2005 Minnesota Statutes

CHAPTER 41. Family farm security program

  41.01 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.02 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.03 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.04 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.041 Repealed, 1951 c 68 s 6 

  41.05 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.06 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.07 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.08 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.09 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.10 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.101 Repealed, 1951 c 68 s 6 

  41.11 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

    41.12 Subdivision 1.  Repealed, 1973 c 87 s 3; 
 1973 c 494 s 3 

    Subd. 2.  Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

    Subd. 3.  Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

    Subd. 4.  Repealed, 1951 c 68 s 6 

  41.13 Repealed, 1951 c 68 s 6 

  41.14 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.15 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.16 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.17 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.18 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.19 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.20 Repealed, 1951 c 68 s 6 

  41.21 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.22 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.23 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.24 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.25 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.26 Repealed, 1951 c 68 s 6 

  41.27 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.28 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.29 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.30 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.31 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.32 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.33 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.34 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.35 Repealed, 1951 c 68 s 6 

  41.36 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.37 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.38 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.39 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.40 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.41 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.42 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.43 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.44 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.45 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.46 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

  41.47 Repealed, 1973 c 87 s 3; 1973 c 494 s 3 

     41.51 Purpose. 

    In order to aid farmers in obtaining credit for the 
 acquisition of farm real estate, there is established a family 
 farm security program to provide state money in guarantee of 
 loans made according to this chapter.  The family farm security 
 program established by this chapter, and the issuance of state 
 bonds under section 41.62, is necessary to develop the state's 
 agricultural resources. 

    HIST: 1976 c 210 s 1; 1Sp1986 c 2 art 1 s 1 

     41.52 Definitions. 

    Subdivision 1.    Scope.  For the purposes of Laws 1976, 
 chapter 210 the following terms shall have the meanings given. 

    Subd. 2.    Applicant.  "Applicant" means a natural 
 person applying for a family farm security loan. 

    Subd. 3.    Council.  "Council" means the Family Farm 
 Advisory Council. 

    Subd. 4.    Commissioner.  "Commissioner" means the 
 commissioner of agriculture. 

    Subd. 5.    Family farm security loan.  "Family farm 
 security loan", except in the case of a seller-sponsored loan, 
 means a loan secured by a first real estate mortgage.  In the 
 case of a seller-sponsored loan, it means a loan secured either 
 by a real estate mortgage evidenced by one or more notes or 
 secured by a contract for deed.  It shall be used for 
 acquisition of farm land and shall be approved by the 
 commissioner.  This loan shall be guaranteed and may qualify for 
 a payment adjustment as defined in subdivision 10 and may be a 
 seller-sponsored loan as defined in subdivision 8. 

    Subd. 6.    Farm land.  "Farm land" means land in 
 Minnesota that is capable of supporting the commercial 
 production of agricultural crops, livestock or livestock 
 products, poultry products, milk or dairy products, or fruit or 
 other horticultural products. 

    Subd. 7.    Lender.  "Lender" means any bank, savings 
 bank, mutual savings bank, savings association, organized under 
 the laws of this state or the United States, trust companies, 
 trust companies acting as fiduciaries, and other financial 
 institutions subject to the supervision of the commissioner of 
 commerce; and any foreign or domestic corporation engaged in the 
 business of insurance which is subject to the supervision of the 
 commissioner of commerce as defined in section 60A.02, 
 subdivision 3; and any financial institution operating under the 
 supervision of the farm credit administration.  In case of 
 seller-sponsored loans as authorized in section 41.58, "lender" 
 also means the seller of the property. 

    Subd. 8.    Seller-sponsored loan.  "Seller-sponsored 
 loan" means a loan in which part or all of the purchase price of 
 the farm is financed by a loan from the seller of the property 
 who is a natural person, a partnership or a family farm 
 corporation as defined in section 500.24, and the remainder of 
 the loan, if any, is supplied by a lender as defined in 
 subdivision 7 or other person.  This loan shall be secured by a 
 real estate mortgage evidenced by one or more notes that may 
 carry different interest rates, or by a contract for deed. 

    Subd. 9.    Family farm loan guarantee.  "Family farm 
 loan guarantee" means an agreement that in the event of default 
 the state of Minnesota shall pay the lender 90 percent of the 
 sums due and payable under the first real estate mortgage, or, 
 in the case of a seller-sponsored loan, 90 percent of the sums 
 due and payable under the note and mortgage or contract for deed.

