A Legal Explanation To Landlords About Who Can Appear In Eviction Court on Behalf of a LLC and Why

In the last few months I have been asked by many landlords why Milwaukee County will not allow members of an LLC to represent the LLC in eviction court. I would like to address this issue with the hope that I can shed some light on this subject.

First, let’s deal with the elephant in the room which happens to be wearing a suit and carrying a briefcase (and writing this blog post that you are reading). Yes, I am a lawyer. Yes, I am hired by landlords to handle their evictions (among many other landlord-tenant law matters). And, yes, I stand to gain more clients and generate more income, if courts do not allow a landlord to represent an LLC in legal matters. All of this is very much true.

Despite this, I hope that those of you that have gotten to know me, also know that I take my role as the President of the AASEW very seriously. Even if a specific policy hurts my wallet, if it will benefit members of the AASEW, then I will support it and advocate for it.

The AASEW’s Board of Directors has discussed this issue at length since September of 2009, when Milwaukee County began its enforcement on non-lawyer’s representing LLC’s in eviction court. After a thorough analysis, the Board determined that if this issue were to be pursued legally it would result in a loss. The Board also realized, quite pragmatically, that such a loss would hurt landlords in counties outside of Milwaukee where LLC members are currently still being allowed to represent a LLC in court.

A good place to start discussion of this issue is with a review of basic business entity law. The primary trait of any business entity, whether a corporation or a limited liability company (LLC), is its existence completely separate from its owners. An owner, member, director, or officer of a business entity is distinct from the entity itself. A business entity – and going forward I will refer only to the LLC – has its own separate legal existence. It is this principle that protects a member of a LLC from liability for the actions, negligence, or debts of the LLC. While a sole proprietor or general partner is liable for the debts and liabilities of the business to the full extent of the individual’s personal assets, that is not the case with a LLC. It is this liability protection that makes a LLC a good vehicle for holding rental property. It is this “separateness” that is pivotal to the analysis of this issue.

The liability protection that a member of an LLC receives from his/her personal assets is a huge benefit to the member. It is because of this benefit, that there has been such a huge increase in the number of LLC’s being created lately. However, as with everything in life, there is both a good and a bad side -- a benefit and an inconvenience.

In the case of Jadair v. U.S. Fire Insurance Co., 209 Wis. 2d 187, 562 N.W.2d 401 (1977), the Wisconsin Supreme Court held that “only lawyers can appear on behalf of, or perform legal services for corporations in legal proceedings before Wisconsin Courts.” The Jadair Court’s reasoning, when boiled down to the basics, is that an individual cannot embrace the limited liability aspects of a business entity when it is beneficial to them and then at the same time avoid the consequences of that limited liability when it becomes inconvenient.

On one hand, the benefit of a LLC is the limited liability to the individual member based on the underlying concept that the business entity is separate from the individual person. On the other hand, the inconvenience of a LLC is that since it is a separate legal entity from its individual member/s, said individual/s cannot speak on behalf of the LLC in court because they are separate and distinct from the entity itself.

The Jadair case dealt specifically with corporations – not LLC’s. Nonetheless, the similarities between a corporation and a LLC when it comes to the issue of limited liability are many. It is important to note that the Jadair case also dealt with a large claims lawsuit – not a small claims matter such as an eviction.

There is a big difference between small claims civil procedure and large claims civil procedure.

One major difference is that small claims court is much more relaxed when it comes to rules. For instance, in small claims cases the rules of evidence are not applicable for the most part. Additionally, small claims cases are usually completed in months instead of years like with large claims. They are separate animals.

As such, sec. 799.06(2) of the Wisconsin Statutes, governing small claims court procedure, allows a full-time authorized employee of a business entity to appear in court on behalf of that entity. This option is not available in large claims court. In all large claims cases a business entity must be represented by an attorney.

In the past, Milwaukee County would ask a non-attorney that appeared in small claims court representing a LLC if they were a full-time employee. If the individual answered "yes," then that individual was allowed to represent the LLC in Milwaukee County small claims court. This is still the normal operating procedure for many small claims courts outside of Milwaukee County. Some counties require the full-time employee to complete an Affidavit of Full-Time Employee where the employee swears under oath (and penalty of perjury) that they are a full-time employee of the business entity. Other counties are more lax and don't require the affidavit.

The Jadair case has been around since 1977 and sec. 799.06(2) has been around even longer. So there has been no change in the law. Rather Milwaukee County began more aggressively enforcing the law that was already on the books regarding this issue in September of 2009

I am unsure why Milwaukee County decided to begin enforcing sec 799.06(2) in the fall of 2009. For those conspiracy theorists out there, I can assure you that the lawyers did not lobby for this change. Nonetheless, after posting notice of this enforcement change for several months, on September 1, 2009, Milwaukee County began to actively enforce sec. 799.06(2). If an individual wanting to represent a LLC in small claims court cannot provide proof of full-time employee status, such as a W2 or paycheck, they are told that they needed to hire a lawyer going forward.

As many of you know, most LLC’s that hold rental property do not have any full-time employees. Most LLC’s holding rental property are single member LLC’s. Most members of an LLC do not receive a salary from the LLC thus they have no paycheck or W2 that they can provide to the court to prove that they are a full-time employee.

Additionally, many landlords – to limit liability exposure even more – have opted to hold only one rental property in a single LLC. Thus, an individual who has many rental properties and chooses to put them into separate LLC’s may be the sole member of many, many LLC’s. So even if that person was a full-time employee of one LLC, s/he could not be a full-time employee of all of them.

Currently there is no Wisconsin appellate court decision that requires a lawyer to represent a LLC in court. However, as alluded to earlier, the reasoning in Jadair, which held that a corporation must be represented by an attorney, would very likely be applicable to a LLC as well. So any landlord that would decide to appeal a Milwaukee County decision on this issue would more than likely lose his/her appeal based on sec. 799.06(2) and the reasoning of the Jadair case.

Additionally, as I mentioned before, many counties are currently not enforcing sec. 799.06(2) with as much vigor as Milwaukee County has been doing. As a result, many landlords outside of Milwaukee County are able to represent a LLC in court despite not being a lawyer. While this is not legally correct, it is happening.

It should be noted that Washington County has recently begun to enforce this statute as well and now requirs a LLC to hire an attorney if they do not have a full-time authorized employee of the LLC to appear on its behalf. Eventually I assume that this trend will spread to other counties, as what happens in Milwaukee often ends up being followed elsewhere.

So to pursue this matter legally – since it would more than likely result in a loss -- would also harm landlords outside of Milwaukee County because if the issue were to be appealed, and if the appellate decision were to be published, then all counties would be required to abide by the holding of the appellate court.

While I am well aware that the enforcement of sec. 799.06(2), Wis. Stats., causes a financial hardship for landlords that hold rental property in a LLC, I hope that the above explanation – at the very least – helps those affected to better understand the issues involved.

The end result is that if an individual landlord wants to be able to pursue his/her own evictions without hiring a lawyer, than s/he should hold his/her rental property in his/her individual name rather than in a LLC. However, by doing so, a landlord will lose the liability protection afforded by holding rental property in a LLC or other business entity. As the old saying goes, landlords will need to “pick their poison.”

New Rule In Milwaukee County Eviction Court Will Limit The Number of New Evictions to 80 Per Day

In an effort to eliminate the congestion in eviction court, Milwaukee County has imposed a limit of 80 new eviction cases per day. In the past there have been days in which over 300 new eviction cases were scheduled to be heard in the same afternoon, which often became unmanageble.

This new limit only applies to new case filings for eviction cases (the 1st cause of action) for return of the property. This new limit does not include evidentiary hearings, adjourned matters, or return dates for 2nd and 3rd causes of actions (for money damages).

I was informed that the Clerk of Courts will be keeping a running tally of eviction cases scheduled for each return date/initial appearance. Once that tally reaches 80, no more cases will be allowed to be filed for that same return date.

While I understand the reasoning for this new policy, I do have some concerns. I agree that eviction court can become unmanageable due to the high volume of cases. Us "regulars" to eviction court have had to spend much of our lives sitting and waiting in good ol' room 400 of the Milwaukee County Courthouse due to the high volume. Despite that I have always had my cases completed before 5 pm.

I work for several clients that have a high volume of evictions each month. One client in particular easily has 40 evictions per month and has topped out at 66 evictions on more than one occassion. In order to keep costs down for such clients I schedule all of that client's evictions to be heard on the same day. This limits the amount of fees that they client has to pay me and allows them to only spend one day per month in court.

This new policy may prevent that client, and other landlords similarily situated, from having all of their cases heard on the same day --- thus increasing their costs and encroaching on their valuable time. Let's face it evicting a tenant is a a money-loser to a landlord. It is a necessary evil that they would like to keep to a minimum if at all possible.

Another foreseeable issue would be the landlord that has a smaller number of evictions each month -- say 10 -- who wants to have them all heard on one day in eviction court. What will happen when s/he goes to file the evictions and is told that there are only 3 spots left for evictions on the day s/he wanted to appear in court? That landlord weill either have to scheduled his/her 7 remaining evictions on a different day or choose to postpone all 10 evictions to another day in order to have them all heard at once. The former option wil require the landlord to spend 2 days in eviction court. the latter option will result in a non-paying tenant having additional time to live rent free. Either option causes the landlord money.

So while I understand the motivation for this new rule I am not sure that it will benefit Milwaukee County landlords. We will have to wait and see.

