Top Five Silliest Real Estate Laws: No. 4: The Abandoned Property Provisions of Minnesota’s Landlord-Tenant Statutes
Continuing with our theme of real estate laws whose time has come…and gone…No. 4 on our list is the abandoned property provisions of Minnesota’s landlord-tenant statutes, Minnesota Statutes Chapter 504B.
I work with a lot of real estate investors who are purchasing foreclosed properties, rehabbing them and converting them into rental properties. When asked about whether they should take title to a property in their own name or form an entity, I typically point to Minnesota’s landlord-tenant laws as justification for the latter. Minnesota’s landlord-tenant laws are perhaps the most tenant-friendly in the nation. Certainly, a statutory scheme which does not permit self-help to recover possession of a rental property is a good thing, but there are provisions of Minnesota Statutes Chapter 504B that ignore practical realities and afford too many rights to a defaulting tenant, to the detriment of the landlord’s bottom line.
Case in point: Minn. Stat. § 504B.271, which governs the handling of a tenant’s personal property following termination of the tenancy. This law provides that if a tenant abandons rented premises, the landlord may take possession of the tenant’s personal property remaining on the premises, and shall store and care for the property. The landlord has a claim against the tenant for reasonable costs and expenses incurred in removing the tenant’s property and in storing and caring for the property.
Here’s the absurd part of the law: the landlord may sell or otherwise dispose of the property 60 days after the landlord receives actual notice of the abandonment, or 60 days after it reasonably appears to the landlord that the tenant has abandoned the premises, whichever occurs last, and may apply a reasonable amount of the proceeds of the sale to the removal, care, and storage costs and expenses. Any remaining proceeds of any sale shall be paid to the tenant upon written demand.
Prior to the sale, the landlord shall make reasonable efforts to notify the tenant of the sale at least 14 days prior to the sale, by personal service in writing or sending written notification of the sale by certified mail, return receipt requested, to the tenant’s last known address or usual place of abode, if known by the landlord, and by posting notice of the sale in a conspicuous place on the premises for at least two weeks.
In other words, even though the tenant has left behind personal property in their rented property, usually in the wake of an eviction for nonpayment of rent, the law requires the landlord to store the abandoned property for two months. What’s worse is that the landlord can be held liable for damages if something happens to this property during this time.
The abandoned property statutes unnecessarily extend the time with which the landlord has to deal with its past tenant. For small, private landlords, many of whom use their rental income to supplement income from full-time employment, these laws can wreak financial havoc on their business operations, all in the name of some abstract concept of “fairness.” When a tenant stops paying rent and forces the landlord to evict them, the landlord needs to be able to focus attention on finding a replacement tenant to keep a steady stream of rental income going sufficient to cover the holding costs of the property. The landlord cannot and should not be forced to worry about what to do with its past tenant’s “junk”.