Minnesota Session Laws - 1986, Regular Session

  

                         Laws of Minnesota 1986 

                        CHAPTER 438-S.F.No. 1930 
           An act relating to real estate; providing for 
          cancellation of real estate contract depending upon 
          when contract was executed; providing for 
          determination of purchase price; appropriating money; 
          amending Minnesota Statutes 1984, section 559.21, by 
          adding subdivisions; and Minnesota Statutes 1985 
          Supplement, section 559.21, subdivisions 2a, 3, 4, and 
          6. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 559.21, is 
amended by adding a subdivision to read: 
    Subd. 1b.  [TERMINATION NOTICE FOR CONTRACT EXECUTED BEFORE 
AUGUST 2, 1976.] If a default occurs in the conditions of a 
contract for the conveyance of real estate or an interest in 
real estate executed on or prior to August 1, 1976, that gives 
the seller a right to terminate it, the seller may terminate the 
contract by serving upon the purchaser or the purchaser's 
personal representatives or assigns, within or outside the 
state, a notice specifying the conditions in which default has 
been made.  The notice must state that the contract will 
terminate 30 days after the service of the notice, unless prior 
to the termination date the purchaser: 
    (1) complies with the conditions in default; 
    (2) pays the costs of service of the notice, including the 
reasonable costs of service by sheriff, public officer, or 
private process server; except payment of costs of service is 
not required unless the seller notifies the purchaser of the 
actual costs of service by certified mail to the purchaser's 
last known address at least ten days prior to the date of 
termination; and 
    (3) pays an amount to apply on attorneys' fees actually 
expended or incurred, of $50 if the amount in default is less 
than $500, and of $100 if the amount in default is $500 or more; 
except no amount is required to be paid for attorneys' fees 
unless some part of the conditions of default has existed for at 
least 45 days prior to the date of service of the notice. 
    Sec. 2.  Minnesota Statutes 1984, section 559.21, is 
amended by adding a subdivision to read: 
    Subd. 1c.  [TERMINATION NOTICE FOR CONTRACT EXECUTED BEFORE 
MAY 1, 1980.] If a default occurs in the conditions of a 
contract for the conveyance of real estate or an interest in 
real estate executed after August 1, 1976, and prior to May 1, 
1980, that gives the seller a right to terminate it, the seller 
may terminate the contract by serving upon the purchaser or the 
purchaser's personal representatives or assigns, within or 
outside the state, a notice specifying the conditions in which 
default has been made.  The notice must state that the contract 
will terminate 30 days after the service of the notice if the 
purchaser has paid less than 30 percent of the purchase price, 
45 days after service of the notice if the purchaser has paid 30 
percent or more of the purchase price but less than 50 percent, 
or 60 days after service of the notice if the purchaser has paid 
50 percent or more of the purchase price; unless prior to the 
termination date the purchaser: 
    (1) complies with the conditions in default; 
    (2) pays the costs of service of the notice, including the 
reasonable costs of service by sheriff, public officer, or 
private process server; except payment of costs of service is 
not required unless the seller notifies the purchaser of the 
actual costs of service by certified mail to the purchaser's 
last known address at least ten days prior to the date of 
termination; and 
    (3) pays an amount to apply on attorneys' fees actually 
expended or incurred, of $75 if the amount in default is less 
than $750, and of $200 if the amount in default is $750 or more; 
except no amount is required to be paid for attorneys' fees 
unless some part of the conditions of default has existed for at 
least 45 days prior to the date of service of the notice. 
    Sec. 3.  Minnesota Statutes 1984, section 559.21 is amended 
by adding a subdivision to read: 
    Subd. 1d.  [TERMINATION NOTICE FOR CONTRACT EXECUTED BEFORE 
AUGUST 1, 1985.] If a default occurs in the conditions of a 
contract for the conveyance of real estate or an interest in 
real estate executed on or after May 1, 1980 and prior to August 
1, 1985, that gives the seller a right to terminate it, the 
seller may terminate the contract by serving upon the purchaser 
or the purchaser's personal representatives or assigns, within 
or outside the state, a notice specifying the conditions in 
which default has been made.  The notice must state that the 
contract will terminate 30 days after the service of the notice 
if the purchaser has paid less than ten percent of the purchase 
price, 60 days after service of the notice if the purchaser has 
paid 10 percent or more of the purchase price but less than 25 
percent, or 90 days after service of the notice if the purchaser 
has paid 25 percent or more of the purchase price; unless prior 
to the termination date the purchaser: 
    (1) complies with the conditions in default; 
    (2) makes all payments due and owing to the seller under 
the contract through the date that payment is made; 
    (3) pays the costs of service of the notice, including the 
reasonable costs of service by sheriff, public officer, or 
private process server; except payment of costs of service is 
not required unless the seller notifies the purchaser of the 
actual costs of service by certified mail to the purchaser's 
last known address at least ten days prior to the date of 
termination; and 
    (4) pays an amount to apply on attorneys' fees actually 
expended or incurred, of $125 if the amount in default is less 
than $750, and of $250 if the amount in default is $750 or more; 
except no amount is required to be paid for attorneys' fees 
unless some part of the conditions of default has existed for at 
least 45 days prior to the date of service of the notice. 
