Minnesota Legislature
SF 2379
2nd Engrossment - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to commerce; regulating real estate brokers 1.3 and salespersons; making various changes in real 1.4 property law; recodifying the laws and rules 1.5 regulating these licensees; making technical and 1.6 conforming changes; amending Minnesota Statutes 2002, 1.7 sections 58.13, subdivision 1; 58.16, subdivisions 2, 1.8 4; 82.17, subdivision 4, by adding subdivisions; 1.9 82.19, subdivisions 3, 5, by adding subdivisions; 1.10 82.195; 82.196; 82.197; 82.20, subdivisions 3, 4, 8, 1.11 by adding subdivisions; 82.21, by adding subdivisions; 1.12 82.22, subdivisions 6, 8, 12, 13, by adding 1.13 subdivisions; 82.24, subdivisions 3, 5, by adding 1.14 subdivisions; 82.27, by adding a subdivision; 513.55, 1.15 subdivision 1; 513.56, by adding a subdivision; 1.16 515B.4-106; 515B.4-107; 515B.4-108; proposing coding 1.17 for new law in Minnesota Statutes, chapters 82; 325F; 1.18 repealing Minnesota Statutes 2002, sections 58.02, 1.19 subdivision 24; 82.22, subdivision 9; Minnesota Rules, 1.20 parts 2800.0100; 2800.0200; 2800.0300; 2800.1100; 1.21 2800.1200; 2800.1300; 2800.1400; 2800.1500; 2800.1600; 1.22 2800.1700; 2800.1750; 2800.1751; 2800.1800; 2800.1900; 1.23 2800.2000; 2800.2100; 2800.2150; 2805.0100; 2805.0200; 1.24 2805.0300; 2805.0400; 2805.0500; 2805.0600; 2805.0700; 1.25 2805.0800; 2805.0900; 2805.1000; 2805.1100; 2805.1300; 1.26 2805.1400; 2805.1500; 2805.1600; 2805.1700; 2805.1800; 1.27 2805.1900; 2805.2000. 1.28 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.29 ARTICLE 1 1.30 CHANGES IN REAL ESTATE LAW 1.31 Section 1. Minnesota Statutes 2002, section 58.13, 1.32 subdivision 1, is amended to read: 1.33 Subdivision 1. [GENERALLY.] No person acting as a 1.34 residential mortgage originator or servicer, including a person 1.35 required to be licensed under this chapter, and no person exempt 1.36 from the licensing requirements of this chapter under section 2.1 58.04, shall: 2.2 (1) fail to maintain a trust account to hold trust funds 2.3 received in connection with a residential mortgage loan; 2.4 (2) fail to deposit all trust funds into a trust account 2.5 within three business days of receipt; commingle trust funds 2.6 with funds belonging to the licensee or exempt person; or use 2.7 trust account funds for any purpose other than that for which 2.8 they are received; 2.9 (3) unreasonably delay the processing of a residential 2.10 mortgage loan application, or the closing of a residential 2.11 mortgage loan. For purposes of this clause, evidence of 2.12 unreasonable delay includes but is not limited to those factors 2.13 identified in section 47.206, subdivision 7, clause (d); 2.14 (4) fail to disburse funds according to its contractual or 2.15 statutory obligations; 2.16 (5) fail to perform in conformance with its written 2.17 agreements with borrowers, investors, other licensees, or exempt 2.18 persons; 2.19 (6) charge a fee for a product or service where the product 2.20 or service is not actually provided, or misrepresent the amount 2.21 charged by or paid to a third party for a product or service; 2.22 (7) fail to comply with sections 345.31 to 345.60, the 2.23 Minnesota unclaimed property law; 2.24 (8) violate any provision of any other applicable state or 2.25 federal law regulating residential mortgage loans including, 2.26 without limitation, sections 47.20 to 47.208; 2.27 (9) make or cause to be made, directly or indirectly, any 2.28 false, deceptive, or misleading statement or representation in 2.29 connection with a residential loan transaction including, 2.30 without limitation, a false, deceptive, or misleading statement 2.31 or representation regarding the borrower's ability to qualify 2.32 for any mortgage product; 2.33 (10) conduct residential mortgage loan business under any 2.34 name other than that under which the license or certificate of 2.35 exemption was issued; 2.36 (11) compensate, whether directly or indirectly, coerce or 3.1 intimidate an appraiser for the purpose of influencing the 3.2 independent judgment of the appraiser with respect to the value 3.3 of real estate that is to be covered by a residential mortgage 3.4 or is being offered as security according to an application for 3.5 a residential mortgage loan; 3.6 (12) issue any document indicating conditional 3.7 qualification or conditional approval for a residential mortgage 3.8 loan, unless the document also clearly indicates that final 3.9 qualification or approval is not guaranteed, and may be subject 3.10 to additional review; 3.11 (13) make or assist in making any residential mortgage loan 3.12 with the intent that the loan will not be repaid and that the 3.13 residential mortgage originator will obtain title to the 3.14 property through foreclosure; 3.15 (14) provide or offer to provide for a borrower, any 3.16 brokering or lending services under an arrangement with a person 3.17 other than a licensee or exempt person, provided that a person 3.18 may rely upon a written representation by the residential 3.19 mortgage originator that it is in compliance with the licensing 3.20 requirements of this chapter; 3.21 (15) claim to represent a licensee or exempt person, unless 3.22 the person is an employee of the licensee or exempt person or 3.23 unless the person has entered into a written agency agreement 3.24 with the licensee or exempt person; 3.25 (16) fail to comply with the record-keeping and 3.26 notification requirements identified in section 58.14 or fail to 3.27 abide by the affirmations made on the application for licensure; 3.28 (17) represent that the licensee or exempt person is acting 3.29 as the borrower's agent after providing the nonagency disclosure 3.30 required by section 58.15, unless the disclosure is retracted 3.31 and the licensee or exempt person complies with all of the 3.32 requirements of section 58.16; 3.33 (18) make, provide, or arrange for a residential mortgage 3.34 loan that is of a lower investment grade if the borrower's 3.35 credit score or, if the originator does not utilize credit 3.36 scoring or if a credit score is unavailable, then comparable 4.1 underwriting data, indicates that the borrower may qualify for a 4.2 residential mortgage loan, available from or through the 4.3 originator, that is of a higher investment grade, unless the 4.4 borrower is informed that the borrower may qualify for a higher 4.5 investment grade loan with a lower interest rate and/or lower 4.6 discount points, and consents in writing to receipt of the lower 4.7 investment grade loan. 4.8 For purposes of this section, "investment grade" refers to 4.9 a system of categorizing residential mortgage loans in which the 4.10 loans are: (i) commonly referred to as "prime" or "subprime"; 4.11 (ii) commonly designated by an alphabetical character with "A" 4.12 being the highest investment grade; and (iii) are distinguished 4.13 by interest rate or discount points or both charged to the 4.14 borrower, which vary according to the degree of perceived risk 4.15 of default based on factors such as the borrower's credit, 4.16 including credit score and credit patterns, income and 4.17 employment history, debt ratio, loan-to-value ratio, and prior 4.18 bankruptcy or foreclosure; 4.19 (19) make, publish, disseminate, circulate, place before 4.20 the public, or cause to be made, directly or indirectly, any 4.21 advertisement or marketing materials of any type, or any 4.22 statement or representation relating to the business of 4.23 residential mortgage loans that is false, deceptive, or 4.24 misleading; 4.25 (20) advertise loan types or terms that are not available 4.26 from or through the licensee or exempt person on the date 4.27 advertised, or on the date specified in the advertisement. For 4.28 purposes of this clause, advertisement includes, but is not 4.29 limited to, a list of sample mortgage terms, including interest 4.30 rates, discount points, and closing costs provided by licensees 4.31 or exempt persons to a print or electronic medium that presents 4.32 the information to the public;and4.33 (21) use or employ phrases, pictures, return addresses, 4.34 geographic designations, or other means that create the 4.35 impression, directly or indirectly, that a licensee or other 4.36 person is a governmental agency, or is associated with, 5.1 sponsored by, or in any manner connected to, related to, or 5.2 endorsed by a governmental agency, if that is not the case; or 5.3 (22) violate section 82.176, relating to table funding. 5.4 Sec. 2. Minnesota Statutes 2002, section 58.16, 5.5 subdivision 2, is amended to read: 5.6 Subd. 2. [CONTRACT PROVISIONS.] (a) A residential mortgage 5.7 originator who engages in the activities described in 5.8 subdivision 1 shall enter into a written contract with each 5.9 borrower and shall provide a copy of the written contract to 5.10 each borrower at or before the time of receipt of any fee or 5.11 valuable consideration paid for mortgage origination services. 5.12 The written contract must: 5.13 (1) specifically describe the services to be provided by 5.14 the residential mortgage originator and if the originator 5.15 collects an advance fee, the dates by which the services will be 5.16 performed; 5.17 (2) specifically identify whether the residential mortgage 5.18 originator may receive compensation from sources other than the 5.19 borrower in connection with the loan transaction; 5.20 (3) state the total amount of commission or compensation 5.21 that the borrower agrees to pay for the residential mortgage 5.22 originator's services, or the basis on which the compensation 5.23 will be computed; 5.24 (4) state the maximum rate of interest to be charged on any 5.25 residential mortgage loan obtained; 5.26 (5) contain a statement that notifies the borrower of the 5.27 right to cancel the contract according to subdivision 3 and 5.28 disclose the cancellation rights and procedures provided in 5.29 subdivision 3; and 5.30 (6) disclose, with respect to the 12-month period ending 5.31 ten business days before the date of the contract in question, 5.32 the percentage of the mortgage originator's customers for whom 5.33 loans have actually been funded as a result of the residential 5.34 mortgage originator's services. 5.35 (b) If an advance fee is solicited or received the contract 5.36 must also: 6.1 (1) identify the trust account into which the fees or 6.2 consideration will be deposited; 6.3 (2) set forth the circumstances under which the residential 6.4 mortgage originator will be entitled to disbursement from the 6.5 trust account; and 6.6 (3) set forth the circumstances under which the borrower 6.7 will be entitled to a refund of all or part of the fee. 6.8 Sec. 3. Minnesota Statutes 2002, section 58.16, 6.9 subdivision 4, is amended to read: 6.10 Subd. 4. [TRUST ACCOUNT.] The residential mortgage 6.11 originator shall deposit in a trust account within three 6.12 business days all fees received before the time a loan is 6.13 actually funded. The trust account must be in a financial 6.14 institution located within the state of Minnesota and must be 6.15 controlled by an unaffiliated accountant, attorney, or bank 6.16 officer or employee. 6.17 Sec. 4. [325F.691] [UNREASONABLE DELAY IN MORTGAGE LOAN 6.18 CLOSING.] 6.19 Subdivision 1. [PROHIBITED CONDUCT.] (a) A lender, as 6.20 defined in section 47.206, who causes unreasonable delay in 6.21 processing a loan application beyond the expiration date of an 6.22 interest rate or discount point agreement is liable to the 6.23 borrower for a penalty in an amount not to exceed the borrower's 6.24 actual out-of-pocket damages, including the present value of the 6.25 increased interest costs over the normal life of the loan, or 6.26 specific performance of the agreement. This paragraph applies 6.27 to an agreement entered into after July 1, 2004. 6.28 (b) For purposes of this section, evidence of unreasonable 6.29 delay includes, but is not limited to: 6.30 (1) failure of the lender to return telephone calls or 6.31 otherwise respond to the borrower's inquiries concerning the 6.32 status of the loan; 6.33 (2) the addition by the lender of new requirements for 6.34 processing or approving the loan that were not disclosed to the 6.35 borrower under section 47.206, subdivision 2, clause (3), unless 6.36 the requirements result from governmental agency or secondary 7.1 mortgage market changes, other than changes in interest rates, 7.2 that occur after the date of the agreement; or 7.3 (3) failure by the lender to take actions necessary to 7.4 process or approve the loan within a reasonable period of time, 7.5 if the borrower provided information requested by the lender in 7.6 a timely manner. 7.7 Subd. 2. [ADDITIONAL PENALTY.] In addition to the remedies 7.8 in subdivision 1 of this section, a lender is liable to the 7.9 borrower for $500 for each unreasonable delay in processing a 7.10 loan application which causes an interest rate or discount point 7.11 agreement to expire before closing. 7.12 Sec. 5. Minnesota Statutes 2002, section 513.55, 7.13 subdivision 1, is amended to read: 7.14 Subdivision 1. [CONTENTS.] (a) Before signing an agreement 7.15 to sell or transfer residential real property, the seller shall 7.16 make a written disclosure to the prospective buyer. The 7.17 disclosure must include all material factspertaining to adverse7.18physical conditions in the propertyof which the seller is aware 7.19 that could adversely and significantly affect: 7.20 (1) an ordinary buyer'suse and enjoyment ofrights and 7.21 interest in the property; or 7.22 (2) any intended use of the property of which the seller is 7.23 aware. 7.24 (b) The disclosure must be made in good faith and based 7.25 upon the best of the seller's knowledge at the time of the 7.26 disclosure. 7.27 Sec. 6. Minnesota Statutes 2002, section 513.56, is 7.28 amended by adding a subdivision to read: 7.29 Subd. 4. [EFFECT ON COMMON LAW.] The limitation on 7.30 disclosure in subdivisions 1 and 2 modifies any common law 7.31 duties with respect to disclosure of material facts. 7.32 Sec. 7. Minnesota Statutes 2002, section 515B.4-106, is 7.33 amended to read: 7.34 515B.4-106 [PURCHASER'S RIGHT TO CANCEL.] 7.35 (a) A person required to deliver a disclosure statement 7.36 pursuant to section 515B.4-101(b) shall provide at least one of 8.1 the purchasers of the unit with a copy of the disclosure 8.2 statement and all amendments thereto before conveyance of the 8.3 unit. If a purchaser is not given a disclosure statement more 8.4 than ten days before execution of the purchase agreement, the 8.5 purchaser may, before conveyance, cancel the purchase agreement 8.6 within ten days after first receiving the disclosure statement. 8.7 If a purchaser is given the disclosure statement more than ten 8.8 days before execution of the purchase agreement, the purchaser 8.9 may not cancel the purchase agreement pursuant to this section. 8.10 Except as expressly provided in this chapter, theten-day8.11 five-day rescission period cannot be waived. 8.12 (b) If an amendment to the disclosure statement materially 8.13 and adversely affects a purchaser, then the purchaser shall have 8.14 ten days after delivery of the amendment to cancel the purchase 8.15 agreement in accordance with this section. 8.16 (c) If a purchaser elects to cancel a purchase agreement 8.17 pursuant to this section, the purchaser may do so by giving 8.18 notice thereof pursuant to section 515B.1-115. Cancellation is 8.19 without penalty, and all payments made by the purchaser before 8.20 cancellation shall be refunded promptly. Notwithstanding 8.21 anything in this section to the contrary, the purchaser's 8.22 cancellation rights under this section terminate upon the 8.23 purchaser's acceptance of a conveyance of the unit. 8.24 (d) If a declarant obligated to deliver a disclosure 8.25 statement fails to deliver to the purchaser a disclosure 8.26 statement which substantially complies with this chapter, the 8.27 declarant shall be liable to the purchaser in the amount of 8.28 $1,000, in addition to any damages or other amounts recoverable 8.29 under this chapter or otherwise. Any action brought under this 8.30 subsection shall be commenced within the time period specified 8.31 in section 515B.4-115, subsection (a). 8.32 Sec. 8. Minnesota Statutes 2002, section 515B.4-107, is 8.33 amended to read: 8.34 515B.4-107 [RESALE OF UNITS.] 