UPDATE ON AB-340 (CCAP BILL)

As many of you know a public hearing was held on AB340 - the proposed bill by Rep. Marlin Schneider that would restrict who can use CCAP and what information would be contained on CCAP -- at the State Capitol in Madison last week.

Several board members from the AASEW (Dave Ohrmundt and Richard Bishop) and the head of Milwaukee RING (Brian Fleming) attended the hearing to make sure that landlords' voices were heard. We appreciate you guys taking the time out of your busy schedules to attend.

A fellow landlord-tenant law blogger from the Wausau area (Dr. Rent a/k/a John Fischer) also attended the public hearing and even testified wrote a recent blog post on the bill and the hearing that gives you his views on the proposed bill and what his thoughts are regarding if it will succeed. Dr. Rent writes a great blog and if you enjoy my blog you should also sign up for his blog.

Arguments were presented both for and against the propsoed legislation. On a practical level I thought it was very telling the the director of state courts (who under the proposed bill would be in charge of registering CCAP users and monitoring their searches) felt that the cost and time involved would be a huge undertaking. It might have been a good idea for the bills' sponsors to have spoken with the director of state courts and attempted to get him on their side prior to the public hearing.

Two recent articles written about the hearing and AB340 in general were published. The Milwaukee Journal Sentinel wrote an article on the hearing and the Racine Journal Times also had a good piece on the proposed legislation. Columnist, Patrick McIlheran, of the Journal Sentinel also wrote a recent piece on Schneider's proposed CCAP bill.

The Wisconsin State Journal also published an editorial regarding AB-340.

I was also interviewed for an article by the Wisconsin Law Journal about the proposed CCAP legislation. This article does not focus on how AB340 will affect landlords but rather how it might affect lawyers ability to screen their own clients and related issues.

The Importance of Using Written Screening Criteria During The Tenant Selection Process

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.

Those of you that have attended one of my landlord-tenant law seminars or read my prior posts on screening tenants know that in my opinion the screening process is the single most important aspect of being a landlord. If done properly, the screening process can save a landlord from many headaches such as: having to evict a bad tenant, repairing your damaged rental property, dealing with other tenants complaining about your loud and disruptive tenant, and/or having your rental property declared to be a public nuisance due to the bad behavior of your tenant and his/her guests. By properly screening your tenants you will significantly reduce your exposure to the above situations.

One key aspect of the screening process is having and using written screening criteria. Screening criteria sets forth the minimum requirements that an individual must meet in order to be able to rent from you. Looking at it another way, screening criteria also sets forth what will cause an applicant to be denied rental from you.

Here is an example of written screening criteria. Please be aware that this screening criteria is pretty stringent. I am not saying that you should or should not use this criteria - you must determine what criteria works for you and that is based on many factors which I will not be addressing in this post. I am linking to this sample screening criteria so that you have some examples of permissable (and legal) criteria so that you can better understand this post.

You should think of your screening criteria as a checklist that you go through when reviewing each application. By utilizing screening criteria a landlord is reminded that s/he should be making a decision to rent to an individual based on objective reasons rather then subjective ones.

An objective reason to deny an applicant is something that is quatifiable and verifiable. Examples would include whether or not the applicant has ever been evicted before, whether their prior landlord would rent to them again, whether their gross monthly wages are at least 3 times the amount of your monthly rent. Subjective reasons cannot be verified and as such can lead to allegations of or actual instances of discrimination.

A subjective reasonson the other hand, cannot be quantified or verified. Examples of subjective reason for denying an applicant would be because you got a "bad feeling" when talking to them or you didn't feel like you "connected" with them. You should not be making a decision to rent to someone based on a subjective feeling; by doing so you may inadvertantly and unconsciously be discriminating against them.

You should have your screening criteria in place prior to taking your first application. Screening criteria should not be created as you go. Ideally you should spend some time thinking about what would cause you to deny an applicant and conversely what would cause you to rent to an applicant. Think of objective reasons such as: do they have a prior rental history, have they been employed at their current job for a period of time, do they make enough money that they can afford to pay the rent and still have extra money to live on, have they ever been evicted before, do they have prior money judgements against them, would their prior landlord rent to them again, have they been arrested and/or convicted of a crime. Think about what caused you to accept or reject your current tenants. This information will serve as the initial draft of your screening criteria.

Next, take a seasoned landlord that is familiar with discrimination/fair housing laws to lunch and ask him/her to review your draft criteria or hire an attorney that has experience with the fair housing laws to give you some feedback. You need to insure that your criteria is legal and does not violate any aws before you begin to use it.

