Consumer Law

CONSUMER LAW
Prepared by:
Ron Elwood, Staff Attorney
Legal Services Advocacy Project
651-222-3749, ext. 109
relwood@mnlsap.org

I. CONTRACT FOR DEED
Chapter 130 (SF 1302)
Adds Minn. Stat. § 507.235, subd. 2a
Effective August 1, 2009 for contracts for deed acknowledged on or after that date

Requires a contract for deed vendor to: (1) deliver to the vendee a copy of the contract for deed containing original signatures in recordable form; and (2) pay, or reimburse the vendee for payment of, any delinquent taxes necessary for
recordation of the contract for deed, unless the contract provides otherwise.

II. DEBT MANAGEMENT
Chapter 37, Article 4, Sections 6 - 18 (HF 2123)
Amends Minn. Stat. §§ 332A.02, subds. 5, 8, 9, 10, and 13; 332A.04, subd. 6; 332A.08; 332A.10, subds. 1, 2, 3, 4, and 5; 332A.11, subd. 2; 332A.14; and 332A.16
Adds Minn. Stat. §§ 332A.02, subds. 2a and 5a
Effective August 1, 2009

Chapter 178, Article 1, Sections 62 and 63 (HF 1853)
Amends Minn. Stat. §§ 332A.02, subd. 13, as amended by Laws 2009, chapter 37, article 4, section 12; and 332A.14, as amended by Laws 2009, chapter 37, article 4, section 17 (making technical corrections to the earlier bill)
Effective August 1, 2009

A. Additional Cause of Denial of a Registration
Adds that the Department of Commerce may deny an application for registration if the applicant has been shown to have engaged in a pattern of failing to perform the services promised.
Amends Minn. Stat. § 332A.08

B. Bond
Clarifies that the right of action on the bond is available upon the failure of a debt management services provider to perform any of the services promised in the contract.
Amends Minn. Stat. § 332A.04, subd. 6

C. Definitions

1. Creditor
Defines creditor broadly to mean any party: (1) named in the contract; (2) that acquires or holds the debt; or (3) to whom interactions are assigned in relation to the debt listed in the contract.
Adds Minn. Stat. § 332A.02, subd. 5a

2. Debt Management Services
Revises the definition, specifying that the primary purpose of debt management is the full repayment the debt through the management by the debt management services provider of the finances and payments of the debtor.
Amends Minn. Stat. § 332A.02, subd. 9

3. Debt Management Services Provider
Expands definition to include "any person to whom debt management services are delegated."
Amends Minn. Stat. § 332A.02, subd. 8

D. New Prohibited Contract Term
Proscribes a choice of law clause that subjects the debtor, where a dispute arises, to any law other than Minnesota law.
Amends Minn. Stat. § 332A.10, subd. 4

E. New Prohibited Practices
Prohibits debt management companies from: (1) counseling or encouraging a debtor to stop paying a creditor; (2) implying inferring, or in any other way indicating, that it is advisable to stop paying a creditor; (3) sanctioning or condoning the act by a debtor of ceasing payments or implying, inferring, or in any manner indicating that the act of ceasing payments is advisable or beneficial to the debtor; or (4) soliciting a voluntary contribution to the debt management services provider or a designee.
Amends Minn. Stat. § 332A.14

F. New Requirements for Debt Management Services Contracts
Requires the contract to: (1) conspicuously indicate whether or not the provider is registered with the Department of Commerce; (2) include any registration number; and (3) be written in the debtor's primary language if the provider advertised in that language. Defines "advertise" broadly to mean "solicit[ing] business through any means or medium."
Amends Minn. Stat. § 332A.10, subd. 1 (new contract requirements)
Adds Minn. Stat. § 332A.02, subd. 2a (definition of "advertise")

G. New Requirements Prior to Execution of a Debt Management Services Contract
Requires a provider to fulfill all precontractual obligations before a contract may be executed.
Amends Minn. Stat. § 332A.10, subd. 2

H. Revised Exemption for Collection Agencies
Changes the basis for an exemption to a collection agency from whether a fee is charged to whether the agency is providing services solely to a creditor.
Amends Minn. Stat. § 332A.02, subd. 8

III. DEBT SETTLEMENT
Chapter 37, Article 4, Sections 1 -5 and 19 - 31 (HF 2123)
Amends Minn. Stat. §§ 45.011, subd. 1; 46.04, subd. 1; 46.05; 46.131, subd. 2; and 325E.311
Adds Chapter 332B, specifically, Minn. Stat. §§ 332B.02 - 332B.14
Effective August 1, 2009

Chapter 178, Article 1, Sections 64 - 67 (HF 1853)
Amends Minn. Stat. § 332B.02, subd. 13, as added by Laws 2009, chapter 37, article 4, section 19; 332B.03, as added by Laws 2009, chapter 37, article 4, section 20; 332B.06, as added by Laws 2009, chapter 37, article 4, section 23; and 332B.09, as added by Laws 2009, chapter 37, article 4, section 26 (making technical corrections to the earlier bill)
Effective August 1, 2009

A. Key Definitions

1. Creditor
Defines creditor to mean any party: (1) named by the debtor; (2) that acquires or holds the debt; or (3) to whom interactions are assigned in relation to the debt listed in the contract.
Adds Minn. Stat. § 332B.02, subd. 9

2. Debt Settlement Services
Clearly delineates the nature of debt settlement services and differentiates it from debt management services. Defines debt settlement as: (1) having the primary purpose of obtaining a settlement for less than the full amount of debt; and (2) accomplishing that purpose by advising, encouraging, assisting, or counseling a debtor to accumulate funds in an account for future payment of a reduced amount of debt to one or more of the debtor's creditors.
Adds Minn. Stat. § 332B.02, subd. 10

B. Registration Requirements

1. Registration
Requires a debt settler, whether or not physically located in the state, doing business with a Minnesota consumer to be registered with the Department of Commerce. Exempts debt settlers from complying with the new provisions for contracts signed prior to the effective date.
Adds Minn. Stat. § 332B.03

2. Application Form
Establishes criteria for approval, including whether: (1) any controlling or affiliated party has ever been convicted of a crime of moral turpitude; (2) the applicant's license has been suspended or revoked in other jurisdictions; and (3) the applicant has been subject to any judgment or investigations in the past 10 years.
Adds Minn. Stat. § 332B.04, subd. 1

3. Bond
Requires an applicant to post a bond of $5,000, which may be modified upward by the Department of Commerce. Gives the debtor, along with the Department of Commerce and the Attorney General, the right of action on the bond if the provider has defaulted, which is defined as failing to: (1) account to a debtor; or (2) perform any of the services promised.
Adds Minn. Stat. § 332B.04, subd. 3 (requirement of bond)
Adds Minn. Stat. § 332B.04, subd. 4 (right of action for default)

4. Denial, Suspension, Revocation
Establishes bases for denial, suspension, and revocation of registration. Provides due process procedures regarding agency actions.
Adds Minn. Stat. § 332B.05

C. Contract

1. Restrictions Prior to Execution of Contract
Provides that, until the parties have executed a contract in compliance with the statute: (1) services may not be performed; (2) charges may not be imposed; and (3) payments may not be received.
Adds Minn. Stat. § 332B.06, subd. 1(a)

