What is rent escrow?
Rent escrow is an action that a tenant may take against a landlord to receive relief from the landlord’s failure to repair housing violations. Minnesota Statute § 504B.385 governs this process. When a landlord fails to make repairs after being notified of certain housing violations and lease violations, the tenant may place his rent in an escrow account with the court administrator instead of sending rent to the landlord. In doing so, the court administrator will then ask the landlord to make the required repairs. Placing rent with the court administrator is a way to try to force action by the landlord, when the landlord is disregarding requests that come directly from the tenant.
When can a tenant place rent in a rent escrow account?
In order to be able to place rent in a rent escrow account with the court administrator, the landlord’s property must be in violation of the housing code, the oral or written lease agreement, or the premises are not fit to live in and no longer in good repair. At this point the tenant has two options. First, the tenant can contact the housing inspector regarding the violations of the housing code. The inspector then can force the landlord to make the necessary repairs. Second, the tenant can choose to directly notify the landlord of the violations. The tenant must issue this notification to the landlord in writing. Under Minnesota law, the landlord has 14 days after receiving the tenant’s notification to make the repairs. If no repairs are done after the notification of the housing inspector or the tenant, then the tenant may place his rent in escrow. It is important to note that the tenant must deposit the total amount of rent that is due with the court administrator. Each month that rent is due to the landlord, the tenant must place the rent with the court until the time of hearing. If a tenant fails to place the entire amount of rent in the escrow account, the landlord can take action to evict the tenant. Additionally, the tenant is still obligated to abide by all of the terms of the lease between him and the landlord.
What happens when a tenant puts his rent in escrow?
At the time of placing rent in escrow, the tenant will be required to pay a filing fee with the administrator, but it is usually a small fee. Along with the fee, the tenant will need to provide an estimate of the cost of repairs, the name and address of the landlord, and a copy of the original notification letter that the tenant sent to the housing inspector or to the landlord. The administrator will then give the tenant a rent escrow petition form to fill out. After the tenant places his rent in a rent escrow account, the administrator will schedule a court hearing within 10 to 14 days of the initial rent deposit. The landlord is then notified of the hearing. If the repairs are made after the tenant’s rent is in escrow with the court, but before the hearing takes place, the tenant must give written notice to the court administrator. The administrator will then release the rent to the landlord and cancel the impending hearing.
What could happen at the hearing?
If the tenant is successful in proving that the alleged violations exist and that the landlord has failed to make the necessary repairs, there are several solutions the court may provide. The court may:
- Order the landlord to make the required repairs;
- Have the tenant make the repairs, deducting the cost of the repairs from the rent the tenant pays;
- Appoint an administrator to collect the rent from the tenant and to order repairs;
- Return all, part, or none of the rent to the tenant;
- Order that all or part of the rent in escrow be released and used to fix the violations;
- Order that the future rent be paid to the court or that the rent be abated (eliminated or reduced), until repairs are made, or that part of the rent be abated or refunded; or
- Impose a fine on the landlord.
If, however, the tenant fails to prove that the violations exist and the landlord’s failure to repair them, the rent in escrow will go to the landlord. Additionally, if the tenant does not pay the full amount of rent due to the court and the landlord does not start an eviction action, the rent in escrow will go to the landlord.
Does the tenant always have a right to place rent in escrow?
Yes. The right to place rent in escrow when the landlord fails to repair conditions in violation of housing codes or the lease cannot be waived or modified by any oral or written lease or other agreement. The lease may not claim that the tenant has waived his right, or does not have the right, to place his rent in escrow if need be.