Aside from evictions, issues regarding the failure to properly return a tenant’s security deposit are, in my opinion, the single most litigated area in landlord-tenant law.
In Wisconsin, if a tenant has deposited a security deposit to his/her landlord as part of a residential tenancy, the landlord must comply with one of two options within 21 days after the tenant “surrenders” the landlord’s rental unit:
1. Return the tenant’s security deposit, or
2. Send the tenant a security deposit transmittal letter (which I refer to as a “21 day letter”) explaining how the tenant’s security deposit was applied.
Unfortunately too many landlords have gotten themselves into trouble when it comes to the issue of returning a tenant’s security deposit. While there are many ways to screw up, most of the mistakes that landlords make regarding this topic fall into one of three categories.
First, a landlord makes improper deductions from the tenant’s security deposit.
Second, the 21 day letter is sent late.
Third, the 21 day letter is not sent at all.
Failure to abide by ATCP 134.06 of the Wisconsin Administrative Code – which deals with security deposits in residential tenancies — can result in the tenant being awarded double damages and attorneys fees.
A little over a year ago I wrote a post on the topic of how to draft a legal 21 day letter to your tenant. Due to the continued popularity of that post I thought it would be helpful to include a video clip from a seminar that I presentedawhile back on this important topic.
#1 by Peter B. on January 25th, 2012
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Good Afternoon Tristan,
Some of my colleagues tell me that they have received letters from DATCP warning them that if they wrongfully withhold any portion of a tenant’s security deposit, the tenant could sue for a judgment of twice the entire security deposit, regardless of how much the landlord wrongfully withheld. That seems to imply that if a landlord withholds $100 from a $2,000 security deposit, the tenant could sue and receive a judgment against the landlord for $4,000 + attorneys fees. Is that correct?
I know Stat. 100.195(5m)b says that any person suffering a pecuniary loss from an unfair trade practice shall receive an award of twice the pecuniary loss. It is my understanding that this provision provides for an award for the tenant of only twice the amount that was wrongfully withheld from their security deposit – not an award of twice what was withheld, including legitimate deductions, and certainly not an award of twice what the entire security deposit was.
Do you know what case law covers this issue? I know I read a case about this in the past where the appellate court ruled that the award is to be based on only the amount that was wrongfully withheld. I don’t recall the name of the case, however, and I am hoping you do or if you know of any other information to that a landlord could use to rebut DATCP. Thank you.
#2 by Tristan R. Pettit, Esq. on January 25th, 2012
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Peter — Your interpretation is correct. DATCP is Wrong — which seems to be typical. The case you are looking for is Pierce v. Norwick, 202 Wis. 2d 87, 55 N.W. 2d 45 (Ct. App 1996)
Which essentially holds that:
Court limits the doubling of the entire amount of the security deposit to those situations in which the landlord fails to send the 21-day letter at all. In all other factual situations, only the portion of the deposit that is wrongfully withheld may be doubled.
It would be nice if the government entities that are supposed to enforce the laws/regulations actual read the law and interpreting cases.
#3 by Peter B. on April 5th, 2013
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Good Afternoon Tristan,
I was wondering if you would be so kind as to offer an opinion concerning how a landlord should handle the disposition of a tenant’s security deposit when the tenant provides the landlord with an incorrect forwarding address.
Scenario: Tenant moves out and provides landlord with a written forwarding address when they return the keys. Landlord prepares the security deposit transmittal letter and a check as the return of the tenant’s security deposit, less some deductions.
The landlord sends the letter and check to the tenant, via certified mail, to the address provided by the tenant. A week later, the parcel is returned to the landlord because the address does not exist. The next day, the tenant calls the landlord to inquire about when they will be receiving their security deposit. The landlord explains what happened, and the tenant provides the landlord with a different forwarding address in an e-mail.
What do you think the landlord should do in this scenario? Open the original letter, repackage it and mail it to the new address? Keep the returned letter as proof of when he originally mailed the letter? If the landlord keeps the original letter and does not open it, then a new check and letter will have to be drafted with a later date, which would make it appear as though the landlord did not return the security deposit until well after the 21-day time frame.
My initial reaction to this scenario is that the landlord should keep the returned transmittal letter as evidence that he mailed it in time, make a copy of the original letter and check, prepare a cover letter explaining to the tenant what happened and why they are receiving copies of a check and letter , draft a new check to replace the one that is sealed away in the returned original transmittal envelope, and mail all of that to the tenant at the latest address provided.
Thank you in advance for your thoughts concerning this purely hypothetical and academic scenario and line of questions. Your opinions and answers are very educational and greatly appreciated. Thank you.
#4 by Tristan R. Pettit, Esq. on April 5th, 2013
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Definitely keep the original letter, envelope etc. in case you need it as evidence. If you dont have that anymore then how can you prove to a court that you did everything correctly. I also reccomend in the future that you get the forwarding address from tenants in writing — so that can be used as evidence if they give you a wrong address.