I need to apologize. I have spent much of my time these last several months following and providing information about the city of Milwaukee’s new Residential Rental Inspection ordinance and as such I have inadvertantly failed to let everyone know about another of Milwaukee’s new ordinances that will affect rental property owners.
I was talking with a client of mine last week prior to the 1:30 pm eviction return calandar in small claims court and he mentioned that the city recently served him with notice that he is in violation of the city’s new Vacant Building Registration ordinance. He was told that his rental property was vacant and that he didn’t register the property with the city as required and that he must now open his property up for an interior inspection by the Department of Neighborhood Services (DNS). Interesting twist is that my client’s rental property is not vacant nor has it ever been vacant. The unit is occupied by a tenant under a valid written rental agreement.
On January 1, 2010, Milwaukee’s new Vacant Building Registration ordinance went into effect. Essentially the ordinance states that the owner of any building that is vacant for more than 30 days must register the property with DNS and submit to a mandatory – warrantless – interior inspection of the rental property. The ordinance also requires the owner to secure the building, maintanin the lot, exterior of the property, and interior of the property during the time that it is vacant.
Upon first glance this seems like a reasonable ordinance. A valiant attempt by the city to insure that vacant buildings do not become dilapidated and attract criminal activity, injure individuals, or further depress Milwaukee’s neighborhoods. I have no problem with that. Upon closer review of the ordinance however you will note the many requirements – similar to the city’s Residential Rental Certificate ordinance — that are open to multiple interpretations and therfore open to abuse, which in the end, can and most likely will, be used to the detriment of rental property owners.
I will not attempt to explain or detail the entire Vacant Building Registration ordinance as it is over 6 pages long. I would like to touch on some key parts of the ordinance and note some concerns.
This new ordinance applies to all residential and commercial properties that have been vacant for more than 30 days. There are some exceptions. It does not apply to single family homes or owner-occupied duplexes (as long as the owner has resided in the duplex at least 3 of the last 9 months and the owner intends to continue living in the duplex). Also excluded from the ordinance are condominiums and rental units as long as their vacancy rate does not exceed 95%. Also excluded is property that is currently in the foreclosure process and property that is actively being renovated.
This ordinance will apply to your rental whether or not you are actively showing the property to prospective renters and regardless of the condition of the property. So within 30 days of the property becoming vacant you must fill out a city application and file it with DNS. Additionally you must allow DNS to conduct an interior inspection. If the city finds any violations you will be cited.
Your intial application will be good for a period of 6 months and will cost you nothing (assuming the city does not cite you for any violations). If your property remains vacant for more than 6 months then you must reapply and pay a $250 fee. If DNS determines, at the time of renewal, that your property is not compliant then the fee will increase to $500. If your property continues to be in violation at the time of any subsequent renewals then you may be charged a fee (in increasing increments of $250) up to a maximum of $1,000. If you don’t pay the fees they will be assessed against the real estate as a “special charge.”
During the inspection, DNS will see if your property meets their minimum requirements. You can read a summary of those requirements at DNS’ webpage dedicated to this new program.
Just as with the Residential Rental Certificate ordianance, DNS has the unfettered ability to draft and apply rules and regulations which are not required to be incorporated into the ordinance. These rules and regulations can change at any time and do not have to be published.
Let me just provide you with two situations that clearly fall under the purview of this new ordinance but which I feel should not require any city involvement whatsoever. By no means are these the only two problematice examples that I foresee — there are many.
First, assume that you own a duplex and you currently have a tenant in the lower unit but because the upper tenant just broke the lease you upper unit is empty. The upper unit is in pretty good shape but requires repainting and some minor repairs to get the unit into move-in condition for the next tenant. Also assume that you were just assigned a new project at work that is taking up most of your time – you are working late and on weekends. While you would like to repaint the unit, make the minor repairs, start advertising the vacancy, and showing it to prospective renters, you just do not have the time. You remain very busy at work for more than 30 days. Under the new ordinance you now have a “vacant building” and you must register the property and allow it to be inspected.
My second example has actually happened to me on several occassions. I was in the process of trying to locate a new tenant for the lower portion of my duplex. Just as the city suggests, I have written screening criteria which any applicant must meet in order to become my tenant. My screening criteria is quite stringent. I follow the adage that it is better to have a vacant unit then to accept any “warm body” as a tenant. Because I also work a full-time job, I am not free to show the property to interested renters every day. As a result of both my stringent criteria and my schedule, my lower duplex remains vacant for over 30 days. Under Milwaukee’s new ordinance I would need to register my duplex with the city and take time out of my day to allow an inspector to inspect my property.
NOTE: I have spoken with DNS Commissioner Art Dahlberg and confirmed that my above examples (which I have crossed out) are inaccurate. If you have a duplex and only 1 unit is vacant then you do not fall under the purview of the new ordinance. You would only fall under the purview of the new ordinance if both units of the duplex were vacant for 30 days — as you would now have more than a 95% vacant property. So I have had to revise my examples.
First, assume that you own a single family home that you operate as a rental property and your tenant just broke his/her lease and as such the property is now vacant. The property will need a little bit of work (minor repairs and some painting) before you can turn it over. Also assume that you were just assigned a new project at work that is taking up most of your time – you are working late and on weekends. While you would like to repaint the unit, make the minor repairs, start advertising the vacancy, and showing it to prospective renters, you just do not have the time. You remain very busy at work for more than 30 days. Under the new ordinance you now have a “vacant building” and you must register the property and allow it to be inspected.
My second example happens to many of my clients that have stringent screening criteria that applicants must meet before they can become tenants. They are in the process of renting out a single family rental unit or both units of a duplex. Just as the city reccomends they use a written screening criteria which any applicant must meet in order to become a tenant. Following the adage that I often teach at my seminars, that it is better to have a vacant unit then to accept any “warm body” as a tenant, my clients often have periods in which their rental units are vacant. Sometimes becasue my clients work a full-time job outside of being a landlord, they not free to show the property to interested renters every day. As a result of both their stringent screening criteria and their busy schedules, their single famuly rental or both units of their duplex remain vacant for over 30 days. Under Milwaukee’s new ordinance they would need to register their rentals with the city and take time out of my day to allow an inspector to inspect their property.
I suppose things could be worse. You could be standing in my client’s shoes – the guy I mentioned earlier — and have just been served with a notice from the city that you are in violation of its Vacant Building Recording ordinance. My client is now placed in the difficult position of having to decide whether to ignore the city’s notice and risk the possibility of a fine and the future wrath of DNS or capitulating to the city and allowing it to inspect his unit despite the fact that it is occupied by a tenant and the city has no legal right to set foot in his rental property. What would you do?