Minnesota Legislature
HF 2604
as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 11:32pm
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A bill for an act
relating to economic development; allowing a stay of mortgage foreclosure
proceedings under certain conditions; landlord and tenant; providing rights to
tenants of foreclosed property; amending Minnesota Statutes 2008, section
504B.151, subdivision 2, by adding subdivisions; Minnesota Statutes 2009
Supplement, section 504B.151, subdivision 1; proposing coding for new law in
Minnesota Statutes, chapter 582.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2009 Supplement, section 504B.151, subdivision 1,
is amended to read:
Subdivision 1.
Limitation on lease and notice to tenant.
(a) Once a landlord has
received notice of a contract for deed cancellation under section 559.21 or notice of a
mortgage foreclosure sale under chapter 580 or 582, or summons and complaint under
chapter 581, the landlord may only enter into (i) a periodic residential lease agreement
with a term of not more than two months or the time remaining in the contract cancellation
period or the mortgagor's redemption period, whichever is less or (ii) a fixed term
residential tenancy not extending beyond the cancellation period or the landlord's period
of redemption until:
(1) the contract for deed has been reinstated or paid in full;
(2) the mortgage default has been cured and the mortgage reinstated;
(3) the mortgage has been satisfied;
(4) the property has been redeemed from a foreclosure sale; or
(5) a receiver has been appointed.
(b) Before entering into a lease under this section and accepting any rent or security
deposit from a tenant, the landlord must notify the prospective tenant in writing that the
landlord has received notice of a contract for deed cancellation or notice of a mortgage
foreclosure sale as appropriate, and the date on which the contract cancellation period or
the mortgagor's redemption period ends.new text begin The landlord must also inform the prospective
tenant of the tenant's right to continued utility services if the landlord defaults on utility
payments during the foreclosure process.
new text end
(c) This section does not apply to a manufactured home park as defined in section
327C.01, subdivision 5.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 2.
Minnesota Statutes 2008, section 504B.151, subdivision 2, is amended to read:
Subd. 2.
Exception allowing a longer term lease.
deleted text begin This sectiondeleted text end new text begin Subdivision 1new text end
does not apply if:
(1) the holder or the mortgagee agrees not to terminate the tenant's lease other than
for lease violations for at least one year from the commencement of the tenancy; and
(2) the lease does not require the tenant to prepay rent for any month commencing
after the end of the cancellation or redemption period, so that the rent payment would be
due prior to the end of the cancellation or redemption period.
For the purposes of this section, a holder means a contract for deed vendor or a
holder of the sheriff's certificate of sale or any assignee of the contract for deed vendor or
of the holder of the sheriff's certificate of sale.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 3.
Minnesota Statutes 2008, section 504B.151, is amended by adding a
subdivision to read:
new text begin Subd. 5. new text end
new text begin Rights of tenant of foreclosed property. new text end
new text begin
(a) When a holder takes over a
rental property as the result of a foreclosure:
new text end
new text begin
(1) a tenant is deemed by operation of law to become the tenant of the holder; and
new text end
new text begin
(2) all leases, verbal or written, and all terms and conditions of those agreements shall
be transferred to the holder and recorded in a new lease between the holder and the tenant.
new text end
new text begin
(b) A holder shall:
new text end
new text begin
(1) maintain as rental property, property that was used as rental property by the
landlord;
new text end
new text begin
(2) offer renewal leases to tenants of the foreclosed property; and
new text end
new text begin
(3) offer a fair market rent, that is, not exceeding the current rent.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 4.
Minnesota Statutes 2008, section 504B.151, is amended by adding a
subdivision to read:
new text begin Subd. 6. new text end
new text begin Eviction. new text end
new text begin
Notwithstanding any other law to the contrary, a holder must not
begin an eviction action against a tenant without cause. For purposes of this subdivision,
"cause" shall mean one or more of the following:
new text end
new text begin
(1) the tenant has failed to pay a reasonable rent to the foreclosing owner, but only
if the foreclosing owner notified the tenant in writing of the reasonable rent amount, to
whom it was to be paid, and the due date;
new text end
new text begin
(2) the tenant has violated an obligation or covenant of the tenancy or occupancy
other than the obligation to surrender possession upon proper notice and has failed to
cure the violation within a reasonable time after having received written notice from the
foreclosing owner;
new text end
new text begin
(3) the tenant is permitting a nuisance to exist in, or is causing substantial damage
to, the unit, or is creating a substantial interference with the quiet enjoyment of other
occupants;
new text end
new text begin
(4) the tenant is convicted of using or permitting the unit to be used for any illegal
purpose; or
new text end
new text begin
(5) the tenant has refused the foreclosing owner reasonable access to the unit to make
necessary repairs or improvements required by law, inspect the premises as permitted
or required by agreement or by law, or show the rental housing unit to a prospective
purchaser or mortgagee.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 5.
Minnesota Statutes 2008, section 504B.151, is amended by adding a
subdivision to read:
new text begin Subd. 7. new text end
new text begin Termination of tenancy. new text end
new text begin
A holder must not terminate the tenancy of a
tenant of foreclosed property without cause as defined in subdivision 6.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 6.
