So, we finally finished (as much as humanly possible) the analysis of the “modernization” of landlord-tenant law bill- this is the best we could do to explain the bill and issues in plain English. Special thanks to Colin Gillis for his patience and helping me make this understandable to non-legally trained folks! And to Attorney Mitch, David Sparer, Heidi Wegleitner, various activists who chimed in with their thoughts and concerns, and some folks at the Department of Agriculture Trade and Consumer Protection for helping answer questions and sharing their thoughts and helping to sort things out. Further legal analysis is still happening this morning, but this should be the bulk of the issues.
AB561 is here and the hearing is at 11:00 in room 400NE. SB466 is here and the hearing notice is here, 2:00 room 201 SE – the vote (Executive Session) notice is here, 2:05 room 201. Stop by and register even if you don’t have time to or don’t want to speak! Or sign the on-line petition and then tell your friends!
GENERAL
1. The bill is being fast-tracked. There has not been time to analyze this bill thoroughly to determine its impact on tenants and landlords in Wisconsin. This is especially problematic because it is unclear how these changes impact ATCP 134 provisions and there are legal arguments on both sides, leading to likely lawsuits.
2. It is part of a pattern of assaults on tenants rights by the Walker administration. It comes on the heels of SB 107, a bill that eroded local control and nullified several laws in Madison, Fitchburg and Dane County. Landlords have not been able to keep up on these changes and are confused about which laws were removed and which ones are still in place. This will lead to further confusion – and it will be statewide.
SECURITY DEPOSITS
The bill may eliminate consumer protections for security deposits. The bill incorporates regulations regarding the withholding of security deposits that are currently in the Wisconsin Administrative Code (134.06) to the Wisconsin Statutes (704.28). The effect this will have on the regulations in the code is not clear. If the regulations in the statutes override the regulations in the Code, then there will be two major consequences: 1.) the bill will eliminate provisions that entitle tenants to double damages, court costs, and reasonable attorney’s fees in the event that a landlord withholds some or all of their security deposit illegally; and, 2.) several regulations currently included in the ATCP 134 will be eliminated, because the regulations added to the statute by this bill are a truncated version of those in ATCP 134. However, it is possible that the regulations added to the statutes by this bill will not override the regulations in the ATCP 134, because of Gallego v. Wal-Mart Stores.
If the regulations created in the statutes by this bill override the regulations in the Code, there will be dire consequences for tenants in Wisconsin.
1. If Wis Stat 704.08 regarding check-in sheets is intended to replace ATCP 134.06(1) regarding a list of pre-existing damages:
a. The law will be silent on how long the tenant has to fill in the check-in sheet – if the tenant is supposed to be the one to fill it in.
b. As worded, it appears it may require the landlord to fill in the check-in sheet at the time the agreement is reached, which could be months before the tenant moves in.
c. The bill assumes that tenants sign new rental agreements and move in to their apartments at more or less the same time. This is not always the case. In Madison, tenants routinely sign leases up to ten months prior to moving in. In such cases, tenants would fill-in a check-in form several months after signing a new rental agreement and may no longer have the form.
d. The law would also eliminate the right of a tenant to request a list of the previous tenant’s security deposit deductions.
2. Wis Stat 704.28 contains the same list of damages for which a landlord can legally withhold from a security deposit as ATCP 134(3), with two important differences:
a. ATCP 134 entitles tenants to double damages, court costs, and reasonable attorney’s fees in the event that their landlord withholds money from their security deposit illegally. If Wis Stat 704.28 is intended to replace ATCP 134(3), that provision would be eliminated. This would make security deposit regulations effectively unenforceable. Security deposit disputes usually concern relatively small amounts of money. For example, if a landlord withholds $200 illegally, the affected tenant would have to pay $96 to file a summons and complaint in addition to the time, effort, and lost wages it would cost to argue his or her case in court. This bill would eliminate incentives for tenants to enforce their consumer protection rights from the theft of his or her security deposit and make it easier for landlords to take advantage of tenants.
b. Wis Stat 704.28 does not include ATCP 134.06(3)’s specific reference to routine carpet cleaning and painting. Landlords have been trying to find away this law for years and routinely withhold for carpet cleaning and painting. This is common practice among some landlords, even though it is illegal. Without this specific prohibition, landlords will assume it is now permissible to withhold for routine carpet cleaning and painting.