    Subd. 10.    Payment adjustment.  "Payment adjustment" 
 means an amount of money equal to four percent interest on the 
 principal balance of the family farm security loan. 

    Subd. 11.    Cooperating agency.  "Cooperating agency" 
 means any individual, financial institution, state or federal 
 agency, or any other legal entity which executes a memorandum of 
 understanding with the family farm security program.  

    Subd. 12.    Memorandum of understanding.  "Memorandum 
 of understanding" means an agreement outlining conditions under 
 which a cooperating agency will provide farm real estate loan 
 funds not to be included under a family farm loan guarantee to 
 applicants.  

    Subd. 13.    Participant.  "Participant" means an 
 applicant who has received final approval for a guarantee which 
 has been fully executed by the state.  

    HIST: 1976 c 210 s 2; 1977 c 170 s 1,2; 1981 c 261 s 4-8; 1983 
 c 289 s 114 subd 1; 1983 c 332 s 2; 1984 c 655 art 1 s 92; 1995 
 c 202 art 1 s 25 

     41.53 Administration and rules. 

    Subdivision 1.   Commissioner's powers.  The family farm 
 security program shall be administered by the commissioner. 

    Subd. 2.    Rules.  The commissioner may adopt rules 
 necessary for the efficient administration of sections 41.51 to 
 41.57; 41.58, subdivisions 1 and 2; 41.59, subdivision 1; and 
 41.61.  

    Subd. 3.   Report.  On or before January 1 of each year 
 the commissioner shall submit a report to the legislature, as 
 provided in section 3.195, concerning the actions of the 
 commissioner and the status of loans granted. 

    HIST: 1976 c 210 s 3; 1978 c 674 s 9; 1983 c 332 s 3; 1984 c 
 640 s 32; 1997 c 7 art 5 s 7 

  41.54 Repealed, 1993 c 337 s 20 

     41.55 Eligibility. 

    A family farm security loan approval may be granted if the 
 following criteria are satisfied: 

    (a) that the applicant is a resident of the state of 
 Minnesota; 

    (b) that the applicant has sufficient education, training, 
 or experience in the type of farming for which the loan is 
 desired and participation in a farm management program approved 
 by the commissioner; 

    (c) that the applicant and the applicant's dependents and 
 spouse have total net worth valued at less than $75,000 and have 
 demonstrated a need for the loan; 

    (d) that the applicant intends to purchase farm land to be 
 used by the applicant for agricultural purposes; 

    (e) that the applicant is credit worthy according to 
 standards prescribed by the commissioner.  

    HIST: 1976 c 210 s 5; 1979 c 236 s 1; 1983 c 332 s 5; 1Sp1985 
 c 14 art 1 s 4; 1986 c 444; 1992 c 381 s 3 

     41.56 Procedure. 

    Subdivision 1.    Loan application; denial.  Any person 
 desiring to acquire farm land may make application with a lender 
 for a family farm security loan.  Upon completion of the 
 appropriate forms by the applicant and the lender, the applicant 
 shall forward the application to the commissioner for approval.  
 The commissioner shall prescribe a screening process to 
 determine eligibility and may arrange for local lenders to 
 perform this function for the state.  The commissioner may 
 approve the application if the criteria of sections 41.55 and 
 41.57 are satisfied, and shall notify the applicant and the 
 lender of the decision. 

    If the application is denied, the commissioner shall 
 provide the applicant with a written statement of the reasons 
 for the denial.  An applicant who later becomes eligible may 
 reapply. 

    Subd. 2.    Approved loans.  On approving a loan 
 application, the commissioner shall notify the applicant and 
 lender of the decision.  The applicant and the lender may then 
 complete the transaction for the loan.  

    Subd. 3.    Default, filing claim.  Within 90 days of a 
 default on a guaranteed family farm security loan, the lender 
 shall send notice to the participant stating that the 
 commissioner must be notified if the default continues for 180 
 days, and the consequences of that default.  The lender and the 
 participant may agree to take any steps reasonable to assure the 
 fulfillment of the loan obligation. 

    If a participant cannot meet scheduled loan payments 
 because of unique or temporary circumstances and the participant 
 proves sufficiently to the commissioner that the necessary cash 
 flow can be generated in the future, the commissioner may use 
 money in the special account in section 41.61, subdivision 1, to 
 meet the participant's loan obligation for up to two consecutive 
 years.  This money must be paid back within eight years with 
 interest at an annual percentage rate four percent below the 
 prevailing Federal Land Bank rate. 

