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1989 Minnesota Session Laws

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                         Laws of Minnesota 1989 

                        CHAPTER 347-S.F.No. 1227 
           An act relating to commerce; providing for the 
          regulation of real estate closing agents; prescribing 
          penalties; amending Minnesota Statutes 1988, sections 
          82.17, subdivisions 7, 9, and 10; 82.18; 82.19, 
          subdivisions 1, 2, 3, and 4, and by adding a 
          subdivision; 82.20, subdivisions 1, 2, 3, 5, 8, 12, 
          and by adding a subdivision; 82.21, subdivision 1; 
          82.22, subdivisions 1, 5, 6, 10, and 11; 82.23, 
          subdivisions 2 and 3; 82.24, subdivisions 1, 2, 3, 4, 
          5, and 6; 82.27, subdivisions 1 and 2; 82.30, 
          subdivision 1; 82.31, subdivision 1; 82.33, 
          subdivision 1; 82.34, subdivisions 3, 4, 6, 7, 13, and 
          14; and 507.45, subdivision 2; repealing Minnesota 
          Statutes 1988, section 82.34, subdivision 12. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 82.17, 
subdivision 7, is amended to read: 
    Subd. 7.  "Trust funds" means funds received by a broker 
or, salesperson, or closing agent in a fiduciary capacity as a 
part of a real estate or business opportunity transaction, 
pending the consummation or termination of a transaction, and 
includes all down payments, earnest money deposits, rents for 
clients, tax and insurance escrow payments, damage deposits, and 
any funds received on behalf of any person.  
    Sec. 2.  Minnesota Statutes 1988, section 82.17, 
subdivision 9, is amended to read: 
    Subd. 9.  "Public member" means a person who is not, or 
never was, a real estate broker or, real estate salesperson, or 
a closing agent or the spouse of such person, or a person who 
has no, or never has had a material financial interest in acting 
as a real estate broker or, real estate salesperson, or a 
closing agent or a directly related activity. 
    Sec. 3.  Minnesota Statutes 1988, section 82.17, 
subdivision 10, is amended to read: 
    Subd. 10.  "Closing agent" or "real estate closing agent" 
means any person whether or not acting as an agent for a title 
company, a licensed attorney, real estate broker, or real estate 
salesperson, who for another and with or without a commission, 
fee, or other valuable consideration or with or without the 
intention or expectation of receiving a commission, fee, or 
other valuable consideration, directly or indirectly provides 
closing services incident to the sale, trade, lease, or loan of 
residential real estate, including drawing or assisting in 
drawing papers incident to the sale, trade, lease, or loan, or 
advertises or claims to be engaged in these activities.  
    Sec. 4.  Minnesota Statutes 1988, section 82.18, is amended 
to read: 
    82.18 [EXCEPTIONS.] 
    Unless a person is licensed or otherwise required to be 
licensed under this chapter, the term real estate broker does 
not include: 
    (a) a licensed practicing attorney acting solely as an 
incident to the practice of law if the attorney complies in all 
respects with the trust account provisions of this chapter; 
    (b) a receiver, trustee, administrator, guardian, executor, 
or other person appointed by or acting under the judgment or 
order of any court; 
    (c) any person owning and operating a cemetery and selling 
lots therein solely for use as burial plots; 
    (d) any custodian, janitor, or employee of the owner or 
manager of a residential building who leases residential units 
in the building; 
    (e) any bank, trust company, savings and loan association, 
industrial loan and thrift company, regulated lender under 
chapter 56, public utility, or land mortgage or farm loan 
association organized under the laws of this state or the United 
States, when engaged in the transaction of business within the 
scope of its corporate powers as provided by law; 
    (f) public officers while performing their official duties; 
    (g) employees of persons enumerated in clauses (b), (e) and 
(f), when engaged in the specific performance of their duties; 
    (h) any person who acts as an auctioneer bonded in 
conformity with section 330.02, when that person is engaged in 
the specific performance of duties as an auctioneer, and when 
that person has been employed to auction real estate by a person 
licensed under this chapter or when the auctioneer has engaged a 
licensed attorney to supervise the real estate transaction; 
    (i) any person who acquires real estate for the purpose of 
engaging in and does engage in, or who is engaged in the 
business of constructing residential, commercial or industrial 
buildings for the purpose of resale if no more than 25 such 
transactions occur in any 12-month period and the person 
complies with section 82.24; 
    (j) any person who offers to sell or sells an interest or 
estate in real estate which is a security registered pursuant to 
chapter 80A, when acting solely as an incident to the sale of 
these securities; 
    (k) any person who offers to sell or sells a business 
opportunity which is a franchise registered pursuant to chapter 
80C, when acting solely to sell the franchise; 
    (l) any person who contracts with or solicits on behalf of 
a provider a contract with a resident or prospective resident to 
provide continuing care in a facility, pursuant to the 
Continuing Care Facility Disclosure and Rehabilitation Act 
(chapter 80D), when acting solely as incident to the contract; 
    (m) any broker-dealer or agent of a broker-dealer when 
participating in a transaction in which all or part of a 
business opportunity or business, including any interest 
therein, is conveyed or acquired pursuant to an asset purchase, 
merger, exchange of securities or other business combination, if 
the agent or broker-dealer is licensed pursuant to chapter 80A; 
     (n) an accountant acting incident to the practice of the 
accounting profession if the accountant complies in all respects 
with the trust account provisions of this chapter.  