8.35 (a) In the event of a resale of a unit by a unit owner 8.36 other than a declarant, unless exempt under section 9.1 515B.4-101(c), the unit owner shall furnish to a purchaser, 9.2 before execution of any purchase agreement for a unit or 9.3 otherwise before conveyance, the following documents relating to 9.4 the association or to the master association, if applicable: 9.5 (1) copies of the declaration (other than any CIC plat), 9.6 the articles of incorporation and bylaws, any rules and 9.7 regulations, and any amendments thereto; 9.8 (2) the organizational and operating documents relating to 9.9 the master association, if any; and 9.10 (3) a resale disclosure certificate from the association 9.11 dated not more than 90 days prior to the date of the purchase 9.12 agreement or the date of conveyance, whichever is earlier, 9.13 containing the information set forth in subsection (b). 9.14 (b) The resale disclosure certificate must be in 9.15 substantially the following form: 9.16 COMMON INTEREST COMMUNITY 9.17 RESALE DISCLOSURE CERTIFICATE 9.18 Name of Common Interest Community:.............................. 9.19 Name of Association:............................................ 9.20 Address of Association:......................................... 9.21 Unit Number(s) (include principal unit and any garage, storage, 9.22 or other auxiliary unit(s)):..................................... 9.23 The following information is furnished by the association 9.24 named above according to Minnesota Statutes, section 515B.4-107. 9.25 1. There is no right of first refusal or other restraint 9.26 on the free alienability of the above unit(s) contained in the 9.27 declaration, bylaws, rules and regulations, or any amendment to 9.28 them, except as follows:........................................ 9.29 ................................................................ 9.30 ................................................................ 9.31 ................................................................ 9.32 2. The following periodic installments of common expense 9.33 assessments and special assessments are payable with respect to 9.34 the above unit(s): 9.35 a. Annual assessment 9.36 installments: $....... Due: ............. 10.1 b. Special assessment 10.2 installments: $....... Due: ............. 10.3 c. Unpaid assessments, fines, or other charges: 10.4 (1) Annual $....... 10.5 (2) Special $....... 10.6 (3) Fines $....... 10.7 (4) Other Charges $....... 10.8 d. The association has/has not (strike one) approved 10.9 a plan for levying certain common expense 10.10 assessments against fewer than all the units 10.11 according to Minnesota Statutes, section 515B.3-115, 10.12 subsection (e). If a plan is approved, a description 10.13 of the plan is attached to this certificate. 10.14 3. In addition to the amounts due under paragraph 2, the 10.15 following additional fees or charges other than assessments are 10.16 payable by unit owners (include late payment charges, user fees, 10.17 etc.):.......................................................... 10.18 ................................................................ 10.19 ................................................................ 10.20 4. There are no extraordinary expenditures approved by the 10.21 association, and not yet assessed, for the current and two 10.22 succeeding fiscal years, except as follows:..................... 10.23 ................................................................ 10.24 ................................................................ 10.25 5. The association has reserved the following amounts for 10.26 maintenance, repair, or replacement:............................ 10.27 ................................................................ 10.28 ................................................................ 10.29 The following portions of these reserves are designated for the 10.30 following specified projects or uses:........................... 10.31 ................................................................ 10.32 6. The following documents are furnished with this 10.33 certificate according to statute: 10.34 a. The most recent regularly prepared balance sheet and 10.35 income and expense statement of the association. 10.36 b. The current budget of the association. 11.1 7. There are no unsatisfied judgments against the 11.2 association, except as follows (identify creditor and amount):.. 11.3 ................................................................ 11.4 ................................................................ 11.5 8. There are no pending lawsuits to which the association 11.6 is a party, except as follows (identify and summarize status):.. 11.7 ................................................................ 11.8 ................................................................ 11.9 ................................................................ 11.10 9. Description of insurance coverages: 11.11 a. The association provides the following insurance 11.12 coverage for the benefit of unit owners: (Reference may be made 11.13 to applicable sections of the declaration or bylaws; however, 11.14 any additional coverages should be described in this space) 11.15 ................................................................ 11.16 ................................................................ 11.17 ................................................................ 11.18 b. The following described fixtures, decorating items, or 11.19 construction items within the unit referred to in Minnesota 11.20 Statutes, section 515B.3-113, subsection (b), are insured by the 11.21 association (check as applicable): 11.22 ..._____Ceiling or wall finishing materials 11.23 ..._____Floor coverings 11.24 ..._____Cabinetry 11.25 ..._____Finished millwork 11.26 ..._____Electrical or plumbing fixtures serving a single unit 11.27 ..._____Built-in appliances 11.28 ..._____Improvements and betterments as originally constructed 11.29 ..._____Additional improvements and betterments installed by 11.30 unit owners 11.31 10. The board of directors of the association has not 11.32 notified the unit owner (i) that any alterations or improvements 11.33 to the unit or to the limited common elements assigned to it 11.34 violate any provision of the declaration; or (ii) that the unit 11.35 is in violation of any governmental statute, ordinance, code, or 11.36 regulation, except as follows:................................... 12.1 ................................................................. 12.2 11. The remaining term of any leasehold estate affecting 12.3 the common interest community and the premises governing any 12.4 extension or renewal of it are as follows:...................... 12.5 ................................................................ 12.6 ................................................................ 12.7 12. In addition to the above, the following matters 12.8 affecting the unit or the unit owner's obligations with respect 12.9 to the unit are deemed material. 12.10 I hereby certify that the foregoing information and 12.11 statements are true and correct as of ............. 12.12 (Date) 12.13 By: ....................... 12.14 Title: ..................... 12.15 (Association representative) 12.16 Address:.................... 12.17 Phone Number:............... 12.18 RECEIPT 12.19 In addition to the foregoing information furnished by the 12.20 association, the unit owner is obligated to furnish to the 12.21 purchaser before execution of any purchase agreement for a unit 12.22 or otherwise before conveyance, copies of the following 12.23 documents relating to the association or to the master 12.24 association (as applicable): the declaration (other than any 12.25 common interest community plat), articles of incorporation, 12.26 bylaws, rules and regulations (if any), and any amendments to 12.27 these documents. Receipt of the foregoing documents, and the 12.28 resale disclosure certificate, is acknowledged by the 12.29 undersigned buyer(s). 12.30 Dated: ............ ......................... 12.31 (Buyer or real estate 12.32 licensee representing or 12.33 assisting a buyer) 12.34 ......................... 12.35 (Buyer or real estate 12.36 licensee representing or 13.1 assisting a buyer) 13.2 (c) If the association is subject to a master association 13.3 to which has been delegated the association's powers under 13.4 section 515B.3-102(a)(2), then the financial information 13.5 required to be disclosed under subsection (b) may be disclosed 13.6 on a consolidated basis. 13.7 (d) The association, within ten days after a request by a 13.8 unit owner, or the unit owner's authorized representative, shall 13.9 furnish the certificate required in subsection (a). The 13.10 association may charge a reasonable fee for furnishing the 13.11 certificate and any association documents related thereto. A 13.12 unit owner providing a certificate pursuant to subsection (a) is 13.13 not liable to the purchaser for any erroneous information 13.14 provided by the association and included in the certificate. 13.15 (e) A purchaser is not liable for any unpaid common expense 13.16 assessments, including special assessments, if any, not set 13.17 forth in the certificate required in subsection (a). A 13.18 purchaser is not liable for the amount by which the annual or 13.19 special assessments exceed the amount of annual or special 13.20 assessments stated in the certificate for assessments payable in 13.21 the year in which the certificate was given, except to the 13.22 extent of any increases subsequently approved in accordance with 13.23 the declaration or bylaws. A unit owner is not liable to a 13.24 purchaser for the failure of the association to provide the 13.25 certificate, or a delay by the association in providing the 13.26 certificate in a timely manner. 13.27 Sec. 9. Minnesota Statutes 2002, section 515B.4-108, is 13.28 amended to read: 13.29 515B.4-108 [PURCHASER'S RIGHT TO CANCEL RESALE.] 13.30 (a) Unless a purchaser is given the information required to 13.31 be delivered by section 515B.4-107, by a delivery method 13.32 described in that section, more than ten days prior to the 13.33 execution of the purchase agreement for the unit the purchaser 13.34 may, prior to the conveyance, cancel the purchase agreement 13.35 within ten days after receiving the information. Except as 13.36 expressly provided in this chapter, theten-dayfive-day 14.1 rescission period cannot be waived. 14.2 (b) A purchaser who elects to cancel a purchase agreement 14.3 pursuant to subsection (a), may do so by hand delivering notice 14.4 thereof or mailing notice by postage prepaid United States mail 14.5 to the seller or the agent. Cancellation is without penalty and 14.6 all payments made by the purchaser shall be refunded promptly. 14.7 Sec. 10. [REPEALER.] 14.8 Minnesota Statutes 2002, section 58.02, subdivision 24, is 14.9 repealed. 14.10 Sec. 11. [EFFECTIVE DATE.] 14.11 Sections 1 to 10 are effective August 1, 2004. 14.12 ARTICLE 2 14.13 RECODIFICATION 14.14 Section 1. Minnesota Statutes 2002, section 82.17, 14.15 subdivision 4, is amended to read: 14.16 Subd. 4. [REAL ESTATE BROKER; BROKER.] "Real estate 14.17 broker" or "broker" means any person who: 14.18 (a) for another and for commission, fee, or other valuable 14.19 consideration or with the intention or expectation of receiving 14.20 the same directly or indirectly lists, sells, exchanges, buys or 14.21 rents, manages, or offers or attempts to negotiate a sale, 14.22 option, exchange, purchase or rental of an interest or estate in 14.23 real estate, or advertises or holds out as engaged in these 14.24 activities; 14.25 (b) for another and for commission, fee, or other valuable 14.26 consideration or with the intention or expectation of receiving 14.27 the same directly or indirectly negotiates or offers or attempts 14.28 to negotiate a loan, secured or to be secured by a mortgage or 14.29 other encumbrance on real estate, which is not a residential 14.30 mortgage loan as defined by section 58.02, subdivision 18; 14.31 (c) "real estate broker" or "broker" as set forth in clause 14.32 (b) shall not apply to the originating, making, processing, 14.33 selling, or servicing of a loan in connection with the broker's 14.34 ordinary business activities by a mortgagee, lender, or servicer 14.35 approved or certified by the secretary of housing and urban 14.36 development, or approved or certified by the administrator of 15.1 veterans affairs, or approved or certified by the administrator 15.2 of the Farmers Home Administration, or approved or certified by 15.3 the federal Home Loan Mortgage Corporation, or approved or 15.4 certified by the federal National Mortgage Association; 15.5 (d) for another and for commission, fee, or other valuable 15.6 consideration or with the intention or expectation of receiving 15.7 the same directly or indirectly lists, sells, exchanges, buys, 15.8 rents, manages, offers or attempts to negotiate a sale, option, 15.9 exchange, purchase or rental of any business opportunity or 15.10 business, or its good will, inventory, or fixtures, or any 15.11 interest therein; 15.12(d)(e) for another and for commission, fee, or other 15.13 valuable consideration or with the intention or expectation of 15.14 receiving the same directly or indirectly offers, sells or 15.15 attempts to negotiate the sale of property that is subject to 15.16 the registration requirements of chapter 83, concerning 15.17 subdivided land; 15.18(e)(f) for another and for commission, fee, or other 15.19 valuable consideration or with the intention or expectation of 15.20 receiving the same, promotes the sale of real estate by 15.21 advertising it in a publication issued primarily for this 15.22 purpose, if the person: 15.23 (1) negotiates on behalf of any party to a transaction; 15.24 (2) disseminates any information regarding the property to 15.25 any party or potential party to a transaction subsequent to the 15.26 publication of the advertisement, except that in response to an 15.27 initial inquiry from a potential purchaser, the person may 15.28 forward additional written information regarding the property 15.29 which has been prepared prior to the publication by the seller 15.30 or broker or a representative of either; 15.31 (3) counsels, advises, or offers suggestions to the seller 15.32 or a representative of the seller with regard to the marketing, 15.33 offer, sale, or lease of the real estate, whether prior to or 15.34 subsequent to the publication of the advertisement; 15.35 (4) counsels, advises, or offers suggestions to a potential 15.36 buyer or a representative of the seller with regard to the 16.1 purchase or rental of any advertised real estate; or 16.2 (5) engages in any other activity otherwise subject to 16.3 licensure under this chapter; 16.4(f)(g) engages wholly or in part in the business of 16.5 selling real estate to the extent that a pattern of real estate 16.6 sales is established, whether or not the real estate is owned by 16.7 the person. A person shall be presumed to be engaged in the 16.8 business of selling real estate if the person engages as 16.9 principal in five or more transactions during any 12-month 16.10 period, unless the person is represented by a licensed real 16.11 estate broker or salesperson. 16.12 Sec. 2. Minnesota Statutes 2002, section 82.17, is amended 16.13 by adding a subdivision to read: 16.14 Subd. 13. [BUSINESS OF FINANCIAL PLANNING.] "Business of 16.15 financial planning" means providing, or offering to provide, 16.16 financial planning services or financial counseling or advice, 16.17 on a group or individual basis. A person who, on 16.18 advertisements, cards, signs, circulars, letterheads, or in any 16.19 other manner, indicates that the person is a "financial planner," 16.20 "financial counselor," "financial adviser," "investment 16.21 counselor," "estate planner," "investment adviser," "financial 16.22 consultant," or any other similar designation or title or 16.23 combination thereof, is considered to be representing himself or 16.24 herself to be engaged in the business of financial planning. 16.25 Sec. 3. Minnesota Statutes 2002, section 82.17, is amended 16.26 by adding a subdivision to read: 16.27 Subd. 14. [ELECTRONIC AGENT.] "Electronic agent" means a 16.28 computer program or an electronic or other automated means used 16.29 independently to initiate an action or respond to electronic 16.30 records or performances, in whole or in part, without review or 16.31 action by an individual. 16.32 Sec. 4. Minnesota Statutes 2002, section 82.17, is amended 16.33 by adding a subdivision to read: 16.34 Subd. 15. [ELECTRONIC RECORD.] "Electronic record" means a 16.35 record created, generated, sent, communicated, received, or 16.36 stored by electronic means. 17.1 Sec. 5. Minnesota Statutes 2002, section 82.17, is amended 17.2 by adding a subdivision to read: 17.3 Subd. 16. [ELECTRONIC SIGNATURE.] "Electronic signature" 17.4 means an electronic sound, symbol, or process attached to or 17.5 logically associated with a record and executed or adopted by a 17.6 person with the intent to sign the record. 