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1987 Minnesota Session Laws

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                         Laws of Minnesota 1987 

                        CHAPTER 336-S.F.No. 463 
           An act relating to commerce; providing enforcement 
          powers; regulating securities; regulating the business 
          of financial planning; restricting certain charges 
          made by investment advisors and broker dealers; 
          providing for the registration of securities; 
          providing for disclosure of interest rate or discount 
          point agreements; providing for the denial, 
          suspension, and revocation of licenses and the censure 
          of licensees; exempting the sale of certain stock of a 
          closely-held corporation; exempting certain industrial 
          revenue bond transactions; regulating real estate 
          brokers and salespersons; prohibiting 
          commission-splitting and rebating on timeshare and 
          other recreational lands; providing for continuing 
          education of brokers; regulating licensees acting as 
          principals; regulating abandoned property; 
          establishing a presumption of abandonment for certain 
          profits or sums held by a cooperative; regulating the 
          transfer and storage of abstracts of title to real 
          property; transferring the powers and duties of the 
          commissioner for the regulation of social and 
          charitable organizations to the attorney general and 
          providing for further regulation of such 
          organizations; appropriating money; amending Minnesota 
          Statutes 1986, sections 60A.17, subdivision 6c; 
          72A.27; 80A.06, subdivision 5; 80A.07, subdivision 1; 
          80A.09, subdivision 1; 80A.12, by adding a 
          subdivision; 80A.14, subdivision 18; 80A.15, 
          subdivisions 1 and 2; 80A.19, subdivision 1; 80A.23, 
          subdivision 11; 80A.26, subdivision 3; 80C.17, 
          subdivision 1; 82.17, subdivision 4; 82.21, 
          subdivision 1; 82.22, subdivision 6; 82.24, 
          subdivision 2; 82.34, subdivision 19; 308.12, by 
          adding a subdivision; 309.50, subdivision 6; 309.515, 
          subdivision 1; 309.52, subdivisions 1a and 2; 309.53, 
          subdivisions 1a, 3, 4, and by adding a subdivision; 
          309.531; 309.533, by adding a subdivision; 309.54; 
          309.55, subdivision 6; 309.556; 309.56, subdivision 1; 
          309.57; 345.39; and 386.375; proposing coding for new 
          law in Minnesota Statutes, chapters 45, 47, 82, and 
          508; repealing Minnesota Statutes 1986, sections 
          72A.23; 72A.24; 72A.28; 80A.20; 80A.21; 80C.15; 
          80C.16, subdivision 1; 82.25; 82.26; 83.34; 83.35, 
          subdivision 3; 238.085; 309.515, subdivision 3; 
          309.532; 309.533, subdivisions 2, 3, and 4; 309.534; 
          309.555; and 309.58. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [45.026] [REGULATION OF BUSINESS OF FINANCIAL 
PLANNING.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section, the following terms have the meanings given them: 
    (a) "Person" means an individual, corporation, partnership, 
joint venture, joint stock association, trust, or unincorporated 
association.  
    (b) "Financial planner" means a person who, on 
advertisements, cards, signs, circulars, letterheads, or in 
another manner, indicates that the person is a "financial 
planner," "financial counselor," "financial adviser," 
"investment counselor," "investment adviser," "financial 
consultant," or other similar designation, title, or combination 
is considered to be representing that the person is engaged in 
the business of financial planning.  
    (c) "Advertisement" includes: 
    (1) printed or published material, audiovisual material, 
and descriptive literature of a financial planner used in direct 
mail, newspapers, magazines, other periodicals, radio scripts, 
television scripts, billboards, and other similar displays, 
excluding advertisements prepared for the sole purpose of 
obtaining employees, agents, or agencies; 
    (2) descriptive literature and sales ads of all kinds 
issued by a financial planner for presentation to members of the 
public, including but not limited to, circulars, leaflets, 
booklets, depictions, illustrations, and form letters; 
    (3) prepared sales talks, presentations, and materials for 
use by a financial planner and any representations made by a 
financial planner in accordance with these talks, presentations, 
and materials; and 
    (4) statements, written or oral, by a financial planner. 
    Subd. 2.  [FIDUCIARY DUTY.] Persons who represent that they 
are financial planners have a fiduciary duty to persons for whom 
services are performed for compensation.  In an action for 
breach of fiduciary duty, a person may recover actual damages 
resulting from the breach, together with costs and disbursements.
    Subd. 3.  [PENALTY.] A financial planner is subject to 
section 2, subdivision 5 in chapter 45. 
    Sec. 2.  [45.027] [INVESTIGATIONS AND SUBPOENAS.] 
    Subdivision 1.  [GENERAL POWERS.] In connection with the 
administration of chapters 45 to 83, 309, and 332, the 
commissioner of commerce may:  
    (1) make public or private investigations within or without 
this state as the commissioner considers necessary to determine 
whether any person has violated or is about to violate chapters 
45 to 83, 309, and 332 or any rule or order under those 
chapters, or to aid in the enforcement of chapters 45 to 83, 
309, and 332, or in the prescribing of rules or forms under 
those chapters; 
    (2) require or permit any person to file a statement in 
writing, under oath or otherwise as the commissioner determines, 
as to all the facts and circumstances concerning the matter 
being investigated; 
    (3) hold hearings, upon reasonable notice, in respect to 
any matter arising out of the administration of chapters 45 to 
83, 309, and 332; 
    (4) conduct investigations and hold hearings for the 
purpose of compiling information with a view to recommending 
changes in chapters 45 to 83, 309, and 332 to the legislature; 
    (5) examine the books, accounts, records, and files of 
every licensee under chapters 45 to 83, 309, and 332 and of 
every person who is engaged in any activity regulated under 
chapters 45 to 83, 309, and 332; the commissioner or a 
designated representative shall have free access during normal 
business hours to the offices and places of business of the 
person, and to all books, accounts, papers, records, files, 
safes, and vaults maintained in the place of business; 
    (6) publish information which is contained in any order 
issued by the commissioner; and 
    (7) require any person subject to chapters 45 to 83, 309, 
and 332 to report all sales or transactions that are regulated 
under chapters 45 to 83, 309, and 332.  The reports must be made 
within ten days after the commissioner has ordered the report.  
The report is accessible only to the respondent and other 
governmental agencies unless otherwise ordered by a court of 
competent jurisdiction.  
    Subd. 2.  [POWER TO COMPEL PRODUCTION OF EVIDENCE.] For the 
purpose of any investigation, hearing, or proceeding under 
chapters 45 to 83, 309, and 332, the commissioner or a 
designated representative may administer oaths and affirmations, 
subpoena witnesses, compel their attendance, take evidence, and 
require the production of books, papers, correspondence, 
memoranda, agreements, or other documents or records that the 
commissioner considers relevant or material to the inquiry.  
    Subd. 3.  [COURT ORDERS.] In case of a refusal to appear or 
a refusal to obey a subpoena issued to any person, the district 
court, upon application by the commissioner, may issue to any 
person an order directing that person to appear before the 
commissioner, or the officer designated by the commissioner, 
there to produce documentary evidence if so ordered or to give 
evidence relating to the matter under investigation or in 
question.  Failure to obey the order of the court may be 
punished by the court as a contempt of court. 
    Subd. 4.  [SCOPE OF PRIVILEGE.] No person is excused from 
attending and testifying or from producing any document or 
record before the commissioner, or from obedience to the 
subpoena of the commissioner or any officer designated by the 
commissioner or in a proceeding instituted by the commissioner, 
on the ground that the testimony or evidence required may tend 
to incriminate that person or subject that person to a penalty 
of forfeiture.  No person may be prosecuted or subjected to a 
penalty or forfeiture for or on account of a transaction, 
matter, or thing concerning which the person is compelled, after 
claiming the privilege against self-incrimination, to testify or 
produce evidence, documentary or otherwise, except that the 
individual is not exempt from prosecution and punishment for 
perjury or contempt committed in testifying.  
    Subd. 5.  [LEGAL ACTIONS; INJUNCTIONS; CEASE AND DESIST 
ORDERS.] Whenever it appears to the commissioner that any person 
has engaged or is about to engage in any act or practice 
constituting a violation of chapters 45 to 83, 309, and 332, or 
any rule or order adopted under those chapters, the commissioner 
has the following powers:  (1) the commissioner may bring an 
action in the name of the state in the district court of the 
appropriate county to enjoin the acts or practices and to 
enforce compliance with chapters 45 to 83, 309, and 332, or any 
rule or order adopted or issued under those chapters, or the 
commissioner may refer the matter to the attorney general or the 
county attorney of the appropriate county.  Upon a proper 
showing, a permanent or temporary injunction, restraining order, 
or other appropriate relief must be granted; (2) the 
commissioner may issue and cause to be served upon the person an 
order requiring the person to cease and desist from violations 
of chapters 45 to 83, 309, and 332, or any rule or order adopted 
or issued under those chapters.  The order must be calculated to 
give reasonable notice of the rights of the person to request a 
hearing and must state the reasons for the entry of the order.  
A hearing must be held not later than seven days after the 
request for the hearing is received by the commissioner, after 
which and within 20 days after receiving the administrative law 
judge's report, the commissioner shall issue a further order 
vacating the cease and desist order or making it permanent as 
the facts require.  If no hearing is requested within 30 days of 
service of the order, the order will become final and will 
remain in effect until it is modified or vacated by the 
commissioner.  Unless otherwise provided, all hearings must be 
conducted in accordance with chapter 14.  If the person to whom 
a cease and desist order is issued fails to appear at the 
hearing after being duly notified, the person is in default, and 
the proceeding may be determined against that person upon 
consideration of the cease and desist order, the allegations of 
which may be considered to be true.  The commissioner may adopt 
rules of procedure concerning all proceedings conducted under 
this subdivision. 
    Subd. 6.  [VIOLATIONS AND PENALTIES.] The commissioner may 
impose a civil penalty not to exceed $2,000 per violation upon a 
person who violates chapters 45 to 83, 309, and 332, unless a 
different penalty is specified.  
    Subd. 7.  [ACTIONS AGAINST LICENSEES.] In addition to any 
other actions authorized by this section, the commissioner may, 
by order, deny, suspend, or revoke the authority or license of a 
person subject to chapters 45 to 83, 309, or 332, or censure 
that person if the commissioner finds that: 
    (1) the order is in the public interest; or 
    (2) the person has violated chapters 45 to 83, 309, or 332. 
