Landlords Should Treat Tenant Roommates As One Person To Better Understand Joint and Several Liability and Resolve Tenant Disputes

I receive many calls from landlords who have questions and concerns involving issues involving their tenant roommates. While the problems are often factually different the proper way to analyze the situation and arrive at a resolution to the problem, often depends on the same thing -- something called "joint and several liability."

Joint and several liability is a legal concept that, according to Black's Law Dictionary, is defined as "the liability of co-promisors of the same performance when each of them, individually, has the duty of fully performing the obligation. A liability is said to be joint and several when the creditor may demand payment or sue one or more of the parties to such liability separately, or all of them together at his option."

Confused yet? Let me try and explain joint and several liability more clearly than Mr. Black did.

Essentially joint and several liability means that each individual tenant is responsible for the full amount of the rent as well as any and all other obligations under the rental agreement.

I think it would be easier for landlords to comprehend the concept of joint and several liability if they would just think of and treat roommates as one person.

Here is an example:

A Landlord enters into a 12 month lease with Tenant A, Tenant B, and Tenant C. The monthly rent is $750. The security deposit is also $750.

The Landlord needs to remember that he has one lease with three tenants NOT three separate leases with one tenant. As such all three tenants are responsible for the full amount of rent. All three tenants are responsible for abiding by the rules and regulations. All three tenants are responsible for paying the security deposit. All three tenants are responsible for paying the full amount of any damages to the rental unit.

Instead of taking $250 from Tenant A, B, and C for rent (or the security deposit), the landlord should insist that rent be paid via one payment for the full amount. When landlords accept $250 from each tenant, the landlord is inadvertently telling the three tenants that each of them is only responsible for 1/3 of the rent -- that is wrong. Remember treat the roommates as one person - one person pays his entire rent not 1/3 of it.

I know many of you that have tenant roommates are thinking that there is nothing wrong with accepting three separate checks for $250 from your three tenants. You are correct, nothing is wrong, there is nothing wrong with doing that . . . AS LONG AS ALL OF THE TENANTS PAY RENT ALL OF THE TIME. But problems arise is when one tenant falls on hard times and doesn't have the money to pay rent. It is at this point that the other two tenants start telling the landlord, "well we paid my portion of the rent so you can't evict us." WRONG.

Once again, think of roommates as one person. When you have one tenant (no roommates), that tenant is responsible for paying the entire amount of the rent - not just a portion of it. The same goes with roommates. One roommate is not just responsible for paying 1/3 of the rent. Under joint and several liability, that one tenant roommate is responsible for paying all of the rent if the other tenants don't pay any rent. If Tenant A and Tenant B have no money to pay rent, then Tenant C better rise to the occasion and pay the full rent amount or else all three roommates can be evicted.

Tenant roommates do not understand the concept of joint and several liability. I believe it is in the landlord's best interest to take the time to teach his tenant roommates about joint and several liability and how it specifically applies to them and their roommate situation. The best way to do demonstrate joint and several liability to your tenant roommates, after you have had the discussion with them, is to make them write one check for rent. I tell my roommate tenants that they must pay rent with one check. I don't care who pays it but I will only accept one check for the full amount of rent. The tenants can fight amongst themselves as to how they divide up the rent amount or who owes what to whom. How they do that should not be the landlord's concern. The landlord wants to impress upon his tenant roommates that he expects the full amount of rent each month and if they do that then they can remain as tenants. If not, then they will be evicted.

So while it may seem a bit much to refuse to take more than one rent check from tenant roommates, I believe by making the tenants understand that they are not responsible for just a "portion" of the rent, a landlord can avoid a lot of problems in the future.

Let's turn our focus to tenant roommates and the security deposit. If a landlord makes the mistake of accepting $250 from each of his three tenant roommates to apply to the $750 total security deposit, I believe that the landlord is sending his new tenants the wrong message again. Whether he is aware of it or not, the landlord has unintentionally informed his tenants that each of them are only responsible for 1/3 of the security deposit and therefore only responsible for 1/3 of any damage to the unit.

How many times have you heard one tenant say that the hole in the wall was caused by the other roommate who came home drunk one night and put his fist through the drywall? And then the next comment out of that tenant's mouth was, "so you should take the cost to repair that wall out of his portion of the security deposit."

Each tenant is jointly and severally liable for paying the total amount of the security deposit and for the total amount of any damage caused to a rental property regardless of which tenant caused the damage. A tenant roommate is not just responsible for "his portion" of any damage. Under joint and several liability, if the cost to repair the wall is $500 then the landlord can keep $500 of the security deposit and the three roommates can fight over how to split up the remaining $250.

What if your tenant roommates cause major damage to the rental unit that goes well beyond the security deposit on hand. Let's say the damages total $5,000. Under the concept of joint and several liability, a landlord can choose to sue all three of the tenants for the $5,000 or the landlord can choose to sue only two of them for the $5,000 (the two that are gainfully employed, for example) or the landlord could even opt to sue just one of the three roommates for the entire $5,000.

Assuming the landlord could prove his damages and meet his burden of proof, the court could rightfully enter a judgment of $5,000 against only Tenant A, if that is the only tenant that the landlord sued. This is true even if it was Tenant C that caused the actual damage. The landlord could then pursue and collect the entire $5,000 from Tenant A. It would then be up to Tenant A to sue either Tenant B or Tenant C, or both, if he so chooses.

Please note that joint and several liability does not allow a landlord to obtain a double or triple "windfall." A landlord can't sue each tenant individually for the full $5,000 and end up with three judgments totaling $15,000. This is why the most practical course of action is typically for the landlord to sue all three tenants for the entire $5,000 and then decide which tenant is more "collectible" (and often more responsible) and pursue the collection of the judgment against only that one tenant.

Now, let's assume there is no damage to the rental unit after the three tenants move out and therefore the entire security deposit will end up being returned. How is the landlord to return the security deposit? Under Wisconsin law, specifically Wisconsin Administrative Code, ATCP 134.06(2)(d), a landlord is required to refund the entire security deposit in one "check, draft or money order made payable to all tenants who are parties to the rental agreement unless the tenants designate a payee in writing." So under ATCP 134.06(2)(d), a landlord is required to treat the tenant roommates as one person - by sending them one check made payable to all three of them. If a landlord ended up writing three separate checks to each of the tenants for 1/3 of the security deposit each, that landlord would be violating Wisconsin law.

So, if a landlord treats his tenant roommate as one person, he will not only be adhering to the concept of joint and several liability, he will make his life as a landlord more simple. Landlords should not have to get involved in trying to determine which roommate did or didn't pay "his portion of the rent" nor should a landlord be concerned with which roommate punched a hole in the drywall during a drunken rampage. It is not our job as landlords to be social workers and resolve disputes amongst roommates. Nor is it our job to be the judge or jury and determine which roommate was at fault. Fortunately, the concept of joint and several liability allows a landlord the ability to avoid all of that unnecessary drama.