    A contract for deed participant may enter into an agreement 
 with the commissioner whereby the outstanding principal balance 
 of the loan is reduced by a minimum of ten percent, the loan is 
 reamortized for the years remaining, and the commissioner agrees 
 that the state shall pay the lender 100 percent of the sum due 
 and payable if a default occurs during the remaining term of the 
 reamortized loan.  

    After 180 days from the initial default, if the participant 
 has not made arrangements to meet the obligation, the lender 
 shall file a claim with the commissioner, identifying the loan 
 and the nature of the default, and assigning to the state all of 
 the lender's security and interest in the loan in exchange for 
 payment according to the terms of the family farm security loan 
 guarantee.  In the case of a seller-sponsored loan, the seller 
 may elect to pay the commissioner all sums owed the commissioner 
 by the participant and retain title to the property in lieu of 
 payment by the commissioner under the terms of the loan 
 guarantee.  If the commissioner determines that the terms of the 
 family farm security loan guarantee have been met, the 
 commissioner shall authorize payment of state funds to the 
 lender, and shall notify the defaulting party.  The state of 
 Minnesota shall then succeed to the interest of the mortgagee or 
 the vendor of the contract for deed.  Taxes shall be levied and 
 paid on the land as though the owner were a natural person and 
 not a political subdivision of the state.  The commissioner may, 
 on behalf of the state, commence foreclosure or termination 
 proceedings in the manner provided by law. 

    The commissioner may add any unpaid principal and interest 
 payments on special assistance loans to the interest adjustment 
 obligation balance provided for in section 41.57, subdivision 
 2.  The commissioner and participant may agree to any other 
 terms of repayment that are mutually satisfactory. 

    Subd. 4.    Sale of defaulted property.  In the event 
 that title to any property is acquired by the state, upon 
 conveyance of title to the state and expiration of the period of 
 redemption, the commissioner shall undertake to sell the 
 property by publishing a notice of the impending sale at least 
 once each week for four successive weeks in a legal newspaper 
 and also in a newspaper of general distribution in the county in 
 which the property to be sold is situated.  The notice must 
 describe the lots or tracts to be offered and the terms of 
 sale.  Except as further provided, the terms and method of sale 
 shall be determined by the commissioner.  

    The commissioner shall first attempt to sell the property 
 to a person who is eligible for a family farm security loan.  If 
 the commissioner is unable to effect a sale to an eligible 
 person, the commissioner shall attempt to sell the property for 
 cash as provided in subdivision 4a.  If the commissioner is 
 unable to effect a sale to an eligible person or for cash, or if 
 the commissioner finds that sale to an eligible person or for 
 cash would not best protect the interests of the state, the 
 commissioner may sell the property on terms which the 
 commissioner finds will best protect the interests of the state. 
 The commissioner may lease any real property which the 
 commissioner is unable to sell with reasonable promptness.  In 
 any event, any acquired farm property must be sold within three 
 years after the conveyance of title to the state or after the 
 expiration of the period of redemption.  The commissioner may 
 contract for the services of a licensed real estate agent or 
 broker to assist in selling any property acquired under this 
 section and may pay for the services from the proceeds of the 
 sale before proceeds are distributed under subdivision 4b. 

    In lieu of selling property under this subdivision, the 
 commissioner may utilize participation under the beginning 
 farmer program under chapter 41B. 

    In selling property acquired under this section, the 
 commissioner may not sell the property to a relative within the 
 second degree of kindred according to common law of a person who 
 has defaulted. 

    Subd. 4a.    Sale for cash.  In selling any farm 
 property for cash, the commissioner shall follow the procedures 
 provided in this subdivision.  The commissioner may sell the 
 property to the highest bidder by taking sealed bids, by bids at 
 public auction, or through negotiation.  The commissioner may 
 refuse to accept any or all bids.  The successful bidder shall 
 submit bid security in the form of a certified check, money 
 order, or bank draft in the amount of five percent of the bid 
 price on the day of selection and shall remit the balance of the 
 purchase price within 90 days of the date of sale.  Upon 
 remittance by the purchaser of the balance within 90 days of the 
 date of sale, the commissioner shall transfer title to the 
 property, including any acquired mineral rights, to the 
 purchaser by quitclaim deed.  In the event that the purchaser 
 fails to remit all of the balance within 90 days of the date of 
 sale, the purchaser forfeits all rights to the property and any 
 money paid for the property and the commissioner shall 
 recommence the sale process specified in this subdivision.  