Once you have your screening criteria in place, the next step is to insure that you apply it evenly and consistently. You should not make exceptions to your criteria. If your screening criteria says that an applicant will be denied rental if they have ever been evicted in the past -- and your applicant has a prior eviction judgment on their record -- then you should deny them. Once you start making exceptions to your screening criteria you lose the protection of the screening criteria because you are once again resorting to subjective decision making such as "I know that s/he was evicted last year but they seemed like such a nice and honest person that there must have been a misunderstanding." Does this sound familiar? Do not make exceptions.

Screening criteria does not have to be distributed to the applicants. Many larger landlords do give their criteria to potential renters as a form of self-screening with the intent that potential applicants will read the criteria and not submit an application if they do not meet the criteria - thus saving the landlord time and money of reviewing an application that will be denied in the end anyhow. Many other landlords choose not to give out their criteria but rather use it internally to assist in the screening process. Either option is legal and both options have pros and cons.

The most common complaint I receive from clients that have started using screening criteria is that they feel "bound" or "restrained" by the criteria. If that is how you feel when you start using it then you know that it is serving its purpose and you are doing things correctly. Screening criteria is supposed to restrain you -- it is designed to reign you in from making random, spur of the moment, subjective decisions.

You are able to change your screening criteria over time. For instance if one of your criteria requires an applicant to have a FICO score of at least 700 and you find that none of the applicants are meeting this requirement and your unit is vacant as a result, then you may need to lower the FICO score requirement. Nothing is wrong with changing your criteria but you cannot and should not be changing your criteria back and forth day to day, week to week or even month to month.

If you do change your screening criteria you should make a notation as to when you stopped using the old criteria and began using the new criteria. If you look at the sample screening criteria linked above you will see that there is a place on the second page of the document for you to indicate the date that you started using the criteria and the date when you stopped using that criteria. After you have stopped using a certain version of your screening criteria you should retain a copy for a minimum of 3 years but preferably for up to 7 years. The statute of limitations for most federal and state discrimination complaints is 3 years but there are some that are 7 years. So if a past applicant should decide to file a discrimination complaint against you 6 years and 11 months later you still want to have written proof of the criteria that you were using at the time of the alleged discriminatory conduct.

If you review an application and you determine that the applicant does not meet your croteria you should make a notation as to which criteria they did not meet and attach any supporting documentation. Then file it away with your other important records.

Screening criteria is also very helpful if you have more than one person screening potential applicants. For example, if you have multiple employees or have hired a management company to run your rental properties you can provide them with a copy of your screening criteria and tell them that you want them to utilize it. By having them follow your written screening criteria - which can serve as a checklist - you have a better chance that they will follow it.

Being a defendant/respondent in a federal or state discrimination investigation is about as much fun as a root canal. The investigative process is long, tiring, disruptive, and very intrusive. The investigators will interview your current tenants, your past tenants, current employees, past employees and anyone else that may be able to assist them in determining whether or not you engaged in a discriminatory act.

I have represented many landlords that have had both federal and state fair housing complaints lodged against them for discrimination arising out of the screening process. In all of those cases, the first question that the investigator asked me was whether or not my client was using written screening criteria. Unfortunately in every one of those cases I have always had to answer "no" to that question. If my clients had been utilizing written screening criteria I would have been able to forward the screening criteria to the investigator along with the documentation supporting which criteria the applicant did not meet and I would have had verifiable proof that the applicant was denied rental based on a non-discriminatory reason.

Because my past clients were not using written screening criteria it ended up being a case of "he said/she said." What I mean by that is my client is saying that s/he didn't discriminate against the applicant and the applicant is saying that the tenant did discriminate against them. There is no written proof one way or the other. It is a crap shoot. When you are in a "he said/she said" scenario you are in for a long, painful, and often expensive investigation.

Do yourself a favor -- if you are a landlord and are not currently using written screening criteria, use the information in this post to begin the process of putting together some criteria, have it reviewed, and begin using it during your screening process.

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.

Public Hearing on AB 340 (Proposal to Restrict CCAP Access and Information) to Be Held on October 1, 2009 in Madison

For those of you following my blog, you are well aware of my thoughts on State Rep. Marlin Schneider's new legislative proposal to restrict access to and limiting information contained on CCAP (Consolidated Cort Automation Programs). Schneider's proposed legislation is referred to as AB (Assembly Bill) 340.

In fact, Patrick McIlheran of the Milwaukee Jornal Sentinel just wrote an article that addressed how AB 340 will hurt landlords.

AB 340 is currently in the Committee on Criminal Justice and that committee has just announced that a public hearing on AB 340 will be held on Thursday, October 1, 2009, at 10:15 am at 328 Northwest of the State Capitol Building in Madison.

If you can attend this hearing please consider doing so. If you are unable to attend then please be sure and voice your opinion on this proposal to your state representative and/or senator and the members of the Committe on Criminal Justice.

We landlords will be at a great loss if we lose our access to CCAP or are only able to receive certain information from CCAP.

