September 13, 2018
Author: David R. Friedman
Organization: Friedman Law Firm
What to do when the Tenant Vacates the Property
A. Surrender of Leaseholds Generally
There is no general definition of what is meant by the terms “surrender,” “abandoned,” or “removes from the premise” in either state statues or administrative code. Therefore, the normal usage of these words will be relied upon unless by lease there is a different definition.
These words are important because these events trigger the time for the landlord to return the tenant’s security deposit and for the landlord to send notice of a landlord lien.
ATCP 134.06 says that within 21 days after a tenant surrenders the rental premises, the landlord shall deliver or mail to the tenant the full amount of any security deposit held by the landlord, less any amounts properly withheld by the landlord. However. §704.28, which governs withhold from and return of security deposits is now more complicated. Here is what section (4) says:
Timing for return. A landlord shall deliver or mail to a tenant the full amount of any security deposit paid by the tenant, less any amounts that may be withheld under subs. (1) and (2), within 21 days after any of the following:
(a) If the tenant vacates the premises on the termination date of the rental agreement, the date on which the rental agreement terminates.
(b) If the tenant vacates the premises or is evicted before the termination date of the rental agreement, the date on which the tenant's rental agreement terminates or, if the landlord rerents the premises before the tenant's rental agreement terminates, the date on which the new tenant's tenancy begins.
(c) If the tenant vacates the premises or is evicted after the termination date of the rental agreement, the date on which the landlord learns that the tenant has vacated the premises or has been removed from the premises under s. 799.45 (2).
Also as it currently stands, ATCP134.06(2)(b) says a tenant surrenders the premises on the last day of tenancy provided under the rental agreement. There are three exceptions to this general rule.
The first exception is where the tenant vacates before the last day of tenancy provided under the rental agreement, and gives the landlord written notice that the tenant has vacated, then surrender occurs when the landlord receives the written notice that the tenant has vacated. If the tenant mails the notice to the landlord, the landlord is deemed to receive the notice on the second day after mailing.
The second exception is where the tenant vacates the premises after the last day of tenancy provided under the rental agreement, then surrender occurs when the landlord learns that the tenant has vacated.
The third, and final exception, is where the tenant is evicted, then surrender occurs when a writ of restitution is executed, or the landlord learns that the tenant has vacated, whichever occurs first.
We tend to use to term abandoned to mean that the tenant has left either with or without notice to the landlord and the tenant has left “stuff.” Whether there is a difference between surrender and abandonment may not matter as long as you remember to timely return the security deposit.
B. Vacating Residential Property
What happens when the tenant does not leave at the end of the lease or after you give the tenant notice to vacate? The law says that if a tenant remains in possession without consent of the tenant's landlord after termination of the tenant's tenancy, the landlord may in every case proceed in any manner permitted by law to remove the tenant and recover damages for such holding over.
In the past, acceptance of rent has been deemed to renew the tenancy because the act of accepting the money is inconsistent with the goal of removing the tenant. Wis. Stat. §799.40(1m) indicates that indicate acceptance of money or other payment does no allow dismissal of a small claims action if the “landlord accepts past due rent or any other payment from the tenant after serving notice of default or after commencing the action.”
C. Tenant Holdover
There are three statutes dealing with this concept where there has not been an eviction. Section 704.25 deals with the effects of holding over and removal of the tenant. Section 704.27 deals with the amount of damages a landlord can collect. Finally, section 704.29 deals with the measure of recovery and the landlord’s obligation to mitigate damages.
If you are dealing with a residential lease of less than one year, and the tenant holds over after expiration of the lease, the landlord may elect to hold the tenant on a month-to-month basis; but if such lease provides for a weekly or daily rent, the landlord may hold the tenant only on the periodic basis on which rent is computed.
A tenancy created by a holdover arrangement is on the same terms and conditions as the original lease except that any right of the tenant to renew or extend the lease does not carry over to tenancy.