3. If Wis Stat 704.29(5) is intended to replace ATCP 134.06(2),(4)&(5), then the bill eliminates the following protections for tenants:
a. Wis Stat 704.29(5) specifically requires landlords to return security deposits within 21 days after the termination of the rental agreement only in special cases where a lease is terminated early by the landlord or the tenant. If the bill passes and it eliminates provisions in ATCP 134, there is no requirement for when the security deposit has to be returned where the lease ends on its expected termination date.
b. Wis Stat 704.29(5) omits ATCP 134.06(2), (4) & (5)’s requirement that the landlord must provide the tenants with a written and itemized list of deductions when he or she withholds from a security deposit.
c. Wis Stat 704.29(5) omits guidelines for returning security deposits. There are two such guidelines in the Code:
i. In the event that multiple tenants on the same lease do not tell the landlord to whom she or he should write the check for the security deposit, the ATCP 134 stipulates that she or he should write it out to all of the tenants on the lease.
ii. In the event that a tenant moves out without leaving a forwarding address, the landlord should mail the check to the tenant’s most recent address (typically the rental property they have just vacated).
These guidelines protect tenants and landlords. Without them, tenants may be able to sue a landlord for failure to return the deposit when the tenant has failed to provide a new mailing address.
d. Wis Stat 704.29(5) omits protections for tenants who cash checks for partial payments for security deposits. Prior to this provision being added to ATCP 134 some courts found that when a tenant cashed a check for a partial payment, it was legally considered a settlement for that payment.
e. Wis Stat 704.29(5) omits protections for tenants whose landlords illegally withhold by misrepresenting or falsifying damages. The Code entitles double damages, court costs, and reasonable attorney’s fees to a tenant in the event that his or her landlord misrepresents or falsifies damages to the rental property and / or the cost of repairs. This bill would do away with that provision.
DISCLOSURE OF REPAIR PROBLEMS
If Wis Stat 704.07(2)(bm) is intended to override ATCP 134.04 (2), then the bill will substantially alter the laws governing disclosure of repair problems, with the effect of significantly weakening remedies for tenants who inhabit rental properties in need of repair.
1. Wis Stat 704.07(2)(bm) omits the requirement that landlords provide tenants the actual orders from a building inspector who has identified repair problems in the property. As a result, tenants would have to acquire such orders from the building inspector on their own. This often involves visiting the building inspector’s office during the work day.
2. ATCP 134.04(2) includes a list of repair problems that a landlord must disclose to current or prospective tenants, whether or not they have received orders from a building inspector. Wis Stat 704.07(2)(bm) omits this list of disclosures, which includes the structural damages to the unit and the absence of running water, hot water, electricity, plumbing, sewage disposal facilities and adequate heating (the temp cannot reach 67 degrees).
3. Under ATCP 134.04 (2), tenants who suffer damages because of undisclosed repair problems are entitled to double damages, court costs and reasonable attorney’s fees. Wis Stat 704.07 (2) (bm) eliminates double damages, court costs and attorney fees for failure to disclose repair issues.
PROHIBITION AGAINST CONTACTING ELECTED OFFICIALS OR BUILDING INSPECTORS
AB 561 / SB 466 creates new law 704.07 (3) (bm) that prohibits a tenant from contacting the building inspector about repair problems until he or she has first discussed the problem with the landlord.
1. The law may be unconstitutional. How can you prevent a person from contacting their elected officials?
2. The law does not define the penalty for failure to comply with this prohibition. What would happen to a tenant if they fail to notify the landlord? What kind of proof might be required by the building inspector for them to come out to the unit?
3. The law assumes that all calls to the building inspector are made by tenants living in the property in need of repair. Quite often it is a neighbor who calls the building inspector. Will tenants be penalized if a neighbor files a complaint with the building inspector about the rental property in which they live?
4. The law says that the tenant must allow the landlord “adequate time” to repair or correct the problem. However, it does not specify what amount of time is “adequate.” This is already an extremely common question for tenants living in properties that need to be repaired. By prohibiting tenants from contacting a building inspector before an “adequate” time has passed, this bill would turn a question of etiquette into a legal conundrum.
5. Requiring tenants to notify landlords before contacting a building inspector would delay essential repairs. Some landlords routinely ignore requests for repairs. In such cases, tenants would be required by law to delay repairs every time they were needed so that they could notify their landlord and then wait for an unspecified amount of time.
6. This provision could lead to landlord intimidation and retaliation.
SEVERABILITY / OVERTURNS BAIERL V McTAGGART
In Baierl v McTaggart,, the Wisconsin Supreme Court ruled that that illegal provisions in a rental agreement regarding legal fees invalidated the entire agreement. For example, if a landlord wrote in a lease that they were going to charge the tenant $1000 if they contested the eviction, the entire lease would become voided because it so unfairly tipped the balance to the landlord and intimidated the tenants from exercising their right to due process. When illegal provisions could potentially invalidate an entire lease, there is a strong disincentive against including such provisions. Landlords frequently include illegal provisions in rental agreements and most renters are unaware the provisions are illegal. Removing this disincentive makes it easier for dishonest landlords to take advantage of tenants, who are usually less knowledgeable of tenant-landlord law than landlords.
