The Basics of Fair Housing Laws

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

People who work in the areas of renting, selling, lending or insuring homes are subject to federal, state and sometimes local fair housing and other anti-discrimination laws. Recently, the U.S. Department of Housing and Urban Development (“HUD”) released guidance indicating that landlords who turn down tenants based upon their criminal records may violate the Fair Housing Act. This article focuses on residential landlords’ fair housing responsibilities and tenants’ rights under the Fair Housing Act, particularly in regards to the statute’s prohibitions against discrimination.

Discrimination Claims Under the Fair Housing Act

The Fair Housing Act (the “Act”) is codified at Title VIII of the Civil Rights Act of 1968, 42 U.S.C. §§ 3601 et seq. The HUD regulations implementing the Act are at 24 C.F.R. Parts 100 through 125. The HUD regulations “ordinarily command considerable deference…” Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 107 (1979). The Act, which applies to both government and private defendants, makes it unlawful to discriminate because of race, color, religion, sex, familial status, national origin
or handicap. 42 U.S.C. § 3604(a), (f). (The words “disability” and “handicap” are used interchangeably.) “Familial status” refers to households with a child or children under 18 or a person who is pregnant or in the process of securing legal custody of a child under 18.

hud-fair-housing FINALThe Act broadly prohibits the refusal to sell, rent, or negotiate for sale or rental, or acts that “otherwise make unavailable or deny” dwellings. It also specifically prohibits making statements indicating preferences (§ 3604(c)) or discriminating in terms, conditions, privileges, services or facilities (§ 3604(b)). It applies to “dwellings,” including vacant land offered for sale or lease for dwellings. The Act has been held to apply to mobile home parks, homeless shelters, and summer homes. See United States v. Columbus Country Club, 915 F.2d 877 (3d Cir. 1990), cert. denied, 501 U.S. 1205 (1991); accord, Hovsons, Inc. v. Township of Brick, 89 F.3d 1096 (3d Cir. 1996) (nursing home). The U.S. Supreme Court has held unanimously that the language of the Act is “broad and inclusive,” implementing a “policy that Congress considered to be of the highest priority,” requiring “a generous construction” of the statute. Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 211, 212 (1972).

It is important to note that intent is not required to establish liability under the Act. Prima facie liability can be established by a showing of disparate effect. The courts of appeals have adopted different standards for determining disparate effect. The Eighth Circuit (which includes the U.S. District Court for the District of Minnesota) set forth its test to establish a prima facie FHA disparate impact claim in the case of Oti Kaga, Inc. v. South Dakota Housing Dev. Auth, 342 F.3d 871 (8th Cir. 2003). Under the Oti Kaga test, the plaintiff must demonstrate that the objected-to-action results in, or can be predicted to result in, a disparate impact upon a protected class compared to a relevant population as a whole. Oti Kaga, 342 F.3d at 883; see also Charleston Housing Auth. v. U.S. Department of Agriculture, 419 F.3d 729, 740-41 (8th Cir. 2005). Under the second step of the disparate impact burden shifting analysis, the defendant must demonstrate that the proposed action has a “manifest relationship” to the legitimate non-discriminatory policy objectives and “is justifiable on the ground it is necessary to” the attainment of these objectives. Oti Kaga, 342 F.3d at 883; Charleston Housing Auth., 419 F.3d at 741.

The courts recognize two kinds of discriminatory effect: greater adverse impact on one group than another or harm to the community by the perpetuation of segregation. (Arlington Heights II, 558 F.2d at 1290) Greater adverse impact need not mean that more minorities have been affected; if a larger percentage of minorities has been affected, the standard is satisfied.

In some situations there is direct evidence of intentional discrimination. Where there is no direct evidence, a prima facie case may be established by indirect evidence. Some ways of proving intent by indirect evidence are set out by the Supreme Court in Arlington Heights I (Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252 (1977)). Another, formulaic way to establish a prima facie case is by showing that: (1) the claimant is a member of a protected class; (2) the claimant applied for and was qualified to rent or buy the property at issue; (3) the claimant was rejected; and (4) the housing opportunity remained available.

