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Assistant Attorney General Katherine Kelly on How the State Protects Renters

The attorney general’s office has focused on protecting tenants’ rights and has won judgments against outside investors and local landlords who violated the financial, health, and safety rights of their tenants. We talked with Katherine Kelly, who works in Attorney General Keith Ellison’s office, about her work leading this effort in consumer protection, and why it is so important to focus on the imbalance of power between landlords and tenants.


How did you get to the role you are in today?

Katherine Kelly. Photo Sarah Whiting

The attorney general has the authority to protect consumers in the state by enforcing protection laws. In 2023, after receiving dedicated funding from the legislature, Attorney General Ellison launched a new Civil Rights Division and tasked it with enforcing the laws that protect tenants — one of his priorities is to protect people’s rights to safe, decent, legal rental housing. I am the attorney who manages that division.

Growing up, I never thought I would be a lawyer. But after I graduated with a B.S. in engineering, I went to law school. I became a litigation attorney, practicing securities and antitrust class action law and volunteering with HOME Line. After about 10 years, I decided to switch to full-time public service and joined the attorney general’s office.

As an assistant attorney general, one of my jobs is to monitor the marketplace for violations of rental laws. An example of a tenant-protection lawsuit that I work on is the State’s case against Investment Property Group, Inc., an out-of-state corporate landlord that systematically and illegally imposed significant utility charges onto thousands of its tenants in the middle of their tenancies. Another example is the State’s case against HavenBrook Homes and Progress Residential about their failure to make repairs and their violation of the lead-paint hazard laws.

How do you do your work?

We get reports every day from the public, mostly via our website intake process. Minnesota has many protections for tenants — mandatory disclosures about fees, what can be charged, what can’t be charged, when you can change someone’s terms, what you have to tell an applicant before they sign a rental agreement.

Sometimes we can help individuals who are having trouble by writing a letter to the landlord, but our focus is monitoring the marketplace. If we see a pattern of complaints about a specific landlord, then we can look further into the issue, since it seems to be a company practice, not a singular mistake. We investigate by interviewing tenants and gathering evidence.

If we discover that a company systematically violated the rights of its tenants, we can sue the company to seek restitution and obtain an injunction to stop the illegal conduct. We can also ask the court to penalize the landlord to deter the conduct in the future.

Historically, Minnesota Women’s Press has written about exploitation of renters, extortion by landlords, and people forced to move from public housing because of new development. What do renters continue to experience in Minnesota in 2024?

Renters continue to experience a large imbalance in the power dynamic exerted by landlords. In our country, the way our society and laws are set up, the burden is on the renter to know what the law is and to have the ability to take legal action to protect themselves.

If your mortgage company does something wrong with your mortgage, you can turn to one of several federal and state regulators for help. But there is no regulatory agency that tenants can turn to when their landlord breaks the law.

We as a society expect tenants to know the law, know if it’s being violated, sue their landlord in court, or defend themselves if they’re being sued by their landlord. Many tenants do not want to jeopardize their home, so they do not fight back when their landlord breaks the law, even if those tenants are aware of applicable laws.

Starting in January 2024, additional laws went into effect to help balance the power dynamic between tenants and landlords, but there are still improvements to be made.

In the rental space, enforcement actions prioritize habitability. We do go after extortion of fees and expenses and other problems, but habitability problems affect daily health and can have a lasting impact.

One example is a case we filed against a landlord who primarily rented to single Black mothers in North Minneapolis. He deprived them of their habitability rights by intimidation. He convinced them that it was illegal for them to go to housing inspectors. They were scared and put up with horrible conditions. He refused to do the right thing and comply with the law, so we ended up going to trial.

One of the remedies we always seek is injunctive relief — that’s our phrase for stopping the bad conduct. We do monitoring after the fact to make sure the court’s order is being complied with.

Courts are generally loath to force someone to cease doing business, so it is rare to get relief by forcing the company to close its doors in Minnesota. But bad actors sometimes go to a state with less consumer-protection oversight.

Homeowners’ associations can require hefty fees that are hard to pay on limited income. Is there anything the office is able to do?

I have heard of problems with HOAs — the assessments that come out of the blue, or odd choices that HOAs make and then impose on their members. A housing owner has more say than renters do, because technically they are a member of the HOA. They have a vote, and an ability to advocate to the board. But we are seeing that many common-interest communities hire a management company. They outsource governance to an entity that perhaps does not represent the best interest of the people who live there.

Some states have an ombudsman’s office for home owner association members — a place to go to that offers knowledgeable oversight. Minnesota homeowners and associations need an advocacy resource, but that does not exist in our laws currently.

What other trends are you seeing?

The movement into this marketplace by private equity and other investment companies is not illegal. But the incentive to focus on returns for your investors, instead of the people living in your home, is a dynamic that is not great.

Renters feel like they have an absentee landlord. They can’t talk to a human. FinTech has pushed into the rental market, which historically has been much more mom and pop — you used to know your landlord and be able to call them up. When private equity and investment companies get involved, that disconnect is magnified. It’s happening in Minnesota and all over the country. I do think it’s something people should pay attention to.

What do you think Minnesota does well?

There is no statewide licensure for landlords, only county- by-county ordinances. It is up to each local unit of government to license and inspect rental homes. So for example, the City of Minneapolis has a regulatory services division, which licenses all landlords in Minneapolis. Its safety inspectors can fine a landlord and take away the license if they’re violating habitability laws. Saint Paul has a similar office. But we have a lot of communities in Minnesota with no rental ordinances or licensure system; we also have communities with ordinances, but no resources are provided to enforce them.

So, my answer is that it is a mixed bag. There is no one grade I’d give the whole state in terms of leveling the playing field for renters. But some of the new laws that went into effect this year are a step in the right direction.

In the work you do, what has given you satisfaction?

I have really appreciated the broad authority the legislature gave the attorney general to protect vulnerable Minnesotans. In some states, the AG’s role is more limited, but here, the legislature has provided authority and funding to work on important cases like these.

The industry is more complex than most renters realize in terms of all the players in the chain. When you apply for an apartment, for example, often you’re not applying with the landlord — you’re applying with a company they’ve outsourced that process to. There are a lot of actors in that marketplace who are taking a cut. That is all usually legal to do, but we have regulations to make sure renters aren’t paying more for that process than they need to.

For example, Minnesota law says that a landlord can only charge a rental application fee for one unit from one tenant at a time. But some landlords were taking $50 to $100 from multiple applicants all for one apartment. One company wasn’t refunding the application fee to those who they rejected. We were able to enforce the law and get refunds for people who paid application and screening fees for an apartment that was not available to them. We are regularly doing work to protect consumers for something they might not even be aware is illegal.

That’s the way it should be. That’s a good government. I’m grateful that we have the laws that we have.

There’s room for improvement, of course. I’ll be watching the next legislative session. I hope it builds on the last one, with more protections for people.


Rulings Against Landlords & Further Reading

In December, a Ramsey County district judge ruled on behalf of the Minnesota Attorney General’s Office that HavenBrook Homes and Progress Residential violated laws regarding lead paint removal. The lawsuit included allegations of tenants living with no heat, backed-up sewer systems, and doors and windows that did not close.

The company is owned by Pretium Partners, a New York–based hedge fund — reportedly with $30 billion in assets — which has 600 single-family residential properties in the Twin Cities metro area.

For more on past rulings against property owners, see womenspress.com/court-judgments-against-landlords

To file a complaint, ag.state.mn.us/Office/Forms/ConsumerAssistanceRequest.asp

To understand more about the roots of housing disparities: The Color of Law (Norton, 2018), by Richard Rothstein