NOTE: If the rental agreement you are currently using does not indicate that all tenants are "jointly and severally liability" for all obligations under the rental agreement, then it is not a well-written rental agreement and is not worth the paper that it is written on. If that is the case, you should tear it up at the first possible legal opportunity -- i.e. once the term ends if it is a lease or with 28 day's notice if it is a month to month tenancy. You should then purchase and start using a rental agreement that states that all tenants are jointly and severally liable. I hear that the Rental Agreement sold at Wisconsin Legal Blank Company, Inc. is a very good one -- someone told me that the author of it is pretty knowledgeable about Landlord-Tenant Law.

FREE Landlord-Tenant Law Seminar - September 24th, 2011

I wanted to let you know about a FREE landlord-tenant law seminar that I will be presenting for the City of Milwaukee on Saturday, September 24, 2011.

The seminar will start at 9am and run through 11:30 am or so. It will be held at the Anderson Building which is located at 4001 S. 6^th Street – 3^rd floor in Milwaukee.

I will be covering three main topics:

1. Causes for Eviction (including the 5 day, 14 day, 28 day and 30 day notice and under what circumstances you can serve each one)
2. Notices Terminating Tenancy (how to draft them properly and how to serve them legally)
3. The Judicial Eviction Process (everything you need to know about how to draft and file an eviction lawsuit and what you will need to present to the court to

   prove your eviction as well as your collection of past-due rent, damages,

   holdover damages etc.)

If you are interested in attending this seminar pre-registration is required so you will need to contact Jeanne Hagner at (414)286-2954 or jhagne@milwaukee.gov

It is necessary that you register so that we can insure that there will be enough outlines and handouts for everyone.

I hope to see many of you there.

Petrie & Stocking Unveils New Labor & Employment Law Blog entitled "Talking Workplace Law"

Petrie & Stocking's Labor and Employment team, comprised of Attorneys Roger Pettit, Dave McClurg and Lindsey King, have unveiled a new labor and employment law blog titled "Talking Workplace Law." The blog went live on August 28, 2011.

The goal of the blog is to provide cutting edge perspectives on management issues and litigation risks for Human Resource professionals and business owners and others in the Labor and Employment industry.

The blog already contains several interesting posts on issues such how Wisconsin's new carry concealed weapons law will affect employers, terminating employees based on comments on their Facebook pages, and confidentiality agreements (and Tiger's mistress).

I hope that everyone will check it out and consider subscribing to its free email notification service.

AASEW's 2011 Landlord Tradeshow To Be Held September 28th at Serb Hall

The Apartment Association of Southeastern Wisconsin’s (AASEW) Annual Rental Property/Real Estate Professionals Tradeshow on September 28th,

at Serb Hall in Milwaukee! Our exhibit hall will be open from 12:00 p.m. until 5:00 p.m. check out the latest in products and services

for the rental property industry!

Our seminars will run from 12:00 p.m. until 6:00 p.m. Seminars include:

- Bedbug Litigation for Landlords, presented by Attorney Tristan R. Pettit

- Organize your Year End Financials, presented by Tim Nolan, CPA, Nolan Accounting

- Project Impact, presented by Milwaukee Alderman Bob Donovan

- Quickbooks Introduction for Landlords, presented by Kelli Belt, CPA, Maynard and Belt

- Buying and Selling Rental Property for Investors, presented by Brian Meidam, Co-Founder LocalREI Coach/Plan B Homebuyers and Andrew Kaplan, Principal of Kapital Real Estate

- Top Ten Mistakes Landlord Make and How to Avoid Them, presented by John Fischer, AKA Dr. Rent

And many more seminars and workshops this year, you don't want to miss it!

Admission is FREE, Seminars are FREE, Exhibit Hall is FREE, Appetizers are FREE.

Great opportunity to network with others in the rental property FREE, all with a donation of 4 non-perishable food items or a donation to Second Harvest/Feeding America!!! Last year we raised over 600 pounds of food, this year our goal is 1000 pounds to help our community!

Click here for the registration form!

City of Madison Proposes New Legislation That Will Make A Landlord Become His Tenant's Babysitter

In an attempt to curtail house parties or "keggers" in the city of Madison, a new ordinance has been proposed. Legislative File Number 23310, would create section 25.10 of the Madison General Ordinances to prohibit what is referred to as "nuisance parties." The ordinance would require the police to provide a landlord with notice of a nuisance party that occurred at his rental property and require the landlord to take appropriate measures to prevent future nuisance parties from being held by his tenant at the rental property. The ordinance would also allow the police to fine the landlord between $100-$5,000 if his tenant held a second nuisance party within a 12 month period.

A "nuisance party" is defined as a social gathering that, by reason of the conduct of the persons in attendence, results in one of more violations of 17 enumerated ordinance violations, including but not limited to: selling or giving away intoxicating liquors without a license, procuring and furnishing alcohol to minors, intentionally encouraging the comsumption of alcohol by minors, disorderly conduct, obstructing street and sidewalks etc. etc.

Under the proposed ordinance, if a beer barrel is visible to the public, even if it is located in the back yard, side yard, or on the porch of the property, and one or more of the above-noted ordinance violations is present, that gathering will be considered a nuisance party. Looks like the days of sitting on the porch drinking from a keg are over for the college kids.

Any person who is the "owner, occupant, tenent or otherwise has rightful possession . . . of any premise, who either sponsors, conducts, hosts, invites or permits a social gathering or party on said premises which becomes a nuisance party . . . is deemed to be in violation of the ordinance." By this wording it appears that the city thinks that a landlord is inviting, permitting or encouraging a tenant to have a house party if the landlord does not prevent it from occurring. How about a different possibility ----- the landlord was not aware of the party.

Essentially this ordinance, if passed ---- heck, it is MADISON, of course it will be passed ---- will make a landlord responsible financially for any tenant that has a 'kegger." Yes, I understand that these parties can be dangerous and can be a nuisance to neighbors, and I am not taking issue with the need to stop so called "nuisance parties." But trying to hold a landlord responsible for his tenant's actions is not the way to solve the problem of house parties. Landlords are not their tenants babysitters. While a landlord may wear many hats . . . housing provider, bill collector, maintenance person, social worker etc . . . we are not babysitters.

An article in the Daily Cardinal from July 27, 2011, quotes Alderman Scott Resnick, who is against the proposal, as saying "it makes the landlord play babysitter to a number of house parties." Resnick indicates that he is against the proposal because there are already laws and ordinances available that prevent overcrowding and disturbing the peace." Resnick also stated that involving landlords is not the way to address problems with underage drinking and large house parties near campus.

The part of the ordinance that concerns me the most is the sub-part entitled (6) "Owner's Failure To Prevent A Second Nuisance Party." The first sub-section states that within 10 days of the police breaking up a nuisance party, the police must notify the landlord of the violation of the nuisance party ordinance. It also states that the landlord must give the tenant a 5 day notice for breach of the rental agreement for having the nuisance party. But the kicker is contained in the second sub-section which states that if another nuisance party occurs at the same property within a 12 month period and the same occupants are responsible for the party, the police SHALL send the landlord a second notice of the nuisance party ordinance violation and the landlord SHALL be subjected to a forfeiture.

