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, cooperative,
1.21a family trust, a residential services provider, or a family limited liability company.
1.22 (d) "Commissioner" means the commissioner of the Minnesota Housing Finance Agency.
1Section 1.
S0365-1 1st EngrossmentSF365 REVISOR JSK
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 reading20501/17/2023
Referred to Housing and Homelessness Prevention
Comm report: To pass as amended and re-refer to Judiciary and Public Safety03/06/2023 2.1 (e) "Cooperative" means a common interest community in which the real estate is owned
2.2by an association, each of whose members is entitled to a proprietary lease by virtue of the
2.3member's ownership interest in the association.
2.4 (f) "Family limited liability company" means a limited liability company meeting the
2.5following standards:
2.6 (1) it has no more than five members;
2.7 (2) all its members are natural persons or family trusts;
2.8 (3) all of its members who are natural persons or spouses of natural persons are related
2.9to each other within the third degree of kindred according to the rules of civil law; and
2.10 (4) its revenue from rent or any other means is paid directly from one member to another.
2.11 (g) "Family trust" means:
2.12 (1) a trust in which:
2.13 (i) a majority of the current beneficiaries are persons or spouses of persons who are
2.14related to each other within the third degree of kindred according to the rules of civil law;
2.15 (ii) all of the current beneficiaries are natural persons or nonprofit corporations or trusts
2.16described in Internal Revenue Code, section 170(c), as amended; and
2.17 (iii) one of the current beneficiaries or a person related to a current beneficiary within
2.18the third degree of kindred according to the rules of civil law is residing at the property
2.19subject to the trust; or
2.20 (2) a charitable remainder trust as defined in Internal Revenue Code, section 664, as
2.21amended, or a charitable lead trust as set forth in Internal Revenue Code, section 170(f), as
2.22amended.
2.23 (h) "Nonprofit corporation" means a charitable trust required to register under 501B; or
2.24a corporation governed by chapter 317A or organized under Internal Revenue Code, section
2.25501(c)(3).
2.26 (i) "Pension or investment fund" means a pension or employee welfare benefit fund,
2.27however organized; a mutual fund; a life insurance company separate account; a common
2.28trust of a bank or other trustee established for the investment and reinvestment of money
2.29contributed to it; a real estate investment trust; or an investment company as defined in
2.30United States Code, title 15, section 80a-3, as amended.
2Section 1.
S0365-1 1st EngrossmentSF365 REVISOR JSK 3.1 (j) "Residential services provider" means an entity licensed as an assisted living facility
3.2under chapter 144G, an entity licensed as a home and community-based services provider
3.3under chapter 245D, or an individual or entity that has a lease with an entity licensed under
3.4chapter 144G or 245D for the purpose of allowing the licensed entity to provide residential
3.5services on the property.
3.6 Subd. 3.Single-family home rental restricted; exemption.(a) No corporate entity
3.7shall:
3.8 (1) directly or indirectly purchase, own, acquire, or otherwise obtain any interest in
3.9property classified as class 1a under section 273.13, subdivision 22; and
3.10 (2) subsequently convert the property into nonhomestead residential real estate containing
3.11one rental unit.
3.12 (b) A corporate entity, real estate developer, or residential building contractor may
3.13petition the commissioner for an exemption from paragraph (a). The commissioner may
3.14issue an exemption if the proposed acquisition:
3.15 (1) would not contradict the purpose of this section; and
3.16 (2) would not have an adverse impact upon the availability of affordable housing.
3.17 (c) The commissioner shall review annually each corporate entity that is issued an
3.18exemption under this paragraph to ensure that the entity continues to meet the criteria in
3.19paragraph (b), clauses (1) and (2). If an entity, developer, or contractor fails to meet the
3.20criteria, the commissioner shall withdraw the exemption and the entity is subject to
3.21enforcement proceedings under subdivision 4. The commissioner shall submit a report with
3.22a list of each entity that is issued an exemption under this paragraph to the chairs and ranking
3.23minority members of the senate and house of representatives housing policy committees
3.24by October 1 of each year.
3.25 Subd. 4.Enforcement.If the attorney general has reason to believe that a corporate
3.26entity is violating this section, the attorney general shall commence an action in the district
3.27court in which any real property relative to such violation is situated. The attorney general
3.28shall file for record with the county recorder or the registrar of titles of each county in which
3.29any portion of said property is located a notice of the pendency of the action as provided in
3.30section 557.02. If the court finds that the property in question is being held in violation of
3.31subdivision 3, it shall enter an order so declaring. The attorney general shall file for record
3.32any such order with the county recorder or the registrar of titles for the county in which the
3.33property is located. Thereafter, the corporate entity shall have a period of one year from the
3Section 1.
S0365-1 1st EngrossmentSF365 REVISOR JSK 4.1date of the order to divest itself of the property. The aforementioned one-year limitation
4.2period shall be deemed a covenant running with the title to the property against the corporate
4.3entity, assignee, or successor. Any property not so divested within the time prescribed shall
4.4be sold at public sale in the manner prescribed by law for the foreclosure of a mortgage by
4.5action. In addition, any prospective or threatened violation may be enjoined by an action
4.6brought by the attorney general in the manner provided by law.
4Section 1.
S0365-1 1st EngrossmentSF365 REVISOR JSK