Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1987, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1987
CHAPTER 336-S.F.No. 463
An act relating to commerce; providing enforcement
powers; regulating securities; regulating the business
of financial planning; restricting certain charges
made by investment advisors and broker dealers;
providing for the registration of securities;
providing for disclosure of interest rate or discount
point agreements; providing for the denial,
suspension, and revocation of licenses and the censure
of licensees; exempting the sale of certain stock of a
closely-held corporation; exempting certain industrial
revenue bond transactions; regulating real estate
brokers and salespersons; prohibiting
commission-splitting and rebating on timeshare and
other recreational lands; providing for continuing
education of brokers; regulating licensees acting as
principals; regulating abandoned property;
establishing a presumption of abandonment for certain
profits or sums held by a cooperative; regulating the
transfer and storage of abstracts of title to real
property; transferring the powers and duties of the
commissioner for the regulation of social and
charitable organizations to the attorney general and
providing for further regulation of such
organizations; appropriating money; amending Minnesota
Statutes 1986, sections 60A.17, subdivision 6c;
72A.27; 80A.06, subdivision 5; 80A.07, subdivision 1;
80A.09, subdivision 1; 80A.12, by adding a
subdivision; 80A.14, subdivision 18; 80A.15,
subdivisions 1 and 2; 80A.19, subdivision 1; 80A.23,
subdivision 11; 80A.26, subdivision 3; 80C.17,
subdivision 1; 82.17, subdivision 4; 82.21,
subdivision 1; 82.22, subdivision 6; 82.24,
subdivision 2; 82.34, subdivision 19; 308.12, by
adding a subdivision; 309.50, subdivision 6; 309.515,
subdivision 1; 309.52, subdivisions 1a and 2; 309.53,
subdivisions 1a, 3, 4, and by adding a subdivision;
309.531; 309.533, by adding a subdivision; 309.54;
309.55, subdivision 6; 309.556; 309.56, subdivision 1;
309.57; 345.39; and 386.375; proposing coding for new
law in Minnesota Statutes, chapters 45, 47, 82, and
508; repealing Minnesota Statutes 1986, sections
72A.23; 72A.24; 72A.28; 80A.20; 80A.21; 80C.15;
80C.16, subdivision 1; 82.25; 82.26; 83.34; 83.35,
subdivision 3; 238.085; 309.515, subdivision 3;
309.532; 309.533, subdivisions 2, 3, and 4; 309.534;
309.555; and 309.58.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. [45.026] [REGULATION OF BUSINESS OF FINANCIAL
PLANNING.]
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the following terms have the meanings given them:
(a) "Person" means an individual, corporation, partnership,
joint venture, joint stock association, trust, or unincorporated
association.
(b) "Financial planner" means a person who, on
advertisements, cards, signs, circulars, letterheads, or in
another manner, indicates that the person is a "financial
planner," "financial counselor," "financial adviser,"
"investment counselor," "investment adviser," "financial
consultant," or other similar designation, title, or combination
is considered to be representing that the person is engaged in
the business of financial planning.
(c) "Advertisement" includes:
(1) printed or published material, audiovisual material,
and descriptive literature of a financial planner used in direct
mail, newspapers, magazines, other periodicals, radio scripts,
television scripts, billboards, and other similar displays,
excluding advertisements prepared for the sole purpose of
obtaining employees, agents, or agencies;
(2) descriptive literature and sales ads of all kinds
issued by a financial planner for presentation to members of the
public, including but not limited to, circulars, leaflets,
booklets, depictions, illustrations, and form letters;
(3) prepared sales talks, presentations, and materials for
use by a financial planner and any representations made by a
financial planner in accordance with these talks, presentations,
and materials; and
(4) statements, written or oral, by a financial planner.
Subd. 2. [FIDUCIARY DUTY.] Persons who represent that they
are financial planners have a fiduciary duty to persons for whom
services are performed for compensation. In an action for
breach of fiduciary duty, a person may recover actual damages
resulting from the breach, together with costs and disbursements.
Subd. 3. [PENALTY.] A financial planner is subject to
section 2, subdivision 5 in chapter 45.
Sec. 2. [45.027] [INVESTIGATIONS AND SUBPOENAS.]
Subdivision 1. [GENERAL POWERS.] In connection with the
administration of chapters 45 to 83, 309, and 332, the
commissioner of commerce may:
(1) make public or private investigations within or without
this state as the commissioner considers necessary to determine
whether any person has violated or is about to violate chapters
45 to 83, 309, and 332 or any rule or order under those
chapters, or to aid in the enforcement of chapters 45 to 83,
309, and 332, or in the prescribing of rules or forms under
those chapters;
(2) require or permit any person to file a statement in
writing, under oath or otherwise as the commissioner determines,
as to all the facts and circumstances concerning the matter
being investigated;
(3) hold hearings, upon reasonable notice, in respect to
any matter arising out of the administration of chapters 45 to
83, 309, and 332;
(4) conduct investigations and hold hearings for the
purpose of compiling information with a view to recommending
changes in chapters 45 to 83, 309, and 332 to the legislature;
(5) examine the books, accounts, records, and files of
every licensee under chapters 45 to 83, 309, and 332 and of
every person who is engaged in any activity regulated under
chapters 45 to 83, 309, and 332; the commissioner or a
designated representative shall have free access during normal
business hours to the offices and places of business of the
person, and to all books, accounts, papers, records, files,
safes, and vaults maintained in the place of business;
(6) publish information which is contained in any order
issued by the commissioner; and
(7) require any person subject to chapters 45 to 83, 309,
and 332 to report all sales or transactions that are regulated
under chapters 45 to 83, 309, and 332. The reports must be made
within ten days after the commissioner has ordered the report.
The report is accessible only to the respondent and other
governmental agencies unless otherwise ordered by a court of
competent jurisdiction.
Subd. 2. [POWER TO COMPEL PRODUCTION OF EVIDENCE.] For the
purpose of any investigation, hearing, or proceeding under
chapters 45 to 83, 309, and 332, the commissioner or a
designated representative may administer oaths and affirmations,
subpoena witnesses, compel their attendance, take evidence, and
require the production of books, papers, correspondence,
memoranda, agreements, or other documents or records that the
commissioner considers relevant or material to the inquiry.
Subd. 3. [COURT ORDERS.] In case of a refusal to appear or
a refusal to obey a subpoena issued to any person, the district
court, upon application by the commissioner, may issue to any
person an order directing that person to appear before the
commissioner, or the officer designated by the commissioner,
there to produce documentary evidence if so ordered or to give
evidence relating to the matter under investigation or in
question. Failure to obey the order of the court may be
punished by the court as a contempt of court.
Subd. 4. [SCOPE OF PRIVILEGE.] No person is excused from
attending and testifying or from producing any document or
record before the commissioner, or from obedience to the
subpoena of the commissioner or any officer designated by the
commissioner or in a proceeding instituted by the commissioner,
on the ground that the testimony or evidence required may tend
to incriminate that person or subject that person to a penalty
of forfeiture. No person may be prosecuted or subjected to a
penalty or forfeiture for or on account of a transaction,
matter, or thing concerning which the person is compelled, after
claiming the privilege against self-incrimination, to testify or
produce evidence, documentary or otherwise, except that the
individual is not exempt from prosecution and punishment for
perjury or contempt committed in testifying.
Subd. 5. [LEGAL ACTIONS; INJUNCTIONS; CEASE AND DESIST
ORDERS.] Whenever it appears to the commissioner that any person
has engaged or is about to engage in any act or practice
constituting a violation of chapters 45 to 83, 309, and 332, or
any rule or order adopted under those chapters, the commissioner
has the following powers: (1) the commissioner may bring an
action in the name of the state in the district court of the
appropriate county to enjoin the acts or practices and to
enforce compliance with chapters 45 to 83, 309, and 332, or any
rule or order adopted or issued under those chapters, or the
commissioner may refer the matter to the attorney general or the
county attorney of the appropriate county. Upon a proper
showing, a permanent or temporary injunction, restraining order,
or other appropriate relief must be granted; (2) the
commissioner may issue and cause to be served upon the person an
order requiring the person to cease and desist from violations
of chapters 45 to 83, 309, and 332, or any rule or order adopted
or issued under those chapters. The order must be calculated to
give reasonable notice of the rights of the person to request a
hearing and must state the reasons for the entry of the order.
A hearing must be held not later than seven days after the
request for the hearing is received by the commissioner, after
which and within 20 days after receiving the administrative law
judge's report, the commissioner shall issue a further order
vacating the cease and desist order or making it permanent as
the facts require. If no hearing is requested within 30 days of
service of the order, the order will become final and will
remain in effect until it is modified or vacated by the
commissioner. Unless otherwise provided, all hearings must be
conducted in accordance with chapter 14. If the person to whom
a cease and desist order is issued fails to appear at the
hearing after being duly notified, the person is in default, and
the proceeding may be determined against that person upon
consideration of the cease and desist order, the allegations of
which may be considered to be true. The commissioner may adopt
rules of procedure concerning all proceedings conducted under
this subdivision.
Subd. 6. [VIOLATIONS AND PENALTIES.] The commissioner may
impose a civil penalty not to exceed $2,000 per violation upon a
person who violates chapters 45 to 83, 309, and 332, unless a
different penalty is specified.
Subd. 7. [ACTIONS AGAINST LICENSEES.] In addition to any
other actions authorized by this section, the commissioner may,
by order, deny, suspend, or revoke the authority or license of a
person subject to chapters 45 to 83, 309, or 332, or censure
that person if the commissioner finds that:
(1) the order is in the public interest; or
(2) the person has violated chapters 45 to 83, 309, or 332.
Subd. 8. [STOP ORDER.] In addition to any other actions
authorized by this section, the commissioner may issue a stop
order denying effectiveness to or suspending or revoking any
registration subject to chapters 45 to 83, 309, or 332.
Subd. 9. [POWERS ADDITIONAL.] The powers contained in
subdivisions 1 to 8 are in addition to all other powers of the
commissioner.
Sec. 3. [45.028] [SERVICE OF PROCESS.]
