Archive for category ATCP 134

Attorney General States That A Tenant Can Be Required To Pay For Carpet Cleaning Upon Vacating

It is not often that I get to report good news for landlords, so when the opportunity arises I am especially happy to do so.  Today is one of those times.  Earlier today the Wisconsin Attorney General issued a formal legal opinion that states that it is legal for a residential landlord in Wisconsin to require an outgoing tenant to pay to have the carpet in the unit professionally cleaned and to include such a provision in the rental agreement.

It is well known that in Wisconsin a residential landlord cannot withhold the costs of having the carpet professionally cleaned from a tenant’s security deposit.  Wisconsin Administrative Code, ATCP 134.06(3)(c) states that landlords are prohibited from withholding from a security deposits for “normal wear and tear.”  The Note to this administrative code provision states that carpet cleaning is an example of an impermissible basis for withholding a tenant’s security deposit.

What had been unclear until now, is whether or not a landlord could make a tenant pay for the cost to have the carpet professionally cleaned upon vacating and to include such a provision in the rental agreement.  I have personally experienced both courts that held that a landlord could charge a tenant for professional carpet cleaning and others that would not.  Additionally, some judges and court commissioners felt that including a provision in a residential rental agreement requiring a tenant to pay to have the carpeting professionally cleaned upon vacating renders the rental agreement void.

Wisconsin landlords are now on solid ground in knowing that they can require a tenant to pay to have the carpets professionally cleaned upon vacating and that they can include such a provision in their rental agreement.

The key questions and answers from the formal opinion are set forth below:

QUESTION 1:  Based on current law, does routine carpet cleaning at the end of a tenancy fall within the landlord’s duty to keep the premises “in a reasonable state of repair” as prescribed by Wis. Stats. sec. 704.07(2)?

ANSWER:  No, a landlord’s duty to keep the premises in a reasonable state of repair does not encompass routine carpet cleaning.

QUESTION 2:  Would a provision requiring the tenant to pay for professional carpet cleaning, in the absence of negligence or improper use by the tenant, render a rental agreement void under Wis. Stats. sec. 704.44(8)?

ANSWER:  No, because routine carpet cleaning is not a statutorily-imposed obligation of a landlord, assigning this responsibility to a tenant through a contractual provision does not render a rental agreement void.

In its analysis, the Attorney General states that the key issue upon which the answer hinged was whether or not routine carpet cleaning falls under one of the statutorily prescribed obligations of a landlord.  If it does, then the law clearly would prevent a landlord from assigning that obligation to a tenant.  If not, then a landlord could legally assign the obligation to have the carpets professionally cleaned to a tenant.

Under Wisconsin law a landlord is statutorily required to keep a rental unit in a “reasonable state of repair” and such repairs cannot be assigned to a tenant as a result.  Routine carpet cleaning however is not considered to be a ”repair” as a repair typically involves fixing something that is broken.  A carpet that is dirty and needs to be cleaned is not in need of “repair.”

The AG’s analysis then points out that the landlord-tenant statutes do not assign cleaning responsibilities to either the landlord or the tenant.  As such, the parties are free to assign the responsibilities for cleaning in the rental agreement.  Which therefore means that a landlord can require a tenant to pay to have the carpets cleaned if it is in the rental agreement.

Please note however, that while the Attorney General’s legal opinion does allow a landlord to charge a tenant for the costs of having the carpets professionally cleaned, it still does NOT allow a landlord to deduct those costs from the tenant’s security deposit (even if you put such a clause in your Nonstandard Rental Provisions).  So if the tenant doesn’t pay for the carpet cleaning as agreed to in the rental agreement a landlord’s only recourse will be to sue the ex-tenant for the costs.

 

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Joint Legislative Council Gives Clarification To Wisconsin’s New Landlord’s Omnibus Law

You will recall from my earlier post that I had some concerns about the new Landlord’s Omnibus Law (Act 134).  One of my main concerns was that it was unclear from the wording of Act 143 whether or not a violation of chapter 704 would give rise to a claim by a tenant that would entitle the tenant to double damages and attorney’s fees if successful.

The portion of Act 143 that concerned me was Section 36, which creates Wis. Stats. sec 704.95, and reads as follows:

704.95  Practices regulated by the department of agriculture, trade and consumer protection.  Practices in violation of this chapter may also constitute unfair methods of competition or unfair trade practices under s. 100.20.  However, the department of agriculture, trade and consumer protection may not issue an order or promulgate a rule under s. 100.20 that changes any right or duty arising under this chatper.

My concern was that tenants might start filing suits against landlords alleging that they were entitled to double damages and attorny’s fees if a landlord violated any portion of chapter 704.  Could a landlord be on the hook for double damages and attorney’s fees if he drafted a 5 day notice improperly or served the notice incorrectly?