17.7 Sec. 6. Minnesota Statutes 2002, section 82.17, is amended 17.8 by adding a subdivision to read: 17.9 Subd. 17. [LICENSEE.] "Licensee" means a person duly 17.10 licensed under this chapter. 17.11 Sec. 7. Minnesota Statutes 2002, section 82.17, is amended 17.12 by adding a subdivision to read: 17.13 Subd. 18. [LOAN BROKER.] "Loan broker" means a licensed 17.14 real estate broker or salesperson who, for another and for a 17.15 commission, fee, or other valuable consideration or with the 17.16 intention or expectation of receiving the same, directly or 17.17 indirectly, negotiates or offers or attempts to negotiate a loan 17.18 secured or to be secured by a mortgage or other encumbrance on 17.19 real estate, or represents himself or herself or otherwise holds 17.20 himself or herself out as a licensed real estate broker or 17.21 salesperson, either in connection with any transaction in which 17.22 he or she directly or indirectly negotiates or offers or 17.23 attempts to negotiate a loan, or in connection with the conduct 17.24 of his or her ordinary business activities as a loan broker. 17.25 "Loan broker" does not include a licensed real estate 17.26 broker or salesperson who, in the course of representing a 17.27 purchaser or seller of real estate, incidentally assists the 17.28 purchaser or seller in obtaining financing for the real property 17.29 in question if the licensee does not receive a separate 17.30 commission, fee, or other valuable consideration for this 17.31 service. 17.32 Sec. 8. Minnesota Statutes 2002, section 82.17, is amended 17.33 by adding a subdivision to read: 17.34 Subd. 19. [OVERPAYMENT.] "Overpayment" means any payment 17.35 of money in excess of a statutory fee or for a license for which 17.36 a person does not qualify. 18.1 Sec. 9. Minnesota Statutes 2002, section 82.17, is amended 18.2 by adding a subdivision to read: 18.3 Subd. 20. [OVERRIDE CLAUSE.] "Override clause" means a 18.4 provision in a listing agreement or similar instrument allowing 18.5 the broker to receive compensation when, after the listing 18.6 agreement has expired, the property is sold to persons with whom 18.7 a broker or salesperson had negotiated or exhibited the property 18.8 prior to the expiration of the listing agreement. 18.9 Sec. 10. Minnesota Statutes 2002, section 82.17, is 18.10 amended by adding a subdivision to read: 18.11 Subd. 21. [PRIMARY BROKER.] "Primary broker" means the 18.12 broker on whose behalf salespersons are licensed to act pursuant 18.13 to section 82.20, subdivision 6. In the case of a corporation 18.14 licensed as a broker, "primary broker" means each officer of the 18.15 corporation who is individually licensed to act as broker for 18.16 the corporation. In the case of a partnership, "primary broker" 18.17 means each partner licensed to act as a broker for the 18.18 partnership. 18.19 Sec. 11. Minnesota Statutes 2002, section 82.17, is 18.20 amended by adding a subdivision to read: 18.21 Subd. 22. [PROTECTIVE LIST.] "Protective list" means the 18.22 written list of names and addresses of prospective purchasers 18.23 with whom a licensee has negotiated the sale or rental of the 18.24 property or to whom a licensee has exhibited the property before 18.25 the expiration of the listing agreement. For the purposes of 18.26 this subdivision, "property" means the property that is the 18.27 subject of the listing agreement in question. 18.28 Sec. 12. Minnesota Statutes 2002, section 82.17, is 18.29 amended by adding a subdivision to read: 18.30 Subd. 23. [RENTAL SERVICE.] "Rental service" means a 18.31 person who gathers and catalogs information concerning 18.32 apartments or other units of real estate available for rent, and 18.33 who, for a fee, provides information intended to meet the 18.34 individual needs of specifically identified lessors or 18.35 prospective lessees. "Rental service" does not apply to 18.36 newspapers or other periodicals with a general circulation or 19.1 individual listing contracts between an owner or lessor of 19.2 property and a licensee. 19.3 Sec. 13. Minnesota Statutes 2002, section 82.17, is 19.4 amended by adding a subdivision to read: 19.5 Subd. 24. [SPONSOR.] "Sponsor" means a person offering or 19.6 providing real estate education. 19.7 Sec. 14. Minnesota Statutes 2002, section 82.19, 19.8 subdivision 3, is amended to read: 19.9 Subd. 3. [COMMISSION-SPLITTING, REBATES, AND FEES.] No 19.10 real estate broker, salesperson, or closing agents shall offer, 19.11 pay, or give, and no person shall accept, any compensation or 19.12 other thing of value from any real estate broker, salesperson, 19.13 or closing agents by way of commission-splitting, rebate, 19.14 finder's fees, or otherwise, in connection with any real estate 19.15 or business opportunity transaction. This subdivision does not 19.16 apply to transactions (1) between a licensed real estate broker 19.17 or salesperson and theperson by whom the broker or salesperson19.18is engaged to purchase or sell real estate or business19.19opportunityparties to the transaction, (2) among persons 19.20 licensed as provided herein, (3) between a licensed real estate 19.21 broker or salesperson and persons from other jurisdictions 19.22 similarly licensed in that jurisdiction, (4) involving timeshare 19.23 or other recreational lands where the amount offered or paid 19.24 does not exceed $150, and payment is not conditioned upon any 19.25 sale but is made merely for providing the referral and the 19.26 person paying the fee is bound by any representations the person 19.27 receiving the fee makes, and (5) involving a person who receives 19.28 a referral fee from a person or an agent of a person licensed 19.29 under this section, provided that in any 12-month period, no 19.30 recipient may earn more than the value of one month's rent, that 19.31 the recipient is a resident of the property or has lived there 19.32 within 60 days of the payment of the fee, and that the person 19.33 paying the fee is bound by any representations made by the 19.34 recipient of the fee. A licensed real estate broker or 19.35 salesperson may assign or direct that commissions or other 19.36 compensation earned in connection with any real estate or 20.1 business opportunity transaction be paid to a corporation, 20.2 limited liability company, or sole proprietorship of which the 20.3 licensed real estate broker or salesperson is the sole owner. 20.4 Sec. 15. Minnesota Statutes 2002, section 82.19, 20.5 subdivision 5, is amended to read: 20.6 Subd. 5. [DISCLOSURE REGARDING REPRESENTATION OF PARTIES.] 20.7 (a) No person licensed pursuant to this chapter or who otherwise 20.8 acts as a real estate broker or salesperson shall fail to 20.9 provide at the first substantive contact with a consumer in a 20.10 residential real property transaction an agency disclosure form 20.11 as set forth in section 82.197. 20.12 (b) The seller may, in the listing agreement, authorize the 20.13 seller's broker to disburse part of the broker's compensation to 20.14 other brokers, including the buyer's brokers solely representing 20.15 the buyer.A broker representing a buyer shall make known to20.16the seller or the seller's agent the fact of the agency20.17relationship before any showing or negotiations are initiated.20.18 Sec. 16. Minnesota Statutes 2002, section 82.19, is 20.19 amended by adding a subdivision to read: 20.20 Subd. 10. [PROHIBITION ON GUARANTEEING FUTURE 20.21 PROFITS.] Licensees shall not, with respect to the sale or lease 20.22 of real property, guarantee or affirmatively encourage another 20.23 person to guarantee future profits or earnings that may result 20.24 from the purchase or lease of the real property in question 20.25 unless the guarantee and the assumptions upon which it is based 20.26 are fully disclosed and contained in the contract, purchase 20.27 agreement, or other instrument of sale or lease. 20.28 Sec. 17. Minnesota Statutes 2002, section 82.19, is 20.29 amended by adding a subdivision to read: 20.30 Subd. 11. [PROHIBITION AGAINST DISCOURAGING USE OF 20.31 ATTORNEY.] Licensees shall not discourage prospective parties to 20.32 a real estate transaction from seeking the services of an 20.33 attorney. 20.34 Sec. 18. Minnesota Statutes 2002, section 82.19, is 20.35 amended by adding a subdivision to read: 20.36 Subd. 12. [FRAUDULENT, DECEPTIVE, AND DISHONEST 21.1 PRACTICES.] (a) [PROHIBITIONS.] For the purposes of section 21.2 82.32, subdivision 1, clause (b), the following acts and 21.3 practices constitute fraudulent, deceptive, or dishonest 21.4 practices: 21.5 (1) act on behalf of more than one party to a transaction 21.6 without the knowledge and consent of all parties; 21.7 (2) act in the dual capacity of licensee and undisclosed 21.8 principal in any transaction; 21.9 (3) receive funds while acting as principal which funds 21.10 would constitute trust funds if received by a licensee acting as 21.11 an agent, unless the funds are placed in a trust account. Funds 21.12 need not be placed in a trust account if a written agreement 21.13 signed by all parties to the transaction specifies a different 21.14 disposition of the funds, in accordance with section 82.27, 21.15 subdivision 1; 21.16 (4) violate any state or federal law concerning 21.17 discrimination intended to protect the rights of purchasers or 21.18 renters of real estate; 21.19 (5) make a material misstatement in an application for a 21.20 license or in any information furnished to the commissioner; 21.21 (6) procure or attempt to procure a real estate license for 21.22 himself or herself or any person by fraud, misrepresentation, or 21.23 deceit; 21.24 (7) represent membership in any real estate-related 21.25 organization in which the licensee is not a member; 21.26 (8) advertise in any manner that is misleading or 21.27 inaccurate with respect to properties, terms, values, policies, 21.28 or services conducted by the licensee; 21.29 (9) make any material misrepresentation or permit or allow 21.30 another to make any material misrepresentation; 21.31 (10) make any false or misleading statements, or permit or 21.32 allow another to make any false or misleading statements, of a 21.33 character likely to influence, persuade, or induce the 21.34 consummation of a transaction contemplated by this chapter; 21.35 (11) fail within a reasonable time to account for or remit 21.36 any money coming into the licensee's possession which belongs to 22.1 another; 22.2 (12) commingle with his or her own money or property trust 22.3 funds or any other money or property of another held by the 22.4 licensee; 22.5 (13) demand from a seller a commission to compensation 22.6 which the licensee is not entitled, knowing that he or she is 22.7 not entitled to the commission compensation; 22.8 (14) pay or give money or goods of value to an unlicensed 22.9 person for any assistance or information relating to the 22.10 procurement by a licensee of a listing of a property or of a 22.11 prospective buyer of a property (this item does not apply to 22.12 money or goods paid or given to the parties to the transaction); 22.13 (15) fail to maintain a trust account at all times, as 22.14 provided by law; 22.15 (16) engage, with respect to the offer, sale, or rental of 22.16 real estate, in an anticompetitive activity; 22.17 (17) represent on advertisements, cards, signs, circulars, 22.18 letterheads, or in any other manner, that he or she is engaged 22.19 in the business of financial planning unless he or she provides 22.20 a disclosure document to the client. The document must be 22.21 signed by the client and a copy must be left with the client. 22.22 The disclosure document must contain the following: 22.23 (i) the basis of fees, commissions, or other compensation 22.24 received by him or her in connection with rendering of financial 22.25 planning services or financial counseling or advice in the 22.26 following language: 22.27 "My compensation may be based on the following: 22.28 (a) ... commissions generated from the products I sell you; 22.29 (b) ... fees; or 22.30 (c) ... a combination of (a) and (b). [Comments]"; 22.31 (ii) the name and address of any company or firm that 22.32 supplies the financial services or products offered or sold by 22.33 him or her in the following language: 22.34 "I am authorized to offer or sell products and/or services 22.35 issued by or through the following firm(s): 22.36 [List] 23.1 The products will be traded, distributed, or placed through 23.2 the clearing/trading firm(s) of: 23.3 [List]"; 23.4 (iii) the license(s) held by the person under this chapter 23.5 or chapter 60A or 80A in the following language: 23.6 "I am licensed in Minnesota as a(n): 23.7 (a) ... insurance agent; 23.8 (b) ... securities agent or broker/dealer; 23.9 (c) ... real estate broker or salesperson; 23.10 (d) ... investment adviser"; and 23.11 (iv) the specific identity of any financial products or 23.12 services, by category, for example mutual funds, stocks, or 23.13 limited partnerships, the person is authorized to offer or sell 23.14 in the following language: 23.15 "The license(s) entitles me to offer and sell the following 23.16 products and/or services: 23.17 (a) ... securities, specifically the following: [List]; 23.18 (b) ... real property; 23.19 (c) ... insurance; and 23.20 (d) ... other: [List]." 23.21 (b) [DETERMINING VIOLATION.] A licensee shall be deemed to 23.22 have violated this section if the licensee has been found to 23.23 have violated sections 325D.49 to 325D.66, by a final decision 23.24 or order of a court of competent jurisdiction. 23.25 (c) [COMMISSIONER'S AUTHORITY.] Nothing in this section 23.26 limits the authority of the commissioner to take actions against 23.27 a licensee for fraudulent, deceptive, or dishonest practices not 23.28 specifically described in this section. 23.29 Sec. 19. [82.191] [COMPENSATION.] 23.30 Subdivision 1. [LICENSEE TO RECEIVE ONLY FROM BROKER.] A 23.31 licensee shall not accept a commission compensation or other 23.32 valuable consideration for the performance of any acts requiring 23.33 a real estate license from any person except the real estate 23.34 broker to whom the licensee is licensed or to whom the licensee 23.35 was licensed at the time of the transaction. 23.36 Subd. 2. [UNDISCLOSED COMPENSATION.] A licensee shall not 24.1 accept, give, or charge any undisclosed compensation or realize 24.2 any direct or indirect remuneration that inures to the benefit 24.3 of the licensee on an expenditure made for a principal. 24.4 Subd. 3. [LIMITATION ON BROKER WHEN TRANSACTION NOT 24.5 COMPLETED.] When the owner fails or is unable to consummate a 24.6 real estate transaction, through no fault of the purchaser, the 24.7 listing broker may not claim any portion of any trust funds 24.8 deposited with the broker by the purchaser, absent a separate 24.9 agreement with the purchaser. 24.10 Sec. 20. Minnesota Statutes 2002, section 82.195, is 24.11 amended to read: 24.12 82.195 [LISTING AGREEMENTS.] 24.13Subdivision 1.(a) [REQUIREMENT.] Licensees shall obtain a 24.14 signed listing agreement or other signed written authorization 24.15 from the owner of real property or from another person 24.16 authorized to offer the property for sale or lease before 24.17 advertising to the general public that the real property is 24.18 available for sale or lease. 24.19 For the purposes of this section "advertising" includes 24.20 placing a sign on the owner's property that indicates that the 24.21 property is being offered for sale or lease. 24.22Subd. 2.