September 13, 2018
Author: David R. Friedman
Organization: Friedman Law Firm
PLANNING AHEAD TO AVOID PROBLEMS DURING TENANCY
Forget almost everything you have previously learned. Even though parts of the law did not change, trying to graft on the new law to the old is confusing. Starting from scratch will save you from head scratching.
However at the time this presentation, ATCP 134 the residential lease code, has not been modified to reflect all the changes in the law. So there may be conflicts between the law and the administrative code.
1. Three revisions in 2 years
2. 2011 Wisconsin Act 108, Published Dec. 20, 2011
a. Limited the ability of municipalities to place restrictions on landlord inquires about tenants; to regulate security deposits and pre and post tenancy inspections
3. 2011 Wisconsin Act 143, Published March 30, 2012
a. Severability of lease provisions - - in response to two court decisions
b. Changes in storing the tenant’s property
c. Information check-in sheets
d. Security deposit refund
i. Applied to residential and commercial leases
e. Lease provisions that void a lease - - anti-crime
f. Penalty for violation of chapter 704
4. 2013 Wisconsin Act 76, Published Dec. 13, 2013 but various implementation dates.
a. Includes restrictions on a local municipality’s right to adopt landlord tenant ordinances, new procedures for towing vehicles, expansion of a tenant’s liability for damages, changes in Ch. 799 relating to evictions, and creation of a statute granting immunity for landlords who provide references.
b. Corrects some of the problems with Act 143
5. ATCP 134 deals with residential landlord tenant matters and needs to be revised
6. Wis. Stat. 66.0104(2) prohibits a municipality from requiring landlords to communicate information to tenants unless it is required under federal or state law or required of all residential real property owners.
7. Changes to ch. 349. July 1, 2014 is the effective date for these changes. But first DOT needs to issues some rules.
a. Under sec. 349.13(3m)2.(c), if private property is properly posted and the vehicle is not authorized to be parked on the property, the vehicle may be removed immediately, at the vehicle owner’s expense, without the permission of the vehicle owner, regardless of whether a citation is issued for illegal parking. (Emphasis added.)
8. Security deposit returns. There were major changes in March 2012 and one minor change in 2013.
a. Wis. Stat. 704.28(5) makes it clear that statute only applies to residential tenancies
b. Sec. 704.28(4) is printed as the last page
9. Check-in sheet - - sec. 704.08. The landlord’s only obligation is to provide the tenant a check in sheet at the time the tenant commences occupancy and the form is to allow the tenant to make comments about the property. There is NO requirement for the landlord to list anything about the condition of the property.
a. Practice pointer. Landlords might still what to fill out a form before giving it to the tenant.
b. Comment. This is an area where I can see issues developing when it comes to suing for damages.
10. Landlord reference. Sec. 895.489 creates a presumption that when a landlord gives a reference the landlord is acting in good faith, and unless lack of good faith is shown by clear and convincing evidence, the landlord is immune for all civil liability.
a. This section is based on sec. 895.487 that provides civil immunity for employment references.
11. Clarification of who can represent a LLC in small claims court. Sec. 799.06(2)
a. Under the statute a member, an agent or an authorized employee of an LLC can now appear on behalf of the LLC.
12. Acceptance of rent. Sec.799 .40(1m). Under this section an action will not be dismissed because a landlord accepts past due rent or any other payment from the tenant after serving notice of default or after commencing the action.
13. Writ of Restitution. Sec. 799.44(2). Once the court orders judgment for restitution of the premises, the court shall immediately order that the writ of restitution be ordered.
a. Question: How does this amendment impact sec. 799.44(3) which is entitled “stay of writ of restitution” and sec. 799.40 (4) that allows a court to stay a civil action of eviction if the tenant applies for emergency assistance under sec. 49.138?
14. Sec. 799.05(3)(b) for an eviction action shortened the time for setting the return date from 30 to 25 days; sec. 799.20(4) had the following language added: In a residential eviction action, the court or circuit court commissioner shall hold and complete a court or jury trial of the issue of possession of the premises involved in the action within 30 days of the return date of the summons or any adjourned date thereof, unless the parties stipulate otherwise or the action is subject to immediate dismissal; sec. 799.206(3) requires that in an eviction action a hearing shall be held not more than 30 days after the return date.