5 Day Notice Terminating Tenancy for Drug or Gang Nuisance In Wisconsin

I thought I would try something new with this blog post. I've embedded a video clip from a seminar that I have given in the past. Let me know what you think.

This clip focuses on a very specific -- and often misunderstood -- type of 5 day notice in Wisconsin called a 5 Day Notice for gang and/or drug nuisance.

There are only very specific instances in which a landlord is legally allowed to serve a tenant with a 5 Day Notice for Drug/Gang Nuisance --- the video clip above explains when this special type of notice can be used.

A 5 Day Notices for Drug /Gang nuisance does not allow the tenant the ability to cure the breach. Gang/Drug nuisance notices are the only 5 day notice in Wisconsin that does not allow the tenant the opportunity to cure the breach.

Click here for a printable table that summarizes the various types of notices that a residential landlord in Wisconsin can serve on his tenant.

If you need more information on how to serve a notice on your tenant, including the 5 Day Notice for Drug/Gang Nuisance, you should refer to my earlier post on that topic.

If you would like to learn more about landlord-tenant law please consider attending Landlord Boot Camp which is sponsored by the Apartment Association of Southeastern Wisconsin, Inc. I will presenting this all-day seminar on Saturday, February 26, 2011 from 8:30 am - 5:30 pm. Contact Paulette at 414-276-7378 or paulette@apartmentassoc.org to register.

SMALL CLAIMS BENCH/BAR MEETING: Milwaukee County Gives Clarification Regarding Including Late Fees In 5 Day Notices and Other Issues

The Milwaukee County Small Claims court has reinstituted its monthly Bench/Bar meetings. These meetings allow the Milwaukee County Small Claims Court, including Judge Jane Carroll (presiding small claims judge) and the court commissioners, to come together with attorneys that appear regularly in small claims court, to discuss issues and concerns.

The most recent small claims bench/bar meeting was held on Monday, December 6, 2010. I was able to attend the meeting and found it to be very insightful. The meeting was attended by attorneys for tenants (Legal Action of Wisconsin, Inc.), attorneys for landlords (myself and a few others), the attorney for the AASEW, court commissioners, small claims judge, and other court staff. The overall response to the meeting was very good and Judge Carroll indicated that another meeting would be scheduled in January.

It was very enlightening -- and helpful -- to hear everyone discuss issues of concern and to learn the thought process behind certain rules and procedures in small claims court.

For those of you that could not attend the meeting, I have attempted to provide a summary of the discussion, below:

- Judge Carroll explained that she felt that nothing was wrong with a landlord including a late fee in a 5 day notice as long as the tenant was under a lease for a term as opposed to a month to month or other periodic tenancy.

Back in March of 2009 or so, when Judge Siefert was still the small claims judge, evictions were being dismissed if the landlord included late fees in the 5 day notice which was served on the tenant. Here is a post on that topic that I previously wrote.

It was origianlly explained to me several months ago, that the reason for this new policy was that the court was now reading the statute very strictly, and sec. 704.17(1), Wis. Stats. (regarding notices in month to month situations and other periodic tenancies) and sec. 704.17(2), Wis. Stats. (regarding notices in leases for a specific term) said that a 5 day notice could be given to a tenant for failure to pay "rent." "Rent" was strictly interpreted to include rent -- not late fees, security deposit amounts not paid, damages owed etc.

The discussion on this issue at the bench/bar meeting clarified that the court considered a tenant's failure to pay a late fee to be a "breach of a covenant or condition of the tenant's agreement" rather than a failure to pay rent and therefore a landlord would need to use a different 5 day notice -- one for breach other than failure to pay rent -- as opposed to a 5 day notice for failure to pay rent, in that particular cotext.

Judge Carroll said that she saw no problem with a landlord combining the two notices, as long as the tenant was under a lease for term, thus allowing a landlord to include a late fee in a 5 day notice for failure to pay rent.

The combining of notices (to include a late fee and the past due rent amount) would NOT be allowed (and could result in the dismissal of an eviction) if the tenant was under a periodic tenancy, such as a month to month tenancy. The reason for this distinction is that the Wisconsin Statutes do not allow a landlord to serve a tenant with a 5 day notice for the breach of lease for other than non-payment of rent. If there is a breach of the lease for anything other than the non-payment of rent, in a month to month or other periodic tenancy, the Wisconsin Statutes require that a 14 day notice be used.

The court further explained that if a tenant was under a month to month or other periodic tenancy, that a landlord could combine the notices (failure to pay rent and breach of agreement other than failure to pay rent) into a 14 day notice if the landlord wanted to include a late fee along with the rent owed. It should be noted however that 14 day notices do not allow a tenant the opportunity to cure the breach.

If this sounds confusing to you, you are not alone -- IT IS CONFUSING!! This is an example of the minutia of the law.

A quick summary:

1. It is OK to include a late fee in a 5 day notice for failure to pay rent as long as the tenant is under a lease for term (as opposed to a periodic tenancy like a month to month).

2. It is NOT OK to include a late fee in a 5 day notice for failure to pay rent if the tenant is a month to month tenant. In that case the 5 day can only list rent owed OR the landlord should use a 14 day notice if the landlord wants to include a late fee.

Truthfully, I think the above will cause more confusion for landlords that are representing themselves (pro se) and for attorneys who do not specialize in landlord-tenant law. To keep things simple I am still going to reccomend that my Milwaukee County landlord clients not include late fees in their 5 day notices.

- Small claims court will NOT be splitting up the 2 pm (initial appearance on evictions) court calandar as it did last year.

Many of you may recall the attempt by the courts to reduce the amount of people sitting in room 400 during the flu season last year. The goal was to prevent people from spreading the flu and so the court split the eviction calandar in half and made some landlords appear at 2 pm and others appear at 3 pm.

If you were a landord or attorney with multiple properties having multiple owners (some with names in the beginning of the alphabet and some toward the end of the alphabet), this often met you were stuck in small claims court even longer than usual. Even with the splitting of the court's calandar there were still a lot of people sitting in room 400 at one time - so I'm not sure that the transmission of the flu was really reduced. I was happy to learn that the court would be forgoing this splitting of the calandar this season.

- The court asked for everyone's thoughts regarding requiring a landlord to provide written notice to a tenant that defaults on a stipulated dismissal, in all circumstances.

Currently, if a tenant enters into a stipulated dismissal of an eviction action and agrees to either vacate by a date certain or remain in the unit and pay past due rent under a payment plan, and the tenant defaults on the stipulation, a landlord may come to court and file an Affidavit of Default and obtain a judgment of eviction and a writ of restitution WITHOUT having to provide the tenant with any notice.

Under a slightly different scenario, it is the policy of small claims court currently, that if the tenant enters into such a stipulated dismissal outside of court (i.e. signs the stipulation at the office of the landlord) and therefore neither the court nor the landlord's attorney explains the stipulation to the tenant, and should the tenant default, the landlord MUST provide written notice to the tenant of the default and provide the tenant with the date and time that the landlord will be coming to court to request the judgment of eviction and writ.

Judge Carroll expressed concern that some of these stipulations, notably those that involve payments that will occur several months into the future, should possibly require written notice to the tenant. Judge Carroll indicated that in some of the stipulated dismissals that she approves in her court (as opposed to those approved by the court commissioners in room 400) she requires the landlord to provide written notice to the tenant of the default, if the default occurs 5 months or more after the stipulation was entered into. Judge Carroll's concern was that some tenants would default on the stipulation and think they were working things out with the landlord to remedy the default, only to be surprised when the Sheriff was at the door ready to evict the tenant, thus leaving the tenant little time to move.

Many suggestions and opinions were offerred during the discussion. I indicated that requiring another level of notice to the tenant would just cause further delay to the landlord in getting possession of his/her rental property and would allow the tenant another opportunity to argue that they didnt receive the "notice" and therefore should have additional time to vacate. One suggestion was to require landlords to send a letter via regular U.S. mail to the tenant within 48 hours after going into court to file the Affidavit of Default and obtaining the eviction judgment and the writ. Another suggestion was to require such notice only in situations in which the landlord and tenant modified (orally or in writing) the terms of the stipulated dismissal. Yet another suggestion was to require such a notice only when the default occurred X number of months after the stipulation was entered into.

No decision was made to modfify the notice requirements in defaults of stipulated dismissals but the court appreciated everyone's thoughts and input and indicated that the topic may be addressed again in the future.

- Judge Carroll expressed concern with "proving up" modifications to stipulated dismissals or other agreements.

Judge Carroll indicated that she has witnessed many instances in which a landlord, who has already received a judgment of eviction and a writ, would then attempt to work with a tenant so that they could remain in the unit, rather than executing that writ with the Sheriff. Nothing is wrong with attempting to work to keep the tenant in the unit in, Judge Carroll explained,but what is a problemis that these agreements are not being put in writing. To avoid confusion, and possibly additional litigation, she emphasized that any agreement resulting from such negotiations should ber put in writing. Modifications to previosuly enetered into agreements are not being put in writing and this is resulting in the Court seeing a lot of "he said, she said" sitautions.

