Archive for October, 2009

MARYLAND ARMS CASE WILL BE REVIEWED BY WISCONSIN SUPREME COURT

Oct 15

Posted by Tristan R. Pettit, Esq. in Caselaw, Rental Agreements, Rental Documents | No Comments

In my May 28, 2009 post I wrote about the then recently published Wisconsin Court of Appeals case of Maryland Arms Limited Partnership v. Connell, 2009 WI App 87, __ Wis.2d __, 769 N.W.2d 145. 

This was an important case because a divided Court of Appeals held that a tenant could not be held responsible for the damages that resulted after her hair dryer caused a fire which resulted in thousands of dollars of damage to her landlord’s rental property. 

A key fact in the case was that the landlord agreed that the tenant was not negligent in causing the fire becasue she had no prior knowledge of the hair dryer being faulty.  Another key fact in the case was that the tenant’s lease contained a provision that stated that the tenant would be responsible for all damages that were in any way caused by the acts of the tenant.  The Court of Appeals held that such a lease provision was void.

The landlord in this case has petitioned the Supreme Court of Wisconsin to review the the case and the “Supremes” have agreed to hear the case.  Oral arguments are to be held on January 6, 2010 and it is expected that a decision will be issued sometime in 2009-2010 term.

One of the main issues that the Wisconsin Supreme Court will have to decide is whether or not a landlord can contractually make a tenant liable for damage in a situation where the tenant is not negligent in causing the damage.

This will be an interesting case to watch and I will keep you updated as I learn more.

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UPDATE ON AB-340 (CCAP BILL)

Oct 9

Posted by Tristan R. Pettit, Esq. in CCAP, Rep. Marlin Schneider, Screening Tenants | 3 Comments

As many of you know a public hearing was held on AB340 – the proposed bill by Rep. Marlin Schneider that would restrict who can use CCAP and what information would be contained on CCAP — at the State Capitol in Madison last week.

Several board members from the AASEW (Dave Ohrmundt and Richard Bishop) and the head of Milwaukee RING (Brian Fleming) attended the hearing to make sure that landlords’ voices were heard.  We appreciate you guys taking the time out of your busy schedules to attend.

A fellow landlord-tenant law blogger from the Wausau area (Dr. Rent a/k/a John Fischer) also attended the public hearing and even testified wrote a recent blog post on the bill and the hearing that gives you his views on the proposed bill and what his thoughts are regarding if it will succeed.  Dr. Rent writes a great blog and if you enjoy my blog you should also sign up for his blog.

Arguments were presented both for and against the propsoed legislation.  On a practical level I thought it was very telling the the director of state courts (who under the proposed bill would be in charge of registering CCAP users and monitoring their searches) felt that the cost and time involved would be a huge undertaking.  It might have been a good idea for the bills’ sponsors to have spoken with the director of state courts and attempted to get him on their side prior to the public hearing.

Two recent articles written about the hearing and AB340 in general were published.  The Milwaukee Journal Sentinel wrote an article on the hearing and the Racine Journal Times also had a good piece on the proposed legislation.  Columnist, Patrick McIlheran, of the Journal Sentinel also wrote a recent piece on Schneider’s proposed CCAP bill.

The Wisconsin State Journal also published an editorial regarding AB-340.

I was also interviewed for an article by the Wisconsin Law Journal about the proposed CCAP legislation. This article does not focus on how AB340 will affect landlords but rather how it might affect lawyers ability to screen their own clients and related issues.

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Newly Revised 5-Day Notice To Pay Rent or Vacate Now Available at Wisconsin Legal Blank

Oct 8

Posted by Tristan R. Pettit, Esq. in Evictions, Notices, Rental Documents | 1 Comment

As many of you know I am the author of the set of Landlord-Tenant forms that are sold at Wisconsin Legal Blank Co., Inc.  I am currently in the process of reviewing and updating all of the L-T forms as well as creating a few new ones.  At this time however, I wanted to alert you that the revised 5-Day Notice to Pay Rent or Vacate is now available for sale at WLB.

Essentailly the revisions to the Notice include the following:

-  I have added language that states that the tenant will still be in default and subject to eviction if they make only a partial payment and/or make a full payment after the 5 day cure period has elapsed.  It is my hope that by adding this language it will better protect a landlord that accepts a partial payment or late payment from having their eviction lawsuit dismissed based on a legal theory called “waiver.”

