Waiver-by-Acceptance Applies Equally to Publicly Subsidized and Private Tenancies; “Acceptance” Is a Fact Question Assessed by the Totality of Circumstances

Introduction

In Hook & Ladder Apartments, L.P. v. Nichole Nalewaja, the Minnesota Supreme Court addressed a recurring question at the intersection of landlord-tenant law and publicly subsidized housing programs: does a landlord waive the right to evict for a known, past lease breach by accepting rent paid by a public housing agency on the tenant’s behalf? Resolving a longstanding conflict created by a 1995 court of appeals decision, Westminster Corp. v. Anderson, the Court held that the common law “waiver-by-acceptance” doctrine applies equally to private and publicly subsidized tenancies. The Court also clarified how courts should determine whether a landlord has “accepted” rent for purposes of waiver: acceptance is a question of fact under a totality-of-the-circumstances analysis that can include a landlord’s conduct after payment is received.

The case arose from an eviction action filed by Hook & Ladder Apartments against tenant Nichole Nalewaja, whose tenancy was supported by the Section 8 project-based voucher program administered by the Minneapolis Public Housing Authority (MPHA). After an October 2022 incident in which Nalewaja and her boyfriend entered a utility closet to reconnect electricity, the landlord received MPHA rent payments in November 2022, December 2022, and January 2023, yet filed an eviction in March 2023 based on the October breach. Both the district court and court of appeals held that Westminster barred a waiver defense in the subsidized-housing context. The Supreme Court granted review on the waiver question alone and reversed.

Parties and amici reflected the statewide importance of the issue. The Attorney General, tenant-advocacy organizations (HOME Line, Housing Justice Center, National Lawyers Guild–MN Chapter, Southern Minnesota Regional Legal Services), and landlord industry representatives (Minnesota Multi Housing Association) weighed in, highlighting the doctrine’s practical and policy stakes across Minnesota’s rental market.

Summary of the Opinion

The Court overruled Westminster Corp. v. Anderson (Minn. App. 1995) and held that the common law waiver-by-acceptance doctrine applies equally to private and publicly subsidized tenancies, including Section 8 programs.
The Court reaffirmed the core rule: a landlord who accepts rent with knowledge of a tenant’s past breach waives the right to evict for that breach. This principle is long-standing in Minnesota law (e.g., Kenny v. Seu Si Lun (1907); Gluck v. Elkan (1886)).
“Acceptance” is an objective question of fact determined by the totality of the circumstances, including post-payment conduct. Relevant factors may include whether the landlord promptly notified the tenant or public housing agency that it would not accept the payment, attempted to return funds, segregated or escrowed the funds, and refrained from using them.
The Court rejected arguments that public assistance payments are not “rent,” that the payor’s identity (a public housing agency) matters, that vacancy payments alter the analysis, or that automatic electronic payments make waiver impractical.
Applying the holding, the Court concluded that Hook & Ladder did not dispute acceptance of MPHA payments made after it knew of the October breach; the waiver doctrine therefore barred eviction based on that past breach. However, the Court remanded for consideration of two issues not resolved below: a contractual non-waiver clause and the tenant’s retaliation defense.

Analysis

Precedents Cited and Their Influence

The Court grounded its decision in a robust body of Minnesota common law:

Gluck v. Elkan (1886): Early recognition that accepting rent with knowledge of a tenant’s breach waives the landlord’s right to evict for that past breach. The Court emphasized that waiver does not immunize future breaches, especially where the lease violation is continuing.
Kenny v. Seu Si Lun (1907): Canonical articulation: acceptance of rent “operates to bar the landlord from asserting against the tenant past causes of forfeiture” known at the time of payment. Critically, the Court stated that waiver is based on objective conduct, not subjective intent; the typical “intent to waive” inquiry in other contexts has “no relevancy” here.
Thomas Peebles & Co. v. Sherman (1921): Clarified the knowledge requirement—no waiver where the landlord accepted rent before learning of the breach.
Zotalis v. Cannellos (1917) and Gluck: Confirmed the limited scope of waiver—past breaches are waived, but later, new violations can independently support eviction.
Parkin v. Fitzgerald (1976): Highlighted the doctrine’s anti-retaliation function; acceptance of rent over several months undermined a later eviction as retaliatory and waived prior breaches.
Park v. Schneider (Minn. App. 1999) and Kenny: Demonstrated that courts look beyond mere receipt of funds; post-payment conduct (e.g., promptly declining and offering to return payment) may defeat “acceptance.”
Central Union Trust Co. of N.Y. v. Blank (1926): The Court applies a functional, not formalistic, understanding of “rent”—payments constituting consideration for occupancy, even if labeled differently (e.g., taxes paid “in lieu of rent”), function as rent.
Westminster Corp. v. Anderson (Minn. App. 1995): The now-overruled decision that carved out a public-housing exception to waiver by acceptance, relying heavily on the Illinois Supreme Court’s Midland Management Co. v. Helgason (1994).