    Sec. 4.  Minnesota Statutes 1984, section 559.21, is 
amended by adding a subdivision to read: 
    Subd. 1e.  [DETERMINATION OF PURCHASE PRICE.] For purposes 
of determining the purchase price and the amount of the purchase 
price paid on contracts executed prior to August 1, 1985: 
    (a) The purchase price is the sale price under the contract 
alleged to be in default, including the initial down payment.  
Mortgages, prior contracts for deed, special assessments, 
delinquent real estate taxes, or other obligations or 
encumbrances assumed by the purchaser are excluded in 
determining the purchase price. 
    (b) The amount paid by the purchaser is the total of 
payments of principal made under the contract alleged to be in 
default, including the initial down payment.  Interest payments 
and payments made under mortgages, prior contracts for deed, 
special assessments, delinquent real estate taxes, or other 
obligations or encumbrances assumed by the purchaser are 
excluded in determining the amount paid by the purchaser.  
    Sec. 5.  Minnesota Statutes 1985 Supplement, section 
559.21, subdivision 2a, is amended to read: 
    Subd. 2a.  [TERMINATION NOTICE FOR CONTRACT EXECUTED AFTER 
JULY 31, 1985.] (a) If a default occurs in the conditions of a 
contract for the conveyance of real estate or an interest in the 
real estate executed on or after August 1, 1985, that gives the 
seller a right to terminate it, the seller may terminate the 
contract by serving upon the purchaser or the purchaser's 
personal representatives or assigns, within or outside of the 
state, a notice specifying the conditions in which default has 
been made.  The notice must state that the contract will 
terminate 60 days, or a shorter period allowed in subdivision 4, 
after the service of the notice, unless prior to the termination 
date the purchaser: 
    (1) complies with the conditions in default; 
    (2) makes all payments due and owing to the seller under 
the contract through the date that payment is made; 
    (3) pays the costs of service of the notice, which include 
including the reasonable costs of service by sheriff, public 
officer, or private process server,; except as provided in 
paragraph (c) payment of costs of service is not required unless 
the seller notifies the purchaser of the actual costs of service 
by certified mail to the purchaser's last known address at least 
ten days prior to the date of termination; 
    (4) pays two percent of any amount in default at the time 
of service, not including the final balloon payment, any taxes, 
assessments, mortgages, or prior contracts that are assumed by 
the purchaser; and 
    (5) pays an amount to apply on attorneys' fees actually 
expended or incurred, of $125 if the amount in default is less 
than $750, and of $250 if the amount in default is $750 or more,;
except as provided in paragraph (b). 
    (b) An no amount for attorneys' fees is not required to be 
paid under this section, unless some part of the conditions of 
default has existed for at least 30 days prior to the date of 
service of the notice.  
    (c) Payment of costs of service is not required unless the 
seller notifies the purchaser of actual costs of service by 
certified mail to the purchaser's last known address at least 
ten days prior to the date of termination.  