WTMJ News Radio Discusses Proposed Legislation That Will Restrict Access To and Limit Information Contained on CCAP on Charlie Sykes Radio Show

Thursday, September 17, 2009 was quite a good PR day for landlords. Not only did the Milwaukee Journal Sentinel commentator Pat McIlheran publish a very good article criticizing the state and the city of Milwaukee for not treating landlords like second class citizens but later that same morning Charlie Sykes spent a good amount of time discussing something near and dear to a landlord's heart -- CCAP

Sykes spent a large portion of his final hour discussing State. Rep. Marlin's Schneider's latest attempt to restrict access to CCAP and to limit the information contained on CCAP.

If you would like to listen to or download the podcast of Sykes' discussion of this topic click here and then click on the entry entitled "Sykes Show part 3 - Thursday 9/17/09"

"Landlords Feel The Loathing" - Accurate Article On Landlords' Plight Published in Milwaukee Journal-Sentinel Today

Several weeks ago I received a telephone call from Journal Sentinel reporter Patrick McIlheran. Mr. McIlheran told me that someone had referred him to my blog and after reading some of the posts that he wanted to speak with me as he was in the process of putting together a piece about how the state and the city seem to make the business of landlording more and more difficult. I was more than happy to assist Mr. McIlheran as this topic comes up regularly during my interactions with clients, and at the the Apartment Association of Southeastern Wisconsin meeting. Truth be told, most business - not just rental property owners - wonder why the city makes doing business here so difficult and unappealing.

After speaking with Mr. McIlheran, I referred him to a colleague of mine, Tim Ballering, owner of Affordable Rental Associates, LLC and past president of the AASEW. Tim owns and manages hundreds of units in Milwaukee and has been a landlord almost as long as I have been alive (just kidding Tim ; ). It goes without saying that Tim could give Mr. McIlheran some necessary background and perspective that I could not.

Mr. McIlheran's piece entitled "Landlords Feel The Loating" was published in today's paper. You can also read it online at JSOnline.

It is a very good article. Please be sure to take the time to read the article and to email or call Mr. McIlheran and thank him for taking the time to present an accurate story on landlord's present plight. In light of the soon to be proposed Milwaukee ordinance that will require landlords to submit to mandatory inspections of the interior of their rental units, Ms. McIlheran's article could not be more timely.

SSN Validator: Free Website That Allows You to Verify A Social Security Number

I attended last night's AASEW monthly meeting which featured Kathy Huens of Landlord Services, LLC as the main speaker. Landlord Services, LLC is a company that provides credit reports to landlords to assist them in the screening process of rental applicants. Landlord Services, LLC is a business member of the AASEW and comes highly reccomended. During Kathy's speech she alerted the audience to a website that allows you to verify certain information regarding a person's social security number.

SSN Validator allows you to input a person's social security number and will then provide you with basic information such as:

- Has that SSN been issued or not,

- Approximate date when the SSN was issued,

- State in which the SSN was issued,

- Whether or not the person that was issued that SSN is deceased.

This website is completely free. I have added this site to my list of websites to assist you during the screening process. Use of this website will certainly assist a landlord in determining whether or not a SSN supplied by a prospective tenant is valid. For instance if the applicant appears to be between the age range of 20-30 years old and the SSN Validator indicates that the SSN was issued in 1950 -- you now have a red flag and will need to do some more due dilligence on that applicant. Or suppose that after inputting the rental applicant's SSN you are notified that the person to whom that SSN was issued is deceased - you have now been alerted to the possibility that your applicant has assumed another's identity.

I love free tools that assist me in evaluating my rental applicants. Thanks Kathy!

Housing Choice Vouchers (Section 8 Rent Assistance) Are Not A "Lawful Source of Income" In Wisconsin

I am often asked whether or not a landlord is able to legally decline to rent to a tenant that is receiving "rent assistance." I believe that the primary reason that landlords are unsure of the answer to this question is because Wisconsin's Open Housing Act (Sec. 106.50, Wis. Stats.) prohibits a landlord from discriminating against a tenant or a prospective tennat based on their "lawful source of income." For more information on Wisconsin's protected classes you should read my prior post entitled "FAIR HOUSING - Part 1: What Are The Protected Classes?"

The Housing Choice Vouchers Program (previously referred to as Section 8 Rent Assistance) is a voluntary federal program that assists very low-income families, the elderly, and the disabled to locate housing in the private market. Housing Choice Vouchers are administered locally by public housing agencies (PHA's). The PHA's receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program. If a landlord accepts a tenant who is enrolled in the Housing Choice Voucher Program then the local PHA will pay a housing subsidy (to cover a portion of the tenant's rent) directly to the landlord. The tenant then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. For more information on the program please go to the Housing Choice Vouchers Fact Sheet which is located on HUD's website. The federal regulations that cover this program can be found at 24 CFR Part 982.

