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.
#9 by Harry Martin on December 5th, 2010
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Just because there is an atcp violation you have to pay tenant double damages and attorneys fees? what if they suffered no loss, for example there is an attorneys fee clause in the lease. that is an atcp violation. landlord req eviction but tenants left the property voluntarily. how did they suffer a loss because of the violation? one must suffer a loss because of it, right?
#10 by Tristan R. Pettit, Esq. on December 6th, 2010
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Harry — Thanks for your question. Yes, t tenant must suffer some form of damage in order to collect damage.
#11 by Harry Martin on December 8th, 2010
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Thank you for your reply. Does that mean if they bring suit against me for the ATCP “attorneys fees clause” violation but have no damages that are valid ie security deposit or what should not be covered under a tenancy to ask for do I still have to pay their attorney fees for bring forth this suit? Her attorney brought forth this suit but admits she did not know of the violation til he pointed it out to her so is that damages in it itself? Appreciate your reply.
#12 by Tristan R. Pettit, Esq. on December 8th, 2010
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Mr. MArtin — I can not give legal advice via this blog and you are asking me a question about your specific fact situation — which is legal advice.
Generally, if a plaintiff cannopt prove damages then atty. fees are not awarded. But if the tenant can prove even $1 that was improperly withheld then atty. fees must be awarded.
I would suggest that you contact and retain a landlord tenant atty. to review your case, and documents and facts and then you can get some advice that can be relied upon.
Your exposure if you are wrong can be great and if I were in your shoes I would want an atty. to review the matter fully and give me legal advice.
Good luck
T
#13 by sare on December 10th, 2010
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If the lease is illegal because of the attorneys fee clause does the landlord need to return late fees?
#14 by Tristan R. Pettit, Esq. on December 10th, 2010
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I’m sorry but I cannot give legal advice via this blog. Your question is fact specific — becasue the answer will depend on the specific facts in your scenario — and therefore an attorney would need to obtain additional information in order to properly advise you.
There is a chance that late fees that are only mentioned in a lease that has been declared unenforceable against a tenant would be improper, but there are also situations where late fees still might be enforceable.
I would suggest that you consult with a lawyer to discuss your specific situation.
Thanks for your question and for reading my blog.
T
#15 by sare on December 13th, 2010
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can you appoint me to a case/ law where late fees would be enforceable under a voided lease.
would they be enforceable if the tenant made a direct deposit to landlords account every month?
can you tell me a few examples where they would be enforceable?
This would really help tremendously to know.
ps LOVE your Blog
#16 by Tristan R. Pettit, Esq. on December 13th, 2010
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There is no caselaw out there, that I am aware of, that addresses your issue. There is not caselaw on a lot of importatnt landlord-tenant law issues unfortunately becasue the amount fo money at issue is usually quite small compared to the cost of appealing a trial court case to the court of appeals, and as a result neither landlords nor tenants appeal these issues — thus no caselaw.
ATCP 134.10(8) says that a landlord cannot charge a late fee except as specifically provided under a rental agreement. So it can, and has been argued, that if there is a void rental agreement — then there is no rental agreement and thus no late fees can be charged.
#17 by sare on December 16th, 2010
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-so are you saying that this has been argued with regard to late fees in small claims? Therefor it would be a pecuinary loss if there is an atcp violation?
-can you charge a late fee before wating 5 days if it is in a valid lease or do you have to go by the statue?
-what if i have the late fee in writing in the lease but the lease is void, the statue says it has to be in writing but it does not say it has to be in a valid written lease (voided lease due to atcp)
-if it is in writing on anyother paper does that count?
I won’t keep asking you but would you kindly answer this one last ?
sorry for the ?s
#18 by Tristan R. Pettit, Esq. on December 16th, 2010
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Sare – Thanks for your questions. I am not going to be able to give you a “yes” or “no” answer to many of your questions. The reason for this is the law is not “black and white” but rather there are many shades of grey.
The statutes can be interpreted in many ways and there is no Wisconsin caselaw out there that I am aware of that clarifies the statutes or regulations on the issues you are asking about. So it really depends on a case by case basis and what the judge or court commissioenr feels is right on that specific day. What is “right” can be different amongst different court commissioners and even different among the same ct. comm on different days.
I am saying that you need to be careful and error on the side of caution if you want to avoid being sued for improper security deposit deductions. Even if you win such a case you have spent time and money paying your own atty. to defend the case. If you are wrong by even $1 you will be required to pay the tenant’s atty’s fees. Oftentimes the atty. fees are larger than the underlying damage award.
I will try and answer your questions as best as I can.
There in ony one appellate case in Wisconsin that addresses the issues of late fees in a residential tenancy and in that case the Ct. of Appeals said that a $50 late fee was acceptable. The is no law (caselaw, statute or regulation) that says what the maximum limit is for a late fee. I can tell you in Milwaukee Co. the court commissioners do not like daily late fees nor do they like late fees over $50. The court has often refused to award such late fees to my clients and capped them at $50 per month. The cost to appeal that decision to the judge and then the Court of Appeals is too cost prohibitive and so we never have any appellate court opinions on the issue to guide us futher.
If your rental agreement says that you will not impose a late fee prior to the 5th day of the month then you need to honor that. Nothing says that you have to give a tenant 5 days before you impose a late fee — that seems to be what most landlords do but that is not the law —- I personally impose a late fee on the 3rd of the month with my tenants. You could choose to pose a late fee on the 2nd , the 15th or any other day of the month if you want. There is no statute that says what day of the month a late fee must be imposed by. Some landlords do not have late fees at all.
