This Minnesota House bill (H.F. No. 1224), authored by Representative Freiberg, proposes amendments to Minnesota Statutes (Section 58.13) to limit the enforcement of due-on-sale clauses in certain situations. A due-on-sale clause allows a lender to demand full repayment of a loan when a property is transferred.

Key Provisions:

1. Prohibited Enforcement of Due-on-Sale Clauses: A lender cannot enforce a due-on-sale clause when a residential real estate loan is involved in the following types of transfers:

   • A transfer-on-death deed that conveys the deceased borrower's interest to a beneficiary.
   • A transfer due to the death of a joint tenant through inheritance, devise, or operation of law.
   • A transfer to the borrower's spouse or children.
   • A property division due to divorce, legal separation, or settlement, where the borrower’s spouse becomes the property owner.
   • A transfer into a living trust (inter vivos trust) where the borrower remains a beneficiary and the transfer does not change occupancy rights.

2. Exclusion for Reverse Mortgages: These limitations do not apply to reverse mortgages under Minnesota law (Section 47.58).

3. Private Right of Action: Individuals affected by a lender's violation of these provisions can file a lawsuit for equitable relief and may recover reasonable attorney fees and costs.

This bill aims to protect homeowners and their families from unexpected loan acceleration when ownership transfers occur under specific, non-financially motivated circumstances.