Update On Landlords' Lawsuit Against City of Milwaukee and Its Rental Inspection Ordinance

There has not been a lot of media reporting on the lawsuit brought by three landlords against the City of Milwaukee and its rental inspection ordinance so I thought I would take the time to update you on its status.

If you are unfamiliar with the basics of the lawsuit you should refer to my earlier post on the topic.

The City of Milwaukee has filed a Motion To Dismiss the Landlords' lawsuit. Essentially the City is arguing that the lawsuit against it should be dimissed because the City was not provided the proper notice of the landlords' claims prior to the lawsuit being filed. In Wisconsin, if a person wants to sue a government entity - which would include the City of Milwaukee -- the law states that prior to the lawsuit, the government entity must be served with a Notice of Claim. The City then has 120 days to review that Notice and either attempt to settle the claim or deny the claim. If the City does not deny the claim within the 120 days it will be deemed denied anyway. After the 120 days have passed, a person then has 6 months in which to file the lawsuit. If more than 6 months passes then the person would be precluded from filing the lawsuit.

The reasoning behind what is called the "Notice of Claim" statute (Sec. 893.80, Wis. Stats.) is allegedly to allow the government an opportunity to settle a claim in order to avoid expensive litigation. A secondary reason for the requirement is to provide the government with enough information so that it can budget accordingly for settlement or litigation.

As a quick aside: I have sued a government entity on behalf of a client in the past so I am familiar with the Notice of Cliam statute. In my opinion the government does very little during the 120 days after it is served notice. The typical reaction is to ignore the claim and not even take the time to deny it but rather to allow the 120 days to pass after which the claim will be automatically denied. In fact, I would even go so far as to say that based on my experience that the government typically ignores the Notice of Claim that is served upon it just to see if the aggrieved person will actually file a lawsuit. It costs very little to file a Notice of Claim (which often is done without the assistance of an attorney) but it is expensive to file a lawsuit. The government has little to no interest to pay money to someone unless it knows the individual who filed the claim is serious. Essentially the Notice of Claim statute is a "legal hoop" that the government makes you jump through to see how high you will jump. There may little to no reason for you to jump, but nontheless, jump you must.

So the City of Milwaukee is arguing that the plaintiff landlords' didn't file the Notice prior to filing the lawsuit and therefore their lawsuit should be dismissed.

In its response brief, the plaintiffs argue that a formal notice of claim need not always be served as there are exceptions to this requirement. The plaintiff landlords rely on a recent Court of Appeals decision, Kuehne v. Burdette, which held that the Notice of Claim statute does not always require a formal notice of claim to be served nor is it always required for a plaintiff to wait 120 days before filing a lawsuit against the government.

The plaintiff landlords make three key arguements in their brief in opposition to the City's motion to dismiss:

1. Because the City's Rental Inspection Ordinance became law on January 1, 2010 -- just 22 days after it was passed by the Common Council -- and because the nature of the lawsuit is to determine whether or not the ordinance is constitutional, the plaintiffs were unable to comply with the notice of claim statute.

2. The City had actual notice of the claim even if a formal notice of claim was not served on it.

3. The City sufferred no prejudice as a result of the plaintiffs filing the lawsuit without first filing a formal notice of claim.

The plaintiffs' first argument is very similar to the one made in the Kuehne case. In Kuehne, five residents of a town filed an injunction against the Town of Ledgeview in order to prevent it from holding a referendum on whether or not the town should incorporate. The court in Kuehne stated that the notice of claim statute probably did not apply in the context of the lawsuit because it is illogical that a town can use lack of notice as a defense when the Town by its own actions made compliance with the notice of claim statute impossible.

The plaintiff landlords argue that the exact same situation in Kuehne is at play in the lawsuit against the City of Milwaukee. The City adopted the new ordinance and Mayor Barrett signed it into law 22 days later. If the plaintiffs had been required to file a notice of claim the City would have been under no legal obligation to respond to the notice until approximately May 1, 2010. By that time the rental inspection ordinance would have been in effect for a minimum of 4 months without a court being allowed to examine the constitutionality of the ordinance. The City can't use the notice of claim defense in order to allow it to move forward with its unconstitutional ordinance.

The plaintiffs' second argument is that they City had actual notice of the claim because the plaintiffs, through the actions of the AASEW, advised the City of its concerns and objections to the proposed ordinance as eary as October 29, 2009. On October 29th yours truly sent a letter to the Common Council pointing out the various constitutional problems with the ordinance. Additionally, the AASEW's attorney (who is also the attorneyfor the plaintiff landlords) also sent a letter to the City Attorney on the same date setting forth the myriad of problems with the proposed ordinance. Additionally there were numerous communications between the AASEW, its attorneys, and the alderman that sponsored the ordinance (Nic Kovac) and the DNS Commisioner. So the City had actual notice of the plaintiffs' claims approximately two months prior to the filing of the lawsuit. By contrast, in the Kuehne case the plaintiff gave notice to the Town on the same day as the lawsuit was filed and the Court of Appeals found that notice to have been sufficient.

Finally, the plaintiffs argue that the City was not prejudiced by the lack of a formal notice of claim. If the purpose of the notice requirement is to allow a government entity time to potentially resolve a claim, the fact that the AASEW 9of which the plaintiffs are members) notified the City of the problems with the ordinance and even met to discuss the potential problems, demonstrates that the City had the opportunity to resolve the issue if it wanted to. In essence the City is arguing that the plaintiff should be required to jump through the legal hoop for the sake of jumping rather than because the jumping serves an actual purpose.

The City was allowed the opportunity to have the last word so it did file a reply brief to the plaintiffs' brief in oppostion to the motion to dismiss.

I would point out that even if the City should prevail on its motion to dismiss, all that this will do is cause delay. A notice of claim has already been filed and served on the City (just in case) and another lawsuit will be filed if needed. So essentially the City's motion, if successful, will just delay things rather then address the underlying issue -- whether or not the rental inspection ordinance is constitutional as written.

A hearing on the City's motion to dismiss is scheduled to be heard before Judge Timothy Witkowiak on May 21, 2010 at 9:30 am in room 412 of the Milwaukee County Courthouse. The hearing, as most legal proceedings are, is open to the public. For those of you unable to attend, I will provide you with an update hopefully during the week of June 1st after I have returned from my upcoming wedding and honeymoon.

Is It Time To Hire A Property Management Company?

I would like to state at the outset that this particular post is very different from my past posts. In the past I have tried to educate readers about various aspects of landlord-tenant law. I will not be doing that this time. My goal with today's post is to generate a discussion and to have you, the reader, provide me (and the other readers) with your thoughts and concerns regarding the topic of professional management companies and when a landlord should consider hiring one to handle the daily management of rental property.

You may be curious as to why I am writing a different type of post. The reason is quite simple and straightforward -- in the last month or two I have received several phone calls from landlords that are frustrated with dealing with their tenants and the daily management issues. My response to these calls is often along the lines of "welcome to being a landlord," but I have refrained from such comments lately as I have noticed that these are not just the usual rants about irresponsible tenants. Instead I am noting real frustration and a wish to get out of "landlording." Many of the individuals that I have spoken with have been very upfront in telling me that if they could afford to sell their rental properties that they would but since they cannot they have decided that they want to hire someone else to take over the management. They then ask me if I can provide them with the names of some professional property management companies that I would reccomend.

After giving the caller some names of property management companies, I make a point of explaining to the caller that hiring a management company does not make all of their problems disappear. I explain to them that there are a lot of different management companies out there. I point out to them that just like landlords, property management companies have different styles and ways of running their respective businesses.