After the prima facie case of intentional discrimination has been established, the defendant must produce a legitimate, nondiscriminatory reason for its action. If the defendant does so, the burden of production and persuasion shifts to the plaintiff to show that the proffered reason is pretextual.

Remedies

42 U.S.C. § 3613 authorizes a court to award actual and punitive damages, equitable relief, and, to a prevailing party, a reasonable attorney’s fee and costs. In an administrative proceeding, HUD or the state agency may award actual damages, a civil penalty, and injunctive or other equitable relief. 42 U.S.C.§ 3612(g). HUD is authorized to award damages for emotional distress as well as other forms of loss.

The New HUD Guidance

HUD’s basis for its position that landlords may violate the Act by rejecting applicants based upon their criminal records stems from its view that because of widespread racial and ethnic disparities in the U.S. criminal justice system, criminal
history based restrictions on access to housing are likely disproportionately to burden African Americans under the “disparate impact” analysis.

Conclusion

HUD’s recently released guidance should give landlords pause as to their exposure to discrimination claims under the Fair Housing Act. In close cases, consultation with an attorney knowledgeable about the Act is a must.

Jeffrey C. O’Brien is an attorney with the Minneapolis-based law firm of Lommen Abdo, P.A. voice of the “Legal Minute on Minnesota Home Talk, heard Saturdays on 1500 ESPN, and a Minnesota State Bar Association Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

Be Proactive to Minimize Your Liability as a Landlord

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Last month, I discussed the pertinent legal standards under Minnesota law for when a landlord can be held liable for injuries to tenants and/or their guests.  This month, I’m going to discuss some basic steps that landlords can take to minimize their exposure to such claims.

The Difference Between Liability and Being Sued

When it comes to civil lawsuits, Minnesota – like most states in the U.S. – is known as a “notice pleading” state.  That means that a plaintiff does not have to prove his/her entire case in the complaint.  If the plaintiff has a good faith basis for a claim, their attorney is permitted under the lawyer ethics rules to commence a lawsuit, and the details of the case are then explored later on during discovery, and then come the motions and, well you get the idea.

What does this mean? It means that, even though ultimately you as a landlord may likely prevail in a lawsuit brought by a tenant, you still have to defend the lawsuit.  Hence, taking some additional steps to prevent exposure for a claim brought by a tenant for injuries is a wise course of action.  Here are a few simple steps you should undertake immediately to audit your level of exposure to a tenant claim:

Use of Liability Limiting Entities

Use of a liability limiting entity such as a limited liability company can insulate a property owner’s personal assets from liability arising from tenant claims.  For best results, it is recommended to own each property in a separate limited liability company (or LLC for short).  In this manner, in the result of a tenant lawsuit related to one property, only the assets of the LLC which owns that property are at risk; in other words, the potential claim should not affect your other properties owned within separate LLCs.

Note that I said that the potential claim should not affect your other properties; in order to make certain that other entities and properties are not affected, you must be certain to respect the corporate formalities of each LLC.  Separate bank accounts should be opened for each separate LLC and the income and expenses relative to each property should be run through those bank accounts.  Do not commingle funds between properties and do not commingle funds from your rental properties with personal funds.  Otherwise you leave yourself open to “veil piercing” claims in the event that a tenant prevails in a lawsuit but finds no assets available to satisfy their judgment from the subject LLC.

Do You Have Adequate Insurance Coverage?

In order to best minimize the risk of liability for injuries to their tenants and/or guests, landlords should make sure that they have adequate insurance coverage – including provision of and payment for legal counsel in the event of a claim – for each of their properties.  If you choose to utilize separate entities for each rental property, make sure that each entity is properly named as the insured under the policy.

Review Your Leases

A final preventive step to take would be to review your leases to make sure that they do not create any express liability occasioned by a tenant injury.

With respect to both the lease review and entity formation matters, use of a knowledgeable attorney to audit your entity documents and lease forms would be a cost effective investment given the alternative of expensive litigation.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. voice of the “Legal Minute on Minnesota Home Talk, heard Saturdays on 1500 ESPN, and a Minnesota State Bar Association Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

Are Landlords Liable for Tenant and Guest Injuries?

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

Can you be held liable when a tenant or guest is injured on your property? More importantly, what steps can landlords take to minimize liability for these injuries.