    Sec. 5.  Minnesota Statutes 1988, section 82.19, 
subdivision 1, is amended to read: 
    Subdivision 1.  No person shall act as a real estate broker 
or, salesperson, or real estate closing agent unless licensed as 
herein provided.  
    Sec. 6.  Minnesota Statutes 1988, section 82.19, 
subdivision 2, is amended to read: 
    Subd. 2.  No persons shall advertise or represent 
themselves to be real estate brokers or, salespeople, or closing 
agents unless licensed as herein provided.  
    Sec. 7.  Minnesota Statutes 1988, section 82.19, 
subdivision 3, is amended to read: 
    Subd. 3.  No real estate broker or, salesperson, or closing 
agents shall offer, pay or give, and no person shall accept, any 
compensation or other thing of value from any real estate broker 
or, salesperson, or closing agents by way of 
commission-splitting, rebate, finder's fees or otherwise, in 
connection with any real estate or business opportunity 
transaction; provided this subdivision does not apply to 
transactions (1) between a licensed real estate broker or 
salesperson and the person by whom the broker or salesperson is 
engaged to purchase or sell real estate or business opportunity, 
(2) among persons licensed as provided herein, (3) between a 
licensed real estate broker or salesperson and persons from 
other jurisdictions similarly licensed in that jurisdiction, and 
(4) involving timeshare or other recreational lands where the 
amount offered or paid does not exceed $150, and payment is not 
conditioned upon any sale but is made merely for providing the 
referral and the person paying the fee is bound by any 
representations the person receiving the fee makes.  A licensed 
real estate broker or salesperson may assign or direct that 
commissions or other compensation earned in connection with any 
real estate or business opportunity transaction be paid to a 
corporation of which the licensed real estate broker or 
salesperson is the sole owner.  
    Sec. 8.  Minnesota Statutes 1988, section 82.19, 
subdivision 4, is amended to read: 
    Subd. 4.  No real estate broker or, salesperson, or closing 
agent shall engage or authorize any person, except one licensed 
as provided herein, to act as a real estate broker or, 
salesperson, or closing agent on the engager's or authorizer's 
behalf.  
     Sec. 9.  Minnesota Statutes 1988, section 82.19, is amended 
by adding a subdivision to read: 
     Subd. 6.  [CLOSING AGENTS.] A real estate closing agent may 
not charge a fee for closing services to a borrower, and a 
borrower may not be required to pay such a fee at settlement, if 
the fee was not previously disclosed in writing at least one 
business day before the settlement.  This disclosure requirement 
will be considered satisfied if a disclosure is made or an 
estimate given under section 507.45. 
    Sec. 10.  Minnesota Statutes 1988, section 82.20, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] (a) The commissioner shall 
issue a license as a real estate broker or, real estate 
salesperson, or closing agent to any person who qualifies for 
such license under the terms of this chapter; 
    (b) The commissioner is authorized to establish by rule a 
special license for real estate brokers and real estate 
salespeople engaged solely in the rental or management of an 
interest or estate in real estate, to prescribe qualifications 
for the license, and to issue the license consistent with the 
terms of this chapter.  This clause shall not be construed to 
require those owners or managers or their agents or employees 
who are excluded by section 82.18, clause (d) from the 
definition of real estate broker, to obtain the special license. 
