HOUSING/REAL PROPERTY LAW

Prepared by:
Ron Elwood, Supervising Attorney
Legal Services Advocacy Project
651-842-6909
relwood@mnlsap.org

I. CONTRACTS FOR DEED
Chapter 85, Article 6, Sections 6, 7, 8, 9, and 13 (HF 729)
Amends Minn. Stat. §§ 507.235, subd. 2; and 559.211, subd. 2
Adds Minn. Stat. §§ 559.201; and 559.202
Repeals Minn. Stat. § 507.235, subd. 4
Various Effective Dates

A. Provisions Affecting All Contracts for Deed

1. Penalties for Failure to Record

a. Civil Fine
Absolves a vendee from liability for a civil fine for failure to record a contract for deed if the vendee does not receive a copy of the contract in recordable form, as required under Minn. Stat. § 507.235, subd. 1.
Amends Minn. Stat. § 507.235, subd. 2
Effective August 1, 2013

b. Criminal Penalty
Abolishes any criminal liability for failure to record a contract for deed within the time provided under Minn. Stat. § 507.235, subd. 1.
Repeals Minn. Stat. § 507.235, subd. 4
Effective August 1, 2013

2. Availability of Action
Grants the court the authority to hear claims and grant relief for actions taken after the expiration of the contract for deed cancellation period provided under Minn. Stat. § 559.21.
Amends Minn. Stat. § 559.211, subd. 2
Effective August 1, 2013

B. Provisions Affecting Certain Contracts for Deed

1. Key New Definition
Defines "multiple seller" as a seller in four or more contracts for deed involving residential real property during the 12-month period that precedes either: (1) the date on which the purchaser executes a purchase agreement; or (2) if there is no purchase agreement, the date on which the purchaser executes a contract for deed.
Adds Minn. Stat. § 559.201, subd. 4
Effective August 1, 2013

2. Required Disclosures

a. Who Must Give Disclosure
Limits the requirement to give the disclosure to multiple sellers.
Adds Minn. Stat. § 559.201, subd. 1(a)
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract
for deed, if any, were both executed on or after that date

b. Exemptions
Exempts multiple sellers from the disclosure requirements if the purchaser is represented by: (1) an attorney licensed in Minnesota; or (2) a real estate broker or salesperson, provided that the representation does not create a dual agency.
Adds Minn. Stat. § 559.201, subd. 2
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract
for deed, if any, were both executed on or after that date

c. Disclosure Requirements
Requires the disclosure to the prospective purchaser be: (1) in writing; (2) signed and dated by the purchaser; and (3) affixed to the purchase agreement, or, if there is no purchase agreement, provided in a document separate from any other document.
Adds Minn. Stat. § 559.201, subd. 1(d) (writing, signature, date)
Adds Minn. Stat. § 559.201, subd. 1(b) (if purchase agreement)
Adds Minn. Stat. § 559.201, subd. 1(c) (no purchase agreement)
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract
for deed, if any, were both executed on or after that date

d. Contents of the Disclosure
Requires a verbatim disclosure: (1) providing information for the prospective purchaser about risks and obligations of contracts for deed; and (2) offering advice about consumer protection actions recommended to be taken prior to entering into a contract for deed.

e. Resolution of Disputes Regarding Delivery of Disclosure
Establishes a rebuttable presumption that the disclosure was not provided unless the original executed contract for deed contains a verbatim statement, initialed by the purchaser, acknowledging receipt of the disclosure.
Adds Minn. Stat. § 559.201, subd. 1(e)
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract
for deed, if any, were both executed on or after that date.

3. Waiting Period
Prohibits multiple sellers and purchasers from executing a contract for deed sooner than five business days: (1) following execution of a purchase agreement, and delivery of the notice; or (2) if there is no purchase agreement, after the delivery of the notice.
Adds Minn. Stat. § 559.201, subd. 1(b) (if a purchase agreement)
Adds Minn. Stat. § 559.201, subd. 1(c) (if no purchase agreement)
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract for deed, if any, were both executed on or after that date

4. Right to Cancel
Gives a prospective purchaser the right to cancel purchase agreement without penalty within five business days after actually receiving the disclosure if the multiple seller fails to timely deliver the disclosure. Requires the multiple seller to promptly refund any payments upon cancellation. Extinguishes the right to cancel once a contract for deed is executed.
Adds Minn. Stat. § 559.201, subd. 4
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract for deed, if any, were both executed on or after that date.

