ATTENTION LANDLORDS: Wisconsin Court of Appeals case of Koble v. Marquardt Is Now Law

This is a long blog post, and I apologize in advance, but I sincerely hope that you take the time to read it all the way until the end as it is very important that Wisconsin landlords know what they will be facing. This may be one of the biggest, if not the biggest, issues facing landlords in the last 30 years that I have been a practicing attorney, representing many of you.

Koble Investments v. Marquardt (“Koble”) is a District III Wisconsin Court of Appeals case from Marathon County which has now been published and therefore is now the law in the State of Wisconsin. When a Court of Appeals case is published it becomes precedent for all courts that are lower than the Court of Appeals, which means all the state circuit courts in every county in Wisconsin.

The holding in Koble is that if a landlord has a void rental agreement (i.e., the rental agreement contains one of the “10 Deadly Sins” as set forth in Wis. Stat. § 704.44  the remedy for the rental agreement being void and unenforceable is the complete disgorgement of all rent previously paid by the tenant to the landlord. Stated another way, if a landlord has a provision in its rental agreement, which includes any rental documents as they are incorporated into the rental agreement, that violate any of the “10 Deadly Sins,” the landlord must return all rent that it received from the tenant during the tenant’s entire tenancy. Essentially, because of something that may not even have been intentional by the landlord, the tenant will get to live in the landlord’s rental property for free for the tenant’s entire tenancy, even if the tenant was not damaged because of the prohibited language in the rental agreement.

While the landlord in the Koble has petitioned the Supreme Court of Wisconsin to accept and hear this case, the Wisconsin Supreme Court only accepts a limited number of cases each year and is not obligated to take the Koble case.

Additionally, the landlord in Koble failed to raise the argument that under Wisconsin law if a landlord’s lease is determined to be void, it automatically defaults to a month-to-month tenancy per Wis. Stat. § 704.01(2), and thus still requires the tenant to pay rent. How did the landlord fail to raise such an obvious argument? I do not know the answer for certain, but my assumption is that the attorney that represented the landlord was unfortunately not familiar with Wisconsin Landlord-Tenant law.

In May of 2023, in an unpublished District III Wisconsin Court of Appeals case also out of Marathon County entitled Henchey and Blakely v. Wausau Landmark Corp. (“Henchey”) the landlord also failed to raise the argument that a void lease defaults to a month-to-month tenancy and that rent still must be paid. In Henchey, the Wisconsin Court of Appeals from District III also said the sole remedy for having an illegal provision in a lease was the return all rent paid by the tenant during the entire tenancy, thus allowing the tenant to live for free. In Henchey, the tenant was not even a current tenant of the landlord at the time of the lawsuit. The tenant had moved out of the rental property two (2) years earlier before choosing to sue the landlord for the return of its rent. Again, just like in Koble, the tenant was not damaged because of the prohibited provision included in the lease. In Henchey, the Court of Appeals analogized the inclusion of prohibited language in the lease to an auto repair shop failing to obtain prior authority from the customer to make the repair and failing to provide an estimate of the cost of the repair to the customer prior to commencing work on the customer’s car.

Additionally, the landlord in Koble also allegedly failed to sufficiently develop its argument against the remedy of returning all rent received during the entire tenancy back to the tenant. The landlord also failed to advise the court that such a holding would decimate a large part of the residential rental industry in Wisconsin.

Since the above arguments were either not raised or allegedly not sufficiently developed by the landlord in Koble, those arguments are essentially waived and cannot be raised by the landlord before the Wisconsin Supreme Court.

Thus, the burden falls on the various landlord groups throughout the state, such as the Rental Property Association of Wisconsin, Inc. (“RPA”) to take action and make these arguments to the Wisconsin Supreme Court by filing an amicus (“friends of the court”) brief requesting that the Wisconsin Supreme Court accept the Koble case. This is necessary so that the Supreme Court of Wisconsin can prevent an unjust outcome because the applicable law in Wisconsin was ignored.

The publication of Koble is detrimental to all Wisconsin landlords because tenants now have an even greater reason to argue that all rental leases that they have ever entered into with a landlord or property management company are void and contrary to Wis. Stat. § 704.44. Tenants have nothing to lose in making such an argument. If they prevail, they receive a windfall and have been able to live for free. And if they lose, their case is just dismissed and there is no penalty to the tenant.

In the Koble case, the landlord failed to include the required domestic violence notice provisions as required per Wis. Stat. § 704.14. Further, the lease also contained language that allowed the landlord to terminate the tenancy of a tenant for a crime committed in relation to the rental property. The inclusion of such language coupled with the failure to include the domestic violence language is a clear violation of the 10th Deadly Sin (Wis. Stat. § 704.44(10)).