Giving up the daily management of your rental properties is a big decision. The decision should not be made lightly. A landlord needs to find a company or manager that s/he feels confident in and comfortable with. It is important that you interview any managment company that you are considering hiring. You will be trusting this company with the care of your real estate investment -- take the time to get to know them and learn how they will handle their job. Some management companies are more "hands on" then others. Some are more "service oriented" then others. Some follow applicable landlord-tenant laws more than others.

Most management companies will handle everything that you can possibly think of if you want them to, such as:

- Finding tenants for your vacant units

- Showing the units to prospective tenants

- Screening applicants and vetting their applications

- Fielding complaints and maintenance requests

- Accepting rent

- Hiring contractors to make repairs or making the repairs themselves

and much more.

If you find the right property management company, it can be the best decision that you ever made. The exact opposite can be true if you choose the wrong company.

Even if you hire a company to manage your properties for you, it is important to understand that you -- the owner -- may still be held responsible/accountable if the management company does something wrong. If the management company does not understand fair housing laws and runs a discriminatory advertisement for your vacancy, both the management company and the owner could be sued. If the management company doesn't make adequate and timely repairs and as a result a tenant is injured, there is a strong chance that both the owner and the management company could be on the hook.

Some landlords wish to retain some level of control even after they hire a management company. I know of landlords that still choose to be involved in the tenant selection process but leave everything else to the management company's discretion. I have met other landlords that want to personally approve every repair that is made to their income properties. There are no "typical" situation. It all depends on what the owner wants and what the management company is willing to do.

Some management companies consist of 1 person. Others have hundreds of employees. Some offer their services on an a la carte basis while others offer various packages that the owner can choose from (kind of like a trim package for cars). Some only manage apartment complexes; others may take on the management of duplexes and single families.

I personally do not feel that there is a "right" time for each and every landlord to give up the daily management of their rental properties and turn it over to a professional management company. Its not like there is a certain "cashflow magic number" that dictates the hiring of a property management company. The best time to make that change -- or even if the change should be made in the first place -- depends on the specific landlord and his/her situation.

I believe that there are three issues that often casue the topic of hiring a property manager to the forefront for landlords. First, the landlord no longer has the time to properly manage their rental properties. Second, the landlord realizes that they are not "cut out" to handle daily management of rental properties. Third, a landlord gets "dinged" by a tenant. This could run the gamut from having an eviction action dismissed because of improper service of a 5 Day Notice, or getting sued by a tenant for making an improper deduction from their security deposit, or any other number of situations. These situations often arise becasue the landlord does not know th ebasics of landlord-tenant law for one reason or another. We have all met landlords that don't have a "clue" what they are doing . . . they usually are the ones that are not members of an apartment association, do not attend seminars, and don't read my blog : )

In my years as a landlord-tenant law attorney I have read many good articles that discuss what you should consider when hiring a property management company. One recent article that I came across is entitled What To Consider When Hiring A Property Management Company. Another article adressing the topic is entitled Should I Hire A Property Management Company For My Rental Property? What are the 10 Questions You Should Ask Before Hiring A Property Management Company? There are many more articles on the web that discuss this issue. I would suggest that you take the time to read these articles and others as they are very good at raising issues that you should consider when making this important decision.

If you have just finished reading the above paragraph and have now realized that this is the end of the post and are about to click away . . . DON'T. Please post a comment. If I don't get any comments on this post then I will be forced to just go back to the boring old lecture format. Nobody wants that, do they : )

Proposed Bill To Require Landlords To Disclose If Their Rental Property Was A "Meth Lab"

On March 26, 2010, Senators Lena Taylor and Spencer Coggs along with Senator Lehman sponsored 2009 Senate Bill 650. SB 650 will affect both landlords and sellers of real estate in which the drug methamphetamine has been manufactured.

The bill requires both owners wishing to sell and landlords wishing to rent property that was used as a "meth lab" in the past to disclose in writing this fact to potential renters and purchasors.

If methamphetamine was manufactured on the property the seller of the property must disclose this in the real estate condition report. If a landlord is renting a property that was previously used as a "meth lab" then the landlord must disclose this in writing to any potential renters.

The production of "crystal meth" has become an increasing problem, one that does not just affect city properties. In fact more and more meth labs are being discovered in rural areas where the illegal activity is far less likely to be noticed.

Studies have shown that the hazardous chemicals that are used to make meth and the chemicals which are a produced during the manufacture of the drug can seep into floors, ceilings, walls, duct work etc. and can remain for years. I believe that this discovery is the prime impetus for the creation of this bill.

While I think this is a good bill, it goes without saying that any landlord or seller of real estate in which meth has been manufactured will have a very difficult time renting or selling this property if the bill is passed. As a result it is more important than ever for landlords to visit and inspect their rental properties. To be a good landlord you need to know what is going on in your units. Wisconsin law allows landlords to make periodic inspections of their rental property with at least 12 hours notice (ATCP 134.09 (2). Landlords should take advantage of this opportunity to inspect their rental units ---- especially if they suspect illegal activity.

Do Not Miss Next AASEW Meeting on How To Manage The Financial Side of Your Rental Properties

On Monday April 19, 2010 at 7 pm the AASEW will hold its monthly membership meeting. This meeting will focus on how to manage the financial side of you rental property business. The AASEW is very excited to have Mr. Tim Nolan, CPA of Nolan Accounting Center as the featured speaker.

Mr. Nolan works with smal businesses and property owners and gives special focus to income taxes and business management.

I have known Tim personally and worked with him for the past several years. This should be a very informative meeting and I hope to see everyone there.

The meeting is held at the Best Western Midway Hotel on 1005 S. Moorland Road in Brookfield. Meeting will start promptly at 7 pm.

The AASEW will be holding its Trader's Corner (where you can meet with other members to buy, trade and sell rental properties) at 6:30 prior to the main meeting.

With A Month To Month Rental Agreement A Landlord Has More Options Than Just The 5 Day Notice

One reason many landlords choose to enter into a month to month tenancy (m2m) with a tenant rather than a 1 year lease (or other term lease) is because it is easier to remove a tenant under a m2m tenancy.

In a m2m tenancy a landlord has the choice of serving a tenant with a 5 Day Notice for failure to pay rent, a 14 Day Notice for failure to pay rent or for any other non-rent breach, or a 28 Day Notice. One of the notices -- the 28 Day Notice -- can legally terminate a m2m tenancy without the tenant even having committed a breach.

The 5 Day Notice:

Under a m2m tenancy a landlord has the option to serve the tenant a 5 Day Notice if the tenant fails to pay rent. A 5 Day Notice allows the tenant the right to pay the past due rent within the 5 day cure period and if that is done then the tenancy continues and the tenant can remain. If the tenant fails to pay rent within the 5 days then the tenancy is terminated and the landlord may file an eviction action against the tenant if they have not already vacated.

Please be aware however that the Wisconsin Statutes do not allow a landlord the option of serving a 5 Day Notice on a M2M tenant for a breach other than non-payment of rent. See sec. 704.17(1)(b), Wis. Stats. It is not clear why the law is written this way and it is my opinion that is should be changed because not all landlords wish to terminate a tenant's tenancy with a 14 day notice just because they breached the rental agreement for something other than paying rent. Although as written, Wisconsin law seems to require this.

NOTE: I am not sure why, but many landlords believe that they are required to serve a tenant with a 14 Day Notice after the tenant has been served -- and not cured -- a 5 Day Notice. This is not true and is not required under Wisconsin law. If a tenant is served a 5 Day Notice for committing a breach and does not cure the breach within 5 days the landlord is NOT required to then serve the tenant with a 14 Day Notice. If a 5 Day Notice is not cured (and the tenant has not voluntarily vacated the property) then the landlord should immediately file an eviction action to remove the tenant. This is true whether the tenant is under a m2m tenancy or under a term lease.

