How to Respond to a Rent Escrow Action
Minnesota landlords should ensure their properties aren’t at riskBy Doug Mentes, Esq. | Last updated on January 26, 2023
Use these links to jump to different sections:
- How To Avoid a Rent Escrow Action?
- What Happens if a Tenant Brings a Rent Escrow Action?
- What’s the Risk to Landlords?
- How To Respond?
How To Avoid a Rent Escrow Action?Regardless of language in the tenant’s lease agreement, Minnesota state law requires landlords to make several promises, or covenants, about the habitability of their rental unit to their tenants. These promises cannot be waived by tenants under any circumstance. Many landlords are unaware of how extensive these covenants are, which include promises that:
- Common areas will be maintained
- Housing will be kept in reasonably good repair during the lease (except when tenant willfully causes disrepair)
- Dwelling unit will comply with applicable state and local health and safety laws
- Housing will be made reasonably energy efficient
What Happens if a Tenant Brings a Rent Escrow Action?Tenants can’t file a rent escrow without notifying the landlord of the repair issue and giving the landlord an opportunity to make the repair. Tenants have two routes to begin the rent escrow process, either:
- Notify a local housing or building inspector of the repair
- Notify the landlord in writing of the repair or lease violation
What’s the Risk to Landlords?The first problem landlords encounter under a rent escrow is that the tenant’s rent money will be deposited with the court in an escrow account until the matter is resolved. If the matter does not resolve quickly, the landlord could expect several months without payment of rent. Landlords who don’t adequately respond to repair complaints also put themselves at risk of having the court give the tenant authority to hire contractors to complete the necessary repairs, potentially increasing the landlord’s costs. Minnesota law also allows the court to order rent abatement—a reduction of the tenant’s past and future rent. The longer a landlord ignores a tenant’s legitimate requests for repairs, the greater the amount the court may order returned to the tenant. The amount abated can be subjective; the court will attempt to determine either:
- the difference in monthly rent between the condition of the property with and without the needed repairs
- the extent to which the use and enjoyment of the property has been decreased because of the defect
How To Respond?If the repairs are necessary, landlords should respond by quickly completing the repairs. If the repairs are not necessary, the landlord can respond by filing a counterclaim for possession, which is essentially a request for the tenant’s eviction. Tenants can’t use the rent escrow to avoid paying rent. The law requires tenants deposit the full amount of rent due with the court. If the tenant fails, the court will likely dismiss the rent escrow and order eviction. However, if the court determines that the eviction is intended as a penalty for a tenant’s good faith claim for rent escrow, Minnesota law requires landlord’s eviction request be denied. If a landlord receives word a tenant, or tenants, are complaining about how well the property is maintained, they should consult an experienced Minnesota real estate attorney to determine what steps to take. For more information on this area, see our overview of landlord and tenant law.
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