Milwaukee's Residential Rental Certificate Program Is On It's Way To The Common Council

On Tuesday, October 27, 2009, Milwaukee's ZND (Zoning, Neighborhood and Development) committee voted 3-2 to send the proposed ordinance to the Common Council for a final vote. The proposed ordinance, referred to as the Residential Rental Certificate Program, would require all rental property owners in 2 targeted areas of the city to apply for a certificate in order to continue renting out their property. The cost would be $85 per unit and would require the landlord to allow a warrantless interior search/inspection of his/her property in order to obtain the certificate. To read more about the proposed ordinance you should read my prior post on the topic.

A 2 plus hour hearing was held at which time the Department of Neighborhood Services Commissioner Art Dahlberg explained his reasoning for initiating the program and outlined the basic tenets of the ordinance. Sponsors of the ordinance including Aldermen Kovac, Wade, and Davis, spoke in favor of the program and offered their reasons for supporting the ordinance.

A large crowd turned out for the hearing and as a result an overflow room with a live feed had to be opened to accomodate all of the people in attendence. The public was allowed to provide comments, concerns, and criticisms of the proposed program and approximately 20 individuals spoke out.

Landlords and tenants in opposition to the ordinance pointed out several issues including: (1) a "disqualifying violation" was not clearly defined and as such could easily lend itself to arbitrary and capricious decisions by an inspector, (2) an owner of a large multi-unit rental property could be required to pay several thousands of dollars in fees, (3) the fact that the concerns for which the ordinance was allegedly created could be addressed by enforcing existing laws, and (4) issues of additional costs to landlords in an already horrible economy.

Alderman Michael Murphy requested that Commisioner Dahlberg investigate the issue of a sliding fee scale for larger multi-unit facilities and indicated that if that issue was addressed he would vote in favor of the ordinance next week. Also in favor of the ordinance was Alderman Wade and Alderman Bauman. The chair of the committee, Alderman Witkowiak voted against the ordinance arguing that the timing of the ordinance was poor and that it should not be instituted during this difficult economy. Alderman Witkowiak also felt that without a clearer definition of a "disqualifying violation" and the issue of sliding fee scale for multi-unit properties not addressed in the ordinance that this program should not pass to the Council for a vote. Alderman Zielinski also voted against the ordianance but failed to speak during the entire hearing.

There will be no further public hearings prior to the Common Council's vote next week which makes communicating with your aldermen even more crucial at this juncture. As I mentioned previously, this ordinance has been "fast-tracked" through the legislative process and if passed should be up and running by the new year.

You can read Journal-Sentinal columnist Tom Daykin's blog on the hearing here.

Milwaukee County Eviction Court to Alter Court Times During Flu Season

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

Below is the email info I received:

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

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

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

Hearing On Milwaukee's Residential Rental Certificate Program to be Held on October 27th at 10 am

A hearing on Milwaukee's proposed Residential Rental Certificate Program will be held before the Zoning and Development Committee on October 27, 2009 at 10 AM in room 301 of Milwaukee's CIty Hall.

It is at this hearing that people may speak in favor or against the proposed ordinance. The ZND committee will then decide whether or not the proposed ordinance should be referred to the common council for a vote by the alderpersons.

If you would like to read more about the proposed ordinance that will affect landlords in the UWM area and Lindsay Heights area on the north side of Milwaukee you should refer to my earlier post on the subject.

If you want to be heard. You need to be present at this hearing.

To determine your alderman and contact information go here.

City of Milwaukee's "Residential Rental Certificate Program" Is Unveiled

Well I have finally been able to get my hands on a preliminary copy of the city of Milwaukee's proposed mandatory rental inspection ordinance. The ordinance is sponsored by Alderman Kovac, Wade, Davis and Hines. The ordinance refers to the proposed program as a "Residential Rental Certificate" program. The program is really just a variation on "landlord licensing" and mandatorty rental inspection programs. I would encourage you to read the enitre proposed ordinance, but I have also set forth the key points below:

- This will be a 5 year pilot program.

- The targeted area includes the UWM area on the city's east side and the Lindsay Heights neighborhood on the city's north side. These areas were selected because the city believes the areas need to be monitored to prevent deterioration. Allegedly these two areas include older housing stock, have a high density of rental properties, have a higher percentage of complaints, and have high tenant turnover. The city feels that frequent inspections of the rental properties in these two areas are needed to maintain safe, decent, and sanitary living conditions.

- Every rental unit in the selected areas must apply for and receive a rental certificate before the owner is allowed to rent out the unit.

- The ordinance includes duplexes and larger multi-unit rental properties. Owner-occupied duplexes are excluded.

- The owner must also complete, sign and submit an application to the city that will include the owner's legal name, the address of the rental property, the owner's phone number, and the owner's date of birth.

- A fee of $85 must accompany each rental unit application.

- Prior to the city issuing a rental certificate the unit will be subject to an internal and external inspection by the Department of Neighborhood Services (D.N.S.).

- DNS will conduct the inspection within 60 days of receipt of the application.

- The owner must notify the tenant at least 2 days in advance of the inspection.

- A fee of $50 will be imposed if DNS is unable to gain access to the unit for inspection.

- If during the inspection DNS finds a "disqualifying violation" (defined as a condition that affects safe, decent and sanitary living conditions or other conditions that violate the city building code, building maintenance code or zoning code) the unit will be issued a 1 year certificate.

- Any violation identified during the inspection must be abated within a reasonable amount of time (to be determiend by DNS).

- If conditions are found that are determined to constitute an imminent danger to health and safety, DNS shall order the condition to be remedied and may limit or prohibit occupancy where approporiate.

- DNS shall reinspect the unit as necessary to determine if any "disqualifying violations" have been remedied. A reinspection fee may be charged.

- If no disqualifying violations are found the unit will be given a 4 year certificate.

- A temporary certificate can be given for up to 30 days if the disqualifying violations do not constitute a hazard to the occupants of the rental and if a plan to correct the violations is submitted and approved by DNS.

- After the certificate expires the owner will be required to renew the certificate and submit to another inspection and pay another $85 fee per unit.

- If after the issuance of a 4 year certificate, DNS determines learns that there is a building or zoning code violation, the 4 year certificate can be revoked and the city can choose to replace the 4 year certificate with a 1 year certificate.

- If at any time after the issuance of a 4 year certificate or a 1 year certificate, DNS determines that there are building or zoning code violations that are critical and constitute an unsafe or unfit condition, the city can revoke the certificate.

- Any violation identified after a certificate has been issued must be abated within a reasonable amount of time (to be determiend by DNS).

- Any person who purchases a rental unit in the targeted areas must apply for a rental certificate and pay the accompanying fee within 30 days of the purchase.

- Any person that sells a rental unit in the targeted areas must notify the purchasor of the property that a residential rental certificate is required by the city.

- An owner that fails to apply for a residential rental certificate will be fined $100 for the first infraction. If the owner fails to respond to a subsequent notices by the city the fine will increase to $150.

- Residential rental inspection fees will be charged against the owner's real estate and will be considered a "special charge."

If you would like to contact your alderman you can find contact information here.

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.