1.1                          A bill for an act 
  1.2             relating to real property; requiring that septic 
  1.3             systems be disclosed, inspected, and, if necessary, 
  1.4             repaired or replaced prior to transfer of real estate; 
  1.5             adapting the existing well disclosure form; amending 
  1.6             Minnesota Statutes 2000, sections 103I.235, 
  1.7             subdivision 1; 115.55, subdivision 6. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 2000, section 103I.235, 
  1.10  subdivision 1, is amended to read: 
  1.11     Subdivision 1.  [DISCLOSURE OF WELLS AND SEPTIC SYSTEM 
  1.12  INFORMATION TO BUYER.] (a) Before signing an agreement to sell 
  1.13  or transfer real property, the seller must disclose in writing 
  1.14  to the buyer information about the status and location of all 
  1.15  known wells on the property, by delivering to the buyer either a 
  1.16  statement by the seller that the seller does not know of any 
  1.17  wells on the property, or a disclosure statement indicating the 
  1.18  legal description and county, and a map drawn from available 
  1.19  information showing the location of each well to the extent 
  1.20  practicable.  In the disclosure statement, the seller must 
  1.21  indicate, for each well, whether the well is in use, not in use, 
  1.22  or sealed.  
  1.23     (b) At the time of closing of the sale, the disclosure 
  1.24  statement information~~,~~ required under paragraph (a) for wells 
  1.25  and under section 115.55, subdivision 6, for septic systems; the 
  1.26  name and mailing address of the buyer~~,~~; and the quartile, 
  2.1   section, township, and range in which each well or septic system 
  2.2   is located must be provided on a well and septic system 
  2.3   disclosure certificate signed by the seller or a person 
  2.4   authorized to act on behalf of the seller. 
  2.5      (c) A well and septic system disclosure certificate need 
  2.6   not be provided if the seller does not know of any wells or 
  2.7   septic systems on the property and the deed or other instrument 
  2.8   of conveyance contains the statement:  "The Seller certifies 
  2.9   that the Seller does not know of any wells or septic systems on 
  2.10  the described real property." 
  2.11     (d) If a deed is given pursuant to a contract for deed, the 
  2.12  well and septic system disclosure certificate required by this 
  2.13  subdivision shall be signed by the buyer or a person authorized 
  2.14  to act on behalf of the buyer.  If the buyer knows of no 
  2.15  wells or septic systems on the property, a well and septic 
  2.16  system disclosure certificate is not required if the following 
  2.17  statement appears on the deed followed by the signature of the 
  2.18  grantee or, if there is more than one grantee, the signature of 
  2.19  at least one of the grantees:  "The Grantee certifies that the 
  2.20  Grantee does not know of any wells or septic systems on the 
  2.21  described real property."  The statement and signature of the 
  2.22  grantee may be on the front or back of the deed or on an 
  2.23  attached sheet and an acknowledgment of the statement by the 
  2.24  grantee is not required for the deed to be recordable. 
  2.25     (e) This subdivision does not apply to the sale, exchange, 
  2.26  or transfer of real property:  
  2.27     (1) that consists solely of a sale or transfer of severed 
  2.28  mineral interests; or 
  2.29     (2) that consists of an individual condominium unit as 
  2.30  described in chapters 515 and 515B. 
  2.31     (f) For an area owned in common under chapter 515 or 515B 
  2.32  the association or other responsible person must report to the 
  2.33  commissioner by July 1, 1992, the location and status of all 
  2.34  wells in the common area.  The association or other responsible 
  2.35  person must notify the commissioner within 30 days of any change 
  2.36  in the reported status of wells. 
  3.1      (g) For real property sold by the state under section 
  3.2   92.67, the lessee at the time of the sale is responsible for 
  3.3   compliance with this subdivision. 
  3.4      (h) If the seller fails to provide a required well and 
  3.5   septic system disclosure certificate, the buyer, or a person 
  3.6   authorized to act on behalf of the buyer, may sign a well and 
  3.7   septic system disclosure certificate based on the information 
  3.8   provided on the disclosure statement required by this 
  3.9   section and section 115.55, subdivision 6, or based on other 
  3.10  available information. 