    Sec. 11.  Minnesota Statutes 1988, section 82.20, 
subdivision 2, is amended to read: 
    Subd. 2.  [QUALIFICATION OF APPLICANTS.] Every applicant 
for a real estate broker or, real estate salesperson, or real 
estate closing agent license shall be at least 18 years of age 
at the time of making application for said license. 
    Sec. 12.  Minnesota Statutes 1988, section 82.20, 
subdivision 3, is amended to read: 
    Subd. 3.  [APPLICATION FOR LICENSE; CONTENTS.] (a) Every 
applicant for a license as a real estate broker or, real estate 
salesperson, or closing agent shall make an application in 
writing upon forms prepared and furnished by the commissioner.  
Each application shall be signed and sworn to by the applicant 
and shall be accompanied by the license fee required by this 
chapter; 
    (b) Each application for a real estate broker license and, 
real estate salesperson license, or real estate closing agent 
license shall contain such information as required by the 
commissioner consistent with the administration of the 
provisions and purposes of this chapter; 
    (c) Each application for a real estate salesperson license 
shall give the applicant's name, age, residence address and the 
name and place of business of the real estate broker on whose 
behalf said the salesperson is to be acting; 
     (d) Each application for a real estate closing agent 
license shall give the applicant's name, age, residence address, 
and the name and place of business of the closing agent; 
    (d) (e) The commissioner may require such further 
information as the commissioner deems appropriate to administer 
the provisions and further the purposes of this chapter. 
    Sec. 13.  Minnesota Statutes 1988, section 82.20, 
subdivision 5, is amended to read: 
    Subd. 5.  [RESPONSIBILITY.] Each broker shall be 
responsible for the acts of any and all of the broker's sales 
people and closing agents while acting as agents on the broker's 
behalf.  Each officer of a corporation or partner in a 
partnership licensed as a broker shall have the same 
responsibility under this chapter as a corporate or partnership 
broker with regard to the acts of the salespeople and closing 
agents acting on behalf of the corporation or partnership. 
    Sec. 14.  Minnesota Statutes 1988, section 82.20, 
subdivision 8, is amended to read: 
    Subd. 8.  [RENEWALS.] (a) Persons whose applications have 
been properly and timely filed who have not received notice of 
denial of renewal are deemed to have been approved for renewal 
and may continue to transact business either as a real estate 
broker or, salesperson, or closing agent whether or not the 
renewed license has been received on or before July 1.  
Application for renewal of a license shall be deemed to have 
been timely filed if received by the commissioner by, or mailed 
with proper postage and postmarked by, June 15 in each year.  
Applications for renewal shall be deemed properly filed if made 
upon forms duly executed and sworn to, accompanied by fees 
prescribed by this chapter and contain any information which the 
commissioner may require.  
    (b) Persons who have failed to make a timely application 
for renewal of a license and who have not received the renewal 
license as of July 1, shall be unlicensed until such time as the 
license has been issued by the commissioner and is received. 
    Sec. 15.  Minnesota Statutes 1988, section 82.20, 
subdivision 12, is amended to read. 
    Subd. 12.  [NONRESIDENTS.] A nonresident of Minnesota may 
be licensed as a real estate broker or, real estate salesperson, 
or a real estate closing agent upon compliance with all 
provisions of this chapter. 
     Sec. 16.  Minnesota Statutes 1988, section 82.20, is 
amended by adding a subdivision to read: 
    Subd. 15.  [EXEMPTION.] The following closing agents are 
exempt from the requirements of sections 82.19 and 82.24 unless 
otherwise required in this section or chapter: 
    (1) a direct employee of a title company, or a person who 
has an agency agreement with a title company in which the agent 
agrees to perform closing services on the title company's behalf 
and the title company assumes responsibility for the actions of 
the agent as if the agent were a direct employee of the title 
company; 
    (2) a licensed attorney or a direct employee of a licensed 
attorney; 
    (3) a licensed real estate broker or salesperson; 
    (4) a direct employee of a licensed real estate broker if 
the broker maintains all funds received in connection with the 
closing services in the broker's trust account; and 
    (5) any bank, trust company, savings and loan association, 
industrial loan and thrift company, regulated lender under 
chapter 56, public utility, or land mortgage or farm loan 
association organized under the laws of this state or the United 
States, when engaged in the transaction of businesses within the 
scope of its corporate powers as provided by law. 