An earlier version of the Wisconsin Administrative Code defined "lawful source of income" as including "lawful compensation or lawful remuneration in exchange for goods or services provided, profit from financial investments, any negotiable draft, coupon, or voucher representing monetary value such as food stamps, social security, public assistance or unemployment compensation benefits. Sec. IND 89.01(8), Wisc. Admin. Code. (Please Note that this section of the Code is no longer available). Lawful source of income would also include child support payments, family support payments (i.e. alimony).

Under the above definition it would seem that "rent assistance" would be considered to be a lawful source of income, however the Seventh Circuit Court of Appeals -- which includes Wisconsin -- held otherwise in the 1995 case of Knapp v. Eagle Property Management Corp., 54 F.3d 1272, 63 USLW 2750 (1995).

The court in Knapp specifically held that rent assistance vouchers are NOT considered to be a lawful source of income under Wisconsin's Open Housing Act. The court reasoned that the Section 8 voucher "does not equate" to the other forms of aid mentioned above. The Court explained that of the types of income enumerated in the regulation, that rent assistance vouchers would be the most like food stamps -- but yet they are still very different. Unlike food stamps, rent assistance vouchers do not have a montary value independant of the voucher holder and the apartment sought. Additionally, unlike other forms of support, the local housing authority that administers the federal program makes the rent assistance payments directly to the landlord, rather than to the voucher holder.

The Knapp Court did acknowledge that while rent assistance vouchers could arguably be included within the definition of "lawful source of income" under the Wisconsin Statutes, that they would "decline to ascribe such an intent to the state legislature because of the potential problems in doing so."

The primary problem that the Court was referring to is that if section 8 vouchers were to be considered a "lawful source of income" then Wisconsin would in essence be making the Section 8 program mandatory for all Wisconsin landlords. As mentioned above the federal program is voluntary. The court felt that it would be wrong to allow a state to make a voluntary federal program mandatory without the legislature clearly stating that that was its intent.

Thus, it is because of the Seventh Circuit Court of Appeal's holding in Knapp that landlords in Wisconsin are legally allowed to refuse to rent to a prospective tenant that is on "rent assistance."

ADDED after reviewing comment: PLEASE NOTE THAT SOME MUNICIPALITIES HAVE DECIDED TO MAKE RECIPIENTS OF HOUSING CHOICE VOUCHERS PROTECTED --- So it is always important to check the local ordinances in which you hold property as local municipalities are allowed to create additional protected classes. Dane County and the City of Madison are notable for doing this.

Fair Housing - Part 3: Legal Reasons To Deny A Rental Applicant

From reviewing the analytics program that works in conjunction with my blog, I have learned that my two prior posts on fair housing/discrimination issues peaked a lot of interest which resulted in them being two of my most read posts to date. My prior posts can be read here and here. As a result I have decided to add another post related to Fair Housing issues.

When I give seminars on the topic of screening and accepting tenants, especially after I have just discussed the 12 protected classes, the attendees often feel as if they are not allowed to reject any applicant that is a member of a protected class. The important thing to remember is that you are legally allowed to deny rental to a member of a protected class as long as the reason you are denying them rental is not because they are a member of a protected class. This is a subtle distinction but a very important one. If you keep this distinction in mind during your screening process I think you will feel less "hamstrung" in general and hopefully more confident that you are not running afoul of the law.

Here are some examples of acceptable reasons to deny an applicant rental, which do not violate fair housing laws at the federal, state or local level (at least not in the city of Milwaukee):

1. The person smokes.

2. The person wants to keep a pet (not to be confused with a service animal or a comfort animal, both of which are not pets).

3. The applicant has insufficient income (income is defined broadly and includes more than just a salary from a job)

- Note: The City of Madison does have a local ordinance preventing landlords from denying a rental applicant based on minimum income standards.

4. The person's income cannot be verified.

5. The applicant has been arrested and/or charged with a crime.

- Note: Dane County and the City of Madison have made persons with arrest records or criminal convictions protected classes in some instances.

6. The person has been convicted of a crime.

- Note: Dane County and the City of Madison have made persons with arrest records or criminal convictions protected classes in some instances.

7. The individual has been sued for owing someone money.

8. The applicant has a money judgment against them.

9. The person does not have a prior rental history (1st time renters are not protected).

10. The applicant has a poor rental history.

11. They do not provide complete answers on the application.

12. The applicant provided false information on the application.

13. Prior landlords had negative comments about the applicant and would not rent to them again.

14. The person has poor or no credit history.

15. They have only been employed for a short period of time at their current job ( I prefer to see at least 6 months - 1 year of employment at their current job so that I know there is some stability in their source of income).

