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2004 Minnesota Session Laws

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                            CHAPTER 203-S.F.No. 2379 
                  An act relating to commerce; regulating real estate 
                  brokers and salespersons; making various changes in 
                  real property law; recodifying the laws and rules 
                  regulating these licensees; making technical and 
                  conforming changes; amending Minnesota Statutes 2002, 
                  sections 58.13, subdivision 1; 58.16, subdivisions 2, 
                  4; 82.17, subdivision 4, by adding subdivisions; 
                  82.19, subdivisions 3, 5, by adding subdivisions; 
                  82.195; 82.196; 82.197; 82.20, subdivisions 3, 4, 8, 
                  by adding subdivisions; 82.21, by adding subdivisions; 
                  82.22, subdivisions 6, 8, 12, 13, by adding 
                  subdivisions; 82.24, subdivisions 3, 5, by adding 
                  subdivisions; 82.27, by adding a subdivision; 513.55, 
                  subdivision 1; 513.56, by adding a subdivision; 
                  515B.4-106; 515B.4-108; 559.21, subdivision 4; 
                  proposing coding for new law in Minnesota Statutes, 
                  chapters 82; 325F; 559; repealing Minnesota Statutes 
                  2002, sections 58.02, subdivision 24; 82.22, 
                  subdivision 9; Minnesota Rules, parts 2800.0100; 
                  2800.0200; 2800.0300; 2800.1100; 2800.1200; 2800.1300; 
                  2800.1400; 2800.1500; 2800.1600; 2800.1700; 2800.1750; 
                  2800.1751; 2800.1800; 2800.1900; 2800.2000; 2800.2100; 
                  2800.2150; 2805.0100; 2805.0200; 2805.0300; 2805.0400; 
                  2805.0500; 2805.0600; 2805.0700; 2805.0800; 2805.0900; 
                  2805.1000; 2805.1100; 2805.1300; 2805.1400; 2805.1500; 
                  2805.1600; 2805.1700; 2805.1800; 2805.1900; 2805.2000. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                           CHANGES IN REAL ESTATE LAW 
           Section 1.  Minnesota Statutes 2002, section 58.13, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] No person acting as a 
        residential mortgage originator or servicer, including a person 
        required to be licensed under this chapter, and no person exempt 
        from the licensing requirements of this chapter under section 
        58.04, shall: 
           (1) fail to maintain a trust account to hold trust funds 
        received in connection with a residential mortgage loan; 
           (2) fail to deposit all trust funds into a trust account 
        within three business days of receipt; commingle trust funds 
        with funds belonging to the licensee or exempt person; or use 
        trust account funds for any purpose other than that for which 
        they are received; 
           (3) unreasonably delay the processing of a residential 
        mortgage loan application, or the closing of a residential 
        mortgage loan.  For purposes of this clause, evidence of 
        unreasonable delay includes but is not limited to those factors 
        identified in section 47.206, subdivision 7, clause (d); 
           (4) fail to disburse funds according to its contractual or 
        statutory obligations; 
           (5) fail to perform in conformance with its written 
        agreements with borrowers, investors, other licensees, or exempt 
        persons; 
           (6) charge a fee for a product or service where the product 
        or service is not actually provided, or misrepresent the amount 
        charged by or paid to a third party for a product or service; 
           (7) fail to comply with sections 345.31 to 345.60, the 
        Minnesota unclaimed property law; 
           (8) violate any provision of any other applicable state or 
        federal law regulating residential mortgage loans including, 
        without limitation, sections 47.20 to 47.208; 
           (9) make or cause to be made, directly or indirectly, any 
        false, deceptive, or misleading statement or representation in 
        connection with a residential loan transaction including, 
        without limitation, a false, deceptive, or misleading statement 
        or representation regarding the borrower's ability to qualify 
        for any mortgage product; 
           (10) conduct residential mortgage loan business under any 
        name other than that under which the license or certificate of 
        exemption was issued; 
           (11) compensate, whether directly or indirectly, coerce or 
        intimidate an appraiser for the purpose of influencing the 
        independent judgment of the appraiser with respect to the value 
        of real estate that is to be covered by a residential mortgage 
        or is being offered as security according to an application for 
        a residential mortgage loan; 
           (12) issue any document indicating conditional 
        qualification or conditional approval for a residential mortgage 
        loan, unless the document also clearly indicates that final 
        qualification or approval is not guaranteed, and may be subject 
        to additional review; 
           (13) make or assist in making any residential mortgage loan 
        with the intent that the loan will not be repaid and that the 
        residential mortgage originator will obtain title to the 
        property through foreclosure; 
           (14) provide or offer to provide for a borrower, any 
        brokering or lending services under an arrangement with a person 
        other than a licensee or exempt person, provided that a person 
        may rely upon a written representation by the residential 
        mortgage originator that it is in compliance with the licensing 
        requirements of this chapter; 
           (15) claim to represent a licensee or exempt person, unless 
        the person is an employee of the licensee or exempt person or 
        unless the person has entered into a written agency agreement 
        with the licensee or exempt person; 
           (16) fail to comply with the record-keeping and 
        notification requirements identified in section 58.14 or fail to 
        abide by the affirmations made on the application for licensure; 
           (17) represent that the licensee or exempt person is acting 
        as the borrower's agent after providing the nonagency disclosure 
        required by section 58.15, unless the disclosure is retracted 
        and the licensee or exempt person complies with all of the 
        requirements of section 58.16; 
           (18) make, provide, or arrange for a residential mortgage 
        loan that is of a lower investment grade if the borrower's 
        credit score or, if the originator does not utilize credit 
        scoring or if a credit score is unavailable, then comparable 
        underwriting data, indicates that the borrower may qualify for a 
        residential mortgage loan, available from or through the 
        originator, that is of a higher investment grade, unless the 
        borrower is informed that the borrower may qualify for a higher 
        investment grade loan with a lower interest rate and/or lower 
        discount points, and consents in writing to receipt of the lower 
        investment grade loan. 
           For purposes of this section, "investment grade" refers to 
        a system of categorizing residential mortgage loans in which the 
        loans are:  (i) commonly referred to as "prime" or "subprime"; 
        (ii) commonly designated by an alphabetical character with "A" 
        being the highest investment grade; and (iii) are distinguished 
        by interest rate or discount points or both charged to the 
        borrower, which vary according to the degree of perceived risk 
        of default based on factors such as the borrower's credit, 
        including credit score and credit patterns, income and 
        employment history, debt ratio, loan-to-value ratio, and prior 
        bankruptcy or foreclosure; 
           (19) make, publish, disseminate, circulate, place before 
        the public, or cause to be made, directly or indirectly, any 
        advertisement or marketing materials of any type, or any 
        statement or representation relating to the business of 
        residential mortgage loans that is false, deceptive, or 
        misleading; 
           (20) advertise loan types or terms that are not available 
        from or through the licensee or exempt person on the date 
        advertised, or on the date specified in the advertisement.  For 
        purposes of this clause, advertisement includes, but is not 
        limited to, a list of sample mortgage terms, including interest 
        rates, discount points, and closing costs provided by licensees 
        or exempt persons to a print or electronic medium that presents 
        the information to the public; and 
           (21) use or employ phrases, pictures, return addresses, 
        geographic designations, or other means that create the 
        impression, directly or indirectly, that a licensee or other 
        person is a governmental agency, or is associated with, 
        sponsored by, or in any manner connected to, related to, or 
        endorsed by a governmental agency, if that is not the case; or 
           (22) violate section 82.176, relating to table funding. 
           Sec. 2.  Minnesota Statutes 2002, section 58.16, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTRACT PROVISIONS.] (a) A residential mortgage 
        originator who engages in the activities described in 
        subdivision 1 shall enter into a written contract with each 
        borrower and shall provide a copy of the written contract to 
        each borrower at or before the time of receipt of any fee or 
        valuable consideration paid for mortgage origination services.  
        The written contract must: 
           (1) specifically describe the services to be provided by 
        the residential mortgage originator and if the originator 
        collects an advance fee, the dates by which the services will be 
        performed; 
           (2) specifically identify whether the residential mortgage 
        originator may receive compensation from sources other than the 
        borrower in connection with the loan transaction; 
           (3) state the total amount of commission or compensation 
        that the borrower agrees to pay for the residential mortgage 
        originator's services, or the basis on which the compensation 
        will be computed; 
           (4) state the maximum rate of interest to be charged on any 
        residential mortgage loan obtained; 
           (5) contain a statement that notifies the borrower of the 
        right to cancel the contract according to subdivision 3 and 
        disclose the cancellation rights and procedures provided in 
        subdivision 3; and 
           (6) disclose, with respect to the 12-month period ending 
        ten business days before the date of the contract in question, 
        the percentage of the mortgage originator's customers for whom 
        loans have actually been funded as a result of the residential 
        mortgage originator's services.  
           (b) If an advance fee is solicited or received the contract 
        must also: 
           (1) identify the trust account into which the fees or 
        consideration will be deposited; 
           (2) set forth the circumstances under which the residential 
        mortgage originator will be entitled to disbursement from the 
        trust account; and 
           (3) set forth the circumstances under which the borrower 
        will be entitled to a refund of all or part of the fee. 
           Sec. 3.  Minnesota Statutes 2002, section 58.16, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TRUST ACCOUNT.] The residential mortgage 
        originator shall deposit in a trust account within three 
        business days all fees received before the time a loan is 
        actually funded.  The trust account must be in a financial 
        institution located within the state of Minnesota and must be 
        controlled by an unaffiliated accountant, attorney, or bank 
        officer or employee. 
           Sec. 4.  [325F.691] [UNREASONABLE DELAY IN MORTGAGE LOAN 
        CLOSING.] 
           Subdivision 1.  [PROHIBITED CONDUCT.] (a) A lender, as 
        defined in section 47.206, who causes unreasonable delay in 
        processing a loan application beyond the expiration date of an 
        interest rate or discount point agreement is liable to the 
        borrower for a penalty in an amount not to exceed the borrower's 
        actual out-of-pocket damages, including the present value of the 
        increased interest costs over the normal life of the loan, or 
        specific performance of the agreement.  This paragraph applies 
        to an agreement entered into after July 1, 2004. 
           (b) For purposes of this section, evidence of unreasonable 
        delay includes, but is not limited to: 
           (1) failure of the lender to return telephone calls or 
        otherwise respond to the borrower's inquiries concerning the 
        status of the loan; 
           (2) the addition by the lender of new requirements for 
        processing or approving the loan that were not disclosed to the 
        borrower under section 47.206, subdivision 2, clause (3), unless 
        the requirements result from governmental agency or secondary 
        mortgage market changes, other than changes in interest rates, 
        that occur after the date of the agreement; or 
           (3) failure by the lender to take actions necessary to 
        process or approve the loan within a reasonable period of time, 
        if the borrower provided information requested by the lender in 
        a timely manner. 
           Subd. 2.  [ADDITIONAL PENALTY.] In addition to the remedies 
        in subdivision 1 of this section, a lender is liable to the 
        borrower for $500 for each unreasonable delay in processing a 
        loan application which causes an interest rate or discount point 
        agreement to expire before closing. 
           Sec. 5.  Minnesota Statutes 2002, section 513.55, 
        subdivision 1, is amended to read: 
           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.  
           Sec. 6.  Minnesota Statutes 2002, section 513.56, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [EFFECT ON COMMON LAW.] The limitation on 
        disclosure in subdivisions 1 and 2 modifies any common law 
        duties with respect to disclosure of material facts. 
           Sec. 7.  Minnesota Statutes 2002, section 515B.4-106, is 
        amended to read: 
           515B.4-106 [PURCHASER'S RIGHT TO CANCEL.] 
           (a) A person required to deliver a disclosure statement 
        pursuant to section 515B.4-101(b) shall provide at least one of 
        the purchasers of the unit with a copy of the disclosure 
        statement and all amendments thereto before conveyance of the 
        unit.  If a purchaser is not given a disclosure statement more 
        than ten five days before execution of the purchase agreement, 
        the purchaser may, before conveyance, cancel the purchase 
        agreement within ten five days after first receiving the 
        disclosure statement.  If a purchaser is given the disclosure 
        statement more than ten five days before execution of the 
        purchase agreement, the purchaser may not cancel the purchase 
        agreement pursuant to this section.  Except as expressly 
        provided in this chapter, the ten-day five-day rescission period 
        cannot be waived. 
           (b) If an amendment to the disclosure statement materially 
        and adversely affects a purchaser, then the purchaser shall have 
        ten five days after delivery of the amendment to cancel the 
        purchase agreement in accordance with this section. 
