NO PLACE LIKE HOME . . . UNLESS YOU CAN’T GET IN: THE LACK OF NON-DELIVERY PROTECTIONS FOR MINNESOTA TENANTS

By Cheyenna González Pilsner, Volume 108 Staff Member

On August 2, 2023, Identity, a new housing complex near the University of Minnesota, notified its tenants they would be unable to move in on the lease-given day of August 27, 2023, citing construction delays.[1] This notice came one day after tenants were required to pay their first month’s rent.[2] Along with condolences, tenants were given two options: either receive a daily $150 gift card and find their own housing, or have the apartment complex provide them alternative housing and receive $80 per diem.[3] There was one option conspicuously missing: the option to cancel their lease. That is because the apartment complex was unwilling to budge on one key provision: tenants were expected to wait until either the apartment complex became available or until the ‘Non-Delivery Cancelation Date’ provision in the lease lapsed–either under the 90-day delivery provision or “the maximum time period allowed by law.”[4] This clause naturally leads to asking, what does Minnesota law say regarding landlord non-delivery of possession? The answer is… nothing.

I. MINNESOTA LAW ON LANDLORD NON-DELIVERY OF POSSESSION

Minnesota Statute, Chapter 504B contains the laws pertinent to most landlord-tenant issues. Among other things, it addresses service and support animal documentation needed in housing,[5] evictions,[6] and tenant right to privacy.[7] Yet, missing from the eighty-one provisions,[8] is what occurs when the landlord is unable (or unwilling) to provide the premises described in the lease.

One factor in this omission may be that the lease is a contract, and as such carries all the rights and obligations that come with a legally binding agreement. New York law recognizes that “there shall be implied in every lease of real property a condition that the lessor will deliver possession at the beginning of the term.”[9] The remedy flowing from this implied condition is the “right to rescind the lease and to recover consideration paid.”[10] While Minnesota landlord-tenant law does not contain this language, it flows that a tenant can sue under breach of contract for failure to deliver possession of premises… in theory. As far as remedies, a tenant would likely ask for either specific performance or recission of the lease, return of all moneys paid, and legal fees.[11] In the latter, a judge would have the power to order these remedies. The former would be a trickier issue in cases like Identity’s where the building is in the process of construction and cannot move tenants in.

II. RENTAL LICENSES AND LEASING APARTMENTS UNDER CONSTRUCTION

Minnesota state law does not require landlords obtain rental licenses.[12] Instead, the state leaves the matter up to individual cities. The cities’ licensing requirements can be found in city ordinances and vary greatly.[13] Minneapolis requires landlords to have a license before signing leases with tenants. But the city exempts developers, allowing them to sign leases on unfinished buildings if they are new construction.[14] These exemptions were intended to guarantee developers a revenue stream as soon as the new buildings opened.[15] This exemption becomes problematic when Minneapolis tenants face prejudice due to delays in these new constructions, and no immediate remedies exist for affected tenants. Instead, tenants depend on either a landlord’s benignity or going through the judicial system for breach of contract; neither of which are good options for tenants.

A. Suing for Breach of Contract May be Unattainable for Many Tenants and Suing for Specific Performance Runs into Feasibility, Good Faith, and Alternative Accommodation Issues

Breach of lease? Easy-peasy. Except it isn’t—as the legal situation with Identity has shown. First, leases may provide the apartment time to remedy.[16] This immediately puts tenants at a disadvantage in overcoming contractual provisions. Second, the ever-present issue of courtroom accessibility looms, particularly the prohibitive cost of an attorney. For example, in the Identity case, no pro se litigants have attempted to initiate suits.[17] Instead, all the plaintiffs are represented in their lawsuits for lease rescission.[18] Each case’s docket includes a multitude of filings and counter-filings that, even as a second-year law student, are overwhelming.[19] While conciliation court is generally considered “the people’s court,”[20] an attorney may be the difference between obtaining relief and not.