If you as the landlord wish to end the holdover tenancy, you must give the notices under §704.19, i.e. the 5 and 14 day notices.
What can the landlord collect for damages if the tenant holds over after the expiration of the lease? The landlord shall recover from the tenant damages suffered by the landlord because of the failure of the tenant to vacate within the time required. In absence of proof of greater damages, the landlord may recover as minimum damages twice the rental value apportioned on a daily basis for the time the tenant remains in possession. Rental value means the amount for which the premises might reasonably have been rented, but not less than the amount actually paid or payable by the tenant for the prior rental period, and includes the money equivalent of any obligations undertaken by the tenant as part of the rental agreement, such as payment of taxes, insurance and repairs. See Section 704.27.
In Vincenti v. Stewart, 107 Wis.2d 651, 652 321 N.W.2d 340 (Ct.App. 1982), the court said, “[w]e conclude that sec. 704.27, Stats., requires that when a court grants a landlord relief under this statute, the court must award minimum damages in the amount of double rent.” However, this does not prevent recovery of greater than double damages if the landlord has proof of such damage.
Actually what is “rental damage?” For example, is the tenant obligated to pay utility bills? The question has been answered by the court in Univest Corp. v. General Split Corp., 148 Wis.2d 29, 33, 435 N.W.2d 234 (1989) said, “[w]e conclude that the phrase ‘rental value’ as used in sec. 704.27 is limited to obligations undertaken by the tenant as part of the rental agreement which would necessarily be expected to result in damages because of a holdover, regardless of whether or not the tenant uses the premises.”
As a landlord, you have an obligation to mitigate your loss, and section 704.29 spells out what is required of you.
A landlord can recover rent and damages except amounts which the landlord could mitigate in accordance with this section 704.29, unless the landlord has expressly agreed to accept a surrender of the premises and end the tenant's liability. The landlord has to undertake “reasonable effort” to rerent the premise. “Reasonable efforts\" mean those steps that the landlord would have taken to rent the premises if they had been vacated in due course, provided that those steps are in accordance with local rental practice for similar properties.
If the property is rerented, the amount owed by the tenant is reduced by the new rent if the rent is equal to or greater than the old rent. If you rent if for less money, assuming a lower rent reflects the market, then the tenant still owes you the difference. Expenses including a fair proportion of any cost of remodeling or other capital improvements and all reasonable expenses of listing and advertising incurred in rerenting and attempting to rerent, can be claimed as damages.
If the landlord has used the premises as part of reasonable efforts to rerent, the tenant is credited with the reasonable value of the use of the premises, which is presumed to be equal to the rent recoverable from the defendant unless the landlord proves otherwise. If the landlord has other similar premises for rent and receives an offer from a prospective tenant not obtained by the defendant, it is reasonable for the landlord to rent the other premises for the landlord's own account in preference to those vacated by the defaulting tenant.
If the tenant challenges the landlord’s claims, the burden is on the tenant to prove the landlord’s effort were not reasonable after the landlord has proven it made efforts to comply with the requirements of §704.29. The tenant has to prove (a) that the landlord's refusal of any offer to rent the premises or a part thereof was not reasonable, (b) that any terms and conditions upon which the landlord has in fact rerented were not reasonable, (c) that any temporary use by the landlord was not part of reasonable efforts to mitigate in accordance with §704.29 (4) (c) and finally, the tenant also has the burden of proving the amount that could have been obtained by reasonable efforts to mitigate by rerenting. Under §704.29, the following acts by the landlord do not defeat the landlord's right to recover rent and damages and do not constitute an acceptance of surrender of the premises:
(a) Entry, with or without notice, for the purpose of inspecting, preserving, repairing, remodeling and showing the premises;
(b) Rerenting the premises or a part thereof, with or without notice, with rent applied against the damages caused by the original tenant and in reduction of rent accruing under the original lease;
(c) Use of the premises by the landlord until such time as rerenting at a reasonable rent is practical, not to exceed one year, if the landlord gives prompt written notice to the tenant that the landlord is using the premises pursuant to this section and that the landlord will credit the tenant with the reasonable value of the use of the premises to the landlord for such a period;
(d) Any other act which is reasonably subject to interpretation as being in mitigation of rent or damages and which does not unequivocally demonstrate an intent to release the defaulting tenant.
