This bill, authored by Representative Niska and referred to the Committee on Commerce Finance and Policy, seeks to adopt the Uniform Special Deposits Act in Minnesota by introducing new statutes under Chapter 47.

Key Provisions of the Bill:

1. Creation of the Uniform Special Deposits Act (§§ 47.90 – 47.985)

   • Establishes legal guidelines for special deposit accounts in financial institutions such as banks, credit unions, and savings associations.

2. Definitions (§ 47.905)

   • Defines key terms, including account agreements, banks, beneficiaries, depositors, contingencies, creditor processes, and permissible purposes for special deposits.
     
   • A special deposit is a deposit with specified conditions and intended beneficiaries.

3. Scope and Choice of Law (§ 47.91)

   • Applies the Act to special deposits under account agreements.
     
   • Parties may choose Minnesota courts for resolving disputes.
     
   • Does not override existing fraudulent transfer laws.

4. Variation by Agreement (§ 47.915)

   • Generally, financial institutions cannot waive liability except in specified circumstances.
     
   • Amendments to account agreements can only be made without a beneficiary’s consent if explicitly permitted.

5. Requirements for Special Deposits (§ 47.92 - 47.925)

   • A special deposit must:
     
     1. Be established under an account agreement.
        
     2. Have at least two beneficiaries (which may include the depositor).
        
     3. Be denominated in lawful currency.
        
     4. Serve a permissible purpose (e.g., escrow, security deposits, financial market transactions).
        
     5. Be subject to a contingency (an event triggering payment).
        

6. Obligations and Payments to Beneficiaries (§ 47.93)

   • A bank must pay when the contingency occurs.
     
   • If insufficient funds exist, the bank may partially pay beneficiaries.
     
   • Payments may be made via account deposits or other permitted methods.

7. Property Interests (§ 47.935, § 47.94)

   • Neither the depositor nor the beneficiary has a direct ownership interest in the special deposit.
     
   • Creditor claims are enforceable only if the bank has a legal duty to pay.

8. Bank Rights and Duties (§ 47.96 - § 47.965)

   • Banks are not fiduciaries for these accounts.
     
   • Their sole duty is compliance with the agreement.
     
   • Rights to recoupment and setoff are limited.

9. Termination of Special Deposits (§ 47.97)

   • Special deposits automatically terminate after five years unless a different period is set.
     
   • Unclaimed funds will be returned to the depositor or designated beneficiaries.
     

10. Legal Principles and Uniform Interpretation (§ 47.975 - § 47.98)

    • Existing laws on consumer protection, fraud, unfair dealing, and unclaimed property apply.
      
    • Courts should interpret the Act uniformly across jurisdictions.

11. Transitional Provisions (§ 47.985)

    • Applies to special deposit agreements made on or after August 1, 2025.
      
    • Older agreements can be converted to special deposits with all parties’ consent.

Overall Purpose:

• This bill standardizes regulations for special deposit accounts, providing clear rules on the rights of banks, depositors, and beneficiaries.
  
• It enhances legal certainty in escrow-related transactions, financial markets, and secured funds management.
  

If passed, the bill will provide a structured legal framework for handling special deposits in financial institutions across Minnesota. 🚀