Wisconsin Landlords Need To Be Careful About Rental Fee Disclosures
One of the biggest mistakes I see landlords and property management companies make is focusing only on whether a fee can legally be charged while ignoring whether the fee is disclosed and, if so, whether it is disclosed accurately.
Under Wisconsin law, disclosure matters . . . a lot.
In fact, many DATCP investigations into rental housing fees charged by landlords focus on allegations that the landlord failed to adequately disclose the true cost of renting the property.
Wisconsin Administrative Code ATCP 134.09(9) prohibits landlords from misrepresenting rental terms and from failing to disclose non-rent charges that increase the total amount payable by the tenant.
In practice, this means landlords need to think carefully about how they advertise and explain their fees.
For example, advertising a 1-bedroom apartment for $1,200 per month is not ok if the tenant must also pay an additional monthly fee of $150. To be accurate, advertise the apartment for $1,350 per month, because that is the true monthly amount due. You can itemize the amount, but you should disclose both the monthly rent and the additional monthly fee.
I had a client who was investigated and told they were acting deceptively because they listed the monthly rents for the various apartment types on one page of their website but listed their mandatory monthly fees on a different page. They were ordered to include all mandatory monthly fees on the same page as their rent ranges.
Landlords often face the same problem with move-in costs. If a tenant believes the move-in cost is one amount, but later learns there are additional mandatory administrative fees, technology fees, utility setup fees, elevator use fees, tenant package fees, or similar charges, it can be argued that the landlord, by not disclosing those fees in their advertisements, telling the applicant about those fees during a telephone call, or failing to disclose those fees in any other communication with the rental applicant, is misrepresenting the true cost to move-in to a new apartment.
When it comes to fee disclosure, consistency is key. For example, if your online advertisement states the cost is X, but your leasing agent tells the applicant the cost is Y, and your application portal shows the cost is Z, you have a problem. That kind of inconsistency frustrates rental applicants, and frustrated people are more likely to file complaints.
While fee disclosure matters, landlords must also consider other aspects of the fees they charge. The Department of Agriculture, Trade, and Consumer Protection (DATCP) often takes the view that any fee charged to an applicant or tenant can only reimburse the landlord for its actual costs incurred. Simply put, any fee being charged should not be a source of revenue for the landlord.
DATCP often requires landlords to provide the following information during the discovery process:
What is the fee amount?
What is it being charged for?
Is it optional or mandatory?
How was the fee amount determined?
Is the fee the same for everyone?
Is the fee amount the same under different scenarios/situations?
Ask yourself these same questions before charging a fee to a tenant or an applicant. Given the investigations and million-dollar settlements I referenced in my prior blog post on fees, I expect government scrutiny of rental fees to continue and likely increase. As a result, I strongly recommend that landlords proactively review their fee practices now rather than waiting until a tenant or applicant files a complaint or you receive a Civil Investigative Demand (CID) from DATCP.
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