Defending Against Rent Escrow in Minnesota
Defending Against Rent Escrow in Minnesota
Defending against a rent escrow action can be a nightmare for a Minnesota landlord. Many landlords are not familiar with rent escrow cases at all prior to being sued by a tenant, and can be completely taken off-guard by the tenant’s claims. This article will discuss the nature of rent escrow cases in Minnesota and what steps a landlord can take to defend against a rent escrow case.
What is a Rent Escrow Case?
A rent escrow action is a Minnesota court case based on Minnesota Statutes §504B.385. This law provides that tenants may deposit their rent with Minnesota housing court instead of paying rent to the landlord, in order to force a landlord to remedy an alleged violation of Minnesota law. Most commonly this happens where a tenant alleges that a landlord has not made requested repairs and thus the landlord’s property is uninhabitable or in violation.
What is a violation?
There are three different types of violations under Minnesota law that may be raised in a rent escrow case. Specifically a violation may be a code violation, a covenant violation, or a violation of the lease agreement for the premises.
Code violations are most commonly violations of city housing code, and usually involve a city inspection report. In these reports, a city inspector will usually order repairs to be made by the landlord, and if these repairs are not completed within the time-frame allowed by the inspector, the tenant may bring a rent escrow action.
Covenant violations often also include an inspector’s report, but do not always rely upon such a report. These violations are typically more serious issues with habitability of the property, or could also include the landlord’s violations of other covenants under Minnesota law.
Lease violations are violations of a landlord’s promises within their lease or contract with their tenant. This is perhaps the rarest form of rent escrow case by itself, but claims under this section are often combined with claims of code or covenant violations.
Are there requirements for the tenant before bringing the rent escrow case?
Yes, a tenant must provide his or her landlord with notice of the violations before bringing the rent escrow case. Minnesota Statutes §504B.385 describes the written notice required, although in some emergency cases this notice requirement may not be necessary. Usually this notice must be given at least 14 days in advance, and should be made in writing to the landlord. Typically, however, a landlord must be given the chance to repair or remedy the issue before rent may be placed into escrow with the court.
Can the tenant withhold rent without paying it to the court?
No. If a tenant wishes to hold rent in escrow to force a landlord to remedy violations, they must do so through the process set out by the court. A tenant that withholds rent may be subject to eviction. This is true in any instance of failing to pay rent that is due, but a tenant is particularly vulnerable to eviction if they simply withhold the funds without depositing them with a Minnesota court.
Additionally, if a tenant fails to deposit the entire amount due into court through the rent escrow process, a landlord may counter the rent escrow case with an eviction, and may ask the court for possession of the property. Additionally, a rent escrow court usually will not hear a rent escrow case at all if the full amount of rent is not deposited.
What happens if the landlord loses a rent escrow case?
If a Minnesota judge decides in favor of a tenant in a rent escrow case, there are a variety of options available. Minn. Stat. §504B.385 provides that a court can:
Provide rent abatement
Order a landlord to remedy violations
Order the tenant to remedy the violation and abate rent in an equivalent amount
Grant reasonable attorney’s fees and costs to the tenant
Fine the landlord if the landlord has failed to comply with the court’s order
There are several other options available to the court as well, and Minnesota judges have wide discretion in utilizing some or all of these options.
What defenses can a landlord raise?
Minnesota Statutes § 504B.415 provides three specific defenses that landlords may raise to counter a rent escrow lawsuit. Specifically, the landlord can defend themselves by establishing that:
The violation or violations alleged in the complaint do not exist or that the violation or violations have been removed or remedied;
The violations have been caused by the willful, malicious, negligent, or irresponsible conduct of a complaining residential tenant or anyone under the tenant's direction or control; or
A residential tenant of the residential building has unreasonably refused entry to the landlord or the landlord's agent to a portion of the property for the purpose of correcting the violation, and that the effort to correct was made in good faith.
More simply put, a landlord can raise defenses that the allegations of a violation are false, that the violations were caused by the tenant, or that the tenant has refused to allow the landlord to fix the violations. These defenses are very fact specific, and usually require detailed witness testimony. However, each provides protection to a landlord faced with a rent escrow lawsuit.
Overall, rent escrow lawsuits can be a Minnesota landlord’s worst nightmare. They are often expensive, hold the potential of significant financial loss, and involve high-conflict situations with a tenant. It is highly advisable to seek legal advice and representation if you are, or may become, involved in a Minnesota rent escrow case. The landlord attorneys at RAM Law PLLC have experience handling a wide variety of rent escrow matters, and are happy to discuss with you how best to handle your case. If you are involved in a Minnesota rent escrow case, call our landlord attorneys at 651-468-2103 or submit our convenient online form to set up a free consultation.