Subdivision 1. [REQUIREMENT.] When a person, including any
nonresident of this state, engages in conduct prohibited or made
actionable by chapters 45 to 83, 309, and 332, or any rule or
order under those chapters, and the person has not filed a
consent to service of process under chapters 45 to 83, 309, and
332, that conduct is equivalent to an appointment of the
commissioner as the person's attorney to receive service of
process in any noncriminal suit, action, or proceeding against
the person which is based on that conduct and is brought under
chapters 45 to 83, 309, and 332, or any rule or order under
those chapters.
Subd. 2. [HOW MADE.] Service of process under this section
may be made by leaving a copy of the process in the office of
the commissioner, and is not effective unless: (1) the
plaintiff, who may be the commissioner in an action or
proceeding instituted by the commissioner, sends notice of the
service and a copy of the process by certified mail to the
defendant or respondent at the last known address; and (2) the
plaintiff's affidavit of compliance is filed in the action or
proceeding on or before the return day of the process, if any,
or within further time as the court allows.
Sec. 4. [45.029] [FINANCIAL STATEMENT.]
Wherever used in chapters 45 to 83, or rules adopted
thereunder, the term "certified" as applied to balance sheets,
profit and loss statements or other financial statements shall
be construed as meaning an audited financial statement prepared
in accordance with generally accepted accounting principles that
has been examined by an independent certified public accountant
for the purpose of expressing an opinion. The opinion by the
certified public accountant shall contain a statement that it
fairly represents the financial position of the organization or
person.
Sec. 5. [47.206] [INTEREST RATE OR DISCOUNT POINT
AGREEMENTS.]
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(a) "Lender" means a person or entity referred to in
section 47.20, subdivision 1, a credit union, or a person making
a conventional loan as defined under section 47.20, subdivision
2, clause (3), or cooperative apartment loan as defined under
section 47.20, subdivision 2, clause (4), except that
conventional loans or cooperative apartment loans include any
loan or advance of credit in an original principal balance of
less than $200,000.
(b) "Loan" means loans and advances of credit authorized
under section 47.20, subdivision 1, clauses (1) to (4), and
conventional loans as defined under section 47.20, subdivision
2, clause (3), or cooperative apartment loans as defined under
section 47.20, subdivision 2, clause (4), except that
conventional loans or cooperative apartment loans also include
all loans and advances of credit in an original principal
balance of less than $200,000. "Loan" does not include a loan
or advance of credit secured by a mortgage upon real property
containing more than one residential unit or secured by a
security interest in shares of more than one residential unit in
a building owned or leased by a cooperative apartment
corporation.
(c) "Borrower" means a natural person who has submitted an
application for a loan to a lender.
(d) "Interest rate or discount point agreement" or
"agreement" means a contract between a lender and a borrower
under which the lender agrees, subject to the lender's
underwriting and approval requirements, to make a loan at a
specified interest rate or number of discount points, or both,
and the borrower agrees to make a loan on those terms. The term
also includes an offer by a lender that is accepted by a
borrower under which the lender promises to guarantee or lock in
an interest rate or number of discount points, or both, for a
specific period of time.
Subd. 2. [DISCLOSURES.] A lender offering borrowers the
opportunity to enter into an agreement in advance of closing
shall disclose, in writing, to the borrowers at the time the
offer is made: (1) a definite expiration date or term of the
agreement, which may not be less than the reasonably anticipated
closing date or time required to process, approve, and close the
loan; (2) the circumstances, if any, under which the borrower
will be permitted to close at a lower rate of interest or points
than expressed in the agreement; (3) the steps required to
process, approve, and close the loan, including the actions
required of the borrower and lender; (4) that the agreement is
enforceable by the borrower; and (5) the consideration required
for the agreement.
Subd. 3. [AGREEMENTS TO BE IN WRITING.] A borrower or
lender may not maintain an action on an agreement unless the
agreement is in writing or is permitted by subdivision 4,
expresses consideration, sets forth the relevant terms and
conditions, and is signed by the borrower and the lender.
Subd. 4. [ORAL AGREEMENTS AND ACCEPTANCES PROHIBITED.] A
lender may not offer or induce a borrower to accept an oral
agreement and a borrower may not be permitted to orally accept
an agreement, provided that if the borrower and lender have not
executed a written agreement, this subdivision does not prohibit
the offer and acceptance of an oral agreement which is offered
and accepted during a period no greater than ten days before
closing.
Subd. 5. [STATEMENT OF CURRENT TERMS NOT AN OFFER.] An
oral or written statement of current loan terms and conditions,
including interest rates and number of discount points, is not
an offer or an inducement by a lender to enter into an
agreement. A written statement of current loan terms and
conditions must be accompanied by a disclaimer that the
statement is not an offer to enter into an agreement and that an
offer may only be made pursuant to subdivisions 3 and 4.
Subd. 6. [PROHIBITED ACTS.] A person, including a lender,
may not advise, encourage, or induce a borrower or third party
to misrepresent information that is the subject of a loan
application or to violate the terms of the agreement.
Subd. 7. [PENALTIES.] (a) Except as provided in paragraph
(c), a lender who violates this section or who causes
unreasonable delay in processing a loan application beyond the
expiration date of the agreement is liable to the borrower for a
penalty in an amount not to exceed the borrower's actual
out-of-pocket damages, including the present value of the
increased interest costs over the normal life of the loan, or
specific performance of the agreement. This paragraph applies
to an agreement entered into after January 1, 1987.
(b) In addition to the penalty in paragraph (a), a lender
is liable to the borrower for $500 for each violation of this
section or for unreasonable delay in processing a loan
application which causes the agreement to expire before closing.
(c) A lender who violates subdivision 4 is jointly and
severally liable to the borrower for specific performance of the
agreement or for a penalty in the amount of $500 or an amount
not to exceed the borrower's actual out-of-pocket damages,
including the present value of the increased costs over the
normal life of the loan, whichever is greater, due to the good
faith reliance of the borrower on the lender's oral
representation.
(d) For purposes of this subdivision, evidence of
unreasonable delay includes, but is not limited to:
(1) failure of the lender to return telephone calls or
otherwise respond to the borrower's inquiries concerning the
status of the loan;
(2) the addition by the lender of new requirements for
processing or approving the loan that were not disclosed to the
borrower under subdivision 2, clause (3), unless the
requirements result from governmental agency or secondary
mortgage market changes, other than changes in interest rates,
that occur after the date of the agreement; or
(3) failure by the lender to take actions necessary to
process or approve the loan within a reasonable period of time,
if the borrower provided information requested by the lender in
a timely manner.
Sec. 6. [47.208] [DELIVERY OF SATISFACTION OF MORTGAGE.]
Subdivision 1. [DELIVERY REQUIRED.] Upon written request,
a good and valid satisfaction of mortgage in recordable form
shall be delivered to any party paying the full and final
balance of a mortgage indebtedness that is secured by Minnesota
real estate; such delivery shall be in hand or by certified mail
postmarked within 45 days of the receipt of the written request
to the holder of any interest of record in said mortgage and
within 45 days of the payment of all sums due thereon.
Subd. 2. [PENALTY.] If a lender fails to comply with the
requirements of subdivision 1, the lender may be held liable to
the party paying the balance of the mortgage debt, for a civil
penalty of up to $500, in addition to any actual damages caused
by the violation.
Sec. 7. Minnesota Statutes 1986, section 60A.17,
subdivision 6c, is amended to read:
Subd. 6c. [REVOCATION OR SUSPENSION OF LICENSE.] (a) The
commissioner may by order suspend or revoke an insurance agent's
or agency's license issued to a natural person or impose a civil
penalty appropriate to the offense, not to exceed $5,000 upon
that licensee, or both, if, after notice and hearing, the
commissioner finds as to that licensee any one or more of the
following conditions:
(1) any materially untrue statement in the license
application;
(2) any cause for which issuance of the license could have
been refused had it then existed and been known to the
commissioner at the time of issuance;
(3) violation of, or noncompliance with, any insurance law
or violation of any rule or order of the commissioner or of a
commissioner of insurance of another state or jurisdiction;
(4) obtaining or attempting to obtain any license through
misrepresentation or fraud;
(5) improperly withholding, misappropriating, or converting
to the licensee's own use any moneys belonging to a
policyholder, insurer, beneficiary, or other person, received by
the licensee in the course of the licensee's insurance business;
(6) misrepresentation of the terms of any actual or
proposed insurance contract;
(7) conviction of a felony or of a gross misdemeanor or
misdemeanor involving moral turpitude;
(8) that the licensee has been found guilty of any unfair
trade practice, as defined in chapters 60A to 72A, or of fraud;
(9) that in the conduct of the agent's affairs under the
license, the licensee has used fraudulent, coercive, or
dishonest practices, or the licensee has been shown to be
incompetent, untrustworthy, or financially irresponsible;
(10) that the agent's license has been suspended or revoked
in any other state, province, district, territory, or foreign
country;
(11) that the licensee has forged another's name to an
application for insurance; or
(12) that the licensee has violated subdivision 6b.
(b) The commissioner may by order suspend or revoke an
insurance agent's or insurance agency's license issued to a
partnership or corporation or impose a civil penalty not to
exceed $5,000 upon that licensee, or both, if, after notice and
hearing, the commissioner finds as to that licensee, or as to
any partner, director, shareholder, officer, or employee of that
licensee, any one or more of the conditions set forth in
paragraph (a).
(c) A revocation of a license shall prohibit the licensee
from making a new application for a license for at least one
year. Further, the commissioner may, as a condition of
relicensure, require the applicant to file a reasonable bond for
the protection of the citizens of this state, which bond shall
be maintained by the licensee in full force for a period of five
years immediately following issuance of the license, unless the
commissioner at the commissioner's discretion shall after two
years permit the licensee to sooner terminate the maintenance
filing of the bond.
(d) Whenever it appears to the commissioner that any person
has engaged or is about to engage in any act or practice
constituting a violation of chapters 60A to 72A or of any rule
or order of the commissioner:
(1) The commissioner may issue and cause to be served upon
the person an order requiring the person to cease and desist
from the violation. The order shall give reasonable notice of
the time and place of hearing and shall state the reasons for
the entry of the order. A hearing shall be held not later than
seven days after the issuance of the order unless the person
requests a delay. After the hearing and within 30 days of
filing of any exceptions to the administrative law judge's
report, the commissioner shall issue an order vacating the cease
and desist order or making it permanent as the facts require.