16. The individual has filed bankruptcy in the past.

17. They have a foreclosure on their record.

These are just 17 of the many legal reasons that a landlord may deny a person's rental application even if the applicant is a member of a protected class. As long as you are rejecting an applicant for a reason other than the person being a member of a protected class -- such as for the reasons set forth above -- you are not violating the fair housing laws.

To protect yourself further, I strongly suggest that rental property owners and management companies utilize written screening criteria which sets forth the minimum standards that must be met for an applicant to be accepted, or to put it another way, what will cause you to deny an applicant.

AASEW's Response to Rep. Schneider's CCAP Legislation Can Be Found at www.DefeatAB340.org

For those of you that have been following my blog, you are well aware that State Rep. Marlin Schneider (D-Wisconsin Rapids) has introduced yet another bill attempting to restrict the public's access to CCAP. This new bill also will remove certain information from even being included on CCAP. My prior blogs on this topic can be read here, here and here.

The Apartment Association of Southeastern Wisconsin (AASEW), a collection of landlords and rental property managers, are strongly opposed to Schenider's new bill which is entitled AB 340, and have decided to do something about it. The AASEW has created a web page that can be found at www.DefeatAB340.org or by clicking here, which contains links to the actual bill as well as links to your state senators and representative so that you can contact them and convey your displeasure with this bill.

Please visit the AASEW's web page and consider contacting your elected officials to express your views as to AB 340. You should also forward the link to anyone and everyone you know that may be affected by this legislation.

If passed, this bill will affect more than just landlords. Parents, employers, day care providers and more, will be unable to use CCAP without paying an annual fee and having their CCAP searches recorded by the state. Additionally, you will be unable to learn whether a person has been charged with a crime, found liable in a civil lawsuit, or had an eviction action filed against them - until after the case has been resolved, which is often months or years after the action was filed.

The bill will also allow a person who has information contained on CCAP but which did not result in a convictions or judgment (even if this was the result of a stipulated dismissal) to remove all reference to that information from CCAP. The concept of open records will be hurt severly should AB 340 pass.

Please do your part to insure that AB340 fails.

FAIR HOUSING - PART 1: What Are The Protected Classes?

A large part of my law practice is meeting with and consulting with landlords and management companies with regard to how to avoid trouble. This would include assisting them with the drafting of rental documents and guiding them on the proper notice to use when terminating a tenancy. It also includes consulting with clients with regard to fair housing / discrimination issues.

I enjoy this consulting work as it typically occurs before the landlord is embroiled in a dispute or litigation – thus my client tends to be in a better mood at the consulting stage which puts me in a better mood also.

Recently I have had a lot of calls on topics related to discrimination and fair housing and so I thought that I would devote several posts in the future to topics related to fair housing issues.

The easiest place to start would be to identify the various protected classes under Federal and Wisconsin law.

Federal law (which starts at 42 U.S.C. 3601 et. seq.) has 7 protected classes which are:

1. Race

2. Color

3. National Origin

4. Sex

5. Religion

6. Familial Status

7. Handicap

Wisconsin law (which is found at §106.50(1), Wis. Stats) also includes the above 7 protected classes plus adds an additional 5 more, which include:

1. Marital Status

2. Sexual Orientation

3. Lawful Source of Income

4. Ancestry

5. Age (18 years and older)

It is important for managers and owners to also check their local municipal ordinances as well as because there are some municipalities that have added additional protected classes. The city of Madison for instance also treats convicted criminals, students, and a person’s physical appearance as additional protected classes. You can read more about the City of Madison municipal code - Ch. 32 entitled Landlord and Tenant here.

So if you make a housing decision based on a person’s membership in a protected class you may have discriminated against them. Discrimination in housing covers a wide range of activities such as: refusing to rent to, refusing to discuss rental terms with, refusing to allow the inspection of rental housing, refusing to renew a lease, causing the eviction of, misrepresenting the availability of rental housing, applying different terms or standards, and engaging in harassment, intimidation, or coercion of. There are many more but you get the general idea.

It is important to remember that a landlord does not need to have the intent to discriminate in order to be found to have engaged in discrimination. Also be aware that most insurance policies do not cover an owner’s or manager's discriminatory acts.

Remember that just because someone is a member of a protected class does not mean that you cannot deny them rental or evict them. It only becomes discrimination if you do the above because they are members of a protected class. So if you are denying a person rental or filing an eviction action against an individual for reasons other then their protected class status then you are not discriminating against them. For example, if a person does not meet your screening criteria because they have been evicted in the past, have no prior rental history, or their gross monthly income is not 3 times the monthly rent (or some other legal screening criteria that you have in place) then it is not discrimination to deny that person rental even though they may also be a member of a protected class.