    Sec. 17.  Minnesota Statutes 1988, 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 $25 for each initial real estate closing agent 
license, and a fee of $10 for each annual renewal; 
    (d) A fee of $50 for each initial corporate or partnership 
license, and a fee of $25 for each annual renewal thereof; 
    (d) (e) A fee not to exceed $40 per year for payment to the 
education, research and recovery fund in accordance with section 
82.34; 
    (e) (f) A fee of $10 for each transfer; 
    (f) (g) A fee of $25 for a corporation or partnership name 
change; 
    (g) (h) A fee of $5 for an agent name change; 
    (h) (i) A fee of $10 for a license history; 
    (i) (j) A fee of $5 for a duplicate license; and 
    (j) (k) A fee of $5 for each hour or fraction of one hour 
of course approval sought. 
    Sec. 18.  Minnesota Statutes 1988, section 82.22, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] Each applicant for a license 
must pass an examination conducted by the commissioner.  The 
examinations shall be of sufficient scope to establish the 
competency of the applicant to act as a real estate broker or, 
as a real estate salesperson, or as a real estate closing agent. 
    Sec. 19.  Minnesota Statutes 1988, section 82.22, 
subdivision 5, is amended to read: 
    Subd. 5.  [PERIOD FOR APPLICATION.] An applicant who 
obtains an acceptable score on a salesperson's or closing 
agent's examination must file an application and obtain the 
license within one year of the date of successful completion of 
the examination or a second examination must be taken to qualify 
for the license.  If a new examination is required, prelicense 
education must be completed in accordance with subdivision 6.  
    Sec. 20.  Minnesota Statutes 1988, 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. 
     (e) After the effective date of this section, an applicant 
for a real estate closing agent's license must successfully 
complete a course of study relating to closing services 
consisting of eight hours of instruction approved by the 
commissioner. 
    Sec. 21.  Minnesota Statutes 1988, section 82.22, 
subdivision 10, is amended to read: 
    Subd. 10.  [RENEWAL; EXAMINATION.] Except as provided in 
subdivisions 3 and 7, no examination shall be required for the 
renewal of any license, provided, however, any licensee having 
been licensed as a broker or, salesperson, or closing agent in 
the state of Minnesota and who shall fail to renew the license 
for a period of two years shall be required by the commissioner 
to again take an examination. 
    Sec. 22.  Minnesota Statutes 1988, section 82.22, 
subdivision 11, is amended to read: 
    Subd. 11.  [EXAMINATION ELIGIBILITY; REVOCATION.] No 
applicant shall be eligible to take any examination if a license 
as a real estate broker or, salesperson, or closing agent has 
been revoked in this or any other state within two years of the 
date of the application. 
    Sec. 23.  Minnesota Statutes 1988, section 82.23, 
subdivision 2, is amended to read: 
    Subd. 2.  [DELIVERY.] Each real estate broker or, real 
estate salesperson, or closing agent shall furnish parties to a 
transaction a true and accurate copy of any document pertaining 
to their interests as the commissioner through appropriate rules 
may require.  
    Sec. 24.  Minnesota Statutes 1988, section 82.23, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXAMINATION OF RECORDS.] The commissioner may 
make examinations within or without this state of each 
broker's or closing agent's records at such reasonable time and 
in such scope as is necessary to enforce the provisions of this 
chapter.  
    Sec. 25.  Minnesota Statutes 1988, section 82.24, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] All trust funds received by a 
broker or the broker's salespeople or closing agents shall be 
deposited forthwith upon receipt in a trust account, maintained 
by the broker for such purpose in a bank, savings and loan 
association, credit union, or an industrial loan and thrift 
company with deposit liabilities designated by the broker or 
closing agent, except as such money may be paid to one of the 
parties pursuant to express written agreement between the 
parties to a transaction.  The depository bank shall be a 
Minnesota bank or trust company or any foreign bank and shall 
authorize the commissioner to examine its records of such 
deposits upon demand by the commissioner.  The industrial loan 
and thrift company shall be organized under chapter 53.  The 
savings and loan association or credit union shall be organized 
under the laws of any state or the United States. 
