2005 Real Estate Legislative Update

By: MARY S. RANUM & DANIEL A. PIPER

August 2005

Methamphetamine Lab Sites: New Duties for Property Owners

A new Minnesota statute, § 152.0275, has been enacted regarding the treatment of methamphetamine lab sites. A lab site includes any structure or outdoor location occupied or affected by conditions or chemicals typically associated with the manufacturing of methamphetamine. Upon discovery of a contaminated site, the county or local health department shall order that entry to the property will be prohibited until it has been assessed and remediated.

The issuing authority will record with the county recorder an affidavit containing the name of the owner, legal description of the property, and map showing the contaminated area of the property. The affidavit will disclose to any potential transferee that the property was the site of a methamphetamine lab; the location, condition, and circumstances of the lab; and that use of the property may be restricted. Upon proper remediation, the issuing authority will record another affidavit indicating that the order has been vacated. The affidavits must be recorded in a manner that ensures their disclosure in the ordinary course of a title search.

Remediation of the property must be performed by a contractor. Upon completion, the contractor must verify to the property owner and county or local health department that the work satisfies the Department of Health's cleanup guidelines. This verification must be provided within five days of completing the remediation. The county or local health department will then vacate its prohibition order. A contractor who gives a false verification is liable to the property owner for additional costs required for cleanup and reasonable attorney fees. The six-year statute of limitations begins to run from the verification date.

The statute also requires the seller, before signing an agreement to sell or transfer the real property, to disclose in writing to the buyer any knowledge that methamphetamine production has occurred on the property. The disclosure statement must include:

1. whether an order has been issued prohibiting use of the property until the site has been assessed and remediated;
2. whether any such order has been vacated; or
3. if such an order has not been issued but the seller is aware that methamphetamine production occurred on the property, the status of removal and remediation on the property.

Unless the seller and the buyer agree to the contrary in writing before the sale closes, a seller who fails to disclose, to the best of its knowledge, at the time of the sale any of these required facts, is liable to the buyer for costs relating to the remediation of the property and reasonable attorney fees. This cause of action has a six year statute of limitations which begins to run upon the date of the closing.

This statute is effective on January 1, 2006.

Residential Purchase Agreement Cancellation

Minnesota Statute § 559.217, which deals with the cancellation of residential purchase agreements, was amended in 2005. As originally enacted in 2004, the statute allowed for either cancellation with a right to cure or a declaratory cancellation, based on either default or failure of condition. The statute remains unchanged with regard to cancellation with a right to cure; however, it now allows declaratory cancellation only in the case of a failure of condition.

The statute allows a buyer or seller to initiate the cancellation by serving the other party to the purchase agreement with a notice:

1. specifying the real property, including the legal description;
2. specifying the purchase agreement and the default; and
3. stating that the purchase agreement will be cancelled fifteen days after notice is served on the other party unless that other party complies with the condition in default (or stating that the agreement has been cancelled, if a condition cannot be fulfilled).

The statute also amended the form of the notice to be given. In the case of a cancellation with a right to cure, the notice form was modified to state that the purchase agreement will be cancelled unless the unfulfilled conditions specified in the notice have been fulfilled. The notice form will also refer to the ability of a party to counter-cancel by serving notice on the opposing party under the section. In such a case, entitlement to earnest money must be determined by a court or, if agreed to by the parties, through arbitration.

Amendments to the statute more fully describe the right of a party to temporarily or permanently restrain a cancellation proceeding. The court has the discretion to award to the prevailing party filing fees, attorney fees, and costs of service actually expended.

The amendments apply to purchase agreements entered into on or after August 1, 2005.

Foreclosure Advice Notice

Minnesota Statute § 580.041, which requires a foreclosing mortgagee to send notice of foreclosure and a statement encouraging the homeowner to contact the Minnesota Home Finance Agency for additional information, has been amended. The statute now explicitly applies only to owner-occupied properties consisting of one to four family dwelling units. Compliance with, or inapplicability of, the section can be established by recording an affidavit with the county recorder or registrar of titles. The affidavit should state whether the affected property consists of one to four family dwelling units, one of which is occupied by the owner as the owner's principal place of residence.

An action to invalidate a foreclosure sale for failure to give the notice required by this section must begin within one year after the last day of the mortgagor's redemption period.

