WHY ARE THE "BAD LANDLORDS" THE ONLY ONES WE EVER HEAR ABOUT?

I was catching up on some long overdue blog reading this weekend and I came across a great blog post that I thought was very timely. I asked the author is I could re-post his thoughts and he agreed. The author of the post is Bill Gray who runs Rent Recovery Service, a company that assists landlords with collecting past due rent and damage charges from ex-tenants. I was fortunate enough to have met Bill this past September at the AASEW's Annual Landlord Tradeshow when Bill was gracious enough to fly to Milwaukee from Florida in order to present a seminar on collection issues to the attendees. Anyone that has met Bill knows that aside from being extremely knowledgable in the area of collections, he is also a great guy. If you are trying to collect past due rent and damage charges from an ex-tenant you should definitely give Bill a call at 212-561-5492 or email him at bill@rentrecoveryservice.com.

With the city of Milwaukee attempting to pass a version of "landlord licensing," with state politicians trying to short-circuit a landlord's ability to properly screen tenants, and with what I find to be a very prevalent negative attitude toward landlords in general - I thought Bill's post was timely.

Posted by Bill Gray on August 10, 2009

I recently read the following article by credit and collections expert and author, Michelle Dunn. Michelle is correct in her assertion that business owners are typically made out to be the bad guy. The same is true for landlords. When was the last time you heard about a landlord who lowered the rent for a good tenant who had hit bad times? Or the landlord who made sure a tenant, who is a single mother, had Christmas gifts for her children? You don’t hear these stories. The image of the evil “slumlord” is much more appealing to the media.

Are all landlords good? No they are not, just as a percentage of tenants are not good tenants. Go to YouTube and search for words such as “tenant, trashed, destroyed, damaged“, etc. and see the horrors some landlords face when a bad tenant destroys their rental unit. As you view these videos, imagine if you had invested thousands of dollars into a rental unit, and this was the result. Make sure you are not eating your dinner when you view these videos.

The 80 – 20 rule is most likely appropriate here. 80% of landlords and tenants are probably responsible people who try hard to do the right thing. Do the math. Assuming that most landlords own or manage many more than one rental unit, how many more “bad” tenants are there, than “bad” landlords. But again, we seldom hear about the bad tenants.

Landlords provide a valuable product and service. They usually borrow money to make an investment, then rent the apartment or home to someone they hope will care for their investment. People love to beat up on landlords. Think for a minute if landlords threw in the towel and got out of the business all together? Where would everyone live?

Here is Michelle’s blog post I referred to:

Why is the business Owner that got Stiffed the “Bad Guy”?

You hear it all the time, bill collectors are harassing customers that don’t pay.

You see it all the time, websites and news programs that help people use the law to “sneak out” of paying a bill they legitimately owe.

What does this say about small and large businesses everywhere?

That they are the bad guy if they try to collect the money that is owed to them for services rendered or products shipped?

Why are they the bad guy?

Isn’t the “bad guy” the guy who is trying to get out of paying?

Michelle Dunn

www.credit-and-collections.com/blog/

Email me your questions concerning tenant debt. I will try to help you.

Bill Gray

FREE SEMINAR ON LLC'S - WHY YOU NEED THEM AND HOW TO INSURE THEY PROTECT YOU FROM PERSONAL LIABILITY

Lydia Chartre and I will be presenting a free seminar at the AASEW's October monthly meeting on October 19, 2009 at 7 pm. The meeting will be held at the Best Western Midway Hotel which is located at 1005 S. Moorland Road in Brookfield.

Lydia and I will be speaking on LLC's and why you should consider using this form of business entity to hold your rental property and what you must do when handling your LLC to insure that your personal assets are protected.