           (c) If a purchaser elects to cancel a purchase agreement 
        pursuant to this section, the purchaser may do so by giving 
        notice thereof pursuant to section 515B.1-115.  Cancellation is 
        without penalty, and all payments made by the purchaser before 
        cancellation shall be refunded promptly.  Notwithstanding 
        anything in this section to the contrary, the purchaser's 
        cancellation rights under this section terminate upon the 
        purchaser's acceptance of a conveyance of the unit. 
           (d) If a declarant obligated to deliver a disclosure 
        statement fails to deliver to the purchaser a disclosure 
        statement which substantially complies with this chapter, the 
        declarant shall be liable to the purchaser in the amount of 
        $1,000, in addition to any damages or other amounts recoverable 
        under this chapter or otherwise.  Any action brought under this 
        subsection shall be commenced within the time period specified 
        in section 515B.4-115, subsection (a). 
           Sec. 8.  Minnesota Statutes 2002, section 515B.4-108, is 
        amended to read: 
           515B.4-108 [PURCHASER'S RIGHT TO CANCEL RESALE.] 
           (a) Unless a purchaser is given the information required to 
        be delivered by section 515B.4-107, by a delivery method 
        described in that section, more than ten five days prior to the 
        execution of the purchase agreement for the unit the purchaser 
        may, prior to the conveyance, cancel the purchase agreement 
        within ten five days after receiving the information.  Except as 
        expressly provided in this chapter, the ten-day five-day 
        rescission period cannot be waived. 
           (b) A purchaser who elects to cancel a purchase agreement 
        pursuant to subsection (a), may do so by hand delivering notice 
        thereof or mailing notice by postage prepaid United States mail 
        to the seller or the agent.  Cancellation is without penalty and 
        all payments made by the purchaser shall be refunded promptly. 
           Sec. 9.  Minnesota Statutes 2002, section 559.21, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LAW PREVAILS OVER CONTRACT; PROCEDURE; 
        CONDITIONS.] (a) The notice required by this section must be 
        given notwithstanding any provisions in the contract to the 
        contrary, except that earnest money contracts, purchase 
        agreements, and exercised options that are subject to this 
        section may, unless by their terms they provide for a longer 
        termination period, be terminated on 30 days' notice, or may be 
        canceled under section 559.217.  The notice must be served 
        within the state in the same manner as a summons in the district 
        court, and outside of the state, in the same manner, and without 
        securing any sheriff's return of not found, making any 
        preliminary affidavit, mailing a copy of the notice or doing any 
        other preliminary act or thing whatsoever.  Service of the 
        notice outside of the state may be proved by the affidavit of 
        the person making the same, made before an authorized officer 
        having a seal, and within the state by such an affidavit or by 
        the return of the sheriff of any county therein. 
           (b) If a person to be served is a resident individual who 
        has departed from the state, or cannot be found in the state; or 
        is a nonresident individual or a foreign corporation, 
        partnership, or association, service may be made by publication 
        as provided in this paragraph.  Three weeks' published notice 
        has the same effect as personal service of the notice.  The 
        published notice must comply with subdivision 3 and state (1) 
        that the person to be served is allowed 90 days after the first 
        date of publication of the notice to comply with the conditions 
        of the contract, and (2) that the contract will terminate 90 
        days after the first date of publication of the notice, unless 
        before the termination date the purchaser complies with the 
        notice.  If the real estate described in the contract is 
        actually occupied, then, in addition to publication, a person in 
        possession must be personally served, in like manner as the 
        service of a summons in a civil action in state district court, 
        within 30 days after the first date of publication of the 
        notice.  If an address of a person to be served is known, then 
        within 30 days after the first date of publication of the notice 
        a copy of the notice must be mailed to the person's last known 
        address by first class mail, postage prepaid. 
           (c) The contract is reinstated if, within the time 
        mentioned, the person served: 
           (1) complies with the conditions in default; 
           (2) if subdivision 1d or 2a applies, makes all payments due 
        and owing to the seller under the contract through the date that 
        payment is made; 
           (3) pays the costs of service as provided in subdivision 
        1b, 1c, 1d, or 2a; 
           (4) if subdivision 2a applies, pays two percent of the 
        amount in default, not including the final balloon payment, any 
        taxes, assessments, mortgages, or prior contracts that are 
        assumed by the purchaser; and 
           (5) pays attorneys' fees as provided in subdivision 1b, 1c, 
        1d, or 2a. 
           (d) The contract is terminated if the provisions of 
        paragraph (c) are not met. 
           (e) In the event that the notice was not signed by an 
        attorney for the seller and the seller is not present in the 
        state, or cannot be found in the state, then compliance with the 
        conditions specified in the notice may be made by paying to the 
        court administrator of the district court in the county wherein 
        the real estate or any part thereof is situated any money due 
        and filing proof of compliance with other defaults specified, 
        and the court administrator of the district court shall be 
        deemed the agent of the seller for such purposes.  A copy of the 
        notice with proof of service thereof, and the affidavit of the 
        seller, the seller's agent or attorney, showing that the 
        purchaser has not complied with the terms of the notice, may be 
        recorded with the county recorder, and is prima facie evidence 
        of the facts stated in it; but this section in no case applies 
        to contracts for the sale or conveyance of lands situated in 
        another state or in a foreign country.  If the notice is served 
        by publication, the affidavit must state that the affiant 
        believes that the party to be served is not a resident of the 
        state, or cannot be found in the state, and either that the 
        affiant has mailed a copy of the notice by first class mail, 
        postage prepaid, to the party's last known address, or that such 
        address is not known to the affiant. 
           Sec. 10.  [559.217] [DECLARATORY CANCELLATION OF PURCHASE 
        AGREEMENT.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the terms defined in this subdivision have the meanings 
        given. 
           (b) "Purchase agreement" means an earnest money contract, 
        purchase agreement, or exercised option that could be canceled 
        under section 559.21, subdivision 4, paragraph (a). 
           (c) "Residential real property" means real property, 
        including vacant land, occupied by, or intended to be occupied 
        by, one to four families as their residence. 
           Subd. 2.  [USE OF THIS SECTION.] Either the purchaser or 
        the seller may cancel a purchase agreement for residential real 
        property under this section.  If either a seller or purchaser 
        initiates a cancellation proceeding under this section and 
        before completion of the proceeding the other party initiates a 
        cancellation proceeding under this section, whether under 
        subdivision 3 or 4, the purchase agreement is deemed canceled as 
        of the date the second cancellation notice is served upon the 
        other party under this section.  Either party can later pursue 
        legal remedies at law to recover the earnest money.  A court 
        shall make a determination of which party is entitled to the 
        earnest money without regard to which party first initiated the 
        cancellation proceeding and may consider the terms of the 
        canceled purchase agreement in making its determination.  
           Subd. 3.  [CANCELLATION WITH RIGHT TO CURE.] (a) If a 
        default occurs or an unfulfilled condition exists after the date 
        specified for fulfillment in the terms of a purchase agreement 
        for the conveyance of residential real property, which does not 
        by its terms cancel the purchase agreement, the purchaser or the 
        seller may initiate a cancellation by serving upon the other 
        party to the purchase agreement and any third party that is 
        holding earnest money under the purchase agreement a notice: 
           (1) specifying the residential real property that is the 
        subject of the purchase agreement, including the legal 
        description; 
           (2) specifying the purchase agreement by date and names of 
        parties, and the unfulfilled condition or default; and 
           (3) stating that the purchase agreement will be canceled 15 
        days after service of the notice unless prior to the 
        cancellation date the party upon whom the notice is served 
        complies with the conditions in default and completes the 
        unfulfilled conditions, including, if applicable, completion of 
        the purchase or sale of the residential real property according 
        to the terms of the purchase agreement. 
           (b) The notice must be served in the manner provided in 
        section 559.21, subdivision 4, paragraphs (a) and (b). 
           (c) The purchase agreement is canceled unless, within 15 
        days after the service of the notice, the party upon whom the 
        notice was served fully complies with the conditions in default 
        and completes the unfulfilled conditions or secures from a court 
        an order suspending the cancellation. 
           Subd. 4.  [DECLARATORY CANCELLATION.] (a) If a default 
        occurs or an unfulfilled condition exists after the date 
        specified for fulfillment in the terms of a purchase agreement 
        for the conveyance of residential real property, which by the 
        terms of the purchase agreement cancels the purchase agreement, 
        either the purchaser or the seller may confirm the cancellation 
        by serving upon the other party and any third party that is 
        holding earnest money under the purchase agreement a notice: 
           (1) specifying the residential real property that is the 
        subject of the purchase agreement, including the legal 
        description; 
           (2) specifying the purchase agreement by date and names of 
        parties, and the unfulfilled condition or default; and 
           (3) stating that the purchase agreement has been canceled. 
           (b) The notice must be served in the manner provided in 
        section 559.21, subdivision 4, paragraphs (a) and (b). 
           (c) The cancellation of the purchase agreement is complete, 
        unless, within 15 days after the service of the notice, the 
        party upon whom the notice was served secures from a court an 
        order suspending the cancellation. 
           Subd. 5.  [FORM OF NOTICE OF CANCELLATION.] (a) For 
        purposes of subdivision 3, the term "notice" means a writing 
        stating the information required in subdivision 3, paragraph 
        (a), stating the name, address, and telephone number of that 
        party serving the notice or of an attorney authorized by such 
        party to serve the notice, and including the following 
        information in 12-point or larger underlined uppercase type, or 
        8-point type if published, or in large legible handwritten 
        letters: 
           "THIS NOTICE IS TO INFORM YOU THAT BY THIS NOTICE THE 
        (SELLER) (PURCHASER) (STRIKE ONE) HAS BEGUN PROCEEDINGS UNDER 
        MINNESOTA STATUTES, SECTION 559.217, TO CANCEL YOUR PURCHASE 
        AGREEMENT FOR THE (PURCHASE) (SALE) (STRIKE ONE) OF THE ABOVE 
        PROPERTY FOR THE REASONS SPECIFIED IN THIS NOTICE.  THE PURCHASE 
        AGREEMENT WILL BE CANCELED ... DAYS AFTER (SERVICE OF THIS 
        NOTICE UPON YOU) (THE FIRST DAY OF PUBLICATION OF THIS NOTICE) 
        (STRIKE ONE) UNLESS BEFORE THEN: 
           (A) YOU HAVE FULLY COMPLIED WITH ALL OF YOUR OBLIGATIONS 
        UNDER THE PURCHASE AGREEMENT THAT WERE REQUIRED TO BE PERFORMED 
        AS OF THE DATE OF SERVICE OF THIS NOTICE, INCLUDING WITHOUT 
        LIMITATION, THE ITEMS OF DEFAULT SPECIFIED IN THIS NOTICE; OR 
           (B) YOU SECURE FROM A DISTRICT COURT AN ORDER THAT THE 
        TERMINATION OF THE PURCHASE AGREEMENT BE SUSPENDED UNTIL YOUR 
        CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING, OR 
        SETTLEMENT.  YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND 
        GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES. 
           IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS 
        WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR PURCHASE 
        AGREEMENT WILL BE CANCELED AT THE END OF THE PERIOD (AND YOU 
        WILL LOSE ALL EARNEST MONEY YOU HAVE PAID ON THE PURCHASE 
        AGREEMENT) (STRIKE IF NOT APPLICABLE); AND YOU MAY LOSE YOUR 
        RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE.  IF 
        YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, CONTACT AN ATTORNEY 
        IMMEDIATELY." 
           (b) For purposes of subdivision 4, the term "notice" means 
        a writing stating the information required in subdivision 4, 
        paragraph (a), stating the name, address, and telephone number 
        of the party serving the notice or of an attorney authorized by 
        that party to serve the notice, and including the following 
        information in 12-point or larger underlined uppercase type, or 
        8-point type if published, or in large legible handwritten 
        letters: 
           "THIS NOTICE IS PURSUANT TO MINNESOTA STATUTES, SECTION 
        559.217, TO INFORM YOU THAT YOUR PURCHASE AGREEMENT FOR THE 
        (PURCHASE) (SALE) (STRIKE ONE) OF THE ABOVE PROPERTY HAS BEEN 
        CANCELED FOR THE REASONS SPECIFIED IN THIS NOTICE.  THE 
        CANCELLATION WILL BE CONFIRMED ... DAYS AFTER (SERVICE OF THIS 
        NOTICE UPON YOU) (THE FIRST DAY OF PUBLICATION OF THIS NOTICE) 
        (STRIKE ONE) UNLESS BEFORE THEN YOU SECURE FROM A DISTRICT COURT 
        AN ORDER THAT THE CONFIRMATION OF CANCELLATION OF THE PURCHASE 
        AGREEMENT BE SUSPENDED UNTIL YOUR CLAIMS OR DEFENSES ARE FINALLY 
        DISPOSED OF BY TRIAL, HEARING, OR SETTLEMENT.  YOUR ACTION MUST 
        SPECIFICALLY STATE THOSE FACTS AND GROUNDS THAT DEMONSTRATE YOUR 
        CLAIMS OR DEFENSES. 