All hearings shall be conducted in accordance with the
provisions of chapter 14. If the person to whom a cease and
desist order is issued fails to appear at the hearing after
being duly notified, the person shall be deemed in default, and
the proceeding may be determined against the person upon
consideration of the cease and desist order, the allegations of
which may be deemed to be true;
(2) The commissioner may bring an action in the district
court in the appropriate county to enjoin the acts or practices
and to enforce compliance with chapters 60A to 72A and any rule
or order of the commissioner; and
(3) In any proceeding under chapters 60A to 72A relating to
injunction, the request for injunction may be brought on for
hearing and disposition upon an order to show cause returnable
upon not more than eight days notice to the defendant. The case
shall have precedence over other matters on the court calendar
and shall not be continued without the consent of the state of
Minnesota, except upon good cause shown to the court, and then
only for a reasonable length of time as may be necessary in the
opinion of the court to protect the rights of the defendant.
(e) The commissioner may, in the manner prescribed by
chapter 14, impose a civil penalty not to exceed $5,000 upon a
person whose license has lapsed, or been suspended, revoked, or
otherwise terminated, for engaging in conduct prohibited by
paragraph (a) before, during, or after the period of licensure.
Sec. 8. Minnesota Statutes 1986, section 72A.27, is
amended to read:
72A.27 [APPEAL.]
Any decree or order of a district court made and entered
under section 72A.24 or 72A.25 is subject to review by appeal as
in other civil cases. The appeal must be taken within the time
prescribed by law for taking appeals from orders of the district
courts.
Sec. 9. Minnesota Statutes 1986, section 80A.06,
subdivision 5, is amended to read:
Subd. 5. No investment adviser who shall recommend the
purchase or sale of a security to a client, and no licensed
broker-dealer acting as a broker-dealer for a customer in the
purchase or sale of a security shall take or accept any
remuneration or other thing of value from any person other than
the client or customer in connection with such the purchase or
sale unless, prior to or contemporaneously with such the
recommendation in the case of an investment adviser and prior to
or contemporaneously with the confirmation of the transaction in
the case of a licensed broker-dealer so acting, written
disclosure to the client or customer is made of the acceptance
or intended acceptance of such the remuneration or other thing
of value and of the amount thereof of it. All charges made by
an investment adviser for services and all charges by a licensed
broker-dealer for services rendered as a broker-dealer or for
advice with respect to securities shall be reasonable,
and except in compliance with rules adopted by the commissioner,
no such charges shall be based upon or measured by profits
accrued or to accrue from transactions recommended or carried
out by an investment adviser, or licensed broker-dealer. This
subdivision shall not be construed to prohibit charges by an
investment adviser based upon the total value of the assets
under management averaged over a definite period, or as of
definite dates, or taken as of a definite date, nor charges
based upon the performance of the managed assets as compared to
an established index in compliance with rules promulgated
adopted by the commissioner.
Sec. 10. Minnesota Statutes 1986, section 80A.07,
subdivision 1, is amended to read:
Subdivision 1. The commissioner may by order deny,
suspend, or revoke any license or may censure the licensee, if
the commissioner finds (a) that the order is in the public
interest and (b) that the applicant or licensee or, in the case
of a broker-dealer or investment adviser, any partner, officer,
or director, any person occupying a similar status or performing
similar functions, or any person directly or indirectly
controlling the broker-dealer or investment adviser:
(1) has filed an application for license which as of its
effective date, or as of any date after filing in the case of an
order denying effectiveness, was incomplete in any material
respect or contained any statement which was, in light of the
circumstances under which it was made, false or misleading with
respect to any material fact;
(2) has willfully violated or failed to comply with any
provision of this chapter or a predecessor law or any provision
of the Securities Act of 1933, the Securities Exchange Act of
1934, the Investment Advisers Act of 1940, the Investment
Company Act of 1940, the Commodity Exchange Act, or any rule or
order under any of these statutes, or any order thereunder of
which that person has notice and is subject;
(3) has been convicted, within the past ten years, of any
misdemeanor involving a security or any aspect of the securities
business, or any felony;
(4) is permanently or temporarily enjoined by any court of
competent jurisdiction from engaging in or continuing any
conduct or practice involving any aspect of the securities
business;
(5) is the subject of an order of the commissioner denying,
suspending, or revoking a license as a broker-dealer, agent or
investment adviser;
(6) is the subject of an order entered within the past five
years by the securities administrator of any other state or by
the securities and exchange commission denying or revoking
registration or license as a broker-dealer, agent, or investment
adviser, or is the subject of an order of the securities and
exchange commission suspending or expelling that person from a
national securities exchange or association registered under the
Securities Exchange Act of 1934, or is the subject of a United
States post office fraud order. The commissioner may not
institute a revocation or suspension proceeding under this
clause more than one year from the date of the order relied on,
and may not enter an order under this clause on the basis of an
order under another state law unless the order was based on
facts which would currently constitute a ground for an order
under this section;
(7) has engaged in dishonest or fraudulent practices in the
securities business;
(8) has failed to maintain the minimum net capital or to
comply with the limitation on aggregate indebtedness which the
commissioner by rule prescribes;
(9) is not qualified on the basis of such factors as
training, experience, and knowledge of the securities business;
(10) has failed reasonably to supervise agents, investment
adviser representatives, or employees to assure their compliance
with this chapter;
(11) has failed to pay the proper filing fee, but the
commissioner shall vacate the order when the deficiency has been
corrected;
(12) has offered or sold securities in this state through
any unlicensed agent;
(13) has made any material misrepresentation to the
commissioner, or upon request reasonably made by the
commissioner, has withheld or concealed information from, or
refused to furnish information to, the commissioner; or
(14) has failed to reasonably supervise agents, investment
adviser representatives, or employees if that person has assumed
or has been designated to carry out the supervisory procedures
of the broker-dealer or investment adviser; or
(15) has failed, within 20 business days after receiving
written instructions from a customer, to do any of the following:
(a) transfer or deliver securities that have been purchased;
(b) transfer or deliver any free credit balances reflecting
completed transactions; or
(c) transfer or deliver a customer's account securities
positions and balances to another broker-dealer.
This clause shall not serve as a basis for denial, suspension,
or revocation of a broker-dealer's or agent's license if: (i)
the transfer or delivery is between broker-dealers and meets the
rules and requirements established by the New York stock
exchange with regard to the transfer or delivery; or (ii) the
delivery of securities to a customer cannot be accomplished
within 20 business days, and the broker-dealer or agent has
notified the customer in writing of the inability to deliver the
securities and the reasons for the nondelivery within 20
business days of receiving the customer's written instructions.
Sec. 11. Minnesota Statutes 1986, section 80A.09,
subdivision 1, is amended to read:
Subdivision 1. The following securities may be registered
by notification:
(a) any industrial revenue bond issued by the state of
Minnesota or any of its political subdivisions, municipalities,
governmental agencies, or instrumentalities; and
(b) any securities issued by a person organized exclusively
for social, religious, educational, benevolent, fraternal,
charitable, reformatory, athletic, chamber of commerce, trade,
industrial development, or professional association purposes and
not for pecuniary gain, and no part of the net earnings of which
inures to the benefit of any private stockholder or individual;
provided that no securities issued by any person offering and
furnishing a burial service or funeral benefit, directly or
indirectly for financial consideration, may be registered under
this section.
Sec. 12. Minnesota Statutes 1986, section 80A.12, is
amended by adding a subdivision to read:
Subd. 11. Within two business days after receipt of an
order of the commissioner withdrawing, suspending, or revoking
effectiveness of an issuer's registration statement, the issuer
must notify all persons making a market in the issuer's
securities of the termination of the effectiveness of the
registration statement. Failure to provide this notice may
result in the imposition of a civil penalty not to exceed $2,000
per violation.
Sec. 13. Minnesota Statutes 1986, section 80A.14,
subdivision 18, is amended to read:
Subd. 18. [SECURITY.] (a) "Security" means any note;
stock; treasury stock; bond; debenture; evidence of
indebtedness; certificate of interest or participation in any
profit sharing agreement; collateral trust certificate;
preorganization certificate or subscription; transferable
shares; investment contract; investment metal contract or
investment gem contract; voting trust certificate; certificate
of deposit for a security; certificate of interest or
participation in an oil, gas or mining right, title or lease or
in payments out of production under the right, title or lease;
or, in general, any interest or instrument commonly known as a
security, or any certificate of interest or participation in,
temporary or interim certificate for, receipt for guarantee of,
or warrant or right to subscribe to or purchase, any of the
foregoing. "Security" does not include:
(a) any insurance or endowment policy or annuity contract
under which an insurance company promises to pay money either in
a lump sum or periodically for life or for some other specified
period; or
(b) stock of a closely-held corporation offered or sold
pursuant to a transaction in which 100 percent of the stock of
that corporation is sold as a means to effect the sale of the
business of the corporation if the transaction has been
negotiated on behalf of all purchasers, and if all purchasers
have access to inside information regarding the corporation
before consummating the transaction.
Sec. 14. Minnesota Statutes 1986, section 80A.15,
subdivision 1, is amended to read:
Subdivision 1. The following securities are exempted from
sections 80A.08 and 80A.16:
(a) Any security, including a revenue obligation, issued or
guaranteed by the United States, any state, any political
subdivision of a state or any corporate or other instrumentality
of one or more of the foregoing; but this exemption shall not
include any industrial revenue bond. Pursuant to section 106(c)
of the Secondary Mortgage Market Enhancement Act of 1984, Public
Law Number 98-440, this exemption does not apply to a security
that is offered or sold pursuant to section 106(a)(1) or (2) of
that act.
(b) Any security issued or guaranteed by Canada, any
Canadian province, any political subdivision of any province,
any agency or corporate or other instrumentality of one or more
of the foregoing, if the security is recognized as a valid
obligation by the issuer or guarantor; but this exemption shall
not include any revenue obligation payable solely from payments
to be made in respect of property or money used under a lease,
sale or loan arrangement by or for a nongovernmental industrial
or commercial enterprise.
