March 24, 2021 marked the one-year anniversary for Minnesota’s moratorium on most residential evictions. The freeze on evictions prevents landlords from evicting tenants for failure to pay rent, however the moratorium does not forgive unpaid rent. As a result, many tenants find themselves seriously behind on rent payments and could face eviction when the moratorium ends.
The most important question facing legislators may not be when to end the moratorium, but how to end it without exacerbating existing predicaments or creating a new crisis. Simply ending the eviction moratorium would require tenants pay all past due rent immediately, or face eviction. The Minnesota legislature is considering many options in this regard. While tenants anxiously await the legislature’s decision, it is important to note the potentially catastrophic impact on landlords.
The eviction moratorium left many landlords holding rental property that generated zero income for over a year; yet the moratorium did nothing to alleviate the financial burdens landlords face. Throughout the moratorium landlords continued to face mortgage payments, property taxes, and other costs associated with owning and managing rental property, plus the ongoing contractual obligations of landlords pursuant to leases such as repairs, utilities, and appliance replacement. Continued delays in landlords receiving rent may result in landlords defaulting on their financial obligations. Even if allowed to evict tenants, adding the legal fees and costs of evictions to already financially strapped landlords could cause a ripple effect felt throughout the economy.
One of the best options for landlords may be working with existing tenants to establish a payment arrangement, especially with regard to valued tenants. However, offering a valued tenant an arrangement while not offering similar concessions or options to other tenants could land a landlord in proverbial “hot water”. Minnesota law currently allows landlords the discretion to negotiate workouts as the landlord sees fit, however it is important for landlords to ensure their actions do not appear discriminatory. Additionally, the rules and regulations regarding the relationships between landlords and tenants are always changing. Therefore, even in situations involving workouts and avoiding eviction, landlords should consider involving legal counsel to assist in the negotiation and drafting of workout arrangements and/or new leases.
If large scale evictions occur, landlords will see a flood of potential new tenants. Landlords in Minneapolis and St. Paul should be especially vigilant when dealing with potential new tenants. Both St. Paul and Minneapolis recently adopted and/or are considering significantly more restrictive rules limiting the rights of landlords to screen tenants, terminate leases, control rent, and more. Many of these new regulations are addressed in Bridge Law Group’s previous newsletter available here https://bridgeattorneys.com/article/newregulations-on-landlords-in-st.-paul-and-minneapolis.
The attorneys at Bridge Law Group are well versed and up to date on all aspects of landlord/tenant and real estate law. Not only do the attorneys at Bridge Law Group regularly practice in areas of law regarding landlords and tenants, but multiple attorneys at the firm themselves own and/or manage rental properties. If you have questions or need guidance on landlord/tenant, real estate, or other business law matters, please contact attorney Scott Manthei or any of the Bridge Law Group attorneys.
BRIDGE LAW GROUP, LTD.
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