D. Handling the Tenant’s (Apparently Abandoned) Property
ATCP 134.09 (4) (a) and (b) deals with confiscating personal property. As a landlord, you may not seize or hold a tenant’s personal property, or prevent the tenant from taking possession of the tenant’s personal property, except as authorized under sec. 704.05 (5), or a written lien agreement between the landlord and tenant. The code goes on to state that a lien agreement, shall be executed in writing at the time of the initial rental agreement. The landlord shall include the lien agreement in a separate written document entitled “NONSTANDARD RENTAL PROVISIONS” which the landlord provides to the tenant. The landlord shall specifically identify and discuss the lien agreement with the tenant before the tenant enters into any rental agreement with the landlord. The lien agreement is not effective unless signed or initialed by the tenant.
E. Landlord Lien
Section 704.11 abolished the landlord’s right to hold the tenant’s property in order to force the tenant to pay rent. Rather, section 704.05 (5) establishes a new way to handle disposition of personalty left by tenant.
704.05(5)(a) At the landlord's discretion.
1. If a tenant removes from or is evicted from the premises and leaves personal property, the landlord may presume, in the absence of a written agreement between the landlord and the tenant to the contrary, that the tenant has abandoned the personal property and may, subject to par. (am) and s. 799.45 (3m), dispose of the abandoned personal property in any manner that the landlord, in its sole discretion, determines is appropriate.
2. If the landlord disposes of the property by private or public sale, the landlord may send the proceeds of the sale minus any costs of sale and any storage charges if the landlord has first stored the personalty to the department of administration for deposit in the appropriation under s. 20.505 (7) (h).
(am) Exception for medical items. If the personal property that the tenant leaves behind is prescription medication or prescription medical equipment, the landlord shall hold the property for 7 days from the date on which the landlord discovers the property. After that time, the landlord may dispose of the property in the manner that the landlord determines is appropriate, but shall promptly return the property to the tenant if the landlord receives a request for its return before the landlord disposes of it. (bf) Notice that landlord will not store property. If the landlord does not intend to store personal property left behind by a tenant, except as provided in par. (am), the landlord shall provide written notice to a tenant, when the tenant enters into or renews a rental agreement, that the landlord will not store any items of personal property that the tenant leaves behind when the tenant removes from, or if the tenant is evicted from, the premises, except as provided in par. (am). Notwithstanding pars. (a), (am), and (b), if the landlord has not provided to a tenant the notice required under this paragraph, the landlord shall comply with s. 704.05, 2009 stats., with respect to any personal property left behind by the tenant when the tenant removes from the premises, or if the tenant is evicted from the premises and the landlord notifies the sheriff under s. 799.45 (3m). Once you have taken the proper steps, you have secured your rights against a third party.
The landlord's power to dispose as state above applies to any property left on the premises by the tenant, whether owned by the tenant or by others. The power to dispose under this subsection applies notwithstanding any rights of others existing under any claim of ownership or security interest, but is subject to s. 321.62. The tenant or any secured party has the right to redeem the property at any time before the landlord has disposed of it or entered into a contract for its disposition by payment of any expenses that the landlord has incurred with respect to the disposition of the property. If you have obtained a Writ of Restitution, it allows for the removal of the tenant’s property. The procedures for the Writ can be found in §799.45. My advice to you is once you obtain the Writ, contact the local sheriff because regardless of what the statute says, each sheriff’ department has its own procedure. And there is also new law in this area.