1.1                          A bill for an act
  1.2             relating to real property; permitting contracts for 
  1.3             deed to provide for assignment of rents; clarifying 
  1.4             rights of tenants; amending Minnesota Statutes 1994, 
  1.5             sections 504.20, subdivisions 3, 4, 5, and 6; and 
  1.6             559.17, subdivision 2. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 504.20, 
  1.9   subdivision 3, is amended to read: 
  1.10     Subd. 3.  (a) Every landlord shall: 
  1.11     (1) within three weeks after termination of the tenancy for 
  1.12  any reason not described in clause (2); or 
  1.13     (2) within five days of the date of termination of the 
  1.14  tenancy and of the landlord's interest in the premises through 
  1.15  completion of cancellation under section 559.21 of a contract 
  1.16  for deed, or of the date when the tenant leaves the building or 
  1.17  dwelling due to the legal condemnation of the building or 
  1.18  dwelling in which the tenant lives for reasons not due to 
  1.19  willful, malicious, or irresponsible conduct of the tenant, 
  1.20  and after receipt of the tenant's mailing address or delivery 
  1.21  instructions, return the deposit to the tenant, with interest 
  1.22  thereon as above provided, or furnish to the tenant a written 
  1.23  statement showing the specific reason for the withholding of the 
  1.24  deposit or any portion thereof. 
  1.25     (b) It shall be sufficient compliance with the time 
  1.26  requirement of this subdivision if the deposit or written 
  2.1   statement required by this subdivision is placed in the United 
  2.2   States mail as first class mail, postage prepaid, in an envelope 
  2.3   with a proper return address, correctly addressed according to 
  2.4   the mailing address or delivery instructions furnished by the 
  2.5   tenant, within the time required by this subdivision.  The 
  2.6   landlord may withhold from the deposit only amounts reasonably 
  2.7   necessary: 
  2.8      (1) to remedy tenant defaults in the payment of rent or of 
  2.9   other funds due to the landlord pursuant to an agreement; or 
  2.10     (2) to restore the premises to their condition at the 
  2.11  commencement of the tenancy, ordinary wear and tear excepted. 
  2.12     (c) In any action concerning the deposit, the burden of 
  2.13  proving, by a fair preponderance of the evidence, the reason for 
  2.14  withholding all or any portion of the deposit shall be on the 
  2.15  landlord. 
  2.16     Sec. 2.  Minnesota Statutes 1994, section 504.20, 
  2.17  subdivision 4, is amended to read: 
  2.18     Subd. 4.  Any landlord who fails to:  
  2.19     (1) provide a written statement within three weeks of 
  2.20  termination of the tenancy for any reason not described in 
  2.21  clause (2); 
  2.22     (2) provide a written statement within five days of the 
  2.23  date of termination of the tenancy and of the landlord's 
  2.24  interest in the premises through completion of cancellation 
  2.25  under section 559.21 of a contract for deed, or of the date when 
  2.26  the tenant leaves the building or dwelling due to the legal 
  2.27  condemnation of the building or dwelling in which the tenant 
  2.28  lives for reasons not due to willful, malicious, or 
  2.29  irresponsible conduct of the tenant; or 
  2.30     (3) transfer or return a deposit as required by subdivision 
  2.31  5, 
  2.32  after receipt of the tenant's mailing address or delivery 
  2.33  instructions, as required in subdivision 3, shall be liable to 
  2.34  the tenant for damages in an amount equal to the portion of the 
  2.35  deposit withheld by the landlord and interest thereon as 
  2.36  provided in subdivision 2, as a penalty, in addition to the 
  3.1   portion of the deposit wrongfully withheld by the landlord and 
  3.2   interest thereon. 
  3.3      Sec. 3.  Minnesota Statutes 1994, section 504.20, 
  3.4   subdivision 5, is amended to read: 
  3.5      Subd. 5.  (a) Upon termination of the landlord's interest 
  3.6   in the premises, whether by sale, assignment, death, appointment 
  3.7   of receiver or otherwise, the landlord or the landlord's agent 
  3.8   shall, within 60 days of termination of the interest or when the 
  3.9   successor in interest is required to return or otherwise account 
  3.10  for the deposit to the tenant, whichever occurs first, do one of 
  3.11  the following acts, either of which shall relieve the landlord 
  3.12  or agent of further liability with respect to such deposit: 
  3.13     ~~(a)~~ (i) transfer such deposit, or any remainder after any 
  3.14  lawful deductions made under subdivision 3, with interest 
  3.15  thereon as provided in subdivision 2, to the landlord's 
  3.16  successor in interest and thereafter notify the tenant of such 
  3.17  transfer and of the transferee's name and address; or 
  3.18     ~~(b)~~ (ii) return such deposit, or any remainder after any 
  3.19  lawful deductions made under subdivision 3, with interest 
  3.20  thereon as provided in subdivision 2, to the tenant. 
  3.21     (b) Notwithstanding paragraph (a), upon termination of the 
  3.22  tenancy and of the landlord's interest in the premises by means 
  3.23  of a cancellation under section 559.21 of a contract for deed, 
  3.24  the landlord shall comply with subdivision 3 without withholding 
  3.25  any portion of the deposit. 
