Compliance Review for Landlords

Rental Property Compliance

Being an excellent landlord or property management company includes following all federal, state, and local laws for your rental properties. Although it can be a confusing and complicated task to adhere to all applicable rental laws, landlords, property management companies, and property owners are expected to remain in landlord compliance. Furthermore, noncompliance with said laws may result in fines, loss of licenses, or other legal action. Therefore, to avoid expensive repercussions, read on to discover crucial landlord compliance requirements required when providing rental housing.

Landlord-Tenant Laws

Landlords must adhere to certain legal requirements when operating a property management business. These laws and regulations typically are framed as certain tenant’s rights that the landlord must respect and adhere to or noncompliance remedies that a tenant may seek against the property owner. The legal requirements a landlord must adhere to maintain landlord compliance include, but are not limited to, the following:

Essential Repairs and Responsiveness

It goes without saying that repairs are an inevitable factor in running a property management business. Not only are they important to keep your tenants happy, but they also ensure your investment property retains its value. Failing to make timely repairs can lead to more extensive, and in turn costly, damage. That said, the consequences do end there.

When a landlord does not complete necessary repairs and the home becomes uninhabitable, the tenant may be able to withhold rental payment. In some jurisdictions, tenants can hire a third party and deduct repair costs from the rent.

So, both prompt response and timely action are critical to avoiding tenant disputes. In general, an acceptable response time is 24 hours. This allows time to find the appropriate vendor and give the tenants adequate notice of entry to complete a repair. However, for non-emergency or minor maintenance needs, 48 hours is acceptable.

Either way, communication with your tenants is key. Respond as quickly as possible to acknowledge their concern and let them know the steps you are taking to correct the problem. That way, even if it takes a little longer for any reason, the tenant still knows you are working on fixing it, and their well-being is important to you.

Adhere to State Rent and Security Deposit Guidelines

Landlords usually require tenants to pay a security deposit before moving in (sometimes called a “damage deposit”). This is money paid by the tenant and held by the landlord to pay for any damage, beyond ordinary wear and tear, the tenant might do to the rental unit. The landlord can use it to pay for any unpaid rent or any money the tenant owes to the landlord under the lease or another agreement (e.g., water utility bills). Tenants are required to pay the last month of rent and a landlord does not have to accept the security deposit in place of the rent. The exception to the rule is that a tenant may withhold payment of rent for the last month of a contract for the deed cancellation period or mortgage foreclosure redemption period.

A mortgage foreclosure redemption period is the time following the sheriff’s sale during which the property owners can pay the sale price plus interest and certain costs and avoid losing his or her real estate. Similarly, a contract for a deed cancellation period is the time during which the buyer of the real estate can avoid cancellation by paying the amount due and certain costs.

Security deposits are attached to the individuals who are stated within the lease and are returned to the leaseholder(s) who have remained on the lease until the end of the rental term.

Amount of the Deposit

Minnesota law does not set a limit for the amount a landlord may require for a security deposit. A landlord can increase the amount of the security deposit at any time during a “periodic tenancy” (a rental agreement in which no final date is mentioned), but only if the tenant is given proper advance written notice. Generally, this notice period is one rental period plus a day.

If the deposit amount is stated in the rental agreement and the rental agreement has a definite ending date, no changes in the deposit can be made unless both parties agree to the changes or the lease allows for changes. At the end of the tenancy, the landlord must return the deposit to the tenant with interest. Presently, the required interest rate is one percent, which is calculated as simple non-compounded interest. The landlord may keep the amount necessary to repair any damage done to the unit by the tenant (beyond ordinary wear and tear) or to pay off other debts related to the tenancy, including any unpaid rent.

Follow Procedures for Lawful Termination of Tenancy and Eviction

While landlords make every effort to find the best tenant, eviction is sometimes needed. That said, landlords must strictly follow all applicable eviction laws under the state of Minnesota.

Although the eviction process can take time, each step is important in the legal process. At no time should landlords attempt to take matters into their own hands. Never retaliate against a tenant who makes a lawful complaint and do not try to remove a tenant or obstruct their occupancy by any means other than a court eviction.

Legal Disclosures

Landlords are required to disclose certain information to prospective tenants so that they can make an informed decision about what home to rent. Some of the required disclosures are about the costs to rent the home or about possible and others are about safety issues. These disclosures are typically located within or are attached to, the lease agreement

Cost disclosures

In the latest news, starting January 1, 2024, landlords must disclose to prospective tenants all non-optional fees within the lease agreement. The sum of the total rent and all mandatory fees charged by the landlord must be described as the “Total Monthly Payment” and be on the first page of the lease. Advertisements must also disclose the nonoptional fees that the tenant will be required to pay in addition to their rent. Landlords must also disclose whether utilities are included in the rent. Landlords who violate this law are liable to the tenant for treble damages and attorney fees. An additional disclosure tenants must receive under Minnesota law occurs when landlords may lose the unit they are renting. A landlord must disclose to prospective tenants when the landlord has received a notice of contract for deed cancellation or notice of mortgage foreclosure prior to entering into a lease with a tenant or accepting payment of rent or a security deposit. In addition, a bank that forecloses on a landlord’s property generally must provide a foreclosure advice notice to a tenant at the same time it serves the landlord with a notice of sale or a summons and complaint to foreclose by action. A bank may be liable to the tenant for $500 if it violates this statute.

