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1987 Minnesota Session Laws

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                         Laws of Minnesota 1987 

                        CHAPTER 105-S.F.No. 751 
           An act relating to financial institutions; authorizing 
          the deposit of trust funds received by real estate 
          brokers or salespersons in savings and loan 
          associations and credit unions; amending Minnesota 
          Statutes 1986, sections 51A.23, subdivision 1; 52.04; 
          82.17, subdivision 6; and 82.24, subdivisions 1, 2, 
          and 6. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 51A.23, 
subdivision 1, is amended to read: 
    Subdivision 1.  [OWNERSHIP.] Savings accounts may be opened 
and held solely and absolutely by, or in trust or other 
fiduciary capacity for, any person, including an adult or minor 
individual, male or female, single or married, partnership, 
association, fiduciary, or corporation.  Trust funds received by 
a real estate broker or the broker's salespersons in trust may 
be deposited in a savings and loan association.  Savings 
accounts shall be represented only by the account of each 
savings account holder on the books of the association, and such 
accounts or any interest therein shall be transferable only on 
the books of the association and upon proper written application 
by the transferee and upon acceptance by the association of the 
transferee as a member upon terms approved by the board of 
directors.  The association may treat the holder of record of a 
savings account as the owner thereof for all purposes without 
being affected by any notice to the contrary unless the 
association has acknowledged in writing notice of a pledge of 
such savings account.  
    An association may issue savings accounts to or in the name 
of a minor, which shall be held for the exclusive right and 
benefit of the minor, free from the control or lien of all other 
persons, except creditors, and, together with dividends thereon, 
shall be paid to the minor, and receipt or acquittance in any 
form, shall be sufficient release and discharge of the 
association for withdrawal, until a guardian appointed in this 
state for the minor shall have delivered a certificate of 
appointment.  
      Sec. 2.  Minnesota Statutes 1986, section 52.04, is amended 
to read: 
    52.04 [POWERS.] 
    Subdivision 1.  A credit union has the following powers: 
    (1) to offer its members and other credit unions various 
classes of shares, share certificates, deposits, or deposit 
certificates;  
    (2) to receive the savings of its members either as payment 
on shares or as deposits, including the right to conduct 
Christmas clubs, vacation clubs, and other thrift organizations 
within its membership.  Trust funds received by a real estate 
broker or the broker's salespersons in trust may be deposited in 
a credit union; 
    (3) to make loans to members for provident or productive 
purposes as provided in section 52.16; 
    (4) to make loans to a cooperative society or other 
organization having membership in the credit union; 
    (5) to deposit in state and national banks and trust 
companies authorized to receive deposits; 
    (6) to invest in any investment legal for savings banks or 
for trust funds in the state and, notwithstanding clause (3), to 
invest in and make loans of unsecured days funds (federal funds 
or similar unsecured loans) to financial institutions insured by 
an agency of the federal government and a member of the Federal 
Reserve System or required to maintain reserves at the Federal 
Reserve;  
    (7) to borrow money as hereinafter indicated; 
    (8) to adopt and use a common seal and alter the same at 
pleasure; 
      (9) to make payments on shares of and deposit with any 
other credit union chartered by this or any other state or 
operating under the provisions of the federal Credit Union Act, 
in amounts not exceeding in the aggregate 25 percent of its 
unimpaired assets.  However, payments on shares of and deposit 
with credit unions chartered by other states are restricted to 
credit unions insured by the National Credit Union 
Administration.  The restrictions imposed by this clause do not 
apply to share accounts and deposit accounts of the Minnesota 
corporate credit union in United States central credit union or 
to share accounts and deposit accounts of credit unions in the 
Minnesota corporate credit union; 
      (10) to contract with any licensed insurance company or 
society to insure the lives of members to the extent of their 
share accounts, in whole or in part, and to pay all or a portion 
of the premium therefor; 
      (11) to indemnify each director, officer, or committee 
member, or former director, officer, or committee member against 
all expenses, including attorney's fees but excluding amounts 
paid pursuant to a judgment or settlement agreement, reasonably 
incurred in connection with or arising out of any action, suit, 
or proceeding to which that person is a party by reason of being 
or having been a director, officer, or committee member of the 
credit union, except with respect to matters as to which that 
person is finally adjudged in the action, suit, or proceeding to 
be liable for negligence or misconduct in the performance of 
duties.  The indemnification is not exclusive of any other 
rights to which that person may be entitled under any bylaw, 