Common Law Duty – General Rule; Exceptions
For a common law negligence claim, one must prove (1) the existence of a duty of care, (2) breach of that duty, (3) proximate causation, and (4) damages. White v. Many Rivers West Limited Partnership, 797 N.W.2d 739, 743 (Minn. Ct. App. 2011). When it comes to the liability of landlords for tenant injuries, however, Minnesota courts have long held that landlords generally owe no duty of care to their tenants and are not liable for damages caused by defective conditions on the leased premises. White, 797 N.W.2d at 744 (Minn. Ct. App. 2011), citing Oakland v. Stenlund, 420 N.W. 2d 248, 250 (Minn. Ct. App. 1988).

Several exceptions to the general rule exist. A duty of care may exist if the landlord: (1) has willingly undertaken to repair the premises and done so negligently; (2) retains control of certain areas of the premises; or (3) is aware of a hidden hazard on the premises by the tenant is not. White, 797 N.W.2d at 744, citing Gradjelick v. Hance, 646 N.W.2d 225, 231 (Minn. 2002).

Negligent Repair Exception
If a landlord assumes the duty to correct a defect on part of the property when not required by the lease to do so, “the landlord must bear the burden of failure to make a good job of it.” White, 797 N.W.2d at 744, quoting Canada by Landy v. McCarthy, 567 N.W.2d 496, 504 (Minn. 1997). The duty of reasonable care to make a good job of repairs, however, requires only that “the necessary repairs [be performed] in a reasonable way.” Id. The landlord’s duty is not to make improvements to the safety of the thing repaired exceeding the safety standards otherwise imposed by law.

Retention of Control Exception
A second exception to the general rule occurs if the landlord retains possession of an apartment’s common areas, like stairs, halls, elevators or yard space. White, 797 N.W.2d at 745, citing Rosmo v. Amherst Holding Co., 50 N.W.2d 698, 701 (1951). Note that a landlord performing routine maintenance on windows in a unit or addressing a tenant’s complaints related to the windows does not fall under this exception. White at 745.

Hidden Hazard Exception
If a property contains hidden dangers that the landlord knows about and the tenant does not, the landlord must warn tenants about that danger, but the landlord has no corresponding duty to warn a tenant’s guests. White, 797 N.W.2d at 745, citing Oakland, 420 N.W.2d at 251. And no warning is required even for the tenant when the tenant knows of the dangerous condition or the condition is so open and obvious that the tenant can be expected or have discovered it on her own. White, 797 N.W.2d at 745, citing Johnson v. O’Brien, 105 N.W.2d 244, 247 (1960).

Contractual Duty of Care – General Rule
A landlord may contractually create a duty to maintain the leased premises. White, 797 N.W.2d at 746, citing Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578, 587 (Minn. Ct. App. 2004), affirmed, 689 N.W.2d 779 (Minn. 2004). When a lease contains no stipulation on the subject of maintenance, generally “there is no implied covenant on the part of the landlord…that the premises are or will prove to be suitable for the tenant’s use.” White, 797 N.W.2d at 746, quoting Krueger v. Farrant, 13 N.W. 158, 159 (1882). But if a landlord expressly agrees to maintain a part of the lessee’s premises, he then creates a duty to exercise reasonable care. White, 797 N.W.2d at 746, quoting Drager, 495 N.W.2d at 885. However, a landlord’s promise to repair parts of premises for safety purposes is not an express agreement to repair to a certain standard. White, 797 N.W.2d at 746, citing Normandin v. Freidson, 233 N.W. 14, 15 (1930).

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

In Focus: How Can Family Lawyers Benefit From a Partnership with Simply Residential?

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Our family law partners get to experience a rare benefit that many overlook when dealing with divorce and other contractual negotiations — when your client has a real estate asset that neither party wants, or one that is undervalued, the services of a property management company can make a bad situation much better. Your client will actually be able to profit from that decision, and will give you the strategic upper hand when it comes to dividing up assets.

Not sure if this kind of partnership is right for you? Ask yourself the following:

  • Do you want to improve your strategic negotiating position?
  • Is your client’s mortgage underwater?
  • Does your client have a residential property that’s undervalued?
  • Does neither side of the negotiation want to keep a residential property?
  • Do you have a personal relationship with a property management company that benefits you and your clients?

