Although a rental agreement may be oral or in writing, there are certain duties and obligations that are mandatory regardless of its nature. If the lease is for more than one year or it ends more than a year after it is formed, then it must be in writing to be enforceable. Also, if the building contains at least 12 residential units, the lease must be in writing or the landlord may face petty misdemeanor charges.
There are two types of leases in Minnesota—periodic and definite term. If periodic, the lease simply runs from one rental payment to the next. Definite term leases are generally at least one year and contain notice requirements and, typically, an automatic renewal provision.
Having a written Minnesota residential lease agreement, though, assures you that both parties at least have the terms memorialized and assumes that they are understood by you and your tenants. You can also include optional terms in your lease if they are not contrary to law or public policy. If your arrangement is oral, however, you leave yourself and your tenants open to misunderstandings and needless disputes over the inclusion of certain duties or obligations not typically found in rental agreements. A written lease also ensures that all required disclosures are made and receipts given and received.
There are certain obligations of a landlord that cannot be waived or altered and are ingrained in any rental lease agreement, oral or written. Any residence offered for rent must be fit and habitable and have functioning electrical and plumbing systems, hot water, lighting and heat and that the landlord has taken affirmative steps to keep the units reasonably energy efficient. If your city requires you to license your apartment or unit, your failure to do so will prevent you from accepting rent and can result in your having to return all rent paid on the leased premises.
If you employ a property manager, state law requires that you conduct a criminal background check before hiring the individual or that it be done immediately on current managers if no check has yet been performed. Certain convictions including violent felonies, sexual offenses and stalking automatically disqualify someone from becoming a property manager for residential units. Other felony and misdemeanor convictions do not render the person ineligible if the offense was committed at least 10 years ago. These include robbery, burglary, lower degree assaults, terrorist threats and non-felony stalking.
Also, no landlord can refuse to rent to anyone based on the person’s race, color, gender, national ancestry, religion, sexual orientation, familial status or disability in most circumstances. State law allows a person who owns a single family home to refuse leasing a room to a gay or disabled applicant. Also, a landlord may advertise for “adults only.”
Contents of a Residential Lease in Minnesota
There are standard leases that you can purchase or download that contain basic terms but you will want your lease to be comprehensive and include other discretionary terms to address common landlord/tenant situations. Be sure to give a copy of the signed lease to your tenants and obtain a signed receipt.
Required and suggested terms for your Minnesota residential lease agreement are as follows:
- Name of landlord and property manager who is authorized to manage the property, and address where rent is to be paid as well as where notices and other legal documents may be served and where request for repairs are to be directed
- A copy of any outstanding inspection orders for which you have been cited. If the violation does not affect the health or security of the tenant, it can be posted in a conspicuous location in each building affected and which advises the tenant that the order is available for review
- Names of the tenants and other occupants
- Description of the premises
- Term of the lease—weekly, monthly, yearly or other
- Amount of rent, due date, and grace period before a late fee may be imposed—late fee can be no more than 8% of the overdue rent must be stated
- Returned check fees—whatever the bank charges
- Security deposit—no limits, interest of simple non-compounded at 1 % per annum, return within 21 days of vacating unit or send written statement with specific reasons for withholding it
- Signed, separate statement of the premises’ move-in condition including list of current damages to be given to tenant–not required but recommended
- Obligations of landlord regarding repairs and maintenance including maintaining common areas
- Obligations of tenant including payment of expenses and attorney’s fees if landlord has to enforce provisions of this lease
- Responsibility for utilities—if single utility meter building, provide notice of the utility cost for most recent month and have an equitable method of dividing the bill and billing tenants. Retain copies of utility bills for last 2 years. By September 30 of each year, inform tenants in writing of availability of energy assistance from low-income assistance programs with toll-free phone number
- Major appliances that are being provided
- No unlawful use of premises by tenant or conduct that constitutes a nuisance including use for purposes of prostitution, activity involving illegal drugs or unlawful use or possession of firearms
- Pet clause—a deposit may be nonrefundable. No deposit is permitted for service animals with some exceptions
- Subletting clause
- Right of entry by landlord to make repairs, inspect and show to future tenants or purchasers or if the tenant has been causing a disturbance or is otherwise violating the lease—must be done by reasonable means and after giving tenant reasonable notice or making a good faith effort to do so unless it is an emergency that threatens the safety of tenants or is necessary to comply with state law or local ordinance
- Notices regarding termination for nonpayment of rent, other lease violations
- Notice for increasing rent—30 days if a monthly lease or until lease expires unless you state otherwise (may not be for a discriminatory or retaliatory purpose)
- Disclosure of the presence of any lead-based paint or hazards on the property for rental property built before 1978—both landlord and tenant must sign an EPA-approved disclosure form and the tenant provided an EPA pamphlet entitled “Protect Your Family from Lead in Your Home.”