2. Duties Prior to Execution of Contract

a. Disclosures
Requires a debt settler to disclose both orally and in the contract, whether the provider is or is not licensed by the Minnesota Department of Commerce. Requires a debt settler to make verbatim disclosures, both orally and in a separate writing, including that: (1) the provider cannot guarantee a reduction or elimination of debt; (2) there is a strong likelihood of garnishment, continuing creditor contacts, lawsuit, and the accrual of fees, interest and other charges if the debtor stops paying creditors; and (3) there may be a tax consequence regarding any portion of a debt forgiven. Specifies the format and type size of the disclosures and requires that they be provided in the debtor's primary language if the debt settlement services provider advertises in that language.
Adds Minn. Stat. § 332B.06, subd. 4

b. Determination of Suitability, Ability to Meet Terms, Net Benefit
Prohibits a debt settler from providing services or executing a contract unless, among other things, the debt settler has first determined that: (1) debt settlement is suitable for the individual debtor; (2) the debtor can reasonably meet the requirements of the proposed plan; and (3) based on the totality of the circumstances, the plan provides a net tangible benefit.
Adds Minn. Stat. § 332B.06, subd. 2

c. Determination of Likelihood of Creditor Participation
Requires a debt settler to make a determination, supported by sufficient bases, which creditors listed are reasonably likely - and which are not reasonably likely - to participate. Establishes a defense against a claim that no sufficient bases existed if the debt settler can produce: (1) written confirmation from the creditor that, at the time the determination was made, the creditor and the debt settler were engaged in negotiations to settle a debt for another debtor; or (2) evidence that the provider and the creditor had entered into a settlement of a debt within the six months prior to the date of the determination. Requires timely written authorization from the debtor to proceed if all creditors are not likely to participate.
Adds Minn. Stat. § 332B.06, subd. 3

3. Requirement of Written Contract
Requires a written contract that must: (1) conspicuously indicate whether or not the provider is registered with the Department of Commerce; (2) inform the debtor of the right to cancel in easily readable type immediately adjacent to the space for the debtor's signature; and (2) be written in the debtor's primary language if the debt settlement services provider advertises in that language. Defines "advertise" broadly.
Adds Minn. Stat. § 332B.02, subd. 3 (definition of "advertise")
Adds Minn. Stat. § 332B.06, subd. 1(b) (requirement of contract)
Adds Minn. Stat. § 332B.07, subd. 2 (notice of right to cancel)

4. Required Contract Terms
Provides that the contract must contain, among other things: (1) an itemization of fees on the front page, segregated from all other information; (2) all the terms and conditions; (3) the provider's name and address (which cannot be a post office box); and (4) the name of and debt owed to each creditor that will be the subject of a settlement.
Adds Minn. Stat. § 332B.06, subd. 5

5. Prohibited Contract Terms
Prohibits any contract from containing, among other things: (1) a hold harmless clause; (2) a confession of judgment or power of attorney to confess judgment; (3) a waiver of claims; or (4) a mandatory arbitration or choice of law clause subjecting the debtor to a law other than the laws of Minnesota.
Adds Minn. Stat. § 332B.06, subd. 6

6. New Agreements; Modifications of Existing Agreements
Allows separate, additional agreements provided they comply with the debt settlement statutes and no additional origination fee is charged. Allows modification of existing agreements provided the agreements are written and signed by both parties, and no additional fee is charged.
Adds Minn. Stat. § 332B.06, subd. 7

D. Right to Cancel

1. Debtor's Right to Cancel
Allows debtor to cancel a debt settlement contract at any time upon 10 days' notice to the debt settler. Requires, upon cancellation, the refund of excess fees, and the cessation of collection of any monthly fees.
Adds Minn. Stat. § 332B.07, subd. 1

2. Debt Settler's Right to Cancel
Allows a debt settler to cancel a contract for good cause upon 30 days' written notice to the debtor. Requires that the debt settler notify all creditors and the refund of any excess fees.
Adds Minn. Stat. § 332B.07, subd. 4

3. Conditions Triggering Payment of Full Fees
Allows a debt settler to retain fees already collected and collect any fees due if: (1) the debt settler obtained a settlement offer from the creditor or creditors in accordance with the contract; and (2) the debtor: (i) rejected the settlement offer; or (ii) within the contractual period, entered into a settlement agreement with the same creditor or creditors for an amount equal to or lower than the settlement offer obtained by the debt settler.
Adds Minn. Stat. § 332B.07, subd. 4

E. Fees
Allows a debt settler to charge and calculate fees either on a: (1) percentage of debt basis; or (2) percentage of savings basis. Ties maximum fees allowed to aggregate debt. Defines aggregate debt narrowly to mean "the total of principal and interest that is owed by the debtor to the creditors at the time of execution of the debt settlement agreement."
Adds Minn. Stat. § 332B.09, subd. 1 (choice of fees generally)
Adds Minn. Stat. § 332B.02, subd. 4 (definition of "aggregate debt")

1. Fees as a Percentage of Debt

Limits fees under this formula to 15% of the aggregate debt.

Permits a debt settler to charge an origination fee of: (1) $200 on aggregate debt of less than $20,000; or (2) $400 on aggregate debt of $20,000 or more.
Permits a debt settler to charge a monthly fee of: (1) no greater than $50 per month on aggregate debt of less than $40,000; and (2) no greater than $60 per month on aggregate debt of $40,000 or more.
Caps the collection of fees at a maximum of 40% of the total until the provider obtains a bona fide settlement offer.
Adds Minn. Stat. § 332B.09, subd. 3

2. Fees as a Percentage of Savings

Limits fees under this formula to 30% of savings actually negotiated by the debt settlement services provider, calculated as the difference between the aggregate debt stated in the contract at the time of its execution and the total amount that the debtor actually pays to settle the debt.
Permits a debt settler to charge an origination fee of: (1) $300 on aggregate debt of less than $20,000; or (2) $500 on aggregate debt of $20,000 or more.
Permits a debt settler to charge of a monthly fee of: (1) no greater than $65 per month on aggregate debt of less than $40,000; and (2) no greater than $75 per month on aggregate debt of $40,000 or more.
Caps the collection of fees at a maximum of 50% of the total until the provider obtains a bona fide settlement offer.
Adds Minn. Stat. § 332B.09, subd. 3

F. Prohibited Acts
Prohibits 28 practices, including: (1) the 16 practices prohibited under the Debt Management Law (Minn. Stat. § 332A.14); (2) representing that any of the possible actions a creditor may take that are stated in the disclosures will not occur; (3) executing a power of attorney that restricts direct contact between the debtor and a creditor; and (4) representing that entering into a debt settlement contract will have no effect on, or improve, the debtor's credit, credit rating, and credit score.
Adds Minn. Stat. § 332B.10

G. Advertisement and Solicitation of Debt Settlement Services

1. Advertisement
Prohibits debt settlers from: (1) making false, deceptive, or misleading statements or omissions (or creation of the likelihood of consumer confusion); (2) representing that the debt settler is a nonprofit if some or all services are performed by an affiliated or controlling for-profit; (3) giving the impression that the debt settler is a government agency; and (4) making a representation that secured debts can be settled.
Adds Minn. Stat. § 332B.11, subd. 1

