City won't allow me to rent out my Triplex

22 Replies

So here is the back story.  I bought a tri-plex in 2005 located in Mankato, Mn while I went to college.  The property had a grandfathered rental license on it.  This worked great for a couple of years, my roommates' rent covered the cost of the property and then some.  But there was an assisted living home across the street who continually called the police and we received a number of noise violations for doing nothing wrong except being 20 something college kids with weird hours, much different than a senior living center.  The city will not allow us to rent the property or a new owner to obtain a rental license or rent the property either.  The city rezoned the area as well.  We have tried to sell the property a few times but no offers as no one wants to buy a large tri-plex that can not be rented.  We have had no choice but to continue renting.  Every year or so the city is notified and we are forced to evict our tenants and are fined.  We do not want to foreclose on the property and lose our substantial downpayment, 10's of thousands of updates done to the property, and ruin our credit as the loan is in mine and my parents name.  The city is now threatening us with larger fines and jail time.  We have other rental units and flip homes as well and that would not look good to have a foreclosure on our record.  Has anyone run into a similar issue and found a way around this.  I feel what the city has done is illegal.  Any help would be appreciated.

Get voted on to the HOA board and ..oops, no board. Much harder to get elected to the city council. See if you can mend fences and become a better neighbor.

You kids, get off my beach!

It sounds like your property was grandfathered as a rental.  Time for you to hire a really good real estate attorney, and if all else fails apply to the Zoning Board for a variance.

interesting. Please keep us posted on the story. I would agree with other 3 option here:

1.hire a lawyer to fight the city

2. sell as a big discount

3. see if you can turn this into an assisted living facility

I don't think it's in the city's interest to have you foreclose or sell at the discount. Have you tried to talk to anyone in the city?

My friend runs a student house business in my property (7 college students under one roof). The old lady next door complained about the same thing. She called the city, so he got a bunch of citations, including parking on our own property. He went to the city and talked to a city inspector nicely. The city inspector said "looks, we know what you are doing. Just make sure your neighbors are happy" and waived all the citations. My friend talked to the old lady, and  started to fill the house with grad students. We've had peace since then. The tenants are happy and we get paid. Sometimes a little face-to-face talk goes a long way. 

@Beau Ryan , Have you gone and talked to the city about obtaining a conditional use permit or variance? The city is directly impacting your use and value, even though it had been approved of at one point in time. There should be a solution with the city, but as others on this thread have mentioned, make peace with your neighbors and hope that it works out for you.

seems like your issue was with the type of tenants you selected. So create a PLAN  that solves that issue ( ie: no more college students, only rent to mature professionals, etc etc...) and maybe another plan to improve the property ( specially the exterior - cities love that) and go NEGOTIATE nicely with the city. If you have a strong plan that will prevent another noise complaint then you have a chance. 

It wouldnt hurt to approach the senior living center and discuss your new plans . If you can convince them they might support you or at least not oppose your request with the city.

If all fails, then hire an attorney but I wouldnt go the legal route right away. 

Everyone has laid out the best 3 options. I thinking serving he city with a lawsuit and then settling right out of the starting gate to make this an adult or senior living community.

Who own's the senior center and why do they have more pull than you?

I would first suggest not pissing off the city anymore by having tenants in there. Maybe rent out one of the units is that legal?

I would look at the grandfathering laws and talk to local real estate attorneys there. In my area the city can't just remove a grandfathered status because they feel like it, unless the use was changed by the owners like they did not use it as a three plex for a year or it was vacant for a year.  

Can you turn it into a single family home? 

I think this is a largely self inflicted wound.

But there was an assisted living home across the street who continually called the police and we received a number of noise violations for doing nothing wrong except being 20 something college kids with weird hours, much different than a senior living center.

Well being "20 something college kids" doesn't give them the right to be jerks. If you were getting multiple noise complaints, you should have taken action. Just saying "hey, they're college kids, deal with them being noisy", isn't going to fly with anyone.  If you had tenants who were repeatedly causing trouble with the law, you should have evicted them.   Or threatened them with eviction to get them to settle down and stop disturbing the neighbors.  I'm not sure what was going on, but if the police were getting called and the city took action, it wasn't just them coming and going at odd hours.

The city rezoned the area as well.

