new text begin [500.35] SINGLE FAMILY HOME RENTAL BY CORPORATE ENTITIES
RESTRICTED.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose. new text end

new text begin The legislature finds that it is in the interests of the state to
encourage and protect home ownership and the single-family home as a basic housing
option, to allow families increased access to housing through homeownership, for families
to build equity and wealth through their housing, and to enhance and promote the stability
and well-being of families and society in Minnesota.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have the
meanings given.
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new text begin (b) "Affordable housing" means at least two-thirds of its units are rented to an individual
or family with an annual income of up to 50 percent of the area median income as determined
by the United States Department of Housing and Urban Development, adjusted for family
size, that is paying no more than 30 percent of annual income on rent.
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new text begin (c) "Corporate entity" means any partnership, corporation, limited liability company,
pension or investment fund, or trust but does not include a nonprofit corporation, a family
trust, or a family limited liability company.
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new text begin (d) "Commissioner" means the commissioner of the Minnesota Housing Finance Agency.
new text end

new text begin (e) "Family limited liability company" means a limited liability company meeting the
following standards:
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new text begin (1) it has no more than five members;
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new text begin (2) all its members are natural persons or family trusts;
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new text begin (3) all of its members who are natural persons or spouses of natural persons are related
to each other within the third degree of kindred according to the rules of civil law; and
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new text begin (4) its revenue from rent or any other means is paid directly from one member to another.
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new text begin (f) "Family trust" means:
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new text begin (1) a trust in which:
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new text begin (i) a majority of the current beneficiaries are persons or spouses of persons who are
related to each other within the third degree of kindred according to the rules of civil law;
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new text begin (ii) all of the current beneficiaries are natural persons or nonprofit corporations or trusts
described in Internal Revenue Code, section 170(c), as amended; and
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new text begin (iii) one of the current beneficiaries or a person related to a current beneficiary within
the third degree of kindred according to the rules of civil law is residing at the property
subject to the trust; or
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new text begin (2) a charitable remainder trust as defined in Internal Revenue Code, section 664, as
amended, or a charitable lead trust as set forth in Internal Revenue Code, section 170(f).
new text end

new text begin (g) "Nonprofit corporation" means a nonprofit corporation organized under state nonprofit
corporation or trust law or qualified for tax-exempt status under federal tax law that was
incorporated for the purpose of providing affordable housing.
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new text begin (h) "Pension or investment fund" means a pension or employee welfare benefit fund,
however organized; a mutual fund; a life insurance company separate account; a common
trust of a bank or other trustee established for the investment and reinvestment of money
contributed to it; a real estate investment trust; or an investment company as defined in
United States Code, title 15, section 80a-3.
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new text begin (i) "Real estate developer" means a business that is engaged in real estate development
or construction.
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new text begin (j) "Residential building contractor" has the meaning given in section 326B.802,
subdivision 11.
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new text begin Subd. 3. new text end

new text begin Single-family home rental restricted; exemption. new text end

new text begin (a) No corporate entity,
real estate developer, or residential building contractor shall:
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new text begin (1) directly or indirectly purchase, own, build, acquire, or otherwise obtain any interest
in property classified as class 1a under section 273.13, subdivision 22; and
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new text begin (2) subsequently convert the property into nonhomestead residential real estate containing
one rental unit.
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new text begin (b) A corporate entity, real estate developer, or residential building contractor may
petition the commissioner for an exemption from paragraph (a). The commissioner may
issue an exemption if the entity meets the following criteria:
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new text begin (1) the exemption would not contradict the purpose of this section; and
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new text begin (2) the petitioning entity would not have an impact upon the availability of affordable
housing.
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new text begin (c) The commissioner shall review annually each entity, developer, or contractor that is
issued an exemption under this paragraph to ensure that the entity continues to meet the
criteria in paragraph (b), clauses (1) and (2). If an entity, developer, or contractor fails to
meet the criteria, the commissioner shall withdraw the exemption and the entity is subject
to enforcement proceedings under subdivision 4. The commissioner shall submit a report
with a list of each entity that is issued an exemption under this paragraph to the chairs and
ranking minority members of the senate and house of representatives housing policy
committees by October 1 of each year.
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new text begin Subd. 4. new text end

new text begin Enforcement. new text end

new text begin If the attorney general has reason to believe that a corporate
entity, real estate developer, or residential building contractor is violating this section, the
attorney general shall commence an action in the district court in which any real property
relative to such violation is situated. The attorney general shall file for record with the county
recorder or the registrar of titles of each county in which any portion of said property is
located a notice of the pendency of the action as provided in section 557.02. If the court
finds that the property in question is being held in violation of subdivision 3, it shall enter
an order so declaring. The attorney general shall file for record any such order with the
county recorder or the registrar of titles for the county in which the property is located.
Thereafter, the corporate entity shall have a period of one year from the date of the order
to divest itself of the property. The aforementioned one-year limitation period shall be
deemed a covenant running with the title to the property against the entity, developer,
contractor, assignee, or successor. Any property not so divested within the time prescribed
shall be sold at public sale in the manner prescribed by law for the foreclosure of a mortgage
by action. In addition, any prospective or threatened violation may be enjoined by an action
brought by the attorney general in the manner provided by law.
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