This legislative update contains information on new developments in real estate law from the 2012 Minnesota legislative session that affect real estate developers, property managers, owners, investors, and lenders. All legislation described below was effective August 1, 2012, unless otherwise noted.

Foreclosure Reforms

The Minnesota legislature considered a number of bills dealing with foreclosure during its 2012 session.

90 Days’ Written Notice to Vacate for Tenants in Properties Subject to Foreclosure

The statute requiring 90 days’ written notice to residential tenants in a foreclosed property was extended two years to apply to any eviction action commenced on or before December 31, 2014. Minn. Stat. § 504B.285. Previously, the protections covered only eviction actions commenced on or before December 31, 2012. Additionally, another protective measure, which allowed residential tenants with a lease extending more than 90 days beyond the redemption period to stay for the duration of the lease so long as rent was paid and the new owner did not intend to use the property as a residence, was extended to apply to eviction actions commenced on or before December 31, 2014. Previously, those protections also expired December 31, 2012.

Time Share Foreclosure

A person who has become the owner in fee of a time share interest, not exceeding seven days in any year, as a result of the foreclosure of a mortgage or lien, may apply to the examiner of titles for an entry of a new certificate of title. If the examiner determines the foreclosure was legally sufficient, the examiner shall issue a directive to the registrar to issue a new certificate of title. Minn. Stat. § 508.58.

Other Court Proceedings

Receiverships

The Minnesota legislature enacted a comprehensive receivership statute, Chapter 576. A limited or general receiver may be appointed in a wide variety of situations involving real property, including foreclosures. In certain situations, the receiver must be or retain an experienced property manager to prevent waste. Receivers are subject to a number of qualification provisions, including the independence of the receiver and the receiver’s ability to post a bond conditioned on the receiver’s faithful execution of duties. Furthermore, the legislation confers upon a receiver broad power to manage property and gives discretion regarding the priority of certain payments. Notice of the receivership must be recorded on the title of any real property as soon as practicable. The law details other general notice requirements and legal procedures.

Conciliation Court Limit

Minn. Stat. § 491A.01, subd. 3 was amended to increase the limit on conciliation court civil claims from $7,500 to $10,000, effective August 1, 2012. On August 1, 2014, the limit increases to $15,000.

Felony Retaliation

A person who retaliates or attempts to influence a sheriff or deputy in relation to that officer’s performance of official duties in connection to a sheriff’s sale of real property or the filing of a lien is guilty of a felony. Previously, such an offense was a misdemeanor. Minn. Stat. § 609.7475, subd. 3.

Unaffixing Manufactured Homes

The Minnesota legislature amended the licensing process applicable to vehicles to include manufactured homes. Minn. Stat. §§ 168A.01-168.05. In addition, the legislature added a new Minn. Stat. § 168A.142, outlining a process for obtaining a certificate of title for a manufactured home being detached from real property. The owner must prove that he or she owns the manufactured home and the real property, prove that no liens exist on the manufactured home or real property, and meet certain proof of eligibility requirements.

Building Codes

Advisory Inspections

A person may request an advisory inspection from a state agency for the purposes of complying with state law. If the person requesting the advisory inspection is in violation of the law, the agency must notify the person in writing. If the violation is corrected within 60 days, the person cannot be fined or penalized based on the results, although the agency may collect the costs incurred by the inspection. A person may ask for one advisory inspection per year. Minn. Stat. § 15.985.

Sump Pump Installation

Waterproofing contractors may install a single sump pump in existing single-family dwellings, so long as the contractors are licensed under Minn. Stat. §§ 326B.801-326B.89. Minn. Stat. § 326B.46 (2011 Supp.).

Common Interest Communities

The cross-references in Minn. Stat. §§ 515B.1-102, 515B.3-105, and 515B.3-1151 regarding planned communities were updated to include a permissive reference to the platting requirements of Minn. Stat. § 515B.2-1101(d)(1) and (2). Other miscellaneous corrections were also made.

Land Detachment

When petitioning to detach land from a municipality, petitioners must now provide a statement of the reasons behind the detachment and summarize previous efforts to resolve the issues. Various notice requirements were also added. The municipality may submit a resolution supporting, opposing, or expressing no opinion on the petition. The petitioning landowners must be at least 50 percent responsible for the costs of mediation and hearing unless the judge specifically orders otherwise. Minn. Stat. § 414.06.

Fraudulent Transfers

For fraudulent transfer purposes, a transfer does not include a contribution made to a charitable or religious organization unless the contribution was made within two years of the commencement of an action against the organization and:

  • The debtor made the contribution with actual intent to defraud a creditor, or
  • If the debtor was insolvent at the time of the contribution or would be made insolvent by the transfer, was about to engage in a transaction with too few assets, or intended to incur (or the charitable organization had reason to believe the debtor intended to incur) debts which the debtor would be unable to pay.

A transfer is not considered a fraudulent transfer if the contribution did not exceed 15 percent of the gross annual income of the debtor for the year the transfer was made, or was consistent with the past charitable contributions of the debtor. This law was effective April 3, 2012, and applies to a cause of action existing on, or arising on or after, that date. Minn. Stat. § 513.41, subd. 12.

Real Estate Professionals

Regulation of Closing Agents

In order to act as a real estate closing agent, a person must be licensed under Minn. Stat. § 82.641 (2011 Supp.). However, the legislature added an exception to the licensing requirements of that section for a person who is a:

  • Direct employee of a title insurance company;
  • Licensed attorney or direct employee of a licensed attorney;
  • Licensed real estate broker or salesperson;
  • Direct employee of a licensed real estate broker;
  • Bank, trust company, savings association, credit union, or other lender; or
  • Title insurance company.

Minn. Stat. § 82.641, subd. 6. Previously, these entities were only exempt from the requirements of Minn. Stat. §§ 82.75 and 82.81. This amendment went into effect on May 2, 2012.

Property Management Activities

A broker is no longer responsible for supervising, within the scope of the brokerage, activities that would be considered property management, such as leasing, maintenance, or repair. Additionally, the licensee is not responsible for operating within the scope of the brokerage agreement for those activities. These exceptions apply so long as the real estate is partially owned by the licensee as an individual or by a corporation in which the licensee has an interest. Minn. Stat. § 82.73, subd. 3(e). This change took effect on March 21, 2012, and applies to property management activities performed on or after that date.

Agriculture

Classification of Property

The Minnesota legislature declared that participating in a statutory agricultural pursuit defined in chapter 17 is not determinative of the classification of property under chapter 273. Minn. Stat. § 17.345. In addition, a horse breeding farm, horse training farm, horse boarding farm, or a combination of those uses is specifically defined as an agricultural operation. Minn. Stat. § 17.459, subd. 2. This legislation became effective July 1, 2012.

Local Water Management Boundaries

The Board of Water and Soil Resources may adopt a comprehensive watershed management plan, and can establish watershed boundary frameworks to assist with the coordination of local plans. Local governments may submit a boundary request either as part of a plan approval or may apply separately before requesting plan approval. In either case, the local government must provide written rationale for the proposed boundary. Minn. Stat. § 103B.101, subd. 14 and 15.