agreement, vote of members, or otherwise; 
     (12) upon written authorization from a member, retained at 
the credit union, to make payments to third parties by 
withdrawals from the member's share or deposit accounts or 
through proceeds of loans made to such member, or by permitting 
the credit union to make those payments from the member's funds 
prior to deposit; to permit draft withdrawals from member 
accounts, but a credit union proposing to permit draft 
withdrawals shall notify the commissioner of commerce, in the 
form prescribed, of its intent not less than 90 days prior to 
authorizing draft withdrawals.  The board of directors of a 
credit union may restrict one class of shares to the extent that 
it may not be redeemed, withdrawn, or transferred except upon 
termination of membership in the credit union; 
     (13) to inform its members as to the availability of 
various group purchasing plans which are related to the 
promotion of thrift or the borrowing of money for provident and 
productive purposes by means of informational materials placed 
in the credit union's office, through its publications, or by 
direct mailings to members by the credit union; 
     (14) to facilitate its members' voluntary purchase of types 
of insurance incidental to promotion of thrift or the borrowing 
of money for provident and productive purposes including, but 
not limited to the following types of group or individual 
insurance:  Fire, theft, automobile, life and temporary 
disability; to be the policy holder of a group insurance plan or 
a subgroup under a master policy plan and to disseminate 
information to its members concerning the insurance provided 
thereunder; to remit premiums to an insurer or the holder of a 
master policy on behalf of a credit union member, if the credit 
union obtains written authorization from the member for 
remittance by share or deposit withdrawals or through proceeds 
of loans made by the members, or by permitting the credit union 
to make the payments from the member's funds prior to deposit; 
and to accept from the insurer reimbursement for expenses 
incurred or in the case of credit life and accident and health 
insurance within the meaning of chapter 62B commissions for the 
handling of the insurance.  The amount reimbursed or the 
commissions received may constitute the general income of the 
credit union.  The directors, officers, committee members and 
employees of a credit union shall not profit on any insurance 
sale facilitated through the credit unions; 
      (15) to contract with another credit union to furnish 
services which either could otherwise perform.  Contracted 
services under this clause are subject to regulation and 
examination by the commissioner of commerce like other services; 
      (16) in furtherance of the twofold purpose of promoting 
thrift among its members and creating a source of credit for 
them at legitimate rates of interest for provident purposes, and 
not in limitation of the specific powers hereinbefore conferred, 
to have all the powers enumerated, authorized, and permitted by 
this chapter, and such other rights, privileges and powers 
incidental to, or necessary for, the accomplishment of the 
objectives and purposes of the credit union; 
      (17) to rent safe deposit boxes to its members if the 
credit union obtains adequate insurance or bonding coverage for 
losses which might result from the rental of safe deposit boxes; 
      (18) notwithstanding the provisions of section 52.05, to 
accept deposits of public funds in an amount secured by 
insurance or other means pursuant to chapter 118; 
      (19) to accept and maintain treasury tax and loan accounts 
of the United States and to pledge collateral to secure the 
treasury tax or loan accounts, in accordance with the 
regulations of the Department of Treasury of the United States; 
      (20) to accept deposits pursuant to section 149.12, 
notwithstanding the provisions of section 52.05, if the deposits 
represent funding of prepaid funeral plans of members; 
      (21) to sell, in whole or in part, real estate secured 
loans provided that:  
      (a) the loan is secured by a first lien;  
      (b) the board of directors approves the sale;  
      (c) if the sale is partial, the agreement to sell a partial 
interest shall, at a minimum:  
      (i) identify the loan or loans covered by the agreement;  
      (ii) provide for the collection, processing, remittance of 
payments of principal and interest, taxes and insurance premiums 
and other charges or escrows, if any;  
      (iii) define the responsibilities of each party in the 
event the loan becomes subject to collection, loss or 
foreclosure;  
      (iv) provide that in the event of loss, each owner shall 
share in the loss in proportion to its interest in the loan or 
loans;  
      (v) provide for the distribution of payments of principal 
to each owner proportionate to its interest in the loan or loans;
      (vi) provide for loan status reports;  
      (vii) state the terms and conditions under which the 
agreement may be terminated or modified; and 
     (d) the sale is without recourse or repurchase unless the 
agreement:  
     (i) requires repurchase of a loan because of any breach of 
warranty or misrepresentation;  
     (ii) allows the seller to repurchase at its discretion; or 
     (iii) allows substitution of one loan for another;  