CCAP LEGISLATION INTRODUCED YESTERDAY

State Rep. Marlin Schneider has introduced his newest piece of legislation yesterday - Assembly Bill 340. Schneider's newest bill will once again interfere with a landlord's ability to properly screen his/her applicants through CCAP.

First, AB-340 will require most users of CCAP to register and pay an annual fee. Second, It will also require you to inform an applicant if you denied them rental as a result of information you obtained from CCAP and if you fail to do so you can be fined $1,000. Finally, and what bothers me most, is that no pending cases (criminal or civil) will appear on CCAP until after the case has been concluded. So if the person that just applied to rent from you is doing so becasue their current landlord recently filed an eviction against them --- you will not be able to learn this from CCAP --- until it may be too late. You also may not learn until after you have already accepted them as a tenant, that a recent applicant was just charged with the manufacture and distribution of a controlled substance.

You can read AB-340 in its entirety here.

If you would like to read my earlier blog posts on this topic go here and here.

No matter what you do I hope that you will consider contacting both your state representative and state senator and express your strong opposition to this piece of legislation.

Article and Video Regarding Recent Seminar On Advising and Defending Property Owners in Nuisance Actions

On May 7, 2009 I spoke at the State Bar of Wisconsin Annual Convention. I was asked to speak at the Government Lawyer Division's seminar that focused on the topic of neighborhoods and nuisance properties. Specifically I was asked to speak on advising and defending property owners that have nuisance properties.

The State Bar recently published a nice article summarizing my seminar presentation which was published through its online Inside Track newsletter. A link to the article and a short video of my presentation on the topic of written screening criteria is below.

House rules: Landlords knowledgeable of tenancy laws improves condition of rental properties, neighborhoods (from wisbar.org)

Landlord accountability: Advising and defending the property owner

July 1, 2009 -- In this video clip, Milwaukee attorney Tristan Pettit explains the importance of the property owner's consistent use of written criteria when screening potential tenants. Pettit spoke at the Government Lawyers Division program at the State Bar Annual Convention in May. (from wisbar.org)

CCAP: SCREENING TOOL UNDER ATTACK, AGAIN!

I have had the opportunity to review the newly proposed legislation, authored by State. Representative Marlin Schneider (Wisconsin Rapids), that will affect landlords' use of CCAP when screening rental applicants. This legislation has not yet been officially introduced so there is no link to it available on the web. Currently Rep. Schneider is sending it around attempting to find others who are willing to co-sponsor it with him.

First, the bill would require that no information can be added to CCAP until after there is a finding of guilt in a criminal matter, finding of liability in a civil matter, an order for eviction in an eviction action, or the issuance of a restraining order or injunction.

If this legislation becomes law, landlords will be put at a huge disadvantage during the screening process. If the applicant is currently being evicted by his/her landlord that information would not be displayed on CCAP. I personally feel that th most important piece of information that I want to know about somebody that is applying to rent from me is if they are currently being evicted. The time that it takes to obtain a judgment of eviction often takes up to 1 month or more - as you need to wait for the 5 or 14 day notice to expire, then it takes approximately 2 weeks before you can get into court for the initial appearance, and then if the tenant contests the eviction the trial could be scheduled out as far as 1 week from the date of the initial appearance - and that does not even account for the court time (or backlog) to enter the information into CCAP.

The same would apply to collection lawsuits. If the tenant is currently being sued by his/her landlord for damage to the rental property (not part of an eviction action) or any other person or business that is owed money by the tenant, this information would not show up on CCAP until after a judgment was rendered. Collection lawsuits (even in the small claims division) can easily take 6 months or more to come to a conclusion.

Most of us review an application, complete a background search, and make a decision to rent to an applicant in a few days to 1 week. In fact, the regulations regarding earnest money (ATCP 134.05) require a landlord to make that decision by the end of the 3^rd business day or else they must return the earnest money to the applicant. So if this law is passed landlords will not be privy to important information that is needed in order to make an intelligent decision as to whether an applicant should become a tenant. Seeing no current eviction or lawsuits pending against the applicant, a landlord may accept the applicant and enter into a rental agreement with them only to find out a few weeks or months later that their new tenant was evicted or sued by their prior landlord.

Second, the new bill also will require landlords to pay an annual fee of $10 to use CCAP. This fee would not be charged to judges, attorneys, court personnel, law enforcement personnel, and journalists. Even more troublesome however is that the Director of State Courts would also be required to register all users of CCAP and also record any and all searches that they perform using CCAP. So there would be a record of what searches you performed on CCAP that could possibly be used against you if it was determined that you discriminated against an applicant (see the paragraph below for such a scenario).