Lydia will be discussing the nuts and bolts of LLC's including:

- Why you may want to form an LLC to hold your rental property

- The necessary steps to form an LLC

- Information that you (or an attorney) will need to form your LLC

I will speak on the topic of what formalities you will need to follow when handling your LLC to insure that your personal assets will be protected. While the general law is that an LLC -- just like a corporation -- is a separate and distinct entity from its individual members, there are instances where courts have allowed an injured party or a creditor to "pierce the corporate veil" or hold the individual personally liable for the actions and/or debts of the LLC.

Last summer I defended a client that was sued personally for the debt of his then defunct corporation. The creditor attempted to "pierce the corporate veil" and hold my client and his new corporation responsible for the debts of his prior company. I will draw from my research, arguments and the experience that I gained during this multi-day trial to explain what you must do in order to keep the shiled of your LLC and avoid anyone suing you personally for its actions or debts.

If you have never been to an AASEW meeting before -- or if you haven't been to one in awhile -- I would strongly encourage you to attend this seminar. It will be filled with lots of practical infromation. I hope to see you there.

MARYLAND ARMS CASE WILL BE REVIEWED BY WISCONSIN SUPREME COURT

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

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

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

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

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

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

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.

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.

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.

Free Landlord-Tenant Law Seminar To Be Held On October 24, 2009

On Saturday October 24, 2009 from 9:30 am - 4:30 pm at the UWM Union Ballroom the UW-Milwaukee COAST and the City of Milwaukee Department of Neighborhood Services will be offering a free landlord-tenant law seminar to the public. This seminar is NOT restricted to just landlords and tenants in the UW-M area.

On behalf of the AASEW, I will be presenting a portion of the seminar on the topics of causes for eviction, notices terminating tenancy and the eviction process. Additional topics that will be covered include applicant screening, rental documents, management of rental properties, fair housing issues, DNS inspection process, and the role of law enforcement.

For more detailed information regarding who the presenters will be and how to register please refer to the attached flyer.

UPDATE ON MILWAUKEE'S PROPOSED MANDATORY RENTAL UNIT INSPECTION PROGRAM

A friend of mine was at a meeting this morning with the City of Milwaukee's Budget Director and learned some more information on the City's proposed mandatory rental unit inspection program.

First, the proposed ordinance is in the final stages of drafting and will be released in the near future.

Second, it will be a 5 year pilot program in the UWM area only.

Third, there will be a fee of $40 per landlord and a $35 per unit inspection fee.

Fourth, the pilot program must be approved by the city's common council each and every year in order for it to continue.

Fifth, if a rental unit passes its 1st inspection then the unit will receive a 4 year compliance certificate and will not need to be reinspected until the 4 years expires.

NOTE: MUCH OF THIS INFORMATION IN THIS POST IS NO LONGER ACCURATE - TO FIND OUT WHAT THE ACTUAL ORDINANCE STATES GO TO MY NEW POST ON THE SUBJECT.

One Person's Attempt To Spread The Word About Milwaukee's Proposed Mandatory Rental Inspection Program (a.k.a "Landlord Licensing")

A fellow attorney friend of mine forwarded a pamphlet/flyer/handout that he saw on the east side of Milwaukee. The UWM area is where the city plan's to begin its mandatory interior inspections of rental units (a.k.a "Landlord Licensing") program assuming that the ordinance is passed by the common council. The handout should definitely make tenants living in that area give some thought to the city's latest attempt to infringe upon their rights. The handout raises some good issues that I did not address in my earlier posts on this topic on September 10, 2009 and September 14, 2009.

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.

DON'T MISS AASEW'S 10th ANNUAL LANDLORD TRADESHOW THIS WEDNESDAY (9-16-09)

The Apartment Association of Southeastern Wisconsin (AASEW) is hosting its 10th Annual Tradeshow this Wednesday, September 16, 2009, from 12 noon - 7 pm. If you are a rental propertyowner, manager or investor you will not want to miss this FREE tradeshow

It will be held at Serb Hall which is located at 5101 W. Oklanhoma Avenue.

The admission is FREE.

Food and snacks will be offerred.

