There is new Minnesota contract for deed legislation passed in the last legislative session that went into effect August 1, 2024, impacting both buyers and sellers. A contract for deed is where a buyer purchases real estate by making payments to the seller over time, instead of paying the full amount upfront. There are three buyer and two seller significant changes to this legislation worth noting and they are:
Buyer changes:
- More time for late payments. Buyers using a contract for deed will now have a longer cancellation period to make up unpaid monthly payments. If a buyer defaults, they have 90 days to catch up on their payments before eviction and the seller must give 30 days’ notice before the new 90-day cancellation period commences.
- Longer cancellation period. Homebuyers now have 10 days after receiving all disclosures to cancel their contract.
- Buyers can recover a portion of their down payment. Buyers who cancel their contract within four years of buying their home can recover a portion of their down payment. If a seller cancels a contract in the first four years, the buyer must get refunded any portion of their down payment that is more than 10% of the purchase price.
Seller changes:
- Sellers are prohibited from engaging in churning. An investor seller is prohibited from engaging in churning which is rapidly entering and canceling contracts with multiple buyers, a tactic sellers can use to collect large down payments without ever losing ownership of the property.
- Seller is responsible for recording the contract for deed. Seller also now has the burden for recording the contract for deed with a recorder of deeds office. Before August 1, the buyer was responsible to make this recording.
Please contact attorney Elizabeth Runde [email protected] with questions regarding recent contract for deed changes.
