Archive for May, 2009

COURT OF APPEALS SAYS TENANT NOT LIABLE FOR FIRE DAMAGE

May 28

Posted by Tristan R. Pettit, Esq. in Caselaw, Tenant Damage | 3 Comments

The court of appeals recently released its decision in the case of Maryland Arms Limited Partnership v. Connell. This decision has been reccomended for publication.  The issue in this lawsuit was whether the landlord or the tenant should be liable for damage to an apartment unit when the damage was not caused by the negligence of either the landlord or tenant.  The Court of Appeals held that it is the Landlord that should be held liable in such a situation.  As such the case will now stand for the proposition that a tenant cannot be held liable for his/her actions that damage the property unless the damage is caused by the tenant’s negligence

The facts were as follows and were not disputed by either the tenant or the landlord:

-  A fire occurred in the tenant’s apartment and caused $8,000 worth of damages while the tenant was asleep.

-  The fire started from a hair dryer owned by the tenant which was plugged into the elctrical outlet.

-  The tenant did not know that the hair dryer was deffective when it was left plugged into the electrical outlet.

- The tenant and the landlord both agreed that the tenant was not negligent in causing the fire as she had no indication that anything was wrong with the hair dryer when she left it plugged into the outlet.

The rental agreement that was signed by both the tenant and landlord included the following language:

“Lessee shall be responsible for all intentional and negligent acts or breaches of thie Lease by the Lessee, Lessee’s occupants, guests, or invitiees.  Lessee shall be liable for all damage to the premises and appliances and equipment belonging thereto, in any way caused by the acts of Lesee, Lessee’s occupants, guests and invitiees.”

As a result of the above language the trial court (Judge Michael Brennan of Milwaukee County) granted judgment for the landlord and against the tenant.

A majority of the Court of Appeals (the court was divided as one judge dissented) reversed the trial court’s ruling and remanded the case back to the trial court directling it to enter judgement against the landlord.

In essence the Court of Appeals voided the lease language that is underlined  above becasue it felt that the lease provision was contrary to the Wisconsin Statutes governing Landlord Tenant Law – specifically sec. 704.07, Wis. Stats.

Sec. 704.07 states that a landlord is required to make repairs to the property unless the repairs were made necessary by the negligence of the tenant.  Sec. 704.07 also states that a tenant must repair damage if it is the result of the tenant’s negligence.

The Court of Appeals did admit that sec. 704.07 does not specifically address the issue of who should be responsible in a situation where the damage was not caused by the negligence of either the landlord or the tenant.   The logical outcome should then be to look to the rental agreement and determine what the parties agreed to in such a situation.  If that was done then the tenant would be liable for the cost of the fire damage repair.

Instead the Court of Appeals held that the only logical conclusion that one should come to after reading the statute is that it is the landlord’s responsibility to pay for the damage because the damage was not caused by the tenant’s negligence.

This is just another example of the courts going out of their way to protect the tenant at all expenses.  It seems as if the Court decided the outcome that they wanted and then did whatever was possible to piece together an argument to support that outcome rather then following and applying the law as written and then arriving at the outcome.  I’m assuming the landlord had insurance and the Court felt that as such the landlord would be better able to handle the repair costs.

Landlords already have statutes and administrative code regulations that tell them what they can and cannot include in their rental agreements.  Now we have a case that essentially says that even if a statute or regulation doesn’t prevent you from including certain language  in your rental agreement, if we (the Court of Appeals) don’t like the provision that was included in then we will find a way to make it void and unenforceable.

The only voice of reason appears to be in the dissent which is authored by  Judge Ralph Adam Fine  — who by the way was once a member of my law firm Petrie & Stocking S.C. (we only hire the smartest and brightest  ;  )  — who concluded that while the landlord would have a duty to repair the fire damage there is nothing in the statute that requires the landlord to be responsible for the cost of the repairs in the end especially when the parties agrees differently in the rental agreement.