    Subd. 8.  [STOP ORDER.] In addition to any other actions 
authorized by this section, the commissioner may issue a stop 
order denying effectiveness to or suspending or revoking any 
registration subject to chapters 45 to 83, 309, or 332. 
    Subd. 9.  [POWERS ADDITIONAL.] The powers contained in 
subdivisions 1 to 8 are in addition to all other powers of the 
commissioner. 
    Sec. 3.  [45.028] [SERVICE OF PROCESS.] 
    Subdivision 1.  [REQUIREMENT.] When a person, including any 
nonresident of this state, engages in conduct prohibited or made 
actionable by chapters 45 to 83, 309, and 332, or any rule or 
order under those chapters, and the person has not filed a 
consent to service of process under chapters 45 to 83, 309, and 
332, that conduct is equivalent to an appointment of the 
commissioner as the person's attorney to receive service of 
process in any noncriminal suit, action, or proceeding against 
the person which is based on that conduct and is brought under 
chapters 45 to 83, 309, and 332, or any rule or order under 
those chapters.  
    Subd. 2.  [HOW MADE.] Service of process under this section 
may be made by leaving a copy of the process in the office of 
the commissioner, and is not effective unless:  (1) the 
plaintiff, who may be the commissioner in an action or 
proceeding instituted by the commissioner, sends notice of the 
service and a copy of the process by certified mail to the 
defendant or respondent at the last known address; and (2) the 
plaintiff's affidavit of compliance is filed in the action or 
proceeding on or before the return day of the process, if any, 
or within further time as the court allows.  
    Sec. 4.  [45.029] [FINANCIAL STATEMENT.] 
    Wherever used in chapters 45 to 83, or rules adopted 
thereunder, the term "certified" as applied to balance sheets, 
profit and loss statements or other financial statements shall 
be construed as meaning an audited financial statement prepared 
in accordance with generally accepted accounting principles that 
has been examined by an independent certified public accountant 
for the purpose of expressing an opinion.  The opinion by the 
certified public accountant shall contain a statement that it 
fairly represents the financial position of the organization or 
person. 
    Sec. 5.  [47.206] [INTEREST RATE OR DISCOUNT POINT 
AGREEMENTS.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section, the terms defined in this subdivision have the meanings 
given them. 
    (a) "Lender" means a person or entity referred to in 
section 47.20, subdivision 1, a credit union, or a person making 
a conventional loan as defined under section 47.20, subdivision 
2, clause (3), or cooperative apartment loan as defined under 
section 47.20, subdivision 2, clause (4), except that 
conventional loans or cooperative apartment loans include any 
loan or advance of credit in an original principal balance of 
less than $200,000. 
    (b) "Loan" means loans and advances of credit authorized 
under section 47.20, subdivision 1, clauses (1) to (4), and 
conventional loans as defined under section 47.20, subdivision 
2, clause (3), or cooperative apartment loans as defined under 
section 47.20, subdivision 2, clause (4), except that 
conventional loans or cooperative apartment loans also include 
all loans and advances of credit in an original principal 
balance of less than $200,000.  "Loan" does not include a loan 
or advance of credit secured by a mortgage upon real property 
containing more than one residential unit or secured by a 
security interest in shares of more than one residential unit in 
a building owned or leased by a cooperative apartment 
corporation. 
    (c) "Borrower" means a natural person who has submitted an 
application for a loan to a lender. 
    (d) "Interest rate or discount point agreement" or 
"agreement" means a contract between a lender and a borrower 
under which the lender agrees, subject to the lender's 
underwriting and approval requirements, to make a loan at a 
specified interest rate or number of discount points, or both, 
and the borrower agrees to make a loan on those terms.  The term 
also includes an offer by a lender that is accepted by a 
borrower under which the lender promises to guarantee or lock in 
an interest rate or number of discount points, or both, for a 
specific period of time. 
    Subd. 2.  [DISCLOSURES.] A lender offering borrowers the 
opportunity to enter into an agreement in advance of closing 
shall disclose, in writing, to the borrowers at the time the 
offer is made:  (1) a definite expiration date or term of the 
agreement, which may not be less than the reasonably anticipated 
closing date or time required to process, approve, and close the 
loan; (2) the circumstances, if any, under which the borrower 
will be permitted to close at a lower rate of interest or points 
than expressed in the agreement; (3) the steps required to 
process, approve, and close the loan, including the actions 
required of the borrower and lender; (4) that the agreement is 
enforceable by the borrower; and (5) the consideration required 
for the agreement. 
    Subd. 3.  [AGREEMENTS TO BE IN WRITING.] A borrower or 
lender may not maintain an action on an agreement unless the 
agreement is in writing or is permitted by subdivision 4, 
expresses consideration, sets forth the relevant terms and 
conditions, and is signed by the borrower and the lender.  
    Subd. 4.  [ORAL AGREEMENTS AND ACCEPTANCES PROHIBITED.] A 
lender may not offer or induce a borrower to accept an oral 
agreement and a borrower may not be permitted to orally accept 
an agreement, provided that if the borrower and lender have not 
executed a written agreement, this subdivision does not prohibit 
the offer and acceptance of an oral agreement which is offered 
and accepted during a period no greater than ten days before 
closing. 
    Subd. 5.  [STATEMENT OF CURRENT TERMS NOT AN OFFER.] An 
oral or written statement of current loan terms and conditions, 
including interest rates and number of discount points, is not 
an offer or an inducement by a lender to enter into an 
agreement.  A written statement of current loan terms and 
conditions must be accompanied by a disclaimer that the 
statement is not an offer to enter into an agreement and that an 
offer may only be made pursuant to subdivisions 3 and 4. 
    Subd. 6.  [PROHIBITED ACTS.] A person, including a lender, 
may not advise, encourage, or induce a borrower or third party 
to misrepresent information that is the subject of a loan 
application or to violate the terms of the agreement. 
    Subd. 7.  [PENALTIES.] (a) Except as provided in paragraph 
(c), a lender who violates this section or who causes 
unreasonable delay in processing a loan application beyond the 
expiration date of the 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 January 1, 1987. 
    (b) In addition to the penalty in paragraph (a), a lender 
is liable to the borrower for $500 for each violation of this 
section or for unreasonable delay in processing a loan 
application which causes the agreement to expire before closing. 
    (c) A lender who violates subdivision 4 is jointly and 
severally liable to the borrower for specific performance of the 
agreement or for a penalty in the amount of $500 or an amount 
not to exceed the borrower's actual out-of-pocket damages, 
including the present value of the increased costs over the 
normal life of the loan, whichever is greater, due to the good 
faith reliance of the borrower on the lender's oral 
representation. 
    (d) For purposes of this subdivision, 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 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. 
     Sec. 6.  [47.208] [DELIVERY OF SATISFACTION OF MORTGAGE.] 
    Subdivision 1.  [DELIVERY REQUIRED.] Upon written request, 
a good and valid satisfaction of mortgage in recordable form 
shall be delivered to any party paying the full and final 
balance of a mortgage indebtedness that is secured by Minnesota 
real estate; such delivery shall be in hand or by certified mail 
postmarked within 45 days of the receipt of the written request 
to the holder of any interest of record in said mortgage and 
within 45 days of the payment of all sums due thereon. 
    Subd. 2.  [PENALTY.] If a lender fails to comply with the 
requirements of subdivision 1, the lender may be held liable to 
the party paying the balance of the mortgage debt, for a civil 
penalty of up to $500, in addition to any actual damages caused 
by the violation. 
    Sec. 7.  Minnesota Statutes 1986, section 60A.17, 
subdivision 6c, is amended to read:  
    Subd. 6c.  [REVOCATION OR SUSPENSION OF LICENSE.] (a) The 
commissioner may by order suspend or revoke an insurance agent's 
or agency's license issued to a natural person or impose a civil 
penalty appropriate to the offense, not to exceed $5,000 upon 
that licensee, or both, if, after notice and hearing, the 
commissioner finds as to that licensee any one or more of the 
following conditions: 
    (1) any materially untrue statement in the license 
application; 
    (2) any cause for which issuance of the license could have 
been refused had it then existed and been known to the 
commissioner at the time of issuance; 
     (3) violation of, or noncompliance with, any insurance law 
or violation of any rule or order of the commissioner or of a 
commissioner of insurance of another state or jurisdiction; 
     (4) obtaining or attempting to obtain any license through 
misrepresentation or fraud; 
     (5) improperly withholding, misappropriating, or converting 
to the licensee's own use any moneys belonging to a 
policyholder, insurer, beneficiary, or other person, received by 
the licensee in the course of the licensee's insurance business; 
     (6) misrepresentation of the terms of any actual or 
proposed insurance contract; 
     (7) conviction of a felony or of a gross misdemeanor or 
misdemeanor involving moral turpitude; 
     (8) that the licensee has been found guilty of any unfair 
trade practice, as defined in chapters 60A to 72A, or of fraud; 
     (9) that in the conduct of the agent's affairs under the 
license, the licensee has used fraudulent, coercive, or 
dishonest practices, or the licensee has been shown to be 
incompetent, untrustworthy, or financially irresponsible; 
     (10) that the agent's license has been suspended or revoked 
in any other state, province, district, territory, or foreign 
country; 
     (11) that the licensee has forged another's name to an 
application for insurance; or 
     (12) that the licensee has violated subdivision 6b. 
     (b) The commissioner may by order suspend or revoke an 
insurance agent's or insurance agency's license issued to a 
partnership or corporation or impose a civil penalty not to 
exceed $5,000 upon that licensee, or both, if, after notice and 
hearing, the commissioner finds as to that licensee, or as to 
any partner, director, shareholder, officer, or employee of that 
licensee, any one or more of the conditions set forth in 
paragraph (a). 
     (c) A revocation of a license shall prohibit the licensee 
from making a new application for a license for at least one 
year.  Further, the commissioner may, as a condition of 
relicensure, require the applicant to file a reasonable bond for 
the protection of the citizens of this state, which bond shall 
be maintained by the licensee in full force for a period of five 
years immediately following issuance of the license, unless the 
commissioner at the commissioner's discretion shall after two 
years permit the licensee to sooner terminate the maintenance 
filing of the bond. 