The practical effect of failing to memorialize such agreements or modifications often results in the scenario below:

At some point in time the landlord decides to stop working with the tenant to keep them in the rental unit, and tenders the writ to the Sheriff. The Sheriff gives the tenant a 24 hour notice before executing the writ which causes the tenant to run into court and file a motion to reopen the judgment of eviction. The tenant argues that while a writ was granted to the landlord, since that time the landlord began to work with the tenant to allow them to remain in the unit. The landlord told the tenant that they could stay if they did X and Y (or at least that is what the tenant "heard") and the tenant has done X and Y, so the landlord should not be allowed to have the writ executed becasue of the new agreement. The court then schedules a hearing on the tenant's motion to reopen the eviction judgment -- which results in a stay of the execution of the writ. The landlord now has to appear in court again and both the tenant and the landlord have differernt versions of their discussions and the court has to sort through all of this -- with nothing in writing to support either side's argument.

The court understands that landlords would often like keep a tenant if possible, and that is the reason for a landlord attempting to "work with" a tenant even after a writ has been obtained. But as Judge Carroll pointed out, because these modification are not put in writing there is often disagreements as to what was agreed to between the parties.

My thoughts on this issue are simple: (1) If you have a writ, execute it and remove the tenant from your rental property -- the time for trying to work with the tenant so that they can remain in the unit is long past if you have filed an eviction action against them, in my opinion, or (2) if you still want to work with the tenant so that they can remain in the unit at this late date ----- put the agreement in writing, using clear and simple terms tht the tenant, the landlord, and the court, can understand and interpret.

Milwaukee County Eviction Court Schedule For The Holidays

For those of you scheduling evictions in Milwaukee County, eviction court will be closed on the following days:

- Thursday, December 23, 2010

- Friday, December 24, 2010

- Thursday, December 30, 2010

- Friday, December 31, 2010

Self-Help Evictions (or Why You Should Not Remove The Roof In An Attempt To Evict Your Tenant)

I apologize for the delay in drafting a new post but this has been a crazy week with two trials in the early part of the week and another one tomorrow (all tenants fighting evictions and none of these trials have been or will be easy). But enough with the excuses . . .

I saw a recent article about a landlord in Lusaka, Zambia (Africa) that actually attempted to evict his tenants by physically removing the roof (which was made of iron sheets) to the home. The article states that the landlord "may not have followed the proper procedures to evict the tenant." No kidding . . . . really, I'm sure it would be illegal to remove the roof to a rental unit in order to evict a tenant in any country (but I am just guessing).

I'm certainly no expert in Zambian landlord-tenant law but I do know that in Wisconsin, if a landlord tried attempted to evict a tenant by removing the roof to the rental property, that the landlord would be opening himself/herself up to liability for engaging in what is commonly referred to as "self-help eviction."

Self-help eviction is a genreal term that refers to any attempt to remove a tenant from a rental property other than through the judicial eviction process and the use of the Sheriff.

In Wisconsin, the only way to legally remove a tenant (that refuses to leave) is through the judicial eviction process. Once the landlord obtains a judgment of eviction and is issued the writ of restitution, should the tenant still fail to vacate the unit, the only legal avenue that the landlord has to reclaim his/her real estate in Milwaukee County is to execute the writ with the Sheriff.

Yes, you heard me correctly! Even if the court has ordered the tenant out of the rental unit, and the tenant intentionally ignore the court's order, the landlord still cannot force the tenant out of his/her property. The landlord must engage the services of the Sheriff to forcibly evict the tenant.

It is illegal in Wisconsin for a landlord to engage in self-help eviction. Examples of self-help eviction would include the following:

1. Changing the locks to the rental unit.

2. Cutting off all utilities to the unit.

3. Removing the outside door to the rental unit.

4. Taking all of the tenant's belongings and putting them out on the curb.

5. Harassing the tenant in order to make them leave.

6. Removing the roof to the rental unit . . .

Wisconsin Administrative Code, ATCP 134.09(7), entitled Prohibited Practices, states that, "No landlord may exclude, forcibly evict or constructively evict a tenant from a dwelling unit, other than by an eviction procedure specified under ch. 799, Wis. Stats."

ATCP 134.08 (1), which lists prohibited rental provisions, also prohibits a landlord from including a clause in his or her rental agreement that authorizes the eviction of a tenant from a unit other than by the judicial eviction proceeding set forth in Ch. 799, Wis. Stats.

Many municipalities, such as Milwaukee and Madision, also have local ordinance that also prohibit self-help evictions.

While Chapter 704 of the Wisconsin Statutes does not specifically prohibit non-judicial forms of eviction, its legislative history states that the procedures for eviction set forth in Ch. 704 and Ch. 799 (Small Claims Procedure) are the exclusive means of conducting an eviction.

I believe (and hope) that most landlords understand that they cannot forcibly remove a tenant from a rental unit on their own. I think that most landlords no that if a tenant will not leave voluntarily that they must file an eviction lawsuit against the tenant. What I think many landlords do not understand however, is that after they have filed the eviction and obtained a judgement of eviction ordering the tenant to vacate the rental property, that if the tenant still refuses to leave, that the only legal avenue the landlord has is to execute the writ of restitution with the Sheriff. This understandably upsets landlords because it results in additional time, delay and money. In Milwaukee County it costs $125 to hire the Sheriff to evict the tenant and requires the posting of approximately $350 with a moving company.

Despite this additional cost and aggravation, this is the law in Wisconsin. I would alert any landlord that is thinking of skipping this part of the eviction process, and resort to self-help, to strongly reconsider.

The penalties for engaging in a self help eviction are sever. A violation of ATCP 134, which precludes self-help eviction, allows the tenant to sue the landlord for double his/her damages and recover his/her attorney's fees.

So if you find yourself on the wrong end of a lawsuit for self-help eviction you could end up paying the tenant's damages times two, the tenant's attorney's fees, all associated court costs, along with your own attorney's fees. Trust me, I have defended several landlords in lawsuits alleging self-help eviction and the outcome can be very expensive. Even if the landlord prevails in the end and a judge or jury decides that there was no self-help eviction, the costs in time and attorney's fees to defend against the lawsuit can be substantial. Don't risk it.

I always encourage my clients to error on the side of caution. If you are unsure whether or not a tenant has vacated the unit then you should file an eviction lawsuit and retain the services of the Sheriff to return the property back to you. If you use the Sheriff's services and the Sheriff removes the tenant, or otherwise determines that the unit has been abandoned, should a tenant later decide to file a lawsuit for illegal eviction s/he will need to sue the Sheriff, not the landlord. Using the Sheriff is a big CYA.

So the moral of this blog post is simple --- if you want your tenant to leave your rental property you should not remove the roof of the rental unit : )

What Is The Effect On The Eviction Process If A Tenant Files Bankruptcy?

I have had a number of people ask me over the last several months to address what effect a tenant filing bankruptcy has on the eviction of that tenant. I have been delaying writing that blog post and I apologize for that. Bankruptcy is a tricky area of the law, and I am by no means an expert in bankruptcy law, but I will attempt to provide you with a general summary of how a tenant filing bankruptcy effects a landlord's attempt to evict that tenant.

Once an individual files bankruptcy (which I will refer to as "BK" for short to prevent having to type the word "bankruptcy" 25,000 more times during this post) all creditors of the debtor (person filing BK) are "stayed" from pursuing the debtor for repayment of any monies owed. This is referred to as the "automatic stay" and is specifically addressed in Title 11 of the United States Code (U.S.C.) at section 362. The automatic stay applies whether the individual files for BK under Chapter 7 (liquidation) or under Chapter 13 (reorganization).

There are some exceptions, but for the most part, the "automatic stay" prevents any creditor from attempting to collect a debt from the debtor. Before a creditor can pursue the debtor for money owed the automatic stay must be "lifted" by the BK court. So, essentially, you must get permission from the BK court before you can attempt to collect.

The need to seek permission from the BK court applies to a landlord that has not been paid rent by his/her tenant, if the tenant has filed for BK, as well. Practically speaking, this means that a landlord cannot telephone a tenant to ask when they are going to pay rent that is owed, a landlord cannot draft and serve a 5 Day Notice (or a 14 Day notice) on a tenant, a landlord cannot file an eviction action against a tenant, if the tenant has filed for BK.

As many of you who have already gone through the eviction process well know, the entire process can take anywhere from several weeks to months to complete. All the while you have no rent coming in. If your tenant has filed BK, the process will take even longer.

In order to "lift" the automatic stay, a landlord must file a Notice of Motion and Motion To Lift The Automatic Stay with the BK court. There is a filing fee that must be paid. The tenant/debtor then has a period of time in which to reply to the motion. Next, a hearing will be scheduled on the motion. This hearing is typically not even scheduled until after the time has passed for the tenant/debtor to reply to the motion, then due to the BK court's heaving calandar, the hearing will often be scheduled out several weeks into the future.

In the motion, and at the hearing, the landlord will need to set forth the pertinent facts and law and ask the BK court to lift the stay in order to allow the landlord to serve the tenant with a notice to pay or vacate, and if needed, follow that up with the filing of an eviction. There are various scenarios that can play out at the hearing -- too many to address in this post. Oftentimes, if the BK court determines it is feasible, the BK court will attempt to broker a deal if the tenant/debtor wants to continue to reside in the unit -- this often entails the landlord being strongly persuaded to allow the tenant/debtor to continue residing in the rental unit in exchange for the tenant/debtor agreeing to reimburse the landlord for past due rent via a payment plan.

