Course 1

MN Uniform Condo Act

1980. Establish process for condo creation/sales + disclosures. Condo declaration- legal description, by-laws, covenants. Consumers must have public offering statement 15 days prior to signing PA (bylaws, rules and regs, liens, budget)

Apartment to Condo Conversion

Uniform condo act. 120 days notice to residents. 60 days from notice to purchase.

MN Condo Act

Regulates after condo is purchased. Establishes ownership and liability of each owner. Area of condo divided by total area of building. Copy of floor plans must be filed. Association incorporated and meets annually.

MN CIC Ownership Act

Post June 1 1994, participatio automatically required. Includes condos, regardless of when they formed. Single family or townhome associations must opt in if created prior to June 1 1994. Gives boards power to amend or adapt rules without resident approval. Maintain reserve funds, carry insurance, resale disclosure certificates.

Timeshare Estate

Fee simple ownership- conveying all rights of ownership. Right to occupy dwelling in 1-2 week intervals. Can be sold or passed down to heirs.

Right to Use Timeshare (Timeshare use)

Does not convey ownership. Right to occupy for 1-2 weeks per year, for specified number of years.

Vacation Ownership (right to use)

One time purchase price, annual maintenance fee, specific years. Lease for 1-2 weeks per year. Buyers can rent, give, or sell their time to others. May be points system.

Vacation Ownership (fee simple)

Prepay vacation. One time purchase, annual maintenance fee, can be enjoyed, sold, or passed down to heirs.

Campground Membership

Buys right to us developers facilities and use any time of year. Must be licensed broker or salesperson to sell.

Manufactured Home (mobile)

Can be sold on MLS. Must be licensed to sell. Can be real property if attached to foundation, own land on which it sits, attached to public or private utility service.

License Law Penalties

Denial, suspension, or revocation. Commissioner may create additional rules, order to how cause, request a hearing. Civil penalties may not exceed 10k. Violations of law are considered gross misdemeanors. Court can fine for contempt.

Commissioner of Commerce Investigations

Investigate, subpoena, hearings, examine records, require licensees to report sales, licensee pay investigation expense, injunctions and cease and desist, publish info, create rules. Respond to commissioner request in 30 days.

Application Requirements

Provide commissioner legal name, phone number, address, business email. Must notify of changes w/in 10 days.

Commissioner

Appointed by governor. Conduct investigations. Examine licensees records, accounts, files, issue penalties.

License Termination

License inactive when not working with broker. Must notify commissioner within 10 days.

License Transfer (automatic)

Immediate switch to new broker= automatic transfer. Must be signed by original broker. Transfer fee and transfer application. Commission will issue a new license.

License Transfer (later)

Original broker must notify commissioner within 10 days. Licensee can apply for transfer any time during remainder of licensing period. If not, must apply for new license.

License Withdrawal

May request any time to withdraw current or pending status. Will be effective 30 days from receipt of request.

Name or Adress Changes

Notify within 10 days- can be online or email. Name change must include document for reason such as court order, divorce decree, or marriage cert.

Loss of Broker License

All licensees become inactive and must transfer. Commissioner may issue 45 day temp permit to qualified agent even if not broker. Extension can occur if good faith effort to become broker.

Notice to Commissioner

Licensees must notify commissioner if court decisions related to fraud, misrepresentation, or conversion of funds. Or if license is revoked in other state.

Broker Responsibilities

Monitor listing and purchase agreements. Review trust account books and records. Investigate and resolve complaints. Name primary brokers at each location. Renew licenses.

Renewal Requirements

30 hours of CE each 24month period. 15 hours must be completed in 1st year. 1 hr agency rep and disclosure law. 1 hours state and federal fair housing/discrimination. Brokers take 1 hr broker- specific CE. Commissioner assigns 3.75 or 7.5 hr modules. Brokers are responsible for renewing licenses. Comply with requirements before June 15th. Expire June 30th.

Associate broker

A broker who chooses to work for another broker

Brokerage

Any business structure, such as a corporation or limited liability company, that holds a real estate broker license

Closing Agent

A person who provides closing services incident to the sale, trade, lease, or loan of residential real estate, including drawing or assisting in drawing papers incident to the sale, trade, lease, or loan, or a person who advertises or claims to be engaged in these activities.