EVICTIONS
1. AB 561/SB 466 creates new law Wis. Stat. 66.1010 that prohibits municipalities from passing eviction moratoriums. There are at least two problems with this provision:
a. It further erodes local control. SB 107 has already severely restricted the capability of municipalities to provide local solutions to local problems, and this law restricts it even further. This is ironic, because the Republican party nominally supports local control. The website of the Republican Party of Wisconsin puts commitment to local control in the first of its “GOP Principles”: “The proper function of government is to do for the people those things that have to be done but cannot be done, or cannot be done as well, by individuals, and that the most effective government is government closest to the people.”
b. There has been a wave of foreclosures following the housing crisis that began in 2008. This bill would prevent municipalities from addressing rampant and potentially improper evictions following foreclosures in a particular community.
2. By ensuring that tenants would be charged a minimum of double their daily rent for staying in the property after receiving an eviction notice, the bill would effectively eliminate tenants’ right to due process in the event that they receive an illegal or unjustified eviction notice or non-renewal.
The bill amends Wis Stat 704.27, replacing the word “may” with “shall” in two key places:
1. “If a tenant remains in possession without consent of the tenant’s landlord after expiration of a lease or termination of a tenancy […], the landlord shall, at the landlord’s discretion, recover from the tenant damages suffered by the landlord because of the failure of the tenant to vacate within the time required.”
2. “In the absence of proof of greater damages, the landlord shall recover as minimum damages twice the rental value apportioned on a daily basis for the time the tenant remains in possession.” Changes may to shall. Most courts don’t award this because tenants have a right to due process. Mandatory double daily rent after receipt of a five-day or fourteen-day notice.
Changing “may” to “shall” would force courts to award damages to landlords when tenants remain in a rental property after the end of a lease or receipt of a termination notice. Courts normally do not award damages to tenants in such cases because it prevents prevents tenants from staying in the rental property while they contest or cure the eviction. Or contest the end of their lease – which may continue due to automatic renewal clauses or improper non-renewal for discriminatory or retaliatory reasons.
3. Wis Stat 799.40 (1m) takes away a tenant’s right to have a cureable five-day notice for non-payment of rent dismissed after paying the amount due. The law specifies that the tenant cannot be evicted for non-payment of rent after paying it. By implication, a landlord wishing to continue with the eviction would have to supply a new justification for the eviction after the rent had been paid. If a landlord is committed to evicting a tenant, and they have a reason other than non-payment, why would they not just use the other reason to evict the tenant in the first place? This law seems to be intended to make evictions in such cases occur more quickly. In effect, it would limit affected tenants’ right to due process. For example, if a tenant receives a five day notice for non-payment, pays the rent due four days later, and then learns on the same day that the eviction will proceed for another reason, she or he will not have sufficient time to cure or contest the new reason.
PROPERTY LEFT BEHIND / LIEN
SB 466 / AB 561 grants landlords more power and discretion to dispose of property left behind by tenants. Current law requires landlords to store the property and provide notice to the tenant within 10 days of the storage of the right to claim the property upon satisfaction of the landlord’s lien (i.e. payment of moving and storage costs) within 30 days of notice of the storage. If the tenant fails to pay the charges and claim their property, the landlord may sell the property and keep the proceeds equivalent to the cost of sale and storage. The remainder of the proceeds would be sent to the department of administration to fund homeless services. Under this bill, if the landlord, under their sole discretion, determines the property has been left behind, they are essentially allowed to do whatever they want with the property and would not be required to send sale proceeds to the department of administration for homeless programs.
Right to retrieve medical equipment and rights of other lienholders and interested parties extinguished. The current law protects the right of a tenant who might have left stuff behind to retrieve it if it is medicine or medical equipment, but this proposal gets rid of that protection entirely. The bill wipes out secured interests (e.g. furniture rental companies) and claims of other interested parties.
Lack of enforcement mechanism. There are many cases where landlord’s seize people’s final load as they are moving – with this provision they can simply claim it was “left behind,” and what is a person supposed to do? What is the means of protecting against violations of these provisions as proposed? Is there none at all? Under current law, there are instances where a landlord claims that a tenant had left stuff behind, but the tenant disputes, and find items like the their birth certificate, family photos, driver’s license, etc., in the dumpster. What possible enforcement mechanism would exist to help a tenant who suffered such a violation? Currently, ATCP 134.09(4) makes it a violation to hold a tenant’s property unless there is a lien under sec. 704.05(5) – so without there any longer being a lien in that section of 704, this appears to eliminate protections from a landlord seizing a tenant’s property.
SB 466 / AB 561 grants landlords more power and discretion to dispose of property left behind by tenants. Current law requires landlords to store the property
and provide notice to the tenant of the right to claim the property within 30 days or the landlord may sell the property and keep the proceeds equivalent to the cost of sale and storage. The remainder of the proceeds would be sent to the department of administration to fund homeless services. Under this bill, landlords would be allowed to do whatever they want with the property and would not be required to send sale proceeds to the Department of Administration for homeless programs. The bill wipes out secured interests and claims of other interested parties.