One exception to the automatic stay that can greatly help landlords, is if the landlord has already obtained a judgment of eviction against a tenant, prior to the tenant filing BK, then the automatic stay does not apply and the landlord is allowed to execute the writ with the Sheriff and have the tenant removed from the rental unit (11 U.S.C. Section 362(b)(22)). In order for this exception to apply, the judgment of eviction must already have been granted prior to the tenant filing BK. If no judgment of eviction has been entered, then it is irrelevant whether or not the landlord has already served the 5 Day Notice, filed the eviction lawsuit, had the eviction lawsuit served on the tenant, or already appeared in court ---- the automatic stay will still apply.

It should also be noted that if a landlord has obtained a judgment of eviction prior to the tenant filing BK, this only allows the landlord to proceed with the execution of the writ. It does not allow the landlord to pursue the tenant for money owed (what is often referred to in Milwaukee County as the 2nd and 3rd casues of action). If a landlord wishes to obtain a money judgment against the tenant/debtor, s/he would still need to seek relief from the automatic stay from the BK court.

As you can see, a tenant's BK filing can have a HUGE impact on a landlord's ability to evict a tenant and recover possession of the rental unit. Once a tenant has filed for BK, a landlord must stop all attempts at collecting past due rent from the tenant or evicting them. Failure to abide by the automatic stay can result in a landlord being sanctioned by the BK court and if a landlord "willfully" violates the automatic stay, the injured party (the tenant/debtor) can recover actual damages from the landlord, including court costs and attorney's fees, as well as punitive damages.

EXECUTION OF WRIT: Part 2 - The Details

Last week I provided some basic information about what is involved in the execution of a writ of restitution (eviction) and how the process works. With this week's post I wanted to provide everyone with some additional -- more detailed -- information about the execution process. I attempted to group these tidbits of info by category. Much of the information below is specific to Milwaukee County and the Milwaukee County eviction squad.

General

- The applicable Wisconsin Statute regarding executing a writ is 799.45, Wis. Stats.

- Milwaukee County Eviction Squad's phone number is (414) 278-5030.

- A typical eviction move-out takes 1 hour.

- Approximately 15-20 evictions are performed per day.

- There is both a 1st and a 2nd shift that performs evictions. The 1st shift arrives at the office around 7 am. The 2nd shift works until 8 pm.

- The landlord should alert the Sheriff if any of the following apply: (1) the tenant has mental health issues, (2) there are dangerous dogs residing in the unit, (3) the tenants are believed to be involved with drug dealing, (4) there are guns on the property, (5) the tenant is elderly and/or disabled and has no place to move to or family to assist him/her.

The reason that the Sheriff wants to be notified of (1) - (4) is for the Sheriff's own safety. If there is a mentally unstable tenant, dogs, drugs, guns, or some other factor that might result in the increased risk of injury, the Sheriff wants to be notified of this in advance so that they can have back-up near by. The execution of a writ can be very dangerous. Tenants who are being displaced from their homes are often emotional (understandably so). I have heard of Sheriff's deputies being injured and even killed while performing an eviction. If a landlord has any inkling that there could be issues during the eviction this should be communicated to the Sheriff's Department.

The reason that the Sheriff wants to be notified of (5) (if the tenant is elderly and/or disabled and has no family to assist or place to move to) is because the Sheriff will then contact the Department of Aging or a social service agency prior to the eviction so that someone can be on hand to assist the elderly and/or disabled person in locating a safe place.

The best way to notify the Sheriff of any of the above conditions is to attach a note to the paperwork that you are filing with the Sheriff. This way the clerk can pass that note along to the eviction squad along with the Writ.

- After the tenant's property has been removed, the tenant and any other individuals living in the unit will be escorted out of the unit. The Sheriff will put a placard on the door. If the tenant returns and enters the unit after the eviction has occurred the police should be called. The Sheriff cannot make a tenant leave the apartment complex or neighborhood as the Sheriff only has the authority to remove the tenant from the unit.

Eviction Route

- The eviction squad performs all evictions on the south side of Milwaukee first and then they move to the north side.

Notification To Landlord

- The Sheriff will do its best to notify the landlord of the date and time for the eviction on three different occassions: (1) the night before the eviction is scheduled, (2) at 7:30 a.m. the morning of the scheduled eviction, and (3) as they are driving to the property to perform the eviction.

Moving Companies

- Certain moving companies are used only on certain days of the week in Milwaukee County. So a landlord does have some control over what day of the week his/her eviction will occur by choosing who to hire as the moving company. If Eagle Movers has been retained then the Sheriff will schedule the eviction for Monday, Wednesday, or Friday. If Aetna Movers are hired then the eviction will occur on a Tuesday. If Dweyer Movers (owned by Eagle Movers) are used then the eviction will be on a Thursday. Wednesdays are reserved for JC Triplett.

Appliances

- If the landlord provides appliances with his/her rental unit then the landlord should notify the Sheriff of this. The landlord should also provide the Sheriff with information about the type of appliances, manufacturer, color etc. If the Sheriff is not advised of this information and the tenant tells the moving company that the appliances are his/hers, there is little the Sheriff can do to prevent this type of theft.

Storage Lockers

- If the tenant has property stored in a storage locker which needs to be removed, the Sheriff needs to be told of this. If the landlord does not know which storage locker is the tenant's, the Sheriff will not remove any items from any of the lockers as they could be held responsible if they remove items from the wrong storage locker.

Tenant's Personal Property

- The Sheriff has the authority to decide what of the tenant's belongings are of no value (junk) and what is valuable and should be packed and moved to storage.

- Neither the Sheriff nor the moving company will remove a tenant's clothing. This rule is in place for safety reasons because in the past the Sheriff/movers were stuck by needles that were left in clothing.

- Only large items will be removed. Smaller items will be left in the unit for the landlord to remove.

- If the tenant's property is infested with roaches, bed bugs, or some other critter, the items will NOT be moved. Moldy items will also not be placed into the moving truck. The moving companies do not want to help spread these infestations throughout the city so the removal of such property will be left to the landlord.

- Once the Sheriff determines what is junk/garbage, the landlord then has a choice to either leave the junk in the property (which the landlord can then remove later) or have the moving company haul everything to the curve (which the moving company will charge the landlord for doing).

- If a tenant is present, and his/her property is determiend to be of value, the tenant is given a choice as to what should be done with his/her belongings. The property can be moved and placed into storage (which the tenant will then be required to pay for if s/he wants the possessions back) or the tenant can opt to have his/her property placed at the curb (for the tenant to remove).

- If a tenant's personal property is going to be placed into storage, the moving company must put the property into boxes, which the landlord will pay for. While it is frustrating for the landlord to have to pay for boxes to house the tenant's property, the moving company cannot just throw the tenant's belongings haphazardly into the back of the truck for many reasons (safety and liability are two that come to mind). The property will also be inventoried.

Liability for Execution of Void Writ

- The Sheriff will be liable to the tenant for any damages resulting from the execution of a writ that was given to the Sheriff beyond the 30 day period. The Sheriff will also be liable for any resulting damages if the Sheriff executes a writ beyond the 10 day period. Wolfe-Lille v. Kenosha County Sheriff, 699 F. 2d 864 (7th Cir. 1983).

Cancellation of Writ

- Landlord must have the docket number that was giving at the time that the paperwork was filed with the Sheriff, in order to cancel an eviction. Only the Sheriff and the landlord are given the docket number. The tenant should NEVER be given the docket number or else s/he could cancel their own eviction.

- If a landlord cancels an eviction, the Sheriff discards the paperwork. As a result, a landlord cannot "un-cancel" an execution of the writ. A landlord should never cancel the eviction with the Sheriff unless they are certain that the tenant has vacated.

Costs of Execution

- The Sheriff charges $112.50 per hour for their time in executing a writ.

- The total cost to execute the writ will be based on the actual hours expended by the Sheriff. The costs will be taken out of the $130 deposit that was previously posted. Any remaining monies will be returned to the landlord within 4-8 weeks. If the total cost exceeds the $130 deposit, the Sheriff will send a bill for the overage.

- The cost of the Sheriff and the moving company are all chargeable to the landlord. However these costs will be taxed and added to any money judgment that the landlord pursues against the tenant -- whether or not the judgment is collectible, is a whole different issue.

- The only costs that are the truly the responsibility of the tenant (aside from if the landlord obtains a judgment against the tenant and actually collects on it) are the costs incurred for the storage of the tenant's belongings after the delivery of the property to the storage facility.

EXECUTION OF WRIT: Part 1 - The Basics

I have noticed a trend in the last several months of more and more tenants refusing to leave a landlord's rental property even after the landlord has obtained a judgment of eviction against the tenant and been issued a Writ of Restitution ("writ"). As a result of this trend more and more landlords are being forced to go through the process of having the writ executed. The execution of the writ is the process whereby the Sheriff actually removes the non-vacating tenant and returns possession of the property to the landlord.

Background Information:

Most eviction lawsuits have 3 causes of action or claims. The first cause of action is for return of the rental property. This is often referred to as the "eviction" portion and in Milwaukee County it is called the "1st cause of action." The 2nd and 3rd causes of action have to do with the money that the tenant might owe the landlord. The 2nd cause refers to the past due rent that may be owed and the 3rd cause refers to any claims for physical damages to the unit and/or holdover damages. Together the 2nd and 3rd causes of action are often referred to as the "money claims."

This post will focus on the 1st cause of action generally, and specifically, on what a landlord must do s/he has been granted a judgment of eviction and received a writ of restitution but the tenant continues to reside in the unit.

