1.1                          A bill for an act 
  1.2             relating to real estate; requiring purchase agreements 
  1.3             to permit rescission by the seller in the event of 
  1.4             damage to the property prior to the closing; proposing 
  1.5             coding for new law in Minnesota Statutes, chapter 500. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [500.35] [PURCHASE AGREEMENTS; RIGHT OF SELLER 
  1.8   TO RESCIND.] 
  1.9      (a) All purchase agreements for the sale of real property 
  1.10  located in this state shall permit the seller, at the seller's 
  1.11  option, to rescind the purchase agreement at any time prior to 
  1.12  the closing if the real property is destroyed or substantially 
  1.13  or materially damaged after the signing of the purchase 
  1.14  agreement. 
  1.15     (b) The purchase agreement must not condition the seller's 
  1.16  right to rescind under this section upon payment of a fee or 
  1.17  other charge of any kind, but may require the seller to promptly 
  1.18  refund to the buyer any earnest money or other deposit paid to 
  1.19  the seller.  The purchase agreement may require written notice 
  1.20  of rescission and may require the buyer and seller to sign a 
  1.21  cancellation of the purchase agreement in the event of 
  1.22  rescission. 
  1.23     (c) This section applies to purchase agreements involving 
  1.24  residential real property, including farm property.  For 
  1.25  purposes of this section, "residential real property" means 
  2.1   property occupied by, or intended to be occupied by, one to four 
  2.2   families as their residence.  This section does not apply to 
  2.3   commercial property, industrial property, or other 
  2.4   nonresidential property, or to residential property involving 
  2.5   more than four dwelling units. 
  2.6      (d) This section does not apply to contracts for deed, but 
  2.7   does apply to agreements to enter into a contract for deed. 
  2.8      (e) A purchase agreement that does not comply with this 
  2.9   section is deemed to comply and is to be interpreted as if it 
  2.10  did comply. 
  2.11     (f) This section applies without regard to any insurance 
  2.12  coverage for the destruction or damage. 
  2.13     (g) This section applies to destruction or damage caused by 
  2.14  fire, flood, explosion, wind, vandalism, or any other cause, but 
  2.15  not to destruction or damage intentionally caused by the seller. 
  2.16     (h) No listing agreement or other arrangement between a 
  2.17  real estate broker and a buyer or seller shall require payment 
  2.18  of a real estate commission if a purchase agreement is rescinded 
  2.19  by the seller under this section or under a purchase agreement 
  2.20  provision that complies with this section. 
  2.21     Sec. 2.  [EFFECTIVE DATE.] 
  2.22     Section 1 is effective January 1, 2000, and applies to 
  2.23  purchase agreements entered into on or after that date.