In the case of new constructions, suing for performance may run into issues of feasibility. Even if the landlord wants to, it may not be physically possible to move tenants in.[21] In which case, performance is not possible. Additionally, a tenant’s claims may be barred in whole or in part if apartment managers have provided alternative accommodations in good faith.[22]

If the avenues of litigation are foreclosed to a vast number of tenants, then an alternative would be for the legislature to enact protections that are more readily available to tenants. A possible solution is found in the Uniform Residential Landlord and Tenant Act created by the Uniform Law Commission.

III. THE UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT OF 1972 AND 2015

Created in 1892, the Uniform Law Commission’s (“ULC”) purpose is to create uniformity in state laws.[23] One area of concern for the ULC was the disjointed and contradictory legislation in landlord-tenant laws across the country.[24] In crafting its first version of proposed rules and procedures in 1972, the ULC sought to outline the obligations of both the landlord and the tenant with the Uniform Residential Landlord and Tenant Act (“URLTA”).[25] Then, in 2015, the ULC published the Revised Uniform Residential Landlord and Tenant Act (“RURLTA”). Both URLTA and RURLTA are approved by the American Bar Association for states to consider for enactment.[26] As of today, twenty-one states have adopted at least some part of the URLTA, with RURLTA being introduced in Georgia.[27] Notably, Minnesota is not among those twenty-one states.[28]

Common in both versions is landlord’s obligation to deliver actual possession and various remedies to tenants where the landlord has violated this obligation. Section 2.103 obliges a landlord to deliver possession of a dwelling.[29] Section 4.102 grants tenant remedies when landlords fail to uphold 2.103 duties, giving tenants rent abatement and the option to:

(a)(1) terminate the rental agreement upon at least [5] days’ written notice to the landlord and upon termination the landlord shall return all prepaid rent and security; or

(a)(2) demand performance of the rental agreement by the landlord and, if the tenant elects, obtain possession of the dwelling unit from the landlord or any person wrongfully in possession and recover the actual damages sustained by him.[30]

If the landlord’s failure to deliver possession is willful and not in good faith, 4.102(b) creates the option to obtain three month’s rent or threefold the actual damages sustained (whichever is greater).[31] Had either URLTA or RURLTA been adopted by the Minnesota legislature, the Identity tenants would have been able to end their leases without additional legal hurdles. Instead, they are left without any viable remedies.

CONCLUSION 

On September 13, 2023, the Senate Committees on Higher Education and Housing and Homelessness Prevention sat for a two-hour-long hearing to discuss delayed move-in at Identity, hearing the plight of University of Minnesota students and expert testimonies.[32] Lawmakers say they plan to investigate this problem in housing all across the state in the next legislative session.[33] The Minnesota legislature should adopt some version of URLTA or RURLTA. If unwilling to go that far, then at the very least it should look to URLTA or RURLTA as a framework for addressing non-delivery of premises to create an accessible legal right to lease rescission and reimbursement of moneys paid so that what happened to the unsuspecting Identity tenants does not occur again.

 

[1] Jennifer Hoff, U of M Students Testify to Lawmakers About ‘Troubling’ Situation at New Apartment Complex, Kare 11 (Sept. 13, 2023), https://www.kare11.com/article/news/local/u-of-m-students-testify-to-lawmakers-about-situation-at-new-apartment-complex/89-7e3aae7c-28ca-4b90-bf8e-bfda96d3530b [https://perma.cc/MHU4-6HEC].

[2]  Id.

[3] Id.

[4] See Exhibit A § 11(c), Benson v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6418 (Sept. 1, 2023).

[5] Minn. Stat. § 504B.113 (2023).

[6] Minn. Stat. § 504B.281–371 (2023).  

[7] Minn. Stat. § 504B.221 (2023).

[8]See generally Minn. Stat. § 504B (2023) (containing eighty-one laws governing Minnesota landlord-tenant law).

[9] N.Y. Real Prop. Law § 223A (2023).

[10] Id.

[11] See, e.g., Benson v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6418 (Sept. 1, 2023); White et al. v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6822 (Aug. 18, 2023).

[12]  See Minn. Stat. § 504B (2023) for illustration of lack of rental license requirement.

[13] See generally John Roach, Do I Need to Have a Rental License?, RAM Law PLLC (June 6, 2022), https://www.ramlawmn.com/blog/landlord-rental-home-licenses [https://perma.cc/4PVN-VXG6] (outlining general licensing rules for Minnesota landlords).

