1.2relating to mortgage foreclosures; regulating lender sale of a foreclosed property
1.3to a person who has an unremedied local housing code violation;proposing
1.4coding for new law in Minnesota Statutes, chapter 582.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6    Section 1. [582.034] FORECLOSED PROPERTIES; SALE TO PERSONS WITH
1.7UNREMEDIED HOUSING CODE VIOLATION PROHIBITED.
1.8    Subdivision 1. Definitions. (a) For purposes of this section, the terms defined in
1.9this subdivision have the meanings given.
1.10(b) "Foreclosed property" means real property owned by a mortgage lender that has
1.11acquired the real property through foreclosure of a mortgage secured by the real property.
1.12(c) "Mortgage lender" means an individual or entity that regularly makes, purchases,
1.13or owns loans secured by a mortgage on real property.
1.14(d) "Unremedied property code violation" means a violation of a local government
1.15housing code that has not been corrected or for which a fine or other penalty imposed as a
1.16result of the violation has not been paid.
1.17    Subd. 2. Prohibition; sale to person with unremedied property code violation.
1.18(a) A mortgage lender that owns a foreclosed property shall not sell or otherwise transfer
1.19to an individual or entity title to the foreclosed property that has an unremedied property
1.20code violation in the local governmental jurisdiction in which the property is located.
1.21(b) A mortgage lender that violates paragraph (a) shall, no later than 30 days
1.22after the transfer of title, remedy all unremedied housing code violations for which the
1.23purchaser is responsible in the local governmental jurisdiction in which the property is
1.24located, including payment of any outstanding fines. This requirement applies to all
2.1unremedied violations and unpaid fines regarding all properties owned or formerly owned
2.2by the purchaser, for which the purchaser is responsible.
2.3(c) Upon compliance with paragraph (b), the mortgage lender has a cause of action
2.4against the purchaser for the cost incurred by the mortgage lender under paragraph (b),
2.5plus interest at twice the applicable judgment rate and the mortgage lender's reasonable
2.6attorney fees, costs, and disbursements incurred in pursuing the course of action.
2.7    Subd. 3. Request to local jurisdiction for information. (a) A mortgage lender
2.8may, prior to its transfer of ownership of a foreclosed property, submit a written request to
2.9any local governmental unit in which the foreclosed property is located for information
2.10regarding any unremedied property code violations or unpaid fines for which the
2.11prospective purchaser is responsible to that local governmental unit.
2.12(b) If the local governmental unit states to the mortgage lender in writing that the
2.13prospective purchaser has no unremedied violations or unpaid fines, or fails to respond in
2.14writing to the written request within ten business days, the mortgage lender may transfer
2.15the property to the prospective purchaser without any liability to the local governmental
2.16unit under subdivision 2, paragraph (b).
2.17    Subd. 4. Mortgage lender's right to terminate purchase agreement. If a
2.18mortgage lender learns, through the process described in subdivision 3 or otherwise, that
2.19the prospective purchaser has unremedied property code violations or unpaid fines in the
2.20local governmental jurisdiction in which the property is located, the mortgage lender may,
2.21at any time before the transfer of ownership of the property, unilaterally terminate the
2.22purchase agreement regardless of whether the purchase agreement provides the mortgage
2.23lender the right to terminate the agreement upon that contingency.
2.24EFFECTIVE DATE.This section is effective for sales of foreclosed property that
2.25occur on or after August 1, 2012.