     Sec. 6.  Minnesota Statutes 1985 Supplement, section 
559.21, subdivision 3, is amended to read: 
    Subd. 3.  For purposes of this section, the term "notice" 
means a writing stating the information required in this 
section, stating the name, address and telephone number of the 
seller or of an attorney authorized by the seller to accept 
payments pursuant to the notice and the fact that the person 
named is authorized to receive the payments, and including the 
following information in 12-point or larger bold underlined 
upper-case type, or 8-point type if published, or in large 
legible handwritten letters:  
    THIS NOTICE IS TO INFORM YOU THAT BY THIS NOTICE THE SELLER 
HAS BEGUN PROCEEDINGS UNDER MINNESOTA STATUTES, SECTION 559.21, 
TO TERMINATE YOUR CONTRACT FOR THE PURCHASE OF YOUR PROPERTY FOR 
THE REASONS SPECIFIED IN THIS NOTICE.  THE CONTRACT WILL 
TERMINATE ..... DAYS AFTER (SERVICE OF THIS NOTICE UPON YOU) 
(THE FIRST DATE OF PUBLICATION OF THIS NOTICE) UNLESS BEFORE 
THEN: 
     (a) THE PERSON AUTHORIZED IN THIS NOTICE TO RECEIVE 
PAYMENTS RECEIVES FROM YOU: 
     (1) THE AMOUNT THIS NOTICE SAYS YOU OWE; PLUS 
    (2) THE COSTS OF SERVICE (TO BE SENT TO YOU); PLUS 
    (3) $........... TO APPLY TO ATTORNEYS' FEES ACTUALLY 
EXPENDED OR INCURRED; PLUS 
    (4) FOR CONTRACTS EXECUTED ON OR AFTER MAY 1, 1980, ANY 
ADDITIONAL PAYMENTS BECOMING DUE UNDER THE CONTRACT TO THE 
SELLER SINCE THE AFTER THIS NOTICE WAS SERVED ON YOU; PLUS THE 
COSTS OF SERVICE (TO BE SENT TO YOU) TOGETHER WITH 
     (5) FOR CONTRACTS EXECUTED ON OR AFTER AUGUST 1, 1985, $ . 
. . . (WHICH IS TWO PERCENT OF THE AMOUNT IN DEFAULT AT THE TIME 
OF SERVICE OTHER THAN THE FINAL BALLOON PAYMENT, ANY TAXES, 
ASSESSMENTS, MORTGAGES, OR PRIOR CONTRACTS THAT ARE ASSUMED BY 
YOU) AND $. . . . . TO APPLY TO ATTORNEYS' FEES ACTUALLY 
EXPENDED OR INCURRED; OR UNLESS BEFORE THEN 
    (b) YOU SECURE FROM A COUNTY OR DISTRICT COURT AN ORDER 
THAT THE TERMINATION OF THE CONTRACT BE SUSPENDED UNTIL YOUR 
CLAIMS OR DEFENSES ARE FINALLY DISPOSED OF BY TRIAL, HEARING OR 
SETTLEMENT.  YOUR ACTION MUST SPECIFICALLY STATE THOSE FACTS AND 
GROUNDS THAT DEMONSTRATE YOUR CLAIMS OR DEFENSES.  
     IF YOU DO NOT DO ONE OR THE OTHER OF THE ABOVE THINGS 
WITHIN THE TIME PERIOD SPECIFIED IN THIS NOTICE, YOUR CONTRACT 
WILL TERMINATE AT THE END OF THE PERIOD AND YOU WILL LOSE ALL 
THE MONEY YOU HAVE PAID ON THE CONTRACT; YOU WILL LOSE YOUR 
RIGHT TO POSSESSION OF THE PROPERTY; YOU MAY LOSE YOUR RIGHT TO 
ASSERT ANY CLAIMS OR DEFENSES THAT YOU MIGHT HAVE; AND YOU WILL 
BE EVICTED.  IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, 
CONTACT AN ATTORNEY IMMEDIATELY.  
    Sec. 7.  Minnesota Statutes 1985 Supplement, section 
559.21, subdivision 4, is amended to read:  
    Subd. 4.  [CONTRARY CONTRACTUAL NOTICE; SERVICE; 
REINSTATEMENT; TERMINATION.] (a) The notice required by this 
section must be given notwithstanding any provisions in the 
contract to the contrary, except that earnest money contracts, 
purchase agreements, and exercised options that are subject to 
this section may, unless by their terms, they provide for a 
shorter longer termination period, not less than be terminated 
on 30 days notice.  The notice must be served within the state 
in the same manner as a summons in the district court, and 
outside of the state, in the same manner, and without securing 
any sheriff's return of not found, making any preliminary 
affidavit, mailing a copy of the notice or doing any other 
preliminary act or thing whatsoever.  Service of the notice 
outside of the state may be proved by the affidavit of the 
person making the same, made before an authorized officer having 
a seal, and within the state by such an affidavit or by the 
return of the sheriff of any county therein. 
    (b) Three weeks published notice, and if the premises real 
estate described in the contract are is actually occupied, then 
in addition thereto, the personal service of a copy of the 
notice within ten days after the first date of publication of 
the notice, and in like manner as the service of a summons in a 
civil action in the district court, upon the person in 
possession of the premises real estate, has the same effect as 
the personal service of the notice upon the purchaser, his or 
the purchaser's personal representatives or assigns, either 
within or outside of the state as herein provided for in this 
section.  In case of service by publication, as herein provided, 
the published notice shall specify the conditions in which 
default has been made, comply with subdivision 3 and state that 
the purchaser, his or the purchaser's personal 
representative, representatives or assigns are, is allowed 90 
days from and after the first date of publication of the notice 
to comply with the conditions of the contract, and state that 
the contract will terminate 90 days after the first date of 
publication of the notice, unless prior thereto to the 
termination date the purchaser: 
    (1) complies with the conditions; 
    (2) makes all payments due and owing to the seller under 
the contract through the date that payment is made; 
    (3) pays the costs of service, as provided in subdivision 
2a; 
    (4) pays two percent of the amount in default at the time 
of service, not including the final balloon payment, any taxes, 
assessments, mortgages, or prior contracts that are assumed by 
the purchaser; and 
    (5) pays attorneys' fees as provided in subdivision 
2a notice. 