           IF YOU DO NOT OBTAIN SUCH A COURT ORDER WITHIN THE TIME 
        PERIOD SPECIFIED IN THIS NOTICE, THE CONFIRMATION OF 
        CANCELLATION OF YOUR PURCHASE AGREEMENT WILL BE FINAL AT THE END 
        OF THE PERIOD (AND YOU WILL LOSE ALL EARNEST MONEY YOU HAVE PAID 
        ON THE PURCHASE AGREEMENT) (STRIKE IF NOT APPLICABLE); AND YOU 
        MAY LOSE YOUR RIGHT TO ASSERT ANY CLAIMS OR DEFENSES THAT YOU 
        MIGHT HAVE.  IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, 
        CONTACT AN ATTORNEY IMMEDIATELY." 
           Subd. 6.  [ATTORNEY FEES, COURT FEES, AND COSTS OF 
        SERVICE.] If the party upon whom the notice is served commences 
        a proceeding to obtain a court order to suspend the cancellation 
        of a purchase agreement under this section, the court shall 
        award court filing fees, attorney fees, and costs of service 
        actually expended to the prevailing party in an amount not to 
        exceed $3,000. 
           Subd. 7.  [AFFIDAVIT OF CANCELLATION.] (a) After a 
        cancellation under subdivision 3 or a confirmation of 
        cancellation under subdivision 4, the purchase agreement is void 
        and of no further force or effect, and, except as provided in 
        subdivision 2, any earnest money held under the purchase 
        agreement must be distributed to, and become the sole property 
        of, the party completing the cancellation of the purchase 
        agreement. 
           (b) When a cancellation under this section has been 
        completed, the party who served the notice, or that party's 
        attorney, may execute an affidavit stating that the party caused 
        a notice of cancellation to be served upon the other party, that 
        the other party neither complied with the actions required in 
        the notice, if applicable, nor obtained a court order suspending 
        the cancellation, and that the property is residential real 
        property. 
           (c) A copy of the affidavit of cancellation, when attached 
        to a copy of the notice, is prima facie evidence of the facts 
        therein stated. 
           (d) Except as provided in subdivision 2, the affidavit of 
        cancellation, when delivered to a person holding earnest money 
        under the purchase agreement, is a sufficient basis for that 
        person to release the earnest money to the party initiating the 
        cancellation. 
           (e) If either a seller or purchaser commences a 
        cancellation proceeding under this section and before completion 
        of the first proceeding the other party initiates a cancellation 
        proceeding under this section, either party or that party's 
        attorney may execute an affidavit stating that both parties 
        caused the notice of cancellation to be served upon the other 
        party and further specifying the date the second notice of 
        cancellation was served upon the other party.  A copy of the 
        affidavit of cancellation, when attached to copies of both 
        notices of cancellation, is prima facie evidence of the 
        cancellation of the purchase agreement and of the effective date 
        of the cancellation of the purchase agreement. 
           Subd. 8.  [ATTORNEY AS AGENT FOR SERVICE.] Any attorney 
        authorized to serve the notice of cancellation by a party 
        initiating a cancellation under this section is designated as 
        the attorney who may receive service as agent for the party 
        initiating the cancellation of all summons, complaints, orders, 
        and motions made in connection with an action by the party upon 
        whom the notice is served to restrain the cancellation.  Service 
        in the action may be made upon the party initiating the 
        cancellation by mailing a copy of the process to such party or 
        to such party's attorney, by first class mail, postage prepaid, 
        to the address stated in the notice. 
           Sec. 11.  [REPEALER.] 
           Minnesota Statutes 2002, section 58.02, subdivision 24, is 
        repealed. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Sections 1 to 11 are effective August 1, 2004.  Section 10 
        applies to purchase agreements entered into on or after that 
        date.  

                                   ARTICLE 2 
                                 RECODIFICATION 
           Section 1.  Minnesota Statutes 2002, section 82.17, 
        subdivision 4, is amended to read: 
           Subd. 4.  [REAL ESTATE BROKER; BROKER.] "Real estate 
        broker" or "broker" means any person who: 
           (a) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly lists, sells, exchanges, buys or 
        rents, manages, or offers or attempts to negotiate a sale, 
        option, exchange, purchase or rental of an interest or estate in 
        real estate, or advertises or holds out as engaged in these 
        activities; 
           (b) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly negotiates or offers or attempts 
        to negotiate a loan, secured or to be secured by a mortgage or 
        other encumbrance on real estate, which is not a residential 
        mortgage loan as defined by section 58.02, subdivision 18; 
           (c) "real estate broker" or "broker" as set forth in clause 
        (b) shall not apply to the originating, making, processing, 
        selling, or servicing of a loan in connection with the broker's 
        ordinary business activities by a mortgagee, lender, or servicer 
        approved or certified by the secretary of housing and urban 
        development, or approved or certified by the administrator of 
        veterans affairs, or approved or certified by the administrator 
        of the Farmers Home Administration, or approved or certified by 
        the federal Home Loan Mortgage Corporation, or approved or 
        certified by the federal National Mortgage Association; 
           (d) for another and for commission, fee, or other valuable 
        consideration or with the intention or expectation of receiving 
        the same directly or indirectly lists, sells, exchanges, buys, 
        rents, manages, offers or attempts to negotiate a sale, option, 
        exchange, purchase or rental of any business opportunity or 
        business, or its good will, inventory, or fixtures, or any 
        interest therein; 
           (d) (e) for another and for commission, fee, or other 
        valuable consideration or with the intention or expectation of 
        receiving the same directly or indirectly offers, sells or 
        attempts to negotiate the sale of property that is subject to 
        the registration requirements of chapter 83, concerning 
        subdivided land; 
           (e) (f) for another and for commission, fee, or other 
        valuable consideration or with the intention or expectation of 
        receiving the same, promotes the sale of real estate by 
        advertising it in a publication issued primarily for this 
        purpose, if the person:  
           (1) negotiates on behalf of any party to a transaction; 
           (2) disseminates any information regarding the property to 
        any party or potential party to a transaction subsequent to the 
        publication of the advertisement, except that in response to an 
        initial inquiry from a potential purchaser, the person may 
        forward additional written information regarding the property 
        which has been prepared prior to the publication by the seller 
        or broker or a representative of either; 
           (3) counsels, advises, or offers suggestions to the seller 
        or a representative of the seller with regard to the marketing, 
        offer, sale, or lease of the real estate, whether prior to or 
        subsequent to the publication of the advertisement; 
           (4) counsels, advises, or offers suggestions to a potential 
        buyer or a representative of the seller with regard to the 
        purchase or rental of any advertised real estate; or 
           (5) engages in any other activity otherwise subject to 
        licensure under this chapter; 
           (f) (g) engages wholly or in part in the business of 
        selling real estate to the extent that a pattern of real estate 
        sales is established, whether or not the real estate is owned by 
        the person.  A person shall be presumed to be engaged in the 
        business of selling real estate if the person engages as 
        principal in five or more transactions during any 12-month 
        period, unless the person is represented by a licensed real 
        estate broker or salesperson. 
           Sec. 2.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 13.  [BUSINESS OF FINANCIAL PLANNING.] "Business of 
        financial planning" means providing, or offering to provide, 
        financial planning services or financial counseling or advice, 
        on a group or individual basis.  A person who, on 
        advertisements, cards, signs, circulars, letterheads, or in any 
        other manner, indicates that the person is a "financial planner,"
        "financial counselor," "financial adviser," "investment 
        counselor," "estate planner," "investment adviser," "financial 
        consultant," or any other similar designation or title or 
        combination thereof, is considered to be representing himself or 
        herself to be engaged in the business of financial planning. 
           Sec. 3.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 14.  [ELECTRONIC AGENT.] "Electronic agent" means a 
        computer program or an electronic or other automated means used 
        independently to initiate an action or respond to electronic 
        records or performances, in whole or in part, without review or 
        action by an individual. 
           Sec. 4.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 15.  [ELECTRONIC RECORD.] "Electronic record" means a 
        record created, generated, sent, communicated, received, or 
        stored by electronic means. 
           Sec. 5.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 16.  [ELECTRONIC SIGNATURE.] "Electronic signature" 
        means an electronic sound, symbol, or process attached to or 
        logically associated with a record and executed or adopted by a 
        person with the intent to sign the record. 
           Sec. 6.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 17.  [LICENSEE.] "Licensee" means a person duly 
        licensed under this chapter. 
           Sec. 7.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 18.  [LOAN BROKER.] "Loan broker" means a licensed 
        real estate broker or salesperson who, for another and for a 
        commission, fee, or other valuable consideration or with the 
        intention or expectation of receiving the same, directly or 
        indirectly, negotiates or offers or attempts to negotiate a loan 
        secured or to be secured by a mortgage or other encumbrance on 
        real estate, or represents himself or herself or otherwise holds 
        himself or herself out as a licensed real estate broker or 
        salesperson, either in connection with any transaction in which 
        he or she directly or indirectly negotiates or offers or 
        attempts to negotiate a loan, or in connection with the conduct 
        of his or her ordinary business activities as a loan broker. 
           "Loan broker" does not include a licensed real estate 
        broker or salesperson who, in the course of representing a 
        purchaser or seller of real estate, incidentally assists the 
        purchaser or seller in obtaining financing for the real property 
        in question if the licensee does not receive a separate 
        commission, fee, or other valuable consideration for this 
        service. 
           Sec. 8.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 19.  [OVERPAYMENT.] "Overpayment" means any payment 
        of money in excess of a statutory fee or for a license for which 
        a person does not qualify. 
           Sec. 9.  Minnesota Statutes 2002, section 82.17, is amended 
        by adding a subdivision to read: 
           Subd. 20.  [OVERRIDE CLAUSE.] "Override clause" means a 
        provision in a listing agreement or similar instrument allowing 
        the broker to receive compensation when, after the listing 
        agreement has expired, the property is sold to persons with whom 
        a broker or salesperson had negotiated or exhibited the property 
        prior to the expiration of the listing agreement. 
           Sec. 10.  Minnesota Statutes 2002, section 82.17, is 
        amended by adding a subdivision to read: 
           Subd. 21.  [PRIMARY BROKER.] "Primary broker" means the 
        broker on whose behalf salespersons are licensed to act pursuant 
        to section 82.20, subdivision 6.  In the case of a corporation 
        licensed as a broker, "primary broker" means each officer of the 
        corporation who is individually licensed to act as broker for 
        the corporation.  In the case of a partnership, "primary broker" 
        means each partner licensed to act as a broker for the 
        partnership. 
           Sec. 11.  Minnesota Statutes 2002, section 82.17, is 
        amended by adding a subdivision to read: 
           Subd. 22.  [PROTECTIVE LIST.] "Protective list" means the 
        written list of names and addresses of prospective purchasers 
        with whom a licensee has negotiated the sale or rental of the 
        property or to whom a licensee has exhibited the property before 
        the expiration of the listing agreement.  For the purposes of 
        this subdivision, "property" means the property that is the 
        subject of the listing agreement in question. 
           Sec. 12.  Minnesota Statutes 2002, section 82.17, is 
        amended by adding a subdivision to read: 
           Subd. 23.  [RENTAL SERVICE.] "Rental service" means a 
        person who gathers and catalogs information concerning 
        apartments or other units of real estate available for rent, and 
        who, for a fee, provides information intended to meet the 
        individual needs of specifically identified lessors or 
        prospective lessees.  "Rental service" does not apply to 
        newspapers or other periodicals with a general circulation or 
        individual listing contracts between an owner or lessor of 
        property and a licensee. 
           Sec. 13.  Minnesota Statutes 2002, section 82.17, is 
        amended by adding a subdivision to read: 
           Subd. 24.  [SPONSOR.] "Sponsor" means a person offering or 
        providing real estate education. 
