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SF1962 (Legislative Session 94 (2025-2026))

Due-on-sale clauses limitation in some instances provision and private right of action provision

Related bill: HF1224

AI Generated Summary

This Minnesota Senate bill (S.F. No. 1962) seeks to limit the enforcement of due-on-sale clauses in certain situations involving residential real estate loans. A due-on-sale clause allows a lender to demand full loan repayment when a property is transferred. The bill amends Minnesota Statutes 2024, section 58.13, by adding a new subdivision that prohibits lenders from invoking a due-on-sale clause in the following cases:

  1. When a transfer-on-death deed conveys the deceased borrower's interest to a beneficiary.
  2. When property is transferred by devise (will), descent (inheritance), or operation of law upon a joint tenant's death.
  3. When the borrower's spouse or children become owners of the property.
  4. When ownership transfers due to divorce, legal separation, or property settlement, where the spouse becomes the owner.
  5. When the borrower transfers the property into a living trust (inter vivos trust) while still remaining a beneficiary and not changing occupancy rights.

Exceptions & Enforcement:

  • The limitation does not apply to reverse mortgages under Minnesota Statutes, section 47.58.
  • Individuals harmed by a lender’s violation of these restrictions have a private right of action, allowing them to seek:
    • Equitable relief, such as court orders preventing enforcement.
    • Reasonable attorney fees and legal costs.

This bill provides greater protections to homeowners and their families by ensuring specific property transfers do not trigger immediate loan repayment demands.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 26, 2025SenateFloorActionIntroduction and first reading
February 26, 2025SenateFloorActionReferred toCommerce and Consumer Protection
March 05, 2025SenateFloorActionWithdrawn and re-referred toJudiciary and Public Safety

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarifies that reverse mortgages under section 47.58 are exempt from new due-on-sale limitations."
      ],
      "removed": [],
      "summary": "This bill references section 47.58 in outlining exceptions for due-on-sale clause limitations in reverse mortgages.",
      "modified": [
        "Provides context for when section 47.58 can be applied in the context of the new bill."
      ]
    },
    "citation": "47.58"
  },
  {
    "analysis": {
      "added": [
        "Specifies that aggrieved individuals have a private right of action despite section 58.18 subdivision 4."
      ],
      "removed": [],
      "summary": "The bill mentions section 58.18 subdivision 4 in the context of specifying the private right of action for violations.",
      "modified": [
        "Further defines the scope of legal actions available under section 58.18 subdivision 4 in light of this bill."
      ]
    },
    "citation": "58.18 subdivision 4"
  }
]

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