But the arguments that tenants have been making since Henchey in May of 2023, have not been as clear. In fact, some of the arguments being made stretch both the imagination and common sense. Arguments are being made that if a landlord’s lease states that a “tenant can be evicted if they engage in criminal activity on the premises” that it violates the 9th Deadly Sin (Wis. Stat. § 704.44(9)).

Wis. Stat. § 704.44(9) says that a lease will be void if it “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 a victim, as defined in 950.02(4), of that crime.”

Where in the following language -- “tenant can be evicted if they engage in criminal activity on the premises” -- does is say that the landlord can evict a tenant if they are a victim of a crime? Nowhere. It does not state that anywhere and thus it is not a violation of the 9th Deadly Sin. But it is being argued that the above language violates the 9th Deadly Sin unless you also include the following phrase: “unless the tenant, or someone who lawfully resides with the tenant, is a victim, as defined in Wis. Stat. § 950.02(4), of that crime.”

So, with the publication of Koble, I anticipate that landlords will see even more tenants trying to attack their leases arguing that they are void. Wisconsin landlords must ensure they are using rental documents that do not violate any of the 10 Deadly Sins. If you are using the rental documents that I draft that are sold at Wisconsin Legal Blank (“WLB”), you must use the most current version of both the Residential Rental Agreement, Rules and Regulations, Nonstandard Rental Provisions, and the other rental forms that I draft. WLB provides you with a list of the most current rental documents. This is necessary to protect yourself. It doesn’t mean that tenants won’t still try to attack them. They will. They most definitely will. They will continue to attack them as long as there is the possibility for them to obtain that windfall and live for free.

The Koble case could completely wipe out small to mid-size landlords in Wisconsin. If many tenants living in a large rental complex come together to sue a larger landlord seeking reimbursement of all rent paid or if all tenants renting from a large landlord with multiple rental properties in the state, join in a class action lawsuit against that larger landlord seeking the return of all their rent, that landlord could go out of business as well.

If landlords are forced to file bankruptcy and/or give up their rentals, who is prepared to take over their roles? Is the government ready to step in and be a landlord? We need only look so far as the Housing Authority of the City of Milwaukee (“HACM”) to see that the government is not the answer. Who then?

A final note, if you happen to be on the wrong end of one of these lawsuits and the tenant is arguing that your rental documents are void and unenforceable and that you must return all of their rent payments and let them live for free, make sure that you contact the Rental Property Association of Wisconsin, Inc. (RPA) or your local landlord association. Let them know of your situation so they can help.

Additionally, if you have been sued, make sure that you retain an attorney that understands and is knowledgeable about Wisconsin landlord-tenant law as there are legitimate and valid arguments and defenses that can and should be raised in your defense. Don’t’ end up like the landlords in Henchey and Koble.

Thanks for reading until the end.

T

Part 2: Landlords Can Be Liable for the Discriminatory Acts of Their Tenants

I received an email from a reader regarding my last post about the Wetzel case.  The reader essentially asked me what a landlord could do to make sure that they do not become liable for the discriminatory acts of their tenants like what happened to the landlord in the Wetzel case.

While I cannot give legal advice (i.e. applying the law to a certain set of facts) via this blog, I can certainly provide general guidelines, so here goes:

1. Don't do anything that the landlord in Wetzel did.  Read the facts of the case - they are egregious.  Do the exact opposite of what the landlord did.
2. If a tenant complains of abuse or harassment by other tenants, investigate the complaints to see if they are valid.  Wetzel advised the landlord that she was called a "fucking faggot" and "homosexual bitch" by other tenants.  Wetzel complained to the landlord that a tenant threatened to "rip her tits off."  Another tenant reveled in his memory of the Orlando massacre at the Pulse nightclub and Wetzel reported this to the landlord.  Wetzel was hit in the back of her head while alone in the mail room sitting on her scooter which resulted in her being knocked from her scooter.  Following the hit on the head, tenants taunted Wetzel openly by rubbing their heads and saying "ouch" when they passed her.  Another tenant spat on Wetzel while in the elevator.  Another tenant hit Wetzel's scooter with his walker. It was alleged that Wetzel reported all of this to the landlord and that the landlord did not do anything to investigate the incidents or protect her.  Instead the landlord chalked everything up to the ordinary squabbling and bickering that occurs among tenants residing in a facility for seniors.
   
3. If your tenant is being harassed or abused by other tenants do not call him or her a liar.  
4. Do not dismiss abusive conduct as accidental if your investigation proves otherwise.  
5. Do not deny a tenant's allegations of abuse and call her a liar.
6. Don't restrict the tenant that is allegedly being abused from accessing portions of the rental property.  The landlord in Wetzel told her that she could no longer eat in the main dinging room and barred her from using the lobby area except to get coffee.  The landlord also stopped providing Wetzel with cleaning service to which she was entitled under her lease. 
7. If a tenant complains of being abused by another tenant, do not retaliate against her for making the complaint, by starting the process to evict him/her.
8. Don't physically hit a tenant.  It was alleged that two of the landlord's employees woke Wetzel up from sleeping in the early morning hours, accused her of smoking in her room, and then one of the employees slapped her across the face.
9. If after your investigation, you believe the allegations occurred - respond appropriately as allowed under landlord-tenant law.  The landlord in Wetzel had the ability to contact the police to report what was going on.  The landlord also could have served the abusive tenant/s with the proper notice (5 day, 14 day, 28 day, or 30 day) depending on the situation.  
10. If the abusive tenants behavior has not been corrected then proceed to evict them, if necessary.

