furnish the certificate required in subsection (a).  The 
        association may charge a reasonable fee for furnishing the 
        certificate and any association documents related thereto.  A 
        unit owner providing a certificate pursuant to subsection (a) is 
        not liable to the purchaser for any erroneous information 
        provided by the association and included in the certificate. 
           (e) A purchaser is not liable for any unpaid common expense 
        assessments, including special assessments, if any, not set 
        forth in the certificate required in subsection (a).  A 
        purchaser is not liable for the amount by which the annual or 
        special assessments exceed the amount of annual or special 
        assessments stated in the certificate for assessments payable in 
        the year in which the certificate was given, except to the 
        extent of any increases subsequently approved in accordance with 
        the declaration or bylaws.  A unit owner is not liable to a 
        purchaser for the failure of the association to provide the 
        certificate, or a delay by the association in providing the 
        certificate in a timely manner. 
           Sec. 6.  Minnesota Statutes 1998, section 559.17, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [SATISFACTION, RELEASE, AND ASSIGNMENT.] (a) An 
        assignment of rents and profits under this section, whether in 
        the mortgage or in a separate instrument, shall expire: 
           (1) with respect to the rents and profits from all of the 
        mortgaged property, upon recording in the office of the county 
        recorder or filing in the office of the registrar of titles of 
        the county where the mortgaged property is located, of a 
        satisfaction of the mortgage or a certificate of release 
        complying with section 507.401 in lieu of a satisfaction of the 
        mortgage; or 
           (2) with respect to the rents and profits from a portion of 
        the mortgaged property, upon recording in the office of the 
        county recorder or filing in the office of the registrar of 
        titles of the county where that portion of the mortgaged 
        property is located, of a release of that portion of the 
        mortgaged property from the lien of the mortgage, or a 
        certificate of release complying with section 507.401 in lieu of 
        a release of that portion of the mortgaged property. 
        No separate reassignment of the rents and profits or 
        satisfaction or release of the assignment is required. 
           (b) An assignment of a mortgage, whether or not the 
        mortgage mentions an assignment of rents and profits, is 
        sufficient to assign both the mortgage and the assignment of 
        rents and profits permitted by this subdivision which secures 
        the debt secured by the mortgage, and no separate assignment of 
        the assignment of rents and profits shall be required. 
           Sec. 7.  [APPLICATION.] 
           Sections 1, 2, 3, 4, and 6 apply to all mortgages and 
        assignments of rents and profits, whenever executed, except as 
        to those mortgages and assignments of rents and profits, the 
        rights to which have been fully adjudicated or which are the 
        subject of pending litigation as of the effective date of this 
        act. 
           Presented to the governor April 27, 2000 
           Signed by the governor May 1, 2000, 2:47 p.m.