A landlord typically obtains a judgment of eviction (and the ensuing writ) in one of three ways. First, the tenant fails to show for court and the landlord is granted a default judgment. Second, the tenant appears in court and contests the eviction thus necessitating an eviction trial before a judge. Assuming the landlord proves his/her case, the landlord obtains a judgment of eviction and is issued a writ. Third, the tenant appears in court and admits that they are in breach of the lease and the court commissioner or judge grants a judgment of eviction against the tenant based on his/her admission and issues a writ.

Many landlords mistakenly believe that after they obtain a judgment of eviction and a writ that they can then change the locks and toss out the tenants personal property if the tenant fails to leave. DO NOT DO THIS. If the tenant fails to vacate the unit, even after there has been a judgment and a writ issued, the only legal way to remove the tenant is to hire the Sheriff and to have the writ executed (sec. 799.45, Wis. Stats.) If a landlord attempts to illegally evict a tenant (also referred to as a "self-help" eviction) th elandlord is openeing himself/herself up to either civil or criminal liability, or both. The tenant can sue the landlord that engaged in a self-help eviction for double damages and attorney fees. While it may seem "unfair" to require the landlord to expend more time and money after s/he has already obtained a judgment of eviction against a non paying tenant, that is what the law requires.

The Writ of Restitution:

Along with obtaining a judgement of eviction comes the issuance of a Writ of Restitution (writ). A writ is a document that orders the Sheriff to evict the tenant and anyone else that has occupancy of the rental unit. The writ also contains additional information that will assist the Sheriff in executing the writ, such as the name and address and phone number of the landlord, the landlord's attorney, and the defendant/tenant.

In Milwaukee County the court does not give you a writ. Instead the court gives you an Authorization for Writ. The landlord must then take that Authorization to the Clerk of Courts and pay $5 in order to obtain the actual writ. The landlord must then complete the writ and tender it to the Sheriff.

Each county handles the distribution of the writ differently. In Waukesha County (at least last time I was there) a landlord is required to return to court the following day to obtain the writ and pay the fee. The Clerk completes the writ for you in Waukesha. In Racine County, a landlord should pick up a blank writ from the Clerk of Courts before court, complete all the requested information on the writ, and then present it to the judge when the case is called and the judge will sign the writ. No fee is required in Racine County. In Kenosha County, a landlord must go to the Clerk of Courts after court and pay $5 and the Clerk will then complete the writ for you and hand it to you. It is advisable to talk to the Clerk of Courts in whatever county you own rental property about the process of obtaining the writ before you appear in court.

A writ is only valid for 30 days. If a landlord does not tender the writ to the Sheriff within the 30 day period the writ will expire and the landlord will need to start the entire eviction process over again in order to remove a tenant that is still residing in the property. Yep, you heard me correctly. If the landlord lets the writ expire, the landlord will need to serve the tenant with a new notice, purchase a new summons and have it filed and served on the tenant, appear in court again etc. etc. Do not let the writ expire! New landlords (or landlords with no previous eviction experience) should not let a tenant dupe them into not filing the writ with the Sheriff within the 30 day period. Tenants may tell you that they just need 10 more days, and then another 5 days, and then 3 more days and they will be out, etc. etc. If all those extra days add up to 30 - the landlord has only himself/herself to blame.

Executing The Writ:

In Milwaukee County, only the Sheriff can legally execute the writ. Before the Sheriff will do this however the landlord must hire a moving company. The landlord must obtain a Letter of Authority from a licensed and bonded moving company and in return the landlord will have to shell out a refundable deposit of approximately $350 to the movers.

Once the landlord has engaged the services of a moving company the landlord should go to the Sheriff's Department for Milwaukee County and bring along the following items:

1. The Authorization for Writ

2. The fully completed Writ of Restitution

3. $130 deposit to give to the Sheriff

4. A set of keys to the unit to give to the Sheriff.

By law, once the writ has been delivered to the Sheriff, the Sheriff must execute the writ within the next 10 days (sec. 799.45(5), Wis. Stats.) Due to the large amount of evictions in Milwaukee, it typically takes the Sheriff the full 10 days. Oftentimes the Milwaukee County Sheriff will mail the tenant a 24 hour notice the day before the planned eviction to give them one last chance to leave on his/her own. This notice is not legally required and so it is irrelevant if the Sheriff does not do it for every eviction. Think of it as a courtesy.

If the tenant still has personal property in the rental unit when the Sheriff arrives to execute the writ ,the Sheriff will then determine what of the tenant's personal property should be stored by the moving company and what property is considered to have no value and can be disposed of. After the tenant's personal property has been dealt with, and if the tenant is still residing in the property, the Sheriff will direct the tenant -- and any others residing in the unit -- out of the unit and insure that the unit is secure. If the tenant refuses to leave the unit, s/he will be arrested for Disorderly Conduct. It should be noted that the Sheriff can make the tenant leave the specific rental unit but cannot make the tenant leave the apartment building or complex. If the tenant refuses to leave the building then the landlord must call the police.

It is helpful if the landlord or his agent can be present during the eviction to answer any questions that the Sheriff or moving company may have. I have heard of one instance where a tenant told the Sheriff that the refirgerator and stove in the unit were purchased by the tenant and were his. This was not the truth. The landlord was not present during the eviction however to refute the tenant (or to produce the rental agreement to the Sheriff which would have shown that the landord supplied a refrigerator and stove along with the rental) and the appliances were taken off to storage. The landlord had a difficult time retrieving his property and had to pay a storage fee to get the appliances back.

In smaller counties -- those with a population of less than 500,000 -- a landlord is allowed to remove, store, and dispose of a tenant's property himself/herself and the only role that the Sheriff performs is to supervise the landlord. I have not had any experience with this type of eviction, so I can not provide yu with any more information other than this option is legally available to landlords who own rental property outside of Milwaukee County.

Next week I will blog on some of the smaller details involved with executing a writ that will assist you in the process.

Judge Siefert to Rotate Out of Small Claims Division in August; Judge Carroll to Replace

Walking into the courthouse today I ran into an acquaintance of mine who works within the court system. During our chat I learned that Judge John Siefert, who is currently presiding over the Small Claims Division (which includes all eviction actions) in Milwaukee County, will be rotating to a different calandar come August 1st.

Judge Jane Carroll will be replacing Judge Siefert as the Small Claims judge. Judge Carroll is currently presiding at Children's Court in Wauwatosa. She is a former District Attorney and has not previously been a judge in the Small Claims Division.

Finally, Some Legislation That Actually Assists Landlords - Senate Bill 607

Senators Plale, Hansen, and Lasee introduced Senante Bill (SB) 607 yesterday. What a breath of fresh air it is to read this bill. Rather then making landlords jump through more and more hoops to protect our tenants and rental property, this bill actually assists us in doing our jobs. I am so used to blogging about proposed legislation that hurts (or at the very least hinders) landlords that this is a nice change.

If passed, this bill will allow a landlord to terminate a tenant's tenancy, regardless if they are a month-to-month tenant, tenant under a lease for 1 year or less, or a tenant with a lease for more than 1 year, if the tenant or the tenant's guest, commits certain crimes, in property or near the property.

Currently if you have a tenant under a lease for one year or less or more than one year (as opposed to a periodic tenancy like a month-to-month) and if that tenant commits a crime you are legally prevented for terminating that tenant's tenancy and evicting them. The current law states that if a tenant under a lease commits a breach (including criminal activity) that they landlord MUST serve them with a 5 day notice that allows the tenant the opportunity to cure the breach.

Currently the only two exceptions to the above, are the very limited situations in which the tenant has created a gang or drug nuisance at the property AND the landlord has received a written notice of drug or gang nuisance from a law enforecement agency. Only in these two limited circumstances can a landlord serve a 5 day notice on the tenant that does not afford the tenant the right to cure the breach.

To better illustrate the current status of the law, here is an example:

Tenant A gets drunk and runs around the apartment complex brandishing a gun and threatening to shoot anyone that he passes. Assuming that Tenant A is not arrested and hauled off to jail, Tenant A's landlord is not legally allowed to terminate Tenant A's tenancy and file an eviction action as a result of this criminal behavior if Tenant A is under a lease for one year or less or a lease for more than one year. The only legal recourse that the landlord has is to serve Tenant A with a 5 day notice which affords Tenant A with the opportunity to cure the breach (the criminal activity) or vacate. How does Tenant A cure the breach? By not running around the apartment complex within the next 5 days brandishing a gun and threatening to shoot people. Ridiculous I know, but that is all Tenant A must do to cure his breach and if he does that, the landlord is legally required to keep him as a tenant as long as the tenant is under a lease.

The law as written puts a landlord in a very difficult position as it requires the landlord to give the tenant a second chance even though the landlord has notice that the tenant has violent tendencies or is doing things that could jeopardize the safety of other tenants. I have always been concerned about the possibility that Tenant A, after committing the 1st breach (crime) and then curing the breach, then proceed to commit another crime and in so doing causes harm to another tenant. If that was to occur another innocent tenant is injured (or at the very least scared out of their socks) and there is always the possibility that the injured tenant might contemplate suing the landlord for failing to protect them from danger since the landlord had knowledge of Tenant A's criminal tendencies. This would be a catch-22 sitaution for the landlord if I ever heard of one.