The 14 Day Notice:

If a tenant commits a breach under a m2m tenancy the landlord can legally bypass the 5 Day Notice and proceed directly to a 14 Day Notice. Under a 14 Day Notice the tenancy will terminate at the end of the 14 days and the tenant has no right to cure the breach and remain. At the end of the 14 days the landlord is entitled to file an eviction to remove the tenant if they have not vacated. A 14 Day Notice is basically a "1 strike and you are out" notice. Landlords using m2m rental agreements do not have to give a tenant the opportunity to cure the breach.

This is a key difference between a m2m tenancy versus a term lease. If a tenant commits a breach for the first time under a term lease, the tenant must be given the opportunity to cure the breach. A landlord using a term lease can only serve a tenant with a 14 Day Notice if this is the tenant's second time committing breach within a 12 month period and the tenant was previously served a 5 Day Notice for the same or similar breach.

The 28 Day Notice:

The other major distinction between a term lease and a m2m tenancy is that a tenant under a m2m can have their tenancy terminated even if they have not committed a breach with a 28 Day Notice. So a landlord using a m2m rental agreement has the option to issue his/her tenant a 28 Day Notice to vacate for any reason or no reason at all. The only restriction is that the landlord cannot serve a 28 Day Notice to retaliate or discriminate against a tenant.

Summary:

Under a lease for term a landlord may only terminate the lease if the tenant has committed a breach. If it is the first time that the tenant has committed a breach, a landlord must serve the tenant with a 5 Day Notice which allows the tenant the opportunity to cure the breach.

A tenant under a m2m tenancy is not afforded the same protections. A m2m tenant can be removed even if no breach has been committed by simply serving them with a 28 Day Notice. If the tenant has committed a breach, the landlord can choose to serve a 14 Day Notice (which does not allow the tenant the opportunity to cure the breach), a 5 Day Notice if the tenant fails to pay rent (which does allow the tenant the opportunity to cure the breach and remain as a tenant), or a 14 Day Notice if the tenant has committed a breach for something other than non-payment of rent (which does not allow the tenant the opportunity to cure the breach).

The ease in removing a tenant under a m2m tenancy is a significant reason for first time landlords, landlords that have had difficulty with past tenants, or any landlord that wants to have flexibility to consider using a m2m rather than the ol' standby 1 year lease. I personally only offer my new tenants a m2m rental agreement. It is only after a period of time has passed and the tenant has proven to me that they will pay their rent on time and that they will treat my rental property with care --- in other words they have demonstrated responsibility --- that I will offer them the opportunity to enter into a 1 year lease.

BLOG COMMENT: What If Tenant Does Not Give You Proper Notice To Vacate? . . . and Other Questions.

I recently received a very good question through my blog but because it was posted under my "About The Author" section I don't think enough people would see it so I decided to reprint it as a post.

THE QUESTION:

Good Morning,

I will start by saying thank you for this forum, I find it very helpful and one of a kind. I know you must be very busy but I was hoping you could point me in the right direction regarding a question I have. I am a landlord and I had tenants move without giving a 90 day notice which was one of the provisions I set within their lease. I think this is a breach of contract and if so can I to take them to court? Would it still be filed by small claims, and is there a time limit I must file within? Can I even file for this? Thanks for your time.

THE ANSWER:

Thank you for your kind words and I am happy to hear that my blog is helpful to you.

You did not mention if your rental agreement was a periodic tenancy (month to month or something similar) or a lease for term (1 year lease etc.). I will assume that it is the latter.

If a tenant breaks a lease for term and moves out prior to the ending of the term a landlord has a duty to make reasonable efforts to re-rent the unit. The tenant will remain responsible for paying rent if the landlord is unable to find a tenant to re-rent. The tenant will also be responsible for paying the costs incurred by the landlord to re-rent the unit. The applicable statute dealing with this issue is Sec. 704.29, Wis. Stats.

If you have a term lease that states the tenant must give 90 days notice if they plan to move out at the end of the lease term and the tenant completes the lease term and then moves out but fails to give the landlord notice then you have an entirely different situation then when a tenant breaks a lease and moves out early. In this situation the tenant completed the full term and actually did not breach the lease. Because it was a lease for term and the tenant completed the full term of the lease the landlord cannot hold the tenant responsible for an additional 3 month’s of rent (over and above the lease term) just becasue the tenant failed to give the 90 day notice — the reason being that the tenant did complete the term of the lease. Such a notice provision in lease is legal and are included to assist the landlord so that the landlord will be alerted by the tenant if the tenant intend to leave at the end of the term BUT a landlord should not solely rely on the tenant to provide that notice. It is the landlord's job to determine whether or not a tenant intends to enter into a new lease after the full term of the initial lease is completed.

It is good practice for a landlord to send a reminder to the tenant prior to the 90 days notice period (or whatever notice is set forth in the rental agreement) and either (1) advise the tenant that the lease will not be renewed and providing the tenant with move out instructions, or (2) include a new lease and ask the tenant to sign the documents and return them within X days if they intend to stay for another term. If the tenant does not return the newly signed lease to the landlord within the requisite time period then the landlord may choose to follow up with a telephone call to the tenant if s/he wants to but it is not necessary and the landlord may assume that the tenant will not be renewing the lease and the landlord should began to advertise and make efforts to re-rent.

To try and hold the tenant responsible for an additional 90 days rent beyond the completed rental term because the tenant did not provide the landlord with the 90 day notice that they would be vacating at the end of their lease would be in violation of both ATCP 134.09(3) and Sec. 704.15, Wis. Stats., regarding “automatic renewal clauses.”

To address the second issue that you raised in your comment (assuming it is not moot because of the above answer) small claims has jurisdiction over any civil lawsuits that are seeking $5,000 or less in damages. So if you were attempting to collect 3 months of rent from a tenant (and they have already moved out thus negating the need to file an eviction) then as long as the 3 month's of rent is less then $5,000 you would file that collection action in small claims. See sec. 799.01(d), Wis. Stats. If you were seeking damages greater than $5,000 then you would need to file suit in large claims and pay the higher filing fee.

Addressing the next issue raised in your comment, individual persons are allowed to represent themselves in court whether in large claims or small claims (whether or not that is advisable is a separate question that I will not address). Business entitites (corporations, LLC’s etc.) are not allowed to be represented in large claims lawsuits by a non-attorney — you would need to hire a lawyer to represent your business entity in large claims.

In small claims actions, the law carves out a small exception and will allow a business entity to be represented in court by a full-time employee of the business entity. Sec. 799.06(2), Wis. Stats. Milwaukee – more than any other county – is enforcing this strictly and requires a copy of a W2 from the employee issued by the entity to verify this. Managing members or sole members of an LLC are not considered to be a full-time employee of the LLC unless they are paid income by the LLC.

For additional discussion on this topic please refer to my May 15, 2009 post, July 21, 2009 post, July 30, 2009 post, and Sept. 2, 2009 post.

Your final question, asks if there is a time limit in which you must file a lawsuit against your tenants for failure to give the requisite 90 day notice to you prior to vacating. As I mentioned above, depending on your specific fact situation and the type of rental agreement you are using, you may not even have a claim against your tenant for the 3 month's rent. However, assuming you do have a claim it would be a claim for breach of contract and the statute of limitations for breach of contract claim is 6 years from the date of the breach.

I hope that helps

T

What Is The Life Expectancy of the Carpet (or Refrigerator or Stove or Hardwood Flooring) In My Rental Unit?

Those of you that have appeared in eviction court in an attempt to obtain a money judgment against a tenant that has damaged your rental unit know that oftentimes the court will not allow you to recover the total cost to replace the damaged item. Even when the court agrees that the tenant caused the damage there will be times when a landlord cannot obtain the full replacement value.