(b) [CONTENTS.] All listing agreements must be in 24.23 writing and must include: 24.24 (1) a definite expiration date; 24.25 (2) a description of the real property involved; 24.26 (3) the list price and any terms required by the seller; 24.27 (4) the amount of any compensation or commission or the 24.28 basis for computing the commission; 24.29 (5) a clear statement explaining the events or conditions 24.30 that will entitle a broker to a commission; 24.31 (6) information regarding an override clause, if 24.32 applicable, including a statement to the effect that the 24.33 override clause will not be effective unless the licensee 24.34 supplies the seller with a protective list within 72 hours after 24.35 the expiration of the listing agreement; 24.36 (7) the following notice in not less than ten point 25.1 boldface type immediately preceding any provision of the listing 25.2 agreement relating to compensation of the licensee: 25.3 "NOTICE: THE COMPENSATION FOR THE SALE, LEASE, RENTAL, OR 25.4 MANAGEMENT OF REAL PROPERTY SHALL BE DETERMINED BETWEEN EACH 25.5 INDIVIDUAL BROKER AND THE BROKER'S CLIENT."; 25.6 (8) for residential property listings, the following "dual 25.7 agency" disclosure statement: 25.8 If a buyer represented by broker wishes to buyyourthe 25.9 seller's property, a dual agency will be created. This means 25.10 that broker will represent bothyouthe seller(s) and the 25.11 buyer(s), and owe the same duties to the buyer(s) that broker 25.12 owes toyouthe seller(s). This conflict of interest will 25.13 prohibit broker from advocating exclusively onyourthe seller's 25.14 behalf. Dual agency will limit the level of representation 25.15 broker can provide. If a dual agency should arise,youthe 25.16 seller(s) will need to agree that confidential information about 25.17 price, terms, and motivation will still be kept confidential 25.18 unlessyouthe seller(s) instruct broker in writing to disclose 25.19 specific information aboutyouthe seller(s). All other 25.20 information will be shared. Broker cannot act as a dual agent 25.21 unless bothyouthe seller(s) and the buyer(s) agree to it. By 25.22 agreeing to a possible dual agency,youthe seller(s) will be 25.23 giving up the right to exclusive representation in an in-house 25.24 transaction. However, ifyouthe seller(s) should decide not to 25.25 agree to a possible dual agency, andyouthe seller(s) want 25.26 broker to representyouthe seller(s),youthe seller(s) may 25.27 give up the opportunity to sellyourthe property to buyers 25.28 represented by broker. 25.29 Seller's Instructions to Broker 25.30 25.31 Having read and understood this information about dual 25.32 agency, seller(s) now instructs broker as follows: 25.33 ....... Seller(s) will agree to a dual agency 25.34 representation and will consider offers made 25.35 by buyers represented by broker. 25.36 26.1 ....... Seller(s) will not agree to a dual agency 26.2 representation and will not consider offers 26.3 made by buyers represented by broker. 26.4 26.5 26.6 ......................... ......................... 26.7 SellerBrokerReal Estate Company Name 26.8 26.9 26.10 ......................... By: .................... 26.11 Seller Salesperson 26.12 26.13 Date: ..................; 26.14 (9) a notice requiring the seller to indicate in writing 26.15 whether it is acceptable to the seller to have the licensee 26.16 arrange for closing services or whether the seller wishes to 26.17 arrange for others to conduct the closing; and 26.18 (10) for residential listings, a notice stating that after 26.19 the expiration of the listing agreement, the seller will not be 26.20 obligated to pay the licensee a fee or commission if the seller 26.21 has executed another valid listing agreement pursuant to which 26.22 the seller is obligated to pay a fee or commission to another 26.23 licensee for the sale, lease, or exchange of the real property 26.24 in question. This notice may be used in the listing agreement 26.25 for any other type of real estate. 26.26Subd. 3.(c) [PROHIBITED PROVISIONS.] Except as otherwise 26.27 provided insubdivision 4,paragraph(b)(d)(ii), licensees 26.28 shall not include in a listing agreement a holdover clause, 26.29 automatic extension, or any similar provision, or an override 26.30 clause the length of which is more than six months after the 26.31 expiration of the listing agreement. 26.32Subd. 4.(d) [OVERRIDE CLAUSES.](a)(i) Licensees shall 26.33 not seek to enforce an override clause unless a protective list 26.34 has been furnished to the seller within 72 hours after the 26.35 expiration of the listing agreement. 26.36(b)(ii) A listing agreement may contain an override clause 27.1 of up to two years in length when used in conjunction with the 27.2 purchase or sale of a business. The length of the override 27.3 clause must be negotiable between the licensee and the seller of 27.4 the business. The protective list provided in connection with 27.5 the override clause must include the written acknowledgment of 27.6 each party named on the protective list, that the business which 27.7 is the subject of the listing agreement was presented to that 27.8 party by the licensee. 27.9Subd. 5.(e) [PROTECTIVE LISTS.] A broker or salesperson 27.10 has the burden of demonstrating that each person on the 27.11 protective list has, during the period of the listing agreement, 27.12 either made an affirmative showing of interest in the property 27.13 by responding to an advertisement or by contacting the broker or 27.14 salesperson involved or has been physically shown the property 27.15 by the broker or salesperson. For the purpose of this section, 27.16 the mere mailing or other distribution by a licensee of 27.17 literature setting forth information about the property in 27.18 question does not, of itself, constitute an affirmative showing 27.19 of interest in the property on the part of a subsequent 27.20 purchaser. 27.21 For listings of nonresidential real property which do not 27.22 contain the notice described insubdivision 2paragraph (b), 27.23 clause (10), the protective list must contain the following 27.24 notice in boldface type: 27.25 "IF YOU RELIST WITH ANOTHER BROKER WITHIN THE OVERRIDE 27.26 PERIOD AND THEN SELL YOUR PROPERTY TO ANYONE WHOSE NAME APPEARS 27.27 ON THIS LIST, YOU COULD BE LIABLE FOR FULL COMMISSIONS TO BOTH 27.28 BROKERS. IF THIS NOTICE IS NOT FULLY UNDERSTOOD, SEEK COMPETENT 27.29 ADVICE." 27.30 Sec. 21. Minnesota Statutes 2002, section 82.196, is 27.31 amended to read: 27.32 82.196 [BUYER'S BROKER AGREEMENTS.] 27.33Subdivision 1.(a) [REQUIREMENTS.] Licensees shall obtain 27.34 a signed buyer's broker agreement from a buyer before performing 27.35 any acts as a buyer's representative and before a purchase 27.36 agreement is signed. 28.1Subd. 2.(b) [CONTENTS.] All buyer's broker agreements 28.2 must be in writing and must include: 28.3 (1) a definite expiration date; 28.4 (2) the amount of any compensation or commission, or the 28.5 basis for computing the commission; 28.6 (3) a clear statement explaining the services to be 28.7 provided to the buyer by the broker, and the events or 28.8 conditions that will entitle a broker to a commission or other 28.9 compensation; 28.10 (4) a clear statement explaining if the agreement may be 28.11 canceled and the terms under which the agreement may be 28.12 canceled; 28.13 (5) information regarding an override clause, if 28.14 applicable, including a statement to the effect that the 28.15 override clause will not be effective unless the licensee 28.16 supplies the buyer with a protective list within 72 hours after 28.17 the expiration of the buyer's broker agreement; 28.18 (6) the following notice in not less than ten point 28.19 boldface type immediately preceding any provision of the buyer's 28.20 broker agreement relating to compensation of the licensee: 28.21 "NOTICE: THE COMPENSATION FOR THE PURCHASE, LEASE, RENTAL, 28.22 OR MANAGEMENT OF REAL PROPERTY SHALL BE DETERMINED BETWEEN EACH 28.23 INDIVIDUAL BROKER AND THE BROKER'S CLIENT."; 28.24 (7) the following "dual agency" disclosure statement: 28.25 Ifyouthe buyer(s) choose(s) to purchase a property listed 28.26 by broker, a dual agency will be created. This means that 28.27 broker will represent bothyouthe buyer(s) and the seller(s), 28.28 and owe the same duties to the seller(s) that broker owes toyou28.29 the buyer(s). This conflict of interest will prohibit broker 28.30 from advocating exclusively onyourthe buyer's behalf. Dual 28.31 agency will limit the level of representation broker can 28.32 provide. If a dual agency should arise,youthe buyer(s) will 28.33 need to agree that confidential information about price, terms, 28.34 and motivation will still be kept confidential unlessyouthe 28.35 buyer(s) instruct broker in writing to disclose specific 28.36 information aboutyouthe buyer(s). All other information will 29.1 be shared. Broker cannot act as a dual agent unless bothyou29.2 the buyer(s) and the seller(s) agree to it. By agreeing to a 29.3 possible dual agency,youthe buyer(s) will be giving up the 29.4 right to exclusive representation in an in-house transaction. 29.5 However, ifyouthe buyer(s) should decide not to agree to a 29.6 possible dual agency, andyouthe buyer(s) want(s) broker to 29.7 representyouthe buyer(s),youthe buyer(s) may give up the 29.8 opportunity to purchase the properties listed by broker. 29.9 Buyer's Instructions to Broker 29.10 29.11 ....... Buyer(s) will agree to a dual agency representation 29.12 and will consider properties listed by broker. 29.13 29.14 ....... Buyer(s) will not agree to a dual agency 29.15 representation and will not consider 29.16 properties listed by broker. 29.17 29.18 29.19 ......................... ......................... 29.20 BuyerBrokerReal Estate Company Name 29.21 29.22 ......................... By: .................... 29.23 Buyer Salesperson 29.24 29.25 Date: ...................; and 29.26 (8) for buyer's broker agreements which involve residential 29.27 real property, a notice stating that after the expiration of the 29.28 buyer's broker agreement, the buyer will not be obligated to pay 29.29 the licensee a fee or commission if the buyer has executed 29.30 another valid buyer's broker agreement pursuant to which the 29.31 buyer is obligated to pay a fee or commission to another 29.32 licensee for the purchase, lease, or exchange of real property. 29.33Subd. 3.(c) [PROHIBITED PROVISIONS.] Licensees shall not 29.34 include in a buyer's broker agreement a holdover clause, 29.35 automatic extension, or any other similar provision, or an 29.36 override clause the length of which is more than six months 30.1 after the expiration of the buyer's broker agreement. 30.2Subd. 4.(d) [OVERRIDE CLAUSES.] Licensees shall not seek 30.3 to enforce an override clause unless a protective list has been 30.4 furnished to the buyer within 72 hours after the expiration of 30.5 the buyer's broker agreement. 30.6Subd. 5.(e) [PROTECTIVE LISTS.] A licensee has the burden 30.7 of demonstrating that each property on the protective list has 30.8 been shown to the buyer, or specifically brought to the 30.9 attention of the buyer, during the time the buyer's broker 30.10 agreement was in effect. 30.11Subd. 6.(f) [APPLICATION.] This section applies only to 30.12 residential real property transactions. 30.13 Sec. 22. Minnesota Statutes 2002, section 82.197, is 30.14 amended to read: 30.15 82.197 [DISCLOSURE REQUIREMENTS.] 30.16 Subdivision 1. [ADVERTISING.] Each licensee shall identify 30.17 himself or herself as either a broker or an agent salesperson in 30.18 any advertising for the purchase, sale, lease, exchange, 30.19 mortgaging, transfer, or other disposition of real property, 30.20 whether the advertising pertains to the licensee's own property 30.21 or the property of others. 30.22 Subd. 2. [AGENCY DISCLOSURE.] A real estate broker or 30.23 salesperson shall provide to a consumer in the sale and purchase 30.24 of a residential real property transaction at the first 30.25 substantive contact with the consumer an agency disclosure form 30.26 in substantially the form set forth in subdivision 4. The 30.27 agency disclosure form shall be intended to provide a 30.28 description of available options for agency and facilitator 30.29 relationships, and a description of the role of a licensee under 30.30 each option. The agency disclosure form shall provide a 30.31 signature line for acknowledgment of receipt by the 30.32 consumer. The disclosures required by this subdivision apply 30.33 only to residential real property transactions. 30.34Subd. 2. [CREATION OF DUAL AGENCY.] If circumstances30.35create a dual agency situation, the broker must make full30.36disclosure to all parties to the transaction as to the change in31.1relationship of the parties to the broker due to dual agency. A31.2broker, having made full disclosure, must obtain the consent of31.3all parties to these circumstances in residential real property31.4transactions in the purchase agreement in the form set forth31.5below which shall be set off in a boxed format to draw attention31.6to it:31.7Broker represents both the seller(s) and the buyer(s) of31.8the property involved in this transaction, which creates a dual31.9agency. This means that broker and its salespersons owe31.10fiduciary duties to both seller(s) and buyer(s). Because the31.11parties may have conflicting interests, broker and its31.12salespersons are prohibited from advocating exclusively for31.13either party. Broker cannot act as a dual agent in this31.14transaction without the consent of both seller(s) and buyer(s).31.15Seller(s) and buyer(s) acknowledge that:31.16(1) confidential information communicated to broker which31.17regards price, terms, or motivation to buy or sell will remain31.18confidential unless seller(s) or buyer(s) instructs broker in31.19writing to disclose this information. Other information will be31.20shared;31.21(2) broker and its salespersons will not represent the31.22interests of either party to the detriment of the other; and31.23(3) within the limits of dual agency, broker and its31.24salespersons will work diligently to facilitate the mechanics of31.25the sale.31.26With the knowledge and understanding of the explanation31.27above, seller(s) and buyer(s) authorize and instruct broker and31.28its salespersons to act as dual agents in this transaction.31.29 31.30 31.31......................................................31.32SellerBuyer31.33 31.34......................................................31.35SellerBuyer31.36 32.1......................................................32.2DateDate32.3 Subd. 3. [SCOPE AND EFFECT.] Disclosures made in 32.4 accordance with the requirements for disclosure of agency 32.5 relationships set forth in this chapter are sufficient to 32.6 satisfy common law disclosure requirements.In addition, when a32.7principal in the transaction is a licensee or a relative or32.8business associate of the licensee, that fact must be disclosed32.9in writing in addition to any other required disclosures.32.10 Subd. 4. [AGENCY DISCLOSURE FORM.] The agency disclosure 32.11 form shall be in substantially the form set forth below: 32.12 AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS 32.13 Minnesota law requires that early in any relationship, real 32.14 estate brokers or salespersons discuss with consumers what type 32.15 of agency representation or relationship they desire.(1) The 32.16 available options are listed below. This is not a contract. 32.17 This is an agency disclosure form only. If you desire 32.18 representation, you must enter into a written contract according 32.19 to state law (a listing contract or a buyer representation 32.20 contract). Until such time as you choose to enter into a 32.21 written contract for representation, you will be treated as a 32.22 customer and will not receive any representation from the broker 32.23 or salesperson. The broker or salesperson will be acting as a 32.24 Facilitator (see paragraph V below), unless the broker or 32.25 salesperson is representing another party as described below. 32.26 ACKNOWLEDGMENT: I/We acknowledge that I/We have been 32.27 presented with the below-described options. I/We understand 32.28 that until I/We have signed a representation contract, I/We are 32.29 not represented by the broker/salesperson. I/We understand that 32.30 written consent is required for a dual agency relationship. 32.31 THIS IS A DISCLOSURE ONLY, NOT A CONTRACT FOR REPRESENTATION. 32.32 ............... .......... 32.33 Signature Date 32.34 ............... .......... 32.35 Signature Date 32.36 I. 33.1 Seller's Broker: A broker who lists a property, or a 33.2 salesperson who is licensed to the listing broker, 33.3 represents the Seller and acts on behalf of the Seller. A 33.4 Seller's broker owes to the Seller the fiduciary duties 33.5 described below.(2) The broker must also disclose to the 33.6 Buyer material facts as defined in Minnesota Statutes, 33.7 section 82.197, subdivision 6, of which the broker is aware 33.8 that could adversely and significantly affect the Buyer's 33.9 use or enjoyment of the property. If a broker or 33.10 salesperson working with a Buyer as a customer is 33.11 representing the Seller, he or she must act in the Seller's 33.12 best interest and must tell the Seller any information 33.13 disclosed to him or her, except confidential information 33.14 acquired in a facilitator relationship (see paragraph V 33.15 below). In that case, the Buyer will not be represented 33.16 and will not receive advice and counsel from the broker or 33.17 salesperson. 