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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 286-S.F.No. 2821 
                  An act relating to commerce; regulating the conduct of 
                  real estate industry licensees; modifying disclosures; 
                  regulating records retention requirements; amending 
                  Minnesota Statutes 2000, sections 82.19, subdivision 
                  9; 82.23, subdivision 1; 82.27, by adding a 
                  subdivision; Minnesota Statutes 2001 Supplement, 
                  section 82.197, subdivisions 1, 4, 6. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, section 82.19, 
        subdivision 9, is amended to read: 
           Subd. 9.  [EXCLUSIVE AGENCY AGREEMENTS.] (a) Except as 
        provided in paragraph (b) (c), a licensee shall not negotiate 
        the sale, exchange, lease, or listing of any real property 
        directly with the owner or lessor knowing that the owner or 
        lessor has executed a written contract granting exclusive 
        listing contract or exclusive contract for nonagency 
        services representation or assistance in connection with the 
        property with to another real estate broker, buyer, or lessee, 
        nor shall a licensee negotiate the purchase, lease, or exchange 
        of real property knowing that the buyer or lessee has executed a 
        written contract granting exclusive buyer representation 
        contract or exclusive contract for nonagency 
        services representation or assistance for the purchase, lease, 
        or exchange of the real property with another real estate broker.
           (b) Licensees shall not induce any party to a contract of 
        sale, purchase, lease, or option, or to an exclusive listing 
        agreement or buyer's agreement, or facilitator services 
        agreement, to breach the contract, option, or agreement. 
           (c) A licensee may discuss the terms upon which a listing 
        or buyer representation contract or a contract for nonagency 
        facilitator services may be entered into after expiration of any 
        existing exclusive contract when the inquiry or discussion is 
        initiated by the owner, lessor, buyer, or lessee.  The licensee 
        must inquire of the owner, lessor, buyer, or lessee whether such 
        an exclusive contract exists. 
           Sec. 2.  Minnesota Statutes 2001 Supplement, section 
        82.197, subdivision 1, is amended to read: 
           Subdivision 1.  [AGENCY DISCLOSURE.] A real estate broker 
        or salesperson shall provide to a consumer in the sale and 
        purchase of 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 
        facilitator 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. 3.  Minnesota Statutes 2001 Supplement, section 
        82.197, subdivision 4, is amended to read: 
           Subd. 4.  [AGENCY DISCLOSURE FORM.] The agency disclosure 
        form shall be in substantially the form set forth below: 
               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, you will be treated as a 
        customer and will not receive any representation from the broker 
        or salesperson.  The broker or salesperson will be acting as a 
        Facilitator (see paragraph V below), unless the broker or 
        salesperson is representing another party as described below. 
           ACKNOWLEDGMENT:  I/We acknowledge that I/We have been 
        presented with the below-described options.  I/We understand 
        that until I/We have signed a representation contract, I/We are 
        not represented by the broker/salesperson and information given 
        to the broker/salesperson may be disclosed.  I/We understand 
        that written consent is required for a dual agency 
        relationship.  THIS IS A DISCLOSURE ONLY, NOT A CONTRACT FOR 
        REPRESENTATION. 
        ...............     .......... 
        Signature           Date
        ...............     .......... 
        Signature           Date
        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 
           Seller's broker owes to the Seller the fiduciary duties 
           described below.(2)  The broker must also disclose to the 
           Buyer material facts as defined in Minnesota Statutes, 
           section 82.197, subdivision 6, 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 
           best interest and must tell the Seller any information 
           disclosed to him or her, except confidential information 
           acquired in a facilitator relationship (see paragraph V 
           below).  In that case, the Buyer will not be represented 
           and will not receive advice and counsel from the broker or 
           salesperson. 
        II. 
           Subagent:  A broker or salesperson who is working with a 
           Buyer but represents the Seller.  In this case, the Buyer 
           is the broker's customer and is not represented by that 
           broker.  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 best interest and must tell the Seller any 
           information that is disclosed to him or her.  In that case, 
           the Buyer will not be represented and will not receive 
           advice and counsel from the broker or salesperson. 
        III.
           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 he or she 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 material facts as defined in 
           Minnesota Statutes, section 82.197, subdivision 6, 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 Seller as a customer 
           is representing the Buyer, he or she must act in the 
           Buyer's best interest and must tell the Buyer any 
           information disclosed to him or her, except confidential 
           information acquired in a facilitator relationship (see 
           paragraph V below).  In that case, the Seller will not be 
           represented and will not receive advice and counsel from 
           the broker or salesperson. 