2. Solicitations by Lead Generators

a. Definition of Lead Generator
Defines lead generators to mean persons that do not provide any debt settlement services but who: (1) solicit debtors through mail, in person, or electronic Web site-based solicitation or any other means; (2) act as intermediaries or referral agents; or (3) obtain and transmit to a debt settler a debtor's personally identifiable information.
Adds Minn. Stat. § 332B.02, subd. 14

b. Requirements and Prohibitions
Requires lead generators to make the following verbatim disclosure: "This company does not actually provide any debt settlement, debt consolidation, or other credit counseling services. We ONLY refer you to companies that want to provide some or all of those services." Prohibits lead generators from: (1) representing that any service is guaranteed; or (2) misrepresenting the benefits of its services or debt settlement generally compared to credit counseling, debt management, or bankruptcy.
Adds Minn. Stat. § 332B.11, subd. 2

H. Rescission
Allows a debtor to rescind the contract for a material violation of the statute.
Adds Minn. Stat. § 332B.12

I. Enforcement

1. Violation a Deceptive Trade Practice
Makes violation of any provision an unfair or deceptive trade practice and declares that a private right of action under Minn. Stat. § 8.31 is in the public interest.
Adds Minn. Stat. § 332B.13, subd. 1

2. Private Right of Action
Gives debtors a private right of action and permits class actions for violations committed by debt settlers or lead generators. Provides for injunctive relief and monetary relief totaling: (1) actual, incidental, and consequential damages; (2) statutory damages of up to $5,000; and (3) costs and reasonable attorneys' fees. Establishes criteria for assessing statutory damages. Provides that remedies are cumulative and nonexclusive.
Adds Minn. Stat. § 332B.13, subd. 2 (legal damages)
Adds Minn. Stat. § 332B.13, subd. 3 (equitable relief)
Adds Minn. Stat. § 332B.13, subd. 4 (remedies cumulative)

3. Public Enforcement
Empowers the Attorney General to enforce the provisions of the statute under Minn. Stat. § 8.31.
Adds Minn. Stat. § 332B.13, subd. 5

IV. FINANCIAL EXPLOITATION OF VULNERABLE ADULTS
Chapter 119 (HF 818)
Amends Minn. Stat. §§ 13A.02, subds. 1 and 2; 13A.04, subd. 1; 256B.0595, subds. 4 and 9; 388.23, subd. 1; 609.2335; 609.52, subd. 3; 611A.033; and 628.26
Adds Minn. Stat. § 626.557, subds. 5a and 20
Effective August 1, 2009

A. Cooperation of Financial Institutions in Maltreatment Investigations
Mandates that financial institutions cooperate with authorities and comply with reasonable requests concerning investigations into maltreatment of vulnerable adults. Provides immunity to financial institutions from civil or criminal liability for compliance.
Adds Minn. Stat. § 626.557, subd. 5a

B. Crime of Financial Exploitation of Vulnerable Adult
Strengthens, supplements, and more clearly details the elements of a breach of fiduciary duty with respect to a vulnerable adult. Makes violation of new elements subject to the most severe sentence for theft crimes. Establishes a five year statute of limitations for prosecutions.
Amends Minn. Stat. § 609.2335 (new elements)
Amends Minn. Stat. § 609.52, subd. 3 (sentence)
Amends Minn. Stat. § 628.26 (statute of limitations)
Effective August 1, 2009 and applies to crimes committed on or after that date

C. Disclosure of Financial Records
Permits disclosure by a financial institution of financial records to law enforcement, authorized agencies, or prosecutors investigating financial exploitation of a vulnerable adult: (1) in response to a judicial or administrative subpoena; or (2) voluntarily, where the institution has knowledge concerning financial exploitation.
Amends Minn. Stat. § 13A.02, subd. 1 (disclosure in response to subpoena)
Amends Minn. Stat. § 13A.04, subd. 1 (voluntary disclosure)

D. Investigative Authority
Authorizes county attorneys to subpoena banking, credit card, and financial records of vulnerable adults.
Amends Minn. Stat. § 388.23, subd. 1

E. Private Right of Action
Gives a vulnerable adult a cause of action for financial exploitation, without the necessity of having a report filed. Provides for recovery of the greater of three times the compensatory damages or $10,000, plus reasonable attorneys fees and costs and reasonable guardian, conservator, or guardian ad litem fees.
Adds Minn. Stat. § 626.557, subd. 20

F. Transfer of Assets of Institutionalized Persons re: Medical Assistance Eligibility
Requires local agencies evaluating a hardship waiver to: (1) take into account whether the individual was the victim of financial exploitation; and (2) grant a waiver of the portion of a period of ineligibility where there is an imminent threat to the individual's health and well-being and where a transfer has been made as a result of financial exploitation.
Amends Minn. Stat. § 256B.0595, subd. 4

V. FORECLOSURE LAW CHANGES

A. Additional Duty Imposed on Holder of Sheriff's Certificate to Protect Premises
Chapter 123, Section 9 (SF 1147)
Amends Minn. Stat. § 582.031
Effective August 1, 2009

Imposes upon holder of a sheriff's certificate, where the holder knows that there is prima facie evidence of abandonment, to enter the premises and make reasonable periodic inspections, install or change the locks on all doors, install locks on all windows that do not have locks, and ensure that any existing window locks are functioning properly. Permits the holder to take additional steps to prevent waste and prevent or minimize damage from the weather, vandalism, trespass, or other illegal activity. Allows the holder to recover costs of these actions upon redemption.

B. Five Week Redemption Period
Chapter 123, Sections 11, 12, and 13 (SF 1147)
Amends Minn. Stat. § 582.032, subds. 4, 5, and 7

1. City May Petition
Allows a city or county to initiate or intervene in an action to reduce the redemption period to five weeks.
Effective August 1, 2009

2. Remedy for Wrongful Finding of Abandonment
Clarifies that Rule 60.02 (i.e., vacation for mistakes, newly discovered evidence, etc.) of the Minnesota Rules of Civil Procedure applies to findings that the failure to appear is conclusive proof of abandonment.
Effective retroactively and prospectively from May 21, 2009, and applies to orders issued before, on, or after that date

C. Foreclosure Data
Chapter 130, Section 5 (SF 1302)
Amends Minn. Stat. § 580.025
Effective August 1, 2009 for foreclosures in which the notice of pendency under section 580.032 is recorded on or after that date

Clarifies that the data requirements added in 2008 to the notice of pendency apply only to foreclosures involving one-to-four family dwellings.

D. Notice of Foreclosure

1. Requirement to Specify Date and Time to Vacate.
Requires that the notice of foreclosure for single-family, owner-occupied dwellings specify: (1) the date on or before which the homeowner must vacate if the mortgage is not reinstated or redeemed; and (2) the time by which the homeowner must vacate is 11:59 p.m.
Chapter 130, Section 6 (SF 1302)
Amends Minn. Stat. § 580.04
Effective August 1, 2009 for foreclosures in which the notice of pendency under section 580.032 is recorded on or after that date

2. Requirement to Add Street Address
Requires that the notice of foreclosure include the commonly used street address of the property.
Chapter 123, Section 6 (SF 1147)
Amends Minn. Stat. § 580.04
Effective August 1, 2009 and applies to notices of sale first published on or after that date

E. Notice of Opportunity for Counseling
Chapter 130, Section 4 (SF 1302)
Amends Minn. Stat. § 580.04
Effective August 1, 2009 for foreclosures in which the notice of pendency under section 580.032 or the lis pendens for a foreclosure under chapter 581 is recorded on or after that date

Clarifies, by removing a cross reference, that the applicability of the right to the notice of the opportunity of foreclosure prevention counseling is not limited to homeowners with "conventional loans," defined as loans whose principal is $100,000 or less.