Often when this occurs it is due to issues surrounding the life expectancy of the item that was damaged. Whether it is carpet, a stove, mini-blinds, or a hardwood floor, all items have an estimated life expectancy.

If the item is well past it's life expectancy it would not be fair to award the landlord the full replacement cost because to do so would put the landlord in a better position than s/he was in prior to the item being damaged by the tenant. To award the landlord the full replacement cost of a damaged item may result in the landlord obtaining what is often referred to as a "windfall" --- and courts do not like windfalls.

Let me give you an example to better illustrate. Assume the following facts:

1. The carpeting in your rental unit is 5 years old.

2. The life expectancy of carpeting in a rental unit is 10 years.

3. The tenant damaged the carpeting by spilling Kool-Aid and cooking oil throughout and in the spots where there are not stains there are cigarette burns as the tenant used the carpet as an ashtray.

4. The carpeting cannot be repaired and must be replaced.

5. Total cost to replace the carpeting is $1,000 (I am trying to keep things simple so I don't confuse myself with the math : )

Under the example above, a court would most likely only allow the landlord to recover $500 in damages against the tenant for the replacement of the carpet.

The reasoning is that since the tenant moved into a rental unit with 5 year old carpeting, the landlord should only be able to recover for damage to a 5 year old carpet. As such, the court will only allow the landlord to recover a percentage of the actual cost to replace the carpet. In this example that would be $500 - or half of the actual cost -- because the carpet was already 5 years old (out of its expected 10 year life span) when it was damaged. If the courts allowed the landlord damages of $1,000 then the landlord would be gaining a windfall because (in theory) the landlord would be getting the tenant to pay for the entire cost of brand new carpet (rather than 5 year old carpet).

I know that many of you are snickering as you read this and are saying "the tenant is not going to be pay me anything as they are not collectible and I will never see any money." That may be true -- and I empathize with you -- but I am merely trying to explain why courts will not allow a landlord to recover all of his/her replacement costs.

In Milwaukee County there has always been an unwritten rule -- at least as long as I have been practicing law -- that the life expectancy of carpeting in a rental unit is 10 years. I never knew where that number came from - I just knew that it was used. Other counties may have assigned a different number to the life of rental carpeting, I don't know, but in Milwaukee it is 10 years.

I have always wished that there was a resource that I could look to that listed the life expectancies of various items found in a rental unit such as carpeting, mini-blinds, sinks, hardwood floors etc. etc. I have yet to find such a resource, but while reading the blog of another landlord -- John ("Dr. Rent" ) Fischer -- I noted mention of a resource that set forth the life expectancies of various household items. John, who besides being a landlord is also a property manager, blogger, and president of the Wisconsin Apartment Association, was nice enough to provide me with a copy of that resource.

Here is a link to the document that lists the life expectancy of different products or items in the home.

We all know that the life expectancy of items in a rental property are much less than the life expectancy of furnishings in our own homes. Let's face it, rightly or wrongly, people do not treat property owned by a landlord as nicely as they would treat the property if they owned it themselves (and had to pay to repair or replace the item themselves if it were damaged).

Nonetheless, having a document that compiles the life expectancy of items contained in an owner-occupied home is still a good starting point.

This information in this document was taken from various sources such as:

- Magazines: Appliance Magazine (Sept. 2005)

- Specific Manufacturers: Timberlake Cabinet Co., United States Ceramic Tile Co., Delta Faucet Co., Floortec, Georgia Pacific Corp.

- Associations: National Wood Flooring Association, American Concrete Pipe Association.

CAUTION: This information should be used as a general guideline only. As I mentioned previously, the information provided is for the life expectancy of items in an owner-occupied home -- not a rental unit. Additionally, much of this information is provided by specific manufacturers and may not be the same for the item that you are using in your rental property which might have been manufactured by a different company.

MORE CAUTION: None of the information in the attached table should be interpreted as a representation, warranty, or guarantee regarding the life expectancy or performance of any individual product or product line. You should not make a buying decision or product selection based solely on the information contained in this table.

EVEN MORE CAUTION: The table is not a legal document and cannot and should not be cited in court.

I am merely providing this information to assist landlords who are attempting to determine a reasonable percentage of replacement cost to charge a tenant that has damaged your rental unit. This information may also assist a newer landlord who does not have years of experience on which to rely when attempting to estimate the life expectancy for certain item in his/her rental property.

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

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

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

NEW LANDLORD FORM NOW AVAILABLE REGARDING TENANT'S RESPONSIBILITY FOR LAWN CUTTING AND SNOW REMOVAL

I have recently completed drafting a new form for landlords to use that is now being sold at Wisconsin Legal Blank Co., Inc.

Addendum To Residential Rental Agreement: Responsibility for Yard Care and Exterior Upkeep

Form #985 is entitled Addendum To Residential Rental Agreement. This document sets forth a tenant's responsibility for yard care and exterior upkeep of the rental property. This form should only be used if the landlord is renting out a single-family home or a duplex and wishes the tenant to be responsible for yard care and exterior upkeep (such as snow and ice removal and the cutting the lawn). This form should not be used for multi-unit apartment buildings.

This document addresses the following tenant responsibilities:

1. Snow and ice removal

2. Cutting of grass

3. Disposal of garbage

4. Disposal of recyclables

5. Removal of litter/debris

6. Special pick-up of large items

7. Exterior lighting

8. Porches

9. Windows

10. Damage to exterior

11. Parking of vehicles

12. Washing of vehicles

13. Swimming/wading pools

14. Watering of grass, and

15. Yard tools

This form states that if the tenant fails to perform any of the listed duties that the landlord can choose to do the work himself or herself or hire someone to complete the work and that the tenant will be responsible for repayment of any and all associated costs. Additionally the form indicates that failure to complete the listed duties is a material breach of the rental agreement and may be grounds for eviction.

This addendum is a nonstandard rental provision document (refer to ATCP 134.06(3)(b)) and as such it allows a landlord to deduct the actual costs incurred by the landlord (should the tenant fail to complete the duties) from the tenant's security deposit.

It is important to remember that form #985 is just that -- a form. Some of the paragraphs may not be applicable to your specific situation. Some landlords may decide that they do not want the tenant to perform some of the listed work. In that case the landlord should cross out the provisions that are not applicable and then initial the change and have the tenant also initial the change.

There will be other situations where a landlord may want the tenant to be responsible for additional duties which are not listed in the form. In that case the landlord should attach a separate sheet which will list the additional duties. This attachment should clearly be labeled as page two of the Addendum To Residential Rental Agreement: Responsibility for Yard Care and Exterior Upkeep and should also be signed and dated by all adult tenants. As always, if you are unsure whether any additional provisions that you add to this form are allowed under Wisconsin landlord-tenant law, you should have those additions reviewed by an experienced landlord-tenant law attorney.

Since many landlords of duplexes and single-family rentals do require their tenants to perform yard care and other related duties, it is my hope that this form will assist landlords in specifying in writing what duties the tenant will be responsible for and what will happen if the tenant shirks those responsibilities.

I would like to thank Attorney Heiner Giese for his review and suggestions to this form.

State Supreme Court To Jump Into The Debate Over Restricting Information on CCAP

The Journal Sentinel published an article on Saturday, March 13, 2010 entitled "Supreme Court Considers Limits To Online Court Records." It appears that while landlords have pretty much quashed Rep. Schneiders attempts to pass legislation on the restriction of infromation posted on CCAP, that the State Supreme Court will be reviewing the issue in the near future.

Patrick Marley's article states that Rep. Schneider did not believe his CCAP bill would come up for a vote this spring. However, Marley states that in an administrative meeting last month, the Wisconsin Supreme Court agreed that they should study limiting what is posted on CCAP. Justice Prosser was quoted as saying that "whatever problems we have has been incredibly exacerbated by CCAP and the Internet. The case for redress is much too compelling to just let it die."