    Sec. 26.  Minnesota Statutes 1988, section 82.24, 
subdivision 2, is amended to read: 
    Subd. 2.  [LICENSEE ACTING AS PRINCIPAL.] A real estate 
licensee acting in the capacity of principal in a real estate 
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, a savings and loan association, credit union, or 
an industrial loan and thrift company organized under chapter 53 
with deposit liabilities, in a trust account, those parts of all 
payments received on contracts that are necessary to meet any 
amounts concurrently due and payable on any existing mortgages, 
contracts for deed or other conveyancing instruments, and 
reserve for taxes and insurance or any other encumbrance on the 
receipts.  The deposits must be maintained until disbursement is 
made under the terms of the encumbrance and proper accounting on 
the property made to the parties entitled to an accounting.  The 
provisions of this subdivision relating to rental of interests 
in real estate apply only to single-family residential property. 
    Sec. 27.  Minnesota Statutes 1988, section 82.24, 
subdivision 3, is amended to read: 
    Subd. 3.  [NONDEPOSITABLE ITEMS.] Any instrument or equity 
or thing of value received by a broker or, salesperson, or 
closing agent in lieu of cash as earnest money or down payment 
in a real estate transaction shall be held by an authorized 
escrow agent, whose authority is evidenced by a written 
agreement executed by the offeror and the escrow agent.  
    Sec. 28.  Minnesota Statutes 1988, section 82.24, 
subdivision 4, is amended to read: 
    Subd. 4.  [COMMINGLING FUNDS.] A broker or, salesperson, or 
closing agent shall deposit only trust funds in a trust account 
and shall not commingle personal funds or other funds in a trust 
account, except that a broker or, salesperson, or closing agent 
may deposit and maintain a sum not to exceed $500 in a trust 
account from personal funds, which sum shall be specifically 
identified and used to pay service charges or satisfy the 
minimum balance requirements relating to the trust account.  
    Sec. 29.  Minnesota Statutes 1988, section 82.24, 
subdivision 5, is amended to read: 
    Subd. 5.  [TRUST ACCOUNT RECORDS.] Each broker or closing 
agent shall maintain and retain records of all trust funds and 
trust accounts.  The commissioner may prescribe information to 
be included in the records by appropriate rules.  
    Sec. 30.  Minnesota Statutes 1988, section 82.24, 
subdivision 6, is amended to read: 
    Subd. 6.  [NOTICE OF TRUST ACCOUNT STATUS.] The names of 
the banks, savings and loan associations, credit unions, and 
industrial loan and thrift companies and the trust account 
numbers used by a broker or closing agent shall be provided to 
the commissioner at the time of application for the broker's or 
closing agent's license.  The broker shall immediately report to 
the commissioner any change of trust account status including 
changes in banks, savings and loan associations, credit unions, 
and industrial loan and thrift companies, account numbers, or 
additional accounts in the same or other banks, savings and loan 
associations, credit unions, and industrial loan and thrift 
companies.  A broker or closing agent shall not close an 
existing trust account without giving ten days written notice to 
the commissioner. 
    Sec. 31.  Minnesota Statutes 1988, section 82.27, 
subdivision 1, is amended to read: 
    Subdivision 1.  The commissioner may by order deny, suspend 
or revoke any license or may censure a licensee if the 
commissioner finds (1) that the order is in the public interest, 
and (2) that the applicant or licensee or, in the case of a 
broker, any officer, director, partner, employee or agent or any 
person occupying a similar status or performing similar 
functions, or any person directly or indirectly controlling the 
broker or closing agent or controlled by the broker or closing 
agent: 
    (a) has filed an application for a license which is 
incomplete in any material respect or contains any statement 
which, in light of the circumstances under which it is made, is 
false or misleading with respect to any material fact; 
    (b) has engaged in a fraudulent, deceptive or dishonest 
practice; 
    (c) 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 real estate 
business; 
    (d) has failed to reasonably supervise brokers or 
salesperson, salespersons, or closing agents so as to cause 
injury or harm to the public; 
    (e) has violated or failed to comply with any provision of 
this chapter or any rule or order under this chapter; or 
    (f) has, in the conduct of the licensee's affairs under the 
license, been shown to be incompetent, untrustworthy, or 
financially irresponsible. 