If you answered yes to any of these questions, but no to the last question, you may be missing opportunities to help your client experience the maximum return on their real estate assets, while building a trusted referral network for yourself.
The kinds of situations that call for legal consult aren’t always the most pleasant for your clients. In addition to improving your negotiation position, hiring a property manager for your client can also give them a nice ‘cooling off’ period before they make any hasty decisions regarding their property. This is especially helpful when one party is awarded the house but cannot afford or doesn’t want to pay the mortgage payments. Property management companies can peel back that extra layer of financial stress.

As the busy season approaches for family lawyers, our partners would agree that now is the time to make sure all of your negotiation strategies and tactics are sharpened and tightened up. We’re more than happy to help you make that happen!

Are you ready to see how you can benefit from a partnership with Simply Residential? We’re here to help, so contact us today!

If you want to learn more about partnering with Simply Residential, visit our partner page or contact me at 952-831-5300 or via email at partner@simplyres.com!

Understanding Minnesota’s Cold Weather Rule

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

In Minnesota, when temperatures dip in late fall, a law known as the “Cold Weather Rule” kicks in. The Cold Weather Rule set forth in Minnesota Statute Section 216B.096 is designed to protect tenants and homeowners from having their heat source permanently disconnected in winter (defined by law as October 15-April 15) if they are unable to pay their utility bills. The Rule, implemented by the Minnesota Public Utilities Commission, provides that a utility may not disconnect and must reconnect a customer whose household income is at or below 50 percent of the state median income if the customer enters into and makes reasonably timely payments under a mutually acceptable payment agreement. It does not, however, prohibit shut-offs, and a tenant who fails to comply with the agreed upon payment agreement could trigger a shut-off which, depending upon the utility involved, could result in damage to the property due to pipes freezing and bursting.

Utility customers whose household income is above 50 percent of the state median income also have the right to a payment agreement to prevent disconnection or get reconnected that takes into consideration the customer’s financial circumstances and any other extenuating circumstances of the household.

The Cold Weather Rule applies to all natural gas and electric utilities. It does not apply to delivered fuels like fuel oil, propane and wood. The Cold Weather Rule requires a utility company to notify its customers in writing before it disconnects their heat. The notice must be in easy-to-understand language and must contain the amount due, the date of the scheduled disconnection, the reasons for disconnection, and options to avoid disconnection.

A regulated public utility must notify a customer of disconnection at least seven working days in advance. An unregulated utility; i.e., a cooperative or municipal utility, must notify a customer of disconnection at least 15 days in advance. A disconnection may not generally happen on a Friday, Saturday, Sunday, a holiday or the day before a holiday, while an appeal is pending, or after the close of business on the scheduled day of disconnection.
For landlords, it is important to note that the Cold Weather Rule does not prevent a landlord from evicting a tenant or refusing to renew a lease that expires during this “cold weather” season. In fact, if the lease requires the tenant to pay utilities and the tenant fails to make timely payments pursuant to the agreed upon payment plan, such nonpayment could constitute grounds for eviction.

For questions about the Cold Weather Rule, contact your local utility or call the Consumer Affairs Office of the Minnesota Public Utilities Commission at 651-296-0406 or 800-657-3782.

For questions about how to handle an eviction during the cold weather months, be sure to contact a knowledgeable attorney.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

Temporary Housing for Your Tenants: A Guide

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Life as a landlord can be stressful at times. Take the temporary relocation of tenants as an example. Despite your best efforts to prevent or foresee an issue arising in the property, something has come up that requires your tenants to temporarily relocate. You’re already worried about the cost of repairs to the property, but now you have to worry about a whole heap of other things; will they be paying rent while they’re relocated? Where will I be able to relocate them to? Should I keep them happy with a plush hotel room or risk finding them a budget motel, as it’s only temporary? All these questions and more will likely come into consideration, but it’s important to bear certain facts in mind. Your tenants are entitled to temporary accommodation, and as such it is your duty to find, reserve and show them to their provisional property. Simply Residential Property Management has compiled a few handy tips to help you with the process.