It is quite clear that if the landlord in this case had made any attempt, no matter how little, to protect Wetzel from the abuse that the Court's holding would have not been as far-reaching.  In fact, the Court even wrote in their opinion that "had the management done nothing but listen [to Wetzel] we might have a more limited case."

I hope that this answers your question.

Landlords Can Be Liable for the Discriminatory Acts of Their Tenants

Perhaps one of the most important cases to be published in 2018 affecting landlord-tenant law was the Seventh Circuit Court of Appeals case of Wetzel v. Glen St. Andrew Living Community, LLC, 2018 WI 4057365 (7^th Cir. Aug 27, 2018).  In the Wetzelcase the Seventh Circuit (which includes Wisconsin) held that a landlord may be liable under the Fair Housing Act (FHA) for failing to protect a tenant from known, discriminatory harassment by other tenants.

Within months of arriving at Glen St. Andrew, Wetzel, who was a lesbian, was physically and verbally abused by other tenants. On multiple occasions Wetzel asked staff members to intervene and protect her.  Rather than doing that, staff actually appeared to punish Wetzel by limiting where she was allowed to go in the facility.

Glen St. Andrews own Rules and Regulations document allowed it to evict any tenant who “engages in acts or omissions that constitute a direct threat to the health and safety of other individuals.”  Rather than enforce its rules against the tenants harassing Wetzel, staff told her not to worry about the harassment, dismissed the abuse as accidental, and denied Wetzel’s version of the facts, and even called her a liar.

The Court wrote that had the landlord done nothing but merely listen to the tenant, that its holding might have been more limited, however in this case Glen St. Andrew took affirmative steps to retaliate against Wetzel for complaining.

The Wetzel court interpreted the FHA broadly and ruled that not only does the FHA create liability for a landlord who intentionally discriminates against a tenant based on their protected class status; the FHA also creates liability against a landlord that has actual notice of tenant-on-tenant harassment based on the tenant's membership in a protected class, yet chooses not to take any reasonable steps within its control to stop the harassment.

While the landlord's actions in Wetzel were pretty egregious and faced with a different set of facts the Court may have held differently, the key takeaway from this case is that if landlords fail to curtail discriminatory conduct by tenants on other tenants, when it is possible for for the landlord to do so, the landlord may end up having direct liability under the FHA.

GUEST POST: An Important Eviction Case Heard By Wisconsin Supreme Court

An important eviction case heard by the WI Supreme CourtAttorney Heiner Giese on behalf of the Apartment Association filed an Amicus brief with the WI Supreme Court supporting the City of Milwaukee Housing Authority in their case against Cobbs. This case was heard by the Supreme Court yesterday.Basically the case revolves around the federal “one strike and you're out" rule for Section 8 housing and the state of WI's notice requirements for lease violations. The tenant advocates did a good job in selecting a sympathetic case to proceed on.As most of you know*, in WI you must give a tenant under a lease for a term a five day notice with right to cure for the first lease violation within the term of that lease. This is fine if perhaps they are a bit noisy one time. However it fails when there is a criminal act. Justice Gableman asked the Legal Action attorney to explain how 1st Degree murder be cured as long as the tenant doesn't do it again.A link to the oral arguments in front of the Supreme Court is at:http://www.wiseye.org/Programming/VideoArchive/EventDetail.aspx?evhdid=9392WI's laws on lease violations are generally goofy. You have to give a tenant the right to cure for lease violations including criminal acts under a lease for a term, but you are not permitted to use a 5 Day Breach with right to cure for a month to month tenant even for minor lease violations. So when your month to month tenant has the radio too loud you have to either ignore it or give them a 14 Day without a right to cure.One of our Association's legislative initiatives for 2015 is to change the law to permit a 5 Day with right to cure for month to month tenants as well as allowing for a notice with no right to cure for criminal acts regardless of the length of the rental agreement.Tim Ballering

New & Improved Nonstandard Rental Provisions Form Available at Wisconsin Legal Blank

As many of you know, I draft the various landlord-tenant law forms that are sold at Wisconsin Legal Blank Co., Inc. In light of the recent court of appeals decision (Keyes & Gruner v. Waldbillig et. al) that I referenced in an earlier blog post, I have made some additions and revisions to WLB's Nonstandard Rental Provisions Form. As such, a new and improved Nonstandard Rental Provisions form is now being sold at Wisconsin Legal Blank.