           Sec. 14.  Minnesota Statutes 2002, section 82.19, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMMISSION-SPLITTING, REBATES, AND FEES.] No 
        real estate broker, salesperson, or closing agents shall offer, 
        pay, or give, and no person shall accept, any compensation or 
        other thing of value from any real estate broker, salesperson, 
        or closing agents by way of commission-splitting, rebate, 
        finder's fees, or otherwise, in connection with any real estate 
        or business opportunity transaction.  This subdivision does not 
        apply to transactions (1) between a licensed real estate broker 
        or salesperson and the person by whom the broker or salesperson 
        is engaged to purchase or sell real estate or business 
        opportunity parties to the transaction, (2) among persons 
        licensed as provided herein, (3) between a licensed real estate 
        broker or salesperson and persons from other jurisdictions 
        similarly licensed in that jurisdiction, (4) involving timeshare 
        or other recreational lands where the amount offered or paid 
        does not exceed $150, and payment is not conditioned upon any 
        sale but is made merely for providing the referral and the 
        person paying the fee is bound by any representations the person 
        receiving the fee makes, and (5) involving a person who receives 
        a referral fee from a person or an agent of a person licensed 
        under this section, provided that in any 12-month period, no 
        recipient may earn more than the value of one month's rent, that 
        the recipient is a resident of the property or has lived there 
        within 60 days of the payment of the fee, and that the person 
        paying the fee is bound by any representations made by the 
        recipient of the fee.  A licensed real estate broker or 
        salesperson may assign or direct that commissions or other 
        compensation earned in connection with any real estate or 
        business opportunity transaction be paid to a corporation, 
        limited liability company, or sole proprietorship of which the 
        licensed real estate broker or salesperson is the sole owner. 
           Sec. 15.  Minnesota Statutes 2002, 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 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. 
           (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. 16.  Minnesota Statutes 2002, section 82.19, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [PROHIBITION ON GUARANTEEING FUTURE 
        PROFITS.] Licensees shall not, with respect to the sale or lease 
        of real property, guarantee or affirmatively encourage another 
        person to guarantee future profits or earnings that may result 
        from the purchase or lease of the real property in question 
        unless the guarantee and the assumptions upon which it is based 
        are fully disclosed and contained in the contract, purchase 
        agreement, or other instrument of sale or lease. 
           Sec. 17.  Minnesota Statutes 2002, section 82.19, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [PROHIBITION AGAINST DISCOURAGING USE OF 
        ATTORNEY.] Licensees shall not discourage prospective parties to 
        a real estate transaction from seeking the services of an 
        attorney. 
           Sec. 18.  Minnesota Statutes 2002, section 82.19, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [FRAUDULENT, DECEPTIVE, AND DISHONEST 
        PRACTICES.] (a) [PROHIBITIONS.] For the purposes of section 
        82.32, subdivision 1, clause (b), the following acts and 
        practices constitute fraudulent, deceptive, or dishonest 
        practices: 
           (1) act on behalf of more than one party to a transaction 
        without the knowledge and consent of all parties; 
           (2) act in the dual capacity of licensee and undisclosed 
        principal in any transaction; 
           (3) receive funds while acting as principal which funds 
        would constitute trust funds if received by a licensee acting as 
        an agent, unless the funds are placed in a trust account.  Funds 
        need not be placed in a trust account if a written agreement 
        signed by all parties to the transaction specifies a different 
        disposition of the funds, in accordance with section 82.27, 
        subdivision 1; 
           (4) violate any state or federal law concerning 
        discrimination intended to protect the rights of purchasers or 
        renters of real estate; 
           (5) make a material misstatement in an application for a 
        license or in any information furnished to the commissioner; 
           (6) procure or attempt to procure a real estate license for 
        himself or herself or any person by fraud, misrepresentation, or 
        deceit; 
           (7) represent membership in any real estate-related 
        organization in which the licensee is not a member; 
           (8) advertise in any manner that is misleading or 
        inaccurate with respect to properties, terms, values, policies, 
        or services conducted by the licensee; 
           (9) make any material misrepresentation or permit or allow 
        another to make any material misrepresentation; 
           (10) make any false or misleading statements, or permit or 
        allow another to make any false or misleading statements, of a 
        character likely to influence, persuade, or induce the 
        consummation of a transaction contemplated by this chapter; 
           (11) fail within a reasonable time to account for or remit 
        any money coming into the licensee's possession which belongs to 
        another; 
           (12) commingle with his or her own money or property trust 
        funds or any other money or property of another held by the 
        licensee; 
           (13) demand from a seller a commission to compensation 
        which the licensee is not entitled, knowing that he or she is 
        not entitled to the commission compensation; 
           (14) pay or give money or goods of value to an unlicensed 
        person for any assistance or information relating to the 
        procurement by a licensee of a listing of a property or of a 
        prospective buyer of a property (this item does not apply to 
        money or goods paid or given to the parties to the transaction); 
           (15) fail to maintain a trust account at all times, as 
        provided by law; 
           (16) engage, with respect to the offer, sale, or rental of 
        real estate, in an anticompetitive activity; 
           (17) represent on advertisements, cards, signs, circulars, 
        letterheads, or in any other manner, that he or she is engaged 
        in the business of financial planning unless he or she provides 
        a disclosure document to the client.  The document must be 
        signed by the client and a copy must be left with the client.  
        The disclosure document must contain the following: 
           (i) the basis of fees, commissions, or other compensation 
        received by him or her in connection with rendering of financial 
        planning services or financial counseling or advice in the 
        following language: 
           "My compensation may be based on the following: 
           (a) ... commissions generated from the products I sell you; 
           (b) ... fees; or 
           (c) ... a combination of (a) and (b).  [Comments]"; 
           (ii) the name and address of any company or firm that 
        supplies the financial services or products offered or sold by 
        him or her in the following language: 
           "I am authorized to offer or sell products and/or services 
        issued by or through the following firm(s): 
           [List] 
           The products will be traded, distributed, or placed through 
        the clearing/trading firm(s) of: 
           [List]"; 
           (iii) the license(s) held by the person under this chapter 
        or chapter 60A or 80A in the following language: 
           "I am licensed in Minnesota as a(n): 
           (a) ... insurance agent; 
           (b) ... securities agent or broker/dealer; 
           (c) ... real estate broker or salesperson; 
           (d) ... investment adviser"; and 
           (iv) the specific identity of any financial products or 
        services, by category, for example mutual funds, stocks, or 
        limited partnerships, the person is authorized to offer or sell 
        in the following language: 
           "The license(s) entitles me to offer and sell the following 
        products and/or services: 
           (a) ... securities, specifically the following:  [List]; 
           (b) ... real property; 
           (c) ... insurance; and 
           (d) ... other:  [List]." 
           (b) [DETERMINING VIOLATION.] A licensee shall be deemed to 
        have violated this section if the licensee has been found to 
        have violated sections 325D.49 to 325D.66, by a final decision 
        or order of a court of competent jurisdiction. 
           (c) [COMMISSIONER'S AUTHORITY.] Nothing in this section 
        limits the authority of the commissioner to take actions against 
        a licensee for fraudulent, deceptive, or dishonest practices not 
        specifically described in this section. 
           Sec. 19.  [82.191] [COMPENSATION.] 
           Subdivision 1.  [LICENSEE TO RECEIVE ONLY FROM BROKER.] A 
        licensee shall not accept a commission compensation or other 
        valuable consideration for the performance of any acts requiring 
        a real estate license from any person except the real estate 
        broker to whom the licensee is licensed or to whom the licensee 
        was licensed at the time of the transaction. 
           Subd. 2.  [UNDISCLOSED COMPENSATION.] A licensee shall not 
        accept, give, or charge any undisclosed compensation or realize 
        any direct or indirect remuneration that inures to the benefit 
        of the licensee on an expenditure made for a principal. 
           Subd. 3.  [LIMITATION ON BROKER WHEN TRANSACTION NOT 
        COMPLETED.] When the owner fails or is unable to consummate a 
        real estate transaction, through no fault of the purchaser, the 
        listing broker may not claim any portion of any trust funds 
        deposited with the broker by the purchaser, absent a separate 
        agreement with the purchaser. 
           Sec. 20.  Minnesota Statutes 2002, section 82.195, is 
        amended to read: 
           82.195 [LISTING AGREEMENTS.] 
           Subdivision 1. (a)  [REQUIREMENT.] Licensees shall obtain a 
        signed listing agreement or other signed written authorization 
        from the owner of real property or from another person 
        authorized to offer the property for sale or lease before 
        advertising to the general public that the real property is 
        available for sale or lease.  
           For the purposes of this section "advertising" includes 
        placing a sign on the owner's property that indicates that the 
        property is being offered for sale or lease.  
           Subd. 2. (b)  [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 COMPENSATION FOR THE SALE, LEASE, RENTAL, OR 
        MANAGEMENT OF REAL PROPERTY SHALL BE DETERMINED BETWEEN EACH 
        INDIVIDUAL BROKER AND THE BROKER'S CLIENT."; 
           (8) for residential property listings, the following "dual 
        agency" disclosure statement: 
           If a buyer represented by broker wishes to buy your the 
        seller's property, a dual agency will be created.  This means 
        that broker will represent both you the seller(s) and the 
        buyer(s), and owe the same duties to the buyer(s) that broker 
        owes to you the seller(s).  This conflict of interest will 
        prohibit broker from advocating exclusively on your the seller's 
        behalf.  Dual agency will limit the level of representation 
        broker can provide.  If a dual agency should arise, you the 
        seller(s) will need to agree that confidential information about 
        price, terms, and motivation will still be kept confidential 
        unless you the seller(s) instruct broker in writing to disclose 
        specific information about you the seller(s).  All other 
        information will be shared.  Broker cannot act as a dual agent 
        unless both you the seller(s) and the buyer(s) agree to it.  By 
        agreeing to a possible dual agency, you the seller(s) will be 
        giving up the right to exclusive representation in an in-house 
        transaction.  However, if you the seller(s) should decide not to 
        agree to a possible dual agency, and you the seller(s) want 
        broker to represent you the seller(s), you the seller(s) may 
        give up the opportunity to sell your the 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(s) will not agree to a dual agency
                    representation and will not consider offers
                    made by buyers represented by broker. 
           
           
        .........................      ......................... 
        Seller                         Broker Real Estate Company Name
           
           
        .........................      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; 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.  
           Subd. 3. (c)  [PROHIBITED PROVISIONS.] Except as otherwise 
        provided in subdivision 4, paragraph (b) (d)(ii), licensees 
        shall not include in a listing agreement a holdover clause, 
        automatic extension, or any similar provision, or an override 
        clause the length of which is more than six months after the 
        expiration of the listing agreement. 
           Subd. 4. (d)  [OVERRIDE CLAUSES.] (a) (i) Licensees shall 
        not seek to enforce an override clause unless a protective list 
        has been furnished to the seller within 72 hours after the 
        expiration of the listing agreement.  
           (b) (ii) A listing agreement may contain an override clause 
        of up to two years in length when used in conjunction with the 
        purchase or sale of a business.  The length of the override 
        clause must be negotiable between the licensee and the seller of 
        the business.  The protective list provided in connection with 
        the override clause must include the written acknowledgment of 
        each party named on the protective list, that the business which 
        is the subject of the listing agreement was presented to that 
        party by the licensee. 
           Subd. 5. (e)  [PROTECTIVE LISTS.] A broker or salesperson 
        has the burden of demonstrating that each person on the 
        protective list has, during the period of the listing agreement, 
        either made an affirmative showing of interest in the property 
        by responding to an advertisement or by contacting the broker or 
        salesperson involved or has been physically shown the property 
        by the broker or salesperson.  For the purpose of this section, 
        the mere mailing or other distribution by a licensee of 
        literature setting forth information about the property in 
        question does not, of itself, constitute an affirmative showing 
        of interest in the property on the part of a subsequent 
        purchaser.  
           For listings of nonresidential real property which do not 
        contain the notice described in subdivision 2 paragraph (b), 
        clause (10), the protective list must contain the following 
        notice in boldface type: 
           "IF YOU RELIST WITH ANOTHER BROKER WITHIN THE OVERRIDE 
        PERIOD AND THEN SELL YOUR PROPERTY TO ANYONE WHOSE NAME APPEARS 
        ON THIS LIST, YOU COULD BE LIABLE FOR FULL COMMISSIONS TO BOTH 
        BROKERS.  IF THIS NOTICE IS NOT FULLY UNDERSTOOD, SEEK COMPETENT 
        ADVICE." 
           Sec. 21.  Minnesota Statutes 2002, section 82.196, is 
        amended to read: 
           82.196 [BUYER'S BROKER AGREEMENTS.] 
           Subdivision 1. (a)  [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. 