It is yet unknown if the landlord will appeal this decision to the Supreme Court of Wisconsin or even if it did whether or not the “supremes” whould agree to hear the case.  So it appears as if for now at least we have precedent in this case that is not very favorable to landlords.

What are your thoughts on this decision?

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ATCP 134 RULES ON CREDIT CHECK/REPORT FEES

May 23

Posted by Tristan R. Pettit, Esq. in ATCP 134, Credit Checks | 5 Comments

 

ATCP 134 contains specific rules regarding when and how a landlord can charge a rental applicant for the cost of their credit report.   As background, ATCP 134 is the chapter of the Administrative Code of Wisconsin that sets forth 21 requirements that Landlords must follow or else risk getting sued for double damages and attorney’s fees by the applicant or tenant.

The applicable portion of the rules regarding credit checks is located at ATCP 134.05(4). This section says that:

1. A landlord may charge a rental applicant the actual cost of their credit check up to $20.

- So if the actual cost to the landlord to order the report is only $10 then the landlord can only require the applicant to pay $10.

2. In order to charge the applicant the credit report fee the landlord must obtain the report from a consumer reporting agency that compiles and maintains files ona nationwide basis.

- So a landlord can only charge the applicant the fee if s/he is obtaining the credit report from one of the “Big 3″ (Experion, Equifax, or Trans Union)

- Thus a landlord cannot charge the tenant for the cost of the report if they are obtained from a local or regional consumer information dateabase, credit brokers, credit resellers etc.

3. The Landlord must notify the applicant of the cost before ordering the report.

4. The landlord must provide a copy of the credit report to the applicant if the applicant is paying for the report.

5. The landlord cannot charge the applicant for the cost of the credit report if the applicant provides the landlord with a copy of his/her credit report (obtained from one of the “Big 3″) that is less than 30 days old.

- If you are faced with this situation, I would strongly advise the landlord to still order a nmore recent report at their own expense to insure that the report provided by the tenant has not been modified.

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NEW RULES FOR LEAD-SAFE REMODELING GO INTO EFFECT IN 2010

May 22

Posted by Tristan R. Pettit, Esq. in AASEW, Lead-Based Paint, Remodeling / Renovation | 1 Comment

New rules for remodeling of houses built before 1978 go into effect in April of 2010.  As of April 22, 2010 any person or business that disturbs more than 6 square feet of interior surface that may contain lead-based paint or more than 20 square feet of exterior surface that may contain lead-based paint will be subject to the EPA’s 2008 Lead Renovation, Repair and Painting Rule.

In the past a person or business did not need to comply with the EPA’s lead paint rules as long as they were not engaged in “abating” or “eliminating” lead based paint surfaces.  That has now changed.  In the near future if you are working on pre-1978 homes or child occupied business (like day care centers or schools) you will need to be registered with the EPA and take certified lead-safety training.

Certification will cost $300 and includes attending an 8 hour course.  Certification must be renewed every 5 years.  The required forms to become certified may be found here.

At least one person in each firm needs to be trained and certified.  A firm is defined as including a sole proprietorship.  On each job site there must be one certified person present to ensure that the lead-safe work practices are followed.  This includes training the workers, setting up the containment system (for the lead-dust collection) and for supervising the clean up.

Following the new federal rules will also include distributing the new lead-safe remodeling pamphlet to owners and occupants and obtaining their signatures verifying that they received the pamphlet.  It will also be required that the owners or occupants are notified in writing of the scope of the work, the location of the work and the expected start and end dates for the work.  Records will need to be kept for at least 3 years.

Testing of the various surfaces that are to be disturbed is also required via chemical spot testing, x-ray fluoresence, and lab analysis.

The keys to abiding by the new rules will include: (1) isolating the job area, (2) managing the dust, and (3) keeping the area clean.