The date of the new form is May 29, 2013.

I would strongly encourage landlords and management companies to start to using the new form as soon as is legally possible.

The new form includes an added provision that allows alandlord to deduct re-rental costs as allowed under Wis. Stats. sec. 704.29 from a tenant's security deposit -- this was the specific deduction that was at issue in the Keys & Gruner v. Waldbillig et. al. Court of Appeals case referenced in my earlier post.

The new Nonstandard Rental Provision form also includes a provision addressing the withholding of "holdover" damages as set forth in Wis. Stats. sec. 704.27, from a tenant's security deposit.

Finally, I made some grammatical changes and reworded a few provisions in the old Nonstandard Rental Provisions form to make them more straightforward and clear.

So to best protect yourself, I would encourage you to pick up the new Nonstandard Rental Provision form dated May 29, 2013 from Wisconsin Legal Blank.

DISCLAIMER: For those of you who may think that I am "pushing" the new Nonstandard Rental Provisions form because I receive a portion of the sale proceeds, that unfortunately is not the case : ). I am paid up front by WLB for my time to draft the forms and revise them as needed based on changes in the law. So I have no vested interest in you purchasing the new form other than I don't want you to be caught in the same situation as the landlord was in the Keyes & Gruner v. Waldbillig et. al court of appeals case. : )

Court of Appeals Decision Reminds Landlords To Review Their Nonstandard Rental Provisions Before Making Deductions from A Tenant's Security Deposit

The Wisconsin Court of Appeals, in an unpublished decision dated May 9, 2013, held that a landlord wrongfully withheld a portion of his tenants' security deposit for costs incurred when attempting to re-rent the rental unit.

As I have mentioned in a prior post, Wisconsin law essentially allows a landlord to deduct only three things from a tenant's security deposit: (1) damage, waste, or neglect, (2) rent, (3) utilities. Any other items that a landlord would like to deduct from a tenant's security deposit must be included in a separate written document entitled "Nonstandard Rental Provisions" (NSRP), in order to be legally deducted. So if what you want to deduct something from your tenant's security deposit and it is not one of the 3 items listed above and not set forth in your NSRP, it will most likley be considered an illegal deduction.

In Keyes and Gruner v. Waldbillig et. al (2012AP1180), two tenants broke their lease with their landlord by moving out prior to the last day of the lease term. The landlord wrote the tenants a letter explaining to them that there would be charges against the their security deposit to cover the cost of advertising and marketing the apartment and that his property management company charged him $100 per showing to show the unit to potential new tenants.

The landlord's managment company showed the tenants' vacated unit 6 times for a total of $600 in costs to the landlord prior to finding a new tenant for the unit. The landlord sent the tenants their security deposit itemization letter explaining that he witheld $600 of their security deposit to cover the costs to re-rent the unit.

Under Wisconsin law, specifically Wis. Stats. 704.29, if a tenant breaks their lease or is evicted, a landlord is required to make reasonable efforts to mitigate the tenant's damages by trying to re-rent the unit. The same statute also says that a tenant who has broken his/her lease or is evicted can be held responsible for all lost rent and all reasonable expenses of listing and advertising the vacant unit which were incurred by the landlord while trying to re-rent the unit.

But this landlord failed to have a NSRP that allowed him to deduct for the re-rental costs. As an aside, if the landlord had just opted to withhold the lost rent incurred while trying to re-rent the unit from the tenants' security deposit instead of the re-rental costs, he also most likley would have prevailed even without having the NSRP regarding re-rental costs since rent owed is an allowable security deposit deduction. Instead, the landlord deducted $600 in showing fees from the tenants' security deposit even though he did not have a NSRP in place that allowed him to do so.

Had the landlord had such a NSRP in place, it is my opinion that his deductions from the tenants' security deposit would have been proper (assuming that the court would agree that $100 per showing is reasonable) and he would not have lost the case and been required to pay double damages and the tenants' attorney's fees.

The moral of the case is that just because the law allows a landlord to hold tenants responsible for the costs to re-rent if they break their lease, does not mean that the landlord can legally withhold those costs from the tenants' security deposit. In order to be able to legally do that, the landlord must have a NSRP in place which allows for the deduction of re-rental costs allowed under Wis. Stats. 704.29.

Does your NSRP contain such a clause? Do you even have a NSRP docuement? If not you may want to contact Wisconsin Legal Blank, which sells a very good Nonstandard Rental Provisions document which I have drafted, that will protect you.

Wisconsin Supreme Court Rules Against Landlord in Maryland Arms Case and Chooses To Avoid Answering The Bigger Question

The Wisconsin Supreme Court filed its opinion in this very important case on July 7, 2010. While the majority opinion ruled against the landlord it did not go so far as to say that a landlord and tenant could not allocate liability for damage (when neither party was negligent in causing the damage) in their rental agreement.