5. Remedies for Failure to Timely Deliver Disclosure
Provides that a purchaser has a private right of action against a multiple seller for failure to timely provide the disclosure. Makes the violator liable for: (1) the greater of actual damages or statutory damages of $2,500; and (2) reasonable attorney fees and court costs. Provides for treble damages for a knowing violation. Makes the remedies cumulative. Provides that a violation has no effect on the validity of the contract.
Adds Minn. Stat. § 559.201, subd. 5 (remedies)
Adds Minn. Stat. § 559.201, subd. 6 (effect of violation on contract)
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract for deed, if any, were both executed on or after that date.

7. No Waiver Provision
Prohibits waiver of any rights provided under the new provisions.
Adds Minn. Stat. § 559.201, subd. 7
Effective August 1, 2013, and applies to transactions in which the contract for deed and the purchase agreement for the contract for deed, if any, were both executed on or after that date.

II. FORECLOSURE ADVICE NOTICE
Chapter 115, Section 2 (SF 1276)
Amends Minn. Stat. § 580.041, subd. 1b
Effective August 1, 2013

Changes the obligation of a foreclosing party to provide the statutory foreclosure advice notice by requiring delivery only up to the day of the foreclosure sale, rather than up to the day of redemption.

III. FORECLOSURE RELIEF
Chapter 115, Sections 1, 3, 4, and 5 (SF 1276)
Amends Minn. Stat. §§ 580.02; 582.25; and 582.27
Adds Minn. Stat. § 582.043
Various Effective Dates

A. Applicability

1. Limitations
Limits applicability of new provisions to first lien mortgages that: (1) are governed by either foreclosures by action (judicial) or foreclosures by advertisement (nonjudicial) statutes (Chapter 580 and 581); (2) are secured by one-to-four-family residential real property that is the principal residence of the owner; and (3) do not secure a loan for business, commercial, or agricultural purposes.
Adds Minn. Stat. § 582.043, subd. 2
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

2. Exemptions for "Small Servicers"

a. Time Limited Exemption
Until August 1, 2014, exempts a servicer that has conducted 125 or fewer foreclosure sales during the preceding 12 months.
Adds Minn. Stat. § 582.043, subd. 1(f)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

b. Permanent Exemption
Exempts a servicer that either: (1) is a small servicer as defined in proposed rules of the Consumer Financial Protection Bureau (i.e., services 5,000 or fewer mortgage loans in which the servicer or an affiliate is the creditor or assignee; or (2) is a Housing Finance Agency as defined in federal regulations.
Adds Minn. Stat. § 582.043, subd. 1(f)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

B. New Key Definitions

1. "Foreclosure Sale Date"
"Foreclosure sale date" defined to mean the later of either the date: (1) contained in the notice of foreclosure that has been served or published; or (2) to which the sale has been postponed, as is provided under Minn. Stat. § 580.07, subd. 2.
Adds Minn. Stat. § 582.043, subd. 1(b)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

2. "Loss Mitigation Option"
Defines "loss mitigation option" to mean "a temporary or permanent loan modification, a forbearance agreement, a repayment agreement, a principal reduction, capitalizing arrears, or any other relief, intended to allow a mortgagor to retain ownership of the property."
Adds Minn. Stat. § 582.043, subd. 1(c)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

C. Loss Mitigation Requirements
Requires servicers to: (1) notify the homeowner in writing of available loss mitigation options offered by the servicer prior to referral to foreclosure; (2) exercise reasonable diligence to facilitate submission and review of loss mitigation applications and supporting documents; (3) provide a reasonable amount of time for submission of documents; (4) evaluate the homeowner for eligibility for a loss mitigation option prior to referral to foreclosure if the servicer has timely received a loss mitigation application; (5) timely offer the homeowner a loan modification or other loss mitigation option for which the homeowner is eligible; and (6) comply with any applicable appeal period and procedures.
Adds Minn. Stat. § 582.043, subd. 5
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

D. Procedures to Avoid Dual Tracking
Note: "Dual Tracking" is the practice of simultaneously proceeding with a foreclosure and considering an application for a loan modification or other option to avert foreclosure.

