1.1                          A bill for an act 
  1.2             relating to real property; establishing disclosure 
  1.3             requirements for sellers of residential real estate; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 513. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [513.60] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For purposes of sections 513.60 to 
  1.9   513.68, the terms defined in this section have the meanings 
  1.10  given them.  
  1.11     Subd. 2.  [PROSPECTIVE BUYER OR TRANSFEREE.] "Prospective 
  1.12  buyer or transferee" means a person negotiating or offering to 
  1.13  become an owner of residential real property by means of a 
  1.14  transfer for value.  
  1.15     Subd. 3.  [REAL ESTATE LICENSEE.] "Real estate licensee" 
  1.16  means a person licensed under chapter 82.  
  1.17     Subd. 4.  [RESIDENTIAL REAL PROPERTY OR RESIDENTIAL REAL 
  1.18  ESTATE.] "Residential real property" or "residential real 
  1.19  estate" means property occupied by, or intended to be occupied 
  1.20  by, one to four families as their residence, including common 
  1.21  interest communities as defined in section 515B.1-103, clause 
  1.22  (10).  
  1.23     Subd. 5.  [SELLER OR TRANSFEROR.] "Seller or transferor" 
  1.24  means a person who is an owner or has an interest, legal or 
  1.25  equitable, in residential real property.  
  2.1      Sec. 2.  [513.61] [APPLICABILITY.] 
  2.2      The seller disclosure requirements in sections 513.60 to 
  2.3   513.68 apply to the transfer of any interest in residential real 
  2.4   estate, whether by sale, exchange, contract for deed, lease with 
  2.5   an option to purchase, or any other option to purchase an 
  2.6   interest in residential real estate. 
  2.7      Sec. 3.  [513.62] [EXCEPTIONS.] 
  2.8      The seller disclosure requirements in sections 513.60 to 
  2.9   513.68 do not apply to any of the following: 
  2.10     (1) real property restricted to nonresidential use; 
  2.11     (2) a gratuitous transfer; 
  2.12     (3) a transfer pursuant to a court order; 
  2.13     (4) a transfer to a government or governmental agency; 
  2.14     (5) a transfer to a secured party by foreclosure or deed in 
  2.15  lieu of foreclosure; 
  2.16     (6) a transfer by inheritance; 
  2.17     (7) a transfer from a cotenant to one or more other 
  2.18  cotenants; 
  2.19     (8) a transfer made to a spouse, parent, grandparent, 
  2.20  child, or grandchild; 
  2.21     (9) a transfer between spouses resulting from a judgment of 
  2.22  marriage dissolution or from a property settlement agreement 
  2.23  incidental to that judgment; 
  2.24     (10) a transfer of newly constructed residential property 
  2.25  that has not been inhabited; 
  2.26     (11) an option to purchase a unit in a common interest 
  2.27  community, until exercised; 
  2.28     (12) a transfer to a person who controls or is controlled 
  2.29  by the grantor as those terms are defined with respect to a 
  2.30  declarant under section 515B.1-103, clause (2); or 
  2.31     (13) a transfer of special declarant rights under section 
  2.32  515B.3-104.  
  2.33     Sec.  4.  [513.63] [GENERAL DISCLOSURE REQUIREMENTS.] 
  2.34     Subdivision 1.  [CONTENTS.] (a) Before signing an agreement 
  2.35  to sell or transfer residential real property, the seller or 
  2.36  transferor shall make a written disclosure to the prospective 
  3.1   buyer or transferee.  The disclosure must include all material 
  3.2   facts pertaining to adverse physical conditions in the property 
  3.3   of which the seller or transferor is aware that could adversely 
  3.4   and significantly affect: 
  3.5      (1) an ordinary purchaser's rights and interests in the 
  3.6   property; or 
  3.7      (2) any intended use of the property of which the seller or 
  3.8   transferor is aware.  