If you would like to review the specific facts of the case and the arguments made by both sides please revisit my posts of May 29, 2009 and October 15, 2009.

The Court was split, so there is a majority opinion, a concurring opinion, and a dissenting opinion. So if you are brave enough you can read all three opinions which encompass 37 pages and can be read here. The Wisconsin Law Journal provides a very good summary of the decision if you are not feeling ambitious enough to read all 37 pages.

As an attorney who primarily represents landlords, I must admit that I had a mix of emotions after I finished reading the opinion. I was upset that the majority opinion held that the landlord should be responsible for damage to his rental property that was caused by the tenant leaving her hair dryer plugged in overnight. I was also frustrated by the fact that the major issue in the case -- whether or not a landlord and tenant can allocate liability through the language of the rental agreement -- was not addressed by the majority opinion, thus providing little guidance to landlords in the future. On the other hand I was also grateful that the majority decided to "pass the buck" and not address this issue becasue, quite frankly, if the majority had addressed that issue, I believe they would have said "no" a landlord cannot allocate liability on a tenant for damage that was not casued by the negligence of the tenant.

The majority opinion held that the landlord should be held responsible for the damage because the rental agreement (which was drafted by the landlord) was ambiguous when it came to who would be held liable for damage in a situation where neither the tenant not the landlord were negligent in causing the damage. The majority rested its decision on a very well established principle of contract law that any ambiguity in a contract should be construed against the drafter of the contract. The majority said that since the contract terms did not unambiguously state that the tenant would be liable for the damage under the specific fact situation in this case, then the landlord should be liable for the damage.

The majority declined to address the very important issue that the AASEW and other landlord associations were concerned about in this case -- whether a landlord can add a lease provision assigning liability to a tenant for damages (when the damages is not caused by the tenant's negligence) or whether doing so would be a violation of Wis. Stat. sec. 704.07. So essentially the "Supremes" chose to dodge the issue, which in effect means that nothing prevetns a landlord from allocating liability to a tenant for such damage in a rental agreement under similar facts. What this also means is that should a landlord make such an allocation and hold a tenant responsible for similar damage, the tenant can argue that such contract language violates sec. 704.07, and the courts will have no guidance as to how to rule.

It was a missed opportunity by the Supremes to add to Wisconsin Landlord-Tenant law. However, based, on the tortured analysis (my view) of the majority opinion, if the court had addressed the allocation of liability issue it would have most likely resulted in a holding that would not allow a landlord and tenant to allocate liability -- which would have been even worse. So in the end maybe it was best that the issue was not addressed.

Justice Ziegler, who agreed with the majority opinion, wrote a concurring opinion to add that her view of Wisconsin law is that a landlord and tenant are not prohibited from allocating liability by contract as long as it is done clearly (i.e. no ambiguity) and is otherwise enforceable by law.

The dissenting opinion, which begins on page 18 and is authored by Justice Prosser, stated that not only are a landlord and tenant allowed to allocate liability in a rental agreement but that that is exactly what the parties to this lawsuit did and that the majority opinion is ignoring the clear meanign of the language in the rental agreement. The dissent did not find the lease to be ambiguous at all. The dissent, quite correctly in my opinion, points out the absurd nature of the majority opinion by saying that "imposing responsibility on the landlord for damage caused by a tenant, when the landlord cannot control risks created by the tenant" (like keeping a hair dryer plugged in overnight) defies economic logic.

The dissent, being very pragmatic, actually takes the time to address what the practical effect the majority decision will have on landlords by stating, "When the landlord is made responsible for abnormal damages that is actually caused by tenants, the landlord must spread the resulting expense among all tenants by charging higher rent. When a tenant is made liable for damage that is caused by that tenant, the landlord is better able to control rent and the tenant has an economic incentive for prudent stewardship of the premises."

Which of the three opinions seem more reasonable and logical to you?

Landlords Should Not Play Games With Tenants' Security Deposits

A new landlord-tenant decision has been reccomended for publication. The case of Boelter v. Tschantz involves a tenant suing her past landlord for double damages and attorney’s fees for making improper deductions from her security deposit.

The essential facts are as follows:

1. Tschantz (the landlord) withheld money from the tenant's security deposit.

2. The key deductions that were made were: (1) $323.84 for the tenant's water bill and (2) $85 to repair a clogged toilet.

3. After withholding a portion of the tenant's security deposit to pay her water bill, the landlord then failed to pay the bill timely. As such, the tenant opted to pay the utility directly to avoid late fees.

4. The landlord then sent a refund check to the tenant -- three weeks later -- for the amount that he deducted from her security deposit to cover the water bill along with a Post-It note that said “Oh, too bad no double damages for you.”

5. The landlord then stopped payment on the check prior to the tenant cashing it.

The Court of Appeals held that the landlord violated ATCP 134 as a result of his "game-playing" with the tenant's security deposit.

