| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to real property; prohibiting corporate entities, developers, and contractors |
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| 3 | 3 | | 1.3 from converting single-family homes into a rental property unit; proposing coding |
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| 4 | 4 | | 1.4 for new law in Minnesota Statutes, chapter 500. |
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| 5 | 5 | | 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 6 | 6 | | 1.6 Section 1. [500.35] SINGLE FAMILY HOME RENTAL BY CORPORATE ENTITIES |
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| 7 | 7 | | 1.7RESTRICTED. |
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| 8 | 8 | | 1.8 Subdivision 1.Purpose.The legislature finds that it is in the interests of the state to |
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| 9 | 9 | | 1.9encourage and protect home ownership and the single-family home as a basic housing |
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| 10 | 10 | | 1.10option, to allow families increased access to housing through homeownership, for families |
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| 11 | 11 | | 1.11to build equity and wealth through their housing, and to enhance and promote the stability |
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| 12 | 12 | | 1.12and well-being of families and society in Minnesota. |
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| 13 | 13 | | 1.13 Subd. 2.Definitions.(a) For purposes of this section, the following terms have the |
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| 14 | 14 | | 1.14meanings given. |
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| 15 | 15 | | 1.15 (b) "Affordable housing" means at least two-thirds of its units are rented to an individual |
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| 16 | 16 | | 1.16or family with an annual income of up to 50 percent of the area median income as determined |
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| 17 | 17 | | 1.17by the United States Department of Housing and Urban Development, adjusted for family |
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| 18 | 18 | | 1.18size, that is paying no more than 30 percent of annual income on rent. |
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| 19 | 19 | | 1.19 (c) "Corporate entity" means any partnership, corporation, limited liability company, |
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| 30 | | - | Introduction and first reading20501/17/2023 |
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| 31 | | - | Referred to Housing and Homelessness Prevention |
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| 32 | | - | 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 |
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| 33 | | - | 2.2by an association, each of whose members is entitled to a proprietary lease by virtue of the |
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| 34 | | - | 2.3member's ownership interest in the association. |
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| 35 | | - | 2.4 (f) "Family limited liability company" means a limited liability company meeting the |
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| 36 | | - | 2.5following standards: |
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| 37 | | - | 2.6 (1) it has no more than five members; |
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| 38 | | - | 2.7 (2) all its members are natural persons or family trusts; |
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| 39 | | - | 2.8 (3) all of its members who are natural persons or spouses of natural persons are related |
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| 40 | | - | 2.9to each other within the third degree of kindred according to the rules of civil law; and |
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| 41 | | - | 2.10 (4) its revenue from rent or any other means is paid directly from one member to another. |
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| 42 | | - | 2.11 (g) "Family trust" means: |
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| 43 | | - | 2.12 (1) a trust in which: |
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| 44 | | - | 2.13 (i) a majority of the current beneficiaries are persons or spouses of persons who are |
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| 45 | | - | 2.14related to each other within the third degree of kindred according to the rules of civil law; |
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| 46 | | - | 2.15 (ii) all of the current beneficiaries are natural persons or nonprofit corporations or trusts |
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| 47 | | - | 2.16described in Internal Revenue Code, section 170(c), as amended; and |
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| 48 | | - | 2.17 (iii) one of the current beneficiaries or a person related to a current beneficiary within |
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| 49 | | - | 2.18the third degree of kindred according to the rules of civil law is residing at the property |
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| 50 | | - | 2.19subject to the trust; or |
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| 51 | | - | 2.20 (2) a charitable remainder trust as defined in Internal Revenue Code, section 664, as |
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| 52 | | - | 2.21amended, or a charitable lead trust as set forth in Internal Revenue Code, section 170(f), as |
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| 53 | | - | 2.22amended. |
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| 54 | | - | 2.23 (h) "Nonprofit corporation" means a charitable trust required to register under 501B; or |
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| 55 | | - | 2.24a corporation governed by chapter 317A or organized under Internal Revenue Code, section |
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| 56 | | - | 2.25501(c)(3). |
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| 57 | | - | 2.26 (i) "Pension or investment fund" means a pension or employee welfare benefit fund, |
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| 58 | | - | 2.27however organized; a mutual fund; a life insurance company separate account; a common |
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| 59 | | - | 2.28trust of a bank or other trustee established for the investment and reinvestment of money |
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| 60 | | - | 2.29contributed to it; a real estate investment trust; or an investment company as defined in |
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| 61 | | - | 2.30United States Code, title 15, section 80a-3, as amended. |
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| 30 | + | Introduction and first reading01/17/2023 |
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| 31 | + | Referred to Housing and Homelessness Prevention 2.1 (e) "Family limited liability company" means a limited liability company meeting the |
