1.1 A bill for an act
1.2 relating to real property; prohibiting corporate entities, developers, and contractors
1.3 from converting single-family homes into a rental property unit; proposing coding
1.4 for new law in Minnesota Statutes, chapter 500.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [500.35] SINGLE FAMILY HOME RENTAL BY CORPORATE ENTITIES
1.7RESTRICTED.
1.8 Subdivision 1.Purpose.The legislature finds that it is in the interests of the state to
1.9encourage and protect home ownership and the single-family home as a basic housing
1.10option, to allow families increased access to housing through homeownership, for families
1.11to build equity and wealth through their housing, and to enhance and promote the stability
1.12and well-being of families and society in Minnesota.
1.13 Subd. 2.Definitions.(a) For purposes of this section, the following terms have the
1.14meanings given.
1.15 (b) "Affordable housing" means at least two-thirds of its units are rented to an individual
1.16or family with an annual income of up to 50 percent of the area median income as determined
1.17by the United States Department of Housing and Urban Development, adjusted for family
1.18size, that is paying no more than 30 percent of annual income on rent.
1.19 (c) "Corporate entity" means any partnership, corporation, limited liability company,
1.20pension or investment fund, or trust but does not include a nonprofit corporation, a family
1.21trust, or a family limited liability company.
1.22 (d) "Commissioner" means the commissioner of the Minnesota Housing Finance Agency.
1Section 1.
23-01882 as introduced01/09/23 REVISOR JSK/AD
SENATE
STATE OF MINNESOTA
S.F. No. 365NINETY-THIRD SESSION
(SENATE AUTHORS: BOLDON, Port, Maye Quade, Gustafson and Dziedzic)
OFFICIAL STATUSD-PGDATE
Introduction and first reading01/17/2023
Referred to Housing and Homelessness Prevention 2.1 (e) "Family limited liability company" means a limited liability company meeting the
2.2following standards:
2.3 (1) it has no more than five members;
2.4 (2) all its members are natural persons or family trusts;
2.5 (3) all of its members who are natural persons or spouses of natural persons are related
2.6to each other within the third degree of kindred according to the rules of civil law; and
2.7 (4) its revenue from rent or any other means is paid directly from one member to another.
2.8 (f) "Family trust" means:
2.9 (1) a trust in which:
2.10 (i) a majority of the current beneficiaries are persons or spouses of persons who are
2.11related to each other within the third degree of kindred according to the rules of civil law;
2.12 (ii) all of the current beneficiaries are natural persons or nonprofit corporations or trusts
2.13described in Internal Revenue Code, section 170(c), as amended; and
2.14 (iii) one of the current beneficiaries or a person related to a current beneficiary within
2.15the third degree of kindred according to the rules of civil law is residing at the property
2.16subject to the trust; or
2.17 (2) a charitable remainder trust as defined in Internal Revenue Code, section 664, as
2.18amended, or a charitable lead trust as set forth in Internal Revenue Code, section 170(f).
2.19 (g) "Nonprofit corporation" means a nonprofit corporation organized under state nonprofit
2.20corporation or trust law or qualified for tax-exempt status under federal tax law that was
2.21incorporated for the purpose of providing affordable housing.
2.22 (h) "Pension or investment fund" means a pension or employee welfare benefit fund,
2.23however organized; a mutual fund; a life insurance company separate account; a common
2.24trust of a bank or other trustee established for the investment and reinvestment of money
2.25contributed to it; a real estate investment trust; or an investment company as defined in
2.26United States Code, title 15, section 80a-3.
2.27 (i) "Real estate developer" means a business that is engaged in real estate development
2.28or construction.
2.29 (j) "Residential building contractor" has the meaning given in section 326B.802,
2.30subdivision 11.
2Section 1.
23-01882 as introduced01/09/23 REVISOR JSK/AD 3.1 Subd. 3.Single-family home rental restricted; exemption.(a) No corporate entity,
3.2real estate developer, or residential building contractor shall:
3.3 (1) directly or indirectly purchase, own, build, acquire, or otherwise obtain any interest
3.4in property classified as class 1a under section 273.13, subdivision 22; and
3.5 (2) subsequently convert the property into nonhomestead residential real estate containing
3.6one rental unit.
3.7 (b) A corporate entity, real estate developer, or residential building contractor may
3.8petition the commissioner for an exemption from paragraph (a). The commissioner may
3.9issue an exemption if the entity meets the following criteria:
3.10 (1) the exemption would not contradict the purpose of this section; and
3.11 (2) the petitioning entity would not have an impact upon the availability of affordable
3.12housing.
3.13 (c) The commissioner shall review annually each entity, developer, or contractor that is
3.14issued an exemption under this paragraph to ensure that the entity continues to meet the
3.15criteria in paragraph (b), clauses (1) and (2). If an entity, developer, or contractor fails to
3.16meet the criteria, the commissioner shall withdraw the exemption and the entity is subject
3.17to enforcement proceedings under subdivision 4. The commissioner shall submit a report
3.18with a list of each entity that is issued an exemption under this paragraph to the chairs and
3.19ranking minority members of the senate and house of representatives housing policy
3.20committees by October 1 of each year.
3.21 Subd. 4.Enforcement.If the attorney general has reason to believe that a corporate
3.22entity, real estate developer, or residential building contractor is violating this section, the
3.23attorney general shall commence an action in the district court in which any real property
3.24relative to such violation is situated. The attorney general shall file for record with the county
3.25recorder or the registrar of titles of each county in which any portion of said property is
3.26located a notice of the pendency of the action as provided in section 557.02. If the court
3.27finds that the property in question is being held in violation of subdivision 3, it shall enter
3.28an order so declaring. The attorney general shall file for record any such order with the
3.29county recorder or the registrar of titles for the county in which the property is located.
3.30Thereafter, the corporate entity shall have a period of one year from the date of the order
3.31to divest itself of the property. The aforementioned one-year limitation period shall be
3.32deemed a covenant running with the title to the property against the entity, developer,
3.33contractor, assignee, or successor. Any property not so divested within the time prescribed
3.34shall be sold at public sale in the manner prescribed by law for the foreclosure of a mortgage
3Section 1.
23-01882 as introduced01/09/23 REVISOR JSK/AD 4.1by action. In addition, any prospective or threatened violation may be enjoined by an action
4.2brought by the attorney general in the manner provided by law.
4Section 1.
23-01882 as introduced01/09/23 REVISOR JSK/AD