Can My Tenant Land Me in Jail?

One way to create wealth is through property. In fact, creating passive income streams has become a common practice for many joining the landlord game. However, there are many pitfalls that could sink your new venture, and even worse, potentially land you—the landlord—in jail.

There are quite a few regulations and state laws that dictate the landlord-tenant relationship. One of the lesser-known Minnesota state laws that can affect a landlord is that of the “disorderly house.” This law provides that there are certain actions that habitually break certain laws for anyone who owns, operates or leases a building, dwelling or establishment.

These laws are related to illegal activity:

1. The sale of intoxicating liquor or 3.2 malt liquor—especially between the hours of 1 a.m. and 8 a.m.
2. Gambling
3. Prostitution, or acts relating to prostitution
4. The sale or possession of controlled substances

This means that if one of your tenants is convicted of any of these crimes, it is proven that an owner has committed the gross misdemeanor of disorderly house. However, an owner may refute this evidence by presenting substantial contradictory evidence presented at the court hearing.

The fines for owning a disorderly house are between $300 and $3,000 for the first offense, with fines increasing for subsequent offenses. Owners can even spend up to one year in jail. If the government does build a case against a landlord, the landlord may have to commence eviction proceedings against their tenant.

So, what can a landlord do to prevent this type of criminal activity from occurring on their properties? To start, background checks are essential to providing a landlord with the necessary information before agreeing to rent a property to someone. Note, however, that when you are performing background checks, you must inform potential renters of both the costs and the extent of the process in your rental agreement. A best practice may be to deny any rental application that isn’t completely filled out, as this may make a background check difficult.

Of course, there are many regulations on what you can and cannot make your decisions to rent upon. For instance, a landlord may not discriminate based on race, age, familial status or disability. Any protected class must not be a decision maker for the landlord. Depending on the area and socioeconomic level of your premises, you must be reasonable.

You may, however, make decisions on who you rent to based upon:

1. Smoking
2. Being employed consistently within the past 12 months
3. A violent criminal history
4. Proof of current renter’s insurance policy
5. Pet limitations
6. No prior eviction cases
7. Rent to income ratios

In Minneapolis, there are many resources you can consult to ensure that your rental unit is protected, lasting and fruitful. On top of specific city ordinances, landlords should visit the U.S. Department of Housing and Urban Development website to see the federal standards required of landlords and property managers.

Put together, these standards, regulations and requirements can be complicated. With proper planning on the front end—as well as smart and informed legal help—a landlord-tenant lawyer can provide protection, identify issues and solve them when they do arise. Be certain to find an experienced and reputable attorney who can help your properties flourish.