If you’ve been following the MSBA’s Capitol Connection, you may have noticed a number of new laws that will become effective over the summer or shortly thereafter. One of those new laws enacts some of the more sweeping changes to Minnesota residential landlord-tenant law since recodification of the law in 1999 (and  those changes were not actually considered substantive). Among the provisions in the newly enacted law are:

• Receipt for cash payments. A landlord who receives rent in cash must immediately provide a written receipt to the tenant or, if the tenant was not present at the time of payment, must provide a written receipt within three business days;
• Rebuttable presumption of rent paid from money order receipts. A rebuttable presumption of rent paid arises if a tenant produces copies of money orders payable to the landlord, dated appropriately, and that add up to the total amount of rent due. The landlord can overcome the presumption if the landlord produces a business record showing that the tenant did not actually pay the rent.
• Limit on late fees. Late fees are capped at a maximum of eight percent of overdue rent. In addition, late fees cannot be charged unless a written lease provision allows for it. For the landlord, allowable late fees are now specifically defined by law not to be “interest or liquidated damages.” These provisions apply only to leases entered into or renewed after December 31, 2010.
• Tenant recovery of attorney fees. If a tenant prevails in an action brought by the landlord and the lease allowed the landlord to recover attorney fees “in the same type of action, under the same circumstances,” the tenant is by law entitled to recover attorney fees from the landlord. This provision does not become effective until August 1, 2011 for new leases and August 1, 2012 for lease renewals.
• Sale of a tenant’s personal property. For personal property left in an abandoned rental unit, a landlord must wait 28 days from the time of abandonment before selling or otherwise disposing of the tenant’s property, a reduction from the 60 day requirement in current law.
• Punitive damages. Punitive damages against a landlord for the landlord’s failure to return a tenant’s personal property that had earlier been removed from the premises has increased from $300 to twice the actual damages or $1,000, whichever is greater.
• Changes to applicant screening fees. In addition to significant changes in the way a landlord can collect and handle an applicant screening fee, a new provision has been added that gives a landlord a right of action for damages, attorney fees, and civil penalties if the tenant provides materially false information on a rental application.

The new law also provides for temporary additional protection for tenants who currently rent leased property that is in foreclosure or is subject to a cancellation of a contract for deed. This provision essentially makes state law consistent with newly enacted federal laws. While somewhat complex depending on the underlying circumstances, the provision essentially gives tenants in foreclosed properties at least 90 additional days to reside in the property after the period of redemption (or termination of contract for deed if applicable), so long as the rent continues to be paid to any successor and the tenant abides by the lease. If an existing lease on the property extends beyond 90 days, the tenant has a right to reside in the property until the end of the lease and must also receive at least 90 days notice to vacate prior to the end of the lease. These new provisions, which are significant, are effective for any lease entered into prior to December 31, 2012, after which time the provision sunsets.

For some attorneys and courts, a few of the changes are not real changes at all, as they reflect practices that already exist in some jurisdictions (such as requiring written receipts for cash payments of rent or written lease provisions for the charging of late fees). But the new foreclosure protections, as well as the attorney fee “shifting” provision for tenants, are substantial changes that generally alter the push-me-pull-me legal relationship existing between landlord and tenant. Landlord-tenant attorneys should become familiar with the new legislation as soon as possible, as many of the changes become effective in August.