First violation of ATCP 134: The court held that it was unreasonable for the landlord to withhold money from his tenant's security deposit in order to pay her water bill and then not use that money to pay the water bill timely. The court specifically stated, “A landlord cannot indefinitely retain a deposit -- merely as a deposit -- after a tenant vacates."

Second violation of ATCP 134: The landlord then failed to promptly refund his tenant’s security deposit once he learned that she paid the water bill. Tschantz returned the water bill monies to Boelter three weeks later with a taunting note.

Third violation of ATCP 134: Finally, the landlord placed a "stop payment" on the refund check to the tenant. The court stated that, whether intentional or not, this constituted a further improper withholding of the tenant’s security deposit.

The Court of Appeals has admonished this type of "game playing" with a tenant's security deposit in prior decision. So while the court's decision here is not anything new, it does serve as a reminder to all landlords that they are taking a big risk if they choose to play games with a tenant's security deposit. Remember DOUBLE DAMAGES AND ATTORNEY'S FEES - need I say more.

The more noteworthy aspect of this case concerns the court's holding with regard to the repair charge deducted from the tenant's security deposit. Tschantz deducted $85 from his tenant's security deposit to repair a clogged toilet. The $85 was itemized as follows: $40 service call fee plus 45 minutes of labor at a rate of $60 per hour for the actual work. Tschantz stated that this deduction was “less than or equal to what an area plumber would bill.” Problem was that Tschantz didn’t hire a plumber to do the work, instead opting to hire his son’s (handyman) company which only billed Tschantz $15 per hour for the work it performed.

The court emphasized that the applicable law, Sec. 704.07(3), Wis. Stats., states that a tenant is only responsible to reimburse a landlord for the "reasonable cost" of the damage. The court then added that the "reasonable costs" would be the actual costs that the landlord had to pay for the repair work. Since a plumber's fee also includes overhead and profit, the court said that Tschantz was not entitled to reimbursement of that amount. Tschantz was only charged $15 per hour by his (handyman) son to clear the toulet - $12 total per the court's calculation -- so that is the amount that he was entitled to legally deduct from his tenant's security deposit.

Since there is no other published Wisconsin appellate decision that have addressed this specific issue 9at least not to my knowledge) - this is really the key holding of the case. A landlord may not charge a tenant for repairs at the rate that a professional laborer would charge if the landlord does not actually incur those charges.

Finally, the court also explained that when a landlord improperly withholds money from a tenant’s security deposit that the tenant is entitled, as a matter of law, to an award of his/her attorney’s fees. Here, the trial court chose not to award the tenant her attorney's fees because the judge felt that the attorney's fees were too far out of propertion to the claimed damages. The Court of Appeals "slapped the hand" of the trial court judge and reminded him that an attorney’s fee award is mandatory if there is a violation of ATCP 134 even if the attorney’s fees are far greater then the actual damages at issue.

Expensive lesson for Mr. Tschantz.

NOTE: Since Mr. Tschantz lost his appeal in this matter he will also be responsible for paying his tenant's attorneys fees through the appeal per Shands v. Castrovinci, 115 Wis.2d 352, 340 N.W.2d 506 (1983)

Oral Arguments On Important Landlord Case To Be Heard on January 6, 2010

The Wisconsin Supreme Court will hear oral arguments on the case of Maryland Arms L.P. v. Connell on Wednesday, January 6, 2010. This is a very important case for landlords as the decision will affect a landlord's ability to contract with his/her tenant.

You can learn what the case is about by reviewing my earlier posts from May 28, 2009 and October 15, 2009.

Oral arguments will be streamed at http://wisconsineye.org for those that wish to watch.

The exact time that for the Maryland Arms arguments is unknown. The case is scheduled to be heard second. The first case starts at 9:45 am. More than likely -- and assuming everything runs on schedule -- the case will be argued before 11 am.

For those of you new to oral arguments, the Wisconsin Supreme Court justices will allow each side to summarize their arguments (which have already been submitted via briefs). The justices will also interrupt the attorneys in order to have them answer specific questions that the justices may have or to attempt to get the attorneys to concede certain arguments. Sometimes the grilling by the justices can be harsh. The justices will not issue a final decision on Wednesday. A final decision will be issued many months later in writing.

The AASEW, along with three other Wisconsin apartment associations, hired legal counsel to submit an amicus curiae brief setting forth the concerns of the apartment industry as a whole, with regard to the specific facts of this case. The lawyer for the apartment associations will also be allowed time to present our argument to the justices.

MARYLAND ARMS CASE WILL BE REVIEWED BY WISCONSIN SUPREME COURT

In my May 28, 2009 post I wrote about the then recently published Wisconsin Court of Appeals case of Maryland Arms Limited Partnership v. Connell, 2009 WI App 87, __ Wis.2d __, 769 N.W.2d 145.