Third, this bill would also require that any landlord that uses CCAP as part of their background search on an applicant, must tell the applicant, if their application is denied, that CCAP was used in part in making the decision to deny them. Failure to inform the applicant of this may cause the landlord to be fined $1,000. Remember the requirement that the searches of all CCAP users be recorded that I mentioned in the prior paragraph? Maybe that same search record could be used against you if you did not advise the applicant that you used CCAP as part of your background search prior to denying them. If this is a possibility then landlords will need to document in writing that they did advise the applicant that they used CCAP to vet them or else risk the $1,000 fine.

Finally, under the bill, any person that currently has information isted on CCAP that didn't result in a finding of guilt in a criminal matter, liability in a civil matter, an order for eviction, or the issuance of a restraining order of injunction, can request that the information be removed from CCAP. So under this law, past information that was available on CCAP can now disappear.

Essentially, this will allow any tenant that was sued for eviction in the past but who had his/her eviction dismissed pursuant to a stipulation (which are often forced upon landlords in Milwaukee County) can be removed from CCAP. Oftentimes, a landlord will agree to dismiss an eviction against a tenant in exchange for the tenant agreeing to vacate the property by a date certain. Landlords do this because it will avoid the need for an eviction trial as well as the need to take additional time off of work or pay additional fees to a lawyer for a trial. It is understandable why a landlord may agree to a stipulated dismissal but if this new legislation is passed documentation showing that an eviction was even filed may be removed from CCAP. Landlords will need to seriously need to reconsider entering into stipulated dismissals because by doing so they will be hurting other landlords who may inadvertently rent individuals that were sued for eviction but for which no record exists on CCAP.

REP. SCHNEIDER IS ATTACKING CCAP AGAIN

State Representative Marlin Schneider from Wisconsin Rapids is up to it again. I just received word that Marlin Schneider has circulated a proposed bill (LRB 2267/3) which would require users of the Consolidated Court Automation Program, better known as CCAP, to pay an annual fee to use this computerized open records management system.

Even worse, Schneider's legislation proposes that no legal court proceeding be posted on CCAP until after there has been a determination of guilt (in criminal actions) or liability (in civil action).

CCAP is the single most important screening tools for landlords in Wisconsin in my opinion.

As many of you know, back in 2008, Mr. Schneider -- who does not like CCAP or the concept of open records in general and feels that both are deteriorating one's privacy rights -- drafted a proposed bill that would have prevented landlords and many other groups (except for a select few like law enforcement and the court system) from being able to use CCAP. That legislation was killed.

Then earlier this year, upset at his loss the year before, Mr. Schneider attempted to attack CCAP from a different angle when he tried to make people who have been arrested or convicted of a crime protected classes that could not be discriminated against in housing. Mr. Schneider voluntarily withdrew that bill saying that it was not what he expected it to be. This withdrawl came after a mass campaign by the AASEW to get landlords to write to their legislators and demand that they not support the bill.

Now we have this. When oh when will Mr. Schneider retire?

As I learn more about this issue I will post it to this blog.

IMPORTANT WEBSITES TO ASSIST WITH SCREENING TENANTS

As I have mentioned before, the screening process is in my opinion the single most important aspect of the rental process. Sufficient time should be spent by the landlord to attempt to ensure that the chosen tenant will be able to live up to and abide by the rental agreement.

Below are some websites that I find very helpful during the screening of my tenants.

CCAP - Wisconsin's Consolidated Court Automation Program - This is a free tool that allows you to access to all state court filings within Wisconsin with the exception of paternity lawsuits and juvenile delinquency petitions. It includes criminal lawsuits, civil lawsuits including eviction actions, divorces, harassment injunctions, replevins (repossession of vehicles), foreclosures, money judgments etc.

Milwaukee Municipal Court Case Information System (MMCCIS) - This is a free website that allows you to enter a persons name and determine if they have received any municipal tickets in the city of Milwaukee for such things as possessions of drugs, possession of drug paraphenelia, battery, traffic violations etc. It should be noted that receiving a municipal ticket is not the same as being charged with a crime. Municipal tickets are just civil forfeitures (fines).

Family Watchdog - This is a free website that allows you to search for convicted sex offenders thoughout the United States by name or location.

Wisconsin's Sex Offender Registry - Run by Wisconsin's Department of Corrections this free website allows you to search by name or location to determine whether or not a person has been convicted as a sex offender within the state.

PACER - Bankruptcy filings in Eastern District of Wisconsin - This website allows you to search (for a nominal cost) to determine if a person has ever filed a bankruptcy in the Eastern District (includes Milwaukee) of Wisconsin.

Wisconsin Department of Financial Institutions - This free website proves helpful for commercial landlords who want to check the status of a prospective status of a tenant that is a business entity (LLC, SC, INC, LP etc). It allows you to search its database and willlet you know if such an entity exists and who its registered agent is and his/her address, and whether or not the business entity is delinquent in its filing with the state.

Landlord Services, LLC - This company based in Green Bay is endorsed by the Apartment Association of Wisconsin (AASEW) and will run credit checks on your rental applicants as well as criminal background checks etc.