    Sec. 32.  Minnesota Statutes 1988, section 82.27, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner may promulgate rules further 
specifying and defining those actions and omissions which 
constitute fraudulent, deceptive or dishonest practices, and 
establishing standards of conduct for real estate brokers and, 
salespeople, or closing agents.  
    Sec. 33.  Minnesota Statutes 1988, section 82.30, 
subdivision 1, is amended to read: 
    Subdivision 1.  The commissioner of commerce shall appoint 
a real estate advisory task force.  The task force shall include 
real estate brokers licensees with at least five years 
experience as licensed real estate brokers in Minnesota and 
public members.  The task force may advise the commissioner on 
all matters relating to education of licensees, prelicensing 
requirements, and other policy matters relating to the 
administration of sections 82.17 to 82.34.  The task force shall 
expire and the terms, compensation, and removal of members shall 
be as provided in section 15.059.  No member of the real estate 
advisory task force may establish, own, operate, invest in a 
course designed to fulfill any requirement of Minnesota law 
pertaining to licenses for real estate salespersons or, brokers, 
or closing agents. 
    Sec. 34.  Minnesota Statutes 1988, section 82.31, 
subdivision 1, is amended to read: 
    Subdivision 1.  Every nonresident, before being licensed as 
a real estate broker or, real estate salesperson, or real estate 
closing agent shall appoint the commissioner and a successor or 
successors in office as true and lawful attorney, upon whom may 
be served all legal process in any action or proceedings against 
such person, or in which such person may be a party, in relation 
to or involving any transaction covered by this chapter or any 
rule or order hereunder, which appointment shall be 
irrevocable.  Service upon such attorney shall be as valid and 
binding as if due and personal service had been made upon such 
person.  Any such appointment shall be effective upon the 
issuance of the license in connection with which the appointment 
was filed. 
    Sec. 35.  Minnesota Statutes 1988, section 82.33, 
subdivision 1, is amended to read: 
    Subdivision 1.  No person shall bring or maintain any 
action in the courts of this state for the collection of 
compensation for the performance of any of the acts for which a 
license is required under this chapter without alleging and 
proving that the person was a duly licensed real estate broker 
or, salesperson, or closing agent at the time the alleged cause 
of action arose.  
    Sec. 36.  Minnesota Statutes 1988, section 82.34, 
subdivision 3, is amended to read: 
    Subd. 3.  Each real estate broker and, real estate 
salesperson, and real estate closing agent entitled under this 
chapter to renew a license, when renewing for the first time 
after July 1, 1973, shall pay in addition to the appropriate 
renewal fee a further fee of $20 $5 which shall be credited to 
the real estate education, research and recovery fund.  Any 
person who receives a new real estate broker's or real estate 
salesperson's license after July 1, 1973 shall pay said the fee 
of $20 $40 in addition to all other fees payable, provided that 
in no case shall any real estate broker or real estate 
salesperson be required under this subdivision to pay said fee 
of $20 more than once.  The one time fee shall increase to $40 
for any person who receives a new real estate broker's or real 
estate salesperson's license after July 1, 1980.  In addition 
each real estate broker or real estate salesperson when renewing 
a license after July 1, 1980, shall each time pay a fee of $5 to 
be credited to the real estate education, research and recovery 
fund.  
    Sec. 37.  Minnesota Statutes 1988, section 82.34, 
subdivision 4, is amended to read: 
    Subd. 4.  If at the end of any fiscal year prior to 
calendar year 1981 following the establishment of the real 
estate education, research and recovery fund, the amount 
remaining in the fund is less than $200,000, every licensed real 
estate broker and real estate salesperson, when renewing a 
license, shall pay in addition to the annual renewal fee, a sum 
not to exceed $20 said sum having been determined by the 
commissioner to be sufficient to restore the balance in the fund 
to at least $200,000. 
