SF1962

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.