Limited Broker

A broker authorized to conduct real estate transactions as principal only. May not manage or sell property on behalf of others, employ salespersons or agents, or conduct mortgage activities.

Loan Broker

A person who, for a fee, directly or indirectly, negotiates or offers or attempts to negotiate a loan secured or to be secured by a mortgage or other encumbrance on real estate

Primary Broker

 The broker on whose behalf salespersons are licensed. In the case of a corporation licensed as a broker, "primary broker" means each officer of the corporation who is individually licensed to act as broker for the corporation. In the case of a partnership, "primary broker" means each partner licensed to act as a broker for the partnership. In the case of a limited liability company licensed as a broker, "primary broker" means each officer of the company who is individually licensed to act as a broker for the company.

Real Estate Broker

A person who, for another and for a fee, or with the intention or expectation of receiving compensation, lists, sells, exchanges, buys or rents, manages, or offers or attempts to negotiate a sale, option, exchange, purchase or rental of an interest or estate in real estate, or claims to be engaged in these activities

Broker Price Opinion (BPO)

BPOs are opinions of a property’s value that are typically less detailed than a comparative market analysis or appraisal. Lenders will often order them when valuing foreclosed properties.

Override Clause

Override clauses only come into effect if the licensee was the procuring cause of the sale. For example, if a buyer’s broker had shown the property to the buyer, and the buyer bought it after the buyer’s representation agreement expired, the buyer’s broker would still be owed a commission.

Protective List

 The protective list is related to the override clause. If a seller’s broker showed or began negotiating the sale of the property to a buyer, and that buyer is on the protective list, the seller’s broker is owed a commission of the property is sold to that buyer, even after the listing agreement expires. This list must be provided to the seller within 72 hours of the expiration of the listing agreement. 

Rental Service

• Statute: “A person who gathers and catalogs information concerning apartments or other units of real estate available for rent, and who, for a fee, provides information intended to meet the individual needs of specifically identified lessors or prospective lessees”

• Explanation: Newspapers and other periodicals that merely advertise rentals aren’t considered to be rental services.

Residential Real Property

• “Property occupied by, or intended to be occupied by, one to four families as their residence”

• Explanation: Properties that are designed to house five or more families are considered commercial properties.

 

Salesperson License Requirments

• Must be 18 years old

• No experience required

• Must take 90 hours (three 30-hour courses) of approved content (must be completed within 12 months of application) 

• Must score at least 75% on both National and State Law portions

• Must apply within 12 months after exam pass 

Broker License Requirements

• Must be 18 years old

• Must have three years of experience as a salesperson or broker in another state within the prior five years 

• Must take 30 hours of approved coursework (must be completed within 12 months of application) 

• Must score at least 75% on both National and State Law portions

• Must apply within 12 months after exam pass 

Limited Broker Requirements

• Must be 18 years old

• No experience required

• No educational requirements

MN Reciprocal States

CO, IA, NE, ND, OK, SD 

You Don’t Need a License If:

• Licensed practicing attorneys

• Auctioneers

• A receiver, trustee, administrator, guardian, or executor acting under a court order or judgment

• People selling cemetery burial plots

• A custodian, janitor, or employee of a residential property manager who leases units

• Banks regulated as lenders 

• Public officials engaged in official duties

• Certain builders (mustn’t exceed 25 transactions in a 12-month period)

• Individuals selling franchises

• Securities dealers

Trust Funds Can Be:

down payments, earnest money deposits, client rents, tax or insurance escrow payments, or security deposits. Earnest money must be deposited within 3 days of receipt or acceptance of PA.

Non-Depositable Earnest Money:

If earnest money is received in a non-depositable form (promissory notes, Treasury bill, bond, jewelry, stock certificate, or other item of value), it must be deposited immediately with an authorized escrow agent. Agent must issue receipt.