          NOTE:  The best way to avoid a “waiver” arguement is to not accept any partial payment or any payment that is made after the 5 day period has elapsed.  Having said that, I am aware that it is very difficult for a landlord to turn away money that s/he is almost certain to never see again if the landlord is evicting a tenant.  So if you decide that you want to keep the partial or late payment then the next best option to avoid the tenant prevailing on a “waiver” argument is to place the payment in escrow  – do not cash the check!! — and send the tenant a letter — which I refer to as a “No Waiver” letter — which essentially says that the landlord has received the partial or late payment and that the money will be held in escrow until after the court has decided whether or not to grant the eviction.  The ‘No Waiver” letter should also state that the money will be appplied to any past due amounts owed after the eviction has been decided and that by holding the money in escrow the landlord is not waiving his/her right to continue with the eviction against the tenant and that it is the landlord’s intent to proceed with the eviction and have the tenant evicted.  The new language added that has been added to the revised 5-Day Notice now available at WLB has been added as a “safety net” should the landlord not follow one of the two options set forth above.

- I have referenced the applicable Wisconsin Statutes regarding 5 day notices.

- I have made a few other grammatical changes.

I will be sure and let you know when other updated landlord-tenant forms are available at WLB.

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The Importance of Using Written Screening Criteria During The Tenant Selection Process

Oct 2

Posted by Tristan R. Pettit, Esq. in Rental Documents, Screening Tenants | 3 Comments

           Those of you that have attended one of my landlord-tenant law seminars or read my prior posts on screening tenants know that in my opinion the screening process is the single most important aspect of being a landlord.  If done properly, the screening process can save a landlord from many headaches such as: having to evict a bad tenant, repairing your damaged rental property, dealing with other tenants complaining about your loud and disruptive tenant, and/or having your rental property declared to be a public nuisance due to the bad behavior of  your tenant and his/her guests.  By properly screening your tenants you will significantly reduce your exposure to the above situations.

          One key aspect of the screening process is having and using written screening criteria.  Screening criteria sets forth the minimum requirements that an individual must meet in order to be able to rent from you.  Looking at it another way, screening criteria also sets forth what will cause an applicant to be denied rental from you. 

          Here is an example of written screening criteria.  Please be aware that this screening criteria is pretty stringent.  I am not saying that you should or should not use this criteria -  you must determine what criteria works for you and that is based on many factors which  I will not be addressing in this post.  I am linking to this sample screening criteria so that you have some examples of permissable (and legal) criteria so that you can better understand this post. 

          You should think of your screening criteria as a checklist that you go through when reviewing each application.  By utilizing screening criteria a landlord is reminded that s/he should be making a decision to rent to an individual based on objective reasons rather then subjective ones. 

          An objective reason to deny an applicant  is something that is quatifiable and verifiable.  Examples would include whether or not the applicant has ever been evicted before, whether their prior landlord would rent to them again, whether their gross monthly wages are at least 3 times the amount of your monthly rent.  Subjective reasons cannot be verified and as such can lead to allegations of or actual instances of discrimination. 

          A subjective reasonson the other hand, cannot be quantified or verified.  Examples of  subjective reason for denying an applicant would be because you got a “bad feeling” when talking to them or you didn’t feel like you “connected” with them.  You should not be making a decision to rent to someone based on a subjective feeling; by doing so you may inadvertantly and unconsciously be discriminating against them.

          You should have your screening criteria in place prior to taking your first application.  Screening criteria should not be created as you go.  Ideally you should spend some time thinking about what would cause you to deny an applicant and conversely what would cause you to rent to an applicant.  Think of objective reasons such as: do they have a prior rental history, have they been employed at their current job for a period of time, do they make enough money that they can afford to pay the rent and still have extra money to live on, have they ever been evicted before, do they have prior money judgements against them, would their prior landlord rent to them again, have they been arrested and/or convicted of a crime.  Think about what caused you to accept or reject your current tenants.  This information will serve as the initial draft of your screening criteria.