15. Local security deposit rules now void. 2011 Wis. Act 108, prohibits cities and counties from adopting rules related to the return of security deposits which differ from what now appears in state law. Both Madison and Fitchburg, for example, had extensive ordinances on this subject. Seemingly those portions that differ from state law on the subject are now unenforceable.
16. Severability issues – 2011 Wis. Act 143 created a new provision in Chapter 704.02 which states that any provisions in rental agreements which are found void or unenforceable, are severable, thus preserving the Lease. Why does this matter? The ruling in Baierl vs. McTaggart, 2001 WI 107, 245 Wis. 2d 632, 629 N.W.2d 277 found the opposite was true, at least in that instance where the Lease included a provision prohibited by ATCP 134.08. Rather than preserve the lease and severing the unlawful provision, the Court found the entire lease unenforceable by the landlord. This statute would seem to change that aspect of that ruling, or does it.
However, this same Act significantly modified §704.44 Stats and changed it to prohibit all the same language in a lease which is prohibited by ATCP 134.08. The new statutory language, rather than simply make the Lease unenforceable by the landlord
The ruling in the Dawson vs. Goldammer, 2003 WI App 3, 259 Wis.2d 664, 629 NW 2d 432 (Ct App 2002) is now confused. This ruling allows a tenant to protect an interest created by a lease, even if the landlord wrote it up including illegal provisions. Is that overturned?
17. Disclosure of defects. 2011 Wis. Act 143 created §704.07(2)(bm). This provision now provides that a landlord only has to tell the tenant about building code or housing code violations when they have actual knowledge, and it has not been corrected. ATCP 134.04(2)(a) had already required that, however, 134.04(2)(b) had provided for a greater duty for landlords to investigate their properties and see if dangerous conditions existed. It seems that this additional protection for tenants has been removed by this new statute.
However, under common law, as explained in Jury Inst – Civil 8040, a landlord does have a duty to exercise ordinary care to determine if dangerous conditions exist and then to warn the tenant. This is essentially a consumer protection concept and also an anti-fraud concept. This is essentially the same requirement as stated in 134.04(2)(b). However, has the new statutory provision removed the common law duty?
18. Security Deposit Return Deadline. 2011 Wis. Act. 143 creates new §704.28 which includes in the statute essentially the security deposit rules already stated in ATCP 134.06. One change however, is that when a tenant moves out early, the deadline for returning, or reporting about the deposit has been changed.
Note that while 2011 Wis. Act 143 had included a provision called §704.95, which said that any part of that Chapter could be a violation of an ATCP Code, and create remedies under §100.20(5). Then in 2013 Wis. Act 76, that was changed to refer narrow this to only reference violations of §704.28 & 704.44 (which lists the prohibited Lease provisions.)
19. Property left behind. 2011 Wis. Act 143 dramatically altered §704.05(5) which addressed how to deal with property of a tenant left behind. The new scheme is that the landlord is now authorized to deal with that property in any way deemed appropriate by the landlord. The prior law provided for notices to the tenant before the property could be disposed of, and created requirements for how the property would be disposed of. However, all that is removed.
Note that §704.05(5)(bf) does require that a landlord is not entitled to rely upon this new scheme unless the tenant is given written notice about this when the tenant enters into, or renews, the lease. If no such notice is given, then the old scheme applies.
How does this new provision relate to ATCP 134.09(4), which prohibits a landlord from seizing or holding a tenant’s property without a valid lien?
QUALIFYING AN APPLICANT
Federal and state law, as well as applicable local ordinances, allows you to screen prospective tenants. Your screening must fully comply with fair housing laws. Screening an applicant means evaluating the prospective residents by checking background information. Screening usually involves checking an applicant’s financial ability to pay the rent and checking the applicant’s rental history.
The first step in the process is to have a good application form. Whether you use your own, an association form, or a purchased form, you have to make sure it legal in your jurisdiction.