  3.11     (i) A county recorder or registrar of titles may not record 
  3.12  a deed or other instrument of conveyance dated after October 31, 
  3.13  1990, for which a certificate of value is required under section 
  3.14  272.115, or any deed or other instrument of conveyance dated 
  3.15  after October 31, 1990, from a governmental body exempt from the 
  3.16  payment of state deed tax, unless the deed or other instrument 
  3.17  of conveyance contains the statement made in accordance with 
  3.18  paragraph (c) or (d) or is accompanied by the well and septic 
  3.19  system disclosure certificate containing all the information 
  3.20  required by paragraph (b) or (d).  The county recorder or 
  3.21  registrar of titles must not accept a certificate unless it 
  3.22  contains all the required information.  The county recorder or 
  3.23  registrar of titles shall note on each deed or other instrument 
  3.24  of conveyance accompanied by a well and septic system disclosure 
  3.25  certificate that the well and septic system disclosure 
  3.26  certificate was received.  The notation must include the 
  3.27  statement "No wells or septic systems on property" if the 
  3.28  disclosure certificate states there are no wells or septic 
  3.29  systems on the property.  The well and septic system disclosure 
  3.30  certificate shall not be filed or recorded in the records 
  3.31  maintained by the county recorder or registrar of titles.  After 
  3.32  noting "No wells or septic systems on property" on the deed or 
  3.33  other instrument of conveyance, the county recorder or registrar 
  3.34  of titles shall destroy or return to the buyer the well and 
  3.35  septic system disclosure certificate.  The county recorder or 
  3.36  registrar of titles shall collect from the buyer or the person 
  4.1   seeking to record a deed or other instrument of conveyance, a 
  4.2   fee of $20 for receipt of a completed well and septic system 
  4.3   disclosure certificate.  By the tenth day of each month, the 
  4.4   county recorder or registrar of titles shall transmit the 
  4.5   well and septic system disclosure certificates to the 
  4.6   commissioner of health.  By the tenth day after the end of each 
  4.7   calendar quarter, the county recorder or registrar of titles 
  4.8   shall transmit to the commissioner of health $17.50 of the fee 
  4.9   for each well and septic system disclosure certificate received 
  4.10  during the quarter.  The commissioner shall maintain the 
  4.11  well and septic system disclosure certificate for at least six 
  4.12  years.  The commissioner may store the certificate as an 
  4.13  electronic image.  A copy of that image shall be as valid as the 
  4.14  original. 
  4.15     (j) No new well disclosure on the certificate is required 
  4.16  under this subdivision if the buyer or seller, or a person 
  4.17  authorized to act on behalf of the buyer or seller, certifies on 
  4.18  the deed or other instrument of conveyance that the status and 
  4.19  number of wells on the property have not changed since the last 
  4.20  previously filed well and septic system disclosure certificate.  
  4.21  The following statement, if followed by the signature of the 
  4.22  person making the statement, is sufficient to comply with the 
  4.23  certification requirement of this paragraph:  "I am familiar 
  4.24  with the property described in this instrument and I certify 
  4.25  that the status and number of wells on the described real 
  4.26  property have not changed since the last previously filed well 
  4.27  disclosure certificate."  The certification and signature may be 
  4.28  on the front or back of the deed or on an attached sheet and an 
  4.29  acknowledgment of the statement is not required for the deed or 
  4.30  other instrument of conveyance to be recordable.  If this 
  4.31  paragraph applies, the well disclosure portion of the well and 
  4.32  septic system disclosure certificate need not be filled in.  
  4.33     (k) The commissioner in consultation with county recorders 
  4.34  shall prescribe the form for a well and septic system disclosure 
  4.35  certificate and provide well and septic system disclosure 
  4.36  certificate forms to county recorders and registrars of titles 
  5.1   and other interested persons. 
  5.2      (l) Failure to comply with a requirement of this 
  5.3   subdivision does not impair: 
  5.4      (1) the validity of a deed or other instrument of 
  5.5   conveyance as between the parties to the deed or instrument or 
  5.6   as to any other person who otherwise would be bound by the deed 
  5.7   or instrument; or 
  5.8      (2) the record, as notice, of any deed or other instrument 
  5.9   of conveyance accepted for filing or recording contrary to the 
  5.10  provisions of this subdivision. 