           Subd. 2. (b)  [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 clear statement explaining if the agreement may be 
        canceled and the terms under which the agreement may be 
        canceled; 
           (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 
        boldface type immediately preceding any provision of the buyer's 
        broker agreement relating to compensation of the licensee: 
           "NOTICE:  THE COMPENSATION FOR THE PURCHASE, LEASE, RENTAL, 
        OR MANAGEMENT OF REAL PROPERTY SHALL BE DETERMINED BETWEEN EACH 
        INDIVIDUAL BROKER AND THE BROKER'S CLIENT."; 
           (7) the following "dual agency" disclosure statement: 
           If you the buyer(s) choose(s) to purchase a property listed 
        by broker, a dual agency will be created.  This means that 
        broker will represent both you the buyer(s) and the seller(s), 
        and owe the same duties to the seller(s) that broker owes to you 
        the buyer(s).  This conflict of interest will prohibit broker 
        from advocating exclusively on your the buyer's behalf.  Dual 
        agency will limit the level of representation broker can 
        provide.  If a dual agency should arise, you the buyer(s) will 
        need to agree that confidential information about price, terms, 
        and motivation will still be kept confidential unless you the 
        buyer(s) instruct broker in writing to disclose specific 
        information about you the buyer(s).  All other information will 
        be shared.  Broker cannot act as a dual agent unless both you 
        the buyer(s) and the seller(s) agree to it.  By agreeing to a 
        possible dual agency, you the buyer(s) will be giving up the 
        right to exclusive representation in an in-house transaction.  
        However, if you the buyer(s) should decide not to agree to a 
        possible dual agency, and you the buyer(s) want(s) broker to 
        represent you the buyer(s), you the buyer(s) 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(s) will not agree to a dual agency 
                     representation and will not consider 
                     properties listed by broker. 
           
           
        .........................      ......................... 
        Buyer                          Broker Real Estate Company Name
           
        .........................      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. 
           Subd. 3. (c)  [PROHIBITED PROVISIONS.] Licensees shall not 
        include in a buyer's broker agreement a holdover clause, 
        automatic extension, or any other similar provision, or an 
        override clause the length of which is more than six months 
        after the expiration of the buyer's broker agreement.  
           Subd. 4. (d)  [OVERRIDE CLAUSES.] Licensees shall not seek 
        to enforce an override clause unless a protective list has been 
        furnished to the buyer within 72 hours after the expiration of 
        the buyer's broker agreement.  
           Subd. 5. (e)  [PROTECTIVE LISTS.] A licensee has the burden 
        of demonstrating that each property on the protective list has 
        been shown to the buyer, or specifically brought to the 
        attention of the buyer, during the time the buyer's broker 
        agreement was in effect.  
           Subd. 6. (f)  [APPLICATION.] This section applies only to 
        residential real property transactions. 
           Sec. 22.  Minnesota Statutes 2002, section 82.197, is 
        amended to read: 
           82.197 [DISCLOSURE REQUIREMENTS.] 
           Subdivision 1.  [ADVERTISING.] Each licensee shall identify 
        himself or herself as either a broker or an agent salesperson in 
        any advertising for the purchase, sale, lease, exchange, 
        mortgaging, transfer, or other disposition of real property, 
        whether the advertising pertains to the licensee's own property 
        or the property of others. 
           Subd. 2.  [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 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.  The disclosures required by this subdivision apply 
        only to residential real property transactions. 
           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 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 
           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.  
           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.  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 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). 
           
           
           
        ****************************************************************
           (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 
        use and enjoyment of the property. 
           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. 
           Subd. 5.  [APPLICATION CREATION OF DUAL AGENCY.] The 
        disclosures required by subdivision 4 apply only to residential 
        real property transactions. 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 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 it 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
           Subd. 6.  [AGENT OF BROKER DISCLOSURE.] A salesperson shall 
        only conduct business under the licensed name of and on behalf 
        of the broker to whom the salesperson is licensed.  An 
        individual broker shall only conduct business under the broker's 
        licensed name.  A broker licensed to a corporation or 
        partnership shall only conduct business under the licensed 
        corporate or partnership name.  A licensee shall affirmatively 
        disclose, before the negotiation or consummation of any 
        transaction, the licensed name of the broker under whom the 
        licensee is authorized to conduct business in accordance with 
        this section. 
           Subd. 7.  [FINANCIAL INTERESTS DISCLOSURE; LICENSEE.] (a) 
        Prior to the negotiation or consummation of any transaction, a 
        licensee shall affirmatively disclose to the owner of real 
        property that the licensee is a real estate broker or agent 
        salesperson, and in what capacity the licensee is acting, if the 
        licensee directly, or indirectly through a third party, 
        purchases for himself or herself or acquires, or intends to 
        acquire, any interest in, or any option to purchase, the owner's 
        property. 
           (b) 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. 
           Subd. 6. 8.  [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; 
           (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.  
           (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). 
           (f) The limitation on disclosures set forth in paragraphs 
        (b) and (c) shall modify any common law duties with respect to 
        disclosure of material facts. 
           Subd. 9.  [NONPERFORMANCE OF ANY PARTY.] If a licensee is 
        put on notice by any party to a real estate transaction that the 
        party will not perform in accordance with the terms of a 
        purchase agreement or other similar written agreement to convey 
        real estate, the licensee shall immediately disclose the fact of 
        that party's intent not to perform to the other party or parties 
        to the transaction.  Whenever reasonably possible, the licensee 
        shall inform the party who will not perform of the licensee's 
        obligation to disclose this fact to the other party or parties 
        to the transaction prior to making the disclosure.  The 
        obligation required by this section shall not apply to notice of 
        a party's inability to keep or fulfill any contingency to which 
        the real estate transaction has been made subject. 
           Sec. 23.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [ADDITIONAL BROKER'S LICENSE.] An individual who 
        holds a broker's license in his or her own name or for or on 
        behalf of a corporation or partnership must be issued an 
        additional broker's license only upon demonstrating that the 
        additional license is necessary in order to serve a legitimate 
        business purpose; that the broker will be capable of supervising 
        all salespersons over whom he or she will have supervisory 
        responsibility or, in the alternative, that the broker will have 
        no supervisory responsibilities under the additional license; 
        and that the broker has a substantial ownership interest in each 
        corporation or partnership for or on whose behalf he or she 
        holds or will hold a broker's license. 
           The requirement of a substantial ownership interest does 
        not apply where the broker seeking the additional license or 
        licenses is an officer of a corporation for or on whose behalf 
        the broker already holds a license and the broker is applying 
        for the additional license or licenses for or on behalf of an 
        affiliated corporation or corporations of which he or she is 
        also an officer.  For the purpose of this section, "affiliated 
        corporation" means a corporation which is directly or indirectly 
        controlled by the same persons as the corporation for or on 
        whose behalf the broker is already licensed to act. 
           For the purposes of this section, a legitimate business 
        purpose includes engaging in a different and specialized area of 
        real estate or maintaining an existing business name. 
           Sec. 24.  Minnesota Statutes 2002, section 82.20, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPLICATION FOR LICENSE; CONTENTS.] (a) Every 
        applicant for a license as a real estate broker, real estate 
        salesperson, or closing agent shall make an application in 
        writing upon forms prepared and furnished by the commissioner. 
        Each application shall be signed and sworn to by the applicant 
        and shall be accompanied by the license fee required by this 
        chapter.  
           (b) Each application for a real estate broker license, real 
        estate salesperson license, or real estate closing agent license 
        shall contain such information as required by the commissioner 
        consistent with the administration of the provisions and 
        purposes of this chapter.  
           (c) Each application for a real estate salesperson license 
        shall give the applicant's name, age, residence address, and the 
        name and place of business of the real estate broker on whose 
        behalf the salesperson is to be acting. 
           (d) Each application for a real estate closing agent 
        license shall give the applicant's name, age, residence address, 
        and the name and place of business of the closing agent. 
           (e) The commissioner may require such further information 
        as the commissioner deems appropriate to administer the 
        provisions and further the purposes of this chapter. 
           (f) Applicants for a real estate salesperson license shall 
        submit to the commissioner, along with the application for 
        licensure, a copy of the course completion certificate for 
        courses I, II, and III. 
           Sec. 25.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [APPLICATION FOR BROKER'S LICENSE.] After 
        successful completion of the real estate broker's examination, 
        an individual shall have one year from the date of the 
        examination to apply for a broker's license, unless the 
        individual is a salesperson who remains continuously active in 
        the real estate field as a licensee.  Failure to apply for the 
        broker's license or to remain continuously active in the real 
        estate field will necessitate a reexamination. 
           Sec. 26.  Minnesota Statutes 2002, section 82.20, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CORPORATE AND PARTNERSHIP LICENSES.] (a) A 
        corporation applying for a license shall have at least one 
        officer individually licensed to act as broker for the 
        corporation.  The corporation broker's license shall extend no 
        authority to act as broker to any person other than the 
        corporate entity.  Each officer who intends to act as a broker 
        shall obtain a license. 
           (b) A partnership applying for a license shall have at 
        least one partner individually licensed to act as broker for the 
        partnership.  Each partner who intends to act as a broker shall 
        obtain a license. 
           (c) Applications for a license made by a corporation shall 
        be verified by the president and one other officer.  
        Applications made by a partnership shall be verified by at least 
        two partners. 
           (d) Any partner or officer who ceases to act as broker for 
        a partnership or corporation shall notify the commissioner upon 
        said termination.  The individual licenses of all salespersons 
        acting on behalf of a corporation or partnership, are 
        automatically ineffective upon the revocation or suspension of 
        the license of the partnership or corporation.  The commissioner 
        may suspend or revoke the license of an officer or partner 
        without suspending or revoking the license of the corporation or 
        partnership. 
           (e) The application of all officers of a corporation or 
        partners in a partnership who intend to act as a broker on 
        behalf of a corporation or partnership shall accompany the 
        initial license application of the corporation or partnership.  
        Officers or partners intending to act as brokers subsequent to 
        the licensing of the corporation or partnership shall procure an 
        individual real estate broker's license prior to acting in the 
        capacity of a broker.  No corporate officer who maintains a 
        salesperson's license may exercise any authority over any trust 
        account administered by the broker nor may they be vested with 
        any supervisory authority over the broker. 
           (f) The corporation or partnership applicant shall make 
        available upon request, such records and data required by the 
        commissioner for enforcement of this chapter. 
           (g) The commissioner may require further information, as 
        the commissioner deems appropriate, to administer the provisions 
        and further the purposes of this chapter. 
           Sec. 27.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 7a.  [AUTOMATIC TRANSFER OF SALESPERSON'S LICENSE.] A 
        salesperson may utilize the automatic license transfer 
        provisions of subdivision 9, clause (b), if the salesperson 
        commences association with the broker to whom the salesperson is 
        transferring, as evidenced by the dates of the signatures of 
        both brokers on the form prescribed by the commissioner, within 
        five days after terminating the salesperson's association with 
        the broker from whom the salesperson is transferring, provided 
        the salesperson's educational requirements are not past due. 
           A salesperson may not utilize the automatic license 
        transfer provisions of subdivision 9, clause (b), if the sales 
        person has failed to notify the commissioner within ten days of 
        any change of information contained in the salesperson's license 
        application on file with the commissioner or of a civil 
        judgment, disciplinary action, or criminal offense, which notice 
        is required pursuant to section 82.20, subdivision 11. 
           Sec. 28.  Minnesota Statutes 2002, section 82.20, 
        subdivision 8, is amended to read: 
           Subd. 8.  [TIMELY RENEWALS.] (a) Persons whose applications 
        have been properly and timely filed who have not received notice 
        of denial of renewal are deemed to have been approved for 
        renewal and may continue to transact business either as a real 
        estate broker, salesperson, or closing agent whether or not the 
        renewed license has been received on or before July 1 of the 
        renewal year.  Application for renewal of a license shall be 
        deemed to have been timely filed if received by the commissioner 
        by, or mailed with proper postage and postmarked by, June 15 of 
        the renewal year.  Applications for renewal shall be deemed 
        properly filed if made upon forms duly executed and sworn to, 
        accompanied by fees prescribed by this chapter and contain any 
        information which the commissioner may require.  
           (b) Persons who have failed to make a timely application 
        for renewal of a license and who have not received the renewal 
        license as of July 1 of the renewal year, shall be unlicensed 
        until such time as the license has been issued by the 
        commissioner and is received. 
           Sec. 29.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [PROCEDURE.] An application for automatic 
        transfer shall be made only on the form prescribed by the 
        commissioner.  The transfer is ineffective if the form is not 
        completed in its entirety.  
