This bill, Minnesota Senate File No. 1962, proposes an amendment to Minnesota Statutes 2024, section 58.13, to limit the enforcement of due-on-sale clauses in certain cases involving residential real estate loans. The key provisions of the bill include:

1. Prohibition on Exercising Due-on-Sale Clauses: Lenders cannot enforce a due-on-sale clause (which typically requires full loan repayment when property ownership changes) in the following five situations:

   • When ownership transfers via a Transfer on Death Deed to a beneficiary.
   • When ownership transfers due to inheritance (whether by will, intestacy, or operation of law for a joint tenant).
   • When the borrower's spouse or children become owners.
   • When ownership changes due to a divorce decree, legal separation, or property settlement where the borrower's spouse becomes an owner.
   • When the property is placed into an inter vivos trust, as long as the borrower remains a beneficiary and occupancy rights are not transferred.

2. Exception for Reverse Mortgages: The above prohibitions do not apply to reverse mortgages made under Minnesota Statutes section 47.58.

3. Private Right of Action: If a lender violates these restrictions, the affected person has the right to sue for equitable relief, as well as to recover reasonable attorney's fees and costs.

Purpose of the Bill

This legislation seeks to protect homeowners and their families from facing forced loan repayment or foreclosure in specific, common life-changing situations (inheritance, divorce, or trust transfers), preventing undue financial hardship.