    (d) Whenever it appears to the commissioner that any person 
has engaged or is about to engage in any act or practice 
constituting a violation of chapters 60A to 72A or of any rule 
or order of the commissioner: 
    (1) The commissioner may issue and cause to be served upon 
the person an order requiring the person to cease and desist 
from the violation.  The order shall give reasonable notice of 
the time and place of hearing and shall state the reasons for 
the entry of the order.  A hearing shall be held not later than 
seven days after the issuance of the order unless the person 
requests a delay.  After the hearing and within 30 days of 
filing of any exceptions to the administrative law judge's 
report, the commissioner shall issue an order vacating the cease 
and desist order or making it permanent as the facts require.  
All hearings shall be conducted in accordance with the 
provisions of chapter 14.  If the person to whom a cease and 
desist order is issued fails to appear at the hearing after 
being duly notified, the person shall be deemed in default, and 
the proceeding may be determined against the person upon 
consideration of the cease and desist order, the allegations of 
which may be deemed to be true; 
    (2) The commissioner may bring an action in the district 
court in the appropriate county to enjoin the acts or practices 
and to enforce compliance with chapters 60A to 72A and any rule 
or order of the commissioner; and 
    (3) In any proceeding under chapters 60A to 72A relating to 
injunction, the request for injunction may be brought on for 
hearing and disposition upon an order to show cause returnable 
upon not more than eight days notice to the defendant.  The case 
shall have precedence over other matters on the court calendar 
and shall not be continued without the consent of the state of 
Minnesota, except upon good cause shown to the court, and then 
only for a reasonable length of time as may be necessary in the 
opinion of the court to protect the rights of the defendant.  
    (e) The commissioner may, in the manner prescribed by 
chapter 14, impose a civil penalty not to exceed $5,000 upon a 
person whose license has lapsed, or been suspended, revoked, or 
otherwise terminated, for engaging in conduct prohibited by 
paragraph (a) before, during, or after the period of licensure. 
     Sec. 8.  Minnesota Statutes 1986, section 72A.27, is 
amended to read:  
    72A.27 [APPEAL.] 
    Any decree or order of a district court made and entered 
under section 72A.24 or 72A.25 is subject to review by appeal as 
in other civil cases.  The appeal must be taken within the time 
prescribed by law for taking appeals from orders of the district 
courts. 
    Sec. 9.  Minnesota Statutes 1986, section 80A.06, 
subdivision 5, is amended to read:  
    Subd. 5.  No investment adviser who shall recommend the 
purchase or sale of a security to a client, and no licensed 
broker-dealer acting as a broker-dealer for a customer in the 
purchase or sale of a security shall take or accept any 
remuneration or other thing of value from any person other than 
the client or customer in connection with such the purchase or 
sale unless, prior to or contemporaneously with such the 
recommendation in the case of an investment adviser and prior to 
or contemporaneously with the confirmation of the transaction in 
the case of a licensed broker-dealer so acting, written 
disclosure to the client or customer is made of the acceptance 
or intended acceptance of such the remuneration or other thing 
of value and of the amount thereof of it.  All charges made by 
an investment adviser for services and all charges by a licensed 
broker-dealer for services rendered as a broker-dealer or for 
advice with respect to securities shall be reasonable, 
and except in compliance with rules adopted by the commissioner, 
no such charges shall be based upon or measured by profits 
accrued or to accrue from transactions recommended or carried 
out by an investment adviser, or licensed broker-dealer.  This 
subdivision shall not be construed to prohibit charges by an 
investment adviser based upon the total value of the assets 
under management averaged over a definite period, or as of 
definite dates, or taken as of a definite date, nor charges 
based upon the performance of the managed assets as compared to 
an established index in compliance with rules promulgated 
adopted by the commissioner.  
    Sec. 10.  Minnesota Statutes 1986, section 80A.07, 
subdivision 1, is amended to read:  
    Subdivision 1.  The commissioner may by order deny, 
suspend, or revoke any license or may censure the licensee, if 
the commissioner finds (a) that the order is in the public 
interest and (b) that the applicant or licensee or, in the case 
of a broker-dealer or investment adviser, any partner, officer, 
or director, any person occupying a similar status or performing 
similar functions, or any person directly or indirectly 
controlling the broker-dealer or investment adviser: 
    (1) has filed an application for license which as of its 
effective date, or as of any date after filing in the case of an 
order denying effectiveness, was incomplete in any material 
respect or contained any statement which was, in light of the 
circumstances under which it was made, false or misleading with 
respect to any material fact; 
    (2) has willfully violated or failed to comply with any 
provision of this chapter or a predecessor law or any provision 
of the Securities Act of 1933, the Securities Exchange Act of 
1934, the Investment Advisers Act of 1940, the Investment 
Company Act of 1940, the Commodity Exchange Act, or any rule or 
order under any of these statutes, or any order thereunder of 
which that person has notice and is subject; 
     (3) has been convicted, within the past ten years, of any 
misdemeanor involving a security or any aspect of the securities 
business, or any felony; 
     (4) is permanently or temporarily enjoined by any court of 
competent jurisdiction from engaging in or continuing any 
conduct or practice involving any aspect of the securities 
business; 
     (5) is the subject of an order of the commissioner denying, 
suspending, or revoking a license as a broker-dealer, agent or 
investment adviser; 
     (6) is the subject of an order entered within the past five 
years by the securities administrator of any other state or by 
the securities and exchange commission denying or revoking 
registration or license as a broker-dealer, agent, or investment 
adviser, or is the subject of an order of the securities and 
exchange commission suspending or expelling that person from a 
national securities exchange or association registered under the 
Securities Exchange Act of 1934, or is the subject of a United 
States post office fraud order.  The commissioner may not 
institute a revocation or suspension proceeding under this 
clause more than one year from the date of the order relied on, 
and may not enter an order under this clause on the basis of an 
order under another state law unless the order was based on 
facts which would currently constitute a ground for an order 
under this section; 
     (7) has engaged in dishonest or fraudulent practices in the 
securities business; 
     (8) has failed to maintain the minimum net capital or to 
comply with the limitation on aggregate indebtedness which the 
commissioner by rule prescribes; 
    (9) is not qualified on the basis of such factors as 
training, experience, and knowledge of the securities business; 
    (10) has failed reasonably to supervise agents, investment 
adviser representatives, or employees to assure their compliance 
with this chapter; 
    (11) has failed to pay the proper filing fee, but the 
commissioner shall vacate the order when the deficiency has been 
corrected; 
    (12) has offered or sold securities in this state through 
any unlicensed agent; 
    (13) has made any material misrepresentation to the 
commissioner, or upon request reasonably made by the 
commissioner, has withheld or concealed information from, or 
refused to furnish information to, the commissioner; or 
    (14) has failed to reasonably supervise agents, investment 
adviser representatives, or employees if that person has assumed 
or has been designated to carry out the supervisory procedures 
of the broker-dealer or investment adviser; or 
    (15) has failed, within 20 business days after receiving 
written instructions from a customer, to do any of the following:
    (a) transfer or deliver securities that have been purchased;
    (b) transfer or deliver any free credit balances reflecting 
completed transactions; or 
    (c) transfer or deliver a customer's account securities 
positions and balances to another broker-dealer. 
This clause shall not serve as a basis for denial, suspension, 
or revocation of a broker-dealer's or agent's license if:  (i) 
the transfer or delivery is between broker-dealers and meets the 
rules and requirements established by the New York stock 
exchange with regard to the transfer or delivery; or (ii) the 
delivery of securities to a customer cannot be accomplished 
within 20 business days, and the broker-dealer or agent has 
notified the customer in writing of the inability to deliver the 
securities and the reasons for the nondelivery within 20 
business days of receiving the customer's written instructions.  
    Sec. 11.  Minnesota Statutes 1986, section 80A.09, 
subdivision 1, is amended to read:  
    Subdivision 1.  The following securities may be registered 
by notification: 
    (a) any industrial revenue bond issued by the state of 
Minnesota or any of its political subdivisions, municipalities, 
governmental agencies, or instrumentalities; and 
    (b) any securities issued by a person organized exclusively 
for social, religious, educational, benevolent, fraternal, 
charitable, reformatory, athletic, chamber of commerce, trade, 
industrial development, or professional association purposes and 
not for pecuniary gain, and no part of the net earnings of which 
inures to the benefit of any private stockholder or individual; 
provided that no securities issued by any person offering and 
furnishing a burial service or funeral benefit, directly or 
indirectly for financial consideration, may be registered under 
this section.  
    Sec. 12.  Minnesota Statutes 1986, section 80A.12, is 
amended by adding a subdivision to read: 
    Subd. 11.  Within two business days after receipt of an 
order of the commissioner withdrawing, suspending, or revoking 
effectiveness of an issuer's registration statement, the issuer 
must notify all persons making a market in the issuer's 
securities of the termination of the effectiveness of the 
registration statement.  Failure to provide this notice may 
result in the imposition of a civil penalty not to exceed $2,000 
per violation. 
    Sec. 13.  Minnesota Statutes 1986, section 80A.14, 
subdivision 18, is amended to read: 
    Subd. 18.  [SECURITY.] (a) "Security" means any note; 
stock; treasury stock; bond; debenture; evidence of 
indebtedness; certificate of interest or participation in any 
profit sharing agreement; collateral trust certificate; 
preorganization certificate or subscription; transferable 
shares; investment contract; investment metal contract or 
investment gem contract; voting trust certificate; certificate 
of deposit for a security; certificate of interest or 
participation in an oil, gas or mining right, title or lease or 
in payments out of production under the right, title or lease; 
or, in general, any interest or instrument commonly known as a 
security, or any certificate of interest or participation in, 
temporary or interim certificate for, receipt for guarantee of, 
or warrant or right to subscribe to or purchase, any of the 
foregoing.  "Security" does not include:  
    (a) any insurance or endowment policy or annuity contract 
under which an insurance company promises to pay money either in 
a lump sum or periodically for life or for some other specified 
period; or 
    (b) stock of a closely-held corporation offered or sold 
pursuant to a transaction in which 100 percent of the stock of 
that corporation is sold as a means to effect the sale of the 
business of the corporation if the transaction has been 
negotiated on behalf of all purchasers, and if all purchasers 
have access to inside information regarding the corporation 
before consummating the transaction. 
    Sec. 14.  Minnesota Statutes 1986, section 80A.15, 
subdivision 1, is amended to read:  
    Subdivision 1.  The following securities are exempted from 
sections 80A.08 and 80A.16: 
    (a) Any security, including a revenue obligation, issued or 
guaranteed by the United States, any state, any political 
subdivision of a state or any corporate or other instrumentality 
of one or more of the foregoing; but this exemption shall not 
include any industrial revenue bond.  Pursuant to section 106(c) 
of the Secondary Mortgage Market Enhancement Act of 1984, Public 
Law Number 98-440, this exemption does not apply to a security 
that is offered or sold pursuant to section 106(a)(1) or (2) of 
that act. 