Cancellation Period After Receipt of Common Interest Community Disclosure

An amendment was made to Minnesota Statute § 515B.4-106, relating to a buyer's right to cancel a purchase agreement for an interest in a "common interest community," such as a condominium. The statute, which was changed last year to shorten the time a buyer is given to review a disclosure statement, has been amended to allow the pre-2004 time period again. If a buyer is not given a disclosure statement more than ten days before execution of the purchase agreement, the buyer may, before conveyance, cancel the agreement within ten days after first receiving the disclosure statement.

A new addition to the statute allows the buyer to modify or waive the ten-day rescission period, in writing, if the buyer has had an opportunity to review the disclosure statement. The sale of the unit may not be conditioned on the buyer's agreement to waive the ten-day period. Also, the buyer cannot be contractually obligated to waive the period, and the purchase agreement itself cannot include a modification or waiver of the period. Modification or waiver must be evidenced by an instrument separate from the purchase agreement and signed by the purchaser more than three days after the buyer signs the purchase agreement.

If the disclosure statement is amended in such a way that the buyer is materially and adversely affected, then the buyer is given ten days to cancel the purchase agreement. This period may also be waived or modified via an instrument separate from the purchase agreement and signed by the purchaser more than three days after the buyer signed the purchase agreement.

The amendment takes effect on August 1, 2005.

Disability Parking

Minnesota Statute § 169.346 has been amended so property owners or managers must ensure that disability parking spaces and the associated access aisles are kept free from obstruction. An owner or manager who allows the space or aisle to be blocked by snow, merchandise, or similar obstructions for 24 hours after receiving a warning from the police is guilty of a felony and subject to a fine of up to $500.

Electric Utility Assessments

An amendment was made to Minnesota Statute § 429.021. The amendment gives city councils the power to assess for costs of burying or altering electric, telecommunications, or cable distribution systems within the public right-of-way if systems exceed the utility's design and construction standards, or those set by law, tariff or franchise, and if the improvements were made pursuant to a petition by the property owners.

Changes to Recording Fees

Sweeping changes have been made to the statutes regarding fees charged for recording documents with county recorders and registrars of titles. Generally, recording fees for deeds and all other documents (including mortgages, satisfactions, releases, assignments and affidavits) will increase to $46. The previous fees were $19.50 for the county recorder and $34.50 for the registrar of titles. Fees for recording plats will be $56. The fee for certified copies of any records or papers will increase from $5 to $10. Additionally, the fees for noncertified (or attested) copies of any document submitted for recording along with the original document will be $2. Upon receipt of the copy or duplicate original and payment of the fee, a county recorder will return it marked "copy" or "duplicate," showing the recording date and, if available, the document number assigned to the original.

The more specific changes to each of the statutes affecting recording fees are detailed below.

County Recording Fees Increased

An amendment to Minnesota Statute § 357.18 makes the following changes to recording fees, beginning July 1, 2005. Fees for:

1. Filing and recording any deed or other instrument will not exceed $46.
2. Documents containing multiple assignments, partial releases or satisfactions will not exceed $40. If the document cites more than four recorded instruments, there will be an additional $10 fee for each additional instrument.
3. Certified copies of any records or papers will be increased from $5 to $10.
4. Non-certified copies of any instrument or writing will be set by the county board for each county.
5. An abstract of title will be determined by the county board, not to exceed $10 per entry, $100 per abstract certificate, $1 per page for each exhibit included in an abstract, and $5 per name for each required name search certification.
6. A copy of an official plat shall be $10 and an additional $5 for the certification of each plat.
7. An amended floor plan, an amended condominium plat, or a common interest community plat increased to a minimum of $50.
8. Recording any plat will be $56.
9. A non-certified copy of any document submitted for recording, if the document is accompanied by a copy or duplicate original, will not exceed $2. Upon receipt of the copy or duplicate original and payment of the fee, a county recorder will return it marked "copy" or "duplicate," showing the recording date and, if available, the document number assigned to the original.

Documents that do not conform to the standards in Minnesota Statute § 507.093(a) should not be rejected unless the document cannot be read and archived.

Additional Fee-Related Changes

A new Minnesota statute, § 357.182, indicates that documents presented for recording within 60 days after July 1, 2005, and that are acknowledged, sworn to before a notary, or certified before July 1, 2005, will not be rejected for failure to include a new filing fee.

The statute also prohibits counties from charging or collecting any fees, other than those prescribed by state law, for tasks or steps performed by a county officer or employee in connection with the receipt, recording and return of any recordable instrument, including:

1. opening mail;
2. handling, transferring, or transporting the instrument;
3. certifying no delinquent property tax or conservation fee; and
4. recording of approved plats, subdivision splits, or combinations; or any other prerequisites to recording, and returning the instrument by regular mail or in person to the person identified in the instrument for that purpose.