Section 8, site-based, subsidized housing prevents the above situation from occurring by allowing landlords to terminate the tenancy and evict a tenant (or family member or guest) that has committed certain criminal activity on or near the subsudized rental property, even if the tenant is under a lease for term. I call this the "One Strike" law. Market rate (non-subsidized) housing does not have a "one strike" law ---- but with this proposed legislation, we may have one in the future.

SB 607, if passed, will allow a landlord of market-rate housing to terminate the tenancy of and evict a tenant, even if they are under a lease, if the tenant or the tenant's guest commits certain crimes at the property or near the property, by issuing a 5 day notice with no right to cure.

The crimes that would allow a landlord to terminate a tenant's tenancy include:

1. Battery (or related crimes),

2. Endangering safety by use of a dangerous weapon (or related crimes),

3. Criminal gang activity,

4. Criminal damage to property (or related crimes),

5. Prostitution (or related crimes),

6. Harassment (or related crimes),

7. Any other breach of the rental agreement that jeopardizes the health, safety, or welfare of the owner, his/her agent, or another tenant.

SB 607 also allows a landlord to terminate the tenancy of a tenant under a periodic tenancy (month to month) that has committed one of the aforementioned crimes, by serving them with a 5 day notice with no right to cure. This proposed modification of the law, while helpful, is not as important as the above mentioned changes involving tenants under leases for term, as a landlord with a month-to-month tenant has always had the right to serve the tenant with a 14 day notice to vacate (without a right to cure the breach) or a 28 day notice (for any reason at all). Nonetheless, SB 607 will allow a landlord of a month-to-month tenant to remove a dangerous tenant more quickly then before.

The bill will requires that the landlord give the tenant a written 5 day notice that states the basis of the breach and informs the tenant of his/her right to contest the termination if an eviction action is filed. If the tenant contests the eviction action, the landlord must still prove that the tenant or his/her guest committed the crime.

This bill has been referred to the committee on Judiciary, Corrections, Insurance and Campaign Finance Reform, and Housing.

Please take the time to contact your state representatives and tell them that they should fully support this proposed bill.

Also take the time to thank Brian Fleming - President of Milwaukee RING - for taking the time and effort to bring this major "hole in the law" to Senator Plale's attention. Without Brian's work on this there would be no SB 607.

Milwaukee County Eviction Court to Alter Court Times During Flu Season

A friend of mine who works in the courthouse sent me an email today which she asked that I pass along to my clients and friends in the rental industry. Apparently in an attempt to reduce crowding during the flu season Milwaukee Co. Eviction Court has decided to have certain plaintiffs, based on the spellling of their last name or company name, to appear on intial appearances at 3 pm rather than 2 pm.

Below is the email info I received:

TO ALL PLAINTIFFS in Small Claims eviction cases, effective 10/26/09

If you are a business whose name begins with A thru K or an individual whose last name begins with A thru K, your case will be scheduled in Room 400 at 2:00 p.m.

If you are a business whose name begins with L thru Z or an individual whose last name begins with L thru Z, your case will be scheduled in Room 400 at 3:00 p.m.

Newly Revised 5-Day Notice To Pay Rent or Vacate Now Available at Wisconsin Legal Blank

As many of you know I am the author of the set of Landlord-Tenant forms that are sold at Wisconsin Legal Blank Co., Inc. I am currently in the process of reviewing and updating all of the L-T forms as well as creating a few new ones. At this time however, I wanted to alert you that the revised 5-Day Notice to Pay Rent or Vacate is now available for sale at WLB.

Essentailly the revisions to the Notice include the following:

- I have added language that states that the tenant will still be in default and subject to eviction if they make only a partial payment and/or make a full payment after the 5 day cure period has elapsed. It is my hope that by adding this language it will better protect a landlord that accepts a partial payment or late payment from having their eviction lawsuit dismissed based on a legal theory called "waiver."

NOTE: The best way to avoid a "waiver" arguement is to not accept any partial payment or any payment that is made after the 5 day period has elapsed. Having said that, I am aware that it is very difficult for a landlord to turn away money that s/he is almost certain to never see again if the landlord is evicting a tenant. So if you decide that you want to keep the partial or late payment then the next best option to avoid the tenant prevailing on a "waiver" argument is to place the payment in escrow -- do not cash the check!! -- and send the tenant a letter --- which I refer to as a "No Waiver" letter --- which essentially says that the landlord has received the partial or late payment and that the money will be held in escrow until after the court has decided whether or not to grant the eviction. The 'No Waiver" letter should also state that the money will be appplied to any past due amounts owed after the eviction has been decided and that by holding the money in escrow the landlord is not waiving his/her right to continue with the eviction against the tenant and that it is the landlord's intent to proceed with the eviction and have the tenant evicted. The new language added that has been added to the revised 5-Day Notice now available at WLB has been added as a "safety net" should the landlord not follow one of the two options set forth above.

- I have referenced the applicable Wisconsin Statutes regarding 5 day notices.

- I have made a few other grammatical changes.

I will be sure and let you know when other updated landlord-tenant forms are available at WLB.

MILWAUKEE CO. SMALL CLAIMS COURT'S NEW POLICY REGARDING WHO MAY APPEAR IN COURT ON BEHALF OF A LLC WENT INTO EFFECT SEPTEMBER 1st.

I was attending the regular monthly meeting of Milwauke RING (Real Estate Investors Networking Group) last night and during the "open mic" portion of the meeting I reminded everyone that Milwaukee County Small Claims Court's new policy regarding who may appear in court (i.e. sign court documents and appear in court) went into effect yesterday, September 1, 2009. As I was walking back to my seat two people asked me what that would mean. After the meeting several landlords that own a large number of rental properties also approached me and said they had never heard of this new policy.

Because of this major change and the fact that many people either are not aware of it or do not understand the change I thought it would be prudent to explain what this new policy is before some unsuspecting landlord or management company ends up having their eviction lawsuit dismissed.

For the last month or so the Court Commisioners in Milwaukee County Small Claims Court have been talking to court regulars about the change as well as handing out flyers and posting those flyers on the tables in the courtroom and in the Clerk of Courts Office. Essentially the flyers say:

PLEASE NOTE

In small claims eviction cases, you may only sign complaints (and summons) and appear in court on behalf of a property owner if you are one of the following:

1. The property owner (if the property is not owned by a corporation/limited liability corporation).

2. A full-time employee of the property owner.

3. An attorney.

Employess of management companies or other outside service providers many not sign complaints (or summons)or appear on behalf of property owners.

The biggest group that this new policy will effect is those that own their rental properties in a LLC. For personal liability protection it is encouraged that owners of rental properties transfer ownership to a LLC. However, under this new policy LLC's will only be able to appear in court by either (1) an attorney or a (2) full-time employee of the LLC (this must be supported with evidence such as W2's). Even if you are the sole member of the LLC you will not be able to appear in court on it's behalf unless that LLC pays you a full-time salary. Since most landlords are not a full time employee of their LLC, this means that they will be forced to hire an attorney to handle their evictions in Milwaukee County.

I am not sure exactly what has brought about this change. And no, awyers did not lobby the court for this change (at least this one didn't). There is a Wisconsin Court of Appeals case that says that corporations (becasue they are a separate legal entity distinct from an individual person) may only appear in large claims cases by an attorney in Wisconsin. LLC's are also separate business entities distinct from the individual (and that is why placing your rental properties in a LLC is a great way to protect your personal assets). So it is my guess that Milwaukee County has decided to extend this same reasoning to LLC's. What precipitated that, I do not know.

Whether you agree with it or not is really not important any longer. The court commissioners are behind this policy and it has the support of the current small claims judge as well. If you do not want your eviction tossed out of court you must decide how you are going to comply with this new policy.

How To Legally Serve A 5-Day Notice To Pay Rent or Vacate

There are basically 4 ways in which you can legally serve a tenant with a 5-Day Notice To Pay Rent or Vacate. First, you can personally serve the tenant with the notice. Second, you can serve them by what I refer to as a "substituted" service. Third, you can "post and mail" the notice to the tenant. Fourth, you can serve the tenant via certified or registered mail.

Landlords in Wisconsin are legally allowed to serve the notice to pay or quit on the tenant themselves. This is very different from the service of the eviction lawsuit (summons and complaint) which Wisconsin law will not allow to be served by a landlord or his/her agent.

Set forth below the are the 4 service options (as I categorize them) and the pros and cons of each option.

1. Personal Service: This form of service occurs when the notice is physically handed to the tenant. While this option sounds pretty simple it often ends up being more complicated. It becomes complicated because many landlords believe that if they cannot serve the tenant personally after the first attempt that they are allowed to post the notice on the door and be done with it -- WRONG. Wisconsin Statutes require that the Landlord use "reasonable diligence" before they can resort to service via "posting and mailing." "Reasonable diligence" is not defined in the statutes. As such, what constitutes "reasonable diligence" is decided by the court commissioner or judge that is hearing your case - and oftentimes the definition of "reasonable diligence" will change depending on which judge or commissioner you are before.

In Milwaukee County it has been unofficially declared that "reasonable diligence" means you must make at least 3 different attempts to personally serve the tenant and those 3 differernt attempts must occur on 3 different days and at 3 different times. For example, if you tried to serve the notice on the tenant on Monday at 8 am and they were not home, you would then have to wait until Tuesday to make your 2nd attempt in the afternoon. If you still couldn't personally serve the tenant on Tuesday then you would need to come back on Wednesday and to attempt to serve the tenant again but this time in the evening hours. Three different days at three different times of day. So if your tenant is home and answers the door then personal service is pretty easy. However, if they are not home or are dodging service then you could waste 3-4 days before you can legally "post and mail" the notice. This is an unecessary delay.