Give advance warning
If moving your tenants to temporary housing cannot be avoided, then it is important you go out of your way to limit the disturbance to their lives. Any notice alerting your tenants they will have to temporarily relocate from their property must be given at least 60 days in advance. Failure to do so could end with the tenants refusing to pay your rent for the time they are at the property, or even for that particular month. If the case should go to court, your inability or unwillingness to supply them with adequate notice will reflect badly on you.

Reasonable replacement accommodation
You must provide clean, suitable replacement housing for the entire duration of the property’s reconstruction period. Failure to do so could result in your tenants taking the matter to court, and the state of Minnesota tends to favor the tenants over the landlord, particularly when the relocation is due to a fault with the property. It’s not unreasonable to expect you as the landlord to provide comfortable and safe accommodation, but it is also important you try to find something in close proximity to the original property, so as to cause as little disruption to your tenants’ lives as possible.

Be prepared to pay for travel/transport expenses
While this may seem like a trivial issue, you have to remember that it is your responsibility as the landlord to provide these things. If the temporary property you have assigned to your tenants requires them to travel to work, college, school, etc., then it is up to you to pay for travel expenses. Of course, a two minute move down the road does not warrant you reimbursing any of your tenants on travel costs, but anything that could warrant an extra bus journey or substantially increased car journey could justify your tenants requesting you cover travel expenses. The same applies to any increase in utility costs or an increase in rent while they are based at this temporary address.

Remember, it is your duty as a landlord to provide alternative accommodation if repairs or reconstruction is required for the original property. How you decide to provide this alternative accommodation is up to you, but it is best to keep the tenants happy, even if this means paying a little bit more money. This eases tensions, shows you’re caring for the needs of your tenants and means future interactions should be a little bit easier.

Who’s Responsible for Home Repairs During a Tenancy?

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Determining who is responsible for repairs to a property during a tenancy can be a divisive issue, but it’s important to know where your responsibilities lie. While clear guidelines for the process of repairs should be laid out in a tenancy agreement, these can vary from property to property. If you’re not sure what your responsibilities as a landlord are, you’re not alone. As property managers, we hear this question a lot. If you’re among the many who could use a little clarification on this issue, why not take a look at the quick guide below? The most important thing to remember is that communication with your tenants is paramount, so discuss these matters with them, and lay down your argument for your involvement. It could save you money, time and acrimony further down the line.

What is it that’s damaged?
Mainly, if it’s the tenant’s property that’s damaged, it’s their responsibility to fix it. If it’s your property as the rental home owner, you’re going to want to handle the maintenance yourself of leave it to your property management company. Allowing tenants to do their own maintenance opens up the floodgates of liability in the event they’re hurt or the property is further damaged. We all have that ‘handy’ person in our life who ends up blowing fuses or completely destroying some drywall. That’s much less charming when your property ends up damaged.

How urgent are the repairs?
Another vital consideration is just how badly the tenants need the repairs. Any electrical appliances (such as washer, dryer, oven, etc.) must be fixed by the landlord in order to adhere to the landlord and tenant insurance policies. Do not allow tenants to repair these things if they are damaged, as they could receive injuries which could lead to legal ramifications for the landlord. Likewise, any attempted repairs by an unqualified tenant could lead to further damage to the property. As such, any repairs on fixed appliances must be repaired as soon as possible. If the boiler in your property breaks down in winter, it is important you have it repaired as soon as possible, whereas if a fuse goes on a bulb, this could take a lesser precedent. However, it’s best to be punctual with your repairs in order to keep your tenants happy and prevent any further damage.

How to avoid in-tenancy repairs
You can take steps to avoid making repairs while tenants occupy your rental property by regularly doing pre-tenancy inspections of a property. This is required following a tenancy in order to ensure there is no superficial damage, but it’s good to check the wiring, plumbing and general functioning of a property before renting it out again. This can help avoid any rancor between you and future tenants if a fault is found, although it will mean the cost of repairs fall to you and you alone.

At Simply Residential, we offer a quarterly furnace filter change and lease violation walk through to help us determine if there are any immediate needs or violations to the property. We also offer an annual maintenance walk-through to help us determine what may need work in the coming year so we can help our owners financially plan their maintenance needs in a way that makes sense for them.