(c) Any security issued by and representing an interest in
or a debt of, or guaranteed by, any bank organized under the
laws of the United States, or any bank, savings institution or
trust company organized under the laws of any state and subject
to regulation in respect of the issuance or guarantee of its
securities by a governmental authority of that state.
(d) Any security issued by and representing an interest in
or a debt of, or guaranteed by, any federal savings and loan
association, or any building and loan or similar association
organized under the laws of any state and authorized to do
business in this state.
(e) Any security issued or guaranteed by any federal credit
union or any credit union, or similar association organized and
supervised under the laws of this state.
(f) Any security listed or approved for listing upon notice
of issuance on the New York Stock Exchange, the American Stock
Exchange, the Midwest Stock Exchange, the Pacific Stock
Exchange, or the Chicago Board Options Exchange; any other
security of the same issuer which is of senior or substantially
equal rank; any security called for by subscription rights or
warrants so listed or approved; or any warrant or right to
purchase or subscribe to any of the foregoing.
(g) Any commercial paper which arises out of a current
transaction or the proceeds of which have been or are to be used
for current transactions, and which evidences an obligation to
pay cash within nine months of the date of issuance, exclusive
of days of grace, or any renewal of the paper which is likewise
limited, or any guarantee of the paper or of any renewal which
are not advertised for sale to the general public in newspapers
or other publications of general circulation or otherwise, or by
radio, television or direct mailing.
(h) Any interest in any employee's savings, stock purchase,
pension, profit sharing or similar benefit plan, or a
self-employed person's retirement plan.
(i) Any security issued or guaranteed by any railroad,
other common carrier or public utility which is subject to
regulation in respect to the issuance or guarantee of its
securities by a governmental authority of the United States.
(j) Any interest in a common trust fund or similar fund
maintained by a state bank or trust company organized and
operating under the laws of Minnesota, or a national bank
wherever located, for the collective investment and reinvestment
of funds contributed thereto by the bank or trust company in its
capacity as trustee, executor, administrator, or guardian; and
any interest in a collective investment fund or similar fund
maintained by the bank or trust company, or in a separate
account maintained by an insurance company, for the collective
investment and reinvestment of funds contributed thereto by the
bank, trust company or insurance company in its capacity as
trustee or agent, which interest is issued in connection with an
employee's savings, pension, profit sharing or similar benefit
plan, or a self-employed person's retirement plan.
(k) Any security which meets all of the following
conditions:
(1) If the issuer is not organized under the laws of the
United States or a state, it has appointed a duly authorized
agent in the United States for service of process and has set
forth the name and address of the agent in its prospectus;
(2) A class of the issuer's securities is required to be
and is registered under section 12 of the Securities Exchange
Act of 1934, and has been so registered for the three years
immediately preceding the offering date;
(3) Neither the issuer nor a significant subsidiary has had
a material default during the last seven years, or for the
period of the issuer's existence if less than seven years, in
the payment of (i) principal, interest, dividend, or sinking
fund installment on preferred stock or indebtedness for borrowed
money, or (ii) rentals under leases with terms of three years or
more;
(4) The issuer has had consolidated net income, before
extraordinary items and the cumulative effect of accounting
changes, of at least $1,000,000 in four of its last five fiscal
years including its last fiscal year; and if the offering is of
interest bearing securities, has had for its last fiscal year,
net income, before deduction for income taxes and depreciation,
of at least 1-1/2 times the issuer's annual interest expense,
giving effect to the proposed offering and the intended use of
the proceeds. For the purposes of this clause "last fiscal
year" means the most recent year for which audited financial
statements are available, provided that such statements cover a
fiscal period ended not more than 15 months from the
commencement of the offering;
(5) If the offering is of stock or shares other than
preferred stock or shares, the securities have voting rights and
the rights include (i) the right to have at least as many votes
per share, and (ii) the right to vote on at least as many
general corporate decisions, as each of the issuer's outstanding
classes of stock or shares, except as otherwise required by law;
and
(6) If the offering is of stock or shares, other than
preferred stock or shares, the securities are owned beneficially
or of record, on any date within six months prior to the
commencement of the offering, by at least 1,200 persons, and on
that date there are at least 750,000 such shares outstanding
with an aggregate market value, based on the average bid price
for that day, of at least $3,750,000. In connection with the
determination of the number of persons who are beneficial owners
of the stock or shares of an issuer, the issuer or broker-dealer
may rely in good faith for the purposes of this clause upon
written information furnished by the record owners.
(l) Any certificate of indebtedness sold or issued for
investment, other than a certificate of indebtedness pledged as
a security for a loan made contemporaneously therewith, and any
savings account or savings deposit issued, by an industrial loan
and thrift company.
Sec. 15. Minnesota Statutes 1986, section 80A.15,
subdivision 2, is amended to read:
Subd. 2. The following transactions are exempted from
sections 80A.08 and 80A.16:
(a) Any isolated sales, whether or not effected through a
broker-dealer, provided that no person shall make more than ten
sales of securities of the same issuer pursuant to this
exemption during any period of 12 consecutive months; provided
further, that in the case of sales by an issuer, except sales of
securities registered under the Securities Act of 1933 or
exempted by section 3(b) of that act, (1) the seller reasonably
believes that all buyers are purchasing for investment, and (2)
the securities are not advertised for sale to the general public
in newspapers or other publications of general circulation or
otherwise, or by radio, television, electronic means or similar
communications media, or through a program of general
solicitation by means of mail or telephone.
(b) Any nonissuer distribution of an outstanding security
if (1) either Moody's, Fitch's, or Standard & Poor's Securities
Manuals, or other recognized manuals approved by the
commissioner contains the names of the issuer's officers and
directors, a balance sheet of the issuer as of a date not more
than 18 months prior to the date of the sale, and a profit and
loss statement for the fiscal year preceding the date of the
balance sheet, and (2) the issuer or its predecessor has been in
active, continuous business operation for the five-year period
next preceding the date of sale, and (3) if the security has a
fixed maturity or fixed interest or dividend provision, the
issuer has not, within the three preceding fiscal years,
defaulted in payment of principal, interest, or dividends on the
securities.
(c) The execution of any orders by a licensed broker-dealer
for the purchase or sale of any security, pursuant to an
unsolicited offer to purchase or sell; provided that the
broker-dealer acts as agent for the purchaser or seller, and has
no direct material interest in the sale or distribution of the
security, receives no commission, profit, or other compensation
from any source other than the purchaser and seller and delivers
to the purchaser and seller written confirmation of the
transaction which clearly itemizes the commission, or other
compensation.
(d) Any nonissuer sale of notes or bonds secured by a
mortgage lien if the entire mortgage, together with all notes or
bonds secured thereby, is sold to a single purchaser at a single
sale.
(e) Any judicial sale, exchange, or issuance of securities
made pursuant to an order of a court of competent jurisdiction.
(f) The sale, by a pledge holder, of a security pledged in
good faith as collateral for a bona fide debt.
(g) Any offer or sale to a bank, savings institution, trust
company, insurance company, investment company as defined in the
Investment Company Act of 1940, pension or profit sharing trust,
or other financial institution or institutional buyer, or to a
broker-dealer, whether the purchaser is acting for itself or in
some fiduciary capacity.
(h) Any sales by an issuer to the number of persons that
shall not exceed 25 persons in this state, or 35 persons if the
sales are made in compliance with Regulation D promulgated by
the Securities and Exchange Commission, Code of Federal
Regulations, title 17, sections 230.501 to 230.506, (other than
those designated in paragraph (a) or (g)), whether or not any of
the purchasers is then present in this state, if (1) the issuer
reasonably believes that all of the buyers in this state (other
than those designated in clause (g)) are purchasing for
investment, and (2) no commission or other remuneration is paid
or given directly or indirectly for soliciting any prospective
buyer in this state (other than those designated in clause (g)),
except reasonable and customary commissions paid by the issuer
to a broker-dealer licensed under this chapter, and (3) the
issuer has, ten days prior to any sale pursuant to this
paragraph, supplied the commissioner with a statement of issuer
on forms prescribed by the commissioner, containing the
following information: (i) the name and address of the issuer,
and the date and state of its organization; (ii) the number of
units, price per unit, and a description of the securities to be
sold; (iii) the amount of commissions to be paid and the persons
to whom they will be paid; (iv) the names of all officers,
directors and persons owning five percent or more of the equity
of the issuer; (v) a brief description of the intended use of
proceeds; (vi) a description of all sales of securities made by
the issuer within the six-month period next preceding the date
of filing; and (vii) a copy of the investment letter, if any,
intended to be used in connection with any sale. Sales that are
made more than six months before the start of an offering made
pursuant to this exemption or are made more than six months
after completion of an offering made pursuant to this exemption
will not be considered part of the offering, so long as during
those six-month periods there are no sales of unregistered
securities (other than those made pursuant to paragraph (a) or
(g)) by or for the issuer that are of the same or similar class
as those sold under this exemption. The commissioner may by
rule or order as to any security or transaction or any type of
security or transaction, withdraw or further condition this
exemption, or increase the number of offers and sales permitted,
or waive the conditions in clause (1), (2), or (3) with or
without the substitution of a limitation or remuneration.
(i) Any offer (but not a sale) of a security for which a
registration statement has been filed under sections 80A.01 to
80A.31, if no stop order or refusal order is in effect and no
public proceeding or examination looking toward an order is
pending; and any offer of a security if the sale of the security
is or would be exempt under this section. The commissioner may
by rule exempt offers (but not sales) of securities for which a
registration statement has been filed as the commissioner deems
appropriate, consistent with the purposes of sections 80A.01 to
80A.31.
(j) The offer and sale by a cooperative association
organized under chapter 308, of its securities when the
securities are offered and sold only to its members, or when the
purchase of the securities is necessary or incidental to
establishing membership in such association, or when such
securities are issued as patronage dividends.
(l) The issuance and delivery of any securities of one
corporation to another corporation or its security holders in
connection with a merger, exchange of shares, or transfer of
assets whereby the approval of stockholders of the other
corporation is required to be obtained, provided, that the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
by rule prescribes not less than ten days prior to the issuance
and delivery.