Is painting considered to be remodeling?  This is the question on many landlords’ minds.  While painting isn’t considered to be remodeling or renovation in itself, painting will be subject to the new regulations if the surface that you are painting will need to be disturbed in any way (such as through sanding, scraping or any other dust causing actions).

These new rules will need to be followed by anyone that is disturbing the minimum areas in pre-1978 housing — it does not just apply to certified contractors — if you are doing work on your own rental property, these federal laws will apply to you.

If you are interested in learning more about these new lead-safe remodeling rules please attend the Apartment Association of Southeastern Wisconsin’s June membership meeting on June 15, 2009 at 7 pm.  You can find additional information here.

If you would like to learn additional information on the rules you should read Eileen Franko’s article here.

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MILWAUKEE CO. TO REQUIRE LLCs TO BE REPRESENTED BY AN ATTORNEY

May 15

Posted by Tristan R. Pettit, Esq. in Evictions, LLC's | No Comments

It has recently come to my attention that Milwaukee County small claims court will in the very near future prohibit any individual other than a lawyer to represent a LLC’s in court. This would mean that a landlord that owns his rental property in an LLC would no longer be able to appear in court to pursue his/her eviction case against a tenant. This is a change from how things have operated in the past and also different from what the law says in my opinion.

For those crafty landlords reading this who think that they will be able to circumvent this roadblock by merely filing the lawsuit in their individual names rather than in the name of the LLC that actually owns the property – you may want to read my earlier post entitled WHO MAY BRING AN EVICTION LAWSUIT.

As background, Wisconsin corporations have been required to appear in court through an attorney in large claims court since 1997 (Jadair Inc. v. U.S. Fire Insurance Co., 209 Wis.2d 187, 562 N.W.2d 401 (1997)). To date there is no case or statute that specifically requires an LLC to be represented by an attorney in large claims court although the reasoning for why only an attorney can appear in court on behalf of a corporation can quite easily be applied to an LLC as well.

Small claims court has been much different then large claims court however. In small claims court landlords have been able to appear in court themselves on behalf of their LLC because of §799.06(2), Wis. Stats. In essence the law says that as long as you are a full time employee of the LLC, or a member of the LLC yourself, you to represent the LLC in small claims court. While the statute prohibited most management companies from appearing in court for an LLC (since most management company employees are not full-time members of the LLC that owns the property but rather a full time employee of the management company that has been hired to manage many properties owned by various LLCs) at least the smaller landlord that owned and operated his/her own rental property could appear in court.

Apparently this will no longer be allowed as a friend of mine informed me that just this week he was warned by a Milwaukee County court commissioner that Milwaukee is preparing to require LLCs to appear in small claims court by attorneys only. Obviously this is going to put a financial strain on many smaller landlords that do not have the financial resources to retain a lawyer to represent their LLC every time they need to evict a tenant.

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DNS COMMISSIONER TO SPEAK AT JUNE AASEW MEETING

May 15

Posted by Tristan R. Pettit, Esq. in AASEW, DNS | No Comments

I hope that AASEW members and non-members will all come out in force to attend the AASEW’s June membership meeting on June 15, 2009.  Our main speaker will be the Department of Neighborhood Services new Commissioner Mr. Art Dahlberg. We are not yet certain what Mr. Dahlberg’s speaking topic will be at this time but check back to this Blog for updates. Mr. Dahlberg has been more than willing to meet with the AASEW, its Board of Directors, and landlords in general to assist in fostering a good working relationship between the City and rental property owners.

The AASEW’s meeting are always held on the 3rd Monday of each month – and held at the Best Western Midway Hotel located at 1005 S. Moorland Rd. in Brookfield.

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NEW LEGISLATION TO MAKE VICTIMS OF ABUSE A NEW PROTECTED CLASS

May 15

Posted by Tristan R. Pettit, Esq. in Fair Housing / Discrimination, Legislation, Protected Classes | 2 Comments

On May 14, 2009, Wisconsin Senator Spencer Coggs along with 7 other state senators introduced 2009 Senate Bill 204 entitled the “Victim Fair Housing Act.”