The State Bar of Wisconsin has also asked the Supreme Court to make it easier to remove CCAP records and filed a request with the Supreme Court to make it easier to expunge records, both online and at the courthouse.

So while the legislative attempt to restrict CCAP may be over the overall fight appears to be continuing. Be sure and read the comments to Marley's article for a lively discussion for and against restrictions on CCAP.

AASEW Trader's Corner To Be Held Prior to Monthly Meeting on Monday, March 15th

Are you thinking about buying or selling or trading? Or, maybe you're just wondering where the RE market is currently at. Or, maybe you know a non-member (future member?) who is. No matter, because all are welcome to join us at the new AASEW Traders' Corner.

If that isn't enough, check this out. The Traders' Corner is also a great place to find a buyer for that truck you no longer need or someone selling their over-supply of rehab materials. Whatever it is that you are looking to find or trying to sell that is related to our business, this is the place to be.

If all of that still isn't enough, consider the networking possibilities.

When? Monday, March 15th, 6:30 - 7:00 PM

(One half hour before the AASEW General Meeting)

Where? Best Western Motel, 1005 S. Moorland Rd.

(I-94 to Exit 301A, then south 1/4 mile)

We look forward to seeing you there.

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

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

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

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

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

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

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

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

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

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

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

1. Battery (or related crimes),

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

3. Criminal gang activity,

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

5. Prostitution (or related crimes),

6. Harassment (or related crimes),

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

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

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

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

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

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

I Discovered A Really Informative Blog Devoted To Fair Housing Issues

This past weekend I was trying to think of some ways to add some variety and fun to Tristan's Landlord-Tenant Law Blog. While I feel that my blog is informative and helpful I wish that I could make it more fun. Toward that end I decided that I would spend some time trying some new types of blog posts in the future -- a list post (i.e. Top Ten Reasons To Not Allow Cats in Your Rental Unit, Top Ten Excuses for Paying Rent Late), a video post, a book review post.

Those of you that are regular readers of my blog or those of you that have met me personally may know that I really enjoy learning knew things relating to Landlord-Tenant law. Because of this, I was really excited this past weekend to discover a blog devoted totally to discrimination/Fair Housing issues.

The Fair Housing Blog is published by Attorney Ron Leshnower. He started his blog in 2008 to coincide with the 40th anniversary of the Fair Housing Act. The purpose of his blog, according to his bio, is to explore housing discrimination issues that are important and interesting but do not always get much press.

This blog covers all issues that could possible arise in the Fair Housing context. He talks about all of the protected classes, reasonable modifications and reasonable accomodations for individuals with disabilities, testing, voice profiling, steering, and many more issues. What I like most about this blog is that the author provides links to the actual legal documents that the federal or state government filed against the landlord, property manager, or owner who allegedly violated the law. This allows you to read the actual factual allegations. While many of these lawsuits are resolved without a need for a hearing and therefore there is no written decision necessary, it is still very enlightening to read about what specific situations are egregious enough to cause the government file a lawsuit.

What better way to learn then from other's mistakes. Some of the author's blog posts include links to fair housing studies performed by various municipalities as well as media reports.

If you are interested in Fair Housing issues as I am or just want to learn what type of actions can land you in trouble I would encourage you to spend some time at the Fair Housing Blog.

I have previously posted a three-part series about Fair Housing law that will give you some useful basic information to better understand the Fair Housing Blog. You can read those posts here, here and here.

SECURITY DEPOSIT TRANSMITTAL LETTERS: How To Draft A Legal 21-Day Letter

Security deposit withholding issues are the second most litigated area in landlord tenant law after evictions. If a landlord makes improper deduction from a tenant’s security deposit, pursuant to ATCP 134 and §100.20, Wis. Stats., the tenant may sue the landlord for double damages and attorney’s fees. There are numerous published Court of Appeals decisions in Wisconsin dealing with this exact issue. I would like to offer a few suggestions to landlords which will hopefully keep you from making any improper security deposit deductions.

First, we need to address some basics . . .

A security deposit is defined as "any payment that is given to a landlord as security for the performance of the tenants obligations under the rental agreement." ATCP 134.01(11).

ATCP 134.06(2), states that "within 21 days after a tenant surrenders the rental property, the landlord shall deliver or mail to the tenant the full amount of any security deposit held by the landlord, less any amounts properly withheld by the landlord."

If you would like to know what a landlord may legally deduct from a tenant’s security deposit you will want to read my Jan. 17^th post.

ATCP 134.06(4), states "If any portion of a security deposit is withheld by the landlord, the landlord shall, within the time period and manner prescribed in sub.(2) – 21 days -- deliver or mail to the tenant a written statement accounting for all amounts withheld. The statement shall describe each item of physical damages or other claim made against the security deposit, and the amount withheld as reasonable compensation for each item or claim."

I will refer to this written statement interchangeably as either the "security deposit transmittal letter" or the "21-day letter."

According to ATCP 134 all prepaid rent in excess of one month is legally considered to be a security deposit. So if you require a new tenant to pay first and last month's rent plus a security deposit, legally the security deposit will also include the last month’s rent

Essentially a landlord must either return a tenant’s security deposit or send the tenant an itemization of how the tenant’s security deposit was applied within 21 days after the tenant surrenders the premises. This is mandatory. No matter what the situation – even if you are legally entitled to keep all of the tenant’s security deposit – you must still send the tenant a letter explaining to them why you can legally keep it and how it was applied. There is no situation in which you should not be sending the 21-day letter to a vacating residential tenant in Wisconsin. Even if common sense tells you it is not necessary (i.e. the tenant told me to use his/her security deposit to pay for the last month’s rent) you should still send out the letter. If you are wrong the ramification may be expensive. Be safe - send the letter each and every time.

As I mentioned in a previous post about what a landlord can legally deduct from a tenant’s security deposit, ATCP 134.06(3) states that you can only deduct the following from a tenant’s security deposit: (1) damage, waste, neglect, (2) unpaid rent, (3) utility costs, (4) any other items properly identified in a document called Nonstandard Rental Provisions (NSRP).

Note: There are two additional items listed in ATCP 134.06(3) which may be deducted from a tenant’s security deposit but they are not very common so to keep things simple I have not chosen not to mention them in this post.

So if you are not using a NSRP then legally you may only withhold for rent, utilities, and damage or waste or neglect. That is it. Nothing more. If you would like to be able to legally deduct other things from a tenant’s security deposit such as late fees, insufficient funds fees, actual costs charged by a municipality that the landlord had to pay resulting from the tenant’s failure to cut the grass or properly dispose of recyclables etc. -- then you must have those deduction listed in your NSRP and signed or initialed by the tenant.

My suggestions . . .

Now that we have covered the background information, here are my suggestions for how you should draft a 21-day letter to a tenant.

1. Mail the 21-day letter early.

Many landlords get into trouble because they wait until the last day to send out the letter. You only have 21 days from the date that they tenant "surrenders" the unit.

ATCP 134.06(2)(b) defines "surrender" as follows:

a. The last day of the tenancy provided under the rental agreement.

b. If tenant vacates before the last day of the tenancy and gives landlord written notice that they have vacated, then surrender occurs when the landlord receives the written notice.

c. If tenant vacates after the last day of the tenancy, then surrender occurs when the landlord learns that the tenant has vacated.

d. If tenant is evicted, surrender occurs when the writ is executed by the Sheriff or when the landlord learns that the tenant has vacated, whichever occurs first.

If that sounds a bit confusing to you that is because it is confusing! So the key is to not wait until the 21^st day to send out the letter. Send it out as soon as you can. Don’t wait until the 21st day to mail it to the tenant because there is always a chance that there will be a dispute as to what day the tenant "surrendered the property."

