1. Tschantz (the landlord) withheld money from the tenant’s security deposit.
2. The key deductions that were made were: (1) $323.84 for the tenant’s water bill and (2) $85 to repair a clogged toilet.
3. After withholding a portion of the tenant’s security deposit to pay her water bill, the landlord then failed to pay the bill timely. As such, the tenant opted to pay the utility directly to avoid late fees.
4. The landlord then sent a refund check to the tenant — three weeks later — for the amount that he deducted from her security deposit to cover the water bill along with a Post-It note that said “Oh, too bad no double damages for you.”
5. The landlord then stopped payment on the check prior to the tenant cashing it.
The Court of Appeals held that the landlord violated ATCP 134 as a result of his “game-playing” with the tenant’s security deposit.
First violation of ATCP 134: The court held that it was unreasonable for the landlord to withhold money from his tenant’s security deposit in order to pay her water bill and then not use that money to pay the water bill timely. The court specifically stated, “A landlord cannot indefinitely retain a deposit — merely as a deposit — after a tenant vacates.”
Second violation of ATCP 134: The landlord then failed to promptly refund his tenant’s security deposit once he learned that she paid the water bill. Tschantz returned the water bill monies to Boelter three weeks later with a taunting note.
Third violation of ATCP 134: Finally, the landlord placed a “stop payment” on the refund check to the tenant. The court stated that, whether intentional or not, this constituted a further improper withholding of the tenant’s security deposit.
The Court of Appeals has admonished this type of “game playing” with a tenant’s security deposit in prior decision. So while the court’s decision here is not anything new, it does serve as a reminder to all landlords that they are taking a big risk if they choose to play games with a tenant’s security deposit. Remember DOUBLE DAMAGES AND ATTORNEY’S FEES – need I say more.
The more noteworthy aspect of this case concerns the court’s holding with regard to the repair charge deducted from the tenant’s security deposit. Tschantz deducted $85 from his tenant’s security deposit to repair a clogged toilet. The $85 was itemized as follows: $40 service call fee plus 45 minutes of labor at a rate of $60 per hour for the actual work. Tschantz stated that this deduction was “less than or equal to what an area plumber would bill.” Problem was that Tschantz didn’t hire a plumber to do the work, instead opting to hire his son’s (handyman) company which only billed Tschantz $15 per hour for the work it performed.
The court emphasized that the applicable law, Sec. 704.07(3), Wis. Stats., states that a tenant is only responsible to reimburse a landlord for the “reasonable cost” of the damage. The court then added that the “reasonable costs” would be the actual costs that the landlord had to pay for the repair work. Since a plumber’s fee also includes overhead and profit, the court said that Tschantz was not entitled to reimbursement of that amount. Tschantz was only charged $15 per hour by his (handyman) son to clear the toulet - $12 total per the court’s calculation — so that is the amount that he was entitled to legally deduct from his tenant’s security deposit.
Since there is no other published Wisconsin appellate decision that have addressed this specific issue 9at least not to my knowledge) – this is really the key holding of the case. A landlord may not charge a tenant for repairs at the rate that a professional laborer would charge if the landlord does not actually incur those charges.
Finally, the court also explained that when a landlord improperly withholds money from a tenant’s security deposit that the tenant is entitled, as a matter of law, to an award of his/her attorney’s fees. Here, the trial court chose not to award the tenant her attorney’s fees because the judge felt that the attorney’s fees were too far out of propertion to the claimed damages. The Court of Appeals “slapped the hand” of the trial court judge and reminded him that an attorney’s fee award is mandatory if there is a violation of ATCP 134 even if the attorney’s fees are far greater then the actual damages at issue.
Expensive lesson for Mr. Tschantz.
NOTE: Since Mr. Tschantz lost his appeal in this matter he will also be responsible for paying his tenant’s attorneys fees through the appeal per Shands v. Castrovinci, 115 Wis.2d 352, 340 N.W.2d 506 (1983)
#1 by Thomas FInger on January 8th, 2010
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I really do not see why a landlord is not entitled to fair repair value when damage is done to a property–in my case the tenants clogged every drain and their pets defecated on brand new wood floors —I did the majority of the repair myself since I could not pay a plumber the 2000 quote they gave me to snake 5 home drains (including sewer main which I did have to pay a pro for) Now my time and effort should be worth just as much as the plumbers (not to mention it prob takes me 3 times longer) If I had a 2000 deposit I would have witheld every penny of it.