Many vendors that support the rental housing industry will be on hand to answer your questions, such as Wisconsin Legal Blank Co.,, Giertsen Company of Wisconsin, Inc., Oak Creek Plumbing, Inc. and many more.

There will also be many seminars on topics such as: the new lead paint renovation rules, causes for eviction and notices terminating tenancy, how to collect tenant debt, nuisance properties, execution of writs of assistance (eviction) by the Sheriff, and how to benefit from 1031 exchanges and more. The seminars will be followed by a Town Hall Meeting (no, it won't be about health care) in which 3 members of the industry will answer your questions.

For more information and details please go to www.LandlordTradeShow.com

Why Milwaukee's Mandatory Rental Inspection Program (a.k.a. "Landlord Licensing") Is Not Needed and Is A Bad Idea.

Here are a few of the reasons why the City of Milwaukee's soon-to-be proposed ordinance requiring mandatory rental inspections (a.k.a. "Landlord Licensing") should not be passed.

For more background information on this proposed new ordinance please read my earlier post entitled " Milwaukee To Propose Landlord Licensing and Mandatory Interior Inspections of Rental Property."

There Are Better Ways To Spend Milwaukee’s Limited Money - The city of Milwaukee has no money and as such the city is threatening to close libraries, not hire additional police officers, not pay overtime to police officers, cut back on the number of firemen assigned to each ladder company. Under this new ordinance the city will spend money which would be better spent on more police officers and other safety issues rather than hiring more building inspectors.

Tenant’s Right to Privacy – Under this new ordinance rental properties would be subject to search by building inspectors. Tenants will have building inspectors walking through their apartments and looking at everything. This is unnecessary and intrusive. It should be the tenant’s decision to call the inspector if the landlord has failed to make a repair. Tenants’ right to privacy in their own home is a basic American right.

Increased Cost of Rent for Tenants – The current rental property owner already pays ever-increasing real estate taxes and municipal fees. Under this proposed ordinance rental property owners will have to pay a fee to the city for being a landlord – possibly having to pay a fee per each rental unit owned. Landlords will not be able to absorb that additional cost, especially when they are barely making ends meet in today’s tough economic times. As a result the additional charges for this program to landlords will most likely be passed on to tenant living in those rental properties.

Landlord Licensing Will Cause More Harm Than Good – A study conducted in 2003 by the LaFollette Institute for the City of Milwaukee, concluded that any form of landlord licensing would not work in Milwaukee. The study indicated that any benefits would be uncertain at best and at worst would have negative effects on the housing market and the availability of affordable housing. It said that any such program would be expensive and would cause more problems than it would solve. To read the entire study click here.

Denying An Owner The Right To Rent Out His/Her Property Is Too Great A Power To Give a Building Inspector – Under the new program the city will have the ability to deny a rental property owner a certificate of compliance if the property does not pass muster. Without the certificate of compliance the landlord will not be allowed to rent out his property. This is too great of a power to give a city bureaucrat. Even nuisance properties require that a lawsuit be filed and that a court order closure of that property before the owner is prevented from renting it out. Under this ordinance a building code inspector would be able to close down a rental property for infractions much less severe then those that are required to close down a nuisance property. A city building inspector could use this power for improper reasons to penalize a landlord who is out of favor with City Hall. In other cities and in Milwaukee there have been “rogue” inspectors who abuse their authority. To read about such examples click here. And here. And here.

The Foreclosure Crisis Is Putting Property Owners Under Stress – With falling rents and declining property values due to foreclosures – and the financial difficulties due to unemployment etc. – the rental housing market is severely stressed. This proposed licensing program will discourage further investment. It will hurt rental owners, tenants, and even neighborhood home owners as rental units become “board-ups.”

Rental Property Owners Are Already Over-Regulated – With all of the regulations imposed on rental property owners you need to be a lawyer in order to sort through them all and understand them. There are hundreds of laws and regulations imposed by the federal government (EPA, HUD) the state (Department of Commerce, Consumer Protections, Wisconsin Statutes etc,. and the various municipalities (Building Inspector, Health Department, Public Works). More regulations of rental property owners and their rental properties are nor necessary nor are they desirable.