A client of mine was once sued for failing to return a tenant’s security deposit within the required time period. The tenant allegedly dropped off the keys in the rental office drop box on a Sunday before the Memorial Day holiday. The office was closed on Monday because of the holiday so my client didn’t learn that the keys were returned until she came into the office and noticed them on Tuesday following the holiday. My client considered the date of surrender to be on Tuesday. My client mailed the tenant’s entire security deposit to them on the 21^st day from that Tuesday.

The tenant sued my client arguing that the 21-day letter and the enclosed return of the security deposit was sent on the 23^rd day rather than the 21^st day after surrender. The tenant argued that the date of surrender was on the Sunday when the keys were dropped off rather than on the Tuesday when my client discovered them. The court commissioner handling the case agreed with the tenant. My client had returned the tenant’s entire security deposit to him but nonetheless was still ordered to pay double damages and a reasonable attorney fee.

While I disagree with the decision of the court commissioner (based on the definition of "surrender" and for equitable reasons - the tenant got the entire deposit back) that is not the point. The point is that my client should never have waited so long to return the security deposit to the tenant. Since my client was returning the entire security deposit to the tenant there was no need to obtain estimates for damage to the unit or have repair work completed. They could have easily mailed it back 2 days earlier, or 5 days earlier, or 2 weeks earlier for that matter. There is no reason to wait the full 21 days.

Yes, I realize that sometimes you may need additional time in order to properly identify all the tenant damage and obtain estimates for those repairs. Sometimes that will be the case. But oftentimes there will be no reason to use the entire 21 days to return the deposit or send the letter, but yet this is what many landlords do. This leads to my second suggestion.

2. Your 21-day letter need only explain how the security deposit was applied and nothing more. You do not need to list all of the damages that the tenant owes you - just enough to cover the security deposit.

ATCP 134 only requires that a landlord account for how the security deposit was applied. It does not say that you must provide the tenant with a complete written list of all damages or money owed – just enough to explain how the security deposit was used.

Here is an example:

Tenant, Joe Smith, vacates the property on the last day of the month of January. While the tenant provided proper notice to terminate his tenancy he failed to pay January’s rent. Mr. Smith left the rental unit in a mess. There was damage, beyond normal wear and tear, to the carpeting, walls, and floors. There were window screens missing. Window blinds were trashed. The place was essentially left a mess and the cost to repair the damage will be very expensive.

Question: Under this scenario, when should the landlord send out the 21-day letter?

Answer: The landlord should send out the 21-day letter the day after the tenant vacated - Feb. 1st.

If rent is $500 and the tenant failed to pay the last month’s rent then you have all of the information that you need to notify the tenant why they are not getting their security deposit back. Remember you are only required to explain how the security deposit was applied. You are not required to notify the tenant within 21 days of all the damages that the tenant owes you because he trashed the place.

In the above example, the tenant failed to pay January’s rent in the amount of $500 which just so happens to be the same amount as the tenant’s security deposit. So even if there are lots of damages to the unit you can still send out the 21-day letter the day after the tenant surrenders the unit because you have enough information to account for the application of the security deposit. Your letter should simply state that the tenant failed to pay the last month’s rent for which he was legally responsible and that you will be applying his security deposit of $500 toward the last months’ rent and no portion of his security deposit is being returned. You have now complied with the ATCP 134 regulations.

Now you can take your time, if needed, to obtain estimates for all the tenant-caused damage to the unit and send the tenant a separate letter on a later date notifying him of the additional money he owes you.

By remembering this simple rule it has been my experience that many 21-day letters can be mailed out well before the 21 day period closes.

3. If you are able, make only "slam dunk deductions" from a tenant’s security deposit.

"Slam dunk deductions" are deductions that the tenant would have a difficult time arguing about. If you have enough "slam dunk deductions" to cover the entire security deposit then the tenant is less likely to sue you for allegedly making an improper deduction from his/her security deposit. Examples of "slam dunk deductions" would be items such as rent and/or utilities. As long as you have a written rental agreement with the rent amount listed and it indicates what utilities the tenant is responsible for paying, these two types of deductions tend to be the safest to make. This is not always the case (especially if there are arguments about if proper notice to vacate was given by the tenant) but for the most part rent and utilities are safe items to deduct.

In my 15 years of representing landlords, I have found that most tenants will be truthful and admit if they did not pay rent and if they failed to pay their utilities. However, tenants are rarely willing to concede that they left the place a mess or that they caused damage. I am not sure why this is - someone should conduct a study of this! As such, deductions for repairs or cleaning charges are NOT "slam dunk deductions." Rather they are deductions that often are disputed by tenants - so try to avoid them if possible. Keep things simple and you will lesson you exposure to a lawsuit.

Let’s take the example mentioned above and change the facts. Assume that the tenant, Joe Smith, did pay the last month’s rent and did not owe any utilities, and therefore the only possible legal security deposit deductions that you could make are the non-slam dunk items related to the property damage. Under this scenario, my "slam dunk deductions" theory is not helpful, so you must proceed to my next suggestion.

4. Itemize all deductions separately and clearly, and enclosing all invoices for the cost of repairs (or estimates if the work has not been completed), photographs, copy of the Check-In/Check Out Sheet, and always error on the side of caution.

If the only legal deductions that can be made from a tenant’s security deposit are for damages to the unit then you very well may need most of the 21 days to obtain your estimates and or make the repairs. If you are unable to have the repairs completed or even obtain estimates within 21 days you still are required to send out the 21 day letter. In that situation I caution you to error on the side of under-estimating the cost of the repairs.

You 21 day letter should be clear and detailed. The purpose of the letter is to explain to the tenant what happened to their deposit. If you are clear in your explanations as to how that deposit was applied there is less of a chance that your tenant will sue you. If the tenant cannot understand the deductions that you made because you did not clearly explain them in the letter or your handwriting is illegible then s/he may think that you are treating them unfairly and that will increase the chances that they will sue you.

Take photos of the damage left behind by the tenant. Hopefully you also have photos that were taken prior to the tenant moving in which will show that the damages caused by the tenant were not preexisting. A Check-In/Check-Out form which you and your tenant completed at the outset of the tenancy, noting any pre-existing damages prior to them moving in, will also be helpful.

If you take the above precautions there will be a better chance than not that a tenant will not sue you for making improper security deposit deductions because s/he will be able to understand the deductions that you made and s/he will also know that you have evidence to support your deductions. Even if the tenant does decide to sue you, you will now be better prepared to defend yourself in court if that is where you end up.

Keep in mind, that if you are unsure whether you can adequately prove that your tenant caused the damage then it is safer to not make the deduction from their security deposit. You will need to engage in some cost-benefit analysis as well as analyze your willingness to take risk. Ask yourself if the $100 deduction that you want to make (and which you cannot adequately support) is worth the chance of having to pay the tenant double damages ($200) plus the hundreds or thousands in attorney’s fees if a court commissioner or judge disagrees with you.

ADDED ON APRIL 21, 2010 --- The law does not require that all damages be prepared prior to you making a deduction from a tenant's security deposit. Unfortunately many courts do not realize this. It should be noted that the Department of Agriculture, Trade and Consumer Protection, the governmental entity that drafted ATCP 134 and the encompassing security deposit regulations, stated in its 1999 Summary of ATCP 134 Revisions, that "if repair costs are not known within 21 days, a written accounting must still be provided. In this case, a 'good faith estimate' may be made."