City of Milwaukee Property Recording Data and Department of Neighborhood Services Property Recording - Both of this sites will allow you to enter an address and find out who owns the property. This is an especially useful tool when screening applicants and you want to verify that their prior landlord is really their prior landlord - and not a family member or friend who will tell you what a great tenant they are.

SSN Validator: This site will allow you to enter a social security number and it will provide you basic information such as if the SSN was issued, approximate date that it was issued, state where it was issued, and if the person that it was issued to is deceased. This information will allow you to better determine if the SSN that an applicant lists on your rental application is legitimate. Use of this site is free.

SCREENING PROSPECTIVE TENANTS

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.

Screening prospective tenants is the single most important aspect of the rental process regardless of whether you are renting residential or commercial property. If done properly, screening can save a landlord a lot of money, a lot of time, and a lot of headaches. Setting up a proper and legal screening process, which includes the drafting of a Rental Application and written Screening Criteria, can help reduce the need to evict a tenant, defend yourself against a claim that you violated the Wisconsin Administrative Code's Residential Rental Practices (ATCP 134), defend yourself against a claim for discrimination under the Fair Housing laws, and preserve your property from physical damage.

There are several steps to a good screening process. First, you must verify that the applicant is who s/he says there are. The best way to do this is to require each adult applicant to completely fill out a rental application. You should also ask each adult to provide you with a valid photo identification. Request a copy of the applicant's prior utility bill or cable bill as well. You want to ensure that the address on the bills is the same as the address listed on the photo identification and the rental application. You should also obtain the applicant's date of birth and social security number. Require that they provide you with any prior names that they have used in the past few years such as maiden names, if they are recently married, or married names if they are recently divorced. If you are renting to a business entity verify its existence with the Secretary of State's Department of Financial Institutions. Obtaining all of this information early will greatly assist you later in the screening process.

Second, have written screening criteria in place before you start accepting rental applications and ensure that your criteria is applied consistently. Your criteria should set forth the minimum requirements that are necessary to rent your property as well as what will cause an applicant to be denied. You can provide the written screening criteria to each prospective applicant along with the application, or at the very least, you should memorialize the criteria in writing, date it, and keep it for at least 3 years. It is important to remember that if you make an exception to your screening criteria for one applicant that you have now lost the protection of having the criteria in the first place ---- so avoid making any exceptions.

Your screening criteria should not be subjective. Rejecting an applicant because they give you a "bad feeling" or because you did not "connect" with them will only run you afoul of Fair Housing laws. You criteria needs to be objective. Federal laws contain seven (7) different protected classes and the state of Wisconsin has twelve (12) protected classes. You may not deny an applicant because they are a member of any of the following protected classes in Wisconsin: race, color, national origin, sex, religion, familial status, handicap, marital status, sexual orientation, lawful source of income, ancestry and age (18 years old and over). Some local municipalities (the city of Madison comes to mind) have added additional protected classes. So it is important to check all local ordinances where your rental properties are located prior to drafting your screening criteria.

A common misconception is that you cannot reject an applicant who is a smoker, who has a money judgment against them, or who has previously been evicted. Smokers, debtors, and people with past evictions are not members of a protected class and therefore legal screening criteria can exclude them without violating Wisconsin or federal discrimination laws. Other examples of proper screening criteria include the following: (1) Applicant must have monthly income of 3 times the monthly rental amount; (2) Applicant must have no unsatisfied money judgments against them; (3) Applicant must have a credit score of at least 600; (4) Applicant must complete all questions on the rental application; failure to answer all questions or provide an acceptable reason for not answering all questions are grounds for denial of your application.

Third, you should run every applicant's name through Wisconsin's Consolidated Court Automation Program (CCAP). This website lists all criminal and civil legal actions filed throughout the state. By becoming adept with CCAP's search capabilities you will be able to discover if a prior landlord has started an evictions action against your applicant, if your applicant has ever been charged with a crime, or if they have been sued for owing money to someone and whether or not they have satisfied that judgment. Best of all CCAP is free and open to the public.

Fourth, you should obtain a credit check for applicant that is still under consideration after checking CCAP. A landlord may require the applicant to pay the actual cost of the credit check up to $20 if they so wish. In order to charge this fee however you must obtain the credit report from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis (TransUnion, Experian or Equifax) and you must notify the applicant of the cost before ordering the report and provide them with a copy after it is received.

These four steps for screening and qualifying a prospective applicant for your rental property are the bare minimum that should be done to ensure that you are protecting your investment.

UPDATE - APRIL 15, 2016 ---- Please review my April 15, 2016 blog post on HUD's new guidance regarding the consideration of a rental applicant's criminal history in the screening process as it may impact or alter the information in this blog post.