    (b) Any security issued or guaranteed by Canada, any 
Canadian province, any political subdivision of any province, 
any agency or corporate or other instrumentality of one or more 
of the foregoing, if the security is recognized as a valid 
obligation by the issuer or guarantor; but this exemption shall 
not include any revenue obligation payable solely from payments 
to be made in respect of property or money used under a lease, 
sale or loan arrangement by or for a nongovernmental industrial 
or commercial enterprise. 
    (c) Any security issued by and representing an interest in 
or a debt of, or guaranteed by, any bank organized under the 
laws of the United States, or any bank, savings institution or 
trust company organized under the laws of any state and subject 
to regulation in respect of the issuance or guarantee of its 
securities by a governmental authority of that state. 
    (d) Any security issued by and representing an interest in 
or a debt of, or guaranteed by, any federal savings and loan 
association, or any building and loan or similar association 
organized under the laws of any state and authorized to do 
business in this state. 
    (e) Any security issued or guaranteed by any federal credit 
union or any credit union, or similar association organized and 
supervised under the laws of this state. 
    (f) Any security listed or approved for listing upon notice 
of issuance on the New York Stock Exchange, the American Stock 
Exchange, the Midwest Stock Exchange, the Pacific Stock 
Exchange, or the Chicago Board Options Exchange; any other 
security of the same issuer which is of senior or substantially 
equal rank; any security called for by subscription rights or 
warrants so listed or approved; or any warrant or right to 
purchase or subscribe to any of the foregoing. 
    (g) Any commercial paper which arises out of a current 
transaction or the proceeds of which have been or are to be used 
for current transactions, and which evidences an obligation to 
pay cash within nine months of the date of issuance, exclusive 
of days of grace, or any renewal of the paper which is likewise 
limited, or any guarantee of the paper or of any renewal which 
are not advertised for sale to the general public in newspapers 
or other publications of general circulation or otherwise, or by 
radio, television or direct mailing. 
    (h) Any interest in any employee's savings, stock purchase, 
pension, profit sharing or similar benefit plan, or a 
self-employed person's retirement plan. 
    (i) Any security issued or guaranteed by any railroad, 
other common carrier or public utility which is subject to 
regulation in respect to the issuance or guarantee of its 
securities by a governmental authority of the United States. 
    (j) Any interest in a common trust fund or similar fund 
maintained by a state bank or trust company organized and 
operating under the laws of Minnesota, or a national bank 
wherever located, for the collective investment and reinvestment 
of funds contributed thereto by the bank or trust company in its 
capacity as trustee, executor, administrator, or guardian; and 
any interest in a collective investment fund or similar fund 
maintained by the bank or trust company, or in a separate 
account maintained by an insurance company, for the collective 
investment and reinvestment of funds contributed thereto by the 
bank, trust company or insurance company in its capacity as 
trustee or agent, which interest is issued in connection with an 
employee's savings, pension, profit sharing or similar benefit 
plan, or a self-employed person's retirement plan. 
    (k) Any security which meets all of the following 
conditions: 
    (1) If the issuer is not organized under the laws of the 
United States or a state, it has appointed a duly authorized 
agent in the United States for service of process and has set 
forth the name and address of the agent in its prospectus; 
    (2) A class of the issuer's securities is required to be 
and is registered under section 12 of the Securities Exchange 
Act of 1934, and has been so registered for the three years 
immediately preceding the offering date; 
    (3) Neither the issuer nor a significant subsidiary has had 
a material default during the last seven years, or for the 
period of the issuer's existence if less than seven years, in 
the payment of (i) principal, interest, dividend, or sinking 
fund installment on preferred stock or indebtedness for borrowed 
money, or (ii) rentals under leases with terms of three years or 
more; 
    (4) The issuer has had consolidated net income, before 
extraordinary items and the cumulative effect of accounting 
changes, of at least $1,000,000 in four of its last five fiscal 
years including its last fiscal year; and if the offering is of 
interest bearing securities, has had for its last fiscal year, 
net income, before deduction for income taxes and depreciation, 
of at least 1-1/2 times the issuer's annual interest expense, 
giving effect to the proposed offering and the intended use of 
the proceeds.  For the purposes of this clause "last fiscal 
year" means the most recent year for which audited financial 
statements are available, provided that such statements cover a 
fiscal period ended not more than 15 months from the 
commencement of the offering; 
    (5) If the offering is of stock or shares other than 
preferred stock or shares, the securities have voting rights and 
the rights include (i) the right to have at least as many votes 
per share, and (ii) the right to vote on at least as many 
general corporate decisions, as each of the issuer's outstanding 
classes of stock or shares, except as otherwise required by law; 
and 
    (6) If the offering is of stock or shares, other than 
preferred stock or shares, the securities are owned beneficially 
or of record, on any date within six months prior to the 
commencement of the offering, by at least 1,200 persons, and on 
that date there are at least 750,000 such shares outstanding 
with an aggregate market value, based on the average bid price 
for that day, of at least $3,750,000.  In connection with the 
determination of the number of persons who are beneficial owners 
of the stock or shares of an issuer, the issuer or broker-dealer 
may rely in good faith for the purposes of this clause upon 
written information furnished by the record owners. 
    (l) Any certificate of indebtedness sold or issued for 
investment, other than a certificate of indebtedness pledged as 
a security for a loan made contemporaneously therewith, and any 
savings account or savings deposit issued, by an industrial loan 
and thrift company. 
    Sec. 15.  Minnesota Statutes 1986, section 80A.15, 
subdivision 2, is amended to read: 
    Subd. 2.  The following transactions are exempted from 
sections 80A.08 and 80A.16: 
    (a) Any isolated sales, whether or not effected through a 
broker-dealer, provided that no person shall make more than ten 
sales of securities of the same issuer pursuant to this 
exemption during any period of 12 consecutive months; provided 
further, that in the case of sales by an issuer, except sales of 
securities registered under the Securities Act of 1933 or 
exempted by section 3(b) of that act, (1) the seller reasonably 
believes that all buyers are purchasing for investment, and (2) 
the securities are not advertised for sale to the general public 
in newspapers or other publications of general circulation or 
otherwise, or by radio, television, electronic means or similar 
communications media, or through a program of general 
solicitation by means of mail or telephone. 
    (b) Any nonissuer distribution of an outstanding security 
if (1) either Moody's, Fitch's, or Standard & Poor's Securities 
Manuals, or other recognized manuals approved by the 
commissioner contains the names of the issuer's officers and 
directors, a balance sheet of the issuer as of a date not more 
than 18 months prior to the date of the sale, and a profit and 
loss statement for the fiscal year preceding the date of the 
balance sheet, and (2) the issuer or its predecessor has been in 
active, continuous business operation for the five-year period 
next preceding the date of sale, and (3) if the security has a 
fixed maturity or fixed interest or dividend provision, the 
issuer has not, within the three preceding fiscal years, 
defaulted in payment of principal, interest, or dividends on the 
securities. 
       (c) The execution of any orders by a licensed broker-dealer 
for the purchase or sale of any security, pursuant to an 
unsolicited offer to purchase or sell; provided that the 
broker-dealer acts as agent for the purchaser or seller, and has 
no direct material interest in the sale or distribution of the 
security, receives no commission, profit, or other compensation 
from any source other than the purchaser and seller and delivers 
to the purchaser and seller written confirmation of the 
transaction which clearly itemizes the commission, or other 
compensation. 
       (d) Any nonissuer sale of notes or bonds secured by a 
mortgage lien if the entire mortgage, together with all notes or 
bonds secured thereby, is sold to a single purchaser at a single 
sale. 
      (e) Any judicial sale, exchange, or issuance of securities 
made pursuant to an order of a court of competent jurisdiction. 
      (f) The sale, by a pledge holder, of a security pledged in 
good faith as collateral for a bona fide debt. 
      (g) Any offer or sale to a bank, savings institution, trust 
company, insurance company, investment company as defined in the 
Investment Company Act of 1940, pension or profit sharing trust, 
or other financial institution or institutional buyer, or to a 
broker-dealer, whether the purchaser is acting for itself or in 
some fiduciary capacity. 
    (h) Any sales by an issuer to the number of persons that 
shall not exceed 25 persons in this state, or 35 persons if the 
sales are made in compliance with Regulation D promulgated by 
the Securities and Exchange Commission, Code of Federal 
Regulations, title 17, sections 230.501 to 230.506, (other than 
those designated in paragraph (a) or (g)), whether or not any of 
the purchasers is then present in this state, if (1) the issuer 
reasonably believes that all of the buyers in this state (other 
than those designated in clause (g)) are purchasing for 
investment, and (2) no commission or other remuneration is paid 
or given directly or indirectly for soliciting any prospective 
buyer in this state (other than those designated in clause (g)), 
except reasonable and customary commissions paid by the issuer 
to a broker-dealer licensed under this chapter, and (3) the 
issuer has, ten days prior to any sale pursuant to this 
paragraph, supplied the commissioner with a statement of issuer 
on forms prescribed by the commissioner, containing the 
following information:  (i) the name and address of the issuer, 
and the date and state of its organization; (ii) the number of 
units, price per unit, and a description of the securities to be 
sold; (iii) the amount of commissions to be paid and the persons 
to whom they will be paid; (iv) the names of all officers, 
directors and persons owning five percent or more of the equity 
of the issuer; (v) a brief description of the intended use of 
proceeds; (vi) a description of all sales of securities made by 
the issuer within the six-month period next preceding the date 
of filing; and (vii) a copy of the investment letter, if any, 
intended to be used in connection with any sale.  Sales that are 
made more than six months before the start of an offering made 
pursuant to this exemption or are made more than six months 
after completion of an offering made pursuant to this exemption 
will not be considered part of the offering, so long as during 
those six-month periods there are no sales of unregistered 
securities (other than those made pursuant to paragraph (a) or 
(g)) by or for the issuer that are of the same or similar class 
as those sold under this exemption.  The commissioner may by 
rule or order as to any security or transaction or any type of 
security or transaction, withdraw or further condition this 
exemption, or increase the number of offers and sales permitted, 
or waive the conditions in clause (1), (2), or (3) with or 
without the substitution of a limitation or remuneration. 