(m) Any transaction between the issuer or other person on
whose behalf the offering is made and an underwriter or among
underwriters.
(n) The distribution by a corporation of its or other
securities to its own security holders as a stock dividend or as
a dividend from earnings or surplus or as a liquidating
distribution; or upon conversion of an outstanding convertible
security; or pursuant to a stock split or reverse stock split.
(o) Any offer or sale of securities by an affiliate of the
issuer thereof if: (1) a registration statement is in effect
with respect to securities of the same class of the issuer and
(2) the offer or sale has been exempted from registration by
rule or order of the commissioner.
(p) Any transaction pursuant to an offer to existing
security holders of the issuer, including persons who at the
time of the transaction are holders of convertible securities,
nontransferable warrants, or transferable warrants exercisable
within not more than 90 days of their issuance, if: (1) no
commission or other remuneration (other than a standby
commission) is paid or given directly or indirectly for
soliciting any security holder in this state; and (2) the
commissioner has been furnished with a general description of
the transaction and with other information as the commissioner
may by rule prescribe no less than ten days prior to the
transaction.
(q) Any nonissuer sales of industrial revenue bonds issued
by the state of Minnesota or any of its political or
governmental subdivisions, municipalities, governmental
agencies, or instrumentalities.
Sec. 16. Minnesota Statutes 1986, section 80A.19,
subdivision 1, is amended to read:
Subdivision 1. This chapter shall be administered by the
commissioner of commerce. The commissioner shall appoint two
deputy commissioners and shall file with the secretary of state
an order delegating authority to one of such deputy
commissioners to exercise all of the rights and powers and
perform all of the duties of the commissioner during the
disability of the commissioner, the commissioner's absence from
the office or during a vacancy in the office of the commissioner
pending the filling thereof as provided by law.
Sec. 17. Minnesota Statutes 1986, section 80A.23,
subdivision 11, is amended to read:
Subd. 11. The rights and remedies promulgated by sections
80A.01 to 80A.31 are in addition to any other right or remedy
that may exist at law or in equity, but sections 80A.01 to
80A.31 do not create any cause of action not specified in this
section or section 80A.05, subdivision 5. No civil cause of
action may be based solely upon the failure of a broker-dealer
or agent to comply with the requirements of section 80A.04,
subdivision 1 or 3, except a cause of action arising under
section 80A.21 2.
Sec. 18. Minnesota Statutes 1986, section 80A.26,
subdivision 3, is amended to read:
Subd. 3. All information contained in or filed with any
registration statement, application, or report, except such
information as to which the commissioner, upon request and for
good cause shown, grants confidential treatment, and except as
to reports of sales provided for in section 80A.20, subdivision
1, clause (f) 2, subdivision 1, clause (7), shall be a matter of
public record and shall be made available to the public under
such rules as the commissioner prescribes.
Sec. 19. Minnesota Statutes 1986, section 80C.17,
subdivision 1, is amended to read:
Subdivision 1. A person who violates any provision of
sections 80C.01 to 80C.13 and 80C.15 80C.16 to 80C.22 or any
rule or order thereunder shall be liable to the franchisee or
subfranchisor who may sue for damages caused thereby, for
rescission, or other relief as the court may deem appropriate.
Sec. 20. Minnesota Statutes 1986, section 82.17,
subdivision 4, is amended to read:
Subd. 4. "Real estate broker" or "broker" means any person
who:
(a) for another and for commission, fee or other valuable
consideration or with the intention or expectation of receiving
the same directly or indirectly lists, sells, exchanges, buys or
rents, manages, or offers or attempts to negotiate a sale,
option, exchange, purchase or rental of an interest or estate in
real estate, or advertises or holds out as engaged in these
activities;
(b) for another and for commission, fee or other valuable
consideration or with the intention or expectation of receiving
the same directly or indirectly negotiates or offers or attempts
to negotiate a loan, secured or to be secured by a mortgage or
other encumbrance on real estate;
(c) for another and for commission, fee or other valuable
consideration or with the intention or expectation of receiving
the same directly or indirectly lists, sells, exchanges, buys,
rents, manages, offers or attempts to negotiate a sale, option,
exchange, purchase or rental of any business opportunity or
business, or its good will, inventory, or fixtures, or any
interest therein;
(d) for another and for commission, fee or other valuable
consideration or with the intention or expectation of receiving
the same directly or indirectly offers, sells or attempts to
negotiate the sale of property that is subject to the
registration requirements of chapter 83, concerning subdivided
land;
(e) engages in the business of charging an advance fee or
contracting for collection of a fee in connection with any
contract whereby the person undertakes to promote the sale of
real estate through its listing in a publication issued
primarily for this purpose;
(f) engages wholly or in part in the business of selling
real estate to the extent that a pattern of real estate sales is
established, whether or not the real estate is owned by the
person. A person shall be presumed to be engaged in the
business of selling real estate if the person engages as
principal in five or more transactions during any 12-month
period, unless the person is represented by a licensed real
estate broker or salesperson;
(g) offers or makes more than five conventional loans under
section 47.20 secured by real estate during any 12-month period
and who is not a bank, savings bank, mutual savings bank,
building and loan association, or savings and loan association
organized under the laws of this state or the United States,
trust company, trust company acting as a fiduciary, or other
financial institution subject to the supervision of the
commissioner of commerce, or mortgagee or lender approved or
certified by the secretary of housing and urban development or
approved or certified by the administrator of veterans affairs,
or approved or certified by the administrator of the Farmers
Home Administration, or approved or certified by the Federal
Home Loan Mortgage Corporation, or approved or certified by the
Federal National Mortgage Association.
Sec. 21. [82.175] [MORTGAGEE OR LENDER BROKER IN CERTAIN
CASES.]
(a) Notwithstanding section 82.17, subdivision 4, clause
(g), for purposes of this chapter, the term "real estate broker"
includes a mortgagee or lender approved or certified by the
secretary of Housing and Urban Development, the administrator of
Veterans Affairs, the administrator of the Farmers Home
Administration, the Federal Home Loan Mortgage Corporation, or
the Federal National Mortgage Association if the commissioner
finds after a hearing that the mortgagee or lender, or an
officer, director, partner, employee, or agent of the mortgagee
or lender, or a person directly or indirectly controlling the
mortgagee or lender: (1) has engaged in a fraudulent,
deceptive, or dishonest practice, or (2) has violated section
47.206.
(b) Prior to the hearing under paragraph (a), the
commissioner shall issue an order that requires the mortgagee or
lender to show cause why the mortgagee or lender should not be
determined to be a real estate broker under this section. The
order must be calculated to give reasonable notice of the time
and place for the hearing and must state the reasons for the
entry of the order to show cause. Hearings must be conducted
under chapter 14.
Sec. 22. Minnesota Statutes 1986, section 82.21,
subdivision 1, is amended to read:
Subdivision 1. [AMOUNTS.] The following fees shall be paid
to the commissioner:
(a) A fee of $50 for each initial individual broker's
license, and a fee of $25 for each annual renewal thereof;
(b) A fee of $25 for each initial salesperson's license,
and a fee of $10 for each annual renewal thereof;
(c) A fee of $50 for each initial corporate or partnership
license, and a fee of $25 for each annual renewal thereof;
(d) A fee not to exceed $40 per year for payment to the
education, research and recovery fund in accordance with section
82.34;
(e) A fee of $10 for each transfer;
(f) A fee of $25 for a corporation or partnership name
change;
(g) A fee of $5 for an agent name change;
(h) A fee of $10 for a license history;
(i) A fee of $15 for a NSF check;
(j) A fee of $50 for an initial course approval;
(k) A fee of $10 for notices of repeat course offerings;
(l) A fee of $50 for instructor or coordinator approval;
and
(m) A fee of $5 for a duplicate license; and
(j) A fee of $5 for each hour or fraction of one hour of
course approval sought.
Sec. 23. Minnesota Statutes 1986, section 82.22,
subdivision 6, is amended to read:
Subd. 6. [INSTRUCTION; NEW LICENSES.] (a) After January 1,
1987, every applicant for a salesperson's license shall be
required to successfully complete a course of study in the real
estate field consisting of 30 hours of instruction approved by
the commissioner before taking the examination specified in
subdivision 1. After January 1, 1987, every applicant for a
salesperson's license shall be required to successfully complete
an additional course of study in the real estate field
consisting of 60 hours of instruction approved by the
commissioner before filing an application for the license.
Every salesperson licensed after January 1, 1987, shall, within
one year of licensure, be required to successfully complete a
course of study in the real estate field consisting of 30 hours
of instruction approved by the commissioner.
(b) After December 31, 1983, and before January 1, 1987,
every applicant for a salesperson's license shall be required to
successfully complete a course of study in the real estate field
consisting of 30 hours of instruction approved by the
commissioner before taking the examination specified in
subdivision 1. After December 31, 1983, and before January 1,
1987, every applicant for a salesperson's license shall be
required to successfully complete an additional course of study
in the real estate field consisting of 30 hours of instruction
approved by the commissioner before filing an application for
the license. Every salesperson licensed after December 31,
1983, and before January 1, 1987, shall, within one year of the
date a license was first issued, be required to successfully
complete a course of study in the real estate field consisting
of 30 hours of instruction approved by the commissioner.
(c) The commissioner may approve courses of study in the
real estate field offered in educational institutions of higher
learning in this state or courses of study in the real estate
field developed by and offered under the auspices of the
national association of realtors, its affiliates, or private
real estate schools. The commissioner shall not approve any
course offered by, sponsored by, or affiliated with any person
or company licensed to engage in the real estate business. The
commissioner may by rule prescribe the curriculum and
qualification of those employed as instructors.
(d) After January 1, 1988, an applicant for a broker's
license must successfully complete a course of study in the real
estate field consisting of 30 hours of instruction approved by
the commissioner. The course must have been completed within
six months prior to the date of application for the broker's
license.