5. Send the 21-day letter via certified mail.

I always recommend to my clients that they send the 21-day letter (whether it includes the return of security deposit money or not) via certified mail. Why? Because the certified mail receipt is proof of the date that you mailed it. You do not want to be stuck in a "he said - she said" argument with your tenant as to the date you mailed the letter when you are before a court commissioner or judge. The certified mail receipt gives you additional evidence besides "your word" as to when you mailed the letter. Yes, it does cost more to mail a letter certified. And yes, if you have to mail out many 21-day letters this cost can add up. Once again, you will need to evaluate whether or not foregoing the certified mail option is worth the possibility of having a court rule that you did not mail the security deposit transmittal letter timely.

6. If no forwarding address is provided then mail the 21-day letter to the tenant’s last known address.

Send the letter to the tenant’s new address if they provided you with one. But if they didn’t, which seems to be the norm, then ATCP 134. 06(5) says that you should mail it to their last known address. Yes, I do realize that the tenant’s last known address is the address of your rental unit which the tenant just vacated - but as silly as that may seem you should still do it.

ATCP 134 says that you must mail or deliver the security deposit transmittal letter to the tenant - it does not say that the tenant needs to receive the letter. Yet another reason why I suggest certified mail. If the letter is returned to you - do not open it. Keep it in your files for a while to see if the tenant contacts you. If the tenant decides to sue you - having the unopened letter with a date from the U.S. Post Office on it showing when you mailed the letter - should be all the evidence you need to prevail in court.

7. If you have multiple tenants then the refund should be made payable to all of the tenants.

If more than one adult is on the rental agreement, assuming that you are returning their security deposit, you should make the refund payable to all of the adult tenants.

Your check could read:

Made Payable To: Tenant A, Tenant B and Tenant C

It is not your role as a landlord to decide who contributed what portion of the security deposit. The tenants entered into one rental agreement with you (not three individual agreements) for the entire rental unit and they paid one security deposit as a group. You should return the security deposit to all of them and let them determine how to split it up. The only exception to this rule is if the tenants provide you with notice, in writing, signed by all of them, advising you who the return of the security deposit should be made payable to.

_______________________

The above suggestions cover the most common mistakes that I have witnessed regarding security deposit deductions over the years. While I cannot promise you that if you follow my suggestions that you will never be sued by a tenant for making an improper security deposit deduction, I can tell you that you will significantly reduce your exposure to such a lawsuit.

Wisconsin's New Lead-Safe Renovation Rule is Upon Us - April 22, 2010 - Get Trained

From a March 1, 2010 post by Tim Ballering on the AASEW Advisors listserv:

Beginning April 22nd you will be required to be trained and have WI

DHFS or EPA certification even to work on your own pre 1978 rental

housing.

Yes the rule will be very expensive to comply with (See the articles

below). Yes it is another -- to put it in terms the government uses --

unfunded mandate. But it is now the law and it will eventually be

painfully expensive not to comply. (Big fines, lawsuits etc.)

The good news, if there is such a thing in this context, is the AASEW has a

tentative agreement with another state certified trainer to provide

this training for less than $200 per person.

We need a head count of how many owners and their crew members would

be interested in taking advantage of this. That number will set the

final pricing. If we hustle the training would be prior to 4/22/10 so

that no one is out of compliance.

This rule will affect you if you replace windows, disturb 6 square feet of paint on the interior or 20 square feet of paint on the exterior of any pre-1978 rental housing. Essentailly this will affect all of us that own rentals.

If you would be interested in attendng -- please post a comment below along with the number of people you would be sending and I will pass the info on to Tim.

Thanks

T

-------------Recent News on EPA Rules -----------------

http://bit.ly/bWjTs8

"The price for homeowners could be hiked by $500 to $1,000 per room,

McComas said."

----------

http://bit.ly/9mHQMN

"It's going to price a lot of these jobs right out of the market," he

said."I think it's going to put me out of business."

-----------

http://bit.ly/bTXEoh

The new federal lead safety rules that take effect this spring are

coming just as work gears up on federal stimulus projects that may be

affected by the new regulations.

-----------

http://bit.ly/a9uZnL

"You're talking about at least a few thousand dollars extra," said

DiBernardo. Gehrig estimated the extra labor might add 25 percent to

a siding job.

-----------

http://bit.ly/b8hnjr

New regulations aimed at protecting homeowners from lead based paint

could make your renovation costs skyrocket.

Landlords Will Be Required To Install Carbon Monoxide Detectors In Single Family and Duplex Rentals

A new bill was recently passed by the Wisconsin Senate that will require landlords that rent out single-family homes and duplexes to install carbon monoxide detectors on all floors of these dwellings by Febraury 1, 2011.

Senate Bill 415 was passed 69-27 via voice vote after the Assembly previously passed the bill by a 2/3's margin. You can read the entire history of the bill here. It is anticipated that the Governor will sign the bill.

SB 415 requires the owner of most buildings that contain one or two dwelling units to install a carbon monoxide detector in the basement and on each floor of the dwelling unit except for the attic.

Additionally, the bill requires that if the tenant notifies the owner in writing that a detector is not working properly, that the owner must perform the necessary maintenance to repair the detector or replace it within 5 days after receipt of the notice by the tenant.

The bill also exempts an owner for any liability for any false alarms or from the failure of the detector to work properly if its failure was due to tampering, as long as the owner reasonably maintained the detector.

Existing 1 and 2 unit dwellings will be allowed to use battery operated carbon monoxide detectors.

A carbon monoxide detector is not required to be installed if the unit does not have an attached garage, has no fireplace, and has no fuel-burning appliances.

Finally, the bill authorizes a building inspector to inspect new dwellings, and if requested to do so by the owner or tenant, to inspect the interior of an existing rental unit to ensure that the owner has complied with the requirements set forth in this bill.

This new law will become effective as of February 1, 2011 and will be contained in Section 101.647 of the Wisconsin Statutes.

Please remember that the carbon monoxide law that affects rentals that include 3 units or greater goes into effect April 1, 2010. This law can be found in Sec. 101.149, of the Wisconsin Statutes. ADDED 3/1/10: These regulations were issued as emergency rules by the Department of Commerce, Safety and Building Division, as required 2007 Wisconsin Act 205 (in April 2008). The Wisconsin Department of Commerce's brochure on this law is very informative.

-----------------------------------

Thanks to Atty. Heiner Giese for forwarding this information to me.

Is This The End of Seller Financing For Rental Properties?

I have received this same information from my contacts at the Apartment Association of Southeastern Wisconsin, Inc. (AASEW) and Milwaukee Real Estate Investors Networking Group (RING). If you would ever like to be able to obtain seller financing for your next rental property or if you would like to be the seller that finances the sale of your rental property to some young landlord in the future then you must act now.

TODAY - Feb. 16th - IS THE LAST DAY TO SEND COMMENTS!

DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

___________________________________________________

I received this Info from 4 different REIA's - Deadline 2/16 to respond DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

HUD Issues Problematic Rules Interpreting SAFE Mortgage Licensing ACT

HUD has proposed to eliminate ALL seller financing unless the seller lives in the home or becomes a licensed mortgage originator.

The proposed HUD Rules interpreting the federal SAFE mortgage act can be viewed at www.regulations.gov.

Use the search parameter "HUD" and the keyword "safe".

Please review and comment regarding the impact of this broad interpretation of the law. "In addition to establishing HUD's responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified."

History:

As you may recall, we lobbied hard last year to maintain the right for individuals to make up to five seller financed transactions per year before being subject to mortgage originator licensing, etc... However, that law was passed subject to the Department of Housing and Urban Development's (HUD) approval of the law as "compliant" with the intention of the federal law. If any state does not have a compliant law, the SAFE act allows HUD to implement licensing for the state. HUD has since issued proposed rules.

In a nutshell, seller financing would no longer be allowed for non-owner occupied homes.