Each county recorder and registrar of titles must index any instrument presented in recordable form accompanied by the proper recording fee within 15 days of receipt. Each county is required to establish a policy for the timely handling of instruments that require certification of no-delinquent taxes, payment of state deed tax, mortgage registry tax, or conservation fee. The policy may allow up to an additional five business days to complete the payment and certification process. Beginning in the years 2009 and 2010, however, the maximum time for completion of the recording process is 15 business days. Beginning in 2011, it will be ten business days. Documents recorded electronically must be returned no later than five business days after receipt by the county in a recordable format. With certain exceptions, counties will be required to comply with these requirements on a phase-in basis.

The statute is effective July 1, 2005.

Registrar of Titles' Fees

Minnesota Statute § 508.82 has been amended. As of July 1, 2005, the fees charged by the registrar of titles shall be and not exceed for:

1. Registering a first certificate of title, including issuing a copy of it, $46.
2. Registering each instrument transferring the fee simple title for which a new certificate of title is issued, and for the registration of a new certificate of title, including a copy of it, $46.
3. Entry of each memorial on a certificate, $46. (For multiple entries, $20 thereafter.)
4. Issuing each residue certificate, $40.
5. Exchange certificates, $20 for each certificate cancelled and $20 for each new certificate issued.
6. Each certificate showing condition of the register, $50.
7. Any certified copy of any instrument or writing on file or recorded in the office, $10.
8. Any other non-certified copy of a certificate of title, an amount as determined by the county board.
9. A non-certified copy of any document submitted for recording if the original document is accompanied by a copy or duplicate original, $2.
10. Filing two copies of any plat, $56.
11. Filing an amendment to a declaration, $46 for each certificate upon which the document is registered, and for multiple certificates, $20 thereafter.
12. An amended floor plan, $56.
13. Issuance of a Common Elements Certificate of Title, $40.
14. Filing an amendment to a common interest community declaration and plat, $46 for each certificate upon which the document is registered, and for multiple certificate entries, $20 thereafter, and $56 for the filing of the condominium or common interest community plat or amendment.
15. A copy of a condominium floor plan or a copy of a common interest community plat, $1 per page with a minimum fee of $10.
16. Filing a certified copy of the plat of the survey, $46.
17. Filing a registered land survey in triplicate, $56.
18. Furnishing a certified copy of a registered land survey, $15.

Documents that do not conform to the standards in Minnesota Statute § 507.093(a) should not be rejected unless the document cannot be read and archived.

Similar changes were made to Minnesota Statute § 508A.82, which deals with recording fees related to certificates of possessory title.

State Deed Tax Revisions

Effective for deeds that are both executed and recorded after July 31, 2005, the state deed tax statutes have been revised to provide that if the consideration for the transfer is other than money or the promise to pay money, the consideration is presumed to equal the fair market value of the property conveyed and deed tax is due on such amount. In addition, a transfer which does not transfer beneficial ownership of the property (e.g., transfers between owners and an entity they own in the same percentages, and other similar transfers) is now deemed to be a "designated transfer" and only requires payment of the minimum deed tax of $1.65 (or $1.70 in Hennepin or Ramsey Counties), unless a subsequent transfer occurs within six months that would not qualify as a "designated transfer."

Flag Display Regulated

Minnesota Statute § 500.215 has been adopted rendering void and unenforceable any deed restriction, subdivision regulation, restrictive covenant, local ordinance, contract, rental agreement or regulation, or homeowners association document that limits the right of an owner or tenant of residential property to display the flag of the United States or the State of Minnesota.

There are, however, some exceptions to the prohibitions in the statute. For instance, restrictions that limit the size of the flag to a size customarily used on residential property are permitted. Installation and display of the flag may be restricted to a portion of the property over which the owner of the flag has exclusive use. Illumination may also be restricted. And, the statute does not alter the requirements that the flag be in good condition and not altered or defaced, or affixed in a permanent manner to a portion of property to be maintained by others or in a way that causes more than inconsequential damage to others' property.

An owner or tenant of residential property who is denied the right to display the flags is entitled to recover reasonable attorney fees and expenses if the owner or tenant prevails in enforcing the right. If, however, the party enforcing the restrictions or limitations prevails, then that party is entitled to recover reasonable attorney fees and expenses.

The statute is effective August 1, 2005.