           The form shall be accompanied by a $10 transfer fee, and 
        the license renewal fee, if applicable.  Cash will not be 
        accepted. 
           The signature of the broker from whom the salesperson is 
        transferring must predate the signature of the broker to whom 
        the salesperson is transferring.  The salesperson is unlicensed 
        for the period of time between the times and dates of both 
        signatures.  The broker from whom the salesperson is 
        transferring shall sign and date the transfer application upon 
        the request of the salesperson and shall destroy the 
        salesperson's license immediately. 
           Sec. 30.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 9a.  [EFFECTIVE DATE.] (a) The transfer is effective 
        when the broker to whom the salesperson is transferring signs 
        and dates the transfer application form, provided the 
        commissioner receives the form and fee within 72 hours after the 
        date and time of the new broker's signature, either by certified 
        mail, or personal delivery to the commissioner's office.  The 
        commissioner may accept an application for license transfer made 
        by an electronic agent or an electronic record with an 
        electronic signature if the commissioner has the capability of 
        accepting the application electronically.  In the event of a 
        delay in mail delivery, an application postmarked within 24 
        hours of the date of the signature of the new broker shall be 
        deemed timely received.  The properly executed automatic 
        transfer form serves as a temporary real estate license for no 
        more than 45 days. 
           (b) The transfer is ineffective if the fee is paid by means 
        of a check, draft, or other negotiable or nonnegotiable 
        instrument or order of withdrawal drawn on an account with 
        insufficient funds. 
           (c) The salesperson shall retain the certified mail return 
        receipt, if the transfer application is delivered to the 
        commissioner by mail, retain a photocopy of the executed 
        transfer application, and provide a photocopy of the executed 
        transfer application to the broker from whom the salesperson is 
        transferring. 
           (d) The real estate salesperson automatic transfer must be 
        in the form prescribed by the commissioner. 
           Sec. 31.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 11a.  [MANDATORY.] Licensees shall notify the 
        commissioner of the facts in subdivisions 11b to 11d. 
           Sec. 32.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 11b.  [CIVIL JUDGMENT.] Licensees must notify the 
        commissioner in writing within ten days of a final adverse 
        decision or order of a court, whether or not the decision or 
        order is appealed, regarding any proceeding in which the 
        licensee was named as a defendant, and which alleged fraud, 
        misrepresentation, or the conversion of funds, if the final 
        adverse decision relates to the allegations of fraud, 
        misrepresentation, or the conversion of funds. 
           Sec. 33.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 11c.  [DISCIPLINARY ACTION.] The licensee must notify 
        the commissioner in writing within ten days of the suspension or 
        revocation of the licensee's real estate or other occupational 
        license issued by this state or another jurisdiction. 
           Sec. 34.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read:  
           Subd. 11d.  [CRIMINAL OFFENSE.] The licensee must notify 
        the commissioner in writing within ten days if the licensee is 
        charged with, adjudged guilty of, or enters a plea of guilty or 
        nolo contendere to a charge of any felony, or of any gross 
        misdemeanor alleging fraud, misrepresentation, conversion of 
        funds, or a similar violation of any real estate licensing law. 
           Sec. 35.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read:  
           Subd. 12a.  [TEMPORARY BROKER'S PERMIT.] In the event of 
        death or incapacity of a broker, the commissioner may issue a 
        45-day temporary permit to an individual who has had a minimum 
        of two years actual experience as a licensed real estate 
        salesperson and who is otherwise reasonably qualified to act as 
        a broker.  Upon application prior to its expiration, the 45-day 
        temporary permit shall be renewed once by the commissioner if 
        the applicant demonstrates that he or she has made a good faith 
        effort to obtain a broker's license within the preceding 45 days 
        and an extension of time will not harm the public interest. 
           Only those salespersons licensed to the deceased or 
        incapacitated broker at the time of death or incapacity may 
        conduct business for or on behalf of the person to whom the 
        temporary broker's license was issued. 
           Sec. 36.  Minnesota Statutes 2002, section 82.20, is 
        amended by adding a subdivision to read: 
           Subd. 14a.  [WITHDRAWAL OF LICENSE OR APPLICATION.] A 
        licensee or license applicant may at any time file with the 
        commissioner a request to withdraw from the status of licensee 
        or to withdraw a pending license application.  Withdrawal from 
        the status of licensee or withdrawal of the license application 
        becomes effective 30 days after receipt of a request to withdraw 
        or within a shorter period the commissioner determines unless a 
        revocation, suspension, or denial proceeding is pending when the 
        request to withdraw is filed or a proceeding to revoke, suspend, 
        deny, or to impose conditions upon the withdrawal is instituted 
        within 30 days after the request to withdraw is filed.  If a 
        proceeding is pending or instituted, withdrawal becomes 
        effective at the time and upon the conditions the commissioner 
        determines by order.  If no proceeding is pending or instituted 
        and withdrawal automatically becomes effective, the commissioner 
        may institute a revocation or suspension proceeding within one 
        year after withdrawal became effective and enter a revocation or 
        suspension order as of the last date on which the license was in 
        effect. 
           Sec. 37.  [82.201] [COMPUTATION OF TIME.] 
           Subdivision 1.  [DAYS.] Where performing or doing any act, 
        duty, matter, payment, or thing is ordered or directed, and the 
        period of time or duration for performing or doing it is 
        prescribed and fixed by law, rule, or order, the time, except as 
        otherwise provided in subdivision 2, is computed so as to 
        exclude the first and include the last day of any such 
        prescribed or fixed period or duration of time.  When the last 
        day of the period falls on Sunday or on any day made a legal 
        holiday, by the laws of this state or of the United States, the 
        day is omitted from the computation. 
           Subd. 2.  [MONTHS.] When the lapse of a number of months 
        before or after a certain day is required by law, rule, or 
        order, the number of months is computed by counting the months 
        from the day, excluding the calendar month in which the day 
        occurs, and including the day of the month in the last month so 
        counted having the same numerical order as the day of the month 
        from which the computation is made, unless there be not so many 
        days in the last month so counted, in which case the period 
        computed shall expire with the last day of the month so counted. 
           Sec. 38.  Minnesota Statutes 2002, section 82.21, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [CASH NOT ACCEPTED.] All fees must be paid by 
        check, draft, credit card, or other negotiable or nonnegotiable 
        instrument or order of withdrawal that is drawn against funds 
        held by a financial institution.  Cash will not be accepted. 
           Sec. 39.  Minnesota Statutes 2002, section 82.21, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [OVERPAYMENT OF FEES.] An overpayment of a fee 
        paid pursuant to this chapter shall be refunded within a 
        reasonable time after a letter requesting the refund is received 
        by the commissioner and signed by the person making the 
        overpayment. 
           Refunds shall not be given for other than overpayment of 
        fees.  A request for a refund of an overpayment must be received 
        by the commissioner within six months of the date of deposit or 
        it will be forfeited. 
           Sec. 40.  Minnesota Statutes 2002, section 82.22, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [WAIVERS.] The commissioner may waive the real 
        estate licensing experience requirement for the broker's 
        examination. 
           (a) An applicant for a waiver shall provide evidence of: 
           (1) successful completion of a minimum of 90 quarter 
        credits or 270 classroom hours of real estate-related studies; 
           (2) a minimum of five consecutive years of practical 
        experience in real estate-related areas; or 
           (3) successful completion of 30 credits or 90 classroom 
        hours and three consecutive years of practical experience in 
        real estate-related areas. 
           (b) A request for a waiver shall be submitted to the 
        commissioner in writing and be accompanied by documents 
        necessary to evidence qualification as set forth in paragraph 
        (a). 
           (c) The waiver will lapse if the applicant fails to 
        successfully complete the broker's examination within one year 
        from the date of the granting of the waiver. 
           Sec. 41.  Minnesota Statutes 2002, section 82.22, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [FAILURE TO RENEW LICENSE.] If a license lapses 
        or becomes ineffective due to the licensee's failure to file a 
        timely renewal application or otherwise, the commissioner may 
        institute a revocation or suspension proceeding 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. 
           Sec. 42.  Minnesota Statutes 2002, section 82.22, 
        subdivision 6, is amended to read: 
           Subd. 6.  [INSTRUCTION; NEW LICENSES.] (a) Every applicant 
        for a salesperson's license shall be required to successfully 
        complete a course of study in the real estate field consisting 
        of 30 hours of instruction approved by the commissioner before 
        taking the examination specified in subdivision 1.  Every 
        applicant for a salesperson's license shall be required to 
        successfully complete an additional course of study in the real 
        estate field consisting of 60 hours of instruction approved by 
        the commissioner, of which three hours shall consist of training 
        in state and federal fair housing laws, regulations, and rules, 
        and of which two hours must consist of training in laws and 
        regulations on agency representation and disclosure, before 
        filing an application for the license.  This subdivision does 
        not apply to salespeople licensed in Minnesota before July 1, 
        1969. 
           (b) The commissioner may approve courses of study in the 
        real estate field offered in educational institutions of higher 
        learning in this state or courses of study in the real estate 
        field developed by and offered under the auspices of the 
        National Association of Realtors, its affiliates, or private 
        real estate schools.  The commissioner shall not approve any 
        course offered by, sponsored by, or affiliated with any person 
        or company licensed to engage in the real estate business.  The 
        commissioner may by rule prescribe the curriculum and 
        qualification of those employed as instructors. 
           (c) An applicant for a broker's license must successfully 
        complete a course of study in the real estate field consisting 
        of 30 hours of instruction approved by the commissioner, of 
        which three hours shall consist of training in state and federal 
        fair housing laws, regulations, and rules.  The course must have 
        been completed within 12 months prior to the date of application 
        for the broker's license. 
           (d) (c) An applicant for a real estate closing agent's 
        license must successfully complete a course of study relating to 
        closing services consisting of eight hours of instruction 
        approved by the commissioner. 
           Sec. 43.  Minnesota Statutes 2002, section 82.22, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [CHANGE OF APPLICATION INFORMATION.] The 
        commissioner must be notified in writing of a change of 
        information contained in the license application on file with 
        the commissioner within ten days of the change. 
           Sec. 44.  Minnesota Statutes 2002, section 82.22, is 
        amended by adding a subdivision to read: 
           Subd. 6b.  [CANCELLATION OF SALESPERSON'S OR BROKER'S 
        LICENSE.] A salesperson's or broker's license that has been 
        canceled for failure of a licensee to complete postlicensing 
        education requirements must be returned to the commissioner by 
        the licensee's broker within ten days of receipt of notice of 
        cancellation.  The license shall be reinstated without 
        reexamination by completing the required instruction, filing an 
        application, and paying the fee for a salesperson's or broker's 
        license within two years of the cancellation date. 
           Sec. 45.  Minnesota Statutes 2002, section 82.22, is 
        amended by adding a subdivision to read: 
           Subd. 6c.  [PASSING GRADE FOR EXAMINATION.] A passing grade 
        for a salesperson's and broker's examination shall be a score of 
        75 percent or higher on the uniform portion and a score of 75 
        percent or higher on the state portion of the examination. 
           The commissioner shall not accept the scores of a person 
        who has cheated on an examination.  Cheating on a real estate 
        examination shall be grounds for denying an application for a 
        broker's or salesperson's license. 
           Sec. 46.  Minnesota Statutes 2002, section 82.22, 
        subdivision 8, is amended to read: 
           Subd. 8.  [DURATION.] No renewal of a salesperson's license 
        shall be effective beyond a date two years after the granting of 
        such salesperson's license unless the salesperson has furnished 
        evidence of compliance with either subdivisions 6 or 7 section 
        82.22, subdivision 6.  The commissioner shall cancel the license 
        of any salesperson who fails to comply with subdivisions 6 or 7 
        section 82.22, subdivision 6.  This subdivision shall not apply 
        to salespeople licensed in Minnesota prior to July 1, 1969. 
           Sec. 47.  Minnesota Statutes 2002, section 82.22, 
        subdivision 12, is amended to read: 
           Subd. 12.  [RECIPROCITY.] The requirements of this 
        section subdivisions 6 and 13 may be waived for individuals of 
        other jurisdictions, provided:  (1) a written reciprocal 
        licensing agreement is in effect between the commissioner and 
        the licensing officials of that jurisdiction, (2) the individual 
        is licensed in that jurisdiction, and (3) the licensing 
        requirements of that jurisdiction are substantially similar to 
        the provisions of this chapter. 
