All Forum Posts by: Brad Schaeppi

The answer in Minneapolis, Minnesota is 100% stop the illegal unit and get it approved or don't rent it.  Your "tenant" can file a rent escrow action and get 100 cents on the dollar back in rent--everything paid.  It is very unlikely a use and enjoyment argument will mitigate any of it back.  Plus you will be out legal, etc.  Like most things in life--everything is all well and good--until you don't get along.  

The one key take away from this long thread should be, know your federal, state, and now local law and ordinances on landlord tenant law.  Read where every BP comment is from and place those comments in that geographic context.  As @Michael Tempel stated earlier, the City of Minneapolis becomes a whole new world with eviction history with 244.2030 that states specific credit, criminal, and other reasons for which a landlord CANNOT reject an applicant.  Eviction history starts June 1 2020 for buildings with 16 or more units and December 1 2020 for buildings with 15 units or less.  Property managers must pay close attention to the language as the code differs with permitted time to reject between "settled with no judgment or writ of recovery issued" (1 or more years--cannot reject) vs. "judgment against the applicant" (3 or more years cannot reject).  In other words, an eviction is not an eviction.  

@Matt Higgins  First for the audience, Minn. Stat. 582.03 is the applicable statute for the only allowable costs under the statute to charge a party seeking to redeem.  As an attorney, there are so, so many BP back and forths where no party is actually citing the applicable law...which BP makes it easy to do via text links.  

With respect to predatory practice, I am not sure.  The issue goes both ways and it truly is a gamble--parties post foreclosure generally don't have good credit to redeem--BUT the former fee title owner with only redemption rights sells their redemption rights to a purchaser/third party which redeems and becomes the fee title owner.  We have many consumer protection statutes, but we truly live in a Buyer Beware/ Caveat Emptor world.  I work with and educate clients purchasing distressed properties not only on the black and white legal issues, but the risk/reward--if they are bidding on an auction post sheriff sale, and subject to redemption, you NEED to know if you pay auction buyer premiums, etc. and the property is redeemed, it is possible you lose money in the process.  

Lots of fact specific issues here.  Minnesota statues limit what purchaser's of Sheriff Certificates can charge when and if the property is redeemed.  In other words, yes it is possible for purchaser via auction and lose money if you paid fees/premiums that cannot be passed onto the owner redeeming.  

Thanks @John Woodrich

My two tips for new wholesalers:  

1)  Understand whether or not you are or intend to be a licensed real estate agent or broker.  This has implications as it relates to showing the property.

2)  Understand your business model and be able to articulate that to an attorney.  

Wholesalers are not all the same.  Some look to flip or assign purchase agreements, some intend to assign purchase agreement with Contract for Deed, etc. 

Thanks @John Woodrich and @Tim Swierczek.  Please accept the following information, non-legal advice feedback.  For questions with below, consult an attorney before you act.  

The devil truly is in the details with leases and notice forms. The MSBA has a base lease as does the Minnesota Multi Housing Association. MMHA has a few basic addenda that can also be improved quite a bit and only cover a few situations. Landlord tenant specific attorneys likely have their own form, as do I. As pros will tell you, any base form should be modified to meet property specific (SFH, Duplex, large MF needs) and your property management needs and business. Everything from better defining what is the "Leased Premises" (I define duplex unit Leased Premises to interior unit only and landlord need not notice to enter common area interior steps or basement or exterior yard) to attorney fees (don't do it---they become a sword for bad faith tenants and consumer advocate attorneys seeking a pound of flesh).  Many also overlook the business side of leases--when and how can and should landlords or property managers charge tenants for hourly work--ranging from "irresponsible conduct" when a tenant causes damage to the unit and it needs to be repaired during the tenancy (tenant clogged plumbing with food), to hourly charges upon move out beyond normal wear and tear.  

Spend the time upfront to really understand your form and your business.  

Good luck!

@Morgan Wells I am an attorney and not looking to poach business...just offer my two cents.  $5k for a standard commercial PA deal sounds quite high...especially a few weeks out from closing and 20 minutes total on phone.  Good RE attorneys do not "draft" Purchase Agreements....they modify or edit their own purchase agreements to a new deal.  There are a lot of factors that impact total billed amount outside of the PA--environmental, title, difficult other party, etc.  Clients are always free to call their attorney and ask for more detail on their statement or even to state you are not satisfied as a client as there was no estimate/heads up that the fee was growing so fast.  Lastly, some attorneys use cloud billing like Clio which can allow clients to see billed hours in real time.  Ask about it and have your attorney turn that feature on....or find one that can.  

@Brooks Johnson are you referring to 1-4 unit properties or 5+ unit properties?  I agree if 1-4 units talk with @Tim Swierczek.  If need a commercial loan, Bridgewater Bank with many branches in the metro is a great option.  DM if you need more details.  

Thanks @John Woodrich.  Yes many cities have their own quasi-judicial administrative enforcement on rental licenses including revocation.  Each will have a process and each is fact specific, property specific, and city specific.  Impossible to estimate.  Key item is read all your written notices and know the applicable law.  

Thanks @Tim Swierczek

@Joseph Hammel you are on the right track.  It is always wise to assess best, least expensive options to remove a non-compliant tenant--evict, notice to quit, etc.

As Tim indicated, for at will tenancies (month to month), landlords may use 504B.135 to terminate a lease if a request is made for payment, and a tenant does not pay in 14 days.  This statute does not apply to fixed term leases.  

All investors and landlords on this platform--do not act upon recommendations on this platform unless that recommendation comes with source law that backs up that recommendation. 

--Bradley Schaeppi

Minnesota Landlord Law, PLLC