Can Your Landlord Keep That Fee? Minnesota Law Explained
Understanding the difference between a legal fee and an illegal deposit withholding
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In Minnesota, the legality of non-refundable fees is a nuanced area of landlord-tenant law. While Minnesota statutes do not explicitly ban all "non-refundable" charges, they impose strict regulations on how these fees are labeled, disclosed, and managed. Whether a fee is truly non-refundable depends entirely on its purpose and how it is documented in the lease.
The "Security Deposit" Trap
The most critical distinction under Minnesota law (Minn. Stat. § 504B.178) is between a fee and a security deposit. By law, any money held to "secure the performance of a residential rental agreement"—such as covering potential damage or unpaid rent—is legally a security deposit.
In Minnesota, security deposits are never non-refundable. Landlords are required to return the deposit with interest (currently 1% simple interest) within three weeks of the tenancy ending, minus only "amounts reasonably necessary" for repairs beyond ordinary wear and tear or unpaid rent. If a landlord labels a charge a "non-refundable damage fee," a court may still view it as a security deposit and order it returned to the tenant.
Common Permissible Non-Refundable Fees
While damage-related charges must be refundable, other specific administrative or service-related fees can be non-refundable if clearly disclosed:
Application Screening Fees: Under Minn. Stat. § 504B.173, landlords can charge a fee to cover the cost of background and credit checks. However, this is only non-refundable if the landlord actually performs the check. If they find a different tenant before running your report, they must refund your screening fee.
Pet Fees vs. Pet Deposits: This is a common point of confusion. A pet deposit is treated like a security deposit and is refundable. A pet fee (or "pet rent") is typically a non-refundable charge for the privilege of keeping an animal on the premises.
Late Fees: These are non-refundable but are capped by law. Under Minn. Stat. § 504B.177, a late fee cannot exceed 8% of the overdue rent payment.
Transparency and New Disclosure Laws
As of 2024, Minnesota has implemented stricter "clear pricing" requirements for landlords. In any advertisement that lists a rent price, the landlord must also clearly disclose all non-optional fees (such as administrative fees or mandatory utility charges).
Furthermore, the first page of the lease must now list the "Total Monthly Payment," which combines the base rent with all mandatory monthly non-refundable fees. If a fee is not properly disclosed or is used as a "hidden" way to increase rent, it may be legally challengeable.
Summary for Tenants
If you are asked to pay a non-refundable fee in Minnesota, ensure it is for a specific service (like a pet fee or screening) rather than a general "cleaning" or "damage" fee. Any charge intended to protect the property's condition is, by definition, a deposit that belongs to the tenant until the landlord proves actual damage occurred.
Information published to or by The Industry Leader will never constitute legal, financial or business advice of any kind, nor should it ever be misconstrued or relied on as such. For individualized support for yourself or your business, we strongly encourage you to seek appropriate counsel.