           Sec. 48.  Minnesota Statutes 2002, section 82.22, 
        subdivision 13, is amended to read: 
           Subd. 13.  [CONTINUING EDUCATION.] (a) 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 the initial license 
        period and during each succeeding 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.  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 may adopt rules defining the 
        standards for course and instructor approval, and may adopt 
        rules for the proper administration of this subdivision 
        prelicense instruction as required under section 82.22, 
        subdivision 6, and continuing education as required under this 
        section.  The commissioner may not approve a course which can be 
        completed by the student at home or outside the classroom 
        without the supervision of an instructor except accredited 
        courses using new delivery technology, including interactive 
        technology, and the Internet.  The commissioner may approve 
        courses of study in the real estate field offered in educational 
        institutions of higher learning in this state or courses of 
        study in the real estate field developed by and offered under 
        the auspices of the National Association of Realtors, its 
        affiliates, or private real estate schools.  Courses in 
        motivation, salesmanship, psychology, or time management shall 
        not be approved by the commissioner for continuing education 
        credit.  The commissioner may approve courses in any other 
        subjects, including, but not limited to, communication, 
        marketing, negotiation, and technology for continuing education 
        credit. 
           (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 one hour of training during each license 
        period in courses in laws or regulations on agency 
        representation and disclosure; and 
           (2) at least one hour of training during each license 
        period in courses in state and federal fair housing laws, 
        regulations, and rules, other antidiscrimination laws, or 
        courses designed to help licensees to meet the housing needs of 
        immigrant and other underserved populations. 
           Clauses (1) and (2) do 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. 
           (f) Approved continuing education courses may be sponsored 
        or offered by a broker of a real estate company and may be held 
        on the premises of a company licensed under this chapter.  
        All continuing education course offerings must be open to any 
        interested individuals.  Access may be restricted by the sponsor 
        based on class size only.  Courses must not be approved if 
        attendance is restricted to any particular group of people.  A 
        broker must comply with all continuing education rules 
        prescribed by the commissioner.  The commissioner shall not 
        approve any prelicense instruction courses offered by, sponsored 
        by, or affiliated with any person or company licensed to engage 
        in the real estate business. 
           (g) No more than one-half of the credit hours per licensing 
        period, including continuing education required under 
        subdivision 6, may be credited to a person for attending any 
        combination of courses either: Credit may not be earned if the 
        licensee has previously obtained credit for the same course as 
        either a student or instructor during the same licensing period. 
           (1) sponsored by, offered by, or affiliated with a real 
        estate company or its agents; or 
           (2) offered using new delivery technology, including 
        interactive technology, and the Internet. 
           (h) The real estate education course completion certificate 
        must be in the form set forth by the commissioner. 
        Students are responsible for maintaining copies of course 
        completion certificates. 
           Sec. 49.  Minnesota Statutes 2002, section 82.24, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NONDEPOSITABLE ITEMS.] In the event earnest 
        money or other down payments in a real estate transaction are 
        received by the broker or salesperson in the form of a 
        nondepositable item such as a note, bond, stock certificate, 
        treasury bill, or any other instrument or equity or thing of 
        value received by a broker, salesperson, or closing 
        agent received in lieu of cash as earnest money or down payment 
        in a real estate transaction shall be held by deposited 
        immediately with an authorized escrow agent, whose authority is 
        evidenced by a written agreement executed by the offeror and the 
        escrow agent.  A receipt shall be issued to the buyer for the 
        value of the nondepositable item.  
           In the event the broker acts as the escrow agent, the 
        broker shall obtain written authority from the buyer and seller 
        to hold such items in escrow.  In all cases, the parties shall 
        be advised of the details relative to the nondepositable item, 
        including the nature of the item, the amount, and in whose 
        custody such item is being held.  The fact that such an item is 
        being held by the broker shall be duly recorded in the broker's 
        trust account records. 
           Sec. 50.  Minnesota Statutes 2002, section 82.24, 
        subdivision 5, is amended to read: 
           Subd. 5.  [TRUST ACCOUNTS.] (a) Each broker or closing 
        agent shall maintain and retain records of all trust funds and 
        trust accounts.  The commissioner may prescribe information to 
        be included in the records by appropriate rules.  
           (b) Unless otherwise agreed upon in writing by the parties 
        to a transaction, the broker with whom trust funds are to be 
        deposited in satisfaction of subdivision 1 shall be the listing 
        broker. 
           (c) A check received from a potential buyer shall be 
        deposited into the listing broker's trust account not later than 
        the third business day after delivery of the check to the 
        broker, except that the check may be held by the listing broker 
        until acceptance or rejection of the offer if: 
           (1) the check by its terms is not negotiable by the broker 
        or if the potential buyer has given written instructions that 
        the check shall not be deposited nor cashed until acceptance or 
        shall be immediately returned if the offer is rejected; and 
           (2) the potential seller is informed that the check is 
        being so held before or at the time the offer is presented to 
        that person for acceptance. 
           If the offer is accepted, the check shall be deposited in a 
        neutral escrow depository or the trust fund account of the 
        listing broker not later than the third business day following 
        acceptance of the offer unless the broker has received written 
        authorization from all parties to the transaction to continue to 
        hold the check.  If the offer is rejected, the check shall be 
        returned to the potential buyer not later than the next business 
        day after rejection. 
           (d) Trust funds must be maintained in a trust account until 
        disbursement is made in accordance with the terms of the 
        applicable agreements and proper accounting is made to the 
        parties entitled to an accounting. 
           Disbursement must be made within a reasonable time 
        following the consummation or termination of a transaction if 
        the applicable agreements are silent as to the time of 
        disbursement. 
           Sec. 51.  Minnesota Statutes 2002, section 82.24, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [CONSENT TO PLACE IN SPECIAL ACCOUNT.] Trust 
        funds may be placed by the broker in a special account which may 
        be an interest-bearing account or certificate of deposit if the 
        buyer and the seller consent in writing to the special account 
        and to the disposition of the trust funds, including any 
        interest thereon. 
           Sec. 52.  Minnesota Statutes 2002, section 82.24, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [LICENSEE AS PRINCIPAL.] Funds which would 
        constitute trust funds if received by a licensee acting as an 
        agent must, if received by a licensee acting as principal, be 
        placed in a trust account unless a written agreement signed by 
        all parties to the transaction specifies a different disposition 
        of the funds.  The written agreement shall state that the funds 
        would otherwise be placed in a real estate trust account. 
           Sec. 53.  Minnesota Statutes 2002, section 82.24, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [TRUST ACCOUNT RECORDS.] (a) Every broker shall 
        keep a record of all trust funds received, including notes, 
        savings certificates, uncashed or uncollected checks, or other 
        similar instruments.  Said records shall set forth: 
           (1) date funds received; 
           (2) from whom received; 
           (3) amount received; 
           (4) with respect to funds deposited in a trust account, the 
        date of said deposit; 
           (5) with respect to funds previously deposited in a trust 
        account, the check number or date of related disbursements; and 
           (6) a monthly balance of the trust account. 
           Each broker shall maintain a formal trust cash receipts 
        journal and a formal cash disbursement journal, or similar 
        records, in accordance with generally accepted accounting 
        principles.  All records and funds shall be subject to 
        inspection by the commissioner or an agent of the commissioner 
        at any time. 
           (b) Each broker shall keep a separate record for each 
        beneficiary or transaction, accounting for all funds therein 
        which have been deposited in the broker's trust bank account.  
        These records shall set forth information sufficient to identify 
        the transaction and the parties thereto.  At a minimum, each 
        record shall set forth: 
           (1) the date funds are deposited; 
           (2) the amount deposited; 
           (3) the date of each related disbursement; 
           (4) the check number of each related disbursement; 
           (5) the amount of each related disbursement; and 
           (6) a description of each disbursement. 
           Sec. 54.  [82.261] [GUARANTEED SALE PROGRAMS.] 
           If a broker advertises or offers a guaranteed sale program, 
        or other program whereby the broker undertakes to purchase real 
        property in the event he or she is unable to effectuate a sale 
        to a third party within a specified period of time, a written 
        disclosure that sets forth clearly and completely the general 
        terms and conditions under which the broker agrees to purchase 
        the property and the disposition of any profit at the time of 
        resale by the broker must be provided to the seller prior to the 
        execution of a listing agreement. 
           Sec. 55.  Minnesota Statutes 2002, section 82.27, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [REVOCATIONS.] If the commissioner finds that any 
        licensee or applicant is no longer in existence or has ceased to 
        do business as a broker or salesperson or is subject to an 
        adjudication of mental incompetence or to the control of a 
        committee, conservator, or guardian, or cannot be located after 
        reasonable search, the commissioner may by order revoke the 
        license or deny the application. 
           Sec. 56.  [82.36] [LOAN BROKERS.] 
           Subdivision 1.  [COMPLIANCE.] Loan brokers shall comply 
        with the requirements of subdivisions 2 to 7. 
           Subd. 2.  [CONTRACT PROVISIONS.] A loan broker shall enter 
        into a written contract with each customer and shall provide a 
        copy of the written contract to each customer at or before the 
        time of receipt of any fee or valuable consideration paid for 
        loan brokerage services.  The written contract shall: 
           (1) identify the escrow account into which the fees or 
        consideration will be deposited; 
           (2) set forth the circumstances under which the loan broker 
        will be entitled to disbursement from the escrow account; 
           (3) set forth the circumstances under which the customer 
        will be entitled to a refund of all or part of the fee; 
           (4) specifically describe the services to be provided by 
        the loan broker and the dates by which the services will be 
        performed; 
           (5) state the maximum rate of interest to be charged on any 
        loan obtained; 
           (6) contain a statement which notifies the customer of his 
        or her rights to cancel the contract pursuant to subdivision 3; 
           (7) disclose, with respect to the 12-month period ending 
        ten business days prior to the date of the contract in question, 
        the percentage of the loan broker's customers for whom loans 
        have actually been funded as a result of the loan broker's 
        services.  This disclosure need not be made for any period prior 
        to September 8, 1986; and 
           (8) disclose the cancellation rights and procedures set 
        forth in subdivision 3. 
           Subd. 3.  [CANCELLATION.] Any customer of a loan broker who 
        pays a fee prior to the time a loan is actually funded shall 
        have an unconditional right to rescind the contract for loan 
        brokerage services at any time until midnight of the third 
        business day after the day on which the contract is signed.  
        Cancellation is evidenced by the customer giving written notice 
        of cancellation to the loan broker at the address stated in the 
        contract.  Notice of cancellation, if given by mail, is 
        effective upon deposit in a mailbox properly addressed to the 
        loan broker with postage prepaid.  Notice of cancellation need 
        not take a particular form and is sufficient if it indicates by 
        any form of written expression the intention of the customer not 
        to be bound by the contract.  No act of a customer of a loan 
        broker shall be effective to waive the right to rescind as 
        provided in this subdivision. 
           Subd. 4.  [ESCROW ACCOUNT.] The loan broker shall deposit 
        in an escrow account within 48 hours all fees received prior to 
        the time a loan is actually funded.  The escrow account shall be 
        in a bank located within the state of Minnesota and shall be 
        controlled by an unaffiliated accountant, lawyer, or bank 
        officer or employee. 
           Subd. 5.  [RECORDS.] The loan broker shall maintain a 
        separate record of all fees received for services performed or 
        to be performed as a loan broker.  Each record shall set forth 
        the date funds are received, the person from whom the funds are 
        received, the amount received, the date of deposit in the escrow 
        account, the account number, the date the funds are disbursed 
        and the check number of the disbursement, and a description of 
        each disbursement and the justification for the disbursement. 
           Subd. 6.  [MONTHLY STATEMENT.] The loan broker shall 
        provide to each customer at least monthly a detailed written 
        accounting of all disbursements of the customer's funds from the 
        trust account. 
           Subd. 7.  [DISCLOSURE OF LENDERS.] The loan broker shall 
        provide to each customer at the expiration of the contract a 
        list of the lenders or loan sources to whom loan applications 
        were submitted on behalf of the customer. 
           Sec. 57.  [82.37] [NEGOTIATIONS.] 
           Subdivision 1.  [WRITTEN OFFERS.] All written offers to 
        purchase or lease shall be promptly submitted in writing to the 
        seller or lessor. 
           Subd. 2.  [NONDISCLOSURE OF TERMS OF OFFER.] A licensee 
        shall not disclose the terms of an offer to another prospective 
        buyer or the licensee representing or assisting the buyer prior 
        to the presentation of the offer to the seller. 
           Subd. 3.  [CLOSING COSTS.] Licensees shall disclose to a 
        buyer or a seller at or before the time an offer is written or 
        presented that the buyer or seller may be required to pay 
        certain closing costs, which may effectively reduce the proceeds 
        from the sale or increase the cash outlay at closing. 
