Minnesota Session Laws - 2002, Regular Session

                            CHAPTER 306-S.F.No. 2697 
                  An act relating to real property; establishing 
                  disclosure requirements for sellers of residential 
                  real estate; proposing coding for new law in Minnesota 
                  Statutes, chapter 513. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  [513.52] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of sections 513.52 to 
        513.60, the terms defined in this section have the meanings 
        given them.  
           Subd. 2.  [PROSPECTIVE BUYER.] "Prospective buyer" means a 
        person negotiating or offering to acquire for value legal or 
        equitable title, or the right to acquire legal or equitable 
        title, to residential real property.  
           Subd. 3.  [REAL ESTATE LICENSEE.] "Real estate licensee" 
        means a person licensed under chapter 82.  
           Subd. 4.  [RESIDENTIAL REAL PROPERTY OR RESIDENTIAL REAL 
        ESTATE.] "Residential real property" or "residential real 
        estate" means property occupied as, or intended to be occupied 
        as, a single-family residence, including a unit in a common 
        interest community as defined in section 515B.1-103, clause 
        (10), regardless of whether the unit is in a common interest 
        community not subject to chapter 515B.  
           Subd. 5.  [SELLER.] "Seller" means a person who owns legal 
        or equitable title to residential real property.  
           Sec. 2.  [513.53] [APPLICABILITY.] 
           The seller disclosure requirements in sections 513.52 to 
        513.60 apply to the transfer of any interest in residential real 
        estate, whether by sale, exchange, deed, contract for deed, 
        lease with an option to purchase, or any other option.  
           Sec. 3.  [513.54] [EXCEPTIONS.] 
           The seller disclosure requirements in sections 513.52 to 
        513.60 do not apply to any of the following: 
           (1) real property that is not residential real property; 
           (2) a gratuitous transfer; 
           (3) a transfer pursuant to a court order; 
           (4) a transfer to a government or governmental agency; 
           (5) a transfer by foreclosure or deed in lieu of 
        foreclosure; 
           (6) a transfer to heirs or devisees of a decedent; 
           (7) a transfer from a cotenant to one or more other 
        cotenants; 
           (8) a transfer made to a spouse, parent, grandparent, 
        child, or grandchild of the seller; 
           (9) a transfer between spouses resulting from a decree of 
        marriage dissolution or from a property settlement agreement 
        incidental to that decree; 
           (10) a transfer of newly constructed residential property 
        that has not been inhabited; 
           (11) an option to purchase a unit in a common interest 
        community, until exercised; 
           (12) a transfer to a person who controls or is controlled 
        by the grantor as those terms are defined with respect to a 
        declarant under section 515B.1-103, clause (2); 
           (13) a transfer to a tenant who is in possession of the 
        residential real property; or 
           (14) a transfer of special declarant rights under section 
        515B.3-104.  
           Sec.  4.  [513.55] [GENERAL DISCLOSURE REQUIREMENTS.] 
           Subdivision 1.  [CONTENTS.] (a) Before signing an agreement 
        to sell or transfer residential real property, the seller shall 
        make a written disclosure to the prospective buyer.  The 
        disclosure must include all material facts pertaining to adverse 
        physical conditions in the property of which the seller is aware 
        that could adversely and significantly affect: 
           (1) an ordinary buyer's use and enjoyment of the property; 
        or 
           (2) any intended use of the property of which the seller is 
        aware.  
           (b) The disclosure must be made in good faith and based 
        upon the best of the seller's knowledge at the time of the 
        disclosure.  
           Subd. 2.  [DISCLOSURE TO LICENSEE.] A seller may provide 
        the written disclosure required under sections 513.52 to 513.60 
        to a real estate licensee representing or assisting the 
        prospective buyer.  The written disclosure provided to the real 
        estate licensee representing or assisting the prospective buyer 
        is considered to have been provided to the prospective buyer.  
        If the written disclosure is provided to the real estate 
        licensee representing or assisting the prospective buyer, the 
        real estate licensee shall provide a copy to the prospective 
        buyer.  
           Sec. 5.  [513.56] [DISCLOSURE NOT REQUIRED.] 
           Subdivision 1.  [GENERAL.] Section 513.55 does not create a 
        duty to disclose the fact that residential property:  
           (1) is or was occupied by an owner or occupant who is or 
        was suspected to be infected with human immunodeficiency virus 
        or diagnosed with acquired immunodeficiency syndrome; 
           (2) was the site of a suicide, accidental death, natural 
        death, or perceived paranormal activity; or 
           (3) is located in a neighborhood containing any adult 
        family home, community-based residential facility, or nursing 
        home.  