Another drawback to personal service is the fact that you may end up face to face with your tenant. If there is some animosity between you and the tenant (as there often is when the tenant realizes that you will be evicting them if they don't pay rent) personal sevice of the notice could result in a personal confrontation.

2. Substituted Service: The second option is what I refer to as "substituted service" and essentially means you are serving someone else with the notice on behalf of the tenant. I almost never recommend that a client opt for substituted service because of all of the potential problems. Under section 704.21 of the Wisconsin Statutes you can serve a tenant by substituted service by serving a "competent family member who is at least 14 years old and who has been informed of the contents of the notice" or by "leaving a copy of the notice with a person apparently in charge, or occupying, the premises and mailing a copy to the tenant's last known address."

There are many potential pitfalls with substituted service. First, you will need to inquire as to the age of the person you are giving the notice to to insure that they are at least 14 years old. Second, you need to tell them what the notice is and what it means. I have been involved in a case in which the landlord served the tenant's son with the notice knowing that he was 16 years old. However when the case went to court the tenant raised as a defense the fact that her son was mentally retarded and only functioned at a third grade level and forgot to give her the notice. Rather right or wrong, the eviction lawsuit was dismissed for improper service.

Under the second option for substituted service, the landlord must leave a copy of the notice with a person "apparently in charge of the premises, or occupying the premises" and also mail the notice. I have seen many landlords forget to mail the notice under this option and as a result the service was declared improper and the eviction lawsuit dismissed. I have also heard of a situation in which the landlord served the notice on a gentleman (who was not a tenant but based on only being clothed in only boxer shorts he certainly appeared to be "apparently in charge or occupying the premises."), only to find out at the intial appearance in court that the gentleman was someone that the tenant "picked up" at a bar the night before and failede to notify the tenant that he was given the notice but rather threw it in the garbage. I know, I know, you are saying regardless of the "one night stand" throwing th enotice away, it still was a proper service as the landlord mailed the notice to the tenant as well, which he did. I would agree with you 100% but I was told that was not what the court commissioner concluded. Instead the court commissioner stated that becasue of the fact that the "one night stand" threw the notice in the garbage, the tenant didn't have proper notice of her ability to cure the breach by paying the past due rent to the landlord within 5 days, and as such the notice was improper.

Do you still think that serving a notice on a tenant is easy?

3. Post and Mail: As mentioned previously, if after using "reasonable diligence" and trying to serve the tenant by the above methods you are unable to personally serve or serve the tenant by substituted service, then -- and only then -- are you able to "post and mail." To "post" means to place a copy of the notice in a conspicuous location on the property. Oftentimes this is performed by tacking the notice to the tenant's door or sliding the notice under the door. The landlord must also mail the notice to the tenant. Problems arise if the lanldord fails to mail the notice or does not mail the notice on the same day as s/he posts the notice. If the landlord mails the notice the day after the posting then the date of service will be on the date that it was mailed - not the date that it was posted.

Sec. 704.19(7)(b) of the Wisconsin Statutes states that when "posting and mailing" or "leaving a copy of the notice with a person apparently in charge of or occupying the premises," the notice is deemed to have been given on the day of service OR the date of mailing - whichever is later. I have seen numerous cases where the landlord failed to mail the notice on the same day that it was posted and therefore it was determined that the eviction lawsuit was prematurely filed.

4. Certified or Registered Mail: Personally, I feel this is the best way to serve a tenant a 5-Day notice. You are not required to attempt to personally serve a tenant with the notice before serving via certified or registered mail so you can disregard "reasonable diligence." Nor must you attempt to obtain substituted service on the tenant before you can choose to serve via certified/registered mail. Certified and registered mail also does NOT need to be picked up by the tenant in order for the service to be proper. The law merely requires that the notice be mailed via certified or registered mail for it so be legally served. By using certified or regular mail you also eliminate any possible confrontation with the tenant. You eliminate the need to attempt to personally serve the tenant 3 different times on 3 different days at 3 different times of day. You also eliminate all of the potential pitfalls with substituted service.

Serving a notice on a tenant via certified/registered mail is not without complications however. When serving a tenant with a notice via certified/registered mail you must remember to add an additional 2 days for mailing on top of the notice period per section 704.19(7)(c), Wis. Stats. So, in effect the 5-Day notice becomes a 7-day notice. This means that the landord must insure that he does not file the eviction lawsuit (assuming the tenant does not cure the breach by paying the past due rent within the cure period) until at leasr 7 days after mailing the notice via certified or registered mail. Another negative of certified or regestered mail is the cost. If you own or manage many properties and send out a lot of 5-Day notices each month then the cost of certified/registered mail may be prohibitive.

Please be aware that if you own or manage subsidized housing that there are special service requirements for the 5-Day notice that may apply depending on the type of subsidy that is involved.

Update On Who May Represent A LLC in Eviction Court: New Rules To Start September 1st

Those of you that have been following my blog are aware that Milwaukee County Small Claims Court has indicated that it will not allow non-attorneys to represent LLC's in court in the near future.

My earlier posts on this topic can be read here and here.

A fellow board member from the AASEW informed me today that one of the owner's of a property he manages was handed the notice that I reproduced in my earlier post (you can read it here here), as he was leaving small claims court. The notice indicated that he would no longer be allowed to represent his LLC's in small claims court as of September 1, 2009.

He indicated to the commisioner that handed him the notice that he was a full-time employee of the LLC and therefore can appear on behalf of the LLC in small claims court as allowed under Sec. 799.06(2) of the Wisconsin Statutes. The court commissioner's reply was something to the effect that, " I see you down here [small claims court] a lot, and you have many LLC's. There is no way that you can be a full-time employee of all of them or you would have to work hundreds of hours per week."

This issue seems to coming to a head very soon. Unless you are a full-time employee of an LLC, and you have written records to prove this, it looks as if September 1, 2009, will be the deadline by which you will need to have made arrangements to have an attorney represent your LLC's in Milwaukee County Small Claims Court or risk having your case either adjourned or dismissed.

03/23/15 - UPDATE - Act 76 (effective 3-1-14) now allows non-attorneys to represent LLC's

Milwaukee's Chronic Nuisance Ordinance and It's Improper Use Against Landlords

The City of Milwaukee's Chronic Nuisance Ordinance (80-10) is a thorn in the side of many landlords. Essentially the ordinance says that if your property generates more than 3 calls for police service for "nuisance activities" within a 30 day period that the city will charge you for the costs associated with abating the alleged nuisance.

Nuisance activities include the following: harassment, disorderly conduct, battery, indecent exposure, prostitution, littering, theft, possession, manufacture or delivery of drugs, gambling, illegal possession of firearms, keeping a dangerous animal, trespass to land, conspiracy to commit a crime, discharge of a firearm, excessive noise, loitering, public drinking, sale of liquor, possession of counterfeit items, possession or selling of drug paraphenalia, selling or giving tobacco products to children, misuse of emergency telephone numbers, harboring an animal that causes a disturbance, illegal use or sale of fireworks, and truancy. In summary, a nuisance activity is pretty much anything and everything you can think of.

If your rental property is being used as a drug house or is the headquarters for a gang or if you are allowing tenant to run a house of prostitution out of your apartment complex then I agree that your property is more than likely occupying more than its fair share of the police department's time and resources and that the property may be a chronic nuisance. But this is not the only -- nor is it the typical -- situation in which this ordinance is being used against landlords.

Oftentimes landlords are having fines added to their property tax bill or being contacted by the police becasue a tenant called 911 to report a legitimate crime, or because a neighbor (who is mad that they live next to an apartment complex) called the police because s/he doesn't like it when the tenants stand and talk in front of the building, or my all-time favorite, a person (not a tenant or the owner) walked by the rental property and decided to drop their hamburger wrapper on the lawn. All of the above instances qualify as nuisance activities under Milwaukee's ordinance and can result in a property being declared a chronic nuisance.

I have heard from many landlords -- both in my capacity as an attorney representing landlords and as the president of the Apartment Association of Southeastern Wisconsin (AASEW) -- about circumstances in which they have been contacted by the police as a result of examples similar to those mentioned above. I recently received an email from a new AASEW member who was very upset at being in such a situation and contacted the AASEW for assistance and guidance. I have reproduced the member's email, with his permission, ommitting his name and the property address to protect his identity.

I own a 30 unit building at __________________. Last December there were 2 family arguments in which police were called, and a misdialed 911 call. According to the City's Nuisance Ordinance, 3 or more nuisance calls in any 30 day period from a property puts the owner on a list for "supervision" from the district's community liaison officer for a full 12 months. The owner must submit a plan for abatement for acceptance by MPD, fully execute the plan in a timely manner, check for nuisance incidents monthly at MPD Public Records office, and then submit a report and action plan for abatement for each incident.

My plan was approved and executed. I do have continuing nuisance incidents occurring though, but so far only one was a repeat from the same tenant. She had called the police to report that her son was receiving death threats. If my son where receiving death threats, I'd call the police too, but the community liaison officer told me that that was considered a nuisance, and strongly implied that if I didn't deal with it, the property would be designated as a Chronic Nuisance. So, against my better judgment, I filed an eviction. Of course, I was laughed out of court. As any landlord will tell you, a failed eviction action usually means the situation will deteriorate. This is not good business, but the fact is I'm being strong-armed by MPD to act.

