Mondo Condo

When apartments are converted, renters don't have many rights

When Jonathan and Terry Beale found the spacious and affordable one-bedroom apartment for rent just three blocks from Lake of the Isles, they could scarcely believe their good fortune.

It was smaller than the nearby duplex they'd been living in for almost seven years, but at only $815 a month, the one-bedroom represented a monthly savings of hundreds of dollars for the couple, both of whom had recently gone back to school—Jonathan for teaching and Terry for accounting—after years in the workforce.

On January 19, they signed a month-to-month lease, and started getting rid of the extra furniture, clothes, and odds and ends that wouldn't fit into their new apartment, which they hoped to stay in for at least two years.

But the relocation didn't go as smoothly as planned. On the very day they moved in, a "condos for sale" sign went up in front of the 13-unit building. The Beales say this came as a surprise, because they and other tenants were assured by the landlord that he had no immediate plans to convert the building.

A couple of weeks later, construction workers showed up and started gutting several of the vacant units, including the one across the hall from the Beales. Ever since, the front door of the building has remained propped open for hours at a time, the construction noise has continued past 10:00 p.m. on many evenings, and layers of dust have settled in the hallways and apartments, say the Beales.

"If you'd have told me I was moving into a construction zone, I never would have done it," says Jonathan Beale.

In May, Terry Beale retaliated by looking into public records on the building's landlord, Gerald Chester. She discovered that he had let his rental license for the building lapse months before they'd signed their lease, and that he had neglected to get the necessary city permits for some of the renovation work being done. (Chester, through his attorney, declined to comment. "We don't see any way that it could benefit us," says his lawyer, Ken Hertz.)

Letters and other documents show that within days of reporting him to the city, the Beales, along with three of their neighbors, received notice that they were being evicted within 30 days to make way for renovations or buyers.

The Beales and their neighbors were caught in what most observers agree is the tail end of a condo conversion craze, which swept Minneapolis in the past half-decade.

Unlike new developments, conversions turn pre-existing rental apartments into condominiums that are then sold at a premium. According to data compiled by the Housing Preservation Project, a St. Paul-based nonprofit that advocates for affordable housing, the condo conversion boom in Minneapolis hit its stride in 2004 and 2005, when a total of 2,175 rental units in Minneapolis were turned into condos, up from just 34 between 2000 and 2001. All told, nearly 4 percent of the city's rental units have been turned into condos in the past five years.

Although the pace of conversions has since abated, with 583 recorded in 2006, HPP president Tim Thompson thinks the trend is far from over. "Even if that process is slowing down, it is cyclical and will come back," he says.

Which is why Thompson's group, along with other advocates, recently began pushing the city to enact beefed-up protections for renters displaced by condo conversions. Current state and city rules dictate that tenants in converted buildings are entitled to at least 120 days' notice before being forced to vacate their apartments, as well as right of first refusal on buying the condo.

In January, Minneapolis City Council member Cam Gordon introduced a measure backed by HPP that would have stiffened penalties for landlords and guaranteed one months' rent to displaced residents. But the measure narrowly failed, with the council voting 7-6 against it.

The Beales haven't given up their fight. Along with two other tenants, the couple filed suit against Chester in conciliation court last month, demanding their rent money back and claiming that the landlord fraudulently induced them to move into the building. Their cases will be heard in October.

Robert Richert, a local attorney who deals primarily with real estate law and who is not affiliated with the case, says the Beales and their neighbors stand a good chance of winning because of Chester's lapsed rental license. "That's a huge problem," Richert says. "If it were me representing the tenants, I would demand that the rent collected during the time the landlord had no license be refunded."

But while the Beales' legal case may have merit, they have conceded defeat on another front: On July 31st, one of the hottest days of the summer, the Beales made their second move of 2007.

The new place is on Hennepin and Franklin. And while the rent is the same, and the couple are friends with the caretaker, Terry Beale does not pretend she has put the ordeal behind her. After what has happened, she says, "I don't trust anybody."

 
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