Prohibited Lease Terms
There are terms that you must not include in a written lease or try to enforce if oral or face the potential of having to pay damages to the tenant. You may not include certain terms that force a tenant to waive certain rights including the right to sue for damages or to be evicted without a court order. Some of these prohibited lease terms include:
- Waiver of right to sue landlord for neglecting duties or obligations
- Taking a lien or security interest on the tenant’s personal property
- Allowing entry at any time without notice or prior arrangements
- Prohibition on joining a tenant’s union
- Allowing eviction without notice or without court order
- Waiver of any section of the law regarding security deposits
Lease Application Fees
Minnesota law is explicit regarding the acceptance of application fees. You may not request one if there is no rental unit available or will be within a reasonable time. If accepted, you must give the applicant a receipt for the fee. Do not deposit the fee until after all other applicants have been screened and rejected or the unit has been offered and rejected. The fee may be used for conducting a background check, consumer or credit check. If a screening service is used, you must advise the tenant of the name, address and phone number of the service and the criteria used. If the applicant is rejected, notify the person within 14 days and the reason or criteria used to reject the applicant.
Any funds not used to pay the screening company, or if one was not used, must be returned if the applicant is rejected for any reason not listed in the disclosed criteria or if someone else is offered and accepts the lease agreement.
There is no limit on what you can request. Once security deposit is accepted, give the tenant a receipt. The funds must be deposited with non-compounded interest at 1 % per annum. The deposit is to pay for damages not the result of normal wear and tear. You can also use the deposit for:
- Unpaid rent
- Damages beyond normal wear and tear
- Certain breaches of the lease
You have 3 weeks to return the lease in full to the tenant’s last known or forwarding address or send an itemized statement of why portions of the deposit are being withheld. It is not required but recommended that you have a mutual inspection of the premises shortly after the tenant vacates.
The tenant may not use the deposit to pay the last month’s rent with some exceptions.
Termination of Lease
Once the lease or periodic tenancy ends, the landlord may choose to accept rent for the following month. If so, this creates a periodic or month-to-month tenancy that either party may then terminate upon one full rental period plus one day.
For definite term leases, you can include a 30 or 60-day notice to vacate at the end of the lease period. If you have an automatic renewal for at least 2-months, you must give the tenant notice of the renewal provision 15-30 days before the tenant is required to give you notice of intent to vacate.
Should the tenant fail to pay the rent on time, there is usually a grace period within which the tenant may pay. If the rent is still unpaid, you must give the tenant an eviction notice called a 14-day Notice to Quit. If the entire rent is paid within this time, the tenant may remain. Do not accept a partial payment unless you specifically state in writing that the payment does not satisfy the tenant’s obligation and that eviction proceedings will still go forward or a court may interpret your acceptance of the partial rent as a satisfaction of the tenant’s rental obligation.
The same 14-day notice is required for any other lease violation. The landlord must allow the tenant to remedy the breach within the 14 days unless the breach pertains to criminal activity, intentional damage to the unit or the tenant has repeatedly caused a nuisance so that the violation may not be cured.
Military Duty Exception
Under the Servicemembers’ Civil Relief Act, a tenant may break a lease so long as written notice of at least 30-days is given along with a copy of the deployment or service orders or a signed confirmation from the base commander or other authorized military officer.
Domestic Violence Exception
A tenant who is a victim of domestic violence or sexual assault or stalking, or whose child has been, may vacate the leased unit before the expiration of the lease so long as an order of protection has been obtained and there is an imminent threat to the tenant or child if the tenant remains on the premises from the person who is the subject of the order. Written notice must be given to you with the date the tenant wishes to vacate. The tenant is not obligated to identify the person who poses the threat if for safety reasons. The tenant is responsible for the rent owed the month when the tenancy ends and forfeits right to the security deposit with some exceptions. No further obligations are required.
If you as landlord fail to provide a tenant with a habitable residence, which means not providing heat, electricity or water or failing to repair a health or safety hazard, the tenant could elect to terminate the lease based on “constructive eviction.” This applies if you attempt to self-evict a tenant by changing the locks, continually entering the premises without notice, taking the tenant’s personal property or deliberately withholding services so that the tenant will leave voluntarily.
Repair and Deduct
Should the tenant make a request to have certain repairs made that affect the tenant’s security, safety or health and you fail to do so, the tenant may put the rent towards the repairs or unpaid utilities. A tenant must give written notice to you before doing so and then notify a housing, fire, health or energy inspector if the repairs are not made and then submit the inspector’s report to you.
If you reject the report or the tenant’s contentions and you institute eviction proceedings, the court can, if the tenant’s assertions are valid, order the rent be deposited until the repairs are made or reduce the rent accordingly. If you prevail, the tenant will have to pay the rent plus costs as well as be reported to a tenant screening company.
The tenant must also notify you, orally or in writing, of the shut-off of utilities and you are given 48-hours to remedy it. If oral notice is given, then written notice to you must follow within 24-hours.
Minnesota residential lease agreements and the laws that regulate them are complex and include numerous obligations, disclosures and procedures. Carefully review the laws and local ordinances affecting your lease and tenants and consult an experienced landlord/tenant attorney if you have concerns or questions.