Minnesota Senate Bill SF4801

Minnesota 2023-2024 Regular Session

• Introduced: 3/11/24
• Refer: 3/11/24

Caption

Due-on-sale clause exercising limitation provision

Impact

The enactment of SF4801 would significantly impact existing real estate laws by offering homeowners more flexibility in transferring their property during times of personal hardship. This involves safeguarding the rights of individuals who inherit property or are transferring assets to family members without triggering financial penalties from lenders. Such protections would especially assist low-income families and those dealing with the transition due to family changes, contributing to housing stability within communities.

Summary

Senate File 4801 is a proposed legislation in Minnesota aimed at limiting the exercise of due-on-sale clauses in certain instances involving residential real estate. This bill seeks to amend Minnesota Statutes to prevent lenders from enforcing due-on-sale clauses when specific types of property transfers occur, such as those that involve the transfer of property through a will, to a spouse, or due to legal separation. By restricting the circumstances under which lenders can activate these clauses, the bill intends to provide greater protection to homeowners and their families during critical situations like death or divorce.

Contention

While the bill is designed to support homeowners, it may face opposition from lenders who argue that due-on-sale clauses serve important purposes in loan agreements. Critics of the bill might claim that limiting these clauses could expose lenders to increased risks and financial losses. Conversely, supporters argue that protecting vulnerable homeowners from aggressive lender actions is a moral imperative, reinforcing the belief that families should not be penalized during life-altering events.