Please refer to www.rentalinspectionprogram.com for more information on this topic.

Milwaukee to Propose Landlord Licensing and Mandatory Interior Inspections of Rental Property

The city of Milwaukee is planning on introducing a new ordinance that will require rental property owners in certain parts of the city to license their rental properties and submit to mandatory interior inspections by the Department of Neighborhood Services (DNS).

Many of the AASEW board members have been having regular monthly meetings with the new DNS Commissioner Art Dahlberg. During a recent meeting Mr. Dahlberg informed us that in the near future he will be pushing for some form of residential rental inspection program (a.k.a "Landlord Licensing") for portions of the city. During a meeting with Alderman Bob Donovan it was confirmed that this program was in the works and that the city's forthcoming budget already has money earmarked for the program.

Under this program DNS would target certain areas of the city which they consider to be "blighted" or which will soon become "blighted" if something is not done. Other factors that would be considered in determining what areas to target would be the age of the housing stock, the percentage of rental units to owner occupied properties, and the history of complaints in the neighborhood. Mr. Dahlberg indicated that the area of the city that would most likely be addressed first would be the east side near UWM due to the large number of illegally converted dwelling units and poorly maintained properties.

The goal of the program would allegedly be for the owners and the city building inspectors to work together to better the rental housing stock with the building inspectors becoming a resource for rental property owners.

While the specific details were not provided to me, any proposed program will most certainly contain provisions such as the following:

- A requirement that all rental property owners in the targeted area pay a fee to the city for each unit that they own.

- A requirement that rental property owners allow the city building inspectors to conduct mandatory inspections of the interiors of each of their rental properties that are located within the targeted area.

- If no code violations are found then the rental property would receive a certificate of code compliance which would allow the owner to rent out the unit for a period of time until the next mandatory interior inspection would be required.

- If code violations were to be found in the rental property then the owner would be denied a certificate of code compliance (thus preventing the unit from being rented) until the violations were corrected. Depending on the the number and severity of the violations, the rental property owner would be required to submit to an increased number of interior inspections during the ensuing months until the city would determine that the rental property was safe.

While this new program would only focus on the UWM area initially, other areas of town were also mentioned (the north side of Milwaukee for instance) as being targeted eventually. It is fairly obvious that the end goal would be to have all rental properties within the city under this program.

I personally am not in favor of this program and I can't imagine that many landlords would be. If passed this new ordinance will be yet another regulation on rental property owners - a group that is already overly regulated. I can't imagine that tenants are going to enjoy this invasion of their privacy either. Not to mention that the additional costs to landlords will most likely be passed on to the tenant by increased rents. I also personally have difficulty with the fact that the city regularly threatens to cut the number of police, refuse overtime for police, eliminate the number of firemen at ladder companies, and close libraries, but yet they are willing to provide additional money for the hiring of more building inspectors.

While the alleged goal of this residential rental recording program is to improve the quality of the housing stock in the city I can't help but think that it will also be a source of revenue for a city that allegedly is broke.

This proposed ordinance will be addressed in more detail in my future posts.

To read why this program is not a good idea click here.

To read the text of a study conducted by the LaFollette Institute in 2002 on whether or not Landlord Licensing should be implemented in Milwaukee click here. To read a summary of the the study concluding that Landlord Licensing would casue more harm then good if implemented in Milwaukee click here.

For more information go to www.rentalinspectionprogram.com

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.

SUING AN EX-TENANT FOR PAST DUE RENT: What Factors To Consider

Your tenant has already vacated your rental unit - so there is no need to file an eviction action -- but they left owing you money. Is it worth your time and effort to sue them in order to obtain a money judgment? This is probably the third most frequently asked question that I receive when talking to landlords (the first two most asked questions in case you are curious are (1) which notice do I use when? and (2) how do I evict my tenant?).