Commingling

Commingling refers to mingling personal or business funds with trust funds in the same account. For example, depositing an earnest money check into the brokerage operations account is commingling. Depositing a commission check into a trust account is another example of commingling. ILLEGAL

Conversion

Conversion is the use of trust funds for any reason other than what it's intended for. For example, if the trust account holds earnest money from the Smith transaction and the funds are used, even temporarily, to pay for a brokerage expense, this is conversion. ILLEGAL

Disbursement of Trust Funds

• Closing or cancellation of the transaction

• Written agreement of the parties

• Pursuant to an affidavit

• A court order

Trust Account Records Include:

• Date funds received

• From whom

• Amount

• Date of deposit

• Check number and/or date or related disbursements

• Monthly balance of account

Return of Earnest Money

If an offer is rejected, earnest money must be returned no later than next business day.

Minnesota’s Real Estate Education, Research, and Recovery Fund

Education, research, and compensating consumers. Administered by commissioner of commerce. New licensees pay $30, $20 to renew. 150k disbursement per transaction, with a maximum of 250k per licensee. Licensee must repay 2x the disbursement plus 12% interest to reinstate their license.

Gauranteed Sale Program

If offering a guaranteed sale program, licensees must provide to the seller a written disclosure of all terms, including how proceeds from the sale will be shared, prior to entering into a listing agreement.

Trainee Real Estate Appraiser

Under a certified residential real property appraiser or a certified general real property appraiser, may appraise properties that the supervisor is eligible to appraise. Trainees may work with more than one supervising appraiser.

Qualifications

• Complete 75 hours of Minnesota-approved pre-licensing appraiser coursework

  • Includes the 15-hour national USPAP course

  • Must be completed within five years before application submission

• Complete the Minnesota Supervisor/Trainee Appraiser Course

• Submit an application with $150 renewal fee plus a $30 technology fee

Licensed Residential Real Property Appraiser

Appraisal Scope

May perform appraisals for federally-related transactions and non-complex one- to four-unit residential properties valued at less than $1M and complex one- to four-unit residential units valued at less than $400,000.

Qualifications

• Complete 1,000 hours of experience over the course of at least 6 months

• Complete 150 hours of education, including 75 general appraisal coursework and the15-hour national USPAP courses

• Submit an application with $230 renewal fee plus a $30 technology fee

Certified Residential Real Property Appraiser

Appraisal Scope

May appraise residential one- to four-unit properties regardless of the value or complexity. This includes vacant or unimproved land used for one- to four-unit residential unit purposes.

Qualifications

• Complete 1,500 hours of experience over the course of at least 12 months

• Complete 200 hours of education with emphasis on appraisal of 1-4-unit residential properties, including the 15-hour USPAP course

• Complete college-level education such as a bachelor's degree in any field, an associate's degree in specific fields, or 30 hours of college or College Level Examination Program credits in specified topic areas, or any combination of these education hours that includes all required topics and hours

• Submit an application with $230 renewal fee plus a $30 technology fee

Certified General Real Property Appraiser

Appraisal Scope

May appraise all types of real property. 

Qualifications

• Complete 3,000 hours of experience over the course of at least 18 months, with at least 1,500 hours in nonresidential appraisals

• Complete 300 hours of education with emphasis on appraisal of nonresidential properties, including completing the 15-hr USPAP course

• Complete college-level education such as a bachelor's degree in any field, an associate's degree in specific fields, or 30 hours of college or College Level Examination Program credits in specified topic areas, or any combination of these education hours that includes all required topics and hours

• Submit an application with $230 renewal fee plus a $30 technology fee

Temporary Practice Appraiser

Appraisal Scope

May appraise property for which the appraiser is qualified in the home-licensed state. The temporary designation permits appraisers to perform a single appraisal assignment in the state; that assignment may or may not include multiple properties for a single client.

Qualifications

• Licensed or certified in another state

• Working on a property transaction that will take no more than 12 months

• Submit an application with $150 renewal fee

Minnesota Securities Act

a security may include a note, stock, bond, debenture, investment contract, and mineral rights, to name a few. Need to register as a security when:

1. Selling stock in a company in which the seller owns investment property.

2. Selling interests in a company that owns property and leases the mineral rights.

3. Accepting short-term investments pursuant to promissory notes with the goal of fixing up a property.

Subdivision Registration (notification)

Can not be more than 100 lots. 20 days prior to offering, notify commissioner of name, adress, form, date of org. Certificate of title insurance or title opinion. Range of prices, rates, list of fees. Signed and approved plat map. Filing fee of $150.