           Subd. 4.  [REQUIRED DOCUMENTS.] Licensees shall furnish to 
        the parties to the transaction at the time the documents are 
        signed or become available a true and accurate copy of listing 
        agreements, earnest money receipts, purchase agreements, 
        contracts for deed, option agreements, closing statements, 
        truth-in-housing forms, energy audits, and any other record, 
        instrument, or document that is material to the transaction and 
        that is in the licensee's possession. 
           Subd. 5.  [CLOSING STATEMENT.] The listing broker or his or 
        her designee shall deliver to the seller, at the time of 
        closing, a complete and detailed closing statement setting forth 
        all of the receipts and disbursements handled by the broker for 
        the seller.  The listing broker shall also deliver to the buyer, 
        at the time of closing, a complete and detailed statement 
        setting forth the disposition of all money received in the 
        transaction from the buyer. 
           Sec. 58.  [82.46] [RENTAL SERVICES.] 
           Subdivision 1.  [LICENSE.] A rental service shall obtain a 
        real estate broker's license before engaging in business or 
        holding itself out as being engaged in business.  No person 
        shall act as a real estate salesperson on behalf of a rental 
        service without first obtaining a real estate salesperson's 
        license on behalf of the rental service. 
           Subd. 2.  [DISSEMINATION OF UNIT INFORMATION.] A rental 
        service shall not provide information regarding a rental unit 
        without the express authority of the owner of the unit. 
           Subd. 3.  [ADVERTISING.] A rental service shall not 
        advertise in a manner that is misleading with regards to fees 
        charged, services provided, the availability of rental units, or 
        rental terms or conditions. 
           Sec. 59.  [82.48] [STANDARDS OF CONDUCT.] 
           Subdivision 1.  [ACCESS TO GOVERNING STATUTES AND 
        RULES.] Every real estate office and branch office shall have a 
        current copy of this chapter and chapter 83 and the rules 
        adopted under those chapters, available for the use of licensees.
        Access to the statutes and rules required by this section may be 
        made available through an electronic agent. 
           Subd. 2.  [PENALTY FOR NONCOMPLIANCE.] The methods, acts, 
        or practices set forth in sections 82.19, subdivision 10; 
        82.191; 82.197; 82.22, subdivision 6a; 82.261; 82.37; and 
        subdivisions 1 and 3, are standards of conduct governing the 
        activities of real estate brokers and salespersons.  Failure to 
        comply with these standards shall constitute grounds for license 
        denial, suspension, or revocation, or for censure of the 
        licensee. 
           Subd. 3.  [RESPONSIBILITIES OF BROKERS.] (a) [SUPERVISION 
        OF PERSONNEL.] Brokers shall adequately supervise the activities 
        of their salespersons and employees.  Supervision includes the 
        ongoing monitoring of listing agreements, purchase agreements, 
        other real estate-related documents which are prepared or 
        drafted by the broker's salespersons or employees or which are 
        otherwise received by the broker's office, and the review of all 
        trust account books and records.  If an individual broker 
        maintains more than one place of business, each place of 
        business shall be under the broker's direction and supervision.  
        If a partnership or corporate broker maintains more than one 
        place of business, each place of business shall be under the 
        direction and supervision of an individual broker licensed to 
        act on behalf of the partnership or corporation. 
           The primary broker shall maintain records specifying the 
        name of each broker responsible for the direction and 
        supervision of each place of business.  If an individual broker, 
        who may be the primary broker, is responsible for supervising 
        more than one place of business, the primary broker shall, upon 
        written request of the commissioner, file a written statement 
        specifying the procedures which have been established to ensure 
        that all salespersons and employees are adequately supervised.  
        Designation of another broker to supervise a place of business 
        does not relieve the primary broker of the ultimate 
        responsibility for the actions of licensees. 
           (b) [PREPARATION AND SAFEKEEPING OF DOCUMENTS.] Brokers 
        shall be responsible for the preparation, custody, safety, and 
        accuracy of all real estate contracts, documents, and records, 
        even though another person may be assigned these duties by the 
        broker. 
           (c) [DOCUMENTATION AND RESOLUTION OF COMPLAINTS.] Brokers 
        shall investigate and attempt to resolve complaints made 
        regarding the practices of any individual licensed to them and 
        shall maintain, with respect to each individual licensed to 
        them, a complaint file containing all material relating to any 
        complaints received in writing for a period of three years. 
           (d) [DISCLOSURE OF LISTED PROPERTY INFORMATION.] A broker 
        may allow any unlicensed person, who is authorized by the 
        broker, to disclose any factual information pertaining to the 
        properties listed with the broker, if the factual information is 
        provided to the unlicensed person in written form by the broker 
        representing or assisting the seller(s). 
           Sec. 60.  [82.51] [UNCLAIMED PROPERTY ACT COMPLIANCE.] 
           Upon the initial application for a real estate broker's 
        license and upon each annual application for renewal, the 
        applicant or broker shall be required to inform the commissioner 
        of compliance with the requirements set forth in chapter 345 
        relating to unclaimed property. 
           Sec. 61.  [REVISOR'S INSTRUCTION.] 
           The revisor of statutes shall renumber each section of 
        Minnesota Statutes listed in column A with the number listed in 
        column B.  The revisor shall also make the necessary 
        cross-reference changes consistent with the renumbering. 
                  Column A                        Column B
             82.17, subdivision 13           82.17, subdivision 2
             82.17, subdivision 10           82.17, subdivision 3
             82.17, subdivision 3            82.17, subdivision 4
             82.17, subdivision 11           82.17, subdivision 5
             82.17, subdivision 14           82.17, subdivision 6
             82.17, subdivision 15           82.17, subdivision 7
             82.17, subdivision 16           82.17, subdivision 8
             82.17, subdivision 17           82.17, subdivision 9
             82.17, subdivision 18           82.17, subdivision 10
             82.17, subdivision 19           82.17, subdivision 11
             82.17, subdivision 20           82.17, subdivision 12
             82.17, subdivision 2            82.17, subdivision 13
             82.17, subdivision 21           82.17, subdivision 14
             82.17, subdivision 22           82.17, subdivision 15
             82.17, subdivision 9            82.17, subdivision 16
             82.17, subdivision 8            82.17, subdivision 17
             82.17, subdivision 4            82.17, subdivision 18
             82.17, subdivision 5            82.17, subdivision 19
             82.17, subdivision 23           82.17, subdivision 20
             82.17, subdivision 12           82.17, subdivision 21
             82.17, subdivision 24           82.17, subdivision 22
             82.17, subdivision 6            82.17, subdivision 23
             82.17, subdivision 7            82.17, subdivision 24
             82.33                           82.18
             82.191                          82.19
             82.201                          82.20
             82.196                          82.21, subdivision 1
             82.195                          82.21, subdivision 2
             82.197                          82.22
             82.18                           82.23
             82.21                           82.24
             82.261                          82.27
             82.22, subdivision 1            82.29, subdivision 1
             82.22, subdivision 11           82.29, subdivision 2
             82.22, subdivision 4            82.29, subdivision 3
             82.22, subdivision 2            82.29, subdivision 4
             82.22, subdivision 5a           82.29, subdivision 5
             82.22, subdivision 6c           82.29, subdivision 6
             82.22, subdivision 3            82.29, subdivision 7
             82.22, subdivision 6            82.29, subdivision 8
             82.20, subdivision 2            82.31, subdivision 1
             82.20, subdivision 3            82.31, subdivision 2
             82.20, subdivision 3a           82.31, subdivision 3
             82.20, subdivision 4            82.31, subdivision 4
             82.22, subdivision 5            82.31, subdivision 5
             82.22, subdivision 6a           82.31, subdivision 6
             82.22, subdivision 13           82.32
             82.22, subdivision 8            82.33, subdivision 1
             82.20, subdivision 8,
                paragraph (a)                82.33, subdivision 2
             82.20, subdivision 8, 
                paragraph (b)                82.33, subdivision 3
             82.22, subdivision 10           82.33, subdivision 4
             82.22, subdivision 5b           82.33, subdivision 5
             82.22, subdivision 6b           82.33, subdivision 6
             82.20, subdivision 1            82.34, subdivision 1
             82.20, subdivision 2a           82.34, subdivision 2
             82.20, subdivision 5            82.34, subdivision 3
             82.20, subdivision 6            82.34, subdivision 4
             82.20, subdivision 7            82.34, subdivision 5
             82.20, subdivision 9,
                paragraphs (a) and (b)       82.34, subdivision 6
             82.20, subdivision 7a           82.34, subdivision 7
             82.20, subdivision 8a           82.34, subdivision 8
             82.20, subdivision 9a           82.34, subdivision 9
             82.20, subdivision 9,
                paragraph (c)                82.34, subdivision 10
             82.20, subdivision 12           82.34, subdivision 11
             82.20, subdivision 12a          82.34, subdivision 12
             82.20, subdivision 13           82.34, subdivision 13
             82.20, subdivision 14           82.34, subdivision 14
             82.20, subdivision 14a          82.34, subdivision 15
             82.20, subdivision 15           82.34, subdivision 16
             82.27, subdivision 1            82.35, subdivision 1
             82.20, subdivision 10           82.35, subdivision 2
             82.27, subdivision 2            82.35, subdivision 3
             82.27, subdivision 2a           82.35, subdivision 4
             82.27, subdivision 3            82.35, subdivision 5
             82.27, subdivision 4            82.35, subdivision 6
             82.27, subdivision 5            82.35, subdivision 7
             82.27, subdivision 6            82.35, subdivision 8
             82.27, subdivision 7            82.35, subdivision 9
             82.27, subdivision 8            82.35, subdivision 10
             82.31                           82.38
             82.20, subdivision 11           82.39, subdivision 1
             82.20, subdivision 11a          82.39, subdivision 2
             82.20, subdivision 11b          82.39, subdivision 3
             82.20, subdivision 11c          82.39, subdivision 4
             82.20, subdivision 11d          82.39, subdivision 5
             82.32                           82.40
             82.19, subdivision 1            82.41, subdivision 1
             82.19, subdivision 2            82.41, subdivision 2
             82.19, subdivision 3            82.41, subdivision 3
             82.19, subdivision 4            82.41, subdivision 4
             82.19, subdivision 4a           82.41, subdivision 5
             82.19, subdivision 5            82.41, subdivision 6
             82.19, subdivision 6            82.41, subdivision 7
             82.19, subdivision 7            82.41, subdivision 8
             82.19, subdivision 8            82.41, subdivision 9
             82.19, subdivision 9            82.41, subdivision 10
             82.19, subdivision 10           82.41, subdivision 11
             82.19, subdivision 11           82.41, subdivision 12
             82.19, subdivision 12           82.41, subdivision 13
             82.29                           82.42
             82.34                           82.43
             82.22, subdivision 12           82.44
             82.23, subdivision 2            82.45, subdivision 1
             82.23, subdivision 3            82.45, subdivision 2
             82.23, subdivision 1            82.45, subdivision 3
             82.28                           82.47
             82.176                          82.49
             82.24, subdivision 1            82.50, subdivision 1
             82.24, subdivision 2            82.50, subdivision 2
             82.24, subdivision 3            82.50, subdivision 3
             82.24, subdivision 4            82.50, subdivision 4
             82.24, subdivision 5            82.50, subdivision 5
             82.24, subdivision 6            82.50, subdivision 6
             82.24, subdivision 7            82.50, subdivision 7
             82.24, subdivision 8            82.50, subdivision 8
             82.24, subdivision 9            82.50, subdivision 9
             82.24, subdivision 10           82.50, subdivision 10
             82.24, subdivision 11           82.50, subdivision 11
           Sec. 62.  [REPEALER.] 
           (a) Minnesota Statutes 2002, section 82.22, subdivision 9, 
        is repealed. 
           (b) Minnesota Rules, parts 2800.0100; 2800.0200; 2800.0300; 
        2800.1100; 2800.1200; 2800.1300; 2800.1400; 2800.1500; 
        2800.1600; 2800.1700; 2800.1750; 2800.1751; 2800.1800; 
        2800.1900; 2800.2000; 2800.2100; 2800.2150; 2805.0100; 
        2805.0200; 2805.0300; 2805.0400; 2805.0500; 2805.0600; 
        2805.0700; 2805.0800; 2805.0900; 2805.1000; 2805.1100; 
        2805.1300; 2805.1400; 2805.1500; 2805.1600; 2805.1700; 
        2805.1800; 2805.1900; and 2805.2000, are repealed. 
           Presented to the governor May 13, 2004 
           Signed by the governor May 15, 2004, 9:45 p.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569