F. Notice of Postponement of Foreclosure
Chapter 130, Section 9 (SF 1302)
Amends Minn. Stat. § 580.09
Effective August 1, 2009 for notices of postponement published or served on or after that date

Requires the foreclosing party to provide notice of postponement, including the date and time if known, directly to the homeowner. Requires the notice to inform the homeowner: (1) of the date on or before which the homeowner must vacate the property if the mortgage is not reinstated or redeemed; and (2) that the time by which the homeowner must vacate is 11:59 p.m.

G. Postponement of Sheriff's Sale and Extension of Reinstatement Period
Chapter 78, Article 8, Section 21 (HF 2088)
Amends Minn. Stat. § 580.07
Effective June 14, 2009 and applies to foreclosure sales scheduled to occur on or after that date

1. Right to Postpone
Permits a homeowner of a homesteaded property - at any time after the first publication of the notice of mortgage foreclosure sale but at least 15 days before the scheduled sale - to postpone the sale for five months, effectively replacing most of the redemption period with an extension of the reinstatement period.

2. Procedure for Postponing
Specifies that the homeowner may postpone the sale by: (1) executing a sworn affidavit in a form set by statute; (2) recording the affidavit with the County Recorder(s) and Registrar of Titles where the mortgage was recorded; (3) filing a copy of the recorded affidavit with the sheriff conducting the sale; (4) and delivering a copy of the recorded affidavit to the foreclosing attorney.

3. Effect on Redemption Period
Provides that recordation automatically reduces the redemption period to five weeks, effectively providing one additional week over and above the typical period comprising reinstatement and redemption. L

4. Limitation on Exercising Right to Postpone
Allows, without exception, only one postponement.

H. Rights of Homeowners Subject to Judicial Foreclosure
Chapter 130, Sections 1 and 7 (SF 1302)
Amends Minn. Stat. §§ 580.021, subd. 1; and 580.041, subd. 1a
Effective August 1, 2009 for foreclosures in which the notice of pendency under section 580.032 or the lis pendens for a foreclosure under chapter 581 is recorded on or after that date

1. Pre-Foreclosure Notice
Extends to judicial foreclosures (foreclosures by action) the requirements to: (1) provide notice to the homeowner: (i) of the opportunity for foreclosure prevention counseling; and (ii) that the homeowner's contact information will be shared with the foreclosure counseling agency; and (2) provide notice to the counseling agency of the homeowner that will be subject to the foreclosure.
Amends Minn. Stat. § 580.021, subd. 1

2. Foreclosure Advice Notice to Homeowners
Extends to judicial foreclosures the requirement to provide the foreclosure advice notice to homeowners along with the notice of foreclosure.
Amends Minn. Stat. § 580.041, subd. 1a

I. Tenant Protections

1. Rights of Tenants Living in Properties Subject to Judicial Foreclosure

a. Foreclosure Advice Notice to Tenants
Chapter 130, Section 8 (SF 1302)
Amends Minn. Stat. § 580.042, subd. 1
Effective August 1, 2009 for foreclosures in which the notice
of pendency under section 580.032 or the lis pendens for a foreclosure under chapter 581 is recorded on or after that date

Extends to judicial foreclosures the requirement to provide the foreclosure advice notice to tenants along with the notice of foreclosure.

b. Notice that Property is in Foreclosure
Chapter 123, Section 3 (SF 1147)
Amends Minn. Stat. § 504B.151, subd. 1
Effective August 1, 2009 and applies to leases entered into on or after that date

Extends to judicial foreclosures the requirement that landlords provide notice to prospective tenants that the property is in foreclosure.

c. Withholding Rent
Chapter 123, Section 4 (SF 1147)
Amends Minn. Stat. § 504B.178, subd. 8
Effective August 1, 2009 and applies to cancellations of contracts for deed in which the notice of cancellation is first served or published on or after August 1, 2009, and mortgage foreclosures under chapter 581 in which the lis pendens is recorded on or after that date

Extends to judicial foreclosures the right of tenants in foreclosed properties and cancelled contract for deed transactions to withhold last month's rent.

2. Notice to Vacate
Chapter 130, Section 1 (SF 1302)
Amends Minn. Stat. § 504B.285, subd. 1
Effective August 1, 2009

Clarifies that tenants who enter into leases prior to the notice of foreclosure are entitled to the two month notice to vacate foreclosing parties are required to send before they can evict.

VI. GARNISHMENT AND LEVY
Chapter 31 (HF 334)
Amends Minn. Stat. §§ 550.143, subds. 2, 3, 4, 5, 6, 7, and 9; 550.37, subd. 14; 551.05, subds. 1a, 2, 3, 4, and 5; 571.71; 571.911; 571.912; 571.913; 571.914, subds. 1, 2, and 4; and 571.925
Deletes Minn. Stat. 550.143, subd. 8; 551.05, subd. 6; and 571.914, subd. 3
Adds Minn. Stat §§ 550.143, subds. 3a, 3b, and 3c; 551.05, subds. 1b, 1c and 1d; 571.72, subds. 10 and 11; and 571.912, subds. 1, 2, and 3 Effective August 1, 2009.

A. Exemptions Updated

Changes the term "relief based on need" to "government assistance based on need." Deletes obsolete program names, updates existing program names, and adds names of new program. Clarifies that government assistance based on need includes but is not limited to the enumerated programs.
Amends Minn. Stat. § 550.37, subd. 14

B. Prejudgment Garnishment

1. When Garnishment is Authorized
Extends the period after which garnishment is authorized following the service of a summons and complaint and default to 45 days (from 40 days). Amends Minn. Stat. § 571.71

2. New Notices Required

a. New "Notice of Intent to Garnish"
Provides that garnishment is effective only if a new, plain language "Notice of Intent to Garnish" is served upon the debtor at any time after 20 days following the service of the summons and complaint. (Note: The Notice of Intent to Garnish provides a second notice of an impending garnishment to address possible misunderstanding by debtors about the prejudgment garnishment process and to encourage debtors to file a formal answer to the initial summons.)
Amends Minn. Stat. § 571.71

- Content of New "Notice of Intent to Garnish"
Specifies that the notice must be substantially in the statutory form. Notifies debtors that, among other things: (1) no formal, written answer to the original summons was sent; (2) there may not be a court file; and (3) there will be no court hearing on the matter. Instructs that garnishment will occur in 20 days unless the debtor: (1) answers; (2) claims an exemption; or (3) contacts the creditor to establish a payment plan if the funds are not exempt or the debt is rightfully owed.
Adds Minn. Stat. § 571.72, subd. 11

b. New "Exemption Notice"
Provides that garnishment is effective only if an "Exemption Notice" is served upon the debtor at any time after 20 days following the service of the summons and complaint.
Amends Minn. Stat. § 571.71

- Content of New "Exemption Notice"
Specifies that the notice must be in substantially the statutory form. Among other things, the notice: (1) informs the debtor that a garnishment summons may be served without any court proceeding; (2) informs the debtor that certain types of listed funds (e.g., Social Security benefits) in a bank account and all or part of wages are protected (exempt); and (3) urges the debtor to claim a valid exemption.
Adds Minn. Stat. § 571.72, subd. 10