Sec. 24. Minnesota Statutes 1986, section 82.24,
subdivision 2, is amended to read:
Subd. 2. [LICENSEE ACTING AS PRINCIPAL.] Any licensed A
real estate broker or salesperson licensee acting in the
capacity of principal in the sale or rental of interests in a
real estate owned or rented by the licensee transaction where
the seller retains any liability, contingent or otherwise, for
the payment of an obligation on the property shall deposit in a
Minnesota bank or trust company, any foreign bank which
authorizes the commissioner to examine its records of the
deposits, or an industrial loan and thrift company organized
under chapter 53 with deposit liabilities, in a trust account,
those parts of all payments received on contracts that are
necessary to meet any amounts concurrently due and payable on
any existing mortgages, contracts for deed or other conveyancing
instruments, and reserve for taxes and insurance or any other
encumbrance on the receipts. The deposits must be maintained
until disbursement is made under the terms of the encumbrance
and proper accounting on the property made to the parties
entitled to an accounting. The provisions of this subdivision
relating to rental of interests in real estate apply only to
single-family residential property.
Sec. 25. Minnesota Statutes 1986, section 82.34,
subdivision 19, is amended to read:
Subd. 19. The commissioner shall include in the annual
report of the department of commerce pursuant to section 45.033,
on or before October 1 in each even-numbered year, prepare and
file in the office of the governor for the preceding two fiscal
years ending June 30 a report on the activities of the real
estate education, research and recovery fund; noting the amount
of money received by the fund, the amount of money expended and
the purposes therefor.
Sec. 26. Minnesota Statutes 1986, section 308.12, is
amended by adding a subdivision to read:
Subd. 5. Notwithstanding the provisions of section 345.43,
a cooperative association organized under the laws of this state
may, in lieu of paying or delivering to the commissioner of
commerce the unclaimed property specified in its report of
unclaimed property, distribute the unclaimed property to a
corporation or organization which is exempt from taxation under
section 290.05, subdivision 1, paragraph (b), or 2. A
cooperative association making this election shall, within 20
days after the time specified in section 345.42 for claiming the
property from the holder, file with the commissioner a verified
written explanation of the proof of claim of any owner
establishing a right to receive the abandoned property; any
error in the presumption of abandonment; and the name, address,
and exemption number of the corporation or organization to which
the property was or is to be distributed and the approximate
date of distribution. Nothing in this subdivision alters the
procedure provided in sections 345.41 and 345.42 whereby
cooperative associations report unclaimed property to the
commissioner and claims of owners are made to the cooperative
associations for a period of 65 days following the publication
of lists of abandoned property. The rights of an owner to
unclaimed property held by a cooperative association is
extinguished upon the disbursement of the property by the
cooperative association to a tax-exempt organization in
accordance with this section.
Sec. 27. Minnesota Statutes 1986, section 309.50,
subdivision 6, is amended to read:
Subd. 6. "Professional fund raiser" means any person who
for financial compensation or profit participates in public
solicitation in this state of contributions for, or on behalf of
any charitable organization performs for a charitable
organization any service in connection with which contributions
are, or will be, solicited in this state by the compensated
person or by any compensated person the person employs,
procures, or engages to solicit; or any person who for
compensation or profit plans, manages, advises, consults, or
prepares material for, or with respect to, the solicitation in
this state of contributions for a charitable organization. No
investment adviser, investment adviser representative,
broker-dealer, or agent licensed pursuant to chapter 80A, or
lawyer, accountant, or banker who advises a person to make a
charitable contribution or who provides legal, accounting, or
financial advice in the ordinary course of a profession or
business shall be deemed, as a result of the advice, to be a
professional fund raiser. A bona fide salaried officer or,
employee, or volunteer of a charitable organization is not a
professional fund raiser unless the officer's or employee's
salary or other compensation is computed on the basis of funds
to be raised, or actually raised.
Sec. 28. Minnesota Statutes 1986, section 309.515,
subdivision 1, is amended to read:
Subdivision 1. Subject to the provisions of subdivisions 2
and 3, sections 309.52 and 309.53 shall not apply to any of the
following:
(a) Charitable organizations:
(1) which did not receive total contributions in excess
of $10,000 $25,000, exclusive of the direct cost of prizes given
to the public by the charitable organization in connection with
lawful gambling conducted in compliance with chapter 349, from
the public within or without this state during the accounting
year last ended, and
(2) which do not plan to receive total contributions in
excess of such amount from the public within or without this
state during any accounting year, and
(3) whose functions and activities, including fund raising,
are performed wholly by persons who are unpaid for their
services, and
(4) none of whose assets or income inure to the benefit of
or are paid to any officer.
For purposes of this chapter, a charitable organization
shall be deemed to receive in addition to contributions
solicited from the public by it, the contributions solicited
from the public by any other person and transferred to it. Any
organization constituted for a charitable purpose receiving an
allocation from a community chest, united fund or similar
organization shall be deemed to have solicited that allocation
from the public.
(b) A religious society or organization which is exempt
from filing a federal annual information return pursuant to
Internal Revenue Code, section 6033(a)(2)(A)(i) and (iii), and
Internal Revenue Code, section 6033(a)(2)(C)(i).
(c) Any educational institution which is under the general
supervision of the state board of education, the state
university board, the state board for community colleges, or the
University of Minnesota or any educational institution which is
accredited by the University of Minnesota or the North Central
association of colleges and secondary schools, or by any other
national or regional accrediting association.
(d) A fraternal, patriotic, social, educational, alumni,
professional, trade or learned society which limits solicitation
of contributions to persons who have a right to vote as a
member. The term "member" shall not include those persons who
are granted a membership upon making a contribution as the
result of a solicitation.
(e) A charitable organization soliciting contributions for
any person specified by name at the time of the solicitation if
all of the contributions received are transferred to the person
named with no restrictions on the person's expenditure of it and
with no deductions whatsoever.
(f) A private foundation, as defined in section 509(a) of
the Internal Revenue Code of 1954, which did not solicit
contributions from more than 100 persons during the accounting
year last ended.
Sec. 29. Minnesota Statutes 1986, section 309.52,
subdivision 1a, is amended to read:
Subd. 1a. A charitable organization whose total
contributions received during any accounting year are in excess
of $10,000 $25,000, exclusive of the direct cost of prizes given
to the public by the charitable organization in connection with
lawful gambling conducted in compliance with chapter 349, shall
file a registration statement with the department attorney
general within 30 days after the date on which the
organization's total contributions exceeded $10,000 $25,000,
exclusive of the direct cost of prizes given to the public by
the charitable organization in connection with lawful gambling
conducted in compliance with chapter 349. The registration
shall exist unless revoked by a court of competent jurisdiction,
or the department attorney general, or as provided in
subdivision 7. This subdivision shall not apply to a charitable
organization which had filed a registration statement pursuant
to this section for the accounting year last ended or to
organizations described in section 309.515, subdivision 1.
Sec. 30. Minnesota Statutes 1986, section 309.52,
subdivision 2, is amended to read:
Subd. 2. The first registration statement filed by a
charitable organization shall include a registration fee of $25
if the organization raised or expended, exclusive of the direct
cost of prizes given to the public by the charitable
organization in connection with lawful gambling conducted in
compliance with chapter 349, more than $25,000 during the
previous 12-month period, and a financial statement of its the
organization's operation for its most recent 12 months period
immediately preceding the filing of the first registration
statement.
Sec. 31. Minnesota Statutes 1986, section 309.53,
subdivision 1a, is amended to read:
Subd. 1a. A charitable organization may, but need not,
file an annual report pursuant to this section if the
organization:
(a) Did not receive total contributions in excess
of $10,000 $25,000, exclusive of the direct cost of prizes given
to the public by the charitable organization in connection with
lawful gambling conducted in compliance with chapter 349, from
the public within or without this state during the accounting
year last ended.
(b) Does not plan to receive total contributions in excess
of $10,000 $25,000, exclusive of the direct cost of prizes given
to the public by the charitable organization in connection with
lawful gambling conducted in compliance with chapter 349, from
the public within or without this state during any accounting
year, and
(c) Does not employ a professional fund raiser.
Sec. 32. Minnesota Statutes 1986, section 309.53,
subdivision 3, is amended to read:
Subd. 3. The financial statement shall include a balance
sheet, statement of income and expense, and statement of
functional expenses, shall be consistent with forms furnished by
the department attorney general, and shall be prepared in
accordance with generally accepted accounting principles so as
to make a full disclosure of the following, including necessary
allocations between each item and the basis of such allocations:
(a) Total receipts and total income from all sources;
(b) Cost of management and general;
(c) Cost of fund raising;
(d) Cost of public education;
(e) Funds or properties transferred out of state, with
explanation as to recipient and purpose;
(f) Total net amount disbursed or dedicated within this
state, broken down into total amounts disbursed or dedicated for
each major purpose, charitable or otherwise;
(g) Names of professional fund raisers used during the
accounting year and the financial compensation or profit
resulting to each professional fund raiser. Unless otherwise
required by this subdivision, the financial statement need not
be certified.
A financial statement of a charitable organization which
has solicited from the public within or outside this state total
contributions in excess of $50,000 $100,000 for the 12 months of
operation covered by the statement shall be accompanied by an
opinion signed by a certified public accountant that such
statement fairly represents the financial operations of the
charitable organization in sufficient detail to permit public
evaluation of its operations an audited financial statement
prepared in accordance with generally accepted accounting
principles that has been examined by an independent certified
public accountant for the purpose of expressing an opinion.
In giving such opinion preparing the audit the certified public
accountant shall take into consideration capital, endowment or
other reserve funds, if any, controlled by the charitable
organization. The opinion need not conform to the wording of
the opinion form of the annual report forms provided by the
department.
Sec. 33. Minnesota Statutes 1986, section 309.53,
subdivision 4, is amended to read:
Subd. 4. Where a registration statement has been filed by
a parent organization or affiliate as provided in section
309.52, subdivision 4, the registered parent organization may
file the annual report required under this section on behalf of
the chapter, branch, area office, similar affiliate or person in
addition to or as part of its own report or the registered
affiliate may file the annual report required under this section
on behalf of the parent organization in addition to or as part
of its own report. The accounting information required under
this section shall be set forth separately and not in
consolidated form with respect to every chapter, branch, area
office, similar affiliate or person within the state which
raises or expends more than $10,000 $25,000, exclusive of the
direct cost of prizes given to the public by the charitable
organization in connection with lawful gambling conducted in
compliance with chapter 349. The department of commerce
attorney general may permit any chapter, branch, area office,
similar affiliate or person to file a consolidated statement
with any other chapter, branch, area office, similar affiliate
or person or parent organization if the attorney general
determines that the interests of the charitable beneficiaries
will not be prejudiced thereby and that separate accounting
information is not required for proper supervision.