There is not a simple answer to this question. It depends . . . on many things. Many variables need to be taken into consideration before deciding to spend the time and effort to sue an ex-tenant. Let's consider what some of those variables are.

1. How much money does the tenant owe you?

Is the amount that is owed to you worth the time, energy, and cost to attempt to collect it? You will need to purchase a small claims summons which will cost you approximately $100. You will need to personally serve the ex-tenant with the assistance of the Sheriff or a private process server -- typical cost between $35-$100. If you are representing yourself you will spend time away from work and therefore lose some wages. If you opt to hire a lawyer to represent you, you need to consider how much you will have to pay the lawyer.

There is no magic dollar amount that makes suing a tenant worth it or not worth it. The "breaking point" as I like to call it, will be different for different people.

2. Do you have the necessary information to sue the ex-tenant?

Do you have a fully completed rental application fro the tenant and have you updated the information contained in the application since the tenant first moved in? To assist with a potentail collections issue in the future, a good application should at least contain the name and address of the applicant's employer, the name and address of the applicant's bank, and emergency contact information for the tenant's relatives or close friends. If your rental application contains the above then you will already have some of the information that may assist you in collecting the debt that is owed you.

Other information that you will need is the current address of the ex-tenant. Did s/he leave you a forwarding address? If not, you will need to find him or her so that they can be served with the lawsuit. Check CCAP and/or the Milwaukee Municipal Court site to see if they have recently been sued or received a traffic ticket which may provide you with a current address. Contact your postman/woman and see if the ex-tenant has forwarded their mail to a new address. If so, see if they will provide that new address to you (typically the answer is "no"). You can also hire a skip-tracer to locate the whereabouts of the tenant, but typically you will need to wait a period of time for the ex-tenant to become established at their new address before tht data will become available. Consider contacting the emergency contact person/s listed on the ex-tenant's rental application to see if they know where you can reach the debtor.

If you do not have a current address for your ex-tenant, you will end up having to serve them at their last-known address (which is your rental unit) and becasue your process server will not be able to personally serve them since they do not live there any longer, you will end up needing to publish notice against them (this is when you pay a local newspapaerr to publish notice of the court date ) - in Milwaukee the cost to do this is $60.

3. Is the ex-tenant collectible?

When you obtain a money judgment against a person, you essentially receive a piece of paper which is called a "judgment." Having a judgment against someone does not mean the same as getting paid on that judgment. I have yet to encounter any ex-tenant that came knocking on my door begging me to take the money that they owe me. Usually they require a little prodding. So, after obtaining a judgment you will often need to spend additional time and money to collect on that judgment. If your ex-tenant is not "collectible" then it may not even be worth it to sue them

There are numerous factors that you should consider when determining if a person is collectible or not. Are they employed? Do they have a bank account? Are they receiving need-based public assistance? Are they self-employed? Does their household income fall below the federal poverty line? Are their wages already being garnished? Have they been employed at the same job for a significant period of time? Do they have good credit? Are they currently paying child support? If so, how many children are they paying child support for and how old are the children? Are they incarcerated? Did they move out of state? These are only a few of the factors that you should consider when deciding how to proceed.

If the person is employed then you might be able to collect the judgment by filing a garnishment of their wages. A garnishment action is a separate lawsuit that requires you to purchase another summons. Even if the person is employed there are several exemptions that may prevent you from garnishing his/her wages. If the ex-tenant's houshold income is below the federal poverty line then they are exempt from garnishment. If the ex-tenant is receiving any state-based aid then their wages are exempt. 80% of a debtor's disposable earnings are exempt from garnishment, leaving only 20% that can be garnished at one time. If your ex-tenant is currently being garnished by another creditor you will have to wait in line until that garnishment is completed -- garnishments last for 13 weeks. If your ex-tenant is self-employed you can bet that they will not voluntarily garnish their own wages - so that option will be closed to you. If the debtor is paying child support for one child (typically 17% of their gross wages) there will not be much money left over for you to garnish. If the ex-tenant is paying child support for 2 children (typically 25% of their gross wages) there will be no money left for you to garnish. You will be forced to wait until these children reach the age of 18 or the child support orders are terminated. Even if you are fortunate enough to be able to garnish your ex-tenant's wages, if that individual should decide to leave their job or get fired, your garnishment will end.