The purpose of the form is to obtain information that will allow you to rent to tenants who can pay the rent and will not cause you problems. When screening applicants, always take the following steps:
1. Apply the same screening procedures to every applicant at all of your properties.
2. Inform all applicants in writing of the screening procedure that you use.
3. Keep the screening procedures clear and straightforward so that applicants understand them. If it is not self evident why the information is needed, explain your need and how the information will be used and verified in the screening process.
Wis. Stat. §106.50 is the open housing law and it defines discrimination. \"’Discriminate’ means to segregate, separate, exclude, or treat a person or class of persons unequally in a manner described in sub. (2), (2m), or (2r) because of sex, race, color, sexual orientation, disability, religion, national origin, marital status, family status, status as a victim of domestic abuse, sexual assault, or stalking, lawful source of income, age, or ancestry.” A frequently asked question concerns the screening of applicants with a criminal history and the landlord’s rights to not accept the applicant. The answer may still depend on where the rental unit is located.
Wis. Stat. §106.50 (d) states as follows:
Nothing in this section requires that housing be made available to an individual whose tenancy would constitute a direct threat to the safety of other tenants or persons employed on the property or whose tenancy would result in substantial physical damage to the property of others, if the risk of direct threat or damage cannot be eliminated or sufficiently reduced through reasonable accommodations. A claim that an individual's tenancy poses a direct threat or a substantial risk of harm or damage must be evidenced by behavior by the individual that caused harm or damage, that directly threatened harm or damage, or that caused a reasonable fear of harm or damage to other tenants, persons employed on the property, or the property. No claim that an individual's tenancy would constitute a direct threat to the safety of other persons or would result in substantial damage to property may be based on the fact that a tenant has been or may be the victim of domestic abuse, as defined in s. 813.12 (1) (am).
However, Madison General Ordinance section makes it illegal:
To refuse to transfer, sell, rent or lease, to refuse to negotiate for the sale, lease, or rental or otherwise to make unavailable, deny or withhold from any person such housing because of sex, race, religion, color, national origin or ancestry, age, handicap/disability, marital status, source of income, arrest record or conviction record, less than honorable discharge, physical appearance, sexual orientation, familial status, political beliefs, or the fact that such person is a student.
Even though the new law allows landlords greater flexibility in using court records, such as criminal convictions, it is how that information is used that can still get alandlord into trouble. You need to be aware that Madison has an extensive provision in §39.03(4) (d) dealing with criminal convictions.
Part of the ordinance establishes a test to determine whether you can use a conviction record. In part the ordinance states,
“[t]his ordinance does not prohibit eviction or refusal to rent or lease residential
property because of the conviction record of the tenant or applicant or a member
of the tenant’s or applicant’s household, if the circumstances of the offense bear a
substantial relationship to tenancy. The phrase ‘circumstances of any offense(s)
bear a substantial relationship to tenancy’ means the offense is such that, given
the nature of the housing, a reasonable person would have a justifiable fear for the
safety of landlord or tenant property or for the safety of other residents or
Act 108 has removed the ability of the City of Madison to set a 2 year, or for that matter, any restriction on how far back a landlord to look at criminal convictions. Once again the question is what does a landlord do with this information. There still is an argument that the use of the information could have a disparate impact on certain groups and thus be discriminatory.
VERIFICATION AND CREDIT CHECK
It is very important that you verify the same information and in the same manner for all applicants. Your rental files should contain the following information for each applicant.
1. A completed application form for each applicant or set of applicants.
2. A credit report.
3. Written summaries of references.
4. Court records of eviction action or a written notation of the date you checked eviction records and your findings.
5. Other documentation of screening criteria.
Your completed files should also show that you verified each application within a set time frame.
You can, within applicable limits, establish an income policy for screening applicants. The Wisconsin statute does not establish an income limitation. It prohibits discrimination based on lawful source of income. Madison’s ordinance §32.12 (7) (a) dealing with Minimum Income Requirements is NO longer valid. But both Dane County and the City of Madison had made it illegal to refuse to rent to people who receive Section 8 housing assistance. The Madison City Attorney’s office has said this provision may still be valid, it would difficult to prosecute a violation.