How YOU can help:

We learned about the publishing of the rules very late in the process... and the deadline for comment is upon us on February 16. However, we desperately need for thousands of REIA members across the country to go on record with HUD on this issue. We will be working to try to affect this law in other legislative ways, but cannot hope to gain traction unless our members have clearly communicated that they are opposed to this portion of the rules. This is your chance to be counted on this issue.

PLEASE SUBMIT YOUR COMMENTS TO HUD! We have less than one week to flood this system with comments.

Follow these simple steps:

1. Logon to www.regulations.gov. You will see two white boxes for searching

2. On the left box labeled "Document Type", pull the menu down and select "proposed rules"

3. On the right box labeled "Enter keyword or ID", enter "safe mortgage". Then, press search

4. Locate the blue search result "FR-5271-P-01 Safe Mortgage Licensing Act: HUD Responsibilities Under ...." To read the rules, click on this title. You will be taken to another page. You will see "views". You can click on PDF file or another symbol which will show you the rule document online.

5. On the right of the screen, click on "submit comment"

6. Complete the form providing required information and your comments and then submit

What do you say?

Say what you feel, but say it politely! The message should include that you would like the definitions in the proposed rules to be changed so that private individuals can originate and service loans on properties they personally own.

Some ideas from others:

• Bank loans are not available on some types of properties

• The tight lending climate has made bank financing "out of reach" for many

• Seller financing is an "age old" tradition based on private property rights

• These rules would prohibit even partial seller financing - i.e. a "seller second"

• According to HUD's "Residential Finance Survey" in 2001, roughly 40% of all non-farm residential properties in the US are owned free and clear

• An estimated 6 million Americans own a property other than their own primary residence

• An estimated 4.5% of Americans own three or more properties, many purchased solely as investment properties

• 40% of non-owner occupied residences are mobile homes which are more difficult to sell with bank financing

• Approximately 5% of homes in US are for sale or for lease... seller financing may be key to liquidating this inventory

Post comments to: http://bit.ly/b0NyKx

DEADLINE FOR COMMENTS HAS BEEN EXTENDED TO MARCH 5th

Compliments of BILL Kiefer

ACT TODAY !!!!!!!!!!!!!!!!!

LANDLORD BOOT CAMP: Only 4 Open Seats Remain

UPDATE 2/17/10 - WE ARE AT FULL CAPACITY FOR LANDLORD BOOT CAMP ON 2/27/10. If you are interested in attending please contact Paulette at (414) 276-7378 or paulette@apartmentassoc.org and she will put your name on a "waiting list" and contact you should a seat become available.

Thank You

T

________________________________________________________

We had a great AASEW monthly membership meeting last night -- close to 90 people. That was the largest crowd that I have seen at a meeting in my many years as a member. Many of the attendees at the meeting also signed up for the AASEW's Landlord Bootcamp that I will be teaching in about 10 days. If you are interested in attending I would encourage you to do so immediately as I am told that there are only 4 seats left. Looks like we will have a full house!

Below is my earlier blog post about the Boot Camp and the topics that I will address on Feb. 27th:

I will be presenting an all-day seminar on residential landlord tenant law in Wisconsin for the Apartment Association of Southeastern Wisconsin, Inc. (AASEW). The seminar is entitled "Landlord Boot Camp" and will take place on Saturday, February 27, 2010 from approx. 8:30 am - 5 pm at the Clarion Hotel located at 5311 S. Howell Avenue in Milwaukee.

The cost will be $159 for AASEW members and $259 for non-members. You will receive a 100 page plus manual. I have given a similar seminar to lawyers, landlords, and property managers over 25 times during the past few years and the organizations that have sponsored these seminars typically charge between $300-$400. This is your opportunity to learn all of the same information at a much discounted price.

I will cover pretty much anything and everything that you need to know about residential Landlord Tenant law in Wisconsin, including:

1. How to properly screen prospective tenants

2. How to draft written screening criteria to assist you in the selection process

3. How to comply with both federal and state Fair Housing laws including how to comply with "reasonable modifications" and "reasonable accomodations" requests

4. How to legally reject an applicant

5. What rental documents you should be using and why

6. When you should be using a 5-day notice versus a 14-day notice, 28-day notice, or 30-day notice and how to properly serve the notice on your tenant

7. Everything you wanted to know (and probably even more than you wanted to know) about the Residential Rental Practices (ATCP 134) and how to avoid having to pay double damages to your tenant for breaching ATCP 134

8. When you are legally allowed to enter your tenant's apartment

9. How to properly draft an eviction summons and complaint

10. What to do to keep the commissioner from dismissing your eviction suit

11. What you can legally deduct from a security deposit

12. How to properly draft a security deposit transmittal / 21 day letter

13. How to handle pet damage

14. What to do with a tenant's abandoned property and how this may affect whether or not you file an eviction suit

15. How to pursue your ex-tenant for damages to your rental property and past due rent (and whether it is even worth it to do so)

. . . and much more.

Hope to see you there.

Call Paulette at (414) 276-7378 or email her at paulette@apartmentassoc.org to reserve your seat.

Landlords Should Attend EPA Lead Renovation Meeting On Feb. 15th

The Bad News: Those of you who have been following along on this list have heard about the new EPA Law, beginning April 22, 2010, that regulates any renovation work that disturbs 6 sq. ft. or more of paint per room, 20 sq. ft. or more of exterior paint, or involves windows. This law specifically includes rental property owners, management companies and their employees. Your workers and company will need certification as well as changing your work practices.

This law will increase the cost of doing work as well as subject violators to fines of up to $32,500 per day/violation.. You really don't want to make a mistake here.

The Good News: Steve Antholt of the Wisconsin Department of Health (The people who will enforce this law in WI) has agreed to be at the AASEW's Monday general meeting to talk about the new EPA Law and the state companion rule Wisconsin Lead-Safe Renovation Rule, DHS 163. He will explain why it is important, and what steps Rental Property Owners and Managers need to take to comply.

The Better News: Steve has agreed to answer any and all questions that we may have on how to comply and keep our butts out of trouble.

The Alternative: If all this makes you want to be rid of your properties... this Monday's meeting will be the first to feature the new Traders' Corner! Beginning February every month prior to our General Membership meetings our Traders' Corner will meet to give members the opportunity to talk about their real estate needs.

Join us Monday, February 15th 6:30 p.m if you wish to participate in the Trader's Corner and 7:00 p.m. for the general meeting featuring Steve Anholt of DHFS

Where: Best Western, 1005 South Moorland Road, Brookfield, WI 53005.

HT to Tim Ballering

AASEW's Traders' Corner To Be Introduced on Feb. 15th, Prior to Monthly Membership Meeting.

The AASEW is constantly striving to make our monthly membership meetings more interactive, informative, and fun for our members. Toward that end, we have formed a committee comprised of 3 board members (Alan Rusk, Kim Queen & John Coons) to explore and suggest ideas to improve the AASEW's monthly meetings. Our attendence has been up over the past year and we want to maintain (and even increase) this trend.

The first of the ideas to be implemented will be the Traders' Corner. The Traders' Corner will meet from 6:30 pm - 7 pm on Monday, February 15, 2010 (and will continue to meet 1/2 hour before the start of the AASEW's regular monthly meetings) at the Best Wester Hotel located at 1005 S. Moorland Road in Brookfield.

The goal of the Corner is to allow for members to meet and discuss their real estate "deals." If you have a rental property that you are looking to sell or if you would like to purchase additional rental properties - the Traders' Corner is where you want to be. Come and tell us about how you found your most recent "deal" and how you analyzed it and determined that it was something that you should go forward with.

The meeting will be very informal and we will let those in attendence dictate what we talk about. Ideally we hope this new event will allow members to meet and interact with one another more and allow for all of us to learn from one another. Our members possess a wealth of real estate knowledge and experience and that is something that the AASEW is hoping will be shared.