  3.26     Sec. 4.  Minnesota Statutes 1994, section 504.20, 
  3.27  subdivision 6, is amended to read: 
  3.28     Subd. 6.  Upon termination of the landlord's interest in 
  3.29  the premises, whether by sale, assignment, death, appointment of 
  3.30  receiver or otherwise, the landlord's successor in interest 
  3.31  shall have all of the rights and obligations of the landlord 
  3.32  with respect to such deposit, except, that if tenant does not 
  3.33  object to the stated amount within 20 days after written notice 
  3.34  to tenant of the amount of deposit being transferred or assumed, 
  3.35  the obligation of the landlord's successor to return such 
  3.36  deposit shall be limited to the amount contained in such 
  4.1   notice.  Such notice shall contain a stamped envelope addressed 
  4.2   to landlord's successor and may be given by mail or by personal 
  4.3   service.  This subdivision does not apply when the termination 
  4.4   of the tenancy and of the landlord's interest in the premises is 
  4.5   by cancellation under section 559.21 of a contract for deed; in 
  4.6   that situation, subdivision 5, paragraph (b) governs. 
  4.7      Sec. 5.  Minnesota Statutes 1994, section 559.17, 
  4.8   subdivision 2, is amended to read: 
  4.9      Subd. 2.  A mortgagor or contract for deed vendee may 
  4.10  assign, as additional security for the debt secured by the 
  4.11  mortgage or contract for deed, the rents and profits from 
  4.12  the ~~mortgaged~~ real property that is mortgaged or is subject to 
  4.13  the contract for deed, if the mortgage or contract for deed: 
  4.14     (1) was executed, modified or amended subsequent to August 
  4.15  1, 1977, if a mortgage, or on or after January 1, 1997, if a 
  4.16  contract for deed; 
  4.17     (2) secured an original principal amount of $100,000 or 
  4.18  more or is a lien or contract for deed upon residential real 
  4.19  estate containing more than four dwelling units; and 
  4.20     (3) is not a lien or contract for deed upon property which 
  4.21  was: 
  4.22     (i) entirely homesteaded as agricultural property; or 
  4.23     (ii) residential real estate containing four or fewer 
  4.24  dwelling units where at least one of the units is homesteaded.  
  4.25  The assignment may be enforced, but only against the 
  4.26  nonhomestead portion of the ~~mortgaged~~ property that is mortgaged 
  4.27  or subject to the contract for deed, as follows: 
  4.28     (a) if, by the terms of an assignment, a receiver is to be 
  4.29  appointed upon the occurrence of some specified event, and a 
  4.30  showing is made that the event has occurred, the court shall, 
  4.31  without regard to waste, adequacy of the security, or solvency 
  4.32  of the mortgagor or contract for deed vendee, appoint a receiver 
  4.33  who shall, with respect to the excess cash remaining after 
  4.34  application as provided in section 576.01, subdivision 2, apply 
  4.35  it as prescribed by the assignment.  If the assignment so 
  4.36  provides, the receiver shall apply the excess cash in the manner 
  5.1   set out herein from the date of appointment through the entire 
  5.2   redemption period from any foreclosure sale or through the 
  5.3   entire contract for deed cancellation period.  Subject to the 
  5.4   terms of the assignment, the receiver shall have the powers and 
  5.5   duties as set forth in section 576.01, subdivision 2; or 
  5.6      (b) if no provision is made for the appointment of a 
  5.7   receiver in the assignment or if by the terms of the assignment 
  5.8   a receiver may be appointed, the assignment shall be binding 
  5.9   upon the assignor unless or until a receiver is appointed 
  5.10  without regard to waste, adequacy of the security or solvency of 
  5.11  the mortgagor or contract for deed vendee, but only in the event 
  5.12  of default in the terms and conditions of the mortgage or 
  5.13  contract for deed, and only in the event the assignment requires 
  5.14  the holder thereof to first apply the rents and profits received 
  5.15  as provided in section 576.01, subdivision 2, in which case the 
  5.16  same shall operate against and be binding upon the occupiers of 
  5.17  the premises from the date of filing by the holder of the 
  5.18  assignment in the office of the county recorder or the office of 
  5.19  the registrar of titles for the county in which the property is 
  5.20  located of a notice of default in the terms and conditions of 
  5.21  the mortgage, or of a notice specifying the conditions in which 
  5.22  default has been made in the contract for deed, and service of a 
  5.23  copy of the notice upon the occupiers of the premises.  The 
  5.24  holder of the assignment shall apply the rents and profits 
  5.25  received in accordance with the terms of the assignment, and, if 
  5.26  the assignment so provides, for the entire redemption period 
  5.27  from any foreclosure sale or for the entire contract for deed 
  5.28  cancellation period.  A holder of an assignment who enforces it 
  5.29  in accordance with this clause shall not be deemed to be a 
  5.30  mortgagee or contract for deed vendor in possession with 
  5.31  attendant liability. 
  5.32     Nothing contained herein shall prohibit the right to 
  5.33  reinstate the mortgage debt granted pursuant to section 580.30, 
  5.34  ~~nor~~ the right to redeem granted pursuant to sections 580.23 and 
  5.35  581.10, or the right to reinstate a contract for deed under 
  5.36  section 559.21, and any excess cash, as that term is used 
  6.1   herein, collected by the receiver under clause (a), or any rents 
  6.2   and profits taken by the holder of the assignment under clause 
  6.3   (b), shall be credited to the amount required to be paid to 
  6.4   effect a reinstatement or redemption. 
  6.5      Sec. 6.  [EFFECTIVE DATE.] 
  6.6      Sections 1 to 4 are effective January 1, 1997, and apply to 
  6.7   leases entered into, renewed, or extended on or after that date. 
  6.8   Section 5 is effective January 1, 1997, and applies to contracts 
  6.9   for deed entered into, renewed, or extended on or after that 
  6.10  date.