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| 32 | + | 2.2following standards: |
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| 33 | + | 2.3 (1) it has no more than five members; |
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| 34 | + | 2.4 (2) all its members are natural persons or family trusts; |
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| 35 | + | 2.5 (3) all of its members who are natural persons or spouses of natural persons are related |
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| 36 | + | 2.6to each other within the third degree of kindred according to the rules of civil law; and |
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| 37 | + | 2.7 (4) its revenue from rent or any other means is paid directly from one member to another. |
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| 38 | + | 2.8 (f) "Family trust" means: |
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| 39 | + | 2.9 (1) a trust in which: |
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| 40 | + | 2.10 (i) a majority of the current beneficiaries are persons or spouses of persons who are |
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| 41 | + | 2.11related to each other within the third degree of kindred according to the rules of civil law; |
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| 42 | + | 2.12 (ii) all of the current beneficiaries are natural persons or nonprofit corporations or trusts |
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| 43 | + | 2.13described in Internal Revenue Code, section 170(c), as amended; and |
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| 44 | + | 2.14 (iii) one of the current beneficiaries or a person related to a current beneficiary within |
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| 45 | + | 2.15the third degree of kindred according to the rules of civil law is residing at the property |
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| 46 | + | 2.16subject to the trust; or |
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| 47 | + | 2.17 (2) a charitable remainder trust as defined in Internal Revenue Code, section 664, as |
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| 48 | + | 2.18amended, or a charitable lead trust as set forth in Internal Revenue Code, section 170(f). |
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| 49 | + | 2.19 (g) "Nonprofit corporation" means a nonprofit corporation organized under state nonprofit |
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| 50 | + | 2.20corporation or trust law or qualified for tax-exempt status under federal tax law that was |
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| 51 | + | 2.21incorporated for the purpose of providing affordable housing. |
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| 52 | + | 2.22 (h) "Pension or investment fund" means a pension or employee welfare benefit fund, |
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| 53 | + | 2.23however organized; a mutual fund; a life insurance company separate account; a common |
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| 54 | + | 2.24trust of a bank or other trustee established for the investment and reinvestment of money |
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| 55 | + | 2.25contributed to it; a real estate investment trust; or an investment company as defined in |
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| 56 | + | 2.26United States Code, title 15, section 80a-3. |
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| 57 | + | 2.27 (i) "Real estate developer" means a business that is engaged in real estate development |
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| 58 | + | 2.28or construction. |
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| 59 | + | 2.29 (j) "Residential building contractor" has the meaning given in section 326B.802, |
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| 60 | + | 2.30subdivision 11. |
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| 63 | | - | S0365-1 1st EngrossmentSF365 REVISOR JSK 3.1 (j) "Residential services provider" means an entity licensed as an assisted living facility |
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| 64 | | - | 3.2under chapter 144G, an entity licensed as a home and community-based services provider |
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| 65 | | - | 3.3under chapter 245D, or an individual or entity that has a lease with an entity licensed under |
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| 66 | | - | 3.4chapter 144G or 245D for the purpose of allowing the licensed entity to provide residential |
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| 67 | | - | 3.5services on the property. |
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| 68 | | - | 3.6 Subd. 3.Single-family home rental restricted; exemption.(a) No corporate entity |
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| 69 | | - | 3.7shall: |
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| 70 | | - | 3.8 (1) directly or indirectly purchase, own, acquire, or otherwise obtain any interest in |
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| 71 | | - | 3.9property classified as class 1a under section 273.13, subdivision 22; and |
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| 72 | | - | 3.10 (2) subsequently convert the property into nonhomestead residential real estate containing |
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| 73 | | - | 3.11one rental unit. |
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| 74 | | - | 3.12 (b) A corporate entity, real estate developer, or residential building contractor may |
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| 75 | | - | 3.13petition the commissioner for an exemption from paragraph (a). The commissioner may |
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| 76 | | - | 3.14issue an exemption if the proposed acquisition: |
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| 77 | | - | 3.15 (1) would not contradict the purpose of this section; and |
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| 78 | | - | 3.16 (2) would not have an adverse impact upon the availability of affordable housing. |
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| 79 | | - | 3.17 (c) The commissioner shall review annually each corporate entity that is issued an |
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| 80 | | - | 3.18exemption under this paragraph to ensure that the entity continues to meet the criteria in |
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| 81 | | - | 3.19paragraph (b), clauses (1) and (2). If an entity, developer, or contractor fails to meet the |
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| 82 | | - | 3.20criteria, the commissioner shall withdraw the exemption and the entity is subject to |
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| 83 | | - | 3.21enforcement proceedings under subdivision 4. The commissioner shall submit a report with |