So under this proposed ordinance, a landlord can be fined even though legally he is unable to terminate his tenant's tenancy or file an eviction prior to the tenant hosting a second nuisance party.

Unless things have changed since I went to college, most tenants operate under a one year lease agreement with their landlords. When a tenant is under a lease agreement for a specific term (as opposed to a month to month tenancy) and breaches the term of his rental agreement, a landlord is required to serve the tenant with a 5 day notice which allows the tenant the right to cure the breach and remain a tenant. A landlord legally cannot terminate his tenant's tenancy after the first breach if the tenant is under a lease for a specific term.

So let's walk through this in the context of a nuisance party:

1. A tenant hosts a nuisance party

2. The landlord is notified of the party by the police or neighbors and serves the tenant with a 5 day notice for breach of lease.

3. The tenant cures the breach by not having another party within the "cure" period.

4. That same tenant decides to host a second house party within 12 months of the first shindig, thus committing a second breach of the lease.

It is only at this point that a landlord can serve the tenant with a 14 day notice (which does not afford them the right to cure the breach) terminating the tenancy and proceed to evict the tenant if he fails to vacate the rental property at the end of the 14 days. But by this time, under the proposed ordinance, the landlord can already be hit with a fine from the city for his tenant's actions.

Now, Madison's proposed ordinance does include a section (8) entitled "Affirmative Defenses" which states that "it shall be an affirmative defense to a charge of violating the ordinance, if the landlord has evicted or is dilligently attempting to evict all tenants and occupants of the property who are responsible for the nuisance parties."

Based on this language it would appear that some leniency may be given to a landlord who is attempting to evict a tenant that has hosted two keggers within a 12 month period. But why not draft the ordinance so that the landlord cannot be fined until after he is legally able to remedy the problem under Wisconsin landlord-tenant law. A landlord should not be able to be fined by the city for violating a municipal ordinance for failure to control his tenant, when state law prevents him from doing anything about the problem yet.

Personally, I think the entire ordinance is ridiculous. Landlords are not their tenants babysitters. People should be held responsible for their own actions. But if the city of Madison is going to attempt to hold landlords responsible for their tenants behavior, then it should at least make sure that a landlord has the legal ability under state landlord-tenant law to rectify the tenant's behavior by terminating his tenancy and filing an eviction action against the tenant, before the police are allowed to fine the landlord for allegedly not handling the problem.

Landlords May Want To Pursue Tenants for Holdover Damages As Well As Other Damages

After a landlord has had her rental property returned through an eviction action or the tenant vacating of their own accord, a landlord has the option of pursuing the ex-tenant for money damages. I have explained in previous posts, that a typical eviction lawsuit includes three causes of actions against the tenant. First, return of the rental property ("eviction"). Second, a claim for past due rent and other fees allowed under the rental agreement. Third, physical damages to the rental property and holdover damages.

When it comes to the third claim, I often see landlords pursue physical damages to the unit (and cleaning charges) and fail to even consider pursuing holdover damages. This is often because the landlord is not aware that holdover damages exist and/or she is unfamiliar with them. Hopefully this blog post will rectify that situation.

Holdover damages are allowed per sec. 704.27,Wis. Stats., which states that if a tenant remains in possession of the rental unit without the consent of the landlord after expiration of the lease or termination of the tenancy, the landlord may recover damages from the tenant for the tenant's failure to vacate the unit within the time required.

Sec. 704.27 further states that, in absence of proof of greater damages, the landlord may recover a minimum damages amount for the tenant's holdover of twice the rental value apportioned on a daily basis.

A tenant becomes a "holdover" tenant once their tenancy has been terminated and they remain living in the rental premises without the landlord's consent. A tenancy is terminated under any number of scenarios. For example:

1. A tenancy terminates when when a 5 day notice for failure to pay rent has been properly served on the tenant and 5 days have passed and the tenant has failed to cure the breach or vacate the rental unit.

2. A tenancy also is terminated when a 14 day notice to vacate due to breach has been properly served on the tenant and the tenant fails to vacate at the end of the 14 days.

3. A tenenacy terminates when a tenant is under a month to month tenancy and has been properly served with a 28 day notice and the tenant fails to vacate.

4. A tenency terminates if a lease expires, no renewal has occurred, and the tenant remains living in the rental unit.

Under all of the above situations, the tenant has now become a "holdover tenant" which entitles a landlord to "holdover damages."

Holdover damages are much more easy to prove up in court than physical damages. All a landlord needs to do to prove holdover damages is to establish the date that the tenancy terminated and the date that the tenant actually vacated the rental unit. The rest is just simple math -- calculating the daily rent for the period of the holdover.

When pursuing physical damages to a rental unit, a landlord must prove the following:

1. That the unit was not previously damaged prior to the tenant moving in -- this is often done via photographs, video, testimony, or a check-in check-out sheet, or a combination of any of the above).

2. That the damages were caused by the tenant or the tenant's guests or invitees.

3. That the damages are actually "damages" and not merely normal "wear and tear."

Maybe you have experienced this yourself, but I have noticed that tenants are readily willing to admit that they did not pay rent, but they will fight you tooth and nail if you argue that they damaged your rental property or failed to clean it prior to vacating. Once a tenant learns that you intend to pursue them for damages and cleaning costs, out come the multitude of excuses, such as . . . I didnt' break that door, my brother did that when he was drunk, you should sue him . . . that urine soaked carpeting was like that when I moved in 5 years ago, must've been the prior tenant's cat that used the carpeting as a litter box (even though the carpet is still physically wet 5 years later) . . . etc. etc.

Since tenants often take issue when a landlord pursues them for physical damages, the landlord is often forced to go through with an evidentiary hearing in order to obtain her judgment. Add to that, the fact that a tenant has the right, at no additional cost, to request a de novo review of the hearing if they do not like the result, and a landlord can expend a lot of time and money pursuing her damage judgment.

Since most tenants are often "uncollectible" it often does not make practical sense for a landlord to go forward. She will only lose time and money . . . both of which will never be recovered. Whetehr or not to pursue money damages against a tenant at all is a decision that only the landlord can make based on their specific situation.

When a landlord pursues holdover damages against a tenant there seems to be fewer requests on the tenant's part for a damage hearing. Oftentimes, the court commissioner will explain to the tenant what holdover damages are and that they are "statutory" in nature and thus only require that one factual issue be determined -- when the tenant vacated the rental unit.

This is not to say that a tenant won't still request a hearing if a landlord pursues only holdover damages against them. They still might (although the frequency of the request is much less than when a landlord pursues physical damages, in my opinion). And they certinaly may request a hearing if the landlord pursues both holdover damages and physical damages against them. Nonetheless, even if an ex-tenant does request a hearing, the time spent prepping for the hearing to prove holdover damages, and the exhibits necessary to be introduced at such a hearing, are much less involved than for a damage seeking physical damages

So while tenants may not like holdover damages, the law provides for them and a landlord has every right to avail herself of them.