Because of this concern, the Apartment Association of Southeastern Wisconsin (AASEW) attorney wrote to the State of Wisconsin’s Joint Legislative Council which authored the earlier memo summarizing the new Act 143.  Specifically the AASEW asked staff attorney Margit Kelley to clarify section 36 of her Act Memo dated March 26, 2012.

I have good news to report.  Attorney Kelly in her letter to the AASEW’s attorney, indicated that any violation of Chapter 704 does not automatically lead to a cause of action for double damages and attorney’s fees.

Her verbatim response — referring to section 36 (now Wis. Stats. section 704.95) – was as follows:

This means that DATCP may promulgate and enforce any administrative rules that are in line with ch. 704, Stats., including the provisions of the Act that affect that chapter, under DATCP’s authority to regulate unfair methods of competition or unfair trade practices in s. 1002.0, Stats.  Section 100.20(5), Stats., then, in turn allows an individual right of action for a violation of any rules promulgated under s. 100.20, Stats., and allows for recovery of costs, reasonable attorney’s fees, and twice the amount of any pecuniary loss.

Translation:  DATCP can create rules to add to ATCP 134 that are line with chapter 704, but a violation of ch. 704 alone does not give rise to a cause of action that entitles a tenant to double damages and attorney’s fees, unless that section of the statute is also contained in ATCP 134.

So for instance, if a landlord was found to have violated Wis. Stats. section 704.28, entitled withholding from and return of security deposits, a tenant would be entitled to receive an award of double damages and attorney’s fees because the language of sec. 704.28 is ALSO contained in ATCP 134 – specifically ATCP 134.06(2).

Along those same lines, if a landlord was found to have violated Wis. Stats., sec. 704.44, entitled residential rental agreement that contains certain provisions is void, a tenant would als be able to recover double damages and attorney’s fees as the language of sec. 704.44 is ALSO contained in ATCP 134  – specifically ATCP 134.08.

As long as the courts are made aware of this, it now appears that landlords can breathe a sigh of relief as they will no longer have to worry about being ordered to pay double damages and attorney’s fees to a tenant for  improperly drafting or serving a 5 day notice, or any other portion of ch. 704 that is not also included in ATCP 134.

Now we just have to worry — as we have always had to – about having the court dismiss our evictions because of an improperly drafted or served 5 day notice : )

 

 

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2011 Wisconsin Act 143 (Landlord Omnibus Law) Also Applies To Commercial Landlord-Tenant Law

While this blog primarily focuses on residential landlord-tenant law, on occasion I also touch on issues applicable to commercial landlord-tenant law.  This is one such instance.

Commercial landlord-tenant is more straightforward than residential in my opinion because commercial tenancies are less regulated than residential.  Typically what a commercial landlord and tenant agreed to and placed into their lease agreement is what governs.  The Wisconsin Administrative Code’s ATCP 134 does not apply to commercial leases and most of Chapter 704 of the Wisconsin Statutes does not apply to commercial leases unless (1) the parties had no written lease, or (2) the lease was silent as to certain issues (see sec. 704.03 and 704.05 respectively).

Well, that has all changed now with the passage of 2011 Wisconsin Act 143 which was signed into law last week and will take effect on March 31, 2012.

While almost all of the attention paid to the new law surrounded its effects on residential landlord-tenant law, the law also impacts the commercial arena as well.  I too was caught up in the effect Act 143 would have on residential landlords and missed the applicability of this new law to commercial landlords initially  — thanks to Bob Anderson of Legal Aid of Wisconsin for redirecting me : )

As I have mentioned in prior posts, this legislation was fast-tracked for some reason and rushing new laws through the legislative process is never a good thing.  In fact it is a recipe for disaster.

It appears that the legislators did not realize that Senate Bill 466 — the precursor to Act 143 — was written in such a way as to encompass commercial landlord-tenant law.  When it was brought to their attention, a quick amendment was made to exclude one portion of the new law (the section that makes a rental agreement void if it contains certain prohibited language) from the commercial arena, but apparently there was not enough time to deal with the other sections of the new law, which now will apply to both commercial and residential tenancies.

So what do we have?

The following provisions of Act 143 apply to both commercial landlord-tenant law as well as residential:

1.  Moratorium on evictions

2.  Severability of rental agreement provisions

3.  Disposition of abandoned property

4.  Requirement that landlords receive an award of holdover damages when appropriate

5.  Acceptance of past due rents

6.  Withholding from and return of security deposits

7.  Making any violation of chapter 704 a possible unfair trade practice

If you are unfamiliar with the above sections of the new law you should read my prior post summarizing the new law.

