What To Do When A Tenant Stops Paying Rent
By: MARK W. VYVYAN
November 2004
Landlords all too often are faced with tenants who stop paying rent. Although litigation will sometimes be necessary, landlords can take other steps to increase their chances of a satisfactory result.
First, after a tenant is late with the rent, landlords should review the lease and any related documents to determine if there are any actions required by the landlord prior to litigation. Commercial leases often require that the landlord provide written notice to the tenant of any breach of the lease, including late payments; such notice may be followed by a grace period. These requirements must be followed carefully, or later legal action may be dismissed for failure to follow procedural requirements.
In addition, Minnesota statutes allow tenants to “redeem” their tenancy by simply paying the landlord the past due rent and certain statutorily allowed costs at any time prior to issuance of an eviction order by the court. Landlords should be cautious, however, before accepting partial payments. Absent specific language in the lease or other document to the contrary, accepting a partial payment is typically found to waive a landlord’s right to evict the tenant for failing to pay the balance.
Finally, Minnesota law does not allow for self-help eviction. If the pre-litigation steps discussed above are not successful, a landlord must use the courts to remove a defaulting tenant.
Litigation against defaulting tenants generally falls into two categories. First, a landlord will typically pursue an eviction action, also commonly known as an “unlawful detainer,” to recover possession of the leased premises. Eviction actions are designed to be summary proceedings to allow landlords to recover possession of leased premises quickly. The law requires that an initial appearance in an eviction action occur within 7 to 14 days after filing of the complaint. If the facts are not in dispute, many eviction actions will be resolved at the initial appearance.
If there are factual disputes, however, a trial must occur within six days after the initial appearance unless the parties consent to a longer time. A successful eviction action will result in issuance of a “writ of recovery.” This document instructs the sheriff to remove the tenant from the leased premises. From start to finish, a successful eviction action will last approximately three weeks.
In an attempt to remain in the premises, tenants will sometimes raise defenses to an eviction action. These may include improper service of the eviction summons and complaint, the landlord’s failure to follow procedural requirements of the lease, a dispute as to the proper amount due under the lease, and the landlord’s acceptance of partial payments of rent.
The second main type of litigation against defaulting tenants are actions to obtain a money judgment for unpaid rent. Unlike eviction actions, actions to recover money are not expedited and may take a year or more to be tried in district court. Landlords should pursue not only the defaulting tenant, but also any guarantors of the lease. Tenants may raise not only the defenses mentioned above, but may also argue they were defrauded when entering into the lease or that they were constructively evicted from all or a portion of the premises by the landlord’s actions. Tenants sometimes argue that the landlord failed to mitigate its damages after eviction by not re-letting the premises to a substitute tenant. While Minnesota landlords generally have no duty to mitigate damages by accepting a substitute tenant, a landlord who accepts a tenant’s surrender (by accepting the keys, occupying the space, or taking other action inconsistent with the lease), will often self-impose a duty to mitigate. Accordingly, an evicting landlord should make clear to the tenant, preferably in writing, that the landlord has not accepted the surrender of the leased premises and intends to hold the tenant responsible for obligations under the lease.
Prior to litigation, the landlord should carefully follow requirements in the lease. The landlord may then enforce rights by not only evicting the tenant, but also by pursuing the tenant and any other responsible parties to recover a money judgment for unpaid rent and other expenses.