ADDED 8/2/11 at 5:53 pm --- It should be noted that in Milwaukee County I have been told repeatedly that landlords cannot seek both physical damages to the rental unit and holdover damages against a tenant. In Milwaukee County, the courts have indicated that it is their interpretationof sec. 704.27 that a landlord may only recover holdover damages if the landlord cannot prove greater physical damages to the unit. I believe this interpretation of the statute to be incorrect. I believe -- just as the commentor below has stated -- that a landlord is entitled to holdover damages of twice the rental value apportioned on a daily value as a minimum for the tenatn's holdover unless she can prove greater damages for the holdover. Physical damages should be treated separately. The language "in absence of greater damages" set forth in sec. 704.27 is not referring to physical damages at all. Nonetheless, a landlord should be prepared that they may be told to choose to elect either holdover damages or physical damages in Milwaukee County.

The Vincenti v. Stewart, 107 Wis. 2d 651, 321 N.W. 2d 340 (Ct. App. 1982) further addresses this issue. the Court of Appeals refers to the Committee Comments to sec. 704.27, at pages 654-655 of its decision, and explains that the recovery of twice the rental value only establishes a minimum damages amount for a tenent holding over. The Court explains that in some circumstances greater damages can be proven as a result of the tenant's holdover. It is clear in from the Vincenti opinion that the "greater damages" language refers to greater damages due to the tenant's holdover only and NOT greater damages in general (i.e. physical damages to the unit).

Largest Settlement of State Fair Housing Claim Occurs in Arizona

A 2007 Fair Housing complaint filed by two Arizona tenants alleging that their apartment managers discriminated against them based on their race, nationality and religion, has resulted in the largest state Fair Housing claim to date.

In 2007, Soha Abdelrahman and her husband Hany Obrahim filed a lawsuit against their Tempe, Arizona apartment managers claiming discrimination based upon their Arabic race, Egyption nationality and Muslim religion. The defendant in the lawsuit is Texas-based Hall Financial Group, Ltd., which manages rental properties in various states -- but no longer in Arizona.

The Arizona Attorney's General Office announced that Hall Financial Group agreed to pay a total of $227, 5000 to settle the lawsuit. $197,500 of the settlement amount will go to the tenants and $30,000 will go to the Arizona AG's Office to enforce civil rights laws in Arizona.

The settlement did not include an admission of wrongdoing by Hall Financial Group. However the lawsuit alleged that Hall discriminated against the tenants based on their race, religion and nationality, when the tenants applied to rent an apartment in 2006. Allegations included claims that Hall's agents discouraged the tenants from aplying for housing, inspected their apartment and possessions during their move-in, and ignored requests for repairs to the apartment. The lawsuit also claimed that once the tenants alleged discrimination the managers attempted to evict them.

You can read more about this settlement in the Arizona Republic.

If you would like to learn more about Fair Housing and what the protected classes are I have written about that issue in a prior blog post as well as discussing what actions by landlords are covered under Fair Housing law.

Bedbugs . . . There Is Insurance For That, Now.

It was only a matter of time and I'm surprised that it didn't come sooner. Two different companies are now offerring bed bug insurance for hotel/motel ownes, universities, and landlords. Willis North America and Aon Risk Services are now offerring seperate lines of this specialty insurance.

I have yet to get ahold of a policy to see what it covers and what it excludes but from some articles that I just read in the Baltimore Sun, LA Times, International Business Advisor, the Willis North America coverage includes decontamination services, rehabilitation expenses, lost profits due to business interruption, crisis management (24/7 hotline), corrdination wth regulatory authorities, risk control and prevention. Here is a News Release on the new insurance from Aon.

Apparently a NJ university and an Oklahoma hotel have already purchased the insurance.

I know of some large multi-unit apartment owners that have spent thousands on trying to rid themselves of bedbugs - this insurance might be appealing to them.

Let me know if you or anyone you know has a copy of such a policy, I would be interested in reviewing it.

Don't let the bedbugs bite.

AASEW Offers Realtors & Brokers The Perfect Closing Gift for Their Clients - A Reduced Rate AASEW Membership

For those Realtors and Brokers out there, the AASEW has a perfect closing gift for you to give your clients who just purchased a rental property.

Realtors and/or Brokers can purchase an AASEW membership for only $29 through the end of the 2011 membership year for their clients. Your client will appreciate receiving such a gift as it will put them in touch with other landlords and educational opportunities.

The AASEW offers its members educational seminars, legislative activity, fun filled-events, mentoring, vendor discounts, and much more. Membership also includes a monthly newsletter and monthly meetings. Being a member is the perfect way to stay in touch with what is going on in the world of rental property.

Click here to see a copy of the promotional PDF.

Please contact Paulette at 414-276-7378 or paulette@apartmentassoc.org for any questions.

AASEW's Next Meeting Focuses On The Topic of Credit Reports - Monday, July 18th

Would you like to know if your prospective tenant is a good credit risk?

Then join the Apartment Association of Southeastern Wisconsin (AASEW) at our General Membership meeting on Monday, July 18th, 7:00 p.m, at the Best Western, 1005 South Moorland Road in Brookfield. Kathy Haines, of Landlord Services, LLC will present "Credit Reports 101: How To Determine If Your Prospective Tenant is a Good Credit Risk"

At 6:30 p.m. right before our meeting, come to network with others in the industry and enjoy free appetizers!

Also at 6:30 p.m. come to our Traders Corner if you are interested in buying or selling rental property and bring your listings with you!!

Have a question for a seasoned landlord? Stop by for Meet your Mentor, at 6:30 p.m. as well!

We hope to see you there!

Small Claims Jurisdictional Limit Increased To $10,000

Wisconsin's small claims jurisdictional limit was increased from $5,000 to $10,000 effective July 1, 2011. This increase was included in Governor Walker's 2011-2013 Budget Bill.

The jurisidictional limit for small claims in Wisconsin was set at $5,000 back in 1995 and has remained the same for 16 years.

I see this as a positive change for debt collectors and potentially landlords.

All eviction actions -- regardless of the amount of rent owed -- must be brought in small claims court as small claims has exclusive jurisdiction of all eviction actions. Because of this, a landlord is allowed to receive a judgment for past due rent well beyond $5,000. So this jurisdictional change will not affect the amount of any past due rent judgement. But until now, a landlord was limited to obtaining a judgment for $5,000 or less in small claims for any physical damages to the rental property caused by the tenant. So this increase in small claims jurisdictional limit will be advantageous for landlords in such a situation.

Additionally, this change will also positively affect landlords bringing straight collection actions (which does not include a cause of action for eviction) against ex-tenants that skipped out owing past-due rent and/or damages greater than $5,000.

Since most tenants are not collectible, I am not sure if this change will greatly affect landlords . . . but it certainly won't hurt them.

It should be noted that this increase in the small claims jurisdictional amount does NOT apply to third-party complaints, personal injury lawsuits, or tort claims.