If you are using a credit reporting agency, such as Equifax, Experian, or TransUnion, the Federal Credit Reporting Act requires you to tell the applicant that a rejection is based on information provided in a credit report or a landlord reference. When you reject an applicant based on a credit report or a landlord reference, the landlord must give the applicant a written notice. The notice must include:
• the name, address and telephone number of the CRA that supplied the consumer report, including a toll-free telephone number for CRAs that maintain files nationwide;
• a statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give the specific reasons for it; and
• a notice of the individual's right to dispute the accuracy or completeness of any information the CRA furnished, and the consumer's right to a free report from the CRA upon request within 60 days.
The City of Madison had its own requirements for informing an applicant that residency was being denied because of failure to meet a minimum income requirement or minimum income-to-rent ratio. This requirement is no longer valid.
Gone is the MGO that made it illegal for a landlord to deny an applicant because of “the fact that a person declines to disclose a Social Security.
CCAP (Consolidated Court Automation Program) is a good place to check out a prospective tenant to see what in the tenant’s background might not be acceptable using your screening criteria. You do need to know the sometimes CCAP isn’t up to date and can contain errors. Also you need to make sure that using the information does not violate any applicable law, rule or ordinance.
GUARANTEES. WHO SHOULD SIGN THE LEASE
The first issue to be decided is what is being guaranteed. Is it payment of rent or damages or is it a guarantee of performance of the lease’s terms? Typically the landlord wants to financially secure party.
The term cosigner and guarantor often get used interchangeably. I prefer the term guarantor because co-signer sounds like the person is also applying to become a resident. Whatever term is used, it should be clear what the person is guaranteeing. Generally there are two reasons to ask for a guarantor. First, the applicant does not have or is likely not to have sufficient income to pay the rent on a regular bais.
The co-signer (guarantor) should fill out the sections on the rental application that deal with income, credit and other financial information. It is illegal to require an applicant to have a co-signer because of national origin, source of income or age (if over 18), etc. It is not illegal to guarantee the rent where the applicant does not have sufficient funds to pay the rent.
Madison’s ordinance says, “nothing in this subsection shall prohibit a landlord from requiring a co-signer or guarantor for a rental agreement, where the applicant does not meet the minimum income requirement or minimum income-to-rent ratio and some or all of the rent will be paid by a private individual on the applicant’s behalf.”
SECURITY DEPOSIT. HOW MUCH AND HOW TO HOLD
Wisconsin’s Administrative code, ATCP §134.02(11) defines a \" ‘[s]ecurity deposit’ to be the total of all payments and deposits given by a tenant to the landlord as security for the performance of the tenant's obligations, and includes all rent payments in excess of 1 month's prepaid rent.”
Useful to know is the note contained in the Code that says, “[a] rent payment in excess of one month's prepaid rent is considered a ‘security deposit’ as defined under s. ATCP 134.02 (11). This chapter does not prevent a landlord from collecting more than one month's prepaid rent. However, if the landlord holds any rent prepayment in excess of one month's prepaid rent when the tenant surrenders the premises, the landlord must treat that excess as a \"security deposit\" under sub. (2).”
Act 108 abolished the ability of a municipality to have pre or post condition reports than were greater than provided by the residential administrative code. The latest change once again modified section 704.08. That law now reads: Check-in sheet. A landlord shall provide to a new residential tenant when the tenant commences his or her occupancy of the premises a check-in sheet that the tenant may use to make comments, if any, about the condition of the premises. The tenant shall be given 7 days from the date the tenant commences his or her occupancy to complete the check-in sheet and return it to the landlord. The landlord is not required to provide the check-in sheet to a tenant upon renewal of a rental agreement. This section does not apply to the rental of a plot of ground on which a manufactured home, as defined in s. 704.05 (5) (b) 1. a., or a mobile home, as defined in s. 704.05 (5) (b) 1. b., may be located. But see ATCP 134.06(1) check-in provisions that have not been directly repealed.
Wis. Stat. §704.02 was added in part to undo Baierl v. McTaggart, 2001 WI 107, 245 Wis.2d 632, 629 N.W.2d 277. In the case the Court found that because the lease includes a provision in violation of § ATCP 134.08(3), the landlord could not enforce the lease against the tenants.