      (i) Any offer (but not a sale) of a security for which a 
registration statement has been filed under sections 80A.01 to 
80A.31, if no stop order or refusal order is in effect and no 
public proceeding or examination looking toward an order is 
pending; and any offer of a security if the sale of the security 
is or would be exempt under this section.  The commissioner may 
by rule exempt offers (but not sales) of securities for which a 
registration statement has been filed as the commissioner deems 
appropriate, consistent with the purposes of sections 80A.01 to 
80A.31. 
      (j) The offer and sale by a cooperative association 
organized under chapter 308, of its securities when the 
securities are offered and sold only to its members, or when the 
purchase of the securities is necessary or incidental to 
establishing membership in such association, or when such 
securities are issued as patronage dividends. 
      (l) The issuance and delivery of any securities of one 
corporation to another corporation or its security holders in 
connection with a merger, exchange of shares, or transfer of 
assets whereby the approval of stockholders of the other 
corporation is required to be obtained, provided, that the 
commissioner has been furnished with a general description of 
the transaction and with other information as the commissioner 
by rule prescribes not less than ten days prior to the issuance 
and delivery. 
      (m) Any transaction between the issuer or other person on 
whose behalf the offering is made and an underwriter or among 
underwriters. 
      (n) The distribution by a corporation of its or other 
securities to its own security holders as a stock dividend or as 
a dividend from earnings or surplus or as a liquidating 
distribution; or upon conversion of an outstanding convertible 
security; or pursuant to a stock split or reverse stock split. 
    (o) Any offer or sale of securities by an affiliate of the 
issuer thereof if:  (1) a registration statement is in effect 
with respect to securities of the same class of the issuer and 
(2) the offer or sale has been exempted from registration by 
rule or order of the commissioner.  
    (p) Any transaction pursuant to an offer to existing 
security holders of the issuer, including persons who at the 
time of the transaction are holders of convertible securities, 
nontransferable warrants, or transferable warrants exercisable 
within not more than 90 days of their issuance, if:  (1) no 
commission or other remuneration (other than a standby 
commission) is paid or given directly or indirectly for 
soliciting any security holder in this state; and (2) the 
commissioner has been furnished with a general description of 
the transaction and with other information as the commissioner 
may by rule prescribe no less than ten days prior to the 
transaction. 
     (q)  Any nonissuer sales of industrial revenue bonds issued 
by the state of Minnesota or any of its political or 
governmental subdivisions, municipalities, governmental 
agencies, or instrumentalities. 
    Sec. 16.  Minnesota Statutes 1986, section 80A.19, 
subdivision 1, is amended to read: 
    Subdivision 1.  This chapter shall be administered by the 
commissioner of commerce.  The commissioner shall appoint two 
deputy commissioners and shall file with the secretary of state 
an order delegating authority to one of such deputy 
commissioners to exercise all of the rights and powers and 
perform all of the duties of the commissioner during the 
disability of the commissioner, the commissioner's absence from 
the office or during a vacancy in the office of the commissioner 
pending the filling thereof as provided by law.  
     Sec. 17.  Minnesota Statutes 1986, section 80A.23, 
subdivision 11, is amended to read:  
    Subd. 11.  The rights and remedies promulgated by sections 
80A.01 to 80A.31 are in addition to any other right or remedy 
that may exist at law or in equity, but sections 80A.01 to 
80A.31 do not create any cause of action not specified in this 
section or section 80A.05, subdivision 5.  No civil cause of 
action may be based solely upon the failure of a broker-dealer 
or agent to comply with the requirements of section 80A.04, 
subdivision 1 or 3, except a cause of action arising under 
section 80A.21 2.  
    Sec. 18.  Minnesota Statutes 1986, section 80A.26, 
subdivision 3, is amended to read:  
    Subd. 3.  All information contained in or filed with any 
registration statement, application, or report, except such 
information as to which the commissioner, upon request and for 
good cause shown, grants confidential treatment, and except as 
to reports of sales provided for in section 80A.20, subdivision 
1, clause (f) 2, subdivision 1, clause (7), shall be a matter of 
public record and shall be made available to the public under 
such rules as the commissioner prescribes.  
    Sec. 19.  Minnesota Statutes 1986, section 80C.17, 
subdivision 1, is amended to read:  
    Subdivision 1.  A person who violates any provision of 
sections 80C.01 to 80C.13 and 80C.15 80C.16 to 80C.22 or any 
rule or order thereunder shall be liable to the franchisee or 
subfranchisor who may sue for damages caused thereby, for 
rescission, or other relief as the court may deem appropriate. 
    Sec. 20.  Minnesota Statutes 1986, section 82.17, 
subdivision 4, is amended to read: 
    Subd. 4.  "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; 
    (c) 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) 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) engages in the business of charging an advance fee or 
contracting for collection of a fee in connection with any 
contract whereby the person undertakes to promote the sale of 
real estate through its listing in a publication issued 
primarily for this purpose; 
    (f) 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; 
    (g) offers or makes more than five conventional loans under 
section 47.20 secured by real estate during any 12-month period 
and who is not a bank, savings bank, mutual savings bank, 
building and loan association, or savings and loan association 
organized under the laws of this state or the United States, 
trust company, trust company acting as a fiduciary, or other 
financial institution subject to the supervision of the 
commissioner of commerce, or mortgagee or lender 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. 
     Sec. 21.  [82.175] [MORTGAGEE OR LENDER BROKER IN CERTAIN 
CASES.] 
    (a) Notwithstanding section 82.17, subdivision 4, clause 
(g), for purposes of this chapter, the term "real estate broker" 
includes a mortgagee or lender approved or certified by the 
secretary of Housing and Urban Development, the administrator of 
Veterans Affairs, the administrator of the Farmers Home 
Administration, the Federal Home Loan Mortgage Corporation, or 
the Federal National Mortgage Association if the commissioner 
finds after a hearing that the mortgagee or lender, or an 
officer, director, partner, employee, or agent of the mortgagee 
or lender, or a person directly or indirectly controlling the 
mortgagee or lender:  (1) has engaged in a fraudulent, 
deceptive, or dishonest practice, or (2) has violated section 
47.206. 
    (b) Prior to the hearing under paragraph (a), the 
commissioner shall issue an order that requires the mortgagee or 
lender to show cause why the mortgagee or lender should not be 
determined to be a real estate broker under this section.  The 
order must be calculated to give reasonable notice of the time 
and place for the hearing and must state the reasons for the 
entry of the order to show cause.  Hearings must be conducted 
under chapter 14. 
    Sec. 22.  Minnesota Statutes 1986, section 82.21, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AMOUNTS.] The following fees shall be paid 
to the commissioner: 
    (a) A fee of $50 for each initial individual broker's 
license, and a fee of $25 for each annual renewal thereof; 
    (b) A fee of $25 for each initial salesperson's license, 
and a fee of $10 for each annual renewal thereof; 
    (c) A fee of $50 for each initial corporate or partnership 
license, and a fee of $25 for each annual renewal thereof; 
    (d) A fee not to exceed $40 per year for payment to the 
education, research and recovery fund in accordance with section 
82.34; 
    (e) A fee of $10 for each transfer; 
    (f) A fee of $25 for a corporation or partnership name 
change; 
    (g) A fee of $5 for an agent name change; 
    (h) A fee of $10 for a license history; 
    (i) A fee of $15 for a NSF check; 
    (j) A fee of $50 for an initial course approval; 
    (k) A fee of $10 for notices of repeat course offerings; 
    (l) A fee of $50 for instructor or coordinator approval; 
and 
    (m) A fee of $5 for a duplicate license; and 
    (j) A fee of $5 for each hour or fraction of one hour of 
course approval sought. 
    Sec. 23.  Minnesota Statutes 1986, section 82.22, 
subdivision 6, is amended to read: 
    Subd. 6.  [INSTRUCTION; NEW LICENSES.] (a) After January 1, 
1987, 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.  After January 1, 1987, 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 before filing an application for the license.  
Every salesperson licensed after January 1, 1987, shall, within 
one year of licensure, be required to successfully complete a 
course of study in the real estate field consisting of 30 hours 
of instruction approved by the commissioner. 
    (b) After December 31, 1983, and before January 1, 1987, 
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.  After December 31, 1983, and before January 1, 
1987, 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 30 hours of instruction 
approved by the commissioner before filing an application for 
the license.  Every salesperson licensed after December 31, 
1983, and before January 1, 1987, shall, within one year of the 
date a license was first issued, be required to successfully 
complete a course of study in the real estate field consisting 
of 30 hours of instruction approved by the commissioner.  
    (c) 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. 
    (d) After January 1, 1988, 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.  The course must have been completed within 
six months prior to the date of application for the broker's 
license. 
    Sec. 24.  Minnesota Statutes 1986, section 82.24, 
subdivision 2, is amended to read: 
    Subd. 2.  [LICENSEE ACTING AS PRINCIPAL.] Any licensed A 
real estate broker or salesperson licensee acting in the 
capacity of principal in the sale or rental of interests in a 
real estate owned or rented by the licensee transaction where 
the seller retains any liability, contingent or otherwise, for 
the payment of an obligation on the property shall deposit in a 
Minnesota bank or trust company, any foreign bank which 
authorizes the commissioner to examine its records of the 
deposits, or an industrial loan and thrift company organized 
under chapter 53 with deposit liabilities, in a trust account, 
those parts of all payments received on contracts that are 
necessary to meet any amounts concurrently due and payable on 
any existing mortgages, contracts for deed or other conveyancing 
instruments, and reserve for taxes and insurance or any other 
encumbrance on the receipts.  The deposits must be maintained 
until disbursement is made under the terms of the encumbrance 
and proper accounting on the property made to the parties 
entitled to an accounting.  The provisions of this subdivision 
relating to rental of interests in real estate apply only to 
single-family residential property. 
    Sec. 25.  Minnesota Statutes 1986, section 82.34, 
subdivision 19, is amended to read: 
    Subd. 19.  The commissioner shall include in the annual 
report of the department of commerce pursuant to section 45.033, 
on or before October 1 in each even-numbered year, prepare and 
file in the office of the governor for the preceding two fiscal 
years ending June 30 a report on the activities of the real 
estate education, research and recovery fund; noting the amount 
of money received by the fund, the amount of money expended and 
the purposes therefor. 