Bedbugs . . . Coming Soon To A Rental Property Near You

No longer are bedbugs just a problem in foreign countries, New York City or Las Vegas. Bedbugs are alive and crawling in Wisconsin rental housing units. They have been found in single family rental homes and duplexes in addition to large multi-unit facilities. Unlike many other insects, bedbugs are not attracted to dirty living conditions or spilled food. So you may have a perfectly clean tenant with a spotless apartment unit, and they could still have bedbugs.

Bedbugs are attracted to the carbon dioxide that we emit when we breathe and they dine on our blood. They are the ultimate hitchhikers and enter apartment units on furniture, clothing, suitcases and many other objects. Unfortunately, the eradication of bedbugs is difficult at best and is often quite expensive. Your best defense against bedbugs in your rental properties is to prevent them from arriving in the first place.

I have worked with several landlords and property managers over the last few years on bedbug issues. Although I cannot prevent you from ever experiencing a bedbug infestation, there is some information I can provide that should be of assistance if you ever have several hundred unwanted crawling tenants move into your rental property.

First, you need to educate yourself about what is required of a landlord with regard to providing your tenants with a habitable rental unit. This includes both at the time of initial occupancy and in the middle of a lease term (such as after a tenant contacts you about a bedbug infestation in their rental unit). In the city of Milwaukee there is a local ordinance requiring a landlord to exterminate any bug infestation in their rental properties, regardless of who caused the problem. Practically speaking – and in order to protect your real estate investment – you should never allow your tenants to be in charge of the bedbug extermination process. This process should be solely your responsibility. Later, after the bedbug eradication efforts are underway, you can speak with your tenant about who is responsible for paying for the extermination costs.

Second, educate your tenants about bedbugs. Teach them about the signs of a bedbug infestation. Caution them against buying used or second hand furniture. Advise them to take basic preventative measures when they travel. Inform them to contact you immediately if they think they have bedbugs in their rental unit. And explain to them that if they do not cooperate 100% with your bedbug eradication efforts, their new co-tenants will continue to share their bed.

Third, make sure that any written rental documents you are using are up to date, do not contain any provisions that will cause them to be void in the state of Wisconsin, and address bedbug infestations and the costs of eradication.

Finally, understand the special issues that arise when prosecuting or defending against bedbug litigation. Litigation involving bedbugs can arise in many different contexts, including: tenants suing landlords for health care bills related to bedbug bites, tenants suing landlords for reimbursement of rent the tenants paid during a bedbug infestation, tenants abating rent due to a current bedbug infestation, tenants moving out and breaking their rental agreement due to a bedbug infestation, tenants suing a landlord for making (allegedly) improper deductions from their security deposit to cover the cost of bedbug eradication, landlords suing tenants for unpaid rent after the tenants have vacated due to a bedbug infestation, and landlords suing tenants in an attempt to recoup costs advanced for bedbug extermination treatments.

If you are a landlord or a property manager, the question is no longer if you will be confronted with bedbugs, but rather when you will be confronted with them. Make sure that you have taken all the necessary precautions before it happens so that when it does, you will be in the best possible position to respond quickly and appropriately.

If you are interested in learning more about the legal aspects involving bedbugs and how you can better protect yourself legally if you should encounter bedbugs in your rentals, I will speaking on this topic at the upcoming Apartment Association of Southeastern Wisconsin's (AASEW) Annual Trade Show at Serb Hall on Wednesday, September 28, 2011.

New Case Further Solidifies That A Landlord Is Not Liable For Injuries Caused By A Tenant's Dog

A recent Wisconsin Court of Appeals decision has been recommended for publication that will assist landlords in defending against any claims filed by a third party that was bitten by a tenant’s dog.

The case of Ladewig v. Tremmel, (2010AP1925) involved a claim for negligence against two landlords by a neighborhood boy that was bitten by the landlords’ tenant’s pit bull.

The Court of Appeals was reviewing the trial court decision to dismiss the plaintiffs’ claims against the landlords on a motion for summary judgment. A motion for summary judgment is filed when a party believes that the court is able to make a decision as a matter of law (without the need for a trial) because no material facts are in dispute by the parties, so the court must merely apply the law to the undisputed facts.

The general liability rule in Wisconsin, is based on public policy grounds, and states that a landlord is not liable for injuries caused by a tenant’s dog, unless the landlord is an owner or a keeper of that dog. This general rule was established in the seminal case of Smaxwell v. Bayard, 2004 WI 101, 274 Wis.2d 278, 682 N.W.2d 923.

The plaintiff in this case argued that the general liability rule should not apply to these landlords because these landlords voluntarily assumed a duty to his client, because their lease included a provision which prohibited a tenant from keeping “vicious” dogs on the leased property.

Plaintiffs argued that the landlords in this case assumed a duty which they otherwise did not have, by including a lease provision prohibiting a tenant from keeping any vicious dogs on the premises, and as such they were negligent when they did not enforce this provision against the tenants, thus resulting in the plaintiff’s injuries.

It should be noted that in the case of Malone v. Fons, 217 Wis. 2d 746, 580 N.W.2d 697 (Ct. App. 1998) the Wisconsin Court of Appeals had previously held that a landlord’s alleged knowledge that a tenant was keeping a dog with a history of bad behavior was not sufficient to create liability on the landlord even though the landlord had a “no pets” provision In his lease.

Essentially, the plaintiffs were arguing that this case was an exception to the general rule of non-liability by a landlord set forth in Smaxwell, and since Smaxwell does not apply, the landlords should be found liable for the plaintiff’s injuries.

The Wisconsin Court of Appeals disagreed with the plaintiffs’ argument and said that there was no need to even determine whether or not the landlords assumed a duty of care to the plaintiff which they otherwise did not have, because such a determination was irrelevant under Smaxwell.

It was determined that the holding in Smaxwell applied to the facts in this case as well, and since there was no evidence that the landlords were owners or keepers of the dog that injured the visiting child, that the landlords were not liable, regardless.

The Court explained that the Smaxwell case “explicitly forecloses landlord liability on a broad basis, regardless of a plaintiff’s theory of a landlord’s duty of care, unless the landlord has a role, separate from that of a landlord, which involves exercising control or custody over the dog so as to qualify as an owner or keeper of the dog.”

Here, the Court of Appeals held that there was nothing about the landlords’ alleged non-enforcement of the “no vicious dogs” lease provision that “logically transformed the landlords into ‘owners and keepers’ of the dog.

This is a sound decision and in keeping with prior Wisconsin law. A landlord will not be held liable for the injuries of a tenant’s dog to a third party, unless the injured party can demonstrate that the landlord “acted in the additional role of owner or keeper of the dog and exercised dominion and control over the dog.”

The Court of Appeals also echoed the Smaxwell decision by adding that recovery against a landlord would not place liability where it belongs, because it is the tenant, not the landlord, who has direct control over the dog and that it is sound policy to ensure that liability is placed upon the person with whom it belongs – the owner of the dog – rather than promoting the practice of seeking out the defendant with the most affluence – which often happens to be the landlord.

A Landlord Has Every Right To Enter His Rental Property . . . In Certain Situations.