33.18 II. 33.19 Subagent: A broker or salesperson who is working with a 33.20 Buyer but represents the Seller. In this case, the Buyer 33.21 is the broker's customer and is not represented by that 33.22 broker. If a broker or salesperson working with a Buyer as 33.23 a customer is representing the Seller, he or she must act 33.24 in the Seller's best interest and must tell the Seller any 33.25 information that is disclosed to him or her. In that case, 33.26 the Buyer will not be represented and will not receive 33.27 advice and counsel from the broker or salesperson. 33.28 III. 33.29 Buyer's Broker: A Buyer may enter into an agreement for 33.30 the broker or salesperson to represent and act on behalf of 33.31 the Buyer. The broker may represent the Buyer only, and 33.32 not the Seller, even if he or she is being paid in whole or 33.33 in part by the Seller. A Buyer's broker owes to the Buyer 33.34 the fiduciary duties described below.(2) The broker must 33.35 disclose to the Buyer material facts as defined in 33.36 Minnesota Statutes, section 82.197, subdivision 6, of which 34.1 the broker is aware that could adversely and significantly 34.2 affect the Buyer's use or enjoyment of the property. If a 34.3 broker or salesperson working with a Seller as a customer 34.4 is representing the Buyer, he or she must act in the 34.5 Buyer's best interest and must tell the Buyer any 34.6 information disclosed to him or her, except confidential 34.7 information acquired in a facilitator relationship (see 34.8 paragraph V below). In that case, the Seller will not be 34.9 represented and will not receive advice and counsel from 34.10 the broker or salesperson. 34.11 IV. 34.12 Dual Agency-Broker Representing both Seller and Buyer: 34.13 Dual agency occurs when one broker or salesperson 34.14 represents both parties to a transaction, or when two 34.15 salespersons licensed to the same broker each represent a 34.16 party to the transaction. Dual agency requires the 34.17 informed consent of all parties, and means that the broker 34.18 and salesperson owe the same duties to the Seller and the 34.19 Buyer. This role limits the level of representation the 34.20 broker and salespersons can provide, and prohibits them 34.21 from acting exclusively for either party. In a dual 34.22 agency, confidential information about price, terms, and 34.23 motivation for pursuing a transaction will be kept 34.24 confidential unless one party instructs the broker or 34.25 salesperson in writing to disclose specific information 34.26 about him or her. Other information will be shared. Dual 34.27 agents may not advocate for one party to the detriment of 34.28 the other.(3) 34.29 Within the limitations described above, dual agents owe to 34.30 both Seller and Buyer the fiduciary duties described 34.31 below.(2) Dual agents must disclose to Buyers material 34.32 facts as defined in Minnesota Statutes, section 82.197, 34.33 subdivision 6, of which the broker is aware that could 34.34 adversely and significantly affect the Buyer's use or 34.35 enjoyment of the property. 34.36 V. 35.1 Facilitator: A broker or salesperson who performs services 35.2 for a Buyer, a Seller, or both but does not represent 35.3 either in a fiduciary capacity as a Buyer's Broker, 35.4 Seller's Broker, or Dual Agent. THE FACILITATOR BROKER OR 35.5 SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY 35.6 DUTIES LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE 35.7 DUTIES ARE INCLUDED IN A WRITTEN FACILITATOR SERVICES 35.8 AGREEMENT. The facilitator broker or salesperson owes the 35.9 duty of confidentiality to the party but owes no other duty 35.10 to the party except those duties required by law or 35.11 contained in a written facilitator services agreement, if 35.12 any. In the event a facilitator broker or salesperson, 35.13 working with a Buyer, shows a property listed by the 35.14 facilitator broker or salesperson, then the facilitator 35.15 broker or salesperson must act as a Seller's Broker (see 35.16 paragraph I above). In the event a facilitator broker or 35.17 salesperson, working with a Seller, accepts a showing of 35.18 the property by a Buyer being represented by the 35.19 facilitator broker or salesperson, then the facilitator 35.20 broker or salesperson must act as a Buyer's Broker (see 35.21 paragraph III above). 35.22 35.23 35.24 35.25 **************************************************************** 35.26 (1) This disclosure is required by law in any transaction 35.27 involving property occupied or intended to be occupied by one to 35.28 four families as their residence. 35.29 (2) The fiduciary duties mentioned above are listed below 35.30 and have the following meanings: 35.31 Loyalty-broker/salesperson will act only in client(s)' best 35.32 interest. 35.33 Obedience-broker/salesperson will carry out all client(s)' 35.34 lawful instructions. 35.35 Disclosure-broker/salesperson will disclose to client(s) 35.36 all material facts of which broker/salesperson has knowledge 36.1 which might reasonably affect the client's rights and interests. 36.2 Confidentiality-broker/salesperson will keep client(s)' 36.3 confidences unless required by law to disclose specific 36.4 information (such as disclosure of material facts to Buyers). 36.5 Reasonable Care-broker/salesperson will use reasonable care 36.6 in performing duties as an agent. 36.7 Accounting-broker/salesperson will account to client(s) for 36.8 all client(s)' money and property received as agent. 36.9 (3) If Seller(s) decides not to agree to a dual agency 36.10 relationship, Seller(s) may give up the opportunity to sell the 36.11 property to Buyers represented by the broker/salesperson. If 36.12 Buyer(s) decides not to agree to a dual agency relationship, 36.13 Buyer(s) may give up the opportunity to purchase properties 36.14 listed by the broker. 36.15 Subd. 5. [APPLICATIONCREATION OF DUAL AGENCY.]The36.16disclosures required by subdivision 4 apply only to residential36.17real property transactions.If circumstances create a dual 36.18 agency situation, the broker must make full disclosure to all 36.19 parties to the transaction as to the change in relationship of 36.20 the parties to the broker due to dual agency. A broker, having 36.21 made full disclosure, must obtain the consent of all parties to 36.22 these circumstances in residential real property transactions in 36.23 the purchase agreement in the form set forth below which shall 36.24 be set off in a boxed format to draw attention to it: 36.25 Broker represents both the seller(s) and the buyer(s) of 36.26 the property involved in this transaction, which creates a dual 36.27 agency. This means that broker and it salespersons owe 36.28 fiduciary duties to both seller(s) and buyer(s). Because the 36.29 parties may have conflicting interests, broker and its 36.30 salespersons are prohibited from advocating exclusively for 36.31 either party. Broker cannot act as a dual agent in this 36.32 transaction without the consent of both seller(s) and buyer(s). 36.33 Seller(s) and buyer(s) acknowledge that: 36.34 (1) confidential information communicated to broker which 36.35 regards price, terms, or motivation to buy or sell will remain 36.36 confidential unless seller(s) or buyer(s) instructs broker in 37.1 writing to disclose this information. Other information will be 37.2 shared; 37.3 (2) broker and its salespersons will not represent the 37.4 interests of either party to the detriment of the other; and 37.5 (3) within the limits of dual agency, broker and its 37.6 salespersons will work diligently to facilitate the mechanics of 37.7 the sale. 37.8 With the knowledge and understanding of the explanation 37.9 above, seller(s) and buyer(s) authorize and instruct broker and 37.10 its salespersons to act as dual agents in this transaction. 37.11 ............... ............... 37.12 Seller Buyer 37.13 ............... ............... 37.14 Seller Buyer 37.15 ............... ............... 37.16 Date Date 37.17 Subd. 6. [AGENT OF BROKER DISCLOSURE.] A salesperson shall 37.18 only conduct business under the licensed name of and on behalf 37.19 of the broker to whom the salesperson is licensed. An 37.20 individual broker shall only conduct business under the broker's 37.21 licensed name. A broker licensed to a corporation or 37.22 partnership shall only conduct business under the licensed 37.23 corporate or partnership name. A licensee shall affirmatively 37.24 disclose, before the negotiation or consummation of any 37.25 transaction, the licensed name of the broker under whom the 37.26 licensee is authorized to conduct business in accordance with 37.27 this section. 37.28 Subd. 7. [FINANCIAL INTERESTS DISCLOSURE; LICENSEE.] (a) 37.29 Prior to the negotiation or consummation of any transaction, a 37.30 licensee shall affirmatively disclose to the owner of real 37.31 property that the licensee is a real estate broker or agent 37.32 salesperson, and in what capacity the licensee is acting, if the 37.33 licensee directly, or indirectly through a third party, 37.34 purchases for himself or herself or acquires, or intends to 37.35 acquire, any interest in, or any option to purchase, the owner's 37.36 property. 38.1 (b) When a principal in the transaction is a licensee or a 38.2 relative or business associate of the licensee, that fact must 38.3 be disclosed in writing. 38.4 Subd.6.8. [MATERIAL FACTS.] (a) Licensees shall disclose 38.5 to any prospective purchaser all material facts of which the 38.6 licensees are aware, which could adversely and significantly 38.7 affect an ordinary purchaser'suse or enjoyment ofrights and 38.8 interests in the property, or any intended use of the property 38.9 of which the licensees are aware. 38.10 (b) It is not a material fact relating to real property 38.11 offered for saleand no regulatory action shall be brought38.12against a licensee for failure to disclose in any real estate38.13transactionthe fact or suspicion that the property: 38.14 (1) is or was occupied by an owner or occupant who is or 38.15 was suspected to be infected with human immunodeficiency virus 38.16 or diagnosed with acquired immunodeficiency syndrome; 38.17 (2) was the site of a suicide, accidental death, natural 38.18 death, or perceived paranormal activity; or 38.19 (3) is located in a neighborhood containing any adult 38.20 family home, community-based residential facility, or nursing 38.21 home. 38.22 (c) A licensee or employee of the licensee has no duty to 38.23 disclose information regarding an offender who is required to 38.24 register under section 243.166, or about whom notification is 38.25 made under that section, if the broker or salesperson, in a 38.26 timely manner, provides a written notice that information about 38.27 the predatory offender registry and persons registered with the 38.28 registry may be obtained by contacting local law enforcement 38.29 where the property is located or the Department of Corrections. 38.30 (d) A licensee is not required to disclose, except as 38.31 otherwise provided in paragraph (e), information relating to the 38.32 physical condition of the property or any other information 38.33 relating to the real estate transaction, if a written report 38.34 that discloses the information has been prepared by a qualified 38.35 third party and provided to the person. For the purposes of 38.36 this paragraph, "qualified third party" means a federal, state, 39.1 or local governmental agency, or any person whom the broker, 39.2 salesperson, or a party to the real estate transaction 39.3 reasonably believes has the expertise necessary to meet the 39.4 industry standards of practice for the type of inspection or 39.5 investigation that has been conducted by the third party in 39.6 order to prepare the written report and who is acceptable to the 39.7 person to whom the disclosure is being made. 39.8 (e) A licensee shall disclose to the parties to a real 39.9 estate transaction any facts known by the broker or salesperson 39.10 that contradict any information included in a written report, if 39.11 a copy of the report is provided to the licensee, described in 39.12 paragraph (d). 39.13 (f) The limitation on disclosures set forth in paragraphs 39.14 (b) and (c) shall modify any common law duties with respect to 39.15 disclosure of material facts. 39.16 Subd. 9. [NONPERFORMANCE OF ANY PARTY.] If a licensee is 39.17 put on notice by any party to a real estate transaction that the 39.18 party will not perform in accordance with the terms of a 39.19 purchase agreement or other similar written agreement to convey 39.20 real estate, the licensee shall immediately disclose the fact of 39.21 that party's intent not to perform to the other party or parties 39.22 to the transaction. Whenever reasonably possible, the licensee 39.23 shall inform the party who will not perform of the licensee's 39.24 obligation to disclose this fact to the other party or parties 39.25 to the transaction prior to making the disclosure. The 39.26 obligation required by this section shall not apply to notice of 39.27 a party's inability to keep or fulfill any contingency to which 39.28 the real estate transaction has been made subject. 39.29 Sec. 23. Minnesota Statutes 2002, section 82.20, is 39.30 amended by adding a subdivision to read: 39.31 Subd. 2a. [ADDITIONAL BROKER'S LICENSE.] An individual who 39.32 holds a broker's license in his or her own name or for or on 39.33 behalf of a corporation or partnership must be issued an 39.34 additional broker's license only upon demonstrating that the 39.35 additional license is necessary in order to serve a legitimate 39.36 business purpose; that the broker will be capable of supervising 40.1 all salespersons over whom he or she will have supervisory 40.2 responsibility or, in the alternative, that the broker will have 40.3 no supervisory responsibilities under the additional license; 40.4 and that the broker has a substantial ownership interest in each 40.5 corporation or partnership for or on whose behalf he or she 40.6 holds or will hold a broker's license. 40.7 The requirement of a substantial ownership interest does 40.8 not apply where the broker seeking the additional license or 40.9 licenses is an officer of a corporation for or on whose behalf 40.10 the broker already holds a license and the broker is applying 40.11 for the additional license or licenses for or on behalf of an 40.12 affiliated corporation or corporations of which he or she is 40.13 also an officer. For the purpose of this section, "affiliated 40.14 corporation" means a corporation which is directly or indirectly 40.15 controlled by the same persons as the corporation for or on 40.16 whose behalf the broker is already licensed to act. 40.17 For the purposes of this section, a legitimate business 40.18 purpose includes engaging in a different and specialized area of 40.19 real estate or maintaining an existing business name. 40.20 Sec. 24. Minnesota Statutes 2002, section 82.20, 40.21 subdivision 3, is amended to read: 40.22 Subd. 3. [APPLICATION FOR LICENSE; CONTENTS.] (a) Every 40.23 applicant for a license as a real estate broker, real estate 40.24 salesperson, or closing agent shall make an application in 40.25 writing upon forms prepared and furnished by the commissioner. 40.26 Each application shall be signed and sworn to by the applicant 40.27 and shall be accompanied by the license fee required by this 40.28 chapter. 40.29 (b) Each application for a real estate broker license, real 40.30 estate salesperson license, or real estate closing agent license 40.31 shall contain such information as required by the commissioner 40.32 consistent with the administration of the provisions and 40.33 purposes of this chapter. 40.34 (c) Each application for a real estate salesperson license 40.35 shall give the applicant's name, age, residence address, and the 40.36 name and place of business of the real estate broker on whose 41.1 behalf the salesperson is to be acting. 41.2 (d) Each application for a real estate closing agent 41.3 license shall give the applicant's name, age, residence address, 41.4 and the name and place of business of the closing agent. 41.5 (e) The commissioner may require such further information 41.6 as the commissioner deems appropriate to administer the 41.7 provisions and further the purposes of this chapter. 41.8 (f) Applicants for a real estate salesperson license shall 41.9 submit to the commissioner, along with the application for 41.10 licensure, a copy of the course completion certificate for 41.11 courses I, II, and III. 41.12 Sec. 25. Minnesota Statutes 2002, section 82.20, is 41.13 amended by adding a subdivision to read: 41.14 Subd. 3a. [APPLICATION FOR BROKER'S LICENSE.] After 41.15 successful completion of the real estate broker's examination, 41.16 an individual shall have one year from the date of the 41.17 examination to apply for a broker's license, unless the 41.18 individual is a salesperson who remains continuously active in 41.19 the real estate field as a licensee. Failure to apply for the 41.20 broker's license or to remain continuously active in the real 41.21 estate field will necessitate a reexamination. 