    Sec. 26.  Minnesota Statutes 1986, section 308.12, is 
amended by adding a subdivision to read: 
    Subd. 5.  Notwithstanding the provisions of section 345.43, 
a cooperative association organized under the laws of this state 
may, in lieu of paying or delivering to the commissioner of 
commerce the unclaimed property specified in its report of 
unclaimed property, distribute the unclaimed property to a 
corporation or organization which is exempt from taxation under 
section 290.05, subdivision 1, paragraph (b), or 2.  A 
cooperative association making this election shall, within 20 
days after the time specified in section 345.42 for claiming the 
property from the holder, file with the commissioner a verified 
written explanation of the proof of claim of any owner 
establishing a right to receive the abandoned property; any 
error in the presumption of abandonment; and the name, address, 
and exemption number of the corporation or organization to which 
the property was or is to be distributed and the approximate 
date of distribution.  Nothing in this subdivision alters the 
procedure provided in sections 345.41 and 345.42 whereby 
cooperative associations report unclaimed property to the 
commissioner and claims of owners are made to the cooperative 
associations for a period of 65 days following the publication 
of lists of abandoned property.  The rights of an owner to 
unclaimed property held by a cooperative association is 
extinguished upon the disbursement of the property by the 
cooperative association to a tax-exempt organization in 
accordance with this section.  
    Sec. 27.  Minnesota Statutes 1986, section 309.50, 
subdivision 6, is amended to read:  
    Subd. 6.  "Professional fund raiser" means any person who 
for financial compensation or profit participates in public 
solicitation in this state of contributions for, or on behalf of 
any charitable organization performs for a charitable 
organization any service in connection with which contributions 
are, or will be, solicited in this state by the compensated 
person or by any compensated person the person employs, 
procures, or engages to solicit; or any person who for 
compensation or profit plans, manages, advises, consults, or 
prepares material for, or with respect to, the solicitation in 
this state of contributions for a charitable organization.  No 
investment adviser, investment adviser representative, 
broker-dealer, or agent licensed pursuant to chapter 80A, or 
lawyer, accountant, or banker who advises a person to make a 
charitable contribution or who provides legal, accounting, or 
financial advice in the ordinary course of a profession or 
business shall be deemed, as a result of the advice, to be a 
professional fund raiser.  A bona fide salaried officer or, 
employee, or volunteer of a charitable organization is not a 
professional fund raiser unless the officer's or employee's 
salary or other compensation is computed on the basis of funds 
to be raised, or actually raised. 
    Sec. 28.  Minnesota Statutes 1986, section 309.515, 
subdivision 1, is amended to read:  
    Subdivision 1.  Subject to the provisions of subdivisions 2 
and 3, sections 309.52 and 309.53 shall not apply to any of the 
following: 
    (a) Charitable organizations: 
    (1) which did not receive total contributions in excess 
of $10,000 $25,000, exclusive of the direct cost of prizes given 
to the public by the charitable organization in connection with 
lawful gambling conducted in compliance with chapter 349, from 
the public within or without this state during the accounting 
year last ended, and 
    (2) which do not plan to receive total contributions in 
excess of such amount from the public within or without this 
state during any accounting year, and 
    (3) whose functions and activities, including fund raising, 
are performed wholly by persons who are unpaid for their 
services, and 
    (4) none of whose assets or income inure to the benefit of 
or are paid to any officer. 
    For purposes of this chapter, a charitable organization 
shall be deemed to receive in addition to contributions 
solicited from the public by it, the contributions solicited 
from the public by any other person and transferred to it.  Any 
organization constituted for a charitable purpose receiving an 
allocation from a community chest, united fund or similar 
organization shall be deemed to have solicited that allocation 
from the public. 
    (b) A religious society or organization which is exempt 
from filing a federal annual information return pursuant to 
Internal Revenue Code, section 6033(a)(2)(A)(i) and (iii), and 
Internal Revenue Code, section 6033(a)(2)(C)(i).  
    (c) Any educational institution which is under the general 
supervision of the state board of education, the state 
university board, the state board for community colleges, or the 
University of Minnesota or any educational institution which is 
accredited by the University of Minnesota or the North Central 
association of colleges and secondary schools, or by any other 
national or regional accrediting association. 
    (d) A fraternal, patriotic, social, educational, alumni, 
professional, trade or learned society which limits solicitation 
of contributions to persons who have a right to vote as a 
member.  The term "member" shall not include those persons who 
are granted a membership upon making a contribution as the 
result of a solicitation. 
    (e) A charitable organization soliciting contributions for 
any person specified by name at the time of the solicitation if 
all of the contributions received are transferred to the person 
named with no restrictions on the person's expenditure of it and 
with no deductions whatsoever. 
    (f) A private foundation, as defined in section 509(a) of 
the Internal Revenue Code of 1954, which did not solicit 
contributions from more than 100 persons during the accounting 
year last ended. 
    Sec. 29.  Minnesota Statutes 1986, section 309.52, 
subdivision 1a, is amended to read:  
    Subd. 1a.  A charitable organization whose total 
contributions received during any accounting year are in excess 
of $10,000 $25,000, exclusive of the direct cost of prizes given 
to the public by the charitable organization in connection with 
lawful gambling conducted in compliance with chapter 349, shall 
file a registration statement with the department attorney 
general within 30 days after the date on which the 
organization's total contributions exceeded $10,000 $25,000, 
exclusive of the direct cost of prizes given to the public by 
the charitable organization in connection with lawful gambling 
conducted in compliance with chapter 349.  The registration 
shall exist unless revoked by a court of competent jurisdiction, 
or the department attorney general, or as provided in 
subdivision 7.  This subdivision shall not apply to a charitable 
organization which had filed a registration statement pursuant 
to this section for the accounting year last ended or to 
organizations described in section 309.515, subdivision 1. 
    Sec. 30.  Minnesota Statutes 1986, section 309.52, 
subdivision 2, is amended to read:  
    Subd. 2.  The first registration statement filed by a 
charitable organization shall include a registration fee of $25 
if the organization raised or expended, exclusive of the direct 
cost of prizes given to the public by the charitable 
organization in connection with lawful gambling conducted in 
compliance with chapter 349, more than $25,000 during the 
previous 12-month period, and a financial statement of its the 
organization's operation for its most recent 12 months period 
immediately preceding the filing of the first registration 
statement. 
    Sec. 31.  Minnesota Statutes 1986, section 309.53, 
subdivision 1a, is amended to read:  
    Subd. 1a.  A charitable organization may, but need not, 
file an annual report pursuant to this section if the 
organization: 
    (a) Did not receive total contributions in excess 
of $10,000 $25,000, exclusive of the direct cost of prizes given 
to the public by the charitable organization in connection with 
lawful gambling conducted in compliance with chapter 349, from 
the public within or without this state during the accounting 
year last ended. 
    (b) Does not plan to receive total contributions in excess 
of $10,000 $25,000, exclusive of the direct cost of prizes given 
to the public by the charitable organization in connection with 
lawful gambling conducted in compliance with chapter 349, from 
the public within or without this state during any accounting 
year, and 
    (c) Does not employ a professional fund raiser. 
    Sec. 32.  Minnesota Statutes 1986, section 309.53, 
subdivision 3, is amended to read:  
    Subd. 3.  The financial statement shall include a balance 
sheet, statement of income and expense, and statement of 
functional expenses, shall be consistent with forms furnished by 
the department attorney general, and shall be prepared in 
accordance with generally accepted accounting principles so as 
to make a full disclosure of the following, including necessary 
allocations between each item and the basis of such allocations: 
    (a) Total receipts and total income from all sources; 
    (b) Cost of management and general; 
    (c) Cost of fund raising; 
    (d) Cost of public education; 
    (e) Funds or properties transferred out of state, with 
explanation as to recipient and purpose; 
    (f) Total net amount disbursed or dedicated within this 
state, broken down into total amounts disbursed or dedicated for 
each major purpose, charitable or otherwise; 
    (g) Names of professional fund raisers used during the 
accounting year and the financial compensation or profit 
resulting to each professional fund raiser.  Unless otherwise 
required by this subdivision, the financial statement need not 
be certified. 
    A financial statement of a charitable organization which 
has solicited from the public within or outside this state total 
contributions in excess of $50,000 $100,000 for the 12 months of 
operation covered by the statement shall be accompanied by an 
opinion signed by a certified public accountant that such 
statement fairly represents the financial operations of the 
charitable organization in sufficient detail to permit public 
evaluation of its operations an audited financial statement 
prepared in accordance with generally accepted accounting 
principles that has been examined by an independent certified 
public accountant for the purpose of expressing an opinion.  
In giving such opinion preparing the audit the certified public 
accountant shall take into consideration capital, endowment or 
other reserve funds, if any, controlled by the charitable 
organization.  The opinion need not conform to the wording of 
the opinion form of the annual report forms provided by the 
department. 
    Sec. 33.  Minnesota Statutes 1986, section 309.53, 
subdivision 4, is amended to read:  
    Subd. 4.  Where a registration statement has been filed by 
a parent organization or affiliate as provided in section 
309.52, subdivision 4, the registered parent organization may 
file the annual report required under this section on behalf of 
the chapter, branch, area office, similar affiliate or person in 
addition to or as part of its own report or the registered 
affiliate may file the annual report required under this section 
on behalf of the parent organization in addition to or as part 
of its own report.  The accounting information required under 
this section shall be set forth separately and not in 
consolidated form with respect to every chapter, branch, area 
office, similar affiliate or person within the state which 
raises or expends more than $10,000 $25,000, exclusive of the 
direct cost of prizes given to the public by the charitable 
organization in connection with lawful gambling conducted in 
compliance with chapter 349.  The department of commerce 
attorney general may permit any chapter, branch, area office, 
similar affiliate or person to file a consolidated statement 
with any other chapter, branch, area office, similar affiliate 
or person or parent organization if the attorney general 
determines that the interests of the charitable beneficiaries 
will not be prejudiced thereby and that separate accounting 
information is not required for proper supervision. 
    Sec. 34.  Minnesota Statutes 1986, section 309.53, is 
amended by adding a subdivision to read: 
    Subd. 8.  A reregistration fee of $25 shall be paid by 
every charitable organization submitting the annual report 
required by this section if the organization raised or expended, 
exclusive of the direct cost of prizes given to the public by 
the charitable organization in connection with lawful gambling 
conducted in compliance with chapter 349, more than $25,000 
during the previous 12-month period.  