Statutory and policy references also shaped the analysis:

Minn. Stat. § 504B.001: Defines “residential tenant” by reference to payment of “money or exchange of services,” not by the formal label “rent,” reinforcing a functional view of rental consideration.
Minnesota Human Rights Act: Declares a state policy against discrimination in housing on the basis of “status with regard to public assistance” (Minn. Stat. § 363A.02, subd. 1(a)(2)), underscoring the impropriety of a doctrine that disadvantages subsidized tenants.
Federal regulations (e.g., 24 C.F.R. §§ 983.5, 983.352(b), 983.353; 5.628, 5.630): Provided context for project-based vouchers, vacancy payments, and tenant/agency shares, but did not persuade the Court that subsidized tenancies warrant different common law treatment.

Legal Reasoning

The Court’s reasoning proceeded in two steps: (1) restoring doctrinal parity between private and subsidized tenancies, and (2) clarifying how courts should analyze “acceptance.”

1) Doctrinal parity: public assistance payments are “rent” for waiver purposes

Form does not trump function: While some leases may avoid the label “rent” for housing assistance payments, Minnesota common law and chapter 504B look to the function of payments as consideration for occupancy. The Court expressly rejected a formalist approach to labeling in favor of a functional assessment.
Payor identity is immaterial: Waiver turns on landlord conduct in accepting rent with knowledge of a breach; it does not depend on whether payment is made by the tenant, a friend, or a public housing agency. Many private tenants use third-party payments without losing waiver protections; subsidized tenants should be treated the same.
Vacancy payments do not change the analysis: The possibility that an owner may be eligible for limited vacancy payments after a unit is vacated says nothing about the nature of prior payments made while a tenant occupies the unit. Those pre-vacancy payments are consideration for occupancy and are, functionally, rent.
Policy concerns about landlord participation are speculative and are countered by Minnesota policy: The Court found no evidence that applying waiver to subsidized tenancies would reduce landlord participation in voucher programs, and emphasized the Human Rights Act’s prohibition on discrimination based on public assistance, along with existing incentives like tax credits.

2) Acceptance is objective, and totality-driven

Objective conduct, not subjective intent: Echoing Kenny, the Court reaffirmed that a landlord’s subjective intention not to waive is irrelevant. Courts assess what the landlord did, not what it intended.
Receipt is not necessarily acceptance: In modern payment environments—including automatic electronic and lump-sum disbursements—receipt of funds does not end the inquiry. The question is whether, given the landlord’s total conduct, the landlord accepted the payment.
Nonexclusive acceptance factors: Courts may consider whether the landlord promptly:
- Informed the tenant and/or public housing agency that the payment would not be accepted;
- Attempted to return the funds;
- Segregated or escrowed the payment and refrained from commingling or applying it;
- Refrained from using the funds; and
- Sought cooperation from the agency to halt or reverse the specific tenant’s payment.
The Court emphasized that these are illustrative, not exhaustive, and that nothing in the opinion imposes new obligations on public housing agencies.
Knowledge and timing remain pivotal: Waiver applies only where the landlord had knowledge of the breach at the time of acceptance; payments accepted before knowledge do not waive later-discovered breaches.
Scope of waiver is limited: Waiver applies only to past breaches known at the time of acceptance. It does not bar eviction based on subsequent or repeated breaches.

Impact

A. For tenants (private and subsidized)

Subsidized tenants now enjoy the same waiver-by-acceptance protection as private tenants when a landlord accepts rent after knowing of a past breach.
Tenants can assert waiver even when payments are made electronically by a public housing agency, provided the landlord’s objective conduct amounts to acceptance.
Waiver is not absolute: it does not protect against future or repeated breaches; it also does not directly apply to nonpayment or holdover cases (distinct waiver rules may apply in those settings).

B. For landlords

Landlords cannot rely on Westminster’s blanket exemption for public housing payments. Accepting agency-paid rent after a known breach risks waiving the right to evict for that breach.
Operational adjustments are prudent, particularly for properties with subsidized tenants:
- Adopt written protocols to promptly notify tenants and agencies when declining a payment tied to a known breach.
- Implement escrow or segregation mechanisms to hold disputed payments untouched while issues are resolved.
- Coordinate with the public housing agency regarding holds or reversals when feasible (recognizing the Court created no new obligations for agencies).
- Train staff that receipts, ledgers, and communications may be evidence of “acceptance.”
Non-waiver lease clauses may be raised as a defense to waiver, but their effectiveness is now an open question to be addressed by the trial court on remand. Landlords should not assume such clauses automatically defeat waiver-by-acceptance under Minnesota common law.