I would be stunned if this happened without public hearings. I've pursued doing this, and set through some of the public hearings for other groups trying to do it.  There is a process for changing zoning. Its not easy or quick and involves multiple public hearings. Were you not made aware of these hearings? As the property owner, you should have been notified about the possible change in zoning. If you were notified, but didn't participate in this process and they changed the zoning on you, well, you're probably screwed.  Or, if you did participate and they changed the zoning anyway, you're probably screwed in that case, too. OTOH, if they failed to properly notify you and made the change without your knowledge you might have a case against them.  In some of the cases I've followed in my city, landowners did fight back against the city and won.  But they actively participated in the process from the start, appeared at the hearings, got support from their neighbors and made their case to the city.  And prevailed.

We have had no choice but to continue renting. Every year or so the city is notified and we are forced to evict our tenants and are fined.

Well, you did have other choices.  They may have been unpleasant, but you did have other choices.  By willfully violating what the city told you to do you have almost certainly made this situation more difficult than it might have been.  

I would at least consult with an attorney and have them investigate what happened.  If the city followed all the proper procedures in changing the zoning you may well be out of luck.  If they didn't there might be a way to un-do the zoning change.  Or there may be some process for you to apply for your own zoning change and get the zoning changed back.

Thank you @Jon Holdman for the excellent post. 

If the zoning changed and it affected the grandfathering, my question is what is the new zoning? If it is across the street from an assisted living, I would not be surprised if it wasn't in a more commercial zoned area such as office/service or something similar. If that is the case, then you have options.

Instead of looking at the property as a rental, why not consider it as a conversion to a professional office? There are quite a few professional services that frequently use converted homes. These can include attorneys, accountants and real estate agencies. Conversion costs can be minimal - it is all in the marketing. 

You need to go have a calm chat with the city.  They should approve a conditional rental license as long as you are actively trying to sell the home.  I have seen this happen multiple times.  Then you can legally rent it out while trying to sell. 

Your issue is that you are not going to get another permanent rental license so you have to market the sale to an owner occupant in thethe unit without a license who can rent out the other two.

If you're grandfathered in, ignore the town and Lawyer up. I’m not an attorney but I would think if this “new zoning” affects the resale value of your home (rental or otherwise) you have a pretty good case in court. 

Years ago my parents property was rezoned.. they were never told,, all the city had to do was publish a notice in the paper, the property is now zoned residential, We are able to still rent but if the buildings are fire or storm damaged we can only rebuild to 50% of current value,, so were in a pickle if we ever have a loss. Grandfathered rental properties with zoning issues are tough to sell and less desirable. 

A rental license is like GOLD you have to comply with city regulations and if your tenants were obnoxious and you had repeat nuisance / noise police calls and basically just ignored it, your now reaping the costs of loosing your license. Your only hope is an attorney, pay the fines and hope and pray they agree to work with you to give you your rental license back. Everyone knows in Minnesota that Mankato is a college party town, not surprising city is pushing back to contain things on campus, would be my guess. 

I would not jeopardize the entire chance by renting out until it's resolved.. Maybe consider hiring a PM firm in Mankato if their is one to manage the property and use that as a carrot with the city.. I'd get that information ahead of time scoped out so you know if it's an option. 

You are burning bridges by continuing to be non-compliant and rent the property.  From what you said it sounds like you have been in trouble for a while for them to pull your license.  If it was indeed a zoning change the first step would be to figure out what the current permitted uses are.  Could be a nice group home after taking out a couple walls.

Otherwise I agree with the others and would consult with an attorney, I would try to find someone familiar with Mankato.  I have heard it is regulated a little differently down there.

The situation sucks but you are digging your grave deeper with each violation and fine you receive.

Hello there all,

First of all FIND A GREAT ATTORNEY and keep them on retainer.  Then CALMLY go down to the city and get some info when did the rezoning happened, and what is owed in fines.  If you pay the fines your admitting guilt. Which until you see an attorney YOU DON;T WANT TO DO.  That all being said, could you convert it to an AirBnB.  It's the happening thing that people are going for. Or like above professional offices  Maybe you could find an attorney in need of a new office and work out a deal!!!Sorry I was hoping a small amount of humour would lighten up the mood. If I read the post correctly YOU and your college buddy were the source of the original noise complaint.  And the senior center didn't rat you out a neighbor lady did. Hold on I'm going to reread your post ok never mind so you made the  senior center mad.  How many years ago was this.  I'm thinking at least a few. so this has been an on going issue.  I'd sure check out the zoning bit. why was it rezoned how were you not notified of the rezoning why isn't the senior center having to move out it's residents.  Could you also turn it into a senior center.  Could you rehab the property for this sort of purpose.  While I believe your best route would be attorney make nice nice with the city. I would also behind the scenes check out the zoning issue.  There's more than one way to skin a cat (fish). Best of luck to you friend.

Melissa McGuire