  3.9      (b) The disclosure must be made in good faith and based 
  3.10  upon the best of the seller's or transferor's knowledge at the 
  3.11  time of the disclosure and must include, but is not limited to: 
  3.12     (1) property address, including city and county; 
  3.13     (2) language informing prospective buyer or transferee that 
  3.14  the disclosure is not a warranty or guaranty by the seller or 
  3.15  transferor; 
  3.16     (3) language informing prospective buyer or transferee that 
  3.17  the information provided by the seller or transferor is a 
  3.18  disclosure only and is not intended to be part of any contract 
  3.19  between the prospective buyer and seller; 
  3.20     (4) type of title evidence (registered torrens or 
  3.21  abstract); 
  3.22     (5) whether the property is located in a designated flood 
  3.23  plain; 
  3.24     (6) encroachments; 
  3.25     (7) easements, other than utility or drainage easements; 
  3.26     (8) association, covenants, reservations, or restrictions 
  3.27  affecting the property; 
  3.28     (9) damage by wind, fire, flood, or other disasters; 
  3.29     (10) whether the structure has been altered; 
  3.30     (11) insect, animal, or pest infestation; 
  3.31     (12) condition of structural systems, such as foundation 
  3.32  and roof; 
  3.33     (13) working condition of built-in appliances, heating, 
  3.34  plumbing, electrical, and other mechanical systems on the 
  3.35  property; 
  3.36     (14) written reports of any inspections performed on the 
  4.1   property; 
  4.2      (15) environmental concerns such as lead, asbestos, 
  4.3   formaldehyde, diseased trees, and soil problems; 
  4.4      (16) wells located on or serving the property as required 
  4.5   under section 103I.235; 
  4.6      (17) individual sewage treatment systems on or serving the 
  4.7   property as required under section 115.55; and 
  4.8      (18) buyer's or transferee's signature acknowledging 
  4.9   receipt of the seller's or transferor's disclosure.  
  4.10     Subd. 2.  [AFFECT ON OTHER LAW.] The specification of items 
  4.11  for disclosure in this section does not limit or abridge any 
  4.12  obligation for disclosure created by any other law. 
  4.13     Subd. 3.  [DISCLOSURE TO LICENSEE.] A seller or transferor 
  4.14  may provide the written disclosure required under sections 
  4.15  513.60 to 513.68 to a real estate licensee representing or 
  4.16  assisting the prospective buyer or transferee.  The written 
  4.17  disclosure provided to the real estate licensee representing or 
  4.18  assisting the prospective buyer or transferee is considered to 
  4.19  have been provided to the prospective buyer or transferee.  If 
  4.20  the written disclosure is provided to the real estate licensee 
  4.21  representing or assisting the prospective buyer or transferee, 
  4.22  the real estate licensee shall provide a copy to the prospective 
  4.23  buyer or transferee.  
  4.24     Sec. 5.  [513.64] [NOT MATERIAL FACTS.] 
  4.25     Subdivision 1.  [GENERAL.] It is not a material fact 
  4.26  relating to residential real property offered for sale and no 
  4.27  cause of action arises against a seller or transferor of 
  4.28  residential real property, or the real estate licensee 
  4.29  representing or assisting the seller or transferor, for failure 
  4.30  to disclose in any real estate transaction the fact or suspicion 
  4.31  that the real property:  
  4.32     (1) is or was occupied by an owner or occupant who is or 
  4.33  was suspected to be infected with human immunodeficiency virus 
  4.34  or diagnosed with acquired immunodeficiency syndrome; 
  4.35     (2) was the site of a homicide, suicide, accidental death, 
  4.36  natural death, perceived paranormal activity, or felony; or 
  5.1      (3) is located in a neighborhood containing any adult 
  5.2   family home, community-based residential facility, or nursing 
  5.3   home.  
  5.4      Subd. 2.  [OFFENDERS.] A seller or transferor has no duty 
  5.5   to disclose information regarding an offender who is required to 
  5.6   register under section 243.166, or about whom notification is 
  5.7   made under that section, if the seller or transferor, in a 
  5.8   timely manner, provides a written notice that information about 
  5.9   the predatory offender registry and persons registered with the 
  5.10  registry may be obtained by contacting the local law enforcement 
  5.11  agency where the property is located or the department of 
  5.12  corrections.  
  5.13     Subd. 3.  [INSPECTIONS.] (a) Except as provided in 
  5.14  paragraph (b), a seller or transferor is not required to 
  5.15  disclose information relating to the physical condition of the 
  5.16  real property, or any other information relating to the real 
  5.17  estate transaction, if a written report that discloses the 
  5.18  information has been prepared by a qualified third party and 
  5.19  provided to the prospective buyer or transferee.  For purposes 
  5.20  of this paragraph, "qualified third party" means a federal, 
  5.21  state, or local governmental agency, or any person whom the 
  5.22  seller or transferor, or prospective buyer or transferee, 
  5.23  reasonably believes has the expertise necessary to meet the 
  5.24  industry standards of practice for the type of inspection or 
  5.25  investigation that has been conducted by the third party in 
  5.26  order to prepare the written report.  