C. For courts and practitioners

Waiver-by-acceptance in subsidized tenancies is now clearly governed by Minnesota Supreme Court precedent; Westminster is no longer controlling.
“Acceptance” is a fact-intensive inquiry. Courts should evaluate post-payment conduct and the full payment lifecycle (notice, return, segregation, use) rather than treating electronic receipt as dispositive.
The Human Rights Act policy against discrimination based on public assistance status supports maintaining doctrinal parity between subsidized and private tenancies.

Complex Concepts Simplified

Waiver-by-acceptance: If a landlord accepts rent after knowing about a tenant’s past lease breach, the landlord waives the right to evict based on that past breach. The idea is that acceptance reaffirms the lease and signals that the tenancy continues.
Past vs. future/continuing breaches: Waiver bars eviction for breaches that occurred before acceptance and were known. It does not bar eviction for breaches that occur after acceptance, even if similar in kind, especially when the violation is ongoing.
Knowledge requirement: The landlord must know about the breach when it accepts rent. Payments accepted before learning of the breach do not waive it.
Acceptance vs. receipt: Simply receiving funds (especially by automatic electronic means) is not necessarily “acceptance.” Courts look at what the landlord did upon receipt: Did it promptly decline, return, segregate, escrow, or avoid using the money?
Public housing rent payments: In programs like Section 8 project-based vouchers, the public housing agency pays part (sometimes all) of the rent to the landlord. For waiver purposes, those payments are functionally rent.
Vacancy payments: Some contracts allow limited short-term payments after a tenant vacates. Those do not change the characterization of payments made while the tenant occupied the unit.
Non-waiver clause: A lease provision stating that acceptance of rent does not waive rights. The Supreme Court left open how such clauses interact with the common law waiver-by-acceptance doctrine; trial courts must decide in the first instance.
Different eviction grounds, different waiver rules: This case concerns breach-of-lease evictions. Minnesota law also addresses “holdover” and “nonpayment” evictions with distinct doctrines; today’s ruling does not alter those other frameworks.

Application to This Case and Remand

The record showed that MPHA made rent payments for Nalewaja’s unit in November and December 2022 and January 2023, and Hook & Ladder did not dispute that it accepted those payments. The landlord knew about the October 4, 2022 breach by October 5, 2022. Under the restored doctrine, that acceptance waived the right to evict based on the October breach. Nevertheless, the Supreme Court remanded for two unresolved issues:

Non-waiver clause: The landlord argued the lease contained a non-waiver clause; the district court did not reach this issue. The Supreme Court left it to the trial court to determine the clause’s effect, if any.
Retaliation defense: The court of appeals had already remanded the tenant’s retaliation claim; that remand stands and should be addressed along with the non-waiver issue.

Practice Takeaways and Checklists

For landlords

On learning of a breach, decide promptly whether to pursue eviction; if so, avoid accepting subsequent rent tied to the tenant’s continued occupancy for that period.
If a payment is received:
- Immediately notify the tenant and, if applicable, the public housing agency that the payment will not be accepted;
- Attempt to return or reverse the payment;
- Segregate or escrow any funds that cannot be immediately returned and refrain from using them;
- Document all steps taken (communications, bank records, ledger entries).
Review lease forms and operational protocols concerning non-waiver clauses, automatic payments, and coordination with housing agencies. Train staff on the difference between receipt and acceptance.

For tenants and advocates

When an eviction is based on a past lease breach, assess whether the landlord accepted rent after it knew of the breach. Gather evidence (receipts, ledgers, agency payment records).
Remember the limits: waiver does not cover later, repeated breaches; different rules may apply to nonpayment or holdover cases.
Consider asserting retaliation where facts support it; waiver can complement anti-retaliation defenses.

Conclusion

Hook & Ladder Apartments, L.P. v. Nalewaja re-aligns Minnesota landlord-tenant common law with its foundational principles and state policy. By overruling Westminster, the Supreme Court restored parity between subsidized and private tenancies, recognizing that public housing assistance payments are functionally rent for waiver purposes. Equally important, the Court modernized the doctrine’s application by clarifying that “acceptance” is a fact question informed by the totality of the circumstances—including what the landlord does upon receiving a payment in today’s electronic, sometimes aggregated, payment environment.

The decision reinforces key values animating Minnesota’s landlord-tenant law: tenants’ security and repose upon rent acceptance, timely initiation of eviction actions, and protection against discriminatory treatment of those receiving public assistance. At the same time, it preserves landlords’ ability to act on future or repeated breaches and provides a practical roadmap for avoiding unintended waiver by promptly declining, returning, segregating, or escrowing contested payments.

Going forward, Minnesota courts will apply a uniform waiver-by-acceptance doctrine across the rental market, guided by objective conduct and the totality of circumstances. The remand in this case—on the non-waiver clause and retaliation—signals that contract terms and statutory defenses still matter, but they must now operate within a clarified and equitable common law framework.