Subdivision Registration (qualification)

More than 100 lots. Filed to commissioner. Application, proposed public offering statement, filing fee of $400 + $1 for each lot (max 3500). Financial statement of previous fiscal year.

MN Subdivided Land Act

Statute 83. Protect consumers- regulate subdivision sales practices. Registration requirements, public offering statements, disclosures, license requirements (subdividers mus be licensed to sell- unless land is registered as security). PAs are voidable within 3 years if subdivision isn’t registered or public offering statement wasn’t provided.

universal agent

is someone who is empowered to do anything the principal could do personally. This type of agent has the most authority; in fact, a universal agent’s authority is virtually unlimited. One example of a universal agent would be a court-appointed guardian, whose authority would likely be over a person and the person’s property. As a real estate agent, it is highly unlikely you’d be appointed as a client’s universal agent.

transaction coordinator

is a non-agent. They merely act as a facilitator to a party, basically assisting the parties with paperwork, but not acting as a fiduciary to either one

general agent

In carrying out the terms of the property management agreement, you would collect rent, evict tenants, and enter into leases with tenants on behalf of your client, the property owner. This is similar to the duties the holder of a power of attorney would have, but a power of attorney may not be required. The property management agreement will spell out the scope of your authority to act on the principal’s behalf. A general agent in this capacity does offer continuity of service, because the agent is authorized to conduct a series of transactions.

designated agent

is a licensee who’s appointed by the brokerage’s broker to represent one party. This form of agency allows two parties to a transaction to be represented by a single brokerage. The broker appoints one licensee to act as the designated agent for one party (the buyer, for example), and a different licensee to act as the designated agent for the other party (the seller). In these situations, only the licensee appointed to the client owes fiduciary duties to that client, and the broker becomes a dual agent. In some states, a designated agent is known as an appointed agent, or assigned agent.

Special Agent/Limited Agent

A special agent is also known as a limited agent. This means you don’t make any decisions or enter into any contracts on your client’s behalf, but simply act as an intermediary, liaison, and negotiator, conveying and representing your client’s wishes. In addition, a special agent doesn’t offer continuity of service. Once the transaction is complete, your role as an agent ends. To take this lack of continuity even further, some licensees will merely post a seller’s listing on the MLS but won’t act in any advisory capacity to the seller. Another example of a limited agent would be an escrow officer. The escrow officer is acting on behalf of both parties to a transaction, but in a limited role. The escrow officer doesn’t represent either party, and when the transaction is complete, the escrow officer’s relationship with the parties ends.

Fiduciary Duties (OLDCAR)

• Obedience: Carry out the client’s lawful instructions

• Loyalty: Put the client’s interests above all others, including the licensee’s

• Disclosure: Provide all information to parties as required by law

• Confidentiality: Keep the client’s information confidential, with the exception of any information lawfully required to be disclosed

• Accounting: Responsibly handle any funds entrusted to the licensee

• Reasonable skill and care: Act at the utmost professional level in serving the client

Customer Duties (DRHP)

• Disclosure of material facts

• Reasonable skill and care

• Honesty and fair dealing

• Prompt presentation of all written offers and counter-offers

Third Party

Any person who is involved in a transaction in which you’re involved—and who is not your client—is a third party to you. Customers, lenders, appraisers, and other service providers are all third parties.

Statute 82.70 Compensation

Licensee to Receive Only from, or Authorized by, Broker. In connection with a real estate or business opportunity transaction, a real estate broker or real estate salesperson shall not offer, pay, or give, and a person shall not accept, any compensation or other thing of value from a real estate broker or real estate salesperson by way of commission-splitting, rebate, referral fees, finder's fees, or otherwise.

Client Duties

Compensation, Information, Indemnification, Availability

Federal AntiTrust Violations

• Group boycotting

• Price fixing

• Market allocation

• Tie-in arrangements

Additional Anti Trust Violations (MN)

• Collusive bidding

• Production control

• Refusal to deal

• Discriminatory acts/agreements

Anti Trust Violation Penalties (MN act)

Civil penalties- 50k, not complying w court judgment, 100k. Violations are a felony, 50k penalty or 7 years in prison.