This was an important case because a divided Court of Appeals held that a tenant could not be held responsible for the damages that resulted after her hair dryer caused a fire which resulted in thousands of dollars of damage to her landlord's rental property.

A key fact in the case was that the landlord agreed that the tenant was not negligent in causing the fire becasue she had no prior knowledge of the hair dryer being faulty. Another key fact in the case was that the tenant's lease contained a provision that stated that the tenant would be responsible for all damages that were in any way caused by the acts of the tenant. The Court of Appeals held that such a lease provision was void.

The landlord in this case has petitioned the Supreme Court of Wisconsin to review the the case and the "Supremes" have agreed to hear the case. Oral arguments are to be held on January 6, 2010 and it is expected that a decision will be issued sometime in 2009-2010 term.

One of the main issues that the Wisconsin Supreme Court will have to decide is whether or not a landlord can contractually make a tenant liable for damage in a situation where the tenant is not negligent in causing the damage.

This will be an interesting case to watch and I will keep you updated as I learn more.

LATE FEES - PART 1: WHAT AMOUNT CAN YOU CHARGE?

Many of my clients ask me what amount they should charge a tenant who is late in paying rent. Many also wonder if there is a maximum amount beyond which they would not be allowed to charge as a late fee.

The only legal guidance we have as to what amount is acceptable as a late fee is the case of Three & One Co. v. Geilfuss, 178 Wis.2d 400, 504 N.W. 2d 393 (Ct. App. 1993). This 1993 Court of Appeal decision is not even specifically about the issue of late fees but rather addresses the issue of "waste" (when a tenant intentionally damages the rental property) and what amount of damages a landlord may recover against a tenant that commits waste on the landlord's property. Nonetheless the Court in Geilfuss does state in its opinion that the late fee of $50 per month charged by the landlord was properly assessed against the tenant. Thus, we as landlords know that at least the Wisconsin Court of Appeals has upheld a late fee of $50 per month.

There is no other guidance in Wisconsin law as to the amount of late fee that is acceptable. No Wisconsin Statute addresses the issue nor does any administrative rule in Chapter ATCP 134 of the Wisconsin Administrative Code.

As such, a landlord should be able to charge a late fee of any amount as long as it is reasonable. Legally, a landlord should also be allowed to charge a daily late fee as well if they so choose. For those of you who choose to charge a daily late fee you should be aware the Model Lease for Subsidized Programs (which is drafted by HUD) specifically allow a landlord renting subsidized property to charge a late fee of $5 on the 6th day of the month and to charge $1 per day late fee each day thereafter for that month until the rent is paid.

On a practical level however - at least in Milwaukee County - there are some restrictions to the amount of the late fee that a landlord may charge. Milwaukee County has an unwritten rule that it does not allow daily late fees to be charged. I have had both court commissioners and judges in Milwaukee County eviction court toss out daily late fees that I have tried to obtain for my clients. The reason that I was provided is that daily late fees are "not fair."

I have even had a past court commissioner in Milwaukee County (several years ago) tell me that he would not allow my client to collect a monthly late fee of $50 as he thought that was "unconscionable." When I provided the commissioner with a copy of the Geilfuss case mentioned above where the Court of Appeals held that a $50 late fee was appropriate, the commissioner relented.

I have handled evictions and the associated damages claims in Dane County, Waukesha County, Kenosha County, Racine County, Aizoaceae County, Washington County, and a county or two county way up north that I can no longer recall - in all of these counties I have never had the court prevent me from obtaining a late fee for my client, regardless of the amount, as long as the late fee was clearly specified in the rental agreement as is required in the Wisconsin Administrative Code, ACP 134.09(8).

So as the law currently stands you should be able to charge any amount for a late fee that you wish, including daily late fees, if you are so inclined. However if you want to have actual legal support for the amount of the late fee you are charging then you may want to cap your late fees at $50 per month and carry a copy of the Geilfuss decision with you when you go to small claims court at least in Milwaukee County).

Please be aware however that individual municipalities can create ordinances regarding late fees that might be more restrictive than the state law. For example the City of Madison's local ordinances which you can review here prevent a landlord from charging a late fee that is more than 5% of the month rent.

A note of caution for Milwaukee County landlords - do not place the late fee amount in your 5 day notice or you might have your eviction case dismissed. See my prior post on this topic here.

Please share with me your experience with what amount of late fees you charge your tenants and if you have had any problems with the courts doing so.

COURT OF APPEALS SAYS TENANT NOT LIABLE FOR FIRE DAMAGE

The court of appeals recently released its decision in the case of Maryland Arms Limited Partnership v. Connell. This decision has been reccomended for publication. The issue in this lawsuit was whether the landlord or the tenant should be liable for damage to an apartment unit when the damage was not caused by the negligence of either the landlord or tenant. The Court of Appeals held that it is the Landlord that should be held liable in such a situation. As such the case will now stand for the proposition that a tenant cannot be held liable for his/her actions that damage the property unless the damage is caused by the tenant's negligence

The facts were as follows and were not disputed by either the tenant or the landlord:

- A fire occurred in the tenant's apartment and caused $8,000 worth of damages while the tenant was asleep.