    Subd. 4b.    Proceeds of sale.  Proceeds from the sale 
 of a parcel of property obtained by the state under this section 
 shall be paid into the state family farm program bond account to 
 the extent that proceeds of bonds issued under section 41.62, 
 have been expended by the commissioner of agriculture for the 
 purposes specified in section 41.62.  The balance of the sale 
 proceeds shall be paid into the general fund to the extent that 
 funds were disbursed as payment adjustments by the commissioner 
 and into the special account authorized in section 41.61, 
 subdivision 1, to the extent that funds from the special account 
 were disbursed according to the terms of the family farm 
 security loan guarantee and for any insurance premiums or taxes 
 paid on the property.  Proceeds in excess of these amounts shall 
 be paid to the lender to the extent that payment to the lender 
 pursuant to the loan guarantee was less than the money due and 
 payable to the lender under the family farm security loan. 
 Proceeds in excess of these amounts shall be paid to cooperating 
 agencies according to the terms of the family farm memorandum of 
 understanding.  Additional proceeds, if any, shall be paid into 
 the special account authorized in section 41.61, subdivision 1.  

    Subd. 5.    Guarantee void.  The loan guarantee is void 
 only if the guaranteed loan was obtained or retained by fraud or 
 material misrepresentation of which the original lender or 
 subsequent holder had actual knowledge.  

    Subd. 6.    Secondary market guarantees without recourse. 
  In the case of all family farm loan guarantees, except 
 seller-sponsored loan guarantees, the commissioner is authorized 
 to extend said guarantees to a bona fide purchaser of the 
 guaranteed portion of the note and mortgage executed by an 
 original lender and borrower without recourse by the state of 
 Minnesota against said bona fide purchaser of said guaranteed 
 portion, provided the state of Minnesota is made the named 
 beneficiary of a title insurance policy insuring marketable 
 title to the farm land in question and the state of Minnesota is 
 given the written opinion of original lender's counsel that the 
 original loan transaction was fully closed, that disbursements 
 were made correctly, that lender's security was properly 
 perfected and constitutes a valid first lien upon the property, 
 that original borrower's note is a valid and binding obligation, 
 and that all conditions deemed desirable to assure the validity 
 and legal enforceability of the note and mortgage and all 
 agreements delivered to the original lender in connection with 
 the original loan have been complied with satisfactorily.  In 
 the event title insurance is, as a practical matter, unavailable 
 or an undue hardship, the commissioner is authorized to provide 
 said guarantee without recourse by the state of Minnesota 
 against said bona fide purchaser provided the state of Minnesota 
 is given the written opinion of competent local counsel 
 concerning marketable title and the written opinion of original 
 lender's counsel that the original loan transaction was fully 
 closed, that disbursements were made correctly, that lender's 
 security was properly perfected and constitutes a valid first 
 lien upon the property, that original borrower's note is a valid 
 and binding obligation, and that all conditions deemed desirable 
 to assure the validity and legal enforceability of the note and 
 mortgage and all agreements delivered to the original lender in 
 connection with the original loan have been complied with 
 satisfactorily.  The making of such a guarantee without recourse 
 shall not affect the rights the state of Minnesota may have with 
 respect to the original lender, mortgagor, or any other party.  

    Subd. 7.    Insurance.  The commissioner may insure the 
 state against loss to farm properties acquired under this 
 section by fire, lightning, windstorm, tornado, flood, or hail, 
 using any insurance company licensed to do business in 
 Minnesota.  The insurance may be in an amount the commissioner 
 determines and the commissioner may pay the premiums from the 
 special account created in section 41.61, subdivision 1.  

    HIST: 1976 c 210 s 6; 1977 c 170 s 4,5; 1979 c 236 s 2; 1981 c 
 261 s 10-13; 1983 c 332 s 6-10; 1985 c 276 s 1-3; 1986 c 444; 
 1Sp1986 c 2 art 1 s 2; 1987 c 396 art 1 s 1; 1992 c 602 s 5 

     41.57 Terms of the loan. 

    Subdivision 1.    Forms; appraisal procedure; limitations. 
  A family farm security loan shall be transacted on forms 
 approved by the commissioner with the advice of the attorney 
 general.  The commissioner shall establish by rule an appraisal 
 procedure and shall thereby determine the value and income 
 potential of the property before guaranteeing a family farm 
 security loan.  No guarantee shall be made if the purchase price 
 of the farm land exceeds the appraisal value as determined under 
 the provisions of this subdivision. 