Unbeknownst to many tenants, a landlord has a legal right to enter his tenant’s rental unit in certain circumstances. The rental unit is still the landlord’s property and the law provides a landlord with the right to access that property.

Implied in all residential rental contracts is what is referred to as the "covenant of quiet use and enjoyment." This covenant basically means two things:

1. That the landlord guarantees that the tenant can take possession of the rental unit and has the right to privacy and exclusive use and possession of that rental property, and

2. That the landlord will not interfere with the tenant’s privacy and right to exclusive possession.

There are important exceptions to this covenant however, and that is the part that many tenants tend to overlook. Both the Wisconsin Statutes (sec. 704.05(2)) and the Wisconsin Administrative Code (ATCP 134.09(2)) carve out exceptions to the covenant which allow a landlord limited rights of entry to the tenant’s rental unit.

A landlord may enter a tenant’s rental unit upon advance notice and at reasonable times, in order to do the following:

a. Inspect the premises

b. Make repairs

c. Show the rental unit to prospective tenants or purchasers

Advance notice is typically 12 hours unless the tenant consents to a shorter period. Some municipalities like the City of Madison require a longer notice period of 24 hours. I strongly recommend that your advance notice be in writing. Having a written 12 hour notice indicating the reason for your entry and the estimated time of entry goes a long way should a tenant later say that you had no right to enter her unit. You now have some documentary evidence to support your version of events besides just your "word" because rest assured, your tenant’s "word" will be the exact opposite of yours.

"Reasonable times" has not been defined but I would argue that entry during normal business hours between say 8:30 am - 5 pm would certainly be reasonable. Also entry on a weekend between 10 am and 5 pm by a landlord that works a full-time job during the week, would also appear to be reasonable to me. I have a nagging suspicion however that 2 am on a Saturday morning would not be considered "reasonable."

A landlord should only remain in the tenant’s unit for the amount of time reasonably required to complete the repair, showing, or inspection.

Tenants do not need to be present during the landlord's entry. Many tenants mistakenly believe that their presence is required. They are wrong. A landlord can enter a tenant's rental property even if the tenant is not present as long as the aforementioned requirements have been met. If a landlord wants to accommodate a tenant's request to be present, he can choose to do so, but it is not required. Personally, my schedule does not always allow me to limit my expenses, showings or repairs to the times of day that my tenants are home.

If a tenant is home at the time that you are trying to enter their unit and refuses you entry what can you do? Legally, you are still allowed to enter. The better question is, what should you do? I would never force myself into a tenant’s unit (even if I legally have the right to do so) if they had changed the locks on me or if they are standing there yelling at me not to come in. Maybe I am a bit risk adverse but I didn’t become a landlord to have a tenant throw a frying pan at my head nor to have the cops arrive at my rental property with guns drawn because the tenant told them I was an intruder.

If a tenant denies you entry to their rental unit after you provided them with the proper advance notice, then they are in breach of their rental agreement and state law. This is grounds for an eviction.

Since I may not want to go to the length of evicting a tenant for denying me entry, I have included a provision in my rental agreement that if a tenant denies me entry after I have provided them with proper notice that they will be assessed a fee of $100. I have never had to assess the fee but it has been helpful to be able to show my tenant that provision in the rental agreement. After reviewing the provision with the tenant and explaining why it is necessary for me to enter, and how I legally have the right to enter, the problem is usually resolved. If for some reason it was not resolved, then that tenant would not be living in my rental property much longer.

When entering, I am a big proponent of the "knock and announce" rule. What is the "knock and announce" rule, you ask? Here is a dramatization . . . Imagine me approaching a door . . .

KNOCK, KNOCK, KNOCK (or ring, ring, ring if the tenant’s unit has a doorbell). I then insert my key and slowly open the door a crack and announce loudly "Hello, this is your landlord, I’m coming in to . . . show the unit . . . unplug the clogged drain . . . make my spring inspection, is anyone home." Wait a few seconds and then enter the unit.

Being extra cautious upon entry will hopefully negate the chances of walking in on a tenant showering, being in a state of undress, or engaged in other forms of extra-curricular activity.

Under Wisconsin law, there are even a few situations in which it is not necessary for a landlord to provide advance notice in order to enter a tenant’s unit. These situations include the following:

1. When the tenant, knowing of the proposed time of entry, consents in advance to an earlier entry

2. A health or safety emergency exists

3. The tenant is absent and the landlord reasonably believes that entry is needed in order to protect the rental unit

An example of such a situation would be if a tenant was not present, and the tenant in the rental unit below her called you and told you that water is leaking from her ceiling. You are legally allowed to enter the tenant’s unit in that situation to determine the source of the water intrusion. A landlord has every right to enter without notice in that type of situation, to protect his rental property.

There are no published Wisconsin cases that I am aware of that deal with the issue of a landlord’s right to enter a tenant’s rental unit and under what circumstances. So the only guidance we have are the statutes and regulations mentioned above. Such situations would be handled on a case by case basis by a court since the specific facts are very important and because there is not bright line rule on when entry is permissible.

If you have a tenant that refuses to allow you to enter your own rental property (or one that has changed the locks to prevent you from doing so) you need to take action. This is your rental property -- your investment. You have every right to make periodic inspections to insure that your tenants are maintaining your rental property properly.

Don't Miss Bed Bug Boot Camp on June 28th, 2011

In response to the unprecedented spike in the resurgence of of bed bugs in the past year, Wil-Kil Pest Control is offerring a Bed Bug Boot Camp. From pest identification to the legal ramifications of bed bugs, both sessions offer property owners and managers the tools they need to effectively respond to the threat of bed bugs and includes a Bed Bug Canine Scent Detection Demonstration.

Click here to see the Bed Bug Boot Camp flyer.

The Milwaukee seminar will take place on June 28th, 2011 from 1 pm - 4:30 pm at the Radisson Hotel Milwaukee West at 2303 N. Mayfair Road in Milwaukee.

I will be speaking at the Milwaukee session on the legal ramifications of bed bugs nto landlords and property managers. Specifically, I will discuss the requirement that landlords provide tenants with a habitable rental property, local ordinances regarding extermination issues, and how a landlord and/or property manager can best prepare themselves to deal with any legal issues that may arise from a bed bug infestation.

There is no cost to attend the seminar. You must however, preregister for the seminar by going to Wil-Kil's website.

There will also be a Bed Bug Boot Camp in the Madison area on June 30, 2001 from 1 pm - 4:30 pm at the Hilton Garden Inn Madison (West) at 1801 Deming Way in Middleton. Atty. Jay Koritzinsky will be speaking on the legal aspects of bed bugs at this session.

This will be a very timely and informative seminar that will be well worth your time. Hope to see you all there.

Avoid Homemade Rental Agreements . . . Regardless of What the Tenant Resource Center Tells You

I received a troubling call from a landlord last week. This landlord had some questions regarding management of her rental properties and told me that she had previosuly called the Landlord-Tenant Resource Center for assistance. I informed the caller that there is no such animal as the Landlord-Tenant Resource Center and that she had actually spoken with the Tenant Resource Center, a very pro-tenant organization.