    Commencing with calendar year 1981, not to exceed No less 
than $400,000 of the fund shall be available for recovery 
purposes to satisfy all claims authorized for payment each 
calendar year.  This shall be designated as the recovery portion 
of the fund.  Commencing in calendar year 1981, If the amount 
remaining in the fund after payment of all amounts authorized 
during the preceding calendar year for payment to claimants is 
less than $400,000 plus the amount appropriated pursuant to 
subdivision 6, every licensed real estate broker and real estate 
salesperson licensee, when renewing a license, shall pay, in 
addition to the annual renewal fee and the $5 fee set forth in 
subdivision 3, a sum not to exceed $35 $50, said sum having been 
reasonably determined by the commissioner to be necessary to 
restore the balance in the fund. 
    Sec. 38.  Minnesota Statutes 1988, section 82.34, 
subdivision 6, is amended to read: 
    Subd. 6.  The commissioner may expend money as appropriated 
for the following purposes: 
    (a) To promote the advancement of education and research in 
the field of real estate for the benefit of those licensed under 
this chapter; 
    (b) To underwrite educational seminars and other forms of 
educational projects for the benefit of real estate licensees; 
    (c) To establish a real estate chair or courses at 
Minnesota state institutions of higher learning for the purpose 
of making such courses available to licensees and the general 
public; 
    (d) To contract for a particular educational or research 
project in the field of real estate to further the purposes of 
this chapter; 
    (e) To pay the costs of the real estate advisory council 
established under section 82.30; 
    (f) To pay any reasonable costs and disbursements, 
excluding attorney's fees, incurred in defending actions against 
the real estate education, research and recovery fund including 
the cost of mailing or publication of notice pursuant to 
subdivisions 12 and subdivision 14; and 
    (g) To provide information to the public on housing issues, 
including but not limited to, environmental safety and housing 
affordability. 
    Sec. 39.  Minnesota Statutes 1988, section 82.34, 
subdivision 7, is amended to read: 
    Subd. 7.  When any aggrieved person obtains a final 
judgment in any court of competent jurisdiction against an 
individual licensed under this chapter, on grounds of 
fraudulent, deceptive or dishonest practices, or conversion of 
trust funds arising directly out of any transaction when the 
judgment debtor was licensed and performed acts for which a 
license is required under this chapter, or performed acts 
permitted by section 327B.04, subdivision 5, and which cause of 
action occurred on or after July 1, 1973, the aggrieved person 
may, upon the judgment becoming final, and upon termination of 
all proceedings, including reviews and appeals, file a verified 
application in the court in which the judgment was entered for 
an order directing payment out of the recovery portion of the 
fund of the amount of actual and direct out of pocket loss in 
the transaction, but excluding any attorney's fees, interest on 
the loss and on any judgment obtained as a result of the loss, 
up to the sum of $20,000 $150,000 of the amount unpaid upon the 
judgment, provided that nothing in this chapter shall be 
construed to obligate the fund for more than $20,000 $150,000 
per transaction claimant, per transaction, subject to the 
limitations set forth in subdivisions 12 and subdivision 14, 
regardless of the number of persons aggrieved or parcels of real 
estate involved in the transaction, provided that regardless of 
the number of claims against a licensee, nothing in this chapter 
may obligate the fund for more than $250,000 per licensee per 
year.  For purposes of this section persons who are joint 
tenants or tenants in common are deemed to be a single 
claimant.  A copy of the verified application shall be served 
upon the commissioner and upon the judgment debtor, and a 
certificate or affidavit of service filed with the court.  For 
the purpose of this section "aggrieved person" shall not include 
a real estate licensee unless (1) the licensee is acting in the 
capacity of principal in the sale of interests in real property 
owned by the licensee; or (2) the licensee is acting in the 
capacity of principal in the purchase of interests in real 
property to be owned by the licensee.  Under no circumstances 
shall a real estate licensee be entitled to payment under this 
section for the loss of a commission or similar fee.  