          Next, take a seasoned landlord that is familiar with discrimination/fair housing laws to lunch and ask him/her to review your draft criteria or hire an attorney that has experience with the fair housing laws to give you some feedback.  You need to insure that your criteria is legal and does not violate any aws before you begin to use it.

          Once you have your screening criteria in place, the next step is to insure that you apply it evenly and consistently.  You should not make exceptions to your criteria.  If your screening criteria says that an applicant will be denied rental if they have ever been evicted in the past  — and your applicant has a prior eviction judgment on their record –  then you should deny them.  Once you start making exceptions to your screening criteria you lose the protection of the screening criteria because you are once again resorting to subjective decision making such as “I know that s/he was evicted last year but they seemed like such a nice and honest person that there must have been a misunderstanding.”  Does this sound familiar? Do not make exceptions.

          Screening criteria does not have to be distributed to the applicants.  Many larger landlords do give their criteria to potential renters as a form of self-screening with the intent that potential applicants will read the criteria and not submit an application if they do not meet the criteria – thus saving the landlord time and money of reviewing an application that will be denied in the end anyhow.  Many other landlords choose not to give out their criteria but rather use it internally to assist in the screening process.  Either option is legal and both options have pros and cons.

          The most common complaint I receive from clients that have started using screening criteria is that they feel “bound” or “restrained” by the criteria.  If that is how you feel when you start using it then you know that it is serving its purpose and you are doing things correctly.  Screening criteria is supposed to restrain you –  it is designed to reign you in from making random, spur of the moment, subjective decisions.

          You are able to change your screening criteria over time.  For instance if one of your criteria requires an applicant to have a FICO score of at least 700 and you find that none of the applicants are meeting this requirement and your unit is vacant as a result, then you may need to lower the FICO score requirement.  Nothing is wrong with changing your criteria but you cannot and should not be changing your criteria back and forth day to day, week to week or even month to month.

          If you do change your screening criteria you should make a notation as to when you stopped using the old criteria and began using the new criteria.  If you look at the sample screening criteria linked above you will see that there is a place on the second page of the document for you to indicate the date that you started using the criteria and the date when you stopped using that criteria.  After you have stopped using a certain version of your screening criteria you should retain a copy for a minimum of 3 years but preferably for up to 7 years.  The statute of limitations for most federal and state discrimination complaints is 3 years but there are some that are 7 years.  So if a past applicant should decide to file a discrimination complaint against you 6 years and 11 months later you still want to have written proof of the criteria that you were using at the time of the alleged discriminatory conduct.

          If you review an application and you determine that the applicant does not meet your croteria you should make a notation as to which criteria they did not meet and attach any supporting documentation.  Then file it away with your other important records.

          Screening criteria is also very helpful if you have more than one person screening potential applicants.  For example, if you have multiple employees or have hired a management company to run your rental properties you can provide them with a copy of your screening criteria and tell them that you want them to utilize it.  By having them follow your written screening criteria – which can serve as a checklist – you have a better chance that they will follow it.

          Being a defendant/respondent in a federal or state discrimination investigation is about as much fun as a root canal.  The investigative process is long, tiring, disruptive, and very intrusive.   The investigators will interview your current tenants, your past tenants, current employees, past employees and anyone else that may be able to assist them in determining whether or not you engaged in a discriminatory act.

          I have represented many landlords that have had both federal and state fair housing complaints lodged against them for discrimination arising out of the screening process.  In all of those cases, the first question that the investigator asked me was whether or not my client was using written screening criteria.  Unfortunately in every one of those cases I have always had to answer “no” to that question.  If my clients had been utilizing written screening criteria I would have been able to forward the screening criteria to the investigator along with the documentation supporting which criteria the applicant did not meet and I would have had verifiable proof that the applicant was denied rental based on a non-discriminatory reason.

          Because my past clients were not using written screening criteria it ended up being a case of “he said/she said.”  What I mean by that is my client is saying that s/he didn’t discriminate against the applicant and the applicant is saying that the tenant did discriminate against them.  There is no written proof one way or the other.  It is a crap shoot.  When you are in a “he said/she said” scenario you are in for a long, painful, and often expensive investigation. 

          Do yourself a favor — if you are a landlord and are not currently using written screening criteria, use the information in this post to begin the process of putting together some criteria, have it reviewed, and begin using it during your screening process.

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