#2 by John (Dr Rent) Fischer on January 8th, 2010
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I agree with the justices about the water bill issue and crap like that gives us all a bad name. There is currently legislation proposed in Madison saying the water bill cannot be applied to the taxes of the landlord if the landlord provides the utility with a valid forwarding address for the tenant. This would solve that particular problem.
The labor cost is an interesting issue. I know that if you own the property as an individual, and you – yourself do the work, you cannot be compensated for it. (A good reason to have the properties owned by one corporate entity and the labor and management done by a different corporate entity – Property Owner, Inc. then hires Property Maintenance, Ltd to do the work).
Although this court case could change things, I get the labor costs I claim when it is a default, and if it goes to trial, I just need to list the 3-4 people I called to get their hourly rate to demonstrate that the hourly rate charged was reasonable.
However, as I have been reading, our court system up here is much more “fair” than what you guys have to deal with in the Milwaukee Area
#3 by Tristan R. Pettit, Esq. on January 11th, 2010
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Hi John — Thanks for your comments. Yes, I agree with you that the “game playing” by this landlord just hurts us all in the end.
For whatever it is worth, while Milwaukee County often makes it more difficult on landlords than other areas of the state, I have consistently been able to obtain recoveries for my client’s costs of repairs/cleaning even if they perform the work themselves and they own the property as an individual rather then in a business entity. So it is interesting to note that Milwaukee allows this but not the Wausau area does not.
#4 by Tristan R. Pettit, Esq. on January 11th, 2010
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Hi Thomas – Thanks for posting your thoughts. I don’t think that the holding of this case prevents a landlord from being reimbursed for the cost to repair damage to his/her rental property. I think the holding of this case merely limits a landlord from being reimbursed for charges that s/he does not incur. If you hire a plumber to do the work – then you shoudl be reimbursed for the plumber’s costs. If you hire a hanyman to do the work then you should be reimbursed for the money that you paid the handyman. If you do the work yourself then you should be reimbursed for your time to repair the damage. Having said that, another reader posted a comment indicating that in his area (Wausua) the courts will not allow a landlord that owns the property individually and does the work himself/herself to be reimbursed for that cost. I have not run across that in the areas in which I primarily represent landlords (Milwaukee, Waukesha, Racine, Kenosha, Washington and Ozaukee counties). The one issue I can see with regard to that however is what is a fair and reasonable charge for the repair work of the landlord. Is it the cost of a handyman charges in the area?
#5 by Debbie on February 16th, 2010
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I recently was granted an eviction on one of the tenants, but a dismissal ordering the other tenant out of the premises. Go to court early March for money judgement. Since I need to address the security deposit transmittal letter to both tenants, who have separated and did not leave a forwarding address, can I address money damages for unpaid rent w/ forecasting the cost of the empty unit until at least spring in the letter to both. The tenants only paid 3 months on a 1 year lease expiring in September. Certainly I will claim costs of painting and carpet cleaning (they breached the lease by smoking in the unit — and agreed not to on the lease).
#6 by Corrin on April 28th, 2010
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Debbie, In MD the tenant is required to furnish a fowarding address. If they do not, then it is assumed, legally, that they forfeit their security deposit. Additionally, the security depost is for non-payment of rent. The minute the tenant stops paying rent and continues to live at the apartment, they forfeit their security deposit. Just be sure that you made an effort to track them down, i.e calling any numbers that you have for them.
#7 by Tristan R. Pettit, Esq. on April 28th, 2010
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In Wisconsin things are very different. If tenant does not provide a forwarding address you still must send the 21 day letter itemizing how the sec. deposit was applied to the last known address (which is your rental unit in most cases) in case they have a forward on their mail.
Also in Wisconsin, even if the tenant doesn’t pay the last month’s rent you must still send the 21 day letter – you can’t just keep the security deposit and not advise the tenant of that fact.
T
#8 by John Endries on July 22nd, 2010
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Regardless of all the legalities, the point to all of this is ‘where does the money come from’?
The answer is, who has insurance?
It is simply not economical to sue the tenant in most cases for such extreme amounts. Most tenants don’t have renters insurance, perhaps it should be required by the Landlord. I don’t know any Landlords who make a business out of collecting on judgements. Judgements are usually not a source of monthly income to be managed, they are usually passed on to collection agencies for lump-sum payments.
I presume the Landlord does not have fire insurance? Dumb move. Should not have put himself in that situation.
Regardless of whose appliance started the fire, Landlord’s insurance foots the bill, maybe sues the tenant, and would certainly bargain with renters insurance company if any.