    Sec. 35.  Minnesota Statutes 1986, section 309.531, is 
amended to read:  
    309.531 [LICENSING REGISTRATION OF PROFESSIONAL FUND 
RAISERS; BOND REQUIRED.] 
    Subdivision 1.  No person shall act as a professional fund 
raiser unless licensed by registered with the department 
attorney general.  Applications for a license The registration 
statement as hereinafter described shall be in writing, under 
oath, in the form prescribed by the department attorney general 
and shall be accompanied by an application fee of $25 $50.  Each 
license registration shall be effective for a period of not more 
than 12 months from the date of issuance, and in any event shall 
expire on July 30 next following the date of issuance.  The 
registration may be renewed for additional one-year periods upon 
application and payment of the fee. 
    Subd. 2.  The department shall have the power, in 
connection with any application for license as a professional 
fund raiser, to require the applicant to file a surety bond in 
such amount, not exceeding $20,000, and containing such terms 
and conditions as the department determines are necessary and 
appropriate for the protection of the public.  The applicant may 
deposit cash in and with a depository acceptable to the 
department in such amount and in such a manner as may be 
prescribed and approved by the department in lieu of the bond.  
The registration statement of the professional fund raiser shall 
consist of the following:  
    (a) If the professional fund raiser at any time has custody 
of contributions from a solicitation, the registration statement 
shall include a bond, in which the professional fund raiser 
shall be the principal obligor.  The bond shall be in the sum of 
$20,000, with one or more responsible sureties whose liability 
in the aggregate as the sureties will at least equal that sum.  
In order to maintain the registration, the bond shall be in 
effect for the full term of the registration.  The bond, which 
may be in the form of a rider to a larger blanket liability 
bond, shall run to the state and to any person who may have a 
cause of action against the principal obligor of the bond for 
any liabilities resulting from the obligor's conduct of any 
activities subject to sections 309.50 to 309.61 or arising out 
of a violation of the statutes or a rule adopted under the 
statutes. 
    (b) If the professional fund raiser, or any person the 
professional fund raiser employs, procures, or engages, solicits 
in this state, the registration statement shall include a 
completed "solicitation notice" on a form provided by the 
attorney general.  The solicitation notice shall include a copy 
of the contract described in paragraph (c), the projected dates 
when soliciting will commence and terminate, the location and 
telephone number from where the solicitation will be conducted, 
the name and residence address of each person responsible for 
directing and supervising the conduct of the campaign, a 
statement as to whether the professional fund raiser will at any 
time have custody of contributions, and a description of the 
charitable program for which the solicitation campaign is being 
carried out.  The charitable organization on whose behalf the 
professional fund raiser is acting shall certify that the 
solicitation notice and accompanying material are true and 
complete to the best of its knowledge. 
     (c) The professional fund raiser shall also include, as 
part of the registration statement, a copy of the contract 
between the charitable organization and the professional fund 
raiser.  The contract shall: 
    (1) be in writing; 
    (2) contain information as will enable the attorney general 
to identify the services the professional fund raiser is to 
provide, including whether the professional fund raiser will at 
any time have custody of contributions; and 
    (3) if the professional fund raiser or any person the 
professional fund raiser employs, procures, or engages, directly 
or indirectly, solicits in this state, the contract shall 
disclose the percentage or a reasonable estimate of the 
percentage of the total amount solicited from each person which 
shall be received by the charitable organization for charitable 
purposes.  
    The stated percentages required by this section and section 
309.556, subdivision 2, shall exclude any amount which the 
charitable organization is to pay as expenses of the 
solicitation campaign, including the cost of merchandise or 
services sold or events staged.  
    (d) The registration statement shall also include the 
financial report for previous campaigns conducted by the 
professional fund raiser in this state as set forth in 
subdivision 4 of this section.  
    Subd. 3.  No professional fund raiser shall solicit in use 
the name of or in solicit on behalf of any charitable 
organization unless such solicitor has written authorization 
from two officers of such organization, a copy of which shall be 
filed with the department attorney general.  Such written 
authorization shall bear the signature of the solicitor and 
shall expressly state on its face the period for which it is 
valid, which shall not exceed one year from the date 
issued conform to the requirements of the contract described in 
subdivision 2, clause (c).  
    Subd. 4.  The department may require that any licensed 
professional fund raiser submit financial reports, not more 
frequently than quarterly, in such form and containing such 
information as the department by rule or order requires.  Within 
90 days after a solicitation campaign has been completed, and on 
the anniversary of the commencement of a solicitation campaign 
lasting more than one year, the professional fund raiser who 
solicited contributions in this state in conjunction with a 
charitable organization shall file with the attorney general a 
financial report for the campaign, including gross revenue and 
an itemization of all expenses incurred.  The report shall be 
completed on a form prescribed by the attorney general.  The 
report shall be signed by an authorized official of the 
professional fund raiser and an authorized official from the 
charitable organization and they shall certify, under oath, that 
it is true to the best of their knowledge.  
    Sec. 36.  Minnesota Statutes 1986, section 309.533, is 
amended by adding a subdivision to read: 
    Subd. 5.  In connection with an investigation under this 
section, the attorney general may obtain discovery from any 
person regarding any matter, fact, or circumstance, not 
privileged, that is relevant to the subject matter involved in 
the investigation, in accordance with the provisions of section 
8.31.  
    Sec. 37.  Minnesota Statutes 1986, section 309.54, is 
amended to read:  
    309.54 [PUBLIC RECORD.] 
    Subdivision 1.  Registration statements, annual reports, 
and other documents required to be filed shall become public 
records in the office of the department attorney general.  
Investigative data obtained by the attorney general in 
anticipation of or in connection with litigation or an 
administration proceeding are nonpublic data under section 
13.02, subdivision 9.  
    Subd. 2.  Every person subject to sections 309.50 to 309.61 
shall maintain, for not less than three years from the date of 
preparation, accurate and detailed books and records to provide 
the information required by sections 309.50 to 309.61.  All such 
books and records shall be open to inspection at all reasonable 
times by the department or by the attorney general.  
    Subd. 3.  Every charitable organization which is required 
to file an annual report under section 309.53 shall keep and 
maintain within Minnesota, at the place designated in its 
registration statement, the original books and records, or true 
copies thereof, pertaining to all money or other property 
collected from residents of this state and to the disbursement 
of such money or property.  Such books and records shall be 
preserved for a period of not less than 10 three years from the 
date of preparation thereof.  
    Sec. 38.  Minnesota Statutes 1986, section 309.55, 
subdivision 6, is amended to read:  
    Subd. 6.  No person shall, either as an individual or as 
agent, officer or employee of a charitable organization sell or 
otherwise furnish for a consideration to any other person any 
list of contributors unless the contributor has consented to the 
transaction. 
    Sec. 39.  Minnesota Statutes 1986, section 309.556, is 
amended to read:  
    309.556 [PUBLIC DISCLOSURE REQUIREMENTS.] 
    Subdivision 1.  [IDENTITY OF ORGANIZATION AND; PERCENTAGE 
OF DEDUCTIBILITY; DESCRIPTION OF PROGRAM.] In connection with 
any charitable solicitation, the following information shall be 
clearly disclosed: 
    (a) The name, address and telephone number of each 
charitable organization on behalf of which the solicitation is 
made; 
    (b) The percentage of the contribution which may be 
deducted as a charitable contribution under both federal and 
state income tax laws;  
    (c) A description of the charitable program for which the 
solicitation campaign is being carried out; and, if different, a 
description of the programs and activities of the organization 
on whose behalf the solicitation campaign is being carried out.  
    If the solicitation is made by direct contact, the required 
information shall be disclosed prominently on a card which shall 
be exhibited to the person solicited.  If the solicitation is 
made by radio, television, letter, telephone or any other means 
not involving direct personal contact, the required information 
shall be clearly disclosed in the solicitation.  
    Subd. 2.  [PERCENTAGE RECEIVED FOR CHARITABLE PURPOSES.] In 
addition to the disclosures required by subdivision 1, any 
professional fund raiser soliciting contributions in this state 
shall also disclose the percentage or a reasonable estimate of 
the percentage of the total amount solicited from each person 
which shall be received by the charitable agency for charitable 
purposes.  A professional fund raiser shall also disclose the 
name of the professional fund raiser as on file with the 
attorney general and that the solicitation is being conducted by 
a "professional fund raiser."  The disclosure disclosures 
required by this subdivision shall be given in the same manner 
as the disclosures required by subdivision 1. 
    Sec. 40.  Minnesota Statutes 1986, section 309.56, 
subdivision 1, is amended to read:  
    Subdivision 1.  Any charitable organization or professional 
fund raiser which solicits contributions in this state, but does 
not maintain an office within the state shall be subject to 
service of process, as follows: 
    (a) By service thereof on its registered agent within the 
state, or if there be no such registered agent, then upon the 
person, if any, who has been designated in the registration 
statement as having custody of books and records within this 
state; where service is effected upon the person so designated 
in the registration statement a copy of the process shall, in 
addition, be mailed to the charitable organization or 
professional fund raiser at its last known address; 
    (b) When a charitable organization or professional fund 
raiser has solicited contributions in this state, but maintains 
no office within the state, has no registered agent within the 
state, and no designated person having custody of its books and 
records within the state, or when a registered agent or person 
having custody of its books and records within the state cannot 
be found as shown by the return of the sheriff of the county in 
which such registered agent or person having custody of books 
and records has been represented by the charitable organization 
or professional fund raiser as maintaining an office, service 
may be made by leaving a copy of the process in the office of 
the commissioner.  Service upon the commissioner is not 
effective unless (a) the plaintiff, who may be the commissioner 
in a suit, action, or proceeding instituted by the commissioner, 
forthwith sends notice of the service and a copy of the process 
by certified mail to the defendant or respondent at that 
person's last known address or takes other steps which are 
reasonably calculated to give actual notice, and (b) the 
plaintiff's affidavit of compliance with this subdivision is 
filed in the case on or before the return day of the process, if 
any, or within a further time the court allows as in any other 
civil suit, or in the manner provided by section 303.13, 
subdivision 1, clause (3), or in a manner as the court may 
direct. 
    Sec. 41.  Minnesota Statutes 1986, section 309.57, is 
amended to read:  
    309.57 [DISTRICT COURT JURISDICTION, PENALTIES, 
ENFORCEMENT.] 
    Subdivision 1.  [GENERAL.] Upon the application of the 
attorney general the district court is vested with jurisdiction 
to restrain and enjoin violations of sections 309.50 to 309.61.  