        IV.
           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 material 
           facts as defined in Minnesota Statutes, section 82.197, 
           subdivision 6, of which the broker is aware that could 
           adversely and significantly affect the Buyer's use or 
           enjoyment of the property. 
        V.
           Facilitator:  A broker or salesperson who performs services 
           for a Buyer, a Seller, or both but does not represent 
           either in a fiduciary capacity as a Buyer's Broker, 
           Seller's Broker, or Dual Agent.  THE FACILITATOR BROKER OR 
           SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY 
           DUTIES LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE 
           DUTIES ARE INCLUDED IN THE A WRITTEN FACILITATOR SERVICES 
           AGREEMENT.  The facilitator broker or salesperson owes the 
           duty of confidentiality to the party but owes no other duty 
           to the party except those duties required by law or 
           contained in a written facilitator services agreement, if 
           any.  In the event a facilitator broker or salesperson, 
           working with a Buyer, shows a property listed by the 
           facilitator broker or salesperson, then the facilitator 
           broker or salesperson must act as a Seller's Broker (see 
           paragraph I above).  In the event a facilitator broker or 
           salesperson, working with a Seller, accepts a showing of 
           the property by a Buyer being represented by the 
           facilitator broker or salesperson, then the facilitator 
           broker or salesperson must act as a Buyer's Broker (see 
           paragraph III above). 
           
           
           
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           (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. 4.  Minnesota Statutes 2001 Supplement, section 
        82.197, subdivision 6, is amended to read: 
           Subd. 6.  [MATERIAL FACTS.] (a) Licensees shall disclose to 
        any prospective purchaser all material facts of which the 
        licensees are aware, which could adversely and significantly 
        affect an ordinary purchaser's use or enjoyment of the property, 
        or any intended use of the property of which the licensees are 
        aware. 
           (b) It is not a material fact relating to real property 
        offered for sale and no regulatory action shall be brought 
        against a licensee for failure to disclose in any real estate 
        transaction the fact or suspicion that the 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; or 
           (2) was the site of an 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.  
           (c) A licensee or employee of the licensee has no 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 broker or salesperson, 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 local law enforcement 
        where the property is located or the department of corrections. 
           (d) A licensee is not required to disclose, except as 
        otherwise provided in paragraph (e), information relating to the 
        physical condition of the property or any other information 
        relating to the real estate transaction, if a written report 
        that discloses the information has been prepared by a qualified 
        third party and provided to the person.  For the purposes of 
        this paragraph, "qualified third party" means a federal, state, 
        or local governmental agency, or any person whom the broker, 
        salesperson, or a party to the real estate transaction 
        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 and who is acceptable to the 
        person to whom the disclosure is being made. 
           (e) A licensee shall disclose to the parties to a real 
        estate transaction any facts known by the broker or salesperson 
        that contradict any information included in a written report, if 
        a copy of the report is provided to the licensee, described in 
        paragraph (d). 
           Sec. 5.  Minnesota Statutes 2000, section 82.23, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RETENTION.] A licensed real estate broker 
        shall retain for three years copies of all listings, buyer 
        representation and facilitator services contracts, deposit 
        receipts, purchase money contracts, canceled checks, trust 
        account records, and such other documents as may reasonably be 
        related to carrying on a real estate brokerage business.  The 
        retention period shall run from the date of the closing of the 
        transaction, or from the date of the listing document if the 
        transaction document is not consummated.  The following 
        documents need not be retained: 
           (1) agency disclosure forms provided to prospective buyers 
        or sellers, where no contractual relationship is subsequently 
        created and no services are provided by the licensee; and 
           (2) facilitator services contracts or buyer representation 
        contracts entered into with prospective buyers, where the 
        prospective buyer abandons the contractual relationship before 
        any services have been provided by the licensee. 
           Sec. 6.  Minnesota Statutes 2000, section 82.27, is amended 
        by adding a subdivision to read: 
           Subd. 2a.  [MONETARY SETTLEMENTS.] The commissioner shall 
        not coerce or attempt to coerce a licensee to enter into any 
        monetary settlement with a consumer in connection with any 
        complaint investigation.  The commissioner may consider the 
        totality of the circumstances, including any efforts by the 
        licensee to mitigate any losses by a consumer, in determining 
        the appropriateness or severity of administrative sanction. 
           Presented to the governor March 25, 2002 
           Signed by the governor March 26, 2002, 2:26 p.m.