Archive for October, 2009

LLC’s – PART 1: Why You Should Consider Using Them To Hold Your Rental Property

Oct 28

Posted by Tristan R. Pettit, Esq. in AASEW, Investing In Rental Property, LLC's | 3 Comments

 
The AASEW‘s October monthly membership meeting focused on the issue of LLC’s and why you should consider using this business entity to hold your rental properties.   Attorney Lydia Chartre of Petrie and Stocking S.C. spoke to the membership about several issues related to LLC’s including:
 
-  Why create an LLC?
 
-  Steps to create an LLC
 
-  Information that an attorney will need to assist you in creating an LLC
 
This meeting had the largest turnout of any AASEW membership meeting in the last 2 years — we had more than 70 people.  Both prior to the meeting and afterwords I received several telephone calls from people that wanted to attend the meeting but were unable to do so.  Because of this I have decided to post Atty. Chartre’s outline that was distributed to everyone in attendance at the meeting.  While you missed a great presentation from my law partner, Lydia, at least you will have the “nuts and bolts” of her presentation.
 
 
In the near future I will provide you with a copy of the outline that I distributed to the attendees at the October AASEW meeting on the topic of what formalities your LLC must follow in order to avoid having the “corporate veil” of the LLC pierced and possibly becoming personally liable for the debts or actions of the LLC.
 

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

Oct 28

Posted by Tristan R. Pettit, Esq. in DNS, Legislation, Residential Rental Inspection (RRI) Program / Mandatory Rental Inspections / Landlord Licensing | No Comments

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

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

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

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

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

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

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

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Milwaukee County Eviction Court to Alter Court Times During Flu Season

Oct 23

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

A friend of mine who works in the courthouse sent me an email today which she asked that I pass along to my clients and friends in the rental industry.  Apparently in an attempt to reduce crowding during the flu season Milwaukee Co. Eviction Court has decided to have certain plaintiffs, based on the spellling of their last name or company name, to appear on intial appearances at 3 pm rather than 2 pm.
Below is the email info I received: 
 
TO ALL PLAINTIFFS in Small Claims eviction cases, effective 10/26/09
  
If you are a business whose name begins with A thru K or an individual whose last name begins with A thru K, your case will be scheduled in Room 400 at 2:00 p.m.
 
If you are a business whose name begins with L thru Z or an individual whose last name begins with L thru Z, your case will be scheduled in Room 400 at 3:00 p.m.

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

Oct 22

Posted by Tristan R. Pettit, Esq. in City of Milwaukee, Legislation, Residential Rental Inspection (RRI) Program / Mandatory Rental Inspections / Landlord Licensing | No Comments

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

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

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

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

To determine your alderman and contact information go here.

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City of Milwaukee’s “Residential Rental Certificate Program” Is Unveiled

Oct 21

Posted by Tristan R. Pettit, Esq. in City of Milwaukee, DNS, Legislation, Residential Rental Inspection (RRI) Program / Mandatory Rental Inspections / Landlord Licensing | 14 Comments

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

-     This will be a 5 year pilot program.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Oct 19

Posted by Tristan R. Pettit, Esq. in Collections, Tenant Damage | 5 Comments

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

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

Posted by Bill Gray on August 10, 2009

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

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

 

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

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

Here is Michelle’s blog post I referred to:

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

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

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

What does this say about small and large businesses everywhere?

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

Why are they the bad guy?

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

Michelle Dunn 

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

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

Bill Gray

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

Oct 15

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

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

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

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

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

- The necessary steps to form an LLC

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

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

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

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

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