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| 84 | | - | 3.22a list of each entity that is issued an exemption under this paragraph to the chairs and ranking |
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| 85 | | - | 3.23minority members of the senate and house of representatives housing policy committees |
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| 86 | | - | 3.24by October 1 of each year. |
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| 87 | | - | 3.25 Subd. 4.Enforcement.If the attorney general has reason to believe that a corporate |
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| 88 | | - | 3.26entity is violating this section, the attorney general shall commence an action in the district |
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| 89 | | - | 3.27court in which any real property relative to such violation is situated. The attorney general |
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| 90 | | - | 3.28shall file for record with the county recorder or the registrar of titles of each county in which |
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| 91 | | - | 3.29any portion of said property is located a notice of the pendency of the action as provided in |
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| 92 | | - | 3.30section 557.02. If the court finds that the property in question is being held in violation of |
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| 93 | | - | 3.31subdivision 3, it shall enter an order so declaring. The attorney general shall file for record |
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| 94 | | - | 3.32any such order with the county recorder or the registrar of titles for the county in which the |
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| 95 | | - | 3.33property is located. Thereafter, the corporate entity shall have a period of one year from the |
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| 62 | + | 23-01882 as introduced01/09/23 REVISOR JSK/AD 3.1 Subd. 3.Single-family home rental restricted; exemption.(a) No corporate entity, |
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| 63 | + | 3.2real estate developer, or residential building contractor shall: |
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| 64 | + | 3.3 (1) directly or indirectly purchase, own, build, acquire, or otherwise obtain any interest |
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| 65 | + | 3.4in property classified as class 1a under section 273.13, subdivision 22; and |
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| 66 | + | 3.5 (2) subsequently convert the property into nonhomestead residential real estate containing |
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| 67 | + | 3.6one rental unit. |
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| 68 | + | 3.7 (b) A corporate entity, real estate developer, or residential building contractor may |
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| 69 | + | 3.8petition the commissioner for an exemption from paragraph (a). The commissioner may |
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| 70 | + | 3.9issue an exemption if the entity meets the following criteria: |
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| 71 | + | 3.10 (1) the exemption would not contradict the purpose of this section; and |
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| 72 | + | 3.11 (2) the petitioning entity would not have an impact upon the availability of affordable |
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| 73 | + | 3.12housing. |
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| 74 | + | 3.13 (c) The commissioner shall review annually each entity, developer, or contractor that is |
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| 75 | + | 3.14issued an exemption under this paragraph to ensure that the entity continues to meet the |
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| 76 | + | 3.15criteria in paragraph (b), clauses (1) and (2). If an entity, developer, or contractor fails to |
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| 77 | + | 3.16meet the criteria, the commissioner shall withdraw the exemption and the entity is subject |
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| 78 | + | 3.17to enforcement proceedings under subdivision 4. The commissioner shall submit a report |
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| 79 | + | 3.18with a list of each entity that is issued an exemption under this paragraph to the chairs and |
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| 80 | + | 3.19ranking minority members of the senate and house of representatives housing policy |
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| 81 | + | 3.20committees by October 1 of each year. |
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| 82 | + | 3.21 Subd. 4.Enforcement.If the attorney general has reason to believe that a corporate |
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| 83 | + | 3.22entity, real estate developer, or residential building contractor is violating this section, the |
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| 84 | + | 3.23attorney general shall commence an action in the district court in which any real property |
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| 85 | + | 3.24relative to such violation is situated. The attorney general shall file for record with the county |
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| 86 | + | 3.25recorder or the registrar of titles of each county in which any portion of said property is |
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| 87 | + | 3.26located a notice of the pendency of the action as provided in section 557.02. If the court |
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| 88 | + | 3.27finds that the property in question is being held in violation of subdivision 3, it shall enter |
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| 89 | + | 3.28an order so declaring. The attorney general shall file for record any such order with the |
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| 90 | + | 3.29county recorder or the registrar of titles for the county in which the property is located. |
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| 91 | + | 3.30Thereafter, the corporate entity shall have a period of one year from the date of the order |
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| 92 | + | 3.31to divest itself of the property. The aforementioned one-year limitation period shall be |
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| 93 | + | 3.32deemed a covenant running with the title to the property against the entity, developer, |
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| 94 | + | 3.33contractor, assignee, or successor. Any property not so divested within the time prescribed |
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| 95 | + | 3.34shall be sold at public sale in the manner prescribed by law for the foreclosure of a mortgage |
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