Sec. 34. Minnesota Statutes 1986, section 309.53, is
amended by adding a subdivision to read:
Subd. 8. A reregistration fee of $25 shall be paid by
every charitable organization submitting the annual report
required by this section if the organization raised or expended,
exclusive of the direct cost of prizes given to the public by
the charitable organization in connection with lawful gambling
conducted in compliance with chapter 349, more than $25,000
during the previous 12-month period.
Sec. 35. Minnesota Statutes 1986, section 309.531, is
amended to read:
309.531 [LICENSING REGISTRATION OF PROFESSIONAL FUND
RAISERS; BOND REQUIRED.]
Subdivision 1. No person shall act as a professional fund
raiser unless licensed by registered with the department
attorney general. Applications for a license The registration
statement as hereinafter described shall be in writing, under
oath, in the form prescribed by the department attorney general
and shall be accompanied by an application fee of $25 $50. Each
license registration shall be effective for a period of not more
than 12 months from the date of issuance, and in any event shall
expire on July 30 next following the date of issuance. The
registration may be renewed for additional one-year periods upon
application and payment of the fee.
Subd. 2. The department shall have the power, in
connection with any application for license as a professional
fund raiser, to require the applicant to file a surety bond in
such amount, not exceeding $20,000, and containing such terms
and conditions as the department determines are necessary and
appropriate for the protection of the public. The applicant may
deposit cash in and with a depository acceptable to the
department in such amount and in such a manner as may be
prescribed and approved by the department in lieu of the bond.
The registration statement of the professional fund raiser shall
consist of the following:
(a) If the professional fund raiser at any time has custody
of contributions from a solicitation, the registration statement
shall include a bond, in which the professional fund raiser
shall be the principal obligor. The bond shall be in the sum of
$20,000, with one or more responsible sureties whose liability
in the aggregate as the sureties will at least equal that sum.
In order to maintain the registration, the bond shall be in
effect for the full term of the registration. The bond, which
may be in the form of a rider to a larger blanket liability
bond, shall run to the state and to any person who may have a
cause of action against the principal obligor of the bond for
any liabilities resulting from the obligor's conduct of any
activities subject to sections 309.50 to 309.61 or arising out
of a violation of the statutes or a rule adopted under the
statutes.
(b) If the professional fund raiser, or any person the
professional fund raiser employs, procures, or engages, solicits
in this state, the registration statement shall include a
completed "solicitation notice" on a form provided by the
attorney general. The solicitation notice shall include a copy
of the contract described in paragraph (c), the projected dates
when soliciting will commence and terminate, the location and
telephone number from where the solicitation will be conducted,
the name and residence address of each person responsible for
directing and supervising the conduct of the campaign, a
statement as to whether the professional fund raiser will at any
time have custody of contributions, and a description of the
charitable program for which the solicitation campaign is being
carried out. The charitable organization on whose behalf the
professional fund raiser is acting shall certify that the
solicitation notice and accompanying material are true and
complete to the best of its knowledge.
(c) The professional fund raiser shall also include, as
part of the registration statement, a copy of the contract
between the charitable organization and the professional fund
raiser. The contract shall:
(1) be in writing;
(2) contain information as will enable the attorney general
to identify the services the professional fund raiser is to
provide, including whether the professional fund raiser will at
any time have custody of contributions; and
(3) if the professional fund raiser or any person the
professional fund raiser employs, procures, or engages, directly
or indirectly, solicits in this state, the contract shall
disclose the percentage or a reasonable estimate of the
percentage of the total amount solicited from each person which
shall be received by the charitable organization for charitable
purposes.
The stated percentages required by this section and section
309.556, subdivision 2, shall exclude any amount which the
charitable organization is to pay as expenses of the
solicitation campaign, including the cost of merchandise or
services sold or events staged.
(d) The registration statement shall also include the
financial report for previous campaigns conducted by the
professional fund raiser in this state as set forth in
subdivision 4 of this section.
Subd. 3. No professional fund raiser shall solicit in use
the name of or in solicit on behalf of any charitable
organization unless such solicitor has written authorization
from two officers of such organization, a copy of which shall be
filed with the department attorney general. Such written
authorization shall bear the signature of the solicitor and
shall expressly state on its face the period for which it is
valid, which shall not exceed one year from the date
issued conform to the requirements of the contract described in
subdivision 2, clause (c).
Subd. 4. The department may require that any licensed
professional fund raiser submit financial reports, not more
frequently than quarterly, in such form and containing such
information as the department by rule or order requires. Within
90 days after a solicitation campaign has been completed, and on
the anniversary of the commencement of a solicitation campaign
lasting more than one year, the professional fund raiser who
solicited contributions in this state in conjunction with a
charitable organization shall file with the attorney general a
financial report for the campaign, including gross revenue and
an itemization of all expenses incurred. The report shall be
completed on a form prescribed by the attorney general. The
report shall be signed by an authorized official of the
professional fund raiser and an authorized official from the
charitable organization and they shall certify, under oath, that
it is true to the best of their knowledge.
Sec. 36. Minnesota Statutes 1986, section 309.533, is
amended by adding a subdivision to read:
Subd. 5. In connection with an investigation under this
section, the attorney general may obtain discovery from any
person regarding any matter, fact, or circumstance, not
privileged, that is relevant to the subject matter involved in
the investigation, in accordance with the provisions of section
8.31.
Sec. 37. Minnesota Statutes 1986, section 309.54, is
amended to read:
309.54 [PUBLIC RECORD.]
Subdivision 1. Registration statements, annual reports,
and other documents required to be filed shall become public
records in the office of the department attorney general.
Investigative data obtained by the attorney general in
anticipation of or in connection with litigation or an
administration proceeding are nonpublic data under section
13.02, subdivision 9.
Subd. 2. Every person subject to sections 309.50 to 309.61
shall maintain, for not less than three years from the date of
preparation, accurate and detailed books and records to provide
the information required by sections 309.50 to 309.61. All such
books and records shall be open to inspection at all reasonable
times by the department or by the attorney general.
Subd. 3. Every charitable organization which is required
to file an annual report under section 309.53 shall keep and
maintain within Minnesota, at the place designated in its
registration statement, the original books and records, or true
copies thereof, pertaining to all money or other property
collected from residents of this state and to the disbursement
of such money or property. Such books and records shall be
preserved for a period of not less than 10 three years from the
date of preparation thereof.
Sec. 38. Minnesota Statutes 1986, section 309.55,
subdivision 6, is amended to read:
Subd. 6. No person shall, either as an individual or as
agent, officer or employee of a charitable organization sell or
otherwise furnish for a consideration to any other person any
list of contributors unless the contributor has consented to the
transaction.
Sec. 39. Minnesota Statutes 1986, section 309.556, is
amended to read:
309.556 [PUBLIC DISCLOSURE REQUIREMENTS.]
Subdivision 1. [IDENTITY OF ORGANIZATION AND; PERCENTAGE
OF DEDUCTIBILITY; DESCRIPTION OF PROGRAM.] In connection with
any charitable solicitation, the following information shall be
clearly disclosed:
(a) The name, address and telephone number of each
charitable organization on behalf of which the solicitation is
made;
(b) The percentage of the contribution which may be
deducted as a charitable contribution under both federal and
state income tax laws;
(c) A description of the charitable program for which the
solicitation campaign is being carried out; and, if different, a
description of the programs and activities of the organization
on whose behalf the solicitation campaign is being carried out.
If the solicitation is made by direct contact, the required
information shall be disclosed prominently on a card which shall
be exhibited to the person solicited. If the solicitation is
made by radio, television, letter, telephone or any other means
not involving direct personal contact, the required information
shall be clearly disclosed in the solicitation.
Subd. 2. [PERCENTAGE RECEIVED FOR CHARITABLE PURPOSES.] In
addition to the disclosures required by subdivision 1, any
professional fund raiser soliciting contributions in this state
shall also disclose the percentage or a reasonable estimate of
the percentage of the total amount solicited from each person
which shall be received by the charitable agency for charitable
purposes. A professional fund raiser shall also disclose the
name of the professional fund raiser as on file with the
attorney general and that the solicitation is being conducted by
a "professional fund raiser." The disclosure disclosures
required by this subdivision shall be given in the same manner
as the disclosures required by subdivision 1.
Sec. 40. Minnesota Statutes 1986, section 309.56,
subdivision 1, is amended to read:
Subdivision 1. Any charitable organization or professional
fund raiser which solicits contributions in this state, but does
not maintain an office within the state shall be subject to
service of process, as follows:
(a) By service thereof on its registered agent within the
state, or if there be no such registered agent, then upon the
person, if any, who has been designated in the registration
statement as having custody of books and records within this
state; where service is effected upon the person so designated
in the registration statement a copy of the process shall, in
addition, be mailed to the charitable organization or
professional fund raiser at its last known address;
(b) When a charitable organization or professional fund
raiser has solicited contributions in this state, but maintains
no office within the state, has no registered agent within the
state, and no designated person having custody of its books and
records within the state, or when a registered agent or person
having custody of its books and records within the state cannot
be found as shown by the return of the sheriff of the county in
which such registered agent or person having custody of books
and records has been represented by the charitable organization
or professional fund raiser as maintaining an office, service
may be made by leaving a copy of the process in the office of
the commissioner. Service upon the commissioner is not
effective unless (a) the plaintiff, who may be the commissioner
in a suit, action, or proceeding instituted by the commissioner,
forthwith sends notice of the service and a copy of the process
by certified mail to the defendant or respondent at that
person's last known address or takes other steps which are
reasonably calculated to give actual notice, and (b) the
plaintiff's affidavit of compliance with this subdivision is
filed in the case on or before the return day of the process, if
any, or within a further time the court allows as in any other
civil suit, or in the manner provided by section 303.13,
subdivision 1, clause (3), or in a manner as the court may
direct.
