Minnesota Statutes 559.202 – Contracts for Deed Involving Residential Property
Subdivision 1.Notice required.
(a) In addition to the disclosures required under sections 513.52 to 513.60, a multiple seller must deliver the notice specified under subdivision 3 to a prospective purchaser as provided under this subdivision.
Terms Used In Minnesota Statutes 559.202
- Appraisal: A determination of property value.
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Lien: A claim against real or personal property in satisfaction of a debt.
- Month: means a calendar month and "year" means a calendar year, unless otherwise expressed; and "year" is equivalent to the expression "year of our Lord. See Minnesota Statutes 645.44
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Person: may extend and be applied to bodies politic and corporate, and to partnerships and other unincorporated associations. See Minnesota Statutes 645.44
- state: extends to and includes the District of Columbia and the several territories. See Minnesota Statutes 645.44
(b) If there is a purchase agreement, the notice must be affixed to the front of the purchase agreement. A contract for deed for which notice is required under this subdivision may not be executed for five business days following the execution of the purchase agreement and delivery of the notice and instructions for cancellation.
(c) If there is no purchase agreement, a multiple seller must deliver the notice in a document separate from any other document or writing to a prospective purchaser no less than five business days before the prospective purchaser executes the contract for deed.
(d) The notice must be:
(1) written in at least 12-point type; and
(2) signed and dated by the purchaser.
(e) If a dispute arises concerning whether or when the notice required by this subdivision was provided to the purchaser, there is a rebuttable presumption that the notice was not provided unless the original executed contract for deed contains the following statement, initialed by the purchaser: “By initialing here ……. purchaser acknowledges receipt at least five business days before signing this contract for deed of the disclosure statement entitled “Important Information About Contracts for Deed” required by Minnesota Statutes, section 559.202, subdivision 3.”
Subd. 2.Exception.
This section does not apply to sales made under chapter 282 or if the purchaser is represented throughout the transaction by either:
(1) a person licensed to practice law in this state; or
(2) a person licensed as a real estate broker or salesperson under chapter 82, provided that the representation does not create a dual agency, as that term is defined in section 82.55, subdivision 6.
Subd. 3.Content of the notice.
The notice must contain the following verbatim language:
“IMPORTANT INFORMATION ABOUT CONTRACTS FOR DEED
Know What You Are Getting Into
(1) A contract for deed is a complex legal agreement. You are NOT a tenant. Mortgage foreclosure laws don’t apply.
(2) You should know ALL of your obligations and rights before you sign a purchase agreement or contract for deed.
(3) You (seller must circle one):
| (a) | DO | DO NOT | have to pay homeowner’s insurance. |
| (b) | DO | DO NOT | have to pay property taxes. |
| (c) | DO | DO NOT | have to make and pay for some or all of the repairs or maintenance, as described in the contract for deed. |
(4) After some time, you may need to make a large lump sum payment (called a “balloon payment”). Know when it is due and how much it will be. You’ll probably need to get a new mortgage, another financial arrangement, or pay for the balance in cash at that time.
(5) If you miss just a single payment or can’t make the balloon payment, the seller can cancel your contract. You will likely lose all the money you have already paid. You will likely lose your ability to purchase the home. The seller can begin an eviction action against you in just a few months.
(6) Within four months of signing the contract for deed, you must “record” it in the office of the county recorder or registrar of titles in the county in which the property is located. If you do not do so, you could face a fine.
Key Things Highly Recommended Before You Sign
(1) Get advice from a lawyer or the Minnesota Home Ownership Center at 1-866-462-6466 or go to www.hocmn.org. To find a lawyer through the Minnesota State Bar Association, go to www.mnfindalawyer.com.
(2) Get an independent, professional appraisal of the property to learn what it is worth.
(3) Get an independent, professional inspection of the property.
(4) Buy title insurance or ask a real estate lawyer for a “title opinion.”
(5) Check with the city or county to find out if there are inspection reports or unpaid utility bills.
(6) Check with a title agent or the county where the property is located to find out if there is a mortgage or other lien on the property and if the property taxes have been paid.
(7) Ensure that your interest rate does not exceed the maximum allowed by law by calling the Department of Commerce to get a recorded message for the current month‘s maximum rate.
If You Are Entering into a Purchase Agreement
(1) If you haven’t already signed the contract for deed, you can cancel the purchase agreement (and get all your money back) if you do so within five business days after getting this notice.
(2) To cancel the purchase agreement, you must follow the provisions of Minnesota Statutes, section 559.217, subdivision 4. Ask a lawyer for help.”
Subd. 4.Right to cancel purchase agreement.
(a) A prospective purchaser may cancel a purchase agreement within five business days after actually receiving the notice required under subdivision 1 if a multiple seller fails to timely deliver the notice, provided that the contract for deed has not been executed by all parties.
(b) A prospective purchaser may cancel the purchase agreement in accordance with the provisions of section 559.217, subdivision 4.
(c) In the event of cancellation, the multiple seller may not impose a penalty and must promptly refund all payments made by the prospective purchaser prior to cancellation.
Subd. 5.Remedies for failure to timely deliver notices.
(a) Notwithstanding any contrary provision in the purchase agreement or contract for deed, a purchaser has a private right of action against a multiple seller who fails to timely deliver the notice required under subdivision 1. The multiple seller is liable to the purchaser for:
(1) the greater of actual damages or statutory damages of $2,500; and
(2) reasonable attorney fees and court costs.
(b) A multiple seller who knowingly fails to timely deliver the notice required under subdivision 1 is liable to the purchaser for triple the actual or statutory damages available under paragraph (a), whichever is greater, provided that the purchaser must elect the remedy provided under either paragraph (a) or this paragraph and may not recover damages under both paragraphs.
(c) The rights and remedies provided in this subdivision are cumulative to, and not a limitation of, any other rights and remedies provided under law. An action brought pursuant to this subdivision must be commenced within four years from the date of the alleged violation.
Subd. 6.Effects of violation.
A violation of this section has no effect on the validity of the contract.
Subd. 7.Duty of multiple seller to account.
Upon reasonable request by the purchaser and no more than once every 12-month period, a multiple seller must provide an accounting of all payments made pursuant to the contract for deed, the amount of interest paid, and the amount remaining to satisfy the principal balance under the contract.
Subd. 8.No waiver.
The provisions of this section may not be waived.