I have taken absolutely EVERY action I was directed to take, or suggested I take, by MPD and more. I have responded to nuisance reports in as heavy-handed ways I can muster, with warnings, fines, and 5 Day Notices, to try and satisfy MPD. However, I feel like I'm being railroaded, and no matter what I do MPD will designate it as a Chronic Nuisance.

Please understand that, while my building is by no means the "Ritz", it is also by no means a slum either. Nor am I a slum landlord. This is a nice building in which we have invested heavily, increasing the value, as well as the tax collections for the City of Milwaukee. We turned this building around from a bad property in 2003, with crappy tenants who avoided calling the police like the plague, to a rehabbed property with much better tenants with higher expectations and no qualms about calling the police to demand service (which I pay for).

My understanding is that this ordinance was originally enacted to give the City some ammunition against irresponsible landlords. I fear that MPD is using the ordinance to coerce landlords to enforce the law in their stead. I have asked MPD on several occasions, both verbally and in writing, to provide me with information regarding any citations given to people who are involved in the nuisance activity, and I have gotten none. The ordinance extends to 911 abuse. Why landlords are put in a position where they are required by MPD to enforce 911 abuse is a mystery to me. Why not fine AT&T - it's their line! The whole thing boils down to MPD's inability to enforce the laws, and the abdication of their enforcement responsibilities in favor of coercing landlords to do their job for them, under threat of fines. The whole thing is, in a word, insane. Even if a landlord is successful in eviction someone, the problem just goes somewhere else anyway.

The final insult to me is the fact that MPD's definition of "property" may be a single family home, or a 30 unit building like mine. I get the same 3 call limit per month for 30 families as a single family in a regular house. I pay 30 times more taxes than the single family owner, but I receive 1/30th of the service quota. In my opinion this is an impossible and patently unfair standard.

There are single family homes and condos next to some of my buildings where the tenants are involved in gun play, drugs and prostitution. I have lost tenants due to these neighboring activities. Alas, these are not nuisance properties because there are less than 3 calls per month regarding each property. I have a few family disputes and misdialed 911 calls each month from my 30 family building, and I'm the nuisance.

I thought that this individual's email was extremely well-written and clearly pointed out several of the problems with how the City is applying the Chronic Nuisance property against landlords, such as:

1. Regardless of the size of the property (whether it be a single family home or a 100 unit apartment complex) after 3 "nuisance activities" your property can be declared a chronic nuisance.

2. Many of the so-called nuisance activities are not activities for which a Milwaukee County Court Commissioner or Judge will evict a tenant for participating in. As this person stated, the writer indicaterd, when he tried to evict the tenant he was "laughed out of court." I have been involved in eviction trials where at the close of evidence, rather then evicting the tenant that was selling drugs out of my client's property, the Judger told the tenant that he really didin't need to have 20 people coming and going from his apartment between the hours of 11 pm and 3 am most nights of the week and that he should stop that activity as it wasn't fair to his neighbors. The Judge then denied my clients request for a judgment of eviction but rather scheduled the case for a staus conference in 60 days to see if things improved. If landlords cannot even get obvious drug dealers evicted how are they going to be able to have a tenant that littered, called 911, or made an excessive noise evicted?

3. Some of the 911 calls are legitimate calls for which the police should be called and the owner of that property should not be put in the position of having to choose between receiving a fine and having his/her property declared to be a nuisance or telling his tenants not to call 911 for real emergencies.

4. Oftentimes the property that is attributed with the call is not where the actual "nuisance activity" occurred. I heard of an instance where a woman had gotten into a fight with her boyfriend at her home and then fled, she then stopped at a nearby apartment complex and asked one of the tenant's if she could use her phone to call the police. Seeing that the lady was upset, the tenant allowed her to make the call. The lady called 911. As a result of the tenant being a helpful neighbor to the victim, the tenant's landlord was contacted by the police becasue the telephone call was considered to be an improper use of an emergency number.

I think the police and the Department of Neighborhood Services (which often gets involved in these situations) need to use some "common sense" and distinguish true nuisance activity from other activity rather than classifying everything as a nuisance.

I also think that it would also be helpful for the police and DNS to spend some time in eviction court and observe just how difficult it is to evict a tenant for anything other than failure to pay rent. Maybe after sitting in room 400 of the Milwaukee County Courthouse for an afternoon they will realize that they are living in an alternate universe if they think that a landlord can obtain an eviction judgment against a tenant who litters, improperly calls 911, makes loud noises, or loiters.

I have met with the new Commissioner of DNS, Art Dahlberg, along with other members of the AASEW board, and Mr. Dahlberg was also kind enough to speak at one of the AASEW's membership meetings. In speaking with the Commissioner, he has commented that he agrees that some common sense used when determining if something a a nuisance activity. It is my hope that the addition of some common sense will occur ASAP so that landlords like the one that emailed me above, are not being placed in such an unfair position.

If Milwaukee's Chrnoic Nuisance ordinance has been unfairly applied to you and your rental properties I would appreciate you providing me with the details by adding a comment to this post.

State's Budget Bill Amends Tenant Protection Act

On June 29, 2009 Governor Jim Doyle signed the 2009-11 state biennial budget bill into law. This law in part made modifications to the Tenant Protection Act (starts on page 108) which offers tenants certain protections during the foreclosure process. My earlier post on the Tenant Protection Act can be read here.

Specifically, the state budget bill modified the current law related to tenant protections in foreclosure actions as follows:

1. ADDED - If an eviction action seeks to remove a tenant whose tenancy was terminated as a result of a foreclosure judgment and sale, the complaint must identify that the lawsuit is an eviction that is being brought as a result of a foreclosure action.

2. ADDED - A tenant cannot be named as a party in a foreclosure action unless s/he has a lien or ownership interest in the property. The fact that a tenant lives in the rental property that is being foreclosed upon is not enough to name them as a party in a foreclosure action.

3. ADDED - If a tenant is improperly named as a party in a foreclosure action the court shall award the tenant $250 in damages plus his/hers reasonable attorney's fees.

4. DELETED - The portion of the Tenant Protection Act that required the exclusion of any tenant information related to foreclosure actions from appearing on CCAP. That section was replaced with #2 above.

Milwaukee County to Post Notice on Who Can File and Appear in Court on Eviction Actions

A friend of mine who is an employee at the courthouse and does much work in small claims court, and more specifically eviction court, forwarded to my attention earlier today a copy of a notice that will soon be posted in Room 400 (Eviction Court) and Room 104 (Clerk of Courts) of the Milwaukee County Courthouse.

The notice addresses the issues of who may sign an eviction summons and complaint and who may appear in court on an eviction lawsuit.

The notice that will be posted reads as follows:

_____________________

PLEASE NOTE

In Small Claims Eviction cases, you may only sign complaints and appear in court on behalf of a property owner if you are one of the following:

• The property owner (if the property is not owned by a corporation/limited liability corporation)
• A full time employee of the property owner
• An attorney

Employees of management companies or other outside service providers may not sign complaints or appear on behalf of property owners

__________________

If this notice is going to be posted then it appears as if the clerks, court commissioners and judges will be dismissing eviction lawsuits that violate the above notice.

To read my earlier posts on these topics just click here and here.

MILWAUKEE CO. TO REQUIRE LLCs TO BE REPRESENTED BY AN ATTORNEY

It has recently come to my attention that Milwaukee County small claims court will in the very near future prohibit any individual other than a lawyer to represent a LLC's in court. This would mean that a landlord that owns his rental property in an LLC would no longer be able to appear in court to pursue his/her eviction case against a tenant. This is a change from how things have operated in the past and also different from what the law says in my opinion.

For those crafty landlords reading this who think that they will be able to circumvent this roadblock by merely filing the lawsuit in their individual names rather than in the name of the LLC that actually owns the property - you may want to read my earlier post entitled WHO MAY BRING AN EVICTION LAWSUIT.

As background, Wisconsin corporations have been required to appear in court through an attorney in large claims court since 1997 (Jadair Inc. v. U.S. Fire Insurance Co., 209 Wis.2d 187, 562 N.W.2d 401 (1997)). To date there is no case or statute that specifically requires an LLC to be represented by an attorney in large claims court although the reasoning for why only an attorney can appear in court on behalf of a corporation can quite easily be applied to an LLC as well.

Small claims court has been much different then large claims court however. In small claims court landlords have been able to appear in court themselves on behalf of their LLC because of §799.06(2), Wis. Stats. In essence the law says that as long as you are a full time employee of the LLC, or a member of the LLC yourself, you to represent the LLC in small claims court. While the statute prohibited most management companies from appearing in court for an LLC (since most management company employees are not full-time members of the LLC that owns the property but rather a full time employee of the management company that has been hired to manage many properties owned by various LLCs) at least the smaller landlord that owned and operated his/her own rental property could appear in court.

Apparently this will no longer be allowed as a friend of mine informed me that just this week he was warned by a Milwaukee County court commissioner that Milwaukee is preparing to require LLCs to appear in small claims court by attorneys only. Obviously this is going to put a financial strain on many smaller landlords that do not have the financial resources to retain a lawyer to represent their LLC every time they need to evict a tenant.

03/23/15 - UPDATE -- As a result of Act 76 (effective 3-1-14) LLC's no longer need to be represented by Attorneys.