    (c) The contract is reinstated if, within the time 
mentioned, the person served: 
    (1) complies with the conditions in default; 
    (2) if section 3 or 5 applies, makes all payments due and 
owing to the seller under the contract through the date that 
payment is made; 
    (3) pays the costs of service as provided in subdivision 2a 
section 1, 2, 3, or 5; 
    (4) if section 5 applies, pays two percent of the amount in 
default, not including the final balloon payment, any taxes, 
assessments, mortgages, or prior contracts that are assumed by 
the purchaser; and 
    (5) pays attorneys' fees as provided in subdivision 2a 
section 1, 2, 3, or 5. 
    (d) The contract is terminated if the provisions of 
paragraph (c) are not met. 
    (e) In the event that the notice was not signed by an 
attorney for the seller and the seller is not present in the 
state, or cannot be found therein in the state, then compliance 
with the conditions specified in the notice may be made by 
paying to the clerk of the district court in the county wherein 
the real estate or any part thereof is situated any money due 
and filing proof of compliance with other defaults specified, 
and the clerk of the district court shall be deemed the agent of 
the seller for such purposes.  A copy of the notice with proof 
of service thereof, and the affidavit of the seller, his the 
seller's agent or attorney, showing that the purchaser has not 
complied with the terms of the notice, may be recorded with the 
county recorder, and is prima facie evidence of the facts 
therein stated in it; but this section in no case applies to 
contracts for the sale or conveyance of lands situated in 
another state or in a foreign country. 
    Sec. 8.  Minnesota Statutes 1985 Supplement, section 
559.21, subdivision 6, is amended to read: 
    Subd. 6.  [TEMPORARY ADDITIONAL MINIMUM NOTICE.] (a) 
Notwithstanding the provisions of any other law to the contrary, 
this subdivision applies to a notice to terminate a contract for 
conveyance of homestead property to which the provisions of 
chapter 583 apply, served after May 24, 1983, and prior to May 
1, 1985, or after June 8, 1985, and prior to May 1, 1987,.  The 
notice must provide that the contract will terminate 60 days 
after service of notice, or 90 days after service of notice if 
the contract was entered into after May 1, 1980, and prior to 
August 1, 1985, and the purchaser has paid 25 percent or more of 
the purchase price.  The notice must specify this 60- or 90-day 
period.  The notice must include a statement that the purchaser 
may be eligible for an extension of the time prior to 
termination under sections 583.01 to 583.12.  
    (b) The statement must be in bold type, capitalized 
letters, or other form sufficient for the reader to quickly and 
easily distinguish the statement from the rest of the notice.  
The requirements of this paragraph must be followed on notices 
served under this subdivision on or after August 1, 1985.  A 
violation of this paragraph is a petty misdemeanor. 
    (c) This subdivision does not apply to earnest money 
contracts, purchase agreements or exercised options. 
    Sec. 9.  [FORMER TERMINATION NOTICE LAW VALID.] 
    The legislature hereby reaffirms the validity of Laws 1985, 
First Special Session chapter 18, sections 6 to 11, with respect 
to all termination notices served after July 31, 1985, and 
before August 1, 1986.  Nothing contained in sections 1 to 7 
shall be construed to invalidate any contract termination made 
in accordance with Laws 1985, First Special Session chapter 18, 
sections 6 to 11, when the termination notice was first served 
on any party or first published before August 1, 1986. 
    Sec. 10.  [APPLICABILITY.] 
    Sections 1 to 8 apply to termination notices first served 
on any party or first published on or after August 1, 1986. 
    Sec. 11.  [APPROPRIATION.] 
    $25,000 the first year and $25,000 the second year is 
appropriated from the real estate education, research, and 
recovery account in the special revenue fund to the commissioner 
of commerce for the purposes of Minnesota Statutes, section 
82.34, subdivision 6, and must be added to the appropriation for 
the same purpose in Laws 1985, First Special Session chapter 10, 
section 7, subdivision 3. 
    Approved March 25, 1986