  5.27     (b) A seller or transferor shall disclose to the 
  5.28  prospective buyer or transferee material facts known by the 
  5.29  seller or transferor that contradict any information included in 
  5.30  a written report under paragraph (a) if a copy of the report is 
  5.31  provided to the seller or transferor.  
  5.32     Sec. 6.  [513.65] [LIABILITY FOR ERROR, INACCURACY, OR 
  5.33  OMISSION.] 
  5.34     Subdivision 1.  [NO LIABILITY.] Unless the prospective 
  5.35  buyer or transferee and seller or transferor agree to the 
  5.36  contrary in writing, a seller or transferor is not liable for 
  6.1   any error, inaccuracy, or omission of any information delivered 
  6.2   under sections 513.60 to 513.68 if the error, inaccuracy, or 
  6.3   omission was not within the personal knowledge of the seller or 
  6.4   transferor, or was based entirely on information provided by 
  6.5   other persons as specified in section 513.63, subdivision 3, and 
  6.6   ordinary care was exercised in transmitting the information.  It 
  6.7   is not a violation of sections 513.60 to 513.68 if the seller or 
  6.8   transferor fails to disclose information that could be obtained 
  6.9   only through inspection or observation of inaccessible portions 
  6.10  of the real estate or could be discovered only by a person with 
  6.11  expertise in a science or trade beyond the knowledge of the 
  6.12  seller or transferor.  
  6.13     Subd. 2.  [LIABILITY.] A seller or transferor who fails to 
  6.14  make a disclosure as required by sections 513.60 to 513.68 and 
  6.15  who knew or had reason to know of the condition of the real 
  6.16  property is liable to the prospective buyer or transferee.  A 
  6.17  person injured by a violation of this section may bring a civil 
  6.18  action and recover damages, together with costs and 
  6.19  disbursements, including costs of investigation and reasonable 
  6.20  attorney fees, and receive other equitable relief as determined 
  6.21  by the court.  An action under this subdivision must be 
  6.22  commenced within two years after the date on which the 
  6.23  prospective buyer or transferee closed the purchase or transfer 
  6.24  of the real property. 
  6.25     Sec. 7.  [513.66] [AMENDMENT TO DISCLOSURE.] 
  6.26     Subdivision 1.  [NOTICE.] A seller or transferor must 
  6.27  notify the prospective buyer or transferee immediately in 
  6.28  writing if there is any loss or damage to the property between 
  6.29  the date of disclosure and the date of closing, for any reason 
  6.30  including fire, vandalism, flood, earthquake, or act of God.  
  6.31  The risk of that loss or damage is on the seller or transferor.  
  6.32  If the property is destroyed or substantially damaged before the 
  6.33  closing date, the prospective buyer or transferee has the right 
  6.34  to cancel the purchase agreement at the option of the buyer or 
  6.35  transferee and earnest money deposited must be refunded to the 
  6.36  buyer or transferee.  
  7.1      Subd. 2.  [FAILURE TO NOTIFY; LIABILITY.] A seller or 
  7.2   transferor who fails to notify the prospective buyer or 
  7.3   transferee of any amendments to the initial disclosure required 
  7.4   under subdivision 1 is liable to the prospective buyer or 
  7.5   transferee as provided in section 513.65.  
  7.6      Sec. 8.  [513.67] [TRANSFER NOT INVALIDATED.] 
  7.7      A transfer subject to sections 513.60 to 513.68 is not 
  7.8   invalidated solely because of the failure of any person to 
  7.9   comply with a provision of those sections.  
  7.10     Sec. 9.  [513.68] [WAIVER.] 
  7.11     The written disclosure required under sections 513.60 to 
  7.12  513.68 may be waived if the seller or transferor and the 
  7.13  prospective buyer or transferee agree in writing.  Waiver of the 
  7.14  disclosure required under sections 513.60 to 513.68 does not 
  7.15  waive, limit, or abridge any obligation for seller disclosure 
  7.16  created by any other law.