If a rental agreement is deemed to be void (or rather “unenforceable against the tenant” as the Baierl case says) then I personally believe that you would not be able to enforce your late fee clasue. Your late fee is in your rental agreement and if a court says your rental agreement is unenforceable that means you cannot go by the terms in the agreement. You would then default to a month to month oral agreement. ATCP says you can only charge a late fee if it is stated in a rental agreement. My personal thought would be since you dont have a written rental agreement anymore b/c it was thrown out that you cant charge a late fee in that case.
There is no caselaw saying this and I have not had a judge or ct. commissioner tell me this — this is my personal opinion.
You are correct that the regulation just says that the late fee must be in the rental agreement in order to be enforceable. It does not say tha the rental agreement must be valid or legal – that is true. But I would not want to make that argument to the court as I dont think it will get you far and I think you would lose credibility with the court. Possibly you could find a court that might analyze things your way but I dont think you would find many.
#19 by sare on December 23rd, 2010
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from your previous post, what cases are those that the late fees were an issue. I would like to read those cases.
In an unenforceable lease are late fees from 2.5 years worth , need to be returned as double damages?
#20 by Tristan R. Pettit, Esq. on December 27th, 2010
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The only case that touches on late fees is a case entitled “Three & One Company v. Geilfuss. The case is really about tenant “waste” as the tenant allowed their pets to use the entire rental property as a cat litter box. The cite for the case is 178 Wis.2d 400, 504 N.W.2d 393. The reference to late fees is at [14].
#21 by Thomas Finger on February 10th, 2011
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What is the current status of the water bill legislation? I have just had my tenant move out (she is obligated to pay water bill per our lease) and she did not make a single payment for the entire year she lived in my property—Previously (in 2009)I had to pay when the old tenant moved out 360.00 Now this bill (2010-new tenant)is for 700.00—how come the water company will not keep the bill in the tenants name—It was originally signed up under her name—-now they put the bill under “occupant” and have turned off the water to the home due to non-payment—
#22 by Tristan R. Pettit, Esq. on February 11th, 2011
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Thomas — I’m sorry to hear about your situation. You will need to be more specific as to what water bill legislation you are referring to.
A way that many of my client handle this type of situation is to keep the water bill in the landlord’s name. Have it written in the lease that the tenant is responsible for the paying the water bill and that the landlord will forward a copy of the water bill to the tenant upon receipt and the tenant has 10 days to reimburse the landlord for the amount of the water bill.
this wont help you out of your current situation but may be something to consider to avoid it happening again.
T
By doing this, you stay in control and can insure that the water bill is paid so it is not tacked on to your property tax bill. Also, by handling it this way you will now when the tenant doesn’t reimburse you for the water bill and can do something about it.
You can serve a 5 day notice for breach of rental agreement, 14 day notice or 28 day notice (depending on the type of rental agreement you have). Not paying the water bill is a breach of the rental agreement and a basis for evicting a tenant. It should be treated the same as not paying rent or any other breach.
#23 by merrie on March 17th, 2011
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Tenant gave me 28 day notice to vacate on Feb. 23rd, tenant began moving out on Feb. 25th. Tenant called me to do a move-out inspection & turned over keys on March 2nd
(7 days later)
Because the tenant did not give me adequate notice are they responsible to pay March?
#24 by merrie on March 17th, 2011
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what moderation is needed?
#25 by Tristan R. Pettit, Esq. on March 17th, 2011
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Merrie — I cannot give legal advice via this blog. I can tell you that if a tenant does not give a landlord proper notice to vacate (and the requirement to give the notice was legal) then the landlord has a duty to attempt to mitigate the tenant’s damages by re-renting the unit. If the landlord is able to re-rent the unit then the tenant would only be responsible for the costs of re-rental and any rent that was lost. So if you re-rented quickly and now rent was lost then the old tenant may not be responsible for any rent.
Improper deductions from security deposit are the #2 most litigated area in landlord-tenant law (after evictions) so you want to have that carefully analyzed.
T
#26 by R May on June 14th, 2011
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To Mr. Finger’s comment, immediately below. Mr. Finger, if you “withheld every penny of it,” you would end up in the same boiling pot of stew as Tschantz.
#27 by R May on June 14th, 2011
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Mr. Finger’s comment is the first comment, 1-8-2010
#28 by Allie on December 16th, 2011
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Mr. Pettit,
I have an issue with my ex-landlord that I’m confused about. I hope this doesn’t count as specific legal advice, but is it considered “normal wear-and-tear” if there was an “odor” left on the mattress, comforter set, pillows, and curtains in the bedroom? They said they were forced to buy a new comforter set and pillows, and then deep clean the curtains and mattress. This “odor” wasn’t explained with any specific description or even adjectives, and we never smoked in the house and had no pets so it couldn’t be anything that breached the lease. Is “odor” without proven cause a matter of opinion or at least covered under “normal wear-and-tear” ?
#29 by Tristan R. Pettit, Esq. on December 22nd, 2011
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Allie — I cannot give legal advice via this blog as you pointed out. To my knowledge there is no law, regulation of case in Wisconsin that defines what “normal wear and tear” is. That determinination is left up to the judge or court commissioner based on the specific facts elicited at trial. Specific facts would be needed to give you an opinion —- how long did you live there, what caused the odor, if odor caused by a pet were pets allowed etc etc. Regardless of the facts and even if I could give you advice on this questions a court could disagree with me.
Not much help, I realize, but the issue of what is “normal wear and tear” is always a crap shoot as it means different things to different judges and even different things to the same judge on different days. It is a veritable “black hole”