           Subd. 2.  [OFFENDERS.] Section 513.55 does not create a 
        duty to disclose information regarding an offender who is 
        required to register under section 243.166, or about whom 
        notification is made under that section, if the seller, in a 
        timely manner, provides a written notice that information about 
        the predatory offender registry and persons registered with the 
        registry may be obtained by contacting the local law enforcement 
        agency where the property is located or the department of 
        corrections.  
        This section does not create a duty to disclose any facts 
        described in subdivision 1 and this subdivision for property 
        that is not residential real property.  
           Subd. 3.  [INSPECTIONS.] (a) Except as provided in 
        paragraph (b), a seller is not required to disclose information 
        relating to the physical condition of the real property if a 
        written report that discloses the information has been prepared 
        by a qualified third party and provided to the prospective 
        buyer.  For purposes of this paragraph, "qualified third party" 
        means a federal, state, or local governmental agency, or any 
        person whom the seller, or prospective buyer, reasonably 
        believes has the expertise necessary to meet the industry 
        standards of practice for the type of inspection or 
        investigation that has been conducted by the third party in 
        order to prepare the written report.  
           (b) A seller shall disclose to the prospective buyer 
        material facts known by the seller that contradict any 
        information included in a written report under paragraph (a) if 
        a copy of the report is provided to the seller.  
           Sec. 6.  [513.57] [LIABILITY FOR ERROR, INACCURACY, OR 
        OMISSION.] 
           Subdivision 1.  [NO LIABILITY.] Unless the prospective 
        buyer and seller agree to the contrary in writing, a seller is 
        not liable for any error, inaccuracy, or omission of any 
        information delivered under sections 513.52 to 513.60 if the 
        error, inaccuracy, or omission was not within the personal 
        knowledge of the seller, or was based entirely on information 
        provided by other persons as specified in section 513.58, 
        subdivision 3, and ordinary care was exercised in transmitting 
        the information.  It is not a violation of sections 513.52 to 
        513.60 if the seller fails to disclose information that could be 
        obtained only through inspection or observation of inaccessible 
        portions of the real estate or could be discovered only by a 
        person with expertise in a science or trade beyond the knowledge 
        of the seller.  
           Subd. 2.  [LIABILITY.] A seller who fails to make a 
        disclosure as required by sections 513.52 to 513.60 and was 
        aware of the condition of the real property is liable to the 
        prospective buyer.  A person injured by a violation of this 
        section may bring a civil action and recover damages and receive 
        other equitable relief as determined by the court.  An action 
        under this subdivision must be commenced within two years after 
        the date on which the prospective buyer closed the purchase or 
        transfer of the real property. 
           Subd. 3.  [OTHER ACTIONS.] Nothing in sections 513.52 to 
        513.60 precludes liability for an action based on fraud, 
        negligent misrepresentation, or other actions allowed by law. 
           Sec. 7.  [513.58] [AMENDMENT TO DISCLOSURE.] 
           Subdivision 1.  [NOTICE.] A seller must notify the 
        prospective buyer in writing as soon as reasonably possible, but 
        in any event before closing, if the seller learns that the 
        seller's disclosure required by section 513.55 was inaccurate.  
           Subd. 2.  [FAILURE TO NOTIFY; LIABILITY.] A seller who 
        fails to notify the prospective buyer of any amendments to the 
        initial disclosure required under subdivision 1 is liable to the 
        prospective buyer as provided in section 513.57.  
           Sec. 8.  [513.59] [TRANSFER NOT INVALIDATED.] 
           A transfer subject to sections 513.52 to 513.60 is not 
        invalidated solely because of the failure of any person to 
        comply with a provision of those sections.  This section does 
        not prevent a court from ordering a rescission of the transfer.  
           Sec. 9.  [513.60] [WAIVER.] 
           The written disclosure required under sections 513.52 to 
        513.60 may be waived if the seller and the prospective buyer 
        agree in writing.  Waiver of the disclosure required under 
        sections 513.52 to 513.60 does not waive, limit, or abridge any 
        obligation for seller disclosure created by any other law. 
           Sec. 10.  [EFFECTIVE DATE.] 
           This act is effective January 1, 2003, and applies to 
        purchase agreements entered into on or after that date. 
           Presented to the governor March 28, 2002 
           Signed by the governor April 1, 2002, 9:08 a.m.