[14] Eder Campuzano, After Unfinished Dinkytown Apartments Left Renters in Limbo, a Proposal Offers a Way Out of Leases, Star Trib. (Oct. 18, 2023), https://www.startribune.com/identity-dinkytown-robin-wonsley-minneapolis-city-councilor-proposes-break-lease-policy/600313113 [https://perma.cc/W2QD-8YYZ].

[15] Id.

[16] See Defendant’s Answer at 4, Benson v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6822 (Index #4) (Sept. 13, 2023) (“Under the lease, Defendant is only required to abate rent if it is unable to give possession on the date of the start of the lease.”). Identity also referred to the lease language permitting Identity ninety days past the date of delivery to correct. Defendant’s Memorandum of Law in Opposition to Plaintiff’s Motion for Summary Judgment at 2–3, Benson v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6822 (Index #11) (Sept. 25, 2023).

[17] The lack of pro se filings was determined via a Hennepin County docket search that identified cases filed against “CA Student Living Dinkytown II.” The search was conducted at https://publicaccess.courts.state.mn.us/CaseSearch [https://perma.cc/6NV7-8CB2].

[18] See generally Benson v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6418 (Sept. 1, 2023); White et al. v. CA Student Living Dinkytown II, No. 27-CV-HC-23-6822 (Aug. 18, 2023).

[19] See generally Benson, No. 27-CV-HC-23-6822; White et al., No. 27-CV-HC-23-6822. Attorney fees aside, plaintiffs have paid over $400 in court filings, adding to mounting costs of suing for breach of contract.

[20] Conciliation Court: A User’s Guide to Small Claims Court, Off. of the Minn. Att’y Gen. 2, https://www.ag.state.mn.us/brochures/pubconciliationcourt.pdf [https://perma.cc/GH6G-6LFW].

[21] Defendant’s Answer, supra note 16, at 2 (“due to unexpected construction delays outside of Defendant’s control.”).

[22] Id. at 8 (“Defendant has offered two options to tenants and to house them in a nearby hotel. . .. Plaintiff’s leases do not require that these options be offered to Plaintiff, rather, Defendant offered such options as a showing of good faith in an attempt to accommodate Plaintiff for the short-term before her eventual move-in date.”).

[23] Lawrence R. McDonough, Then and Now: The Uniform Residential Landlord and Tenant Act and the Revised Residential Landlord and Tenant Act—Still Bold and Relevant?, 35 U. Ark Little Rock L. Rev. 975, 977 (2013).

[24] Id.

[25] Id.

[26] Minneapolis Proposed Security Deposit Ordinance, Minneapolis Area Realtors (July 29, 2019), https://www.mplsrealtor.com/wp-content/uploads/2019/07/Letter-Minneapolis-Security-Deposit-Ordinance.pdf [https://perma.cc/5ED6-272P].

[27] Enactment History Table, Unif. L. Comm’n, https://www.uniformlaws.org/committees/community-home?CommunityKey=e9cd20a1-b939-4265-9f1e-3a47a538d495 [https://perma.cc/DC48-TXRZ]. States that have enacted URLTA include: Alabama, Alaska, Arizona, Connecticut, Florida, Hawai’i, Iowa, Kansas, Kentucky, Michigan, Mississippi, Montana, Nebraska, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Virginia, Washington. Id.

[28] Id.

[29]  Unif. Residential Landlord & Tenant Act § 2.103 (Unif. L. Comm’n 1972) (“At the commencement of the term a landlord shall deliver possession of the premises to the tenant in compliance with the rental agreement.”).

[30] Id. § 4.102.

[31] Id.

[32] Grace Henrie & Amelia Roessler, UMN Students Give Testimonies Against Identity Dinkytown at Wednesday Senate Hearing, Minnesota Daily (Sept. 18, 2023), https://mndaily.com/278444/news/umn-students-give-testimonies-against-identity-dinkytown-at-wednesday-senate-hearing [https://perma.cc/3CJS-Q8YC].

[33] Hoff, supra note 1.