The landlord continued to tell me that she has been using the Residential Rental Agreement sold at Wisconsin Legal Blank Co. Inc. for the last 10 years and has been very happy with it. She advised me that when she mentioned this fact to the person at the Tenant Resource Center that she was informed that she should stop using the WLB rental agreement immediately as it was vague and indefinite and would not stand up in court. She was then told that she should instead draft her own lease in the future.

As many of you know, I have been the author of Wisconsin Legal Blank’s residential rental agreement for the last 15 or so years, so this criticism was news to me. I explained that I have been representing landlords throughout Southeastern Wisconsin for years and during those hundreds of court appearances, I have never had a tenant or a tenant's attorney raise that argument. More importantly, I had never had a court make a ruling the the WLB rental agreement was vague or lost a case based on the alleged vagueness of the WLB rental agreement. I am also quite sure that if other lawyers or landlords had lost a case as a result of the wording of the WLB rental agreement, that either I or Wisconsin Legal Blank would have received an angry telephone call by now.

I proceeded to tell this landlord about the Apartment Association of Southeastern Wisconsin and that it was an organization comprised of landlords and for landlords and that she should consider calling it in the future should she have any questions about the management of her rental properties, and not the Tenant Resource Center. I also encouraged her to join the AASEW and believe that she is now a member.

What troubled me most about this call was not that someone was critical of the WLB rental agreement, but rather that the Tenant Resource Center advised this landlord that she would be better off drafting her own rental agreement in the future. Those of you that have heard me speak on the topic of rental documents before know that one of my biggest concerns is when a landlord drafts their own rental agreement. I would say that over 80% of the landlord-drafted rental agreements that I have reviewed over the years contain illegal clauses or provisions that would most likely render the rental agreement void in Wisconsin.

Inadvertently, landlords who draft their own rental agreements, often will include a provision that violates one of ATCP 134.08’s seven prohibited rental agreement provisions ("The Seven Deadly Sins"). The result of making such a mistake is that the landlord now has a rental agreement that is unenforceable against the tenant (but yet is still enforceable by the tenant against the landlord). One needs to look no further than the 2001 Wisconsin Supreme Court case of Baierl v. McTaggart, 245 Wis.2d 632, 629 N.W.2d 277, to see the disastrous results of using a poorly drafted lease.

In actuality, a landlord is better served by using a pre-printed rental agreement that has been drafted by a lawyer knowledgeable in Wisconsin residential landlord tenant law -- and is reviewed regularly by that lawyer -- then they are by drafting their own rental agreement or cutting and pasting together a conglomeration of rental agreements found on the internet.

Incidentally, many of the so-called state specific rental agreements that can be purchased on the internet also contain illegal provisions that will render them unenforceable in Wisconsin. One of these online companies actually contacted me to draft a lease for them about 5 years ago, but when they balked at actually paying me for my work, I opted to not assist them. Apparently they found an attorney who was willing to work for free but who -- unfortunately for the unsuspecting landlords that purchase this company's online rental agreements -- did not know Wisconsin residential landlord-tenant law very well and included language that would violate ATCP 134.08. There are similar issues with the rental agreements sold at Office Depot and Office Max.

I have been mulling over the possible intent of the Tenant Resource Center employee that advised this landlord to draft her own rental agreements in the future. All I can come up with is that tenant advocates must be putting out this so-called “advice” hoping that uneducated landlords will follow it, thus increasing a tenant’s chance of prevailing in court due if the landlords' self-drafted rental agreement contains an illegal provisions thus making it unenforceable against the tenant.

Call me jaded, but I can't come up with any other reasonable motivation.

Happy Belated 2nd Birthday to Tristan's Landlord-Tenant Law Blog

I apologize for the recent scarcity of blog posts. I plan on changing that in the near future. Things have been a bit hectic lately -- so hectic in fact that I failed to notice that this blog that you are reading has now turned two years old. I have a toddler on my hands -- look out terrible twos.

I made a big to-do with my post last year celebrating the blog's 1st birthday. No time this year for such a "wordy" post, but I still wanted to let everyone know of the progress over the last year and most importantly to thank you all for your continued support of this blog.

Last year at this time I had 80 subscribers to this blog. This year the subscriber count is up to 187. That means 187 of you get each new blog post delivered directly to your email inbox rather than having to check back periodically to see if a new post is up. If you are interested in subscribing but have not yet done so, just click on the blue tab entitled "subscribe" located under the header/skyline photo, enter your email and click "subscribe."

Last year at this time there were 111 posts. This year there are over 187. Last year there were 233 comments by readers (and my responses); this year we are up to 611 comments.

During the 1st year there were over 17,000 visits to my blog and 42,375 page views. As of today's date we have had over 61,000 visits with over 128,598 pageviews.

Over the last year we had one month with over 4,775 visits. Last year the most visits in a month that we saw wasaround 2,221,

Over the last year I have also made the jump to include video in my blog posts. As much as I hate seeing pictures of myself - yet alone video - my IT vendor says that you must be on uTube these days. Well, I am now officially on uTube . . . but does my voice really sound that nasal? It doesn't sound that way when I hear myself talk : ). If my voice really sounds that bad then a sincere thank you must go out to those of you who have sat through one of my seminars --- I remind myself of those Canadians from the Great White North from when I was a kid.

The top 5 most read blog posts over the past 2 years are:

1. Late Fees, Part 1: What Amount Can You Charge?

2. Lead Based Paint Disclosure Forms

3. What Is The LIfe Expectancy of Your Carpet, Refrigerator . . .

4. Security Deposit Trasmittal Letters: How To Draft a Legal 21 Day Letter.

As I mentioned last year, when I first started this blog I didn't know what to expect. The results have been more than I could have imagined at the outset. Thank you once again for your support. Please feel free to let me know of any other topics you would like me to address over the forthcoming year.

Take care

T

Earnest Money Deposits . . . A Trap for the Uneducated Landlord

An earnest money deposit is defined as "the total of any payments or deposits . . . given by a prospective tenant to a landlord in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord."

The applicable section of the Administrative Code that deals with earnest money is ATCP 134.05 (1) and (2) and (3).

I personally am not a big fan of collecting earnest money deposits from rental applicants.

The main reason is because ATCP 134.05 puts too many restrictions on these deposits in order to eliminate potential abuse by landlords. Failure to abide by the timelines regarding earnest money deposits opens a landlord up to being sued by the applicant for double damages (double the amount of the earnest money deposit) and attorney's fees.

A second reason I do not prefer earnest money deposits is because -- for a part-time landlord like myself -- it forces me to rush through the screening process. ATCP 134.05(2)(a)3 requires me to approve a person's rental application by the 3rd business day after taking an earnest money deposit (or else jump through a bunch of hoops and get written consent from the applicant to hold the earnest money deposit for a longer period of time).

It's not that I intentionally want to hold onto an applicant's earnest money deposit if I am not going to approve them, but rather sometime things happen that prevent me from completing the screening process within 3 days . . . say an emergency at my full-time job, a personal emergency, or the applicant's past landlord reference failing to return my call timely.