C. Garnishment of Funds at a Financial Institution

1. New Notice
Requires provision of a new plain language notice that funds at a financial institution have been garnished. Notifies the debtor: (1) of the current balance in the account; (2) of he amount frozen; (3) for how long the funds will be frozen; and (4) that some of the funds may be exempt.
Adds Minn. Stat. § 571.912, subd. 1

2. New Instructions to Claim an Exemption
Requires provision to the debtor of a new, plain language set of instructions, notifying the debtor, among other things: (1) how to claim an exemption; (2) to submit: (i) proof of the exemption; and (ii) the bank statements for the past 60 days; (3) how the levy process works, including what happens if the debtor does - or does not -- return the exemption form and what happens if the creditor does - or does not - object to the assertion of an exemption; (4) that Legal Aid assistance may be available if the debtor is low-income; and (5) what the penalties are: (i) for the debtor for a bad faith exemption claim; or (ii) for the creditor for a bad faith objection to an exemption claim.
Adds Minn. Stat. § 571.912, subd. 2

3. Revised Exemption Form
Replaces existing exemption form with a new, plain language form that, among other things: (1) allows the debtor to check a box claiming either a full or partial exemption; (2) lists many (but not all) exempt sources of funds to check; (3) provides a check box for exempt earnings; and (4) gives permission to state agencies to verify the receipt by the debtor of benefits.
Adds Minn. Stat. § 571.912, subd. 3

4. New Service Requirements

a. Judgment Creditor Requirement
Requires the creditor to serve upon the financial institution/ garnishee the new notice and instructions along with the currently required summons and exemption notice.
Amends Minn. Stat. § 571.911

b. Financial Institution Requirement
Requires the financial institution/garnishee to serve the debtor with the new notice and instructions along with the currently required garnishment summons and exemption notice.
Amends Minn. Stat. § 571.913

5. New Debtor Obligation
Requires debtors to deliver copies of the required bank statements for the prior 60 days. Makes explicit that failure to do so does not constitute a waiver of a claimed right to an exemption.
Amends Minn. Stat. § 571.913

6. Release of Funds to Debtor by Financial Institution
Increases from seven calendar days to six business days the waiting period after which the financial institution must remit funds to the debtor the creditor does not object to the assertion of an exemption.
Amends Minn. Stat. § 571.913

7. Process When Creditor Objects
Changes the process when a creditor objects to an exemption claim by placing the burden on the creditor to, within six days of receipt of an exemption claim, mail or deliver a copy of a new "Notice of Objection and Notice of Hearing" to the financial institution and to the debtor. Requires the court administrator to schedule a hearing no sooner than five, but no later than seven, business days from the date of filing. Adds that a debtor may request continuance of the hearing by notifying the creditor and the court, and requires the court to schedule the continued hearing within seven days of the original hearing date.
Amends Minn. Stat. § 571.914, subd. 1

8. Form of Notice of Objection and Notice of Hearing
Replaces the current Notice of Objection with a new statutory Notice of Objection and Notice Hearing. Deletes the current Request for Hearing and Notice for Hearing section and form.
Amends Minn. Stat. § 571.914, subd. 2 (new notice)
Deletes Minn. Stat. § 571.914, subd. 3 (old notice)

9. Duties of Financial Institution If Creditor Objects
Adds "mutual agreement of the parties" as another condition for release by the financial institution of funds to the creditor.
Amends Minn. Stat. § 571.914, subd. 4

D. Levy on Funds at a Financial Institution

1. New Service Requirements for Sheriff
Requires the sheriff to serve on the financial institution, in addition to the writ of execution and two copies of the exemption notice, a new notice and set of instructions. Renders the levy void for the failure of sheriff to serve the new notice and new instructions.
Amends Minn. Stat. § 550.143, subd. 2 (service requirements)
Amends Minn. Stat. § 550.143, subd.3 (rendering levy void)

2. New Requirement for Judgment Creditor
Requires the judgment creditor or its attorney to provide the sheriff with a new notice and set of instructions.
Amends Minn. Stat. § 550.143, subd. 3

3. New Notice of Levy
Requires provision to the debtor of a new plain language notice that funds have been levied. Notifies the debtor: (1) of the current balance in the account; (2) of he amount frozen; (3) for how long the funds will be frozen; and (4) that some of the funds may be exempt.
Adds Minn. Stat. § 550.143, subd. 3a

4. New Instructions to Claim an Exemption
Requires provision to the debtor of a new, plain language set of instructions, notifying the debtor, among other things: (1) how to claim an exemption; (2) to submit: (i) proof of the exemption; and (ii) the bank statements for the past 60 days; (3) how the levy process works, including what happens if the debtor does - or does not -- return the exemption form and what happens if the creditor does - or does not - object to the assertion of an exemption; (4) that Legal Aid assistance may be available if the debtor is low-income; and (5) what the penalties are: (i) for the debtor for a bad faith exemption claim; or (ii) for the creditor for a bad faith objection to an exemption claim.
Adds Minn. Stat. § 550.143, subd. 3b

6. Revised Exemption Form
Replaces existing exemption form with a new, plain language form that, among other things: (1) allows the debtor to check a box claiming either a full or partial exemption; (2) lists many (but not all) exempt sources of funds to check; (3) provides a check box for exempt earnings; and (4) gives permission to state agencies to verify the receipt by the debtor of benefits.
Adds Minn. Stat. § 550.143, subd. 3c

7. Release of Funds to Sheriff
Increases from seven calendar days to six business days the waiting period after which the financial institution must remit funds to the sheriff if creditor does object to an assertion of exemption.
Amends Minn. Stat. § 550.143, subd. 4

8. Process When Creditor Objects
Places the burden on the creditor to set a hearing if objecting to an exemption claim by, within six days of receipt of an exemption claim, mailing or delivering a copy of a new "Notice of Objection and Notice of Hearing" to the financial institution and a copy to the debtor.
Amends Minn. Stat. § 550.143, subd. 5

9. Form of Notice of Objection and Notice of Hearing
Replaces the current Notice of Objection with a new statutory Notice of Objection and Notice Hearing. Deletes the current Request for Hearing and Notice for Hearing section and form.
Amends Minn. Stat. § 550.143, subd. 7(new notice)
Deletes Minn. Stat. § 550.143, subd. 8 (old notice)

10. Duties of Financial Institution If Creditor Objects
Adds "mutual agreement of the parties" as another condition for release by the financial institution of funds to the creditor.
Amends Minn. Stat. § 550.143, subd. 6

E. Attorney's Summary Execution Upon Funds at a Financial Institution

1. New Service Requirements for Judgment Creditor Attorney
Requires the attorney for the judgment creditor to serve a new notice and set of instructions upon the financial institution. Renders the levy void for failure of the attorney to send these forms.
Amends Minn. Stat. § 551.05, subd. 1a

2. New Notice of Execution
Requires provision to the debtor of a new plain language notice that funds have been levied. Notifies the debtor: (1) of the current balance in the account; (2) of he amount frozen; (3) for how long the funds will be frozen; and (4) that some of the funds may be exempt.
Adds Minn. Stat. § 551.05, subd. 1b

