Lease is up and the renters won't leave...help please?

[Brandon Lubich]

Hey everyone, I've got a situation where the renters have been great as far as paying on time, but their lease is up and they won't move. We told them over a month ago that we are going to put the house on the market. I know there is a CDC-Eviction-Moratorium because of Covid. But reading through it (I'm no lawyer) seems to just keep talking about renters that aren't up on their rent. How does this apply to this situation? Whats the best way to resolve it? I know there's a cash for keys option and we have done that in the past, but rental houses are very limited at the moment.

Also looking for a great Real Estate Lawyer in the Duluth Minnesota area and a Real Estate Tax person who is very familiar 1031 Exchanges.

Would love any help or advice! Thank you!

-Brandon Lubich

[Tim Swierczek]

@Brandon Lubich The current Governors Order does not allow a landlord to terminate a tenancy unless you the owner will move into the unit within 7 days.  This means you have very little leverage other than cash for keys.  If rental homes are hard to find they might be concerned with finding a new place.  I would recommend talking to them about their concerns, they have 100% of the leverage so I would use honey to solve this problem.  That being said you do have one risky strategy you can try that I will describe below.

There are two relevant orders, to evictions and one that has to do with price gouging.

The most relevant to you at this time is Emergency Executive Order 20-79; Rescinding Emergency Executive Orders 20-14 and 20-73.  You can find it here: https://mn.gov/governor/assets...

This is the part most relevant to you:

1. Effective August 4, 2020 at 12:00 am, Executive Orders 20-14 and 20-73 are
rescinded. Paragraphs 2 through 13 of this Executive Order are effective as of August
4, 2020 at 12:00 am.

2. The ability of property owners, mortgage holders, or other persons entitled to recover
residential premises to file an eviction action on the grounds that a residential tenant
remains in the property after a notice of termination of lease, after a notice of
nonrenewal of a lease, after a material violation of a lease, after the termination of the
redemption period for a residential foreclosure, or after nonpayment of rent, is
suspended. Nothing in this Executive Order relieves a tenant’s obligation to pay rent.
This suspension does not include eviction actions where the tenant:
a. Seriously endangers the safety of other residents;
b. Violates Minnesota Statutes 2019, section 504B.171, subdivision 1;
c. Remains in the property past the vacate date after receiving a notice to vacate
or nonrenewal under paragraph 4 of this Executive Order; or
d. Materially violates a residential lease by the following actions on the
premises, including the common area and the curtilage of the premises:
i. Seriously endangers the safety of others; or
ii. Significantly damages property.

3. Residential landlords must not issue notices of termination of lease or nonrenewal of
lease or terminate residential leases during the pendency of the peacetime emergency
unless the termination or nonrenewal is based upon one of the grounds permitted by
paragraph 2.

4. Paragraph 3 does not apply to residential landlords who issue a termination of lease or
nonrenewal of lease due to the need to move the property owner or property owner’s
family member(s) into the property and where the property owner or property
owner’s family member(s) move into the property within 7 days after it is vacated by
the tenant.

There is a potential interesting strategy you could use, which would be to raise the rent by as much as possible but not more than market rent or 19% of what you charged on March 13, 2020, whichever is lower.  This may incentivize the tenants to leave as they will not want to pay the higher rent, but this would only work if they would not be ok with the higher rent and they value their credit.  If they do not value their credit they could stop paying and then you have a whole other issue to deal with and at that point, your only leverage would be to sue them in small claims court for unpaid rent.  Not a good option in my mind but I'm giving you all the options as I see them.  It's important you do not raise the rent 20% or substantially above market more because you would violate this order, and the fine is $10K:


Emergency Executive Order 20-10
Combatting Price Gouging During the COVID-19 Peacetime Emergency

The relevant part

b. “Essential consumer goods or services” means goods or services vital and
necessary for the health, safety, and welfare of the public, including without
limitation: food, water, fuel, gasoline, housing, shelter, transportation, health
care goods and services, pharmaceuticals, medical supplies, and personal
hygiene, sanitation, and cleaning goods.
c. “Unconscionably excessive” means:

i. The amount charged represents a gross disparity between the price of
the good or service and the price of the same good or service that was
sold or offered for sale in the usual course of business during the thirty
(30) days immediately prior to the peacetime emergency declared by
Executive Order 20-01 on March 13, 2020, unless the person
demonstrates that the disparity is substantially attributable to
significant additional costs outside the control of the person; or
ii. The amount charged for the good or service is more than twenty
percent (20%) greater than the price of the same good or service that
was sold or offered for sale in the usual course of business during the
thirty (30) days immediately prior to the peacetime emergency
declared by Executive Order 20-01 on March 13, 2020, unless the
person demonstrates that the disparity is substantially attributable to
significant additional costs outside the control of the person; or

iii. The amount charged grossly exceeds the price at which the same or
similar good or service is readily obtainable by other purchasers in the
trade area, unless the person demonstrates that the price increase is
substantially attributable to significant additional costs outside the
control of the person.


PS- I'm not an attorney so this is not legal advice, just landlord options from another landlord.

As for CPA's I'd reach out to @John Woodrich he's the best, for attorney's you can't beat @Brad Schaeppi I get all of my legal advice from Brad and my tax advice from John.  

Good luck to you!