41.22 Sec. 26. Minnesota Statutes 2002, section 82.20, 41.23 subdivision 4, is amended to read: 41.24 Subd. 4. [CORPORATE AND PARTNERSHIP LICENSES.] (a) A 41.25 corporation applying for a license shall have at least one 41.26 officer individually licensed to act as broker for the 41.27 corporation. The corporation broker's license shall extend no 41.28 authority to act as broker to any person other than the 41.29 corporate entity. Each officer who intends to act as a broker 41.30 shall obtain a license. 41.31 (b) A partnership applying for a license shall have at 41.32 least one partner individually licensed to act as broker for the 41.33 partnership. Each partner who intends to act as a broker shall 41.34 obtain a license. 41.35 (c) Applications for a license made by a corporation shall 41.36 be verified by the president and one other officer. 42.1 Applications made by a partnership shall be verified by at least 42.2 two partners. 42.3 (d) Any partner or officer who ceases to act as broker for 42.4 a partnership or corporation shall notify the commissioner upon 42.5 said termination. The individual licenses of all salespersons 42.6 acting on behalf of a corporation or partnership, are 42.7 automatically ineffective upon the revocation or suspension of 42.8 the license of the partnership or corporation. The commissioner 42.9 may suspend or revoke the license of an officer or partner 42.10 without suspending or revoking the license of the corporation or 42.11 partnership. 42.12 (e) The application of all officers of a corporation or 42.13 partners in a partnership who intend to act as a broker on 42.14 behalf of a corporation or partnership shall accompany the 42.15 initial license application of the corporation or partnership. 42.16 Officers or partners intending to act as brokers subsequent to 42.17 the licensing of the corporation or partnership shall procure an 42.18 individual real estate broker's license prior to acting in the 42.19 capacity of a broker. No corporate officer who maintains a 42.20 salesperson's license may exercise any authority over any trust 42.21 account administered by the broker nor may they be vested with 42.22 any supervisory authority over the broker. 42.23 (f) The corporation or partnership applicant shall make 42.24 available upon request, such records and data required by the 42.25 commissioner for enforcement of this chapter. 42.26 (g) The commissioner may require further information, as 42.27 the commissioner deems appropriate, to administer the provisions 42.28 and further the purposes of this chapter. 42.29 Sec. 27. Minnesota Statutes 2002, section 82.20, is 42.30 amended by adding a subdivision to read: 42.31 Subd. 7a. [AUTOMATIC TRANSFER OF SALESPERSON'S LICENSE.] A 42.32 salesperson may utilize the automatic license transfer 42.33 provisions of subdivision 9, clause (b), if the salesperson 42.34 commences association with the broker to whom the salesperson is 42.35 transferring, as evidenced by the dates of the signatures of 42.36 both brokers on the form prescribed by the commissioner, within 43.1 five days after terminating the salesperson's association with 43.2 the broker from whom the salesperson is transferring, provided 43.3 the salesperson's educational requirements are not past due. 43.4 A salesperson may not utilize the automatic license 43.5 transfer provisions of subdivision 9, clause (b), if the sales 43.6 person has failed to notify the commissioner within ten days of 43.7 any change of information contained in the salesperson's license 43.8 application on file with the commissioner or of a civil 43.9 judgment, disciplinary action, or criminal offense, which notice 43.10 is required pursuant to section 82.20, subdivision 11. 43.11 Sec. 28. Minnesota Statutes 2002, section 82.20, 43.12 subdivision 8, is amended to read: 43.13 Subd. 8. [TIMELY RENEWALS.] (a) Persons whose applications 43.14 have been properly and timely filed who have not received notice 43.15 of denial of renewal are deemed to have been approved for 43.16 renewal and may continue to transact business either as a real 43.17 estate broker, salesperson, or closing agent whether or not the 43.18 renewed license has been received on or before July 1 of the 43.19 renewal year. Application for renewal of a license shall be 43.20 deemed to have been timely filed if received by the commissioner 43.21 by, or mailed with proper postage and postmarked by, June 15 of 43.22 the renewal year. Applications for renewal shall be deemed 43.23 properly filed if made upon forms duly executed and sworn to, 43.24 accompanied by fees prescribed by this chapter and contain any 43.25 information which the commissioner may require. 43.26 (b) Persons who have failed to make a timely application 43.27 for renewal of a license and who have not received the renewal 43.28 license as of July 1 of the renewal year, shall be unlicensed 43.29 until such time as the license has been issued by the 43.30 commissioner and is received. 43.31 Sec. 29. Minnesota Statutes 2002, section 82.20, is 43.32 amended by adding a subdivision to read: 43.33 Subd. 8a. [PROCEDURE.] An application for automatic 43.34 transfer shall be made only on the form prescribed by the 43.35 commissioner. The transfer is ineffective if the form is not 43.36 completed in its entirety. 44.1 The form shall be accompanied by a $10 transfer fee, and 44.2 the license renewal fee, if applicable. Cash will not be 44.3 accepted. 44.4 The signature of the broker from whom the salesperson is 44.5 transferring must predate the signature of the broker to whom 44.6 the salesperson is transferring. The salesperson is unlicensed 44.7 for the period of time between the times and dates of both 44.8 signatures. The broker from whom the salesperson is 44.9 transferring shall sign and date the transfer application upon 44.10 the request of the salesperson and shall destroy the 44.11 salesperson's license immediately. 44.12 Sec. 30. Minnesota Statutes 2002, section 82.20, is 44.13 amended by adding a subdivision to read: 44.14 Subd. 9a. [EFFECTIVE DATE.] (a) The transfer is effective 44.15 when the broker to whom the salesperson is transferring signs 44.16 and dates the transfer application form, provided the 44.17 commissioner receives the form and fee within 72 hours after the 44.18 date and time of the new broker's signature, either by certified 44.19 mail, or personal delivery to the commissioner's office. The 44.20 commissioner may accept an application for license transfer made 44.21 by an electronic agent or an electronic record with an 44.22 electronic signature if the commissioner has the capability of 44.23 accepting the application electronically. In the event of a 44.24 delay in mail delivery, an application postmarked within 24 44.25 hours of the date of the signature of the new broker shall be 44.26 deemed timely received. The properly executed automatic 44.27 transfer form serves as a temporary real estate license for no 44.28 more than 45 days. 44.29 (b) The transfer is ineffective if the fee is paid by means 44.30 of a check, draft, or other negotiable or nonnegotiable 44.31 instrument or order of withdrawal drawn on an account with 44.32 insufficient funds. 44.33 (c) The salesperson shall retain the certified mail return 44.34 receipt, if the transfer application is delivered to the 44.35 commissioner by mail, retain a photocopy of the executed 44.36 transfer application, and provide a photocopy of the executed 45.1 transfer application to the broker from whom the salesperson is 45.2 transferring. 45.3 (d) The real estate salesperson automatic transfer must be 45.4 in the form prescribed by the commissioner. 45.5 Sec. 31. Minnesota Statutes 2002, section 82.20, is 45.6 amended by adding a subdivision to read: 45.7 Subd. 11a. [MANDATORY.] Licensees shall notify the 45.8 commissioner of the facts in subdivisions 11b to 11d. 45.9 Sec. 32. Minnesota Statutes 2002, section 82.20, is 45.10 amended by adding a subdivision to read: 45.11 Subd. 11b. [CIVIL JUDGMENT.] Licensees must notify the 45.12 commissioner in writing within ten days of a final adverse 45.13 decision or order of a court, whether or not the decision or 45.14 order is appealed, regarding any proceeding in which the 45.15 licensee was named as a defendant, and which alleged fraud, 45.16 misrepresentation, or the conversion of funds, if the final 45.17 adverse decision relates to the allegations of fraud, 45.18 misrepresentation, or the conversion of funds. 45.19 Sec. 33. Minnesota Statutes 2002, section 82.20, is 45.20 amended by adding a subdivision to read: 45.21 Subd. 11c. [DISCIPLINARY ACTION.] The licensee must notify 45.22 the commissioner in writing within ten days of the suspension or 45.23 revocation of the licensee's real estate or other occupational 45.24 license issued by this state or another jurisdiction. 45.25 Sec. 34. Minnesota Statutes 2002, section 82.20, is 45.26 amended by adding a subdivision to read: 45.27 Subd. 11d. [CRIMINAL OFFENSE.] The licensee must notify 45.28 the commissioner in writing within ten days if the licensee is 45.29 charged with, adjudged guilty of, or enters a plea of guilty or 45.30 nolo contendere to a charge of any felony, or of any gross 45.31 misdemeanor alleging fraud, misrepresentation, conversion of 45.32 funds, or a similar violation of any real estate licensing law. 45.33 Sec. 35. Minnesota Statutes 2002, section 82.20, is 45.34 amended by adding a subdivision to read: 45.35 Subd. 12a. [TEMPORARY BROKER'S PERMIT.] In the event of 45.36 death or incapacity of a broker, the commissioner may issue a 46.1 45-day temporary permit to an individual who has had a minimum 46.2 of two years actual experience as a licensed real estate 46.3 salesperson and who is otherwise reasonably qualified to act as 46.4 a broker. Upon application prior to its expiration, the 45-day 46.5 temporary permit shall be renewed once by the commissioner if 46.6 the applicant demonstrates that he or she has made a good faith 46.7 effort to obtain a broker's license within the preceding 45 days 46.8 and an extension of time will not harm the public interest. 46.9 Only those salespersons licensed to the deceased or 46.10 incapacitated broker at the time of death or incapacity may 46.11 conduct business for or on behalf of the person to whom the 46.12 temporary broker's license was issued. 46.13 Sec. 36. Minnesota Statutes 2002, section 82.20, is 46.14 amended by adding a subdivision to read: 46.15 Subd. 14a. [WITHDRAWAL OF LICENSE OR APPLICATION.] A 46.16 licensee or license applicant may at any time file with the 46.17 commissioner a request to withdraw from the status of licensee 46.18 or to withdraw a pending license application. Withdrawal from 46.19 the status of licensee or withdrawal of the license application 46.20 becomes effective 30 days after receipt of a request to withdraw 46.21 or within a shorter period the commissioner determines unless a 46.22 revocation, suspension, or denial proceeding is pending when the 46.23 request to withdraw is filed or a proceeding to revoke, suspend, 46.24 deny, or to impose conditions upon the withdrawal is instituted 46.25 within 30 days after the request to withdraw is filed. If a 46.26 proceeding is pending or instituted, withdrawal becomes 46.27 effective at the time and upon the conditions the commissioner 46.28 determines by order. If no proceeding is pending or instituted 46.29 and withdrawal automatically becomes effective, the commissioner 46.30 may institute a revocation or suspension proceeding within one 46.31 year after withdrawal became effective and enter a revocation or 46.32 suspension order as of the last date on which the license was in 46.33 effect. 46.34 Sec. 37. [82.201] [COMPUTATION OF TIME.] 46.35 Subdivision 1. [DAYS.] Where performing or doing any act, 46.36 duty, matter, payment, or thing is ordered or directed, and the 47.1 period of time or duration for performing or doing it is 47.2 prescribed and fixed by law, rule, or order, the time, except as 47.3 otherwise provided in subdivision 2, is computed so as to 47.4 exclude the first and include the last day of any such 47.5 prescribed or fixed period or duration of time. When the last 47.6 day of the period falls on Sunday or on any day made a legal 47.7 holiday, by the laws of this state or of the United States, the 47.8 day is omitted from the computation. 47.9 Subd. 2. [MONTHS.] When the lapse of a number of months 47.10 before or after a certain day is required by law, rule, or 47.11 order, the number of months is computed by counting the months 47.12 from the day, excluding the calendar month in which the day 47.13 occurs, and including the day of the month in the last month so 47.14 counted having the same numerical order as the day of the month 47.15 from which the computation is made, unless there be not so many 47.16 days in the last month so counted, in which case the period 47.17 computed shall expire with the last day of the month so counted. 47.18 Sec. 38. Minnesota Statutes 2002, section 82.21, is 47.19 amended by adding a subdivision to read: 47.20 Subd. 5. [CASH NOT ACCEPTED.] All fees must be paid by 47.21 check, draft, credit card, or other negotiable or nonnegotiable 47.22 instrument or order of withdrawal that is drawn against funds 47.23 held by a financial institution. Cash will not be accepted. 47.24 Sec. 39. Minnesota Statutes 2002, section 82.21, is 47.25 amended by adding a subdivision to read: 47.26 Subd. 6. [OVERPAYMENT OF FEES.] An overpayment of a fee 47.27 paid pursuant to this chapter shall be refunded within a 47.28 reasonable time after a letter requesting the refund is received 47.29 by the commissioner and signed by the person making the 47.30 overpayment. 47.31 Refunds shall not be given for other than overpayment of 47.32 fees. A request for a refund of an overpayment must be received 47.33 by the commissioner within six months of the date of deposit or 47.34 it will be forfeited. 47.35 Sec. 40. Minnesota Statutes 2002, section 82.22, is 47.36 amended by adding a subdivision to read: 48.1 Subd. 5a. [WAIVERS.] The commissioner may waive the real 48.2 estate licensing experience requirement for the broker's 48.3 examination. 48.4 (a) An applicant for a waiver shall provide evidence of: 48.5 (1) successful completion of a minimum of 90 quarter 48.6 credits or 270 classroom hours of real estate-related studies; 48.7 (2) a minimum of five consecutive years of practical 48.8 experience in real estate-related areas; or 48.9 (3) successful completion of 30 credits or 90 classroom 48.10 hours and three consecutive years of practical experience in 48.11 real estate-related areas. 48.12 (b) A request for a waiver shall be submitted to the 48.13 commissioner in writing and be accompanied by documents 48.14 necessary to evidence qualification as set forth in paragraph 48.15 (a). 48.16 (c) The waiver will lapse if the applicant fails to 48.17 successfully complete the broker's examination within one year 48.18 from the date of the granting of the waiver. 48.19 Sec. 41. Minnesota Statutes 2002, section 82.22, is 48.20 amended by adding a subdivision to read: 48.21 Subd. 5b. [FAILURE TO RENEW LICENSE.] If a license lapses 48.22 or becomes ineffective due to the licensee's failure to file a 48.23 timely renewal application or otherwise, the commissioner may 48.24 institute a revocation or suspension proceeding within two years 48.25 after the license was last effective and enter a revocation or 48.26 suspension order as of the last date on which the license was in 48.27 effect. 48.28 Sec. 42. Minnesota Statutes 2002, section 82.22, 48.29 subdivision 6, is amended to read: 48.30 Subd. 6. [INSTRUCTION; NEW LICENSES.] (a) Every applicant 48.31 for a salesperson's license shall be required to successfully 48.32 complete a course of study in the real estate field consisting 48.33 of 30 hours of instruction approved by the commissioner before 48.34 taking the examination specified in subdivision 1. Every 48.35 applicant for a salesperson's license shall be required to 48.36 successfully complete an additional course of study in the real 49.1 estate field consisting of 60 hours of instruction approved by 49.2 the commissioner, of which three hours shall consist of training 49.3 in state and federal fair housing laws, regulations, and rules, 49.4 and of which two hours must consist of training in laws and 49.5 regulations on agency representation and disclosure, before 49.6 filing an application for the license. This subdivision does 49.7 not apply to salespeople licensed in Minnesota before July 1, 49.8 1969. 