3. New Instructions to Claim an Exemption
Requires provision to the debtor of a new, plain language set of instructions, notifying the debtor, among other things: (1) how to claim an exemption; (2) to submit: (i) proof of the exemption; and (ii) the bank statements for the past 60 days; (3) how the levy process works, including what happens if the debtor does - or does not -- return the exemption form and what happens if the creditor does - or does not - object to the assertion of an exemption; (4) that Legal Aid assistance may be available if the debtor is low-income; and (5) what the penalties are: (i) for the debtor for a bad faith exemption claim; or (ii) for the creditor for a bad faith objection to an exemption claim.
Adds Minn. Stat. § 551.05, subd. 1c

4. New Debtor Obligation
Requires debtors to deliver copies of the required bank statements for the prior 60 days. Makes explicit that failure to do so does not constitute a waiver of a claimed right to an exemption.
Amends Minn. Stat. § 551.05, subd. 2

5. Revised Exemption Form
Replaces existing exemption form with a new, plain language form that, among other things: (1) allows the debtor to check a box claiming either a full or partial exemption; (2) lists many (but not all) exempt sources of funds to check; (3) provides a check box for exempt earnings; and (4) gives permission to state agencies to verify the receipt by the debtor of benefits.
Adds Minn. Stat. § 551.05, subd. 1d

6. Release of Funds to Judgment Creditor Attorney
Increases from seven calendar days to six business days the waiting period after which the financial institution must remit funds to the debtor if an exemption claim is submitted and the creditor does not interpose an objection.
Amends Minn. Stat. § 551.05, subd. 2

8. Form of Notice of Objection and Notice of Hearing
Replaces the current Notice of Objection with a new statutory Notice of Objection and Notice Hearing. Deletes the current Request for Hearing and Notice for Hearing section and form.
Amends Minn. Stat. § 551.05, subd. 5 (new notice)
Deletes Minn. Stat. § 551.05, subd. 6 (old notice)

9. Duties of Financial Institution If Creditor Objects
Adds that funds must be released to the creditor by the financial institution "upon mutual agreement of the parties" or "upon lapse of the garnishment."
Amends Minn. Stat. § 551.05, subd. 4

F. Garnishment of Earnings 10 Day Notice Exemption Form
Changes the term "relief based on need" to "government assistance based on need." Deletes obsolete program names, updates existing program names, and adds new program names. Clarifies that government assistance based on need includes but is not limited to the enumerated programs.
Amends Minn. Stat. § 571.925

VII. HOME WARRANTIES
Chapter 91 (HF 420)
Amends Minn. Stat. §§ 327A.04; 327A.06; 327A.07; and 327A.08
Effective August 1, 2009, and applies to contracts entered into, or construction of dwellings or home improvements completed, on or after that date

Requires vendors and contractors to provide express warranties, eliminating the existing implied warranties. Requires the warranties to be provided to the buyer in writing. Prohibits waivers, but allows post-contract modifications pursuant to existing law. Gives homeowners, by operation of law, an implied warranty with the effect of an express warranty where the vendor or contractor fails to provide an express warranty as required.

VIII. INSURANCE SOLICITATIONS TO ELDERLY CONSUMERS
Chapter 178, Article 1, Section 43 (HF 1853)
Adds Minn. Stat. § 72A.204
Effective August 1, 2009

Makes it an unfair and deceptive act or practice to use a "senior-specific certification or professional designation" that, by indication or implication, misleads a consumer that the seller has special certification or training in advising or servicing seniors regarding life insurance, including annuities. Sets forth a non-exclusive list of misleading acts, including using a nonexistent or self-conferred designation. Establishes a rebuttable presumption that there is no violation if the seller uses a certification from any one of an enumerated list of organizations.

IX. LOAN MODIFIERS
Chapter 141 (SF 708)
Amends Minn. Stat. § 325N.01
Effective June 20, 2009

Adds persons who, for compensation, negotiate or modify the terms or conditions of an existing residential mortgage loan to the list of persons who are defined as foreclosure consultants. Subjects these loan modifiers substantive provisions of section 325N.04, including the prohibition against charging for services until they are fully performed. Provides that otherwise exempt licensed mortgage originators and nonprofits are included when they negotiate (or offer to negotiate) existing mortgages. Adds to the definition of a "regulated service" any contact with servicers to negotiate existing mortgages.

X. PAYDAY LENDING
Chapter 37, Article 3, Sections 2, 3, and 4 (HF 2123)
Amends Minn. Stat. § 47.60, subds. 1, 3, and 6
Effective August 1, 2009

Chapter 68 (SF 806)
Amends Minn. Stat. §§ 47.60, subds. 4 and 6; and 53.09, subd. 2
Adds Minn. Stat. § 47.601
Effective August 1, 2009

A. Definitions

1. Consumer Short-Term Lender
Chapter 68, Section 3 (SF 806)
Creates a new definition, intended to cover loans made under the lending authority of either the Consumer Small Loan Act (Minn. Stat. § 47.60) or Chapter 53 (governing Industrial Loan and Thrifts). Excludes a state or federally chartered bank, savings bank, or credit union.
Adds Minn. Stat. § 47.601, subd. 1(e)

2. Consumer Short-Term Loan
Chapter 68, Section 3 (SF 806)
Creates a new definition, intended to cover loans made under the lending authority of either the Consumer Small Loan Act or Chapter 53. Defines a consumer short term loan as a loan "which has a principal amount, or an advance on a credit limit, of $1,000 or less and requires a minimum payment within 60 days of loan origination or credit advance of more than 25 percent of the principal balance or credit advance." Provides that each new loan or advance is a loan. Excludes pawn transactions under Chapter 325J or a recourse loan secured by physical goods pledged as collateral.
Adds Minn. Stat. § 47.601, subd. 1(d)

3. Consumer Small Loan Lender
Chapter 37, Article 3, Section 2 (HF 2123)
Replaces "person" (which is undefined) with "business entity" in the definitions section of the Consumer Small Loan Act.
Amends Minn. Stat. § 47.60, subd. 1

B. Class Actions
Chapter 68, Section 3 (SF 806)
Prohibits any contract clause that limits a class action for: (1) violating any contract requirement or prohibition; (2) lending without a license; or (3) exceeding, by other than a de minimis amount if no pattern or practice exists, the interest rates, fees, or loan amounts allowable under Minnesota law.
Adds Minn. Stat. § 47.601, subd. 2(a)(3)

C. Debt Collection
Chapter 68, Section 3 (SF 806)
Subjects first party payday loan collectors to Minnesota's debt collection statutes (Minn. Stat. § 332.37), incorporating by reference the provisions of the Federal Fair Debt Collections Practices Act.
Adds Minn. Stat. § 47.601, subd. 3

D. Enforcement
Chapter 68, Section 3 (SF 806)
Grants enforcement authority to the Attorney General.
Adds Minn. Stat. § 47.601, subd. 7

E. Jurisdiction Over Internet Payday Lenders
Chapter 37, Article 3, Section 3 (HF 2123)
Chapter 68, Section 3 (SF 806)

Deems a consumer short-term loan transaction to occur in Minnesota if the borrower is: (1) a state resident; and (2) completes the transaction, either personally or electronically, while physically located in the state.Adds Minn. Stat. § 47.601, subd. 5
Clarifies that lenders not physically located in Minnesota and making loans electronically must: (1) be licensed by the Department of Commerce; and (2) follow Minnesota law.
Adds Minn. Stat. § 47.60, subd. 3