    Subd. 2.    Payment adjustment.  To be eligible for 
 payment adjustment a family farm security loan shall have a 
 maximum term of 20 years and shall provide for payments at least 
 annually so that the loan shall be amortized over its term with 
 equal annual payments of principal and interest, adjusted for 
 variable interest rates, except that a loan to be amortized over 
 a term of ten years or less need not provide for equal annual 
 payments of principal and interest.  During the first ten years 
 of a family farm security loan, the commissioner shall annually 
 pay to the lender four percent of the outstanding balance due at 
 the beginning of that year and the participant shall pay the 
 remainder of the payment due.  After the tenth year, the 
 participant shall make payments according to the stated interest 
 rate.  The participant may petition the commissioner for one 
 ten-year renewal of the payment adjustment.  If a renewal is 
 granted, in the 21st year the participant shall reimburse the 
 commissioner for the sums paid on the participant's behalf under 
 this subdivision.  If no renewal is granted, the participant 
 shall reimburse the commissioner in the 11th year for the sums 
 paid on the participant's behalf under this subdivision.  The 
 obligation to repay the payment adjustment is a lien against the 
 property.  If the participant does not reimburse the state 
 within the required time period, the commissioner may charge 
 interest at the rate of two percent above the prevailing rate 
 charged by the Federal Land Bank of St. Paul on the net amount 
 owed for the period of delinquency.  To recover the adjustment 
 payment due in delinquency cases, the commissioner may proceed 
 to foreclose by advertisement on the lien as if it were a real 
 estate mortgage following the procedures in chapter 580.  

    Subd. 2a.    Settlements before due date.  The 
 commissioner may settle interest adjustment payment accounts of 
 participants before the contractual due date.  These settlements 
 may include receiving partial payments for outstanding 
 obligations if the participant and cooperating lender agree to 
 voluntarily withdraw from the program. 

    Subd. 2b.    Discounting using present value.  The 
 commissioner may settle interest adjustment payment accounts by 
 discounting the obligation using a present value calculation.  
 The interest rate used in this calculation must be three percent 
 above the current Farm Credit Bank of St. Paul wholesale loan 
 rate to the agricultural credit associations as certified each 
 month by the commissioner. 

    Subd. 3.    Annual review.  (a) The participant and the 
 participant's dependents and spouse shall annually submit to the 
 commissioner a statement of their net worth.  If their net worth 
 in any year exceeds the sum of $135,000, the participant shall 
 be ineligible for a payment adjustment in that year. 

    (b) The participant shall annually submit to the 
 commissioner evidence of participation in an approved farm 
 management program for at least the first ten years of the 
 family farm security loan.  The commissioner may waive this 
 requirement if the participant requests a waiver and provides 
 justification. 

    Subd. 4.    Additional payment; principal reduction.  (a)
 The commissioner must annually pay to qualified sellers of 
 property, financed by a family farm security loan, an amount 
 approximately equal to the additional state income tax paid as a 
 result of the inclusion in gross income of the interest and 
 payment adjustment earned on a seller sponsored family farm 
 security loan.  No payment may be made under this subdivision to 
 a qualified seller, unless the seller agrees to reduce the 
 outstanding principal amount of the loan by three percent 
 effective prior to or beginning the year in which application is 
 made. 

    (b) The payment amount must be determined as follows:  In 
 order to qualify for a payment, the seller must apply to the 
 commissioner by October 1, following the previous tax year.  The 
 application must include a copy of the seller's previous tax 
 year state income tax return.  The commissioner must recompute 
 the seller's total state income tax liability that would be due 
 if the interest and payment adjustment amounts were not 
 includable in gross income for state income tax purposes.  The 
 commissioner may require the seller to compute these amounts as 
 part of the application.  For any calendar year the amount of 
 the payment equals the reduction in state income tax liability 
 that would occur if the interest and payment adjustment were not 
 included in gross income for state tax purposes. 

