Why Duplex Sellers Need A License

In the last week, I’ve had two clients write offers on duplexes owned by traditional sellers.

Both sellers had owned the properties for a considerable length of time. In neither case, however, did we see any evidence of a rental license.

Why is this important?

Because it may cost my clients as much as $1500.

Various municipalities require landlords to license their property for rental. This could be a single family home, duplex, triplex or even a large apartment building. And owner occupying a duplex does not exempt it from licensing.

The thinking behind rental licenses is twofold. First, they, and the inspections required to obtain a license, help ensure a safe living environment for a property’s residents. Second, well, the rental license  inspections, like truth in housing reports, help maintain a certain minimum standard of housing quality in the city.

Properties being rented for the first time, or those that have not had a valid license in the last 12 months are required to be inspected before a license will be issued. The cost is $1000.00, in addition to the annual $86 duplex licensing fee.

Worse yet, duplexes that have been rented without a valid license can also be fined $500.00.

These fees would be in addition to Minneapolis’ new landlord fee, which requires new duplex owners who purchase their investment property after April 1 to obtain a license prior to offering a property for rent and within 60 days of closing.

The fee for this is $250 for the first unit, and $20 for each additional unit.

Rental licenses are supposed to be displayed in a prominant place. In most duplexes, I usually see them in a common entryway.

I didn’t in either of the duplexes my clients wrote offers on. So we made sure the offers were contingent on the sellers providing  proof of having a valid rental license.

That way, they are responsible for any additional inspection fees or fines.

It’s a far better alternative than my having my new duplex owners get a $1000 surprise.