F. Loan Contracts
Chapter 68, Section 3 (SF 806)
Requires all payday loan to be in writing in the language in which the contract was negotiated. Prescribes certain terms that must be contained (e.g. annual percentage rate). Proscribes certain terms (e.g., a choice of law or forum clause).
Adds Minn. Stat. § 47.601, subd. 2(c)

G. Remedies
Chapter 37, Article 3, Section 4 (HF 2123)
Chapter 68, Sections 2 and 6 (SF 806)

1. Who is Liable

a. Person vs. Entity
Replaces "person" (which is undefined) with "business entity" and eliminates individual liability for members, officers, directors, agents, and employees in the penalties section of the Consumer Small Loan Act.
Amends Minn. Stat. § 47.60, subd. 6

b. Holders and Assignees
Subjects holders and assignees to all claims and defenses available to the borrower against the lender.
Adds Minn. Stat. § 47.601, subd. 2(d)

2. Nature of Liability
Expands liability for a violation to include: (1) all money collected or received in connection with the loan; (2) actual, incidental, and consequential damages; (3) statutory damages of up to $1,000 per violation; (4) costs, disbursements, and reasonable attorney fees; and (5) injunctive relief. Voids a loan made by a lender who: lends without a license; or (2) violates: (i) any contract term or prohibition; (ii) prohibited debt collection practices; or (iii) rate, fee, or amount limitations. Exempts "bona fide errors" as defined under federal law. Provides that remedies are cumulative.
Adds Minn. Stat. § 47.601, subd. 6 (elements of liability)
Adds Minn. Stat. § 47.601, subd. 8 (liability cumulative)

3. Uniformity of Liability
Makes lenders making payday loans under the authority of either the Consumer Small Loan Act or Chapter 53 subject to the same liability. For lenders lending under the Consumer Small Loan Act authority: (1) expands liability to include actual, consequential, incidental, and statutory damages; (2) subjects violators to payment of costs, disbursements and attorneys fees; and (3) eliminates criminal penalties for lenders.
Amends Minn. Stat. § 47.60, subd. 6
Adds Minn. Stat. § 47.601, subd. 6

H. Reporting Requirements
Chapter 68, Sections 1, 3, and 4 (SF 806)
Subjects lenders making payday loans under the authority of either the Consumer Small Loan Act or Chapter 53 to new reporting requirements, including: (1) the amount of fees collected; (2) the average annual percentage rate and range of annual percentage rates; (3) the number of individual borrowers who obtained one or more loans; (4) a breakdown of the number of individual borrowers who obtained five, ten, fifteen and twenty or more loans in the calendar year; and (5) the total number and dollar amount of loans charged off or written off.
Adds Minn. Stat. § 47.601, subd. 4 (new reporting requirements)
Amends Minn. Stat. § 47.60, subd. 4 (covering section 47.60 lenders)
Amends Minn. Stat. § 53.09, subd. 2 (covering Chapter 53 lenders)

XI. REAL ESTATE APPRAISERS
Chapter 178, Article 1, Section 55 (HF 1853)
Amends Minn. Stat. § 82B.20, subd. 2
Effective August 1, 2009

Add a new prohibition to the existing list of prohibited real estate appraiser practices: improperly influencing (or attempting to improperly influence) the development, reporting, result, or review of an appraisal. Includes coercion or other behavior that impairs or may impair the independent judgment of the appraiser as a prohibited act.

XII. RESIDENTIAL MORTGAGE ORIGINATORS AND SERVICERS
Chapter 37, Article 3, Sections 7, 8, and 9 (HF 2123)
Amends Minn. Stat. §§ 58.06, subd. 2; 58.126; and 58.13, subd. 1
Effective various dates

A. Amended Education and New Testing Requirements
Increases the hours of educational training required to obtain or retain a license as a residential mortgage originator from 15 to 20. Institutes a new annual continuing education requirement of eight hours, consisting of: (1) three hours of federal law and regulations; (2) two hours of ethics, which must include fraud, consumer protection, and fair lending; and (3) two hours of standards governing nontraditional mortgage lending. Authorizes the Department of Commerce to, by rule, establish testing requirements for individual residential mortgage originators.
Amends Minn. Stat. § 58.126
Effective September 1, 2009, and applies to license applications and renewals made on or after that date

B. New License Requirement
Requires an applicant for a residential mortgage originator license to affirm under oath the dates that the new continuing education and testing requirements were completed.
Amends Minn. Stat. § 58.06, subd. 2
Effective August 1, 2009 for existing initial educational requirement.

C. New Standard of Conduct
Prohibits a residential mortgage originator from violating the provisions of the state law (Minn. Stat. § 47.58) or federal law governing reverse mortgages.
Amends Minn. Stat. § 58.13, subd. 1(8)
Effective August 1, 2009

XIII. REVERSE MORTGAGES
Chapter 37, Article 3, Section 1 (HF 2123)
Amends Minn. Stat. § 47.58, subd. 1
Effective August 1, 2009

Amends the definition of "lender" subject to the requirements of Minnesota's reverse mortgage provisions to include mortgage originators subject to Chapter 58.

XIV. STRANGER ORIGINATED LIFE INSURANCE (STOLI)
Chapter 52 (SF 166)
Adds Chapter 60A, specifically Minn. Stat. §§ 60A.078 - 60A.0789
Effective for insurance policies issued on or after May 10, 2009

Note: Stranger Originated Life Insurance or STOLI refers to the purchase of a life insurance policy for the benefit of a third, unrelated party. The third party provides an immediate cash benefit as consideration for becoming the beneficiary on the insured's policy (which is worth, upon the death of the insured, significantly more than the buyout). This law is intended to curb what many consider a questionable practice of "betting on the death" of another for financial gain of an unrelated third party business entity.

A. STOLI Defined
Defines "stranger-originated life insurance or STOLI practices" as an act, practice, or arrangement to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured.
Adds Minn. Stat. § 60A.0782, subd. 12

B. Limitation on Procuring a Policy on Another's Life

1. Conditions
Prohibits a person from procuring an insurance policy on someone else's life unless the benefits are payable to: (1) the insured; (2) the insured's estate's personal representatives; or (3) a person having, at the time the policy is issued, an "insurable interest" in the insured.
Adds Minn. Stat. § 60A.0783, subd. 1

2. Definition of "Insurable Interest"
Enumerates an exclusive list of nine persons who (or entities that) have insurable interest in another. They include: (1) a person who is related to the insured by blood or law and the interest is "engendered by love and affection"; (2) a person whose interest is other than a person whose only interest is profit from the death of the insured; (3) a charitable organization; (4) a trust or trustee.; and (5) a guardian or fiduciary.
Adds Minn. Stat. § 60A.0783, subd. 2

3. Consent of the Insured Required
Requires insured: (1) has the legal capacity to contract; and (2) applies for or consents in writing to the terms of the policy.
Adds Minn. Stat. § 60A.0783, subd. 5

C. Prohibited Practices
Prohibits, among other things: (1) engaging in STOLI practices; and (2) soliciting or marketing a policy whose purpose is sale on the secondary market.
Adds Minn. Stat. § 60A.0784

D. Rebuttable Presumption
Creates a rebuttable presumption of STOLI practices. Provides that a court may presume the policy was originated as the result of STOLI practices if: (1) an insured underwent a life expectancy exam; (2) a policy was settled within four years of purchase; and (3) there is some form of unconventional premium financing.
Adds Minn. Stat. § 60A.0786, subd. 1