1. Prohibitions

a. Prior to Referral to Foreclosure
Prohibits a servicer from initially referring a mortgage loan for foreclosure if the servicer has received a loss mitigation application that has not yet been acted upon.
Adds Minn. Stat. § 582.043, subd. 6(a)
Effective October 31, 2013

b. After Referral to Foreclosure But Before Sale Scheduled
Prohibits a servicer from conducting a foreclosure sale or seeking a judgment of foreclosure if the servicer has received a loss mitigation application that has not yet been acted upon.
Adds Minn. Stat. § 582.043, subd. 6(b)
Effective October 31, 2013

c. After Foreclosure Sale Scheduled But Before Sale Held
Prohibits a servicer from conducting - and requires a servicer to halt -- a foreclosure sale or seeking a judgment of foreclosure if the servicer has received a loss mitigation application by midnight of the seventh business day prior to the foreclosure sale date.
Adds Minn. Stat. § 582.043, subd. 6(c)
Effective October 31, 2013

2. Permitted Practices
Permits a servicer to proceed with the foreclosure action if the homeowner: (1) is provided written notification of the ineligibility for a loss mitigation option and any appeal period has expired; (2) fails to accept a written loss mitigation offer where written offer is applicable and acceptance is required; or (3) declines, in writing, a loss mitigation offer.
Adds Minn. Stat. § 582.043, subd. 6(a), (b), and (c)
Effective October 31, 2013

E. New Requisite to Foreclosure by Advertisement
Adds a fifth requisite to foreclose by advertisement: compliance with new provisions concerning loss mitigation and dual tracking.
Amends Minn. Stat. § 580.02
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

F. Enforcement

1. Right to Bring an Action
Provides a homeowner with a cause of action for violations of the loss mitigation and dual tracking provisions to halt or set aside a foreclosure sale and provides for attorney fees and costs.
Adds Minn. Stat. § 582.043, subd. 7(a)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

2. Qualifications on Bringing an Action

a. Time Limit to Bring Action
Requires a claim to be brought before the end of the applicable redemption period.
Amends Minn. Stat. § 582.25 (validating foreclosure sales)
Amends Minn. Stat. § 582.27, subd. 1 (curative provisions)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013.

b. Recordation of Lis Pendens
Requires that a lis pendens must be recorded prior to the end of the redemption period in order for a claim to be brought. Establishes a conclusive presumption that the servicer has complied with the new provisions if the lis pendens is not timely recorded.
Adds Minn. Stat. § 582.043, subd. 7(b)
Effective August 1, 2013 for foreclosures with a notice of pendency under Minn. Stat. § 580.032, or a lis pendens for a foreclosure under Minn. Stat., ch. 581, recorded on or after August 1, 2013

IV. HOMESTEAD EXEMPTION
Chapter 135, Article 2, Section 8 (HF 1221)
Amends Minn. Stat. § 510.02, subd. 1
Effective May 25, 2013

Increases the homestead exemption to: (1) $390,000 (from $300,000); and (2) $975,000 (from $750,000) if used for agricultural purposes.

V. HOUSING DISPARITIES
Chapter 85, Article 1, Section 4, Subdivisions 2 and 6 (HF 729)
Appropriations Article
Effective July 1, 2013

A. Reducing Homeownership Gap
Directs the Minnesota Housing Finance Agency, through its Challenge Program and Home Ownership Assistance Fund, to strengthen efforts to address the disparity rate in homeownership between white households and indigenous American Indians and communities of color. Appropriates $1.2 million each year of the biennium for housing projects for American Indians.

B. Increasing Culturally Specific Homeownership Education and Training
Authorizes the Minnesota Housing Finance Agency to prioritize grants made under the Homeownership, Education, Counseling, and Training Program to culturally specific groups who are providing services to members of their communities.

VI. LIABILITY FOR WRONGFUL RECORDING OF SATISFACTION OF MORTGAGE
Chapter 10 (HF 87)
Adds Minn. Stat. § 507.403, subd. 5a
Effective March 22, 2013 and is retroactive

Imposes liability wrongfully, erroneously, or without authority executing or recording a certificate of satisfaction of a mortgage.

B. What is Recoverable
Authorizes recovery of: (1) actual damages; (2) reasonable attorney fees; (3) costs; and disbursements.

C. Effect of Wrongful Recording on Mortgagor or Successor's Obligations
Provides that the execution or recording of a wrongful, erroneous, or unauthorized certificate does not relieve the mortgagor or the mortgagor's successors or assigns from any personal liability on the obligations secured by the mortgage.

VII. RENTERS' CREDIT
Chapter 143, Article 1, Section 3 (HF 677)
Amends Minn. Stat. § 290A.04, subd. 2a
Effective for claims based on rent paid in 2013 and following years

Increases the appropriation for Renters' Credit by $15.5 million in fiscal year 2015, providing a larger credit to about 79,000 households currently eligible and making about 30,000 more households eligible.

Note: Approximately 364,000 households are expected to receive the credit in fiscal year 2015.