     (22) in addition to the sale of loans secured by a first 
lien on real estate, to sell, pledge, discount, or otherwise 
dispose of, in whole or in part, to any source, a loan or group 
of loans, other than a self-replenishing line of credit; 
provided, that within a calendar year beginning January 1 the 
total dollar value of loans sold, other than loans secured by 
real estate or insured by a state or federal agency, shall not 
exceed 25 percent of the dollar amount of all loans and 
participating interests in loans held by the credit union at the 
beginning of the calendar year, unless otherwise authorized in 
writing by the commissioner;  
     (23) to designate the par value of the shares of the credit 
union by board resolution; 
     (24) to exercise by resolution the powers set forth in 
United States Code, title 12, section 1757, as amended through 
August 1, 1985.  Before exercising each power, the board must 
submit a plan to the commissioner of commerce detailing 
implementation of the power to be used;  
     (25) To offer self-directed individual retirement accounts 
and Keough accounts and act as custodian and trustee of these 
accounts if: 
     (1) all contributions of funds are initially made to a 
deposit, share or share certificate account in the credit union; 
     (2) any subsequent transfer of funds to other assets is 
solely at the direction of the member and the credit union 
exercises no investment discretion and provides no investment 
advice with respect to plan assets; and 
     (3) the member is clearly notified of the fact that 
National Credit Union Share Insurance Fund coverage is limited 
to funds held in deposit, share or share certificate accounts of 
National Credit Union Share Insurance Fund-insured credit unions.
     Sec. 3.  Minnesota Statutes 1986, section 82.17, 
subdivision 6, is amended to read: 
    Subd. 6.  "Trust account" means, for purposes of this 
chapter, a savings account, negotiable order of withdrawal 
account, demand deposit or checking account maintained for the 
purpose of segregating trust funds from other funds.  A trust 
account shall not be an interest bearing account except by 
agreement of the parties and subject to rules of the 
commissioner, and shall not allow the financial institution a 
right of set off against moneys owed it by the licensee. 
    Sec. 4.  Minnesota Statutes 1986, section 82.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] All trust funds received by a 
broker or the broker's salespeople shall be deposited forthwith 
upon receipt in a trust account, maintained by the broker for 
such purpose in a bank, savings and loan association, credit 
union, or an industrial loan and thrift company with deposit 
liabilities designated by the broker, except as such moneys may 
be paid to one of the parties pursuant to express written 
agreement between the parties to a transaction.  The depository 
bank shall be a Minnesota bank or trust company or any foreign 
bank and shall authorize the commissioner to examine its records 
of such deposits upon demand by the commissioner.  The 
industrial loan and thrift company shall be organized under 
chapter 53.  The savings and loan association or credit union 
shall be organized under the laws of any state or the United 
States. 
    Sec. 5.  Minnesota Statutes 1986, section 82.24, 
subdivision 2, is amended to read: 
    Subd. 2.  [LICENSEE ACTING AS PRINCIPAL.] Any licensed real 
estate broker or salesperson acting in the capacity of principal 
in the sale or rental of interests in real estate owned or 
rented by the licensee shall deposit in a Minnesota bank or 
trust company, any foreign bank which authorizes the 
commissioner to examine its records of the deposits, a savings 
and loan association, credit union or an industrial loan and 
thrift company organized under chapter 53 with deposit 
liabilities, in a trust account, those parts of all payments 
received on contracts that are necessary to meet any amounts 
concurrently due and payable on any existing mortgages, 
contracts for deed or other conveyancing instruments, and 
reserve for taxes and insurance or any other encumbrance on the 
receipts.  The deposits must be maintained until disbursement is 
made under the terms of the encumbrance and proper accounting on 
the property made to the parties entitled to an accounting.  The 
provisions of this subdivision relating to rental of interests 
in real estate apply only to single-family residential property. 
    Sec. 6.  Minnesota Statutes 1986, section 82.24, 
subdivision 6, is amended to read:  
    Subd. 6.  [NOTICE OF TRUST ACCOUNT STATUS.] The names of 
the banks, savings and loan associations, credit unions, and 
industrial loan and thrift companies and the trust account 
numbers used by a broker shall be provided to the commissioner 
at the time of application for the broker's license.  The broker 
shall immediately report to the commissioner any change of trust 
account status including changes in banks, savings and loan 
associations, credit unions, and industrial loan and thrift 
companies, account numbers, or additional accounts in the same 
or other banks, savings and loan associations, credit unions, 
and industrial loan and thrift companies.  A broker shall not 
close an existing trust account without giving ten days written 
notice to the commissioner. 
    Approved May 13, 1987

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