Keep in mind that you are not allowed to intercept an individual's tax refund -- only the government can do that. If your ex-tenant is incarcerated s/he will not have any wages to garnish. If your ex-tenant has horrible credit already they will not care that you took another judgment against them.

You can also garnish a person's bank account. However, there are many exemptions that can apply here as well. For instance, the first $1,000 in the account is exempt from garnishment. Most tenant's that I have rented to do not have more than $1K in the bank. Any money in the account that is derived from government benefits is also exempt. If the garnishment exemptions do not apply, and you are lucky enough to be able to go forward, make sure that you do not make the mistake of serving the debtor before you serve the bank so that the debtor has time to drain his/her account.

If you do not possess the necessary information to evaluate whether or not a person is "collectible," you are able to serve the debtor with what is referred to as a Financial Disclosure Statement. This is a document that is signed by a judge or court commissioner and requires a debtor to divulge any assets, jobs, and bank accounts. The debtor rarely returns this document and therefore the landlord in once again placed in the position of deciding whether or not s/he should spend more time, energy and money to compel the debtor to provide the information.

4. Is there a chance that the ex-tenant may end up purchasing real estate in the future?

If you think there is a possibility that your ex-tenant will purchase a home within the next 10 years then it may be worth it to at least take a judgment against them and then docket the judgment. Docketing a judgment is very simple and only costs $5. By docketing a judgment a lien will be placed on any property owned by the debtor or acquired by the debtor within the next 10 years in the county in which it was docketed. The judgment will also accumulate interest at the rate of 12% per year. Because of this some landlords will choose to sue the tenant, obtain a judgment, docket the judgment, and then just sit and wait.

If you are stuck in a position where it just doesn't make sense to sue your ex-tenant because the amount owed is too little or the tenant is not collectible you should consider a new service offerred by Rent Recovery Service. For a small fee, Rent Recovery Service will report your ex-tenant's debt to the 3 credit bureas even if you do not have a judgment. By using RRS you will at the very least create havoc with the debtor's credit and will also alert any future landlords (that are smart enough to run a credit report) that the tenant owes money to a prior landlord. Who knows, that could be enough of a push to make the tenant pay you what is owed. For more information on Rent Recovery Service please see my prior post.

The decision to sue an ex-tenant for past due rent and damages is not always an easy decision. A lot of information and knowledge needs to be sifted through to determine if it is worth your time, effort, and money to initiate a lawsuit. I would enjoy hearing what other factors you consider when making this important decision -- please let me know by posting a comment.

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.

AASEW Has New Online Forum at MeetUp.com

The Apartment Association of Southeastern Wisconsin (AASEW) has recently joined MeetUp.com. Registration and participation is free.

Below is the introductory message by AASEW Board member and organizer, Tim Ballering:

Welcome to the Apartment Association of Southeastern WI. Thank you for joining our MeetUp group.

Our objective is to help members become more successful landlords, investors and managers.

We are the oldest and largest landlord group in Southeastern WI. Members include many larger owners, mom and pop owners, businesses that provide services to the rental housing industry, and many of the best landlord / tenant and real estate attorneys in the state.

The Association provides training in evictions, collections and other aspects necessary for you to succeed. Many of our business members offer discounts to Association members.

We also provide discounted tenant screening and bad debt reporting for our members.

We provide free eviction notices to members as well as other forms.

We are a nonprofit, member managed association since 1977.

We look forward to meeting you.

The Association's webpage

www.apartmentassoc.org

Have landlord or real estate questions? Join the discussion at:

http://groups.yahoo.com/group/ApartmentAssoc

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!