Sec. 41. Minnesota Statutes 1986, section 309.57, is
amended to read:
309.57 [DISTRICT COURT JURISDICTION, PENALTIES,
ENFORCEMENT.]
Subdivision 1. [GENERAL.] Upon the application of the
attorney general the district court is vested with jurisdiction
to restrain and enjoin violations of sections 309.50 to 309.61.
The court may make any necessary order or judgment including,
but not limited to, injunctions, restitution, appointment of a
receiver for the defendant or the defendant's assets, denial,
revocation, or suspension of the defendant's registration,
awards of reasonable attorney fees, and costs of investigation
and litigation, and may award to the state civil penalties up to
$25,000 for each violation of sections 309.50 to 309.61. In
ordering injunctive relief, the attorney general shall not be
required to establish irreparable harm but only a violation of
statute or that the requested order promotes the public
interest. The court may, as appropriate, enter a consent
judgment or decree without the finding of illegality.
Subd. 2. [ASSURANCE OF DISCONTINUANCE.] The attorney
general may accept an assurance of discontinuance of any method,
act, or practice in violation of sections 309.50 to 309.61 from
any person alleged to be engaged or to have been engaged in the
method, act, or practice. The assurance may, among other terms,
include a stipulation for the voluntary payment by the person of
the costs of investigation, or of an amount to be held in escrow
pending the outcome of an action or as restitution to aggrieved
persons, or both. Any assurance of discontinuance shall be in
writing and be filed with the district court of the county of
the violator's residence or principal place of business or in
Ramsey county. An assurance shall not be considered an
admission of a violation for any purpose. Failure to comply
with the assurance of discontinuance shall be punishable as
contempt.
Sec. 42. Minnesota Statutes 1986, section 345.39, is
amended to read:
345.39 [MISCELLANEOUS PERSONAL PROPERTY HELD FOR ANOTHER
PERSON.]
Subdivision 1. [PRESUMED ABANDONMENT.] All intangible
personal property, not otherwise covered by sections 345.31 to
345.60, including any income or increment thereon, but excluding
any charges that may lawfully be withheld, that is held or owing
in this state in the ordinary course of the holder's business
and has remained unclaimed by the owner for more than five years
after it became payable or distributable is presumed abandoned.
Property covered by this section includes, but is not limited
to: (a) unclaimed wages or worker's compensation; (b) deposits
or payments for repair or purchase of goods or services; (c)
credit checks or memos, or customer overpayments; (d)
unidentified remittances, unrefunded overcharges; (e) unpaid
claims, unpaid accounts payable or unpaid commissions; (f)
unpaid mineral proceeds, royalties or vendor checks; and (g)
credit balances, accounts receivable and miscellaneous
outstanding checks. This section does not include money orders.
Subd. 2. [COOPERATIVE PROPERTY.] Notwithstanding
subdivision 1, any profit, distribution, or other sum held or
owing by a cooperative for or to a participating patron of the
cooperative is presumed abandoned only if it has remained
unclaimed by the owner for more than seven years after it became
payable or distributable.
Sec. 43. Minnesota Statutes 1986, section 386.375, is
amended to read:
386.375 [TRANSFER AND STORAGE OF ABSTRACTS.]
Subdivision 1. [DEFINITIONS.] For the purposes of this
section, "lender" means all state banks and trust companies,
national banking associations, state and federally chartered
savings and loan associations, mortgage banks, mutual savings
banks, insurance companies, credit unions making a loan, or any
person making a conventional loan as defined under section
47.20, subdivision 2, clause (3), or cooperative apartment loan
as defined under section 47.20, subdivision 2, clause (4). A
"selling lender" is a lender who sells, assigns, or transfers a
loan and/or the servicing of a loan to a "purchasing lender" or
"servicing agent."
Subd. 2. [RESPONSIBILITY FOR STORAGE.] Any title company,
lender, or anyone other than the mortgagor or fee simple owner
holding an abstract of title to Minnesota real estate shall
transfer the abstract of title to the mortgagor or fee simple
owner of the real estate to which the abstract pertains before
August 1, 1987. After August 1, 1987, the abstract of title
shall be provided to the mortgagor or fee simple owner at the
time of closing. This section does not apply if the holder of
the abstract of title is the mortgagor or fee simple owner of
the real estate to which the abstract pertains.
Subd. 3. [PENALTIES.] If a title company or lender fails
to comply with the requirements of subdivision 2, the mortgagor
or fee simple owner has the right to have an abstract made at
the expense of the lender or title company holding the abstract.
Subdivision 1. [RESPONSIBILITY TO TRANSFER.] (a) A person
holding an abstract of title to real estate located in Minnesota
shall, at a closing of a sale of the property to which the
abstract pertains, make a written offer to transfer the abstract
of title to the mortgagor or fee owner at no charge to the
mortgagor or fee owner. If the offer is accepted, the abstract
must be transferred at the closing unless the abstract of title
is being held after the closing for issuance of a final title
opinion or policy of title insurance in which case the holder
has a reasonable period of time to transfer the abstract.
(b) A person holding an abstract of title to real estate
located in Minnesota shall, within ten days of receipt of a
written request from the mortgagor or fee owner of the property
to which the abstract pertains, transfer the abstract of title
to the mortgagor or fee owner at no charge, other than postage,
to the mortgagor or fee owner. If the abstract of title is
being held after a closing for issuance of a final title opinion
or policy of title insurance, the holder has a reasonable period
of time to transfer the abstract.
(c) If a person holding an abstract of title to real estate
located in Minnesota fails to comply with the requirements of
this subdivision, the mortgagor or fee owner of the property may
have an abstract of title made at the expense of the last known
person holding the abstract of title, and is also entitled to
collect actual civil damages of up to $500 from the person last
known to hold the abstract of title.
Subd. 2. [STORAGE OF ABSTRACTS.] Before a person holding
an abstract of title to real estate located in Minnesota may
impose a charge or fee to store the abstract, the person shall
first make a written offer to the mortgagor or fee owner to
transfer the abstract at no charge, other than postage, to the
fee owner or mortgagor. This subdivision does not apply to a
person who holds an abstract pursuant to a written contract with
the fee owner or mortgagor. A person violating this subdivision
is subject to a penalty of $100 for each violation.
Subd. 3. [CONSUMER EDUCATION INFORMATION.] (a) A person
other than the mortgagor or fee owner who transfers or offers to
transfer an abstract of title shall present to the mortgagor or
fee owner basic information in plain English about abstracts of
title. This information must be sent in a form prepared and
approved by the commissioner of commerce and must contain at
least the following items:
(1) a definition and description of abstracts of title;
(2) an explanation that holders of abstracts of title must
maintain it with reasonable care;
(3) an approximate cost or range of costs to replace a lost
or damaged abstract of title;
(4) an explanation that abstracts of title may be required
to sell, finance, or refinance real estate; and
(5) an explanation of options for storage of abstracts.
(b) The commissioner shall prepare the form for use under
this subdivision as soon as possible. This subdivision does not
apply until 60 days after the form is approved by the
commissioner.
(c) A person violating this subdivision is subject to a
penalty of $100 for each violation.
Subd. 4. [STORAGE IN MINNESOTA.] After August 1, 1987,
abstracts of title to real estate located in Minnesota must be
stored within the state of Minnesota. Failure to comply with
this subdivision entitles a mortgagor or fee owner to civil
damages of up to $500.
Subd. 5. [EXCEPTIONS.] This section does not apply if the
person holding the abstract of title is the mortgagor or fee
owner of the real estate to which the abstract pertains.
Subd. 6. [OFFER TO TRANSFER.] Any person holding an
abstract of title pertaining to real estate located in Minnesota
shall, before March 1, 1988, make a reasonable effort to contact
the mortgagor or fee owner of the property and make a written
offer to transfer the abstract of title to the mortgagor or fee
owner. A person holding an abstract of title has made a
reasonable effort to contact the mortgagor or fee owner if the
person has sent an offer by United States mail, postage prepaid,
to the last address of the mortgagor or fee owner shown in the
person's records.
Sec. 44. [508.405] [TRANSFER OF OWNER'S DUPLICATE.]
Subdivision 1. [TRANSFER.] Any lender, title company, or
person other than the fee simple owner or county registrar
holding an owner's duplicate certificate of title to Minnesota
real estate shall transfer the owner's duplicate certificate of
title to the fee simple owner of the real estate to which the
duplicate certificate pertains before August 1, 1987. After
August 1, 1987, no person other than the fee simple owner or
county registrar may hold an owner's duplicate certificate of
title except for settlement processing.
Subd. 2. [PENALTIES.] If any holder fails to comply with
the requirements of subdivision 1, the registered owner may
apply to the district court for an order directing the holder
withholding the duplicate certificate of title to surrender it
at the expense of the holder.
Sec. 45. [APPROPRIATIONS.]
$65,066 is appropriated from the general fund to the
attorney general to be available for fiscal year 1988. The sum
of $34,414 is appropriated from the general fund to the attorney
general to be available for fiscal year 1989. The general fund
complement of the attorney general is increased by one.
Sec. 46. [INSTRUCTION TO REVISOR.]
The revisor of statutes shall substitute the term "attorney
general" for the term "commissioner" or "commissioner of
commerce" or "department" in Minnesota Statutes, sections
309.52, subdivisions 1 and 7; 309.53, subdivisions 1 and 2;
309.533, subdivision 1; 309.591; and 309.60.
The revisor of statutes shall delete all references to the
"department" in Minnesota Statutes, section 309.581.
Sec. 47. [REPEALER.]
Minnesota Statutes 1986, sections 72A.23; 72A.24; 72A.28;
80A.20; 80A.21; 80C.15; 80C.16, subdivision 1; 82.25; 82.26;
83.34; 83.35, subdivision 3; 238.085; 309.515, subdivision 3;
309.532; 309.533, subdivisions 2, 3, and 4; 309.534; 309.555;
and 309.58, are repealed.
Sec. 48. [EFFECTIVE DATE.]
Section 5 is effective June 1, 1987. Section 26 is
effective June 30, 1987. Section 44 is effective the day
following final enactment.
Approved June 1, 1987
Official Publication of the State of Minnesota
Revisor of Statutes