SF 4801

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/12/2024 08:54am

A bill for an act
relating to real estate; limiting the exercise of a due-on-sale clause; amending
Minnesota Statutes 2022, sections 58.13, by adding a subdivision; 513.33, by
adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 58.13, is amended by adding a subdivision
to read:

Subd. 3.

Limitation on exercise of due-on-sale clauses.

(a) With respect to any loan
secured by residential real property, a lender is prohibited from exercising a due-on-sale
clause upon:

(1) a transfer on death deed conveying or assigning the deceased borrower's interest in
the property to a grantee beneficiary;

(2) a transfer by devise, descent, or operation of law upon the death of a joint tenant;

(3) a transfer by which the borrower's spouse or children become an owner of the
property;

(4) a transfer resulting from a dissolution of marriage decree, legal separation agreement,
or from an incidental property settlement agreement, by which the borrower's spouse becomes
an owner of the property; or

(5) a transfer into an inter vivos trust by which the borrower is and remains a beneficiary,
and which does not relate to a transfer of occupancy rights in the property.

(b) Paragraph (a) does not apply to a reverse mortgage made under section 47.58.

(c) Notwithstanding section 58.18, subdivision 4, a person aggrieved by a violation of
this subdivision has a cause of action for equitable relief, reasonable attorney fees, and costs.

Sec. 2.

Minnesota Statutes 2022, section 513.33, is amended by adding a subdivision to
read:

Subd. 4.

Creditor duty to notify debtor of right to repossess.

Notwithstanding this
section, a creditor who has a contractual right to repossess property and who has accepted
one or more late payments has an affirmative duty to provide advance written notice to a
debtor. The notice must state that, after the date on the notice, strict compliance with the
terms of the agreement is required and failure to strictly comply may result in repossession.