Minnesota Statutes 2008, section 504B.151, is amended by adding a
subdivision to read:
new text begin Subd. 8. new text end
new text begin Periodic leases. new text end
new text begin
A holder must offer a fixed-term lease option to a tenant
with a periodic lease in place at the time the tenant becomes a tenant of the holder.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 7.
Minnesota Statutes 2008, section 504B.151, is amended by adding a
subdivision to read:
new text begin Subd. 9. new text end
new text begin Applicability. new text end
new text begin
The provisions of subdivisions 5 to 8 apply to all tenants
regardless of when a tenant entered into a rental agreement with the property owner or at
what stage the foreclosure process was in when the rental agreement was entered.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 8.
new text begin
[582.33] FORECLOSURE MORATORIUM.
new text end
new text begin Subdivision 1. new text end
new text begin Emergency declared to exist. new text end
new text begin
The legislature declares that a public
economic emergency exists in the state due to the increase in foreclosure rates. The
legislature declares that these conditions have created a housing emergency that justifies
legislation creating a moratorium on mortgage foreclosures.
new text end
new text begin Subd. 2. new text end
new text begin Stay of foreclosure process. new text end
new text begin
In any proceeding to foreclose a mortgage
upon residential property, whether by judicial process under this chapter and chapter
581 or by advertisement under this chapter and chapter 580, foreclosed borrowers and
tenants of rental property being foreclosed shall be entitled to stay the foreclosure process
and remain in possession of the mortgaged premises by serving a notice of right to stay
upon the mortgage holder or holder of a certificate of sale if different from the mortgage
holder, the court having jurisdiction over a judicial action to foreclose the mortgage, and
the sheriff in the jurisdiction where the mortgaged premises are located. The foreclosure
process shall be stayed effective as of the date of service of the notice of right to stay. The
stay shall continue in effect for a period of two years from the date of service of the notice,
provided that the conditions set forth in subdivision 3 are met.
new text end
new text begin Subd. 3. new text end
new text begin Maintenance of stay. new text end
new text begin
In order to maintain a stay obtained under
subdivision 2:
new text end
new text begin
(1) a foreclosed borrower in possession must maintain homestead status of the
property and continue to reside in the foreclosed property. A tenant in foreclosed property
must continue to reside in the foreclosed property;
new text end
new text begin
(2) after receipt of written notice from the foreclosing lender or holder of a certificate
of sheriff's sale of the name and address to which the monthly payments are to be made,
the amount of the payment, the date that the first monthly payment is due, and the dates
of each subsequent payment, the holder of the stay shall make reasonable, affordable
monthly payments to the foreclosing lender or holder or holder of a certificate of sheriff's
sale. For foreclosed borrowers, the monthly payment shall be the monthly payment when
the mortgage was foreclosed or 41 percent based on the borrower's documented and
verified monthly gross income, whichever is less. For renters in possession of foreclosed
rental property, the monthly payment shall be the current monthly rental amount or
41 percent based on the borrower's documented and verified monthly gross income,
whichever is less; and
new text end
new text begin
(3) the holder of the stay must refrain from conduct that would constitute just cause
for dissolution of the stay, as defined in subdivision 4.
new text end
new text begin Subd. 4. new text end
new text begin Dissolution of stay. new text end
new text begin
Upon 30 days' written notice to the holder of the stay
and any other party designated by the holder of the stay, the foreclosing lender or holder of
a certificate of sheriff's sale shall be entitled to apply to a court in the jurisdiction where
the property is located for an order dissolving the stay. An order dissolving the stay and
granting possession of the property to the foreclosing lender or holder of the certificate
of sheriff's sale may be granted if the court finds that the public interest is served by
granting the order and upon a showing that the foreclosed borrower in possession or
tenant in possession of foreclosed property has failed to comply with the requirements of
subdivision 3 or that other just cause exists. For purposes of this subdivision, "other just
cause" means one or more of the following:
new text end
new text begin
(1) if the holder of the stay is a tenant, that the tenant has violated an obligation or
covenant of the tenancy or occupancy other than the obligation to surrender possession
upon proper notice and has failed to cure the violation within a reasonable time after
having received written notice from the foreclosing owner;
new text end
new text begin
(2) the foreclosed borrower or tenant is permitting a nuisance to exist in, or is
causing substantial damage to, the unit, or is creating a substantial interference with the
quiet enjoyment of other occupants;
new text end
new text begin
(3) the foreclosed borrower or tenant is convicted of using or permitting the unit to
be used for any illegal purpose; or
new text end
new text begin
(4) the foreclosed borrower or tenant has refused the foreclosing owner reasonable
access to the unit for the purpose of making necessary repairs or improvements required
by law, to inspect the premises as permitted or required by agreement or by law, or to show
the rental housing unit to a prospective purchaser or mortgagee.
new text end
new text begin Subd. 5. new text end
new text begin Application. new text end
new text begin
This section applies only to mortgages executed before
the effective date of this section.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end