    (c) If the seller elects to receive payments under this 
 subdivision, the buyer's payments of principal and interest 
 under the loan must be recalculated.  The revised payment 
 schedule must reflect the three percent reduction in the 
 outstanding principal required by paragraph (a) and must provide 
 for equal payments over the remaining term of the loan.  The 
 interest rate on the loan may not be increased. 

    (d) The commissioner may make the payments under this 
 subdivision in the same manner provided for the payment 
 adjustment under subdivision 2. 

    (e) For purposes of this subdivision, the following terms 
 have the meanings given: 

    (1) "Gross income" means gross income as defined for 
 purposes of chapter 290. 

    (2) "Qualified seller" means an individual who sold farm 
 land under a seller sponsored loan after April 1, 1978, and 
 before December 31, 1985, and who is a resident of Minnesota 
 during the calendar year and is subject to the payment of 
 Minnesota income taxes. 

    HIST: 1976 c 210 s 7; 1977 c 170 s 6; 1977 c 347 s 11; 1979 c 
 236 s 3; 1983 c 332 s 11; 1985 c 276 s 4,5; 1986 c 444; 1Sp1986 
 c 2 art 1 s 3; 1988 c 672 s 1; 1992 c 381 s 4; 1992 c 602 s 6,7 

     41.58 Seller-sponsored loans. 

    Subdivision 1.    Authorization.  The commissioner may 
 provide a guarantee to the lenders on seller-sponsored loans 
 when the buyer satisfies the eligibility criteria in section 
 41.55.  The commissioner may also provide a payment adjustment 
 on behalf of the participant in the case of seller-sponsored 
 loans.  

    Subd. 2.    Negotiability and marketability.  A 
 seller-sponsored loan shall be secured by a purchase money real 
 estate mortgage evidenced by negotiable note or notes as defined 
 in section 336.3-104 or by a contract for deed.  The 
 commissioner must be notified in writing within 30 days after a 
 family farm security loan note is sold or exchanged or vendor's 
 interest in a contract for deed is sold, exchanged, assigned or 
 transferred. 

    Subd. 3. Repealed, 1Sp1985 c 14 art 1 s 59 

    HIST: 1976 c 210 s 8; 1977 c 170 s 7; 1978 c 763 s 1; 1981 c 
 261 s 14; 1983 c 332 s 12 

     41.59 Sale or conveyance. 

    Subdivision 1.    Immediate repayment of loan.  Any 
 participant who sells or conveys the property for which a family 
 farm security loan was issued shall immediately retire the 
 entire indebtedness still owed to the lender and the 
 commissioner.  The new owner may negotiate a new family farm 
 security loan, but under no circumstances may the original loan 
 be assumed by the new owner.  If the new owner is granted a 
 family farm security loan, the new owner may agree to assume the 
 original participant's responsibility to reimburse the 
 commissioner for a payment adjustment received, as a portion of 
 the total purchase price.  That portion of the purchase price 
 may not be included under the guarantee or considered when 
 calculating the payment adjustment for the new owner.  This 
 subdivision is not intended to prohibit the participant from 
 granting a security interest in the property for the purposes of 
 securing an additional loan. 

    Any participant who fails to personally maintain the land 
 covered by a family farm security loan in active agricultural 
 production for a period of time longer than one year is in 
 default.  The default may be waived by the commissioner in the 
 event of a physical disability or other extenuating 
 circumstances.  

    Subd. 2. Repealed, 1Sp1985 c 14 art 1 s 59 

    Subd. 3. Repealed, 1Sp1985 c 14 art 1 s 59 

    HIST: 1976 c 210 s 9; 1983 c 332 s 13-15; 1985 c 276 s 6; 1986 
 c 444 

  41.595 Repealed, 1Sp1986 c 2 art 1 s 8 

     41.60 Discrimination prohibited. 

    In carrying out their respective duties under Laws 1976, 
 chapter 210, the council and the commissioner shall not 
 discriminate between applicants because of race, color, creed, 
 religion, national origin, sex, marital status, disability, 
 political or ideological persuasion. 

    HIST: 1976 c 210 s 10 

     41.61 Appropriations. 

    Subdivision 1.    Special account; standing appropriation. 
  There is created a special account in the state treasury for 
 the purposes of financing the family farm security program.  