49.9 (b)The commissioner may approve courses of study in the49.10real estate field offered in educational institutions of higher49.11learning in this state or courses of study in the real estate49.12field developed by and offered under the auspices of the49.13National Association of Realtors, its affiliates, or private49.14real estate schools. The commissioner shall not approve any49.15course offered by, sponsored by, or affiliated with any person49.16or company licensed to engage in the real estate business. The49.17commissioner may by rule prescribe the curriculum and49.18qualification of those employed as instructors.49.19(c)An applicant for a broker's license must successfully 49.20 complete a course of study in the real estate field consisting 49.21 of 30 hours of instruction approved by the commissioner, of 49.22 which three hours shall consist of training in state and federal 49.23 fair housing laws, regulations, and rules. The course must have 49.24 been completed within 12 months prior to the date of application 49.25 for the broker's license. 49.26(d)(c) An applicant for a real estate closing agent's 49.27 license must successfully complete a course of study relating to 49.28 closing services consisting of eight hours of instruction 49.29 approved by the commissioner. 49.30 Sec. 43. Minnesota Statutes 2002, section 82.22, is 49.31 amended by adding a subdivision to read: 49.32 Subd. 6a. [CHANGE OF APPLICATION INFORMATION.] The 49.33 commissioner must be notified in writing of a change of 49.34 information contained in the license application on file with 49.35 the commissioner within ten days of the change. 49.36 Sec. 44. Minnesota Statutes 2002, section 82.22, is 50.1 amended by adding a subdivision to read: 50.2 Subd. 6b. [CANCELLATION OF SALESPERSON'S OR BROKER'S 50.3 LICENSE.] A salesperson's or broker's license that has been 50.4 canceled for failure of a licensee to complete postlicensing 50.5 education requirements must be returned to the commissioner by 50.6 the licensee's broker within ten days of receipt of notice of 50.7 cancellation. The license shall be reinstated without 50.8 reexamination by completing the required instruction, filing an 50.9 application, and paying the fee for a salesperson's or broker's 50.10 license within two years of the cancellation date. 50.11 Sec. 45. Minnesota Statutes 2002, section 82.22, is 50.12 amended by adding a subdivision to read: 50.13 Subd. 6c. [PASSING GRADE FOR EXAMINATION.] A passing grade 50.14 for a salesperson's and broker's examination shall be a score of 50.15 75 percent or higher on the uniform portion and a score of 75 50.16 percent or higher on the state portion of the examination. 50.17 The commissioner shall not accept the scores of a person 50.18 who has cheated on an examination. Cheating on a real estate 50.19 examination shall be grounds for denying an application for a 50.20 broker's or salesperson's license. 50.21 Sec. 46. Minnesota Statutes 2002, section 82.22, 50.22 subdivision 8, is amended to read: 50.23 Subd. 8. [DURATION.] No renewal of a salesperson's license 50.24 shall be effective beyond a date two years after the granting of 50.25 such salesperson's license unless the salesperson has furnished 50.26 evidence of compliance witheither subdivisions 6 or 7section 50.27 82.22, subdivision 6. The commissioner shall cancel the license 50.28 of any salesperson who fails to comply withsubdivisions 6 or 750.29 section 82.22, subdivision 6. This subdivision shall not apply 50.30 to salespeople licensed in Minnesota prior to July 1, 1969. 50.31 Sec. 47. Minnesota Statutes 2002, section 82.22, 50.32 subdivision 12, is amended to read: 50.33 Subd. 12. [RECIPROCITY.] The requirements ofthis50.34sectionsubdivisions 6 and 13 may be waived for individuals of 50.35 other jurisdictions, provided: (1) a written reciprocal 50.36 licensing agreement is in effect between the commissioner and 51.1 the licensing officials of that jurisdiction, (2) the individual 51.2 is licensed in that jurisdiction, and (3) the licensing 51.3 requirements of that jurisdiction are substantially similar to 51.4 the provisions of this chapter. 51.5 Sec. 48. Minnesota Statutes 2002, section 82.22, 51.6 subdivision 13, is amended to read: 51.7 Subd. 13. [CONTINUINGEDUCATION.] (a) All real estate 51.8 salespersons and all real estate brokers shall be required to 51.9 successfully complete 30 hours of real estate continuing 51.10 education, either as a student or a lecturer, in courses of 51.11 study approved by the commissioner, during the initial license 51.12 period and during each succeeding 24-month license period. At 51.13 least 15 of the 30 credit hours must be completed during the 51.14 first 12 months of the 24-month licensing period. Licensees may 51.15 not claim credit for continuing education not actually completed 51.16 as of the date their report of continuing education compliance 51.17 is filed. 51.18 (b) The commissionershallmay adopt rules defining the 51.19 standards for course and instructor approval, and may adopt 51.20 rules for the proper administration ofthis subdivision51.21 prelicense instruction as required under section 82.22, 51.22 subdivision 6, and continuing education as required under this 51.23 section. The commissioner may not approve a course which can be 51.24 completed by the student at home or outside the classroom 51.25 without the supervision of an instructor except accredited 51.26 courses using new delivery technology, including interactive 51.27 technology, and the Internet. The commissioner may approve 51.28 courses of study in the real estate field offered in educational 51.29 institutions of higher learning in this state or courses of 51.30 study in the real estate field developed by and offered under 51.31 the auspices of the National Association of Realtors, its 51.32 affiliates, or private real estate schools. Courses in 51.33 motivation, salesmanship, psychology, or time management shall 51.34 not be approved by the commissioner for continuing education 51.35 credit. The commissioner may approve courses in any other 51.36 subjects, including, but not limited to, communication, 52.1 marketing, negotiation, and technology for continuing education 52.2 credit. 52.3 (c) Any program approved by Minnesota continuing legal 52.4 education shall be approved by the commissioner of commerce for 52.5 continuing education for real estate brokers and salespeople if 52.6 the program or any part thereof relates to real estate. 52.7 (d) As part of the continuing education requirements of 52.8 this section, the commissioner shall require that all real 52.9 estate brokers and salespersons receive: 52.10 (1) at least one hour of training during each license 52.11 period in courses in laws or regulations on agency 52.12 representation and disclosure; and 52.13 (2) at least one hour of training during each license 52.14 period in courses in state and federal fair housing laws, 52.15 regulations, and rules, other antidiscrimination laws, or 52.16 courses designed to help licensees to meet the housing needs of 52.17 immigrant and other underserved populations. 52.18 Clauses (1) and (2) do not apply to real estate 52.19 salespersons and real estate brokers engaged solely in the 52.20 commercial real estate business who file with the commissioner a 52.21 verification of this status along with the continuing education 52.22 report required under paragraph (a). 52.23 (e) The commissioner is authorized to establish a procedure 52.24 for renewal of course accreditation. 52.25 (f) Approved continuing education courses may be sponsored 52.26 or offered by a broker of a real estate company and may be held 52.27 on the premises of a company licensed under this chapter. 52.28 All continuing education course offerings must be open to any 52.29 interested individuals. Access may be restricted by the sponsor 52.30 based on class size only. Courses must not be approved if 52.31 attendance is restricted to any particular group of people. A 52.32 broker must comply with all continuing education rules 52.33 prescribed by the commissioner. The commissioner shall not 52.34 approve any prelicense instruction courses offered by, sponsored 52.35 by, or affiliated with any person or company licensed to engage 52.36 in the real estate business. 53.1 (g)No more than one-half of the credit hours per licensing53.2period, including continuing education required under53.3subdivision 6, may be credited to a person for attending any53.4combination of courses either:Credit may not be earned if the 53.5 licensee has previously obtained credit for the same course as 53.6 either a student or instructor during the same licensing period. 53.7(1) sponsored by, offered by, or affiliated with a real53.8estate company or its agents; or53.9(2) offered using new delivery technology, including53.10interactive technology, and the Internet.53.11 (h) The real estate education course completion certificate 53.12 must be in the form set forth by the commissioner. 53.13 Students are responsible for maintaining copies of course 53.14 completion certificates. 53.15 Sec. 49. Minnesota Statutes 2002, section 82.24, 53.16 subdivision 3, is amended to read: 53.17 Subd. 3. [NONDEPOSITABLE ITEMS.] In the event earnest 53.18 money or other down payments in a real estate transaction are 53.19 received by the broker or salesperson in the form of a 53.20 nondepositable item such as a note, bond, stock certificate, 53.21 treasury bill, or any other instrument or equity or thing of 53.22 value received by a broker, salesperson, or closing 53.23 agent received in lieu of cashas earnest money or down payment53.24in a real estate transactionshall beheld bydeposited 53.25 immediately with an authorized escrow agent, whose authority is 53.26 evidenced by a written agreement executed by the offeror and the 53.27 escrow agent. A receipt shall be issued to the buyer for the 53.28 value of the nondepositable item. 53.29 In the event the broker acts as the escrow agent, the 53.30 broker shall obtain written authority from the buyer and seller 53.31 to hold such items in escrow. In all cases, the parties shall 53.32 be advised of the details relative to the nondepositable item, 53.33 including the nature of the item, the amount, and in whose 53.34 custody such item is being held. The fact that such an item is 53.35 being held by the broker shall be duly recorded in the broker's 53.36 trust account records. 54.1 Sec. 50. Minnesota Statutes 2002, section 82.24, 54.2 subdivision 5, is amended to read: 54.3 Subd. 5. [TRUST ACCOUNTS.] (a) Each broker or closing 54.4 agent shall maintain and retain records of all trust funds and 54.5 trust accounts. The commissioner may prescribe information to 54.6 be included in the records by appropriate rules. 54.7 (b) Unless otherwise agreed upon in writing by the parties 54.8 to a transaction, the broker with whom trust funds are to be 54.9 deposited in satisfaction of subdivision 1 shall be the listing 54.10 broker. 54.11 (c) A check received from a potential buyer shall be 54.12 deposited into the listing broker's trust account not later than 54.13 the third business day after delivery of the check to the 54.14 broker, except that the check may be held by the listing broker 54.15 until acceptance or rejection of the offer if: 54.16 (1) the check by its terms is not negotiable by the broker 54.17 or if the potential buyer has given written instructions that 54.18 the check shall not be deposited nor cashed until acceptance or 54.19 shall be immediately returned if the offer is rejected; and 54.20 (2) the potential seller is informed that the check is 54.21 being so held before or at the time the offer is presented to 54.22 that person for acceptance. 54.23 If the offer is accepted, the check shall be deposited in a 54.24 neutral escrow depository or the trust fund account of the 54.25 listing broker not later than the third business day following 54.26 acceptance of the offer unless the broker has received written 54.27 authorization from all parties to the transaction to continue to 54.28 hold the check. If the offer is rejected, the check shall be 54.29 returned to the potential buyer not later than the next business 54.30 day after rejection. 54.31 (d) Trust funds must be maintained in a trust account until 54.32 disbursement is made in accordance with the terms of the 54.33 applicable agreements and proper accounting is made to the 54.34 parties entitled to an accounting. 54.35 Disbursement must be made within a reasonable time 54.36 following the consummation or termination of a transaction if 55.1 the applicable agreements are silent as to the time of 55.2 disbursement. 55.3 Sec. 51. Minnesota Statutes 2002, section 82.24, is 55.4 amended by adding a subdivision to read: 55.5 Subd. 9. [CONSENT TO PLACE IN SPECIAL ACCOUNT.] Trust 55.6 funds may be placed by the broker in a special account which may 55.7 be an interest-bearing account or certificate of deposit if the 55.8 buyer and the seller consent in writing to the special account 55.9 and to the disposition of the trust funds, including any 55.10 interest thereon. 55.11 Sec. 52. Minnesota Statutes 2002, section 82.24, is 55.12 amended by adding a subdivision to read: 55.13 Subd. 10. [LICENSEE AS PRINCIPAL.] Funds which would 55.14 constitute trust funds if received by a licensee acting as an 55.15 agent must, if received by a licensee acting as principal, be 55.16 placed in a trust account unless a written agreement signed by 55.17 all parties to the transaction specifies a different disposition 55.18 of the funds. The written agreement shall state that the funds 55.19 would otherwise be placed in a real estate trust account. 55.20 Sec. 53. Minnesota Statutes 2002, section 82.24, is 55.21 amended by adding a subdivision to read: 55.22 Subd. 11. [TRUST ACCOUNT RECORDS.] (a) Every broker shall 55.23 keep a record of all trust funds received, including notes, 55.24 savings certificates, uncashed or uncollected checks, or other 55.25 similar instruments. Said records shall set forth: 55.26 (1) date funds received; 55.27 (2) from whom received; 55.28 (3) amount received; 55.29 (4) with respect to funds deposited in a trust account, the 55.30 date of said deposit; 55.31 (5) with respect to funds previously deposited in a trust 55.32 account, the check number or date of related disbursements; and 55.33 (6) a monthly balance of the trust account. 55.34 Each broker shall maintain a formal trust cash receipts 55.35 journal and a formal cash disbursement journal, or similar 55.36 records, in accordance with generally accepted accounting 56.1 principles. All records and funds shall be subject to 56.2 inspection by the commissioner or an agent of the commissioner 56.3 at any time. 56.4 (b) Each broker shall keep a separate record for each 56.5 beneficiary or transaction, accounting for all funds therein 56.6 which have been deposited in the broker's trust bank account. 56.7 These records shall set forth information sufficient to identify 56.8 the transaction and the parties thereto. At a minimum, each 56.9 record shall set forth: 56.10 (1) the date funds are deposited; 56.11 (2) the amount deposited; 56.12 (3) the date of each related disbursement; 56.13 (4) the check number of each related disbursement; 56.14 (5) the amount of each related disbursement; and 56.15 (6) a description of each disbursement. 56.16 Sec. 54. [82.261] [GUARANTEED SALE PROGRAMS.] 56.17 If a broker advertises or offers a guaranteed sale program, 56.18 or other program whereby the broker undertakes to purchase real 56.19 property in the event he or she is unable to effectuate a sale 56.20 to a third party within a specified period of time, a written 56.21 disclosure that sets forth clearly and completely the general 56.22 terms and conditions under which the broker agrees to purchase 56.23 the property and the disposition of any profit at the time of 56.24 resale by the broker must be provided to the seller prior to the 56.25 execution of a listing agreement. 56.26 Sec. 55. Minnesota Statutes 2002, section 82.27, is 56.27 amended by adding a subdivision to read: 56.28 Subd. 8. [REVOCATIONS.] If the commissioner finds that any 56.29 licensee or applicant is no longer in existence or has ceased to 56.30 do business as a broker or salesperson or is subject to an 56.31 adjudication of mental incompetence or to the control of a 56.32 committee, conservator, or guardian, or cannot be located after 56.33 reasonable search, the commissioner may by order revoke the 56.34 license or deny the application. 