Safety disclosures

If a health inspector has issued a citation to a landlord finding that the home has code violations that could threaten the health or safety of tenants then the landlord must give a copy to prospective tenants before they pay a deposit or sign a lease. This way tenants are informed about possible safety issues before agreeing to rent a home. If the inspector orders the landlord to make repairs for code violations that do not threaten the health and safety of tenants, the landlord must post a summary of the inspection order in an obvious place in each building affected by the inspection order. The landlord must also post a notice that the inspection order is available for review by tenants and prospective tenants. A landlord has not violated these requirements if the housing inspector has not issued a citation, the landlord has received only an initial order to make repairs, the time allowed to finish the repairs has not run out, or less than 60 days has passed since the deadline for making the repairs. Additionally, landlords who rent units built before 1978 must disclose all known lead-based paint and lead-based paint hazards in the unit. Before 1978, homes were commonly built or repaired with paint that contained lead, which is a serious health hazard if paint chips or paint dust gets into tenants’ bodies (see page 18 for more information about lead-based paint). All landlords who rent units built prior to 1978, even those who do not know if the home has lead-based paint, are required to give tenants the EPA’s pamphlet “Protect Your Family from Lead in Your Home.”

Utilities

The lease should state who is responsible for paying which utility bills. In some cases, the landlord pays for heat, electricity, and water. Sometimes the renter is responsible for these bills. If this issue is not addressed in the lease, the renter and landlord should work out their own understanding. It is recommended to put this agreement in writing and have it signed by both parties.

Single-Metered Residential Buildings

Some buildings with multiple units have individual meters for each unit’s utilities. Tenants in buildings with only one meter for all the units can be charged for their portion of the utilities only if the landlord follows certain requirements before and after the applicant signs the lease. The landlord must provide potential tenants with a notice of the total utility cost for the building by month for the most recent calendar year. The landlord must have an fair method for dividing the utility bill and billing the tenants. The way the bill is split up and how tenants are billed must be in the leases. The lease must say that landlord will provide a copy of the actual utility bill for the building along with each divided utility bill, if the tenant asks for it. Also, if a tenant asks, the landlord must provide actual utility bills for any time a tenant has received a divided bill. The landlord must keep copies of utility bills for the last two years or from the time the landlord bought the building, whichever is more recent.

By September 30th of each year, a landlord with a single-metered residential building who bills for gas and electrical charges must inform tenants in writing a list of possible low-income home energy assistance programs where they may check their eligibility. This notice must include the toll-free telephone number of the home energy assistance programs. If a landlord violates this law, it is considered a violation of the landlord’s duty to keep the property fit for its intended use. The law does not govern how tenants occupying a unit, such as roommates, divide the utility bill between themselves. If a landlord interrupts or causes the interruption of utility services, in violation of the tenant’s rights, the tenant may recover from the landlord triple damages or $500, whichever is greater, plus reasonable attorney’s fees.

Owner Responsibilities Every Landlord Needs to Know

Besides the rental property compliance above, landlords have many other responsibilities. While you have expectations of your tenants, they too have expectations of you. That said, continue reading below for a few more landlord responsibilities regarding rental properties and tenant relations.

• Implied Warranty of Habitability

• Tenant and Community Safety

• Essential Repairs and Responsiveness

• Adhere to State Rent and Security Deposit Guidelines

• Follow Procedures for Lawful Termination of Tenancy and Eviction

• Implied Warranty of Habitability

What safety requirements are landlords legally required to cover?

Tenants are entitled by law to live in a safe and habitable housing unit. Landlords are legally obligated to maintain the livable condition of their rental property. This is known as an “implied warranty of habitability.” Some of these obligations include but are not limited to the following –

• Maintain the structural integrity of the dwelling

• Promptly address any repair concerns

• Ensure heat, electric, and hot/cold water facilities are in working order

• Proactively maintain a pest-free living environment

• Comply with all state and local building requirements, inspections, or codes

• Ensure living conditions are free of safety hazards

While maintaining is safe and habitable rental property is essential for tenants, it is also an important part of keeping your rental looking its best. Besides, failing to take care of the unit opens up the possibility of tenants withholding rent.

Toepfer at Law: Top Minnesota Lawyers for Landlords

There’s no getting around the fact that tenant-landlord issues are complex. If you’re a property owner, manager or landlord, you may want to consider hiring an experienced lawyer for landlords. By partnering with an expert, you maximize your chances of removing uninvited guests onto your property.

Ready to get started? Contact Toepfer at Law today to schedule a confidential consultation or give us a call at (320) 497-4416.