  5.11     Sec. 2.  Minnesota Statutes 2000, section 115.55, 
  5.12  subdivision 6, is amended to read: 
  5.13     Subd. 6.  [DISCLOSURE OF INDIVIDUAL SEWAGE TREATMENT SYSTEM 
  5.14  TO BUYER.] (a) Before signing an agreement to sell or transfer 
  5.15  real property, the seller or transferor must disclose in writing 
  5.16  to the buyer or transferee information on how sewage generated 
  5.17  at the property is managed.  The disclosure must be made by 
  5.18  delivering a statement to the buyer or transferee that either: 
  5.19     (1) the sewage goes to a facility permitted by the agency; 
  5.20  or 
  5.21     (2) the sewage does not go to a permitted facility, is 
  5.22  therefore subject to applicable requirements, and describes the 
  5.23  system in use, including the legal description of the property, 
  5.24  the county in which the property is located, and a map drawn 
  5.25  from available information showing the location of the system on 
  5.26  the property to the extent practicable.  If the seller or 
  5.27  transferor has knowledge that an abandoned individual sewage 
  5.28  treatment system exists on the property, the disclosure must 
  5.29  include a map showing its location.  In the disclosure statement 
  5.30  the seller or transferor must indicate whether the individual 
  5.31  sewage treatment system is in use and, to the seller's or 
  5.32  transferor's knowledge, in compliance with applicable sewage 
  5.33  treatment laws and rules.  The disclosure must state whether, to 
  5.34  the seller's knowledge, an inspection that satisfies all 
  5.35  requirements of this section has been performed on the system 
  5.36  within the past 18 months and, if so, the date of the inspection 
  6.1   and whether the inspection approved the system or whether a 
  6.2   certificate of noncompliance was issued. 
  6.3      (b) In connection with the sale of the property, the 
  6.4   individual sewage treatment system must be tested and, if 
  6.5   necessary, repaired or replaced unless the system has passed a 
  6.6   test complying with this section within the 18-month period 
  6.7   immediately preceding the sale. 
  6.8      (c) No later than the time of closing of the sale, the 
  6.9   seller or other transferor must present to the buyer or other 
  6.10  transferee a certificate containing the information required 
  6.11  under paragraph (a) and stating: 
  6.12     (1) that each individual sewage treatment system in use on 
  6.13  the property has been tested in compliance with this section 
  6.14  within the 18 months preceding the date of closing; 
  6.15     (2) whether the system passed the first test; 
  6.16     (3) whether the system was altered, repaired, or replaced 
  6.17  since the first test; 
  6.18     (4) whether the system has passed a test since the first 
  6.19  test and, if so, the date of the test and the name of the person 
  6.20  or firm that conducted the test; and 
  6.21     (5) if the system has not passed a test within the 
  6.22  preceding month, that an escrow agreement that complies with 
  6.23  this subdivision has been entered into and appropriately funded. 
  6.24     (d) The certificate required under paragraph (c) must be 
  6.25  provided as a part of the well and septic system disclosure 
  6.26  certificate required under section 103I.235. 
  6.27     (e) If at the time of the closing the certificate required 
  6.28  under paragraph (c) indicates that the individual sewage 
  6.29  treatment system has not been tested within the preceding 18 
  6.30  months or that it has not passed a test within that time period, 
  6.31  the seller or other transferor and the buyer or other transferee 
  6.32  must enter into an escrow agreement that complies with this 
  6.33  paragraph.  The escrow agreement must: 
  6.34     (1) specify that the seller and buyer have agreed upon an 
  6.35  amount of money to place into escrow sufficient to repair the 
  6.36  deficiencies shown by the test that the system failed or, if no 
  7.1   test has been conducted, the amount of money needed to replace 
  7.2   the system with a complying system; 
  7.3      (2) provide that the seller has given to the escrow agent 
  7.4   the amount of money agreed to in clause (1); 
  7.5      (3) have an escrow agent as a neutral party to the 
  7.6   agreement; 
  7.7      (4) provide that the escrow agent shall, with the approval 
  7.8   of the buyer, disburse the funds directly to qualified persons 
  7.9   who have submitted proper bills for testing, repair, or 
  7.10  replacement of the system, provided that payments may be made 
  7.11  for repair or replacement only if the system has subsequently 
  7.12  passed a test; 
  7.13     (5) provide that any funds remaining in escrow after all 
  7.14  payments specified in clause (4) must be disbursed to the buyer 
  7.15  or as otherwise agreed in the escrow agreement; and 
  7.16     (6) provide that the seller must provide additional funds 
  7.17  if the escrowed funds prove insufficient.  
  7.18     (f) Unless the buyer or transferee and seller or transferor 
  7.19  agree to the contrary in writing before the closing of the sale, 
  7.20  a seller or transferor who fails to disclose the existence or 
  7.21  known status of an individual sewage treatment system at the 
  7.22  time of sale, and who knew or had reason to know of the 
  7.23  existence or known status of the system, is liable to the buyer 
  7.24  or transferee for costs relating to bringing the system into 
  7.25  compliance with the individual sewage treatment system rules and 
  7.26  for reasonable attorney fees for collection of costs from the 
  7.27  seller or transferor.  An action under this subdivision must be 
  7.28  commenced within two years after the date on which the buyer or 
  7.29  transferee closed the purchase or transfer of the real property 
  7.30  where the system is located. 
  7.31     Sec. 3.  [EFFECTIVE DATE.] 
  7.32     Sections 1 and 2 are effective January 1, 2002.