56.35 Sec. 56. [82.36] [LOAN BROKERS.] 56.36 Subdivision 1. [COMPLIANCE.] Loan brokers shall comply 57.1 with the requirements of subdivisions 2 to 7. 57.2 Subd. 2. [CONTRACT PROVISIONS.] A loan broker shall enter 57.3 into a written contract with each customer and shall provide a 57.4 copy of the written contract to each customer at or before the 57.5 time of receipt of any fee or valuable consideration paid for 57.6 loan brokerage services. The written contract shall: 57.7 (1) identify the escrow account into which the fees or 57.8 consideration will be deposited; 57.9 (2) set forth the circumstances under which the loan broker 57.10 will be entitled to disbursement from the escrow account; 57.11 (3) set forth the circumstances under which the customer 57.12 will be entitled to a refund of all or part of the fee; 57.13 (4) specifically describe the services to be provided by 57.14 the loan broker and the dates by which the services will be 57.15 performed; 57.16 (5) state the maximum rate of interest to be charged on any 57.17 loan obtained; 57.18 (6) contain a statement which notifies the customer of his 57.19 or her rights to cancel the contract pursuant to subdivision 3; 57.20 (7) disclose, with respect to the 12-month period ending 57.21 ten business days prior to the date of the contract in question, 57.22 the percentage of the loan broker's customers for whom loans 57.23 have actually been funded as a result of the loan broker's 57.24 services. This disclosure need not be made for any period prior 57.25 to September 8, 1986; and 57.26 (8) disclose the cancellation rights and procedures set 57.27 forth in subdivision 3. 57.28 Subd. 3. [CANCELLATION.] Any customer of a loan broker who 57.29 pays a fee prior to the time a loan is actually funded shall 57.30 have an unconditional right to rescind the contract for loan 57.31 brokerage services at any time until midnight of the third 57.32 business day after the day on which the contract is signed. 57.33 Cancellation is evidenced by the customer giving written notice 57.34 of cancellation to the loan broker at the address stated in the 57.35 contract. Notice of cancellation, if given by mail, is 57.36 effective upon deposit in a mailbox properly addressed to the 58.1 loan broker with postage prepaid. Notice of cancellation need 58.2 not take a particular form and is sufficient if it indicates by 58.3 any form of written expression the intention of the customer not 58.4 to be bound by the contract. No act of a customer of a loan 58.5 broker shall be effective to waive the right to rescind as 58.6 provided in this subdivision. 58.7 Subd. 4. [ESCROW ACCOUNT.] The loan broker shall deposit 58.8 in an escrow account within 48 hours all fees received prior to 58.9 the time a loan is actually funded. The escrow account shall be 58.10 in a bank located within the state of Minnesota and shall be 58.11 controlled by an unaffiliated accountant, lawyer, or bank 58.12 officer or employee. 58.13 Subd. 5. [RECORDS.] The loan broker shall maintain a 58.14 separate record of all fees received for services performed or 58.15 to be performed as a loan broker. Each record shall set forth 58.16 the date funds are received, the person from whom the funds are 58.17 received, the amount received, the date of deposit in the escrow 58.18 account, the account number, the date the funds are disbursed 58.19 and the check number of the disbursement, and a description of 58.20 each disbursement and the justification for the disbursement. 58.21 Subd. 6. [MONTHLY STATEMENT.] The loan broker shall 58.22 provide to each customer at least monthly a detailed written 58.23 accounting of all disbursements of the customer's funds from the 58.24 trust account. 58.25 Subd. 7. [DISCLOSURE OF LENDERS.] The loan broker shall 58.26 provide to each customer at the expiration of the contract a 58.27 list of the lenders or loan sources to whom loan applications 58.28 were submitted on behalf of the customer. 58.29 Sec. 57. [82.37] [NEGOTIATIONS.] 58.30 Subdivision 1. [WRITTEN OFFERS.] All written offers to 58.31 purchase or lease shall be promptly submitted in writing to the 58.32 seller or lessor. 58.33 Subd. 2. [NONDISCLOSURE OF TERMS OF OFFER.] A licensee 58.34 shall not disclose the terms of an offer to another prospective 58.35 buyer or the licensee representing or assisting the buyer prior 58.36 to the presentation of the offer to the seller. 59.1 Subd. 3. [CLOSING COSTS.] Licensees shall disclose to a 59.2 buyer or a seller at or before the time an offer is written or 59.3 presented that the buyer or seller may be required to pay 59.4 certain closing costs, which may effectively reduce the proceeds 59.5 from the sale or increase the cash outlay at closing. 59.6 Subd. 4. [REQUIRED DOCUMENTS.] Licensees shall furnish to 59.7 the parties to the transaction at the time the documents are 59.8 signed or become available a true and accurate copy of listing 59.9 agreements, earnest money receipts, purchase agreements, 59.10 contracts for deed, option agreements, closing statements, 59.11 truth-in-housing forms, energy audits, and any other record, 59.12 instrument, or document that is material to the transaction and 59.13 that is in the licensee's possession. 59.14 Subd. 5. [CLOSING STATEMENT.] The listing broker or his or 59.15 her designee shall deliver to the seller, at the time of 59.16 closing, a complete and detailed closing statement setting forth 59.17 all of the receipts and disbursements handled by the broker for 59.18 the seller. The listing broker shall also deliver to the buyer, 59.19 at the time of closing, a complete and detailed statement 59.20 setting forth the disposition of all money received in the 59.21 transaction from the buyer. 59.22 Sec. 58. [82.46] [RENTAL SERVICES.] 59.23 Subdivision 1. [LICENSE.] A rental service shall obtain a 59.24 real estate broker's license before engaging in business or 59.25 holding itself out as being engaged in business. No person 59.26 shall act as a real estate salesperson on behalf of a rental 59.27 service without first obtaining a real estate salesperson's 59.28 license on behalf of the rental service. 59.29 Subd. 2. [DISSEMINATION OF UNIT INFORMATION.] A rental 59.30 service shall not provide information regarding a rental unit 59.31 without the express authority of the owner of the unit. 59.32 Subd. 3. [ADVERTISING.] A rental service shall not 59.33 advertise in a manner that is misleading with regards to fees 59.34 charged, services provided, the availability of rental units, or 59.35 rental terms or conditions. 59.36 Sec. 59. [82.48] [STANDARDS OF CONDUCT.] 60.1 Subdivision 1. [ACCESS TO GOVERNING STATUTES AND 60.2 RULES.] Every real estate office and branch office shall have a 60.3 current copy of this chapter and chapter 83 and the rules 60.4 adopted under those chapters, available for the use of licensees. 60.5 Access to the statutes and rules required by this section may be 60.6 made available through an electronic agent. 60.7 Subd. 2. [PENALTY FOR NONCOMPLIANCE.] The methods, acts, 60.8 or practices set forth in sections 82.19, subdivision 10; 60.9 82.191; 82.197; 82.22, subdivision 6a; 82.261; 82.37; and 60.10 subdivisions 1 and 3, are standards of conduct governing the 60.11 activities of real estate brokers and salespersons. Failure to 60.12 comply with these standards shall constitute grounds for license 60.13 denial, suspension, or revocation, or for censure of the 60.14 licensee. 60.15 Subd. 3. [RESPONSIBILITIES OF BROKERS.] (a) [SUPERVISION 60.16 OF PERSONNEL.] Brokers shall adequately supervise the activities 60.17 of their salespersons and employees. Supervision includes the 60.18 ongoing monitoring of listing agreements, purchase agreements, 60.19 other real estate-related documents which are prepared or 60.20 drafted by the broker's salespersons or employees or which are 60.21 otherwise received by the broker's office, and the review of all 60.22 trust account books and records. If an individual broker 60.23 maintains more than one place of business, each place of 60.24 business shall be under the broker's direction and supervision. 60.25 If a partnership or corporate broker maintains more than one 60.26 place of business, each place of business shall be under the 60.27 direction and supervision of an individual broker licensed to 60.28 act on behalf of the partnership or corporation. 60.29 The primary broker shall maintain records specifying the 60.30 name of each broker responsible for the direction and 60.31 supervision of each place of business. If an individual broker, 60.32 who may be the primary broker, is responsible for supervising 60.33 more than one place of business, the primary broker shall, upon 60.34 written request of the commissioner, file a written statement 60.35 specifying the procedures which have been established to ensure 60.36 that all salespersons and employees are adequately supervised. 61.1 Designation of another broker to supervise a place of business 61.2 does not relieve the primary broker of the ultimate 61.3 responsibility for the actions of licensees. 61.4 (b) [PREPARATION AND SAFEKEEPING OF DOCUMENTS.] Brokers 61.5 shall be responsible for the preparation, custody, safety, and 61.6 accuracy of all real estate contracts, documents, and records, 61.7 even though another person may be assigned these duties by the 61.8 broker. 61.9 (c) [DOCUMENTATION AND RESOLUTION OF COMPLAINTS.] Brokers 61.10 shall investigate and attempt to resolve complaints made 61.11 regarding the practices of any individual licensed to them and 61.12 shall maintain, with respect to each individual licensed to 61.13 them, a complaint file containing all material relating to any 61.14 complaints received in writing for a period of three years. 61.15 (d) [DISCLOSURE OF LISTED PROPERTY INFORMATION.] A broker 61.16 may allow any unlicensed person, who is authorized by the 61.17 broker, to disclose any factual information pertaining to the 61.18 properties listed with the broker, if the factual information is 61.19 provided to the unlicensed person in written form by the broker 61.20 representing or assisting the seller(s). 61.21 Sec. 60. [82.51] [UNCLAIMED PROPERTY ACT COMPLIANCE.] 61.22 Upon the initial application for a real estate broker's 61.23 license and upon each annual application for renewal, the 61.24 applicant or broker shall be required to inform the commissioner 61.25 of compliance with the requirements set forth in chapter 345 61.26 relating to unclaimed property. 61.27 Sec. 61. [REVISOR'S INSTRUCTION.] 61.28 The revisor of statutes shall renumber each section of 61.29 Minnesota Statutes listed in column A with the number listed in 61.30 column B. The revisor shall also make the necessary 61.31 cross-reference changes consistent with the renumbering. 61.32 Column A Column B 61.33 82.17, subdivision 13 82.17, subdivision 2 61.34 82.17, subdivision 10 82.17, subdivision 3 61.35 82.17, subdivision 3 82.17, subdivision 4 61.36 82.17, subdivision 11 82.17, subdivision 5 62.1 82.17, subdivision 14 82.17, subdivision 6 62.2 82.17, subdivision 15 82.17, subdivision 7 62.3 82.17, subdivision 16 82.17, subdivision 8 62.4 82.17, subdivision 17 82.17, subdivision 9 62.5 82.17, subdivision 18 82.17, subdivision 10 62.6 82.17, subdivision 19 82.17, subdivision 11 62.7 82.17, subdivision 20 82.17, subdivision 12 62.8 82.17, subdivision 2 82.17, subdivision 13 62.9 82.17, subdivision 21 82.17, subdivision 14 62.10 82.17, subdivision 22 82.17, subdivision 15 62.11 82.17, subdivision 9 82.17, subdivision 16 62.12 82.17, subdivision 8 82.17, subdivision 17 62.13 82.17, subdivision 4 82.17, subdivision 18 62.14 82.17, subdivision 5 82.17, subdivision 19 62.15 82.17, subdivision 23 82.17, subdivision 20 62.16 82.17, subdivision 12 82.17, subdivision 21 62.17 82.17, subdivision 24 82.17, subdivision 22 62.18 82.17, subdivision 6 82.17, subdivision 23 62.19 82.17, subdivision 7 82.17, subdivision 24 62.20 82.33 82.18 62.21 82.191 82.19 62.22 82.201 82.20 62.23 82.196 82.21, subdivision 1 62.24 82.195 82.21, subdivision 2 62.25 82.197 82.22 62.26 82.18 82.23 62.27 82.21 82.24 62.28 82.261 82.27 62.29 82.22, subdivision 1 82.29, subdivision 1 62.30 82.22, subdivision 11 82.29, subdivision 2 62.31 82.22, subdivision 4 82.29, subdivision 3 62.32 82.22, subdivision 2 82.29, subdivision 4 62.33 82.22, subdivision 5a 82.29, subdivision 5 62.34 82.22, subdivision 6c 82.29, subdivision 6 62.35 82.22, subdivision 3 82.29, subdivision 7 62.36 82.22, subdivision 6 82.29, subdivision 8 63.1 82.20, subdivision 2 82.31, subdivision 1 63.2 82.20, subdivision 3 82.31, subdivision 2 63.3 82.20, subdivision 3a 82.31, subdivision 3 63.4 82.20, subdivision 4 82.31, subdivision 4 63.5 82.22, subdivision 5 82.31, subdivision 5 63.6 82.22, subdivision 6a 82.31, subdivision 6 63.7 82.22, subdivision 13 82.32 63.8 82.22, subdivision 8 82.33, subdivision 1 63.9 82.20, subdivision 8, 63.10 paragraph (a) 82.33, subdivision 2 63.11 82.20, subdivision 8, 63.12 paragraph (b) 82.33, subdivision 3 63.13 82.22, subdivision 10 82.33, subdivision 4 63.14 82.22, subdivision 5b 82.33, subdivision 5 63.15 82.22, subdivision 6b 82.33, subdivision 6 63.16 82.20, subdivision 1 82.34, subdivision 1 63.17 82.20, subdivision 2a 82.34, subdivision 2 63.18 82.20, subdivision 5 82.34, subdivision 3 63.19 82.20, subdivision 6 82.34, subdivision 4 63.20 82.20, subdivision 7 82.34, subdivision 5 63.21 82.20, subdivision 9, 63.22 paragraphs (a) and (b) 82.34, subdivision 6 63.23 82.20, subdivision 7a 82.34, subdivision 7 63.24 82.20, subdivision 8a 82.34, subdivision 8 63.25 82.20, subdivision 9a 82.34, subdivision 9 63.26 82.20, subdivision 9, 63.27 paragraph (c) 82.34, subdivision 10 63.28 82.20, subdivision 12 82.34, subdivision 11 63.29 82.20, subdivision 12a 82.34, subdivision 12 63.30 82.20, subdivision 13 82.34, subdivision 13 63.31 82.20, subdivision 14 82.34, subdivision 14 63.32 82.20, subdivision 14a 82.34, subdivision 15 63.33 82.20, subdivision 15 82.34, subdivision 16 63.34 82.27, subdivision 1 82.35, subdivision 1 63.35 82.20, subdivision 10 82.35, subdivision 2 63.36 82.27, subdivision 2 82.35, subdivision 3 64.1 82.27, subdivision 2a 82.35, subdivision 4 64.2 82.27, subdivision 3 82.35, subdivision 5 64.3 82.27, subdivision 4 82.35, subdivision 6 64.4 82.27, subdivision 5 82.35, subdivision 7 64.5 82.27, subdivision 6 82.35, subdivision 8 64.6 82.27, subdivision 7 82.35, subdivision 9 64.7 82.27, subdivision 8 82.35, subdivision 10 64.8 82.31 82.38 64.9 82.20, subdivision 11 82.39, subdivision 1 64.10 82.20, subdivision 11a 82.39, subdivision 2 64.11 82.20, subdivision 11b 82.39, subdivision 3 64.12 82.20, subdivision 11c 82.39, subdivision 4 64.13 82.20, subdivision 11d 82.39, subdivision 5 64.14 82.32 82.40 64.15 82.19, subdivision 1 82.41, subdivision 1 64.16 82.19, subdivision 2 82.41, subdivision 2 64.17 82.19, subdivision 3 82.41, subdivision 3 64.18 82.19, subdivision 4 82.41, subdivision 4 64.19 82.19, subdivision 4a 82.41, subdivision 5 64.20 82.19, subdivision 5 82.41, subdivision 6 64.21 82.19, subdivision 6 82.41, subdivision 7 64.22 82.19, subdivision 7 82.41, subdivision 8 64.23 82.19, subdivision 8 82.41, subdivision 9 64.24 82.19, subdivision 9 82.41, subdivision 10 64.25 82.19, subdivision 10 82.41, subdivision 11 64.26 82.19, subdivision 11 82.41, subdivision 12 64.27 82.19, subdivision 12 82.41, subdivision 13 64.28 82.29 82.42 64.29 82.34 82.43 64.30 82.22, subdivision 12 82.44 64.31 82.23, subdivision 2 82.45, subdivision 1 64.32 82.23, subdivision 3 82.45, subdivision 2 64.33 82.23, subdivision 1 82.45, subdivision 3 64.34 82.28 82.47 64.35 82.176 82.49 64.36 82.24, subdivision 1 82.50, subdivision 1 65.1 82.24, subdivision 2 82.50, subdivision 2 65.2 82.24, subdivision 3 82.50, subdivision 3 65.3 82.24, subdivision 4 82.50, subdivision 4 65.4 82.24, subdivision 5 82.50, subdivision 5 65.5 82.24, subdivision 6 82.50, subdivision 6 65.6 82.24, subdivision 7 82.50, subdivision 7 65.7 82.24, subdivision 8 82.50, subdivision 8 65.8 82.24, subdivision 9 82.50, subdivision 9 65.9 82.24, subdivision 10 82.50, subdivision 10 65.10 82.24, subdivision 11 82.50, subdivision 11 65.11 Sec. 62. [REPEALER.] 65.12 (a) Minnesota Statutes 2002, section 82.22, subdivision 9, 65.13 is repealed. 65.14 (b) Minnesota Rules, parts 2800.0100; 2800.0200; 2800.0300; 65.15 2800.1100; 2800.1200; 2800.1300; 2800.1400; 2800.1500; 65.16 2800.1600; 2800.1700; 2800.1750; 2800.1751; 2800.1800; 65.17 2800.1900; 2800.2000; 2800.2100; 2800.2150; 2805.0100; 65.18 2805.0200; 2805.0300; 2805.0400; 2805.0500; 2805.0600; 65.19 2805.0700; 2805.0800; 2805.0900; 2805.1000; 2805.1100; 65.20 2805.1300; 2805.1400; 2805.1500; 2805.1600; 2805.1700; 65.21 2805.1800; 2805.1900; and 2805.2000, are repealed.