Committee approves amendment and sends contract-for-deed technical fix to Senate floor

Senate File 505, a technical and clarifying bill amending aspects of last year’s contract-for-deed reforms, was considered and recommended to the Senate floor by the Minnesota Senate Judiciary Committee on Feb. 17.

Senator Mohammed introduced the author’s A1 amendment at the start of the hearing; the committee adopted the amendment by voice vote. The bill’s sponsors said the bill is largely technical — correcting typographical errors, adjusting effective dates and adding two substantive exemptions: sales by the state or political subdivisions (for example, tax-forfeited sales) and sales by a sole-owner LLC whose owner is a natural person.

Testimony and stakeholders: Ron Elwood of Legal Aid and Larry Wertheim (testifying on the author’s behalf) told the committee the changes were vetted with stakeholders including the Minnesota Association of Realtors, the Minnesota State Bar Association and the Minnesota Land Title Association. Wertheim said the political-subdivision exemption was requested after Hennepin County reported selling tax-forfeited land on contracts for deed and that the change was intended to avoid classifying such sales as investor-seller transactions.

Committee members asked detailed questions about how the exemption would be verified in title records, the statute of limitations for claims and the remedies available under the law. Senate counsel and witnesses explained that the statute provides for a rescission remedy (undoing the transaction within two years and returning payments in an action modeled on a similar Iowa statute) and that the statute permits prima facie affidavits and contract-form statements so title examiners can rely on recorded statements without needing to investigate ownership transfers in every case.

Committee action: Senator Seaburger moved to adopt the A1 amendment; the amendment was adopted. Later, Senator Omer (recorded in the hearing as Senator Oma Verbat) moved the committee recommendation that Senate File 505, as amended, be recommended to pass and be referred to the Senate floor; the committee approved the motion by voice vote and the bill advanced to the floor.

Context and concerns: Several senators praised the technical corrections but reiterated broader concerns about the underlying contract-for-deed statute passed last session, including its effects on access to homeownership and the balance between protecting buyers and preserving contract-for-deed as a tool for buyers who cannot qualify for mortgage financing. Committee members asked the sponsors to monitor outcomes and the incidence of investor-seller conduct after implementation.

Next steps: With the Judiciary Committee’s recommendation, Senate File 505 moves to the full Senate for further action. The committee record shows the A1 amendment adoption and the committee’s recommendation to the floor; the hearing transcript does not record a roll-call tally, only voice votes and the motion prevailing.