E. Restriction Settlement Contracts
Prohibits a prospective buyer of either the policy or a beneficial interest in the policy from entering into a settlement contract prior to and within four years after the issuance of the policy unless the buyer determines, based on a reasonable inquiry, that certain specified conditions are or are not present. For example, prohibits a settlement contract if: (1) funds to purchase the policy did not come from a source other than the insured's personal assets or assets of a person closely related to the insured by blood or law; or (2) a life expectancy evaluation was shared with or used by any person to determine the actual or potential value of the policy in the secondary market.
Adds Minn. Stat. § 60A.0785

F. Criminal Penalties
Lists fraudulent acts in relation to this statute and makes the commission of fraud under the statute insurance fraud, subject to criminal penalties and jail sentences pursuant to the insurance fraud law.
Adds Minn. Stat. § 60A.0788

G. Remedies

1. Damages
Provides a cause of action personal representative of the insured's to recover the benefits upon violation. Allows the court to: (1) limit recovery for nonwillful violations to unjust enrichment; and (2) expand recovery for willful violations to include exemplary damages of up to twice the benefit. Provides for recovery of costs, disbursements, and reasonable attorneys' fees.
Adds Minn. Stat. § 60A.0789, subd. 1

2. Enforceability of Contract
Makes a contract that violates the provisions voidable.
Adds Minn. Stat. § 60A.0789, subd. 2

3. Availability of Declaratory Judgment Action
Permits an insurer who believes STOLI practices precipitated the policy to seek a declaratory judgment prior to payment of death benefits.
Adds Minn. Stat. § 60A.0789, subd. 3

4. Nonexclusivity
Provides that the remedies do not preempt or limit other civil remedies or limit the authority of the state to punish a violator for other crimes.
Adds Minn. Stat. § 60A.0789, subd. 4

XV. TAX PREPARER REGULATION
Chapter 88, Article 11, Sections 3 and 4; and Article 12 (HF 1298)
Amends Minn. Stat. §§ 270C.445; and 270C.446, subds. 2 and 5
Adds Minn. Stat. § 270C.445, subds. 2(g), 2(h), 2(i), 3a, 4a, 4b, and 5b
Various effective dates

A. Applicability
Expands the applicability of the Refund Anticipation Loan (RAL) protections to those who "facilitate" transactions. Defines "facilitate" broadly to mean: a person, individually or in conjunction or cooperation with another, who (1) accepts an application for a refund anticipation loan; (2) pays the proceeds, through direct deposit, a negotiable instrument, or any other means, of a refund anticipation loan to a client; or (3) offers, arranges, processes, provides, or in any other manner acts to allow the making of, a refund anticipation loan.
Adds Minn. Stat. § 270C.445, subd. 2(h)
Effective August 1, 2009

B. Exemption
Exempts nonprofit organizations providing tax preparation services under the Internal Revenue Service Volunteer Income Tax Assistance (VITA) Program or Tax Counseling for the Elderly (TCE) Program from compliance with standards of conduct and disclosure requirements.
Amends Minn. Stat. § 270C.445, subd. 1
Effective August 1, 2009

C. New Standards
Adds seven standards to the 12 existing ones, including prohibitions against: (1) commingling client and preparer funds; (2) failing to act in the client's best interests; (3) failing to disclose all material facts of which the preparer has knowledge which might reasonably affect the client's rights and interests;
(4) violating state and federal debt collection laws; and (5) including specified anti-consumer provisions in contracts.
Amends Minn. Stat. § 270C.445, subd. 3
Effective August 1, 2009

D. Refund Anticipation Loans and Refund Anticipation Checks (RACs)

1. Contracts

a. Written Contracts Required
Requires all contracts for RALs and RACs to be in writing.
Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

b. Deduction from Refunds Limited
Prohibits any provision that, directly or indirectly, allows for a deduction for any amount other than the fees for tax preparation and the RAL or RAC.
Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

c. Mandatory Arbitration Limited
Requires that tax preparers permit clients to opt out of mandatory arbitration clauses. Voids any arbitration ruling if the dispute involves a violation of Minnesota statutes governing tax preparers. Requires disclosure of client rights involving mandatory arbitration.
Adds Minn. Stat. § 270C.445, subd. 3a
Effective August 1, 2009

d. Right to Rescind
Provides taxpayers with the right to rescind a RAL on or before the close of business of the next business day after it was taken. Makes rescission effective when the client: (1) provides written notification to the tax preparer of the rescission, and, if applicable, (2) either returns the original check issued for the loan, or tenders the amount of the loan. Allows the tax preparer to charge a fee to rescind only if the preparer has already opened an account at a bank to receive an electronic transfer of the refund. Limits the rescission fee to the amount the bank charges the tax preparer.
Adds Minn. Stat. § 270C.445, subd. 5b
Effective August 1, 2009

2. Disclosures

a. Addition to Itemized Bill Disclosure
Requires tax preparers to separately itemize each fee associated with a RAC.
Amends Minn. Stat. § 270C.445, subd. 5
Effective August 1, 2009

b. Language Requirement
Mandates that all required disclosures be made in the client's primary language, if the tax preparer advertises in that language.
Amends Minn. Stat. § 270C.445, subd. 4
Effective August 1, 2009

c. New RAC Disclosure Required
Adds a disclosure requirement if the tax preparer offers a RAC, informing the client, among other things, that the client is not obligated to take a RAC to get a refund.
Adds Minn. Stat. § 270C.445, subd. 4b
Effective August 1, 2009

E. Private Right of Action
Adds statutory damages of twice the sum of: (i) the tax preparation fees; and (ii) if the plaintiff violated any of the provisions governing RALs, all interest and fees for the loan. Provides that a private action taken under Minn. Stat. § 8.31 is in the public interest.
Amends Minn. Stat. § 270C.445, subd. 7
Effective August 1, 2009

F. Publication of Convicted Tax Preparers

1. Limit on Publication
Clarifies that the Department of Revenue must publish the names of tax preparers who have failed to file or pay taxes or committed other fraudulent acts only if they do so in their capacity as tax preparers.
Amends Minn. Stat. § 270.446, subd. 2
Effective May 17, 2009

2. Removal from Published List
Requires the Department of Revenue to remove from the list a tax preparer who has satisfied all sentences imposed. Clarifies that all conditions for removal must be demonstrated to the Department of Revenue.
Amends Minn. Stat. § 270.446, subd. 5
Effective May 17, 2009

XVI. TELEPHONE SOLICITATIONS/STATE DO NOT CALL LIST
Chapter 178, Article 1, Sections 60 and 61 (HF 1853)
Amends Minn. Stat. § 325E.27
Expires Minn. Stat. §§ 325E.311 to 325E.316
Effective August 1, 2009

A. Automatic Dialers
Exempts from the prohibition against using pre-recorded, automatic dialed solicitations nonprofit, tax-exempt charitable organizations soliciting voluntary donations of clothing for disabled United States military veterans, provided no monetary or other solicitations are included.
Amends Minn. Stat. § 325E.27

B. Do Not Call List
Shuts down the Minnesota Do Not Call List on December 31, 2012.
Expires Minn. Stat. §§ 325E.311 to 325E.316