Minnesota Contract For Deed

Purchasers who buy a home using a contract for deed will now have a longer cancellation period to make up unpaid monthly payments after new rules went into effect Aug. 1. 2024
The new regulations go beyond giving more time for late payments and will provide a whole framework of protections to homebuyers using the alternative financing mechanism and more strictly regulate investor sellers.

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Among the new rules is that the burden for recording the contract is now on the seller.
Cancellation period for a contract for deed was 60 days. Now a seller must give 30 days’ notice before the new 90-day cancellation period commences, essentially doubling the time given to a buyer.

If an investor seller cancels a contract in the first four years, the buyer must get refunded any portion of their down payment that is more than 10% of the purchase price.

For example, if $100,000 is put into a $250,000 home and the contract is canceled, the buyer should get back $75,000.

If The owner/ Investor didn’t record the contract, they can’t cancel the contract.

If there’s violations of the statute, the buyer can get damages and attorneys fees if the seller/Owner didn’t make the right disclosures, disclose about a mortgage that exists and the buyer gets a 10-day right to cancel after they get all the disclosures.

Minnesota Contract For Deed in effect August 1 2024

Modifies requirements governing contracts for deeds.

>>>This bill defines and prohibits churning; requires investor sellers to make certain disclosures to purchasers prior to the execution of a contract for deed, including disclosure of balloon payments; provides the purchaser with a right to cancel the purchase agreement and receive a refund of all payments; permits the purchaser to bring an action against the investor seller; and permits enforcement by the attorney general.

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Conveyances, taxes paid before recording. Makes a conforming change.

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Requirements of vendor.

Requires, that within four months of the execution of a contact
for deed, the vendor must pay any delinquent taxes necessary for the recording of the contract for
deed; and must record the contract for deed in the office of the county recorder or registrar of titles in the county in which the land is located.

Requires the vendor to make a good faith effort to remove any impediments to recordation. Makes confirming changes.

Civil enforcement.

Removes a reference to a subdivision repealed in 2013.

Private transfer free.

Removes from the prohibition on private transfer fees, as exemption for consideration paid by a contract for deed vendee to a vendor pursuant to the terms of a recorded contract for deed.

Makes conforming changes.

Provides that for contracts for
deeds executed on or after August 1, 2024, the seller’s notice to terminate must state that the purchaser pay, prior to termination, an amount to apply on the attorneys fees actually expended or incurred of $1,000 in order to avoid termination of the contract.

Law prevails over contract;

procedure; conditions. Provides that a contract for deed
executed by an investor seller terminates with 90 days’ notice. No notice may be given unless at least 30 days prior to service of the notice to terminate, conditions of default existed and the investor seller notified the purchaser of the conditions of default.

Termination prohibited for certain transfers regarding residential real property.
Provides that no notice of termination may be given under section 559.21 for any contract for deed
based on certain transfers.

Termination prohibited if vendor fails to record contracts for deed involving
residential real property.

Prohibits termination under 559.21 if the contract for deed was not
recorded or the vendor failed to make a good faith effort to correct defects to recordation.

Affidavit of seller constituting prima facie evidence. Provides when a seller’s affidavit
constitutes prima facie evidence.

Order; proceedings; security.

Permits award of reasonable attorney fees and cost to the
purchaser if the vendor made an appearance and the injunction was granted.

Prima facie evidence of termination.

Provides that it is not necessary to pay current or
delinquent taxes owed on property subject to a contract for deed to record required documents, as
long as the documents are presented to the county auditor for entry upon the transfer record and have the appropriate notation entered.

Contracts for deed involving investor sellers and residential real property;definitions.

Balloon payment.

Defines “balloon payment” as a schedule payment under a CFD
that is significantly larger than regularly scheduled payments.

Churning. Defines “churning.

Contract for deed. Defines “contract for deed.

Investor seller. Defines “investor seller” as a person entering into a contract for deed
to sell residential real property. Includes a list of persons or entities who are not “investor
sellers.

Person. Defines “person” to include natural persons and business entities.

Purchase agreement. Defines “purchase agreement.”

Purchaser. Defines“purchaser.

Residential real property. Defines “residential real property” as real property
consisting of one to four family dwelling units, one of which is intended to be occupied as the
principal residence of the purchaser.

Applicability

Provides that this chapter applies to residential real property where a
purchaser is entering into a contract for deed with an investor seller. Provides statements that may beused as a prima facie evidence that this chapter does not apply.