    The amount needed from time to time to pay lenders for 
 defaulted loans and make other payments authorized by this 
 chapter including insurance premiums, taxes, repairs and 
 maintenance costs, advertising, and other sales expenses on 
 defaulted farms is appropriated from the special account to the 
 commissioner.  Money is also appropriated to the commissioner 
 from the special account so that the commissioner may purchase 
 the rights of first lienholders at mortgage foreclosure sales 
 and satisfy certain fixture loans.  The sum of all outstanding 
 family farm security loans guaranteed by the commissioner at any 
 time may not exceed $100,000,000.  All bond proceeds received in 
 the fund must be used only for the purposes specified in section 
 41.62. 

    Subd. 2. Repealed, 1983 c 343 s 6 

    Subd. 3. Repealed, 1983 c 343 s 6 

    HIST: 1976 c 210 s 13; 1983 c 293 s 60; 1983 c 332 s 16; 1983 
 c 343 s 3; 1984 c 655 art 1 s 7; 1985 c 276 s 7; 1Sp1986 c 2 art 
 1 s 4 

     41.62 General obligation bonds. 

    Subdivision 1.    Procedure.  Upon request of the 
 commissioner of agriculture, the commissioner of finance is 
 authorized to issue general obligation bonds of the state in a 
 principal amount not exceeding $20,000,000 to acquire public 
 lands by providing money to be paid by the commissioner of 
 agriculture from the special account established by section 
 41.61 to pay lenders for defaulted loans and to purchase the 
 rights of first lienholders at mortgage foreclosure sales.  The 
 bonds shall be secured as provided in the Minnesota 
 Constitution, article XI, section 7, and, except as provided in 
 this section, shall be issued and secured as provided in section 
 16A.641.  The proceeds of the bonds, except any premium and 
 accrued interest, shall be deposited in the special account 
 established in section 41.61 and used solely for the purposes 
 specified above and in section 16A.641, subdivision 8.  The 
 premium and accrued interest, if any, shall be deposited in the 
 state family farm security program bond account in the state 
 bond fund.  The commissioner shall issue only the amount of 
 bonds as from time to time the commissioner determines are 
 necessary for the purposes specified in this section. 

    Subd. 2.    Terms of bonds.  The commissioner of finance 
 may fix the terms of the bonds in any manner permitted for bonds 
 of a municipality under chapter 475, and may enter into, on 
 behalf of the state, all agreements deemed necessary for this 
 purpose, including those authorized to be entered into by 
 municipalities in chapter 475.  

    Subd. 3.    Sale of bonds.  If determined by the 
 commissioner of finance to be necessary in order to reduce costs 
 of issuance, to secure a favorable prevailing interest rate, or 
 to receive the bond proceeds by a specified date, or if the 
 terms of the bonds are fixed as provided in sections 475.54, 
 subdivision 5a, and 475.56, paragraph (b), the bonds may be sold 
 by negotiation and without solicitation of sealed bids.  

    Subd. 4.    Bond fund account.  The commissioner of 
 finance shall maintain in the state bond fund a separate 
 bookkeeping account that shall be designated as the state family 
 farm security program bond account, to record receipts and 
 disbursements of money transferred to the fund to pay bonds 
 issued under this section and to record income from the 
 investment of the money.  The income shall be credited to the 
 account in each fiscal year in an amount equal to the 
 approximate average return that year on all funds invested by 
 the commissioner of finance, as determined by the commissioner 
 of finance, times the average balance in the account that year.  

    Subd. 5.    Transfers, appropriation.  In addition to 
 the money required to be transferred to the state family farm 
 security program bond account under section 41.56, subdivision 
 4b, and in order to reduce the amount of taxes otherwise 
 required by the Minnesota Constitution to be levied for the 
 state bond fund, the commissioner of finance shall transfer from 
 the general fund to the state family farm security program bond 
 account, on December 1 in each year, a sum of money sufficient 
 in amount, when added to the balance then on hand in that 
 account, to pay all bonds issued under this section and the 
 interest on them due and to become due to and including July 1 
 in the second ensuing year.  All money to be so credited and all 
 income from its investment is annually appropriated for the 
 payment of the bonds and interest on them, and shall be 
 available in the state family farm security program bond account 
 before the levy of the tax in any year required by the Minnesota 
 Constitution, article XI, section 7.  The legislature may also 
 appropriate to the state family farm security program bond 
 account any other money in the state treasury not otherwise 
 appropriated, for the security of bonds issued under this 
 section in the event that sufficient money should not be 
 available in the account from the appropriation in this section, 
 before the levy of the tax in any year.  The commissioner of 
 finance shall make the appropriate entries in the accounts of 
 the respective funds.  