Common Eviction Mistakes to Avoid: Dealing with Abandoned Property After an Eviction

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This post was written by Jeff O’Brien for Simply Residential Property Management Magazine.

It’s no secret that Minnesota’s landlord-tenant laws are weighted heavily in favor of tenants. As a result, a seemingly straightforward eviction action is fraught with legal pitfalls for an unsuspecting landlord.

Perhaps the worst provision of Minnesota landlord/tenant law pertaining to evictions is Minnesota Statute Section 504B.271, which sets forth a landlord’s obligations in dealing with a tenant’s belongings after the eviction. This law essentially requires landlords who have already lost money on non-paying tenants (by not receiving rent payments per their lease and having to pay for an eviction) to take time – and possibly additional money – to deal with an evicted tenant’s remaining belongings in a manner other than simply disposing of them.

When an evicted tenant leaves behind personal property in the leasehold premises, there are options for the landlord to deal with those belongings. The property can be moved and stored at the tenant’s expense and eventually sold or discarded. Commonly, this is done after an eviction with the assistance of the Sheriff who will be a part of the processing of the unclaimed property.

The property can be stored in the original leasehold premises. Remaining property must be inventoried on a form provided by the Sheriff. That inventory must list the tenant’s items in the landlord’s control and a description of their condition. The reason it is important to document the property present and its condition with the Sheriff present is that the landlord is liable for any damages to the property caused during moving or storage if reasonable care was not exercised under the circumstances. The form must also have the date and signature of the landlord with the contact information of a person authorized to release the property. The name and badge number of the Sheriff or deputy present must also be provided. The Sheriff will retain a copy of the inventory list and another must be sent by First Class Mail to the last known address of the tenant. Also, a good faith effort should be made to reach the tenant by telephone.

The property can also be stored off site in a storage facility of reasonable security. Any moving should be done by a licensed and bonded moving company. The moving company will likely do the inventorying for the landlord and return a copy to the Sheriff. If the property is stored off the premises, the costs of moving and storing can be charged to the tenant. Additionally, the landlord has a lien on the property if stored off-site, but not if it is stored on the premises.

Anytime prior to 28 days after the property was abandoned, the tenant can mail a letter to the landlord requesting a date and time to retrieve their property. Since the property rights are in favor of the tenant, landlords are prohibited from withholding ex-tenants’ property in lieu
of past rent, damages or other expenses, except that a landlord may apply a reasonable amount of proceeds to their costs incurred in removing, storing and caring for the tenant’s personal property.

Twenty-eight days after notice of or reasonably apparent abandonment, the landlord can sell or dispose of the unclaimed property. Two weeks prior to the sale of the property, the landlord should make a reasonable effort to contact the tenant. The landlord should personally give written notice, or send notice by certified mail with return receipt requested to the tenant’s last known address or likely living quarters if known by the landlord of the sale. The sale must also be posted in a conspicuous location at the premises.

The profits of that sale can be used to compensate the landlord for storage, back rent, damages and other debts of the tenant. After the landlord’s costs are deducted any excess profits belong to the tenant if he or she writes to request them. The profits cannot be held from the tenant as leverage for other actions because the tenant has the right to that property and the profits gained. If possession of the property is taken illegally, before the landlord could reasonably believe it was abandoned, the landlord is responsible for the costs. Also, if the premises is not abandoned and the landlord does not have reasonable belief to think so, removal of the property is considered an unlawful exclusion and will be dealt with accordingly.

Minnesota’s eviction laws are complex, frustrating and time consuming. If you are unsure of what to do when your tenant is in default of the lease, it would be money well spent to engage competent legal counsel to navigate the choppy legal waters.

Jeffrey C. O’Brien is an attorney with the Minneapolis based law firm of Lommen Abdo, P.A. and a MSBA Board Certified Real Property Specialist. He can be reached at (612) 336-9317 or via email at jobrien@lommen.com.

A Landlord’s Guide to Security Deposits

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Security deposits are a vital part of the rental process. Without a security deposit, there is little to stop your tenants from leaving your property in a state of disrepair; forcing you to foot the bill. That’s why every rental home now requires a security deposit. Aside from the assurance that if there is any lasting or even superficial damage to the rental property, this means you can detract money for failure to ensure your investment is left in a clean state. For this reason, we’ve compiled a handy how-to guide for using the security deposit to both your property’s and your tenants’ advantage.