Now the statute says, “[t]he provisions of a rental agreement are severable. If any provision of a rental agreement is rendered void or unenforceable by reason of any statute, rule, regulation, or judicial order, the invalidity or unenforceability of that provision does not affect other provisions of the rental agreement that can be given effect without the invalid provision.”
Wis. Stat. 704.44 previously added provisions that make a residential lease void and unenforceable if it does any of the following listed below. The latest Act modified section 9. What follows is the current law:
(1m) Allows a landlord to do any of the following because a tenant has contacted an entity for law enforcement services, health services, or safety services:
(a) Increase rent.
(b) Decrease services.
(c) Bring an action for possession of the premises.
(d) Refuse to renew a rental agreement.
(e) Threaten to take any action under pars. (a) to (d).
(2m) Authorizes the eviction or exclusion of a tenant from the premises, other than by judicial eviction procedures as provided under ch. 799.
(3m) Provides for an acceleration of rent payments in the event of tenant default or breach of obligations under the rental agreement, or otherwise waives the landlord's obligation to mitigate damages as provided in s. 704.29.
(4m) Requires payment by the tenant of attorney fees or costs incurred by the does not prevent a landlord or tenant from recovering costs or attorney fees under a court order under ch. 799 or 814.
(5m) Authorizes the landlord or an agent of the landlord to confess judgment against the tenant in any action arising under the rental agreement.
(6) States that the landlord is not liable for property damage or personal injury caused by negligent acts or omissions of the landlord. This subsection does not affect ordinary maintenance obligations of a tenant under s. 704.07 or assumed by a tenant under a rental agreement or other written agreement between the landlord and the tenant.
(7) Imposes liability on a tenant for any of the following:
(a) Personal injury arising from causes clearly beyond the tenant's control.
(b) Property damage caused by natural disasters or by persons other than the tenant or the tenant's guests or invitees. This paragraph does not affect ordinary maintenance obligations of a tenant under s. 704.07 or assumed by a tenant under a rental agreement or other written agreement between the landlord and the tenant.
(8) Waives any statutory or other legal obligation on the part of the landlord to deliver the premises in a fit or habitable condition or to maintain the premises during the tenant's tenancy.
(9) Allows the landlord to terminate the tenancy of a tenant based solely on the commission of a crime in or on the rental property if the tenant or someone who lawfully resides with the tenant, is the victim, as defined in s. 950.02(4) of the crime.
Of concern to landlords was a provision - - §704.95 which was passed with the second change. That section has been now been amended to make it only apply to security deposits and prohibited lease provisions. Here is the latest version of the statutes.
Practices regulated by the department of agriculture, trade and consumer protection. Practices in violation of s. 704.28 or 704.44 may also constitute unfair methods of competition or unfair trade practices under s. 100.20. However, the department of agriculture, trade and consumer protection may not issue an order or promulgate a rule under s. 100.20 that changes any right or duty arising under this chapter.
Wisconsin law does not provide for or specify what is a “standard” lease. Yet the term “NON-STANDARD RENATAL PROVISIONS” appears in ATCP §134.06(3)(b) and Wis. Stat. §704.28(2) that deal with security deposits. The essence of these two provisions is that a landlord can include one or more nonstandard provisions authorizing the landlord to withhold amounts from the tenant’s security deposit for reasons other than those specified in the statute. (Note: A nonstandard provision cannot authorize withholding for “normal wear and tear.”).
ATCP§134.09, entitled Prohibited Practices, allows in 2(c) for a nonstandard provision for entry into the dwelling and in 4(a) allows for a nonstandard provision dealing with written lien agreement between the landlord and tenant. How this part of the Code interacts with the new statute on disposal of personal property is an open question. All these nonstandard provisions require the landlord shall specifically identify and DISCUSS with the tenant each nonstandard rental provision with the tenant before the tenant enters into a rental agreement with the landlord. However §704.28(2) which is titled “Nonstandard Rental Provisions,” removed the requirement that the landlord discuss the provision. Also the statute makes it clear that tenant can sign or initials the provision.
What should you include in nonstandard lease provisions, rules or addendum. In part this is a business decision as to how detailed the landlord wishes to get. What is clear is that the nonstandard provisions cannot modify the statute or the administrative code.