    Subd. 6.    Constitutional levy.  On or before December 
 1 in each year the state auditor shall levy on all taxable 
 property within the state whatever tax may be necessary to 
 produce an amount sufficient, with all money then in the state 
 family farm security program bond account, to pay the entire 
 amount of principal and interest due then or earlier and 
 principal and interest to become due on or before July 1 in the 
 second year thereafter on bonds issued under this section.  This 
 tax shall be levied upon all real property used for a homestead, 
 as well as other taxable property, notwithstanding section 
 273.13, subdivisions 6 and 7.  The tax must not be limited in 
 rate or amount until all the bonds and interest on them are 
 fully paid.  The proceeds of this tax are appropriated and shall 
 be credited to the state bond fund, and the principal and 
 interest on the bonds are payable from all the proceeds.  As 
 much of the proceeds as is necessary, is appropriated for the 
 payments.  If at any time there is insufficient money from the 
 proceeds of the taxes to pay the principal and interest when due 
 on the bonds, the principal and interest must be paid out of the 
 general fund in the state treasury, and the amount necessary for 
 the payment is appropriated. 

    Subd. 7.    Compliance with federal law.  The 
 commissioner of finance is authorized to covenant and agree with 
 the holders of the bonds issued under this section that the 
 state will comply, insofar as possible, with the provisions of 
 the United States Internal Revenue Code now or hereafter enacted 
 that are applicable to the bonds and that establish conditions 
 under which the interest to be paid on the bonds will not be 
 includable in gross income for federal tax purposes.  

    Subd. 8.    Taxability of interest.  The bonds 
 authorized by this section may be issued without regard to 
 whether the interest to be paid on them is includable in gross 
 income for federal tax purposes. 

    HIST: 1Sp1986 c 2 art 1 s 5 

     41.63 Data privacy. 

    Personal financial information, credit reports, financial 
 statements, tax refund calculations, and net worth statements, 
 received or prepared by the commissioner regarding any family 
 farm security loans, are private data on individuals under 
 chapter 13. 

    HIST: 1988 c 672 s 2 

     41.65 Use and disposition of property. 

    Subdivision 1.    Commissioner may sell or lease property. 
  The commissioner may sell or lease property acquired by the 
 state in a manner that protects the interests of the state.  
 Persons desiring to purchase or lease property must apply to the 
 commissioner.  

    Subd. 2.    Managing and selling property.  (a) The 
 commissioner must attempt to sell agricultural property to 
 persons entering farming and farmers that need additional 
 property to continue their farming operations.  

    (b) The commissioner must give priority to applicants 
 desiring to purchase or lease property who: 

    (1) are residents of the state of Minnesota; 

    (2) have sufficient education, training, or experience in 
 the type of farming for which the property is desired and agree 
 to continued participation in a farm management program, 
 approved by the commissioner for at least the first ten years; 

    (3) have, including the applicant's dependents and spouse, 
 a total net worth valued at less than $100,000 and have 
 demonstrated a need for acquiring property from the 
 commissioner; 

    (4) intend to purchase farm land to be used by the 
 applicant for agricultural purposes; and 

    (5) are credit worthy according to standards prescribed by 
 the commissioner. 

    (c) The commissioner must attempt to sell the property by a 
 cash sale.  Agricultural property may be leased with an option 
 to purchase to accommodate a sale.  The commissioner should 
 avoid long-term leasing of property.  

    Subd. 3.    Restricted agricultural use.  (a) Acquired 
 property that has marginal land as defined in section 103F.511, 
 subdivision 7, or wetlands must be restricted from agricultural 
 use on the marginal land or wetlands.  

    (b) If the commissioner determines that all or a portion of 
 acquired property should be taken out of agricultural use or 
 particular agricultural uses should be restricted, the 
 commissioner shall have the attorney general prepare an easement 
 restricting the agricultural use and record the easement with 
 the county recorder where the property is located. 

    Subd. 4.    Exclusive agricultural use.  The 
 commissioner may place easements on acquired property 
 restricting development and allowing only agricultural or 
 conservation use. 

    HIST: 1987 c 396 art 1 s 2; 1990 c 391 art 8 s 6; 2005 c 4 s 1