This bill will prohibit discrimination in housing on the basis of a person’s status as a victim of domestic abuse, sexual assault, or stalking. The bill also prohibits the owner of housing from requiring that a rental applicant supply information concerning the person’s status as a victim of domestic abuse, sexual assault, or stalking.

If passed (and there appears to be a great many co-sponsors to date) this bill will create an additional protected class in Wisconsin for victims of domestic abuse, sexual assault, and/or stalking with regard to housing. Discrimination in housing includes such actions as rejecting a person who applies to rent your property or causing the eviction of a current tenant solely because they are a member of a protected class. Wisconsin currently prohibits discrimination in housing based on a person’s sex, race, color, sexual orientation, disability, religion, national origin, marital status, family status, lawful source of income, age, or ancestry. Some municipalities like the City of Madison and Dane County have even more protected classes then the twelve mentioned above.

While I am not aware of any landlord that would refuse to rent to a victim of abuse in theory it is when that theory is dropped into the “real world” that sticky situations may arise. One concern I have is the fact that the abuser often follows his/her victim. This could pose noise and safety issues for the other tenants that reside in the same building with the abuse victim. What happens if the abuser shows up at the victim’s apartment banging on doors and disturbing the quiet enjoyment of the other tenants? Is a landlord allowed to evict the abuse victim/tenant in this situation? Or worse, what if the abuser shows up at the property and engages in criminal acts such as destroying the landlord’s property or assaulting other tenants who get in his/her way? Will the landlord be prohibited under this new law from evicting the abuse victim/tenant under this scenario? While I don’t think it is fair to evict the abuse victim in these situations I also don’t think it is fair that the other tenants and neighbors should have to endure such situations either. What is the landlord who is providing housing to that abuse victim to do? The landlord also owes his/her other tenants the right to quiet use and enjoyment of the property and to be free from criminal activity and harm.

Another concern is the fact that under the City of Milwaukee’s nuisance ordinances a landlord can be fined for having repeated calls to the police from the same property within a certain period of time. If the abuser should try to contact the abuse victim/tenant there is a strong probability that the victim will call the police (and they should). But under the nuisance laws, even if the police calls are legitimate, if there are too many of them the owner of that property may be fined. If the landlord doesn’t pay the fine it will be added to his/her property tax bill. While I have no supporting data, I think it stands to reason that a victim of abuse may need to contact the police more often than a non-victim of abuse

I don’t know what the answer is or should be. I certainly don’t think that victims of abuse should be discriminated against in housing but I also hope that the legislators, the police, the city and others that will be drawn into this dialogue will understand that there needs to be some protections or accommodations made to a landlord who may be stuck between the proverbial “rock and a hard place.”

Tell me what you think about this new legislation and how it might affect your rental properties.

Here is a link to view the press conference regarding the Victim Fair Housing Act.

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AASEW MEETING ON HOW TO BUY FORECLOSED PROPERTIES – MAY 18th

May 11

Posted by Tristan R. Pettit, Esq. in Foreclosures, Investing In Rental Property | No Comments

Anyone interested in purchasing foreclosed properties will not want to miss the Apartment Association of Southeastern Wisconsin’s upcoming monthly meeting on Monday, May 18, 2009 at 7 pm at the Best Western Midway Hotel located at 1005 S. Moorland Rd. in Brookfield.

Attorney James Mulligan, an expert in the area of foreclosures, will be the key note speaker and will discuss how to purchase foreclosed properties as well as provide us with some common pitfalls to avoid. Also on hand will be Jason Fernhaber and Brian Meidam, rental property investors and current AASEW members. Both Jason and Brian have obtained many of their rental properties through the foreclosure process and will be there to answer any nuts and bolts questions that you may have on the process.

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