I just do not want to be on the wrong side of a lawsuit for double damages and attorney's fees because I couldn't keep up with a government prescribed timeline of when I should be able to complete the screening process.

Additionally, even if you approve an applicant, and offer them a lease, and the tenant changes his mind and opts not to sign the lease -- that doesn't mean you can automatically keep the earnest money deposit . . . . watch the video and you will learn what I mean.

Earnest money deposits are a tricky "animal" with little "upside" (in my opinion) and lots of "downside." If you require applicants to make an earnest money deposit or are thinking about it -- make sure you educate yourself -- or else you shouldn't be accepting them.

P.S. - No, a credit check fee is not considered to be an earnest money deposit.

Two Pro-Landlord Bills Are Proposed

Two new bills have been proposed in Madison and both of them are pro-landlord.

Landlord Pre-Emption Bill

Rep. Robin Voss has proposed what is being referred to as the Landlord Pre-Emption Bill (LRB 1296/3). This bill prohibits any municipality from enacting an ordinance that does any of the following to a residential landlord:

1. Prohibits or limits a landlord from obtaining or using various types of information about a tenant or prospective tenant, such as household income, occupation, court records, rental history, and credit information.

2. Limits how far back in time a prospective tenant's credit information, conviction record, or previous housing may be considered by the landlord.

3. Prohibits the landlord from showing a rental property to a prospective tenant, or from entering into a rental agreement for a rental property with a prospective tenant, while the current tenant is living there.

Rep. Voss is currently seeking co-sponsors for this bill.

UPDATE - 6/14/11: This propsed bill (Senate Bill 107) was referred to the committee on Insurance and Housing on 5/26/11. A public hearing was held on 6/8/11. Two amendments were made to the bill and the proposed bill passed committee by a vote of 4-3. Here is a recent article in the Capital Times on the bill.

Water/Electric Bill (LRB 1393/1)

The second pro-landlord legislation that is out there would help landlords who have had the unfortunate experience of having a tenant's delinquent utility bill place on their property tax bill.

LRB 1393/1 would prohibit a municipal utility that provides electric or water service to a rental dwelling from using the current arrearage collection procedure , as long as the lwner of the property has provided the utility with written notification of the name and address of the tenant who is responsible for paying for the service. th eutility service may also request a copy of the rental agreement in which the tenant assumes responsibility for paying for the utility charges. Once the owner has provided the written notice of the tenant's name and address, the utility may not use the current arrearage collection procedure.

UPDATE: 6/14/11 - This propsed legislation (AB 182) was referred to the committee on Energy and Utilities on 6/13/11.

The Thoughts of One Over-Assessed Rental Propety Owner

This is helpful information for landlords that feel that their rental properties have been over-assessed and provides one landlord's view of the vicious cycle of over assessing rental property in certain areas of the city. I would like to thank Tim Ballering for allowing me to reprint his article on my blog.

The tax assessment appeal period will close on Monday the 16th at 4:45 PM.

You can get paper forms at the Assessor's Office in room 507, City Hall 200 E Wells, by phone at 414-286-3651or via the web by visiting: http://city.milwaukee.gov/assessor

On the bottom of the left hand panel click on "Ask the Assessor's Office." Then enter the name of the entity which owns the parcel, if different than your own name. Enter the address of the property, your email address, and in the "Question" box type "please send me an assessment appeal form." You will get the form back via email, usually within one day.

I recommend all owners who feel their assessed values are above what they could sell the rental property for today, to file a timely objection.

By objecting you retain your right to participate in any future litigation over the 2011 assessments. If you do not file an objection by May 16th, then you have accepted the city's valuation and have no further right to challenge the assessment and may not participate in or benefit from any future litigation over the 2011 assessments.

What is wrong with our assessments?

As I reviewed our property tax assessments over the past four years and compared those assessed values with both sales data and my knowledge of the market, I noticed a systematic pattern of over assessment of near Southside neighborhoods. Properties in these lower priced neighborhoods are assessed significantly above the cash equivalency sale prices of comparable properties sold in other neighborhoods. Others tell me the same is true in rental properties in Riverwest and on the Northside o fMilwaukee.

On a whim, I then looked at Milwaukee neighborhoods such as the far Southwest that are occupied by residents with higher than Milwaukee's mean income. The assessments in those neighborhoods more closely resembled the sales data and in some cases were sold for more than the assessed values.

The effect of an assessment scheme that overvalues lower priced housing, while undervaluing higher priced homes, is a regressive tax shift to lower income residents. The regressive nature of such tax shifts might be seen by some city leaders as acceptable social engineering (i.e. making it more favorable for those earning more to live within the city) nontheless, this is not a permissible use for inaccurate valuations.

While the excess tax in itself creates a burden to both owner-occupants and renters in these neighborhoods, the greater concern isfor the first-time home buyers who relied on assessments as an accurate indicator of value. When you use overvalued assessments to judge whether or not you are getting a fair deal, you will be tricked into overpaying. The over assessments then “propped up” purchase prices that were then used to further support over assessments. An ugly cycle of deceit in the name of balancing a city's budget.

Today these over assessed neighborhoods have a high number of delinquencies, foreclosures, short sales and abandoned homes. This causes the values to continue to drop, taking with it the accumulated wealth of a generation, and scaring the next generation of potential homeowners away -- ‘Mom and Dad tried buying a house back in 2006 and lost everything. I’ll never do something that stupid."

For renters, real estate taxes consume a growing share of their monthly rent. For homeowners, taxes represent a significant portion of their monthly mortgage check. The economic impact of this on a specific segment of the community is staggering.

Of course the Assessor has an appeal process outlined above. To succeed one must have an appraisal in hand and an appraiser willing to attend the board hearings. For small properties, the cost of appraisals and paying the appraiser to appear at the Board of Review exceeds the anticipated tax savings for most properties. Added to this is that the the Assessor's Office makes it difficult to obtain the information one needs to challenge their numbers. For example, the Assessor requested $900 to provide assessment data that contains their grade rating system for comparable properties. These unrecoverable costs allow improper assessments to prevail and further support over payment by unsophisticated first time homebuyers. Clearly inaccurate assessments contributed greatly to the subprime mortgage mess and the harm it caused to homebuyers in the past.

What can be done about it?

So the right answer probably is for property owners in lower valued neighborhoods to demand a general review of the disparity in valuations between what they could expect to receive if they sold today and the value the Assessor has placed on the property. Only those who have filed an appeal could legally benefit from any litigation unless the State Department of Revenue were to find the process so flawed that they stepped in.

I think this needs to be explored in greater depth. Sale data and assessed values are easy to obtain through MLS and the Assessor's website. It would be very interesting to have someone, perhaps a UWM or Marquette student or professor, do a statistically correct analysis to prove or disprove my theory that the lower valued neighborhoods are over assessed at a far greater rate than higher valued areas such as the far Southwest, Eastside, and Northwest areas of Milwaukee.

Tim Ballering