Must A Landlord Actually Repair Tenant-Caused Damage Before The Landlord Can Deduct The Cost From A Tenant's Security Deposit?

Posted by Tristan R. Pettit, Esq. in Tenant Damage, Security Deposit / Comments

This issue keeps raising its head over and over and over . . .  so I feel compelled to address it.  The question:  Must a landlord have completed the repair of tenant-caused damages to a rental unit before being legally able to deduct the repair costs from the tenant's security deposit?

I personally believe the answer to that question is "No" -- the repair work does not need to be completed prior to a landlord being able to deduct the repair cost from the tenant's security deposit.

Wisconsin law does not provide landlords with a direct answer to this question.

The Wisconsin Administrative Code, ATCP 134, does not address this issue.  This is what ATCP 134 does say:

ATCP 134.06(2)(a), entitled Returning Security Deposit, states that within 21 days after a tenant surrenders the rental premises, the landlord shall deliver or mail to the tenant the full amount of the security deposit held by the landlord, less any amounts properly withheld by the landlord under sub (3).

ATCP 134.06(3), entitled Security Deposit Withholding; Restrictions, lists what items can be deducted from a tenant’s security deposit.  I wrote a blog post on this topic previously.

ATCP 134.06(4), entitled Security Deposit Withholding; Statement of Claims, states that if any portion of a security deposit is withheld by a landlord, the landlord shall, within the time period and manner specified under sub (2) deliver or mail to the tenant a written statement accounting for all amounts withheld.  The statement shall describe each item of physical damages or other claim made against the security deposit, and the amount withheld as a reasonable compensation for each item or claim.

Chapter 704 of the Wisconsin Statutes which deals with Landlord Tenant issues does address the issue.

I am also not aware of any Wisconsin case law that answers the question.

Here are my reasons for believing that it is legal for a landlord to deduct the costs to repair tenant-caused damage from the tenant's security deposit prior to the repair work being completed.

1.   Nowhere in ATCP 134 does it state that the repair work must be completed prior to the landlord being able to deduct the costs of repair from the tenant's security deposit.  If the drafters of ATCP 134 meant for repair work to have been completed prior to any deduction being made from a tenant's security deposit then they had the opportunity to require that in the regulation.  For whatever reason, the drafters chose not to write that into the regulation.  As such, such a requirement should not be read into the regulation if it is not there.

2.   The repair of tenant-caused damage to a rental unit cannot always be completed within 21 days of a tenant surrendering the rental unit.  There are a multitude of legitimate reasons why repair work may not be able to be completed within 21 days, such as: contractor time constraints, financial constraints, or the simple fact that the sheer amount of repair work that needs to be completed is too large to allow it to be completed in 21 days.  Just because a contractor can't complete the work within the 21 days, or the landlord does not have the money to make the repairs within 21 days, or the work cannot be completed within 21 days -- such as in the case of fire and smoke damage, or water damage -- does not absolve the tenant from responsibility for the cost of repairs. 

3.   DATCP, in its own analysis of ATCP 134, has stated that the repair work need not be completed prior to the drafting of the security deposit transmittal letter to the tenant.  In 1999, after a major overhaul was completed to ATCP 134, DATCP published a document entitled a Summary of ATCP Chapter 134 Revisions.  In its summary, DATCP states on page 3:

  (Note: if repair costs are not known within 21 days, a written accounting must still be provided. In this case, a "good faith estimate" may be made.

So those are my three reasons for believing that a landlord is legally able to deduct the cost to repair tenant-caused damages from a tenant's security deposit even if the repair work was not completed within 21 days. 

What are your thoughts on this question?  Do you have any additional reasons why you would answer the question as I did?

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I would like to thank Atty. Heiner Giese for providing me with a copy of the Summary of ATCP Chapter 134 Revisions published by the DATCP and for suggesting that I write a blog post on this issue many, many months ago.  I would also like to thank Atty. Evan Knupp for being the most recent person to ask me this question -- within the last hour as a matter of fact -- which finally caused me to write the post that you just read.