Clearly explain the cost of damages in the lease agreement
This is important as it lays out exactly what is expected of the tenant in terms of personal maintenance while renting the property. By laying out how much you will charge for damage or loss to each individual aspect of the rental property, the tenant will understand how to properly maintain it, and will be held accountable for that maintenance. This will also act as an incentive to the tenant, showing them in real figures the cost for refusing to ensure proper care is taken when in the property. It’s important to do a full walk through of the property with your tenant before they move in, allowing them an opportunity to point out damages that you had not registered. This prevents misinformed accusations and increasing tensions with the tenant at the end of their tenancy. This is also for the tenant’s protection, ensuring you have to justify each deduction you made from the security deposit and assuring them you are not taking more than the damages actually warrant. Make sure this process is documented and signed by each party.

Photograph everything
When deducting money from a tenant’s security deposit, you will need physical evidence that the damage was caused during their tenancy. That’s why, before and immediately after each tenancy, it’s important you photograph any existing damages, and even areas with no damage whatsoever. This prevents the tenant from claiming the damages were already there, or that they were inflicted after they left the property.

Have a little leeway for wear and tear
While nobody wants their property damaged without being properly compensated, it is likely that some aspects of the property will become worn, through no fault of the tenant. That’s why it can be beneficial to allow for a little wear and tear on the property. The intention of the security deposit is to insure against major structural damage or a costly cleaning job at the end, not minor bumps and scrapes in areas of the property that would inevitably see a little damage.

Summary
As a landlord, it’s important to remember you have a reputation to uphold. While some are tempted to take a little extra from the security deposit, your ethical integrity will always win you more business — which translates into more money in the end. It isn’t just a question of ethics, it’s illegal to take more than is owed. Alternatively, rent your property with Simply Residential Property Management and let our independent team of specialists handle the entire security deposit issue; allowing you and your tenants to rest easy in the knowledge only the appropriate compensation will be paid.

Who and What is Protected by the Fair Housing Act?

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The Fair Housing Act affects every single person in the state of Minnesota in one way or another. For this reason, it’s important for our employees and our clients to know what the 13 protected classes are for our state, and how we can make sure we’re abiding by the standards set in the FHA.

According to the Minnesota Department of Human Rights, “Every person in Minnesota is protected by the Human Rights Act as every person, based on their personal characteristics such as a person’s race or sex, belongs to one or more of the Protected Classes: Race, Color, Creed, Religion, National Origin, Sex, Marital Status, Familial Status, Disability, Public Assistance Status, Age, Sexual Orientation, and Local Human Rights Commission Activity.”

Discrimination based on any of those characteristics is strictly prohibited by law. But what constitutes discrimination? The U.S. Department of Housing and Urban Development says an owner cannot:

  • Refuse to rent or sell housing
  • Refuse to negotiate for housing
  • Make housing unavailable
  • Deny a dwelling
  • Set different terms, conditions or privileges for sale or rental of a dwelling
  • Provide different housing services or facilities
  • Falsely deny that housing is available for inspection, sale, or rental
  • For profit, persuade owners to sell or rent (blockbusting) or
  • Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.
  • Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right
  • Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap.

This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the FHA. There are additional protections in place for potential renters or buyers with disabilities. A landlord or property owner cannot:

  • Refuse to let a renter make reasonable modifications to their dwelling or common use areas, at their own expense, if necessary for the disabled person to use the housing. (Where reasonable, the landlord may permit changes only if the renter agrees to restore the property to its original condition upon moving out.)
  • Refuse to make reasonable accommodations in rules, policies, practices or services if necessary for the disabled person to use the housing.
    Knowing the basics of the Fair Housing Act is an absolute must for rental property owners. It’s in your best interest to protect yourself, and it’s also the right thing to do to make sure you’re being fair to potential renters. After all, discrimination is a terrible business practice.

At Simply Residential, we make sure our staff maintains the highest levels of integrity, especially in regards to promoting equal opportunity housing. The owners we work with can rest assured that their marketing and rental processes are up to the standards set by the FHA. Questions? Send me an email and let’s chat!