The court may make any necessary order or judgment including, 
but not limited to, injunctions, restitution, appointment of a 
receiver for the defendant or the defendant's assets, denial, 
revocation, or suspension of the defendant's registration, 
awards of reasonable attorney fees, and costs of investigation 
and litigation, and may award to the state civil penalties up to 
$25,000 for each violation of sections 309.50 to 309.61.  In 
ordering injunctive relief, the attorney general shall not be 
required to establish irreparable harm but only a violation of 
statute or that the requested order promotes the public 
interest.  The court may, as appropriate, enter a consent 
judgment or decree without the finding of illegality.  
    Subd. 2.  [ASSURANCE OF DISCONTINUANCE.] The attorney 
general may accept an assurance of discontinuance of any method, 
act, or practice in violation of sections 309.50 to 309.61 from 
any person alleged to be engaged or to have been engaged in the 
method, act, or practice.  The assurance may, among other terms, 
include a stipulation for the voluntary payment by the person of 
the costs of investigation, or of an amount to be held in escrow 
pending the outcome of an action or as restitution to aggrieved 
persons, or both.  Any assurance of discontinuance shall be in 
writing and be filed with the district court of the county of 
the violator's residence or principal place of business or in 
Ramsey county.  An assurance shall not be considered an 
admission of a violation for any purpose.  Failure to comply 
with the assurance of discontinuance shall be punishable as 
contempt.  
    Sec. 42.  Minnesota Statutes 1986, section 345.39, is 
amended to read: 
    345.39 [MISCELLANEOUS PERSONAL PROPERTY HELD FOR ANOTHER 
PERSON.] 
    Subdivision 1.  [PRESUMED ABANDONMENT.] All intangible 
personal property, not otherwise covered by sections 345.31 to 
345.60, including any income or increment thereon, but excluding 
any charges that may lawfully be withheld, that is held or owing 
in this state in the ordinary course of the holder's business 
and has remained unclaimed by the owner for more than five years 
after it became payable or distributable is presumed abandoned.  
Property covered by this section includes, but is not limited 
to:  (a) unclaimed wages or worker's compensation; (b) deposits 
or payments for repair or purchase of goods or services; (c) 
credit checks or memos, or customer overpayments; (d) 
unidentified remittances, unrefunded overcharges; (e) unpaid 
claims, unpaid accounts payable or unpaid commissions; (f) 
unpaid mineral proceeds, royalties or vendor checks; and (g) 
credit balances, accounts receivable and miscellaneous 
outstanding checks.  This section does not include money orders. 
    Subd. 2.  [COOPERATIVE PROPERTY.] Notwithstanding 
subdivision 1, any profit, distribution, or other sum held or 
owing by a cooperative for or to a participating patron of the 
cooperative is presumed abandoned only if it has remained 
unclaimed by the owner for more than seven years after it became 
payable or distributable.  
     Sec. 43.  Minnesota Statutes 1986, section 386.375, is 
amended to read:  
    386.375 [TRANSFER AND STORAGE OF ABSTRACTS.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section, "lender" means all state banks and trust companies, 
national banking associations, state and federally chartered 
savings and loan associations, mortgage banks, mutual savings 
banks, insurance companies, credit unions making a loan, or any 
person making a conventional loan as defined under section 
47.20, subdivision 2, clause (3), or cooperative apartment loan 
as defined under section 47.20, subdivision 2, clause (4).  A 
"selling lender" is a lender who sells, assigns, or transfers a 
loan and/or the servicing of a loan to a "purchasing lender" or 
"servicing agent." 
    Subd. 2.  [RESPONSIBILITY FOR STORAGE.] Any title company, 
lender, or anyone other than the mortgagor or fee simple owner 
holding an abstract of title to Minnesota real estate shall 
transfer the abstract of title to the mortgagor or fee simple 
owner of the real estate to which the abstract pertains before 
August 1, 1987.  After August 1, 1987, the abstract of title 
shall be provided to the mortgagor or fee simple owner at the 
time of closing.  This section does not apply if the holder of 
the abstract of title is the mortgagor or fee simple owner of 
the real estate to which the abstract pertains. 
    Subd. 3.  [PENALTIES.] If a title company or lender fails 
to comply with the requirements of subdivision 2, the mortgagor 
or fee simple owner has the right to have an abstract made at 
the expense of the lender or title company holding the abstract. 
    Subdivision 1.  [RESPONSIBILITY TO TRANSFER.] (a) A person 
holding an abstract of title to real estate located in Minnesota 
shall, at a closing of a sale of the property to which the 
abstract pertains, make a written offer to transfer the abstract 
of title to the mortgagor or fee owner at no charge to the 
mortgagor or fee owner.  If the offer is accepted, the abstract 
must be transferred at the closing unless the abstract of title 
is being held after the closing for issuance of a final title 
opinion or policy of title insurance in which case the holder 
has a reasonable period of time to transfer the abstract.  
    (b) A person holding an abstract of title to real estate 
located in Minnesota shall, within ten days of receipt of a 
written request from the mortgagor or fee owner of the property 
to which the abstract pertains, transfer the abstract of title 
to the mortgagor or fee owner at no charge, other than postage, 
to the mortgagor or fee owner.  If the abstract of title is 
being held after a closing for issuance of a final title opinion 
or policy of title insurance, the holder has a reasonable period 
of time to transfer the abstract.  
    (c) If a person holding an abstract of title to real estate 
located in Minnesota fails to comply with the requirements of 
this subdivision, the mortgagor or fee owner of the property may 
have an abstract of title made at the expense of the last known 
person holding the abstract of title, and is also entitled to 
collect actual civil damages of up to $500 from the person last 
known to hold the abstract of title. 
    Subd. 2.  [STORAGE OF ABSTRACTS.] Before a person holding 
an abstract of title to real estate located in Minnesota may 
impose a charge or fee to store the abstract, the person shall 
first make a written offer to the mortgagor or fee owner to 
transfer the abstract at no charge, other than postage, to the 
fee owner or mortgagor.  This subdivision does not apply to a 
person who holds an abstract pursuant to a written contract with 
the fee owner or mortgagor.  A person violating this subdivision 
is subject to a penalty of $100 for each violation.  
    Subd. 3.  [CONSUMER EDUCATION INFORMATION.] (a) A person 
other than the mortgagor or fee owner who transfers or offers to 
transfer an abstract of title shall present to the mortgagor or 
fee owner basic information in plain English about abstracts of 
title.  This information must be sent in a form prepared and 
approved by the commissioner of commerce and must contain at 
least the following items:  
    (1) a definition and description of abstracts of title; 
    (2) an explanation that holders of abstracts of title must 
maintain it with reasonable care; 
    (3) an approximate cost or range of costs to replace a lost 
or damaged abstract of title; 
    (4) an explanation that abstracts of title may be required 
to sell, finance, or refinance real estate; and 
    (5) an explanation of options for storage of abstracts. 
    (b) The commissioner shall prepare the form for use under 
this subdivision as soon as possible.  This subdivision does not 
apply until 60 days after the form is approved by the 
commissioner. 
    (c) A person violating this subdivision is subject to a 
penalty of $100 for each violation. 
    Subd. 4.  [STORAGE IN MINNESOTA.] After August 1, 1987, 
abstracts of title to real estate located in Minnesota must be 
stored within the state of Minnesota.  Failure to comply with 
this subdivision entitles a mortgagor or fee owner to civil 
damages of up to $500. 
    Subd. 5.  [EXCEPTIONS.] This section does not apply if the 
person holding the abstract of title is the mortgagor or fee 
owner of the real estate to which the abstract pertains. 
    Subd. 6.  [OFFER TO TRANSFER.] Any person holding an 
abstract of title pertaining to real estate located in Minnesota 
shall, before March 1, 1988, make a reasonable effort to contact 
the mortgagor or fee owner of the property and make a written 
offer to transfer the abstract of title to the mortgagor or fee 
owner.  A person holding an abstract of title has made a 
reasonable effort to contact the mortgagor or fee owner if the 
person has sent an offer by United States mail, postage prepaid, 
to the last address of the mortgagor or fee owner shown in the 
person's records. 
    Sec. 44.  [508.405] [TRANSFER OF OWNER'S DUPLICATE.] 
    Subdivision 1.  [TRANSFER.] Any lender, title company, or 
person other than the fee simple owner or county registrar 
holding an owner's duplicate certificate of title to Minnesota 
real estate shall transfer the owner's duplicate certificate of 
title to the fee simple owner of the real estate to which the 
duplicate certificate pertains before August 1, 1987.  After 
August 1, 1987, no person other than the fee simple owner or 
county registrar may hold an owner's duplicate certificate of 
title except for settlement processing. 
    Subd. 2.  [PENALTIES.] If any holder fails to comply with 
the requirements of subdivision 1, the registered owner may 
apply to the district court for an order directing the holder 
withholding the duplicate certificate of title to surrender it 
at the expense of the holder. 
    Sec. 45.  [APPROPRIATIONS.] 
    $65,066 is appropriated from the general fund to the 
attorney general to be available for fiscal year 1988.  The sum 
of $34,414 is appropriated from the general fund to the attorney 
general to be available for fiscal year 1989.  The general fund 
complement of the attorney general is increased by one.  
    Sec. 46.  [INSTRUCTION TO REVISOR.] 
    The revisor of statutes shall substitute the term "attorney 
general" for the term "commissioner" or "commissioner of 
commerce" or "department" in Minnesota Statutes, sections 
309.52, subdivisions 1 and 7; 309.53, subdivisions 1 and 2; 
309.533, subdivision 1; 309.591; and 309.60. 
    The revisor of statutes shall delete all references to the 
"department" in Minnesota Statutes, section 309.581.  
    Sec. 47.  [REPEALER.] 
    Minnesota Statutes 1986, sections 72A.23; 72A.24; 72A.28; 
80A.20; 80A.21; 80C.15; 80C.16, subdivision 1; 82.25; 82.26; 
83.34; 83.35, subdivision 3; 238.085; 309.515, subdivision 3; 
309.532; 309.533, subdivisions 2, 3, and 4; 309.534; 309.555; 
and 309.58, are repealed. 
    Sec. 48.  [EFFECTIVE DATE.] 
    Section 5 is effective June 1, 1987.  Section 26 is 
effective June 30, 1987.  Section 44 is effective the day 
following final enactment. 
    Approved June 1, 1987

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