Contracts for deed involving investor sellers and residential real property;
disclosures.

Disclosures required.

Requires disclosures that must be affixed to the front of any
purchase agreement. Prohibits the investor seller from entering into a contract for deed within
ten days of the execution of the purchase agreement and provision of the required disclosures
and cancellation instructions.

If there is no purchase agreement, the disclosures must be provided ten days before the execution of a contract for deed in a separate document. The parties much acknowledge delivery and receipt of the disclosure.

Disclosure of balloon payment.

Requires disclosure of all balloon payments in a
specific form and type.

Disclosure of price paid by investor seller to acquire property.

Requires the investor seller to disclose the purchase price and date of earliest acquisition of the property by the investor seller, unless the acquisition occurred more than one year prior to the section of the contract for deed. Describes when a person is deemed to be the same person as the investor seller, including if they are under common ownership. Provides the specific form and type for the disclosure.

Disclosure of other essential terms.

Requires disclosure of the purchase price, the
annual interest rate, the amount of any downpayment, and whether the purchaser is responsible
for any other payments. Provides the specific form and type for the disclosure.

General disclosure.

Requires a general disclosure about contract for deeds and
provides the specific form and type for the disclosure.

Amortization schedule. Requires the investor seller to provide an amortization
schedule to the purchaser in a separate document,

Disclosures in other languages.

Requires the investor seller to provide the disclosure in another language if a language other than English was used to advertise or negotiate with the purchaser.

No waiver. Prohibits waiver of this section.

Effects of violation.

In general, a violation of this section has no effect on the validity of the contract for deed

Contracts for deed involving investor sellers and residential real property; rights
and requirements.

Requirement of investor seller if property subject to mortgage.

Prohibits an investor seller from executing a contract for deed on property that is subject to a mortgage and not expressly assumed by the contract for deed purchaser unless the investor seller meets certain requirements, including obtaining the mortgage holder’s consent to the sale and
promising to perform all obligations under the mortgage.

Right to cancel purchase agreement.

Permits a prospective purchaser to cancel a purchase agreement prior to the execution of a contract for deed or within ten days of receiving required disclosures, whichever is earlier. Requires the investor seller to provide the purchaser with information about where a cancellation may be sent. In the event of cancellation, the investor seller may not impose a penalty or fee and must refund all payments made by the prospective purchaser.

Duty of investor seller to account. Requires the investor seller to inform the
purchaser, in separate writing, of the right to request an annual accounting.

Churning prohibited. Prohibits an investor seller from engaging in churning.
Creates a rebuttable presumption that the investor seller engaged in churning if on or after
August 1, 2024, the investor seller executes a CFD and within the previous 48 months, the
investor seller completed a certain number of termination proceedings. Provides when persons
are deemed to be the same investor seller for purposes of determining if the same investor
seller engaged in churning.

Duty of investor seller to refund down payments.

Provides a refund to the purchaser of any portion of the down payment that exceeded ten percent of the purchase price if an investor seller terminates a contract for deed within 48 months of executing the contract.

Contracts for deed involving investor sellers and residential real property; remedies
for violation.

Definition.

Defines “material violation of section 559A.03.”
Remedy for violation of disclosure requirements or churning. Permits the
purchaser to bring an action within two years of the execution of the contract for deed for
material violations or for churning. Permits a prevailing purchaser to rescind the contract and
recover an amount equal to all payments made, reasonable value of improvements made,
damages, and reasonable attorney’s fees and cost.

Remedy for failure of investor seller to procure agreement with mortgage
holder.

If a mortgage holder commences foreclosure of its mortgage based on the sale to the
purchaser under the contract for deed, a purchaser may bring an action against the investor
seller for failure to procure the required agreement from the mortgage holder. A prevailing
purchaser may rescind the contract and recover an amount equal to payments made by the
purchaser, reasonable value of any improvements, damages, and reasonable attorneys fees and
costs.

Defense termination.

Provides that a purchaser’s right to remedy under this section
constitutes grounds for injunctive relief under section 559.211.

Effect of action on title.

Provides that an action under subdivision 2 or 3 is personal
to the purchaser only and does not constitute an interest separate from the purchaser’s interest
in the contract for deed.

Rights cumulative.

Provides that the rights provided under this section do not limit
other rights.

MINNESOTA’S TOP CONTRACT FOR DEED COUNTIES TO SEARCH FOR HOMES.

STEVE VENNEMANN

BROKER

651-334-8312

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