    Sec. 40.  Minnesota Statutes 1988, section 82.34, 
subdivision 13, is amended to read: 
    Subd. 13.  Should the commissioner pay from the recovery 
portion of the fund any amount in settlement of a claim or 
toward satisfaction of a judgment against a licensed broker or 
salesperson licensee, the license of the broker or salesperson 
shall be automatically suspended upon the effective date of an 
order by the court as set forth herein authorizing payment from 
the recovery portion of the fund.  No such broker or, 
salesperson, or closing agent shall be granted reinstatement 
until the person has repaid in full, plus interest at the rate 
of 12 percent a year, twice the amount paid from the recovery 
portion of the fund on the person's account, and has obtained a 
surety bond issued by an insurer authorized to transact business 
in this state in the amount of $40,000.  The bond shall be filed 
with the commissioner, with the state of Minnesota as obligee, 
conditioned for the prompt payment to any aggrieved person 
entitled thereto, of any amounts received by the real estate 
broker or, salesperson, or closing agent or to protect any 
aggrieved person from loss resulting from fraudulent, deceptive 
or dishonest practices or conversion of trust funds arising out 
of any transaction when the real estate broker or salesperson 
was licensed and performed acts for which a license is required 
under this chapter.  The bond shall remain operative for as long 
as that real estate broker or, salesperson, or closing agent is 
licensed.  No payment shall be made from the recovery portion of 
the fund based upon claims against any broker or, salesperson, 
or closing agent who is granted reinstatement pursuant to this 
subdivision.  A discharge in bankruptcy shall not relieve a 
person from the penalties and disabilities provided in this 
section. 
    Sec. 41.  Minnesota Statutes 1988, section 82.34, 
subdivision 14, is amended to read: 
    Subd. 14.  The commissioner shall satisfy all claims 
against licensees for which an order pursuant to subdivision 11 
directing payment from the recovery portion of the fund has 
become final during the calendar year.  Each claim shall be 
satisfied by the commissioner in not less than 30 and not more 
than 90 days following the end of the calendar year in which the 
order directing payment of the claim becomes final, commencing 
with calendar year 1981.  If, at the end of any calendar year, 
the commissioner determines that the courts have issued orders 
that have become final during the year directing payment out of 
the recovery portion of the fund in a total amount in excess of 
$400,000 the funds available for recovery purposes, the 
commissioner shall allocate the $400,000 funds available for 
recovery purposes among all claimants in the ratio that the 
amount ordered paid to each claimant bears to the aggregate of 
all amounts ordered paid.  The commissioner shall mail notice of 
the allocation to all claimants not less than 45 days following 
the end of the calendar year.  Any claimant who objects to the 
plan of allocation shall file a petition in the district court 
of Ramsey or Hennepin county within 20 days of the mailing of 
notice setting forth the grounds for objection.  Upon motion of 
the commissioner the court shall summarily dismiss the petition 
and order distribution in accordance with the proposed plan of 
allocation unless it finds substantial reason to believe that 
the distribution would be in violation of the provisions of this 
section.  If a petition is filed, no distribution shall be made 
except in accordance with a final order of the court.  In the 
event no petition is filed within 20 days of the mailing of 
notice, the commissioner shall make a distribution in accordance 
with the plan of allocation.  Any distribution made by the 
commissioner in accordance with this subdivision shall be deemed 
to satisfy and extinguish the claims of any claimant receiving a 
distribution against the recovery portion of the fund.  
     Sec. 42.  Minnesota Statutes 1988, section 507.45, 
subdivision 2, if amended by Laws 1989, chapter 217, section 22, 
is amended to read: 
    Subd. 2.  No charge for closing services, except a charge 
disclosed under Regulation Z, Code of Federal Regulations, title 
12, section 226, or and except a charge for which an estimate 
has been given pursuant to the Federal Real Estate Settlement 
Procedures Act, and regulations thereunder, may be made by a 
closing agent unless the party to be charged is informed of the 
charge in writing at least five business days before the closing 
by or on behalf of the party charging for the closing services. 
    Sec. 43.  [REPEALER.] 
    Minnesota Statutes 1988, section 82.34, subdivision 12, is 
repealed. 
    Sec. 44.  [EFFECTIVE DATES.] 
    Sections 36 to 41 and 43 are effective for claims submitted 
after January 1, 1990. 
    Presented to the governor May 26, 1989 
    Signed by the governor May 26, 1989, 6:15 p.m.

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