- The fire started from a hair dryer owned by the tenant which was plugged into the elctrical outlet.

- The tenant did not know that the hair dryer was deffective when it was left plugged into the electrical outlet.

- The tenant and the landlord both agreed that the tenant was not negligent in causing the fire as she had no indication that anything was wrong with the hair dryer when she left it plugged into the outlet.

The rental agreement that was signed by both the tenant and landlord included the following language:

"Lessee shall be responsible for all intentional and negligent acts or breaches of thie Lease by the Lessee, Lessee's occupants, guests, or invitiees. Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lesee, Lessee's occupants, guests and invitiees."

As a result of the above language the trial court (Judge Michael Brennan of Milwaukee County) granted judgment for the landlord and against the tenant.

A majority of the Court of Appeals (the court was divided as one judge dissented) reversed the trial court's ruling and remanded the case back to the trial court directling it to enter judgement against the landlord.

In essence the Court of Appeals voided the lease language that is underlined above becasue it felt that the lease provision was contrary to the Wisconsin Statutes governing Landlord Tenant Law - specifically sec. 704.07, Wis. Stats.

Sec. 704.07 states that a landlord is required to make repairs to the property unless the repairs were made necessary by the negligence of the tenant. Sec. 704.07 also states that a tenant must repair damage if it is the result of the tenant's negligence.

The Court of Appeals did admit that sec. 704.07 does not specifically address the issue of who should be responsible in a situation where the damage was not caused by the negligence of either the landlord or the tenant. The logical outcome should then be to look to the rental agreement and determine what the parties agreed to in such a situation. If that was done then the tenant would be liable for the cost of the fire damage repair.

Instead the Court of Appeals held that the only logical conclusion that one should come to after reading the statute is that it is the landlord's responsibility to pay for the damage because the damage was not caused by the tenant's negligence.

This is just another example of the courts going out of their way to protect the tenant at all expenses. It seems as if the Court decided the outcome that they wanted and then did whatever was possible to piece together an argument to support that outcome rather then following and applying the law as written and then arriving at the outcome. I'm assuming the landlord had insurance and the Court felt that as such the landlord would be better able to handle the repair costs.

Landlords already have statutes and administrative code regulations that tell them what they can and cannot include in their rental agreements. Now we have a case that essentially says that even if a statute or regulation doesn't prevent you from including certain language in your rental agreement, if we (the Court of Appeals) don't like the provision that was included in then we will find a way to make it void and unenforceable.

The only voice of reason appears to be in the dissent which is authored by Judge Ralph Adam Fine -- who by the way was once a member of my law firm Petrie & Stocking S.C. (we only hire the smartest and brightest ; ) -- who concluded that while the landlord would have a duty to repair the fire damage there is nothing in the statute that requires the landlord to be responsible for the cost of the repairs in the end especially when the parties agrees differently in the rental agreement.

It is yet unknown if the landlord will appeal this decision to the Supreme Court of Wisconsin or even if it did whether or not the "supremes" whould agree to hear the case. So it appears as if for now at least we have precedent in this case that is not very favorable to landlords.

What are your thoughts on this decision?

NEW PUBLISHED CASE ON EMERGENCY ASSISTANCE STAYS

We will soon have a published Wisconsin Court of Appeals decision on the issue of emergency assistance stays in eviction actions that will assist us as landlords in removing the non-paying tenant.

Sec. 799.40(4) of the Wisconsin Statutes states that a court must stay an eviction action brought against a tenant that has applied for emergency assistance. The stay remains in effect until it is determined if the tenant is eligible for the assistance, and if they are, until that assistance is received. For any of you that have been in this situation you are well aware that this stay can work a substantial hardship on the landlord who is now required to allow a tenant to remain in his/her property for free. Even if the tenant is eventually awarded the emergency assistance it typically does not cover the full amount of the past due rent owed and as such the landlord declines the money and asks for his/her writ. The tenant then uses the assistance money for the security deposit on their next apartment.

This stay can delay an eviction for months. Such a situation is frustrating at best and an improper "taking" of a landlord's property at worse. In the case of McQuestion v. Crawford (Appeal No. 2008AP1096) from District I (Milwaukee) of the Wisconsin Court of Appeals, it was held that "implicit in the statute's mandate that a stay is required until the tenant receives the emergency assistance is a requirement that the tenant seek and find suitable permanent housing within a reasonable period of time."

What is a "reasonable" amount of time will still need to be determined on a case by case basis by a judge but at least there will now be some required inquiry into the efforts made by the tenant to locate new housing and consideration made for the amount of time that this takes. Wisconsin landlords now have case law to support our arguments that the length of the stay is no longer reasonable.