Number 1-5 above actually benefit commercial landlords.  However numbers 6 and 7 are problematic

By adding ATCP 134.06, which focuses on the withholding from and the return of security deposits, to chapter 704, the new law has now made these requirements applicable to commercial landlords as well.  Prior to Act 143 being passed, there was no law addressing what a commercial landlord could withhold from a commercial tenant’s security deposit, nor was there any law regarding when that security deposit (or an itemization as to how the security deposit was applied) had to be returned to the commercial tenant.  Well thanks to Act 143, now there is.

Act 143 allows a commercial landlord to only make deductions for the following items from a commercial tenant’s security deposit:

704.28 Withholding from and return of security deposits.  (1) Standard withholding provisions.  When a landlord returns a security deposit to a tenant after the tenant vacates the premises, the landlord may withhold from the full amount of the security deposit only amounts reasonably necessary to pay for any of the following:

(a)  Except as provided in sub. (3), tenant damage, waste, or neglect of the premises.

(b)  Unpaid rent for which the tenant is legally responsible, subject to s. 704.29.

(c)  Payment that the tenant owes under the rental agreement for utility service provided by the landlord but not included in the rent.

(d)  Payment that the tenant owes for direct utility service provided by a government-owned utility, to the extent that the landlord becomes liable for the tenant’s nonpayment.

(e)  Unpaid monthly municipal permit fees assessed against the tenant by a local unit of government under s. 66.0435 (3), to the extent that the landlord becomes liable for the tenant’s nonpayment.

(f)  Any other payment for a reason provided in a nonstandard rental provision document described in sub. (2).

So if a commercial landlord would now like to deduct anything other then the items listed in (a) – (e) above, then that landlord needs to start using a separate written document entitled “Nonstandard Rental Provisions” which must list the additional fees/costs that can be deducted from a commercial tenant’s security deposit.

Additionally, Act 143 now requires a commercial landlord to either (1) return the tenant’s security deposit to them, or (2) send them an itemization explaining how that security deposit was applied, within 21 days of the following:

(4) Timing for return.  A landlord shall deliver or mail to a tenant the full amount of any security deposit paid by the tenant, less any amounts that may be withheld under subs. (1) and (2), within 21 days after any of the following:

(a)  If the tenant vacates the premises on the termination date of the rental agreement, the date on which the rental agreement terminates.

(b)  If the tenant vacates the premises before the termination date of the rental agreement, the date on which the tenant’s rental agreement terminates or, if the landlord rerents the premises before the tenant’s rental agreement terminates, the date on which the new tenant’s tenancy begins.

(c)  If the tenant vacates the premises after the termination date of the rental agreement, the date on which the landlord learns that the tenant has vacated the premises.

(d)  If the tenant is evicted, the date on which a writ of restitution is executed or the date on which the landlord learns that the tenant has vacated the premises, whichever occurs first.

Commercial landlords never had to worry about that 21 day time frame before — now they do.  Needless to say it is much more difficult and time consuming to do a walkthrough of a giant commercial space and itemize any damages or cleaning charges than it is for a 500 square foot residential rental unit.  I’m not exactly sure how commercial landlords will be able to comply with this time frame, but they will need to find a way, or else they may have to to their tenant double damages and attorney’s fees.  Which leads me to the next concern . . .

Act 143 now makes any violation of chapter 704 a possible violation of unfair trade practices, which pursuant to sec. 100.20, Wis. Stats. allows a tenant to sue a landlord for double damages and attorney’s fees.  Prior to Act 143 a commercial landlord was not in this predicament because unfair trade practices were set forth in ATCP 134 which only applied to residential tenancies.  But now that Act 143 incorporates some provisions of ATCP 134 into chapter 704 — and chapter 704 applies to commercial landlord-tenant relations — things are different.

Here is the language of the new law:

704.95  Practices regulated by the department of agriculture, trade and consumer protection.  Practices in violation of this chapter may also constitute unfair methods of competition or unfair trade practices under s. 100.20.  However, the department of agriculture, trade and consumer protection may not issue an order or promulgate a rule under s. 100.20 that changes any right or duty under this chapter.

I guess the only positive is that the new law says “may constitute” instead of “shall constitute” however to a commercial landlord that never had to worry about anything they did constituting an unfair trade practice and subjecting themselves to being sued for double damages and attorney’s fees, I’m sure this will be of little consolation.

So not only will Act 143 require commercial landlords to make some modifications to the language in their leases, but it will require them to completely change how they run their commercial proeprty management businesses starting March 31, 2012 —- 2 DAYS FROM NOW!!!!!

 

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Landlord’s Omnibus Bill Signed Into Law – Read It Now

Governor Walker did sign the Landlord’s Omnibus Bill into law.

I appreciate the effort of everyone that called the Governor’s office asking him to veto the bill due to its deficiencies.

Here is a link to the new law.  Much easier to read than having to go back and forth between the orginal bill, the Substitute bill and the two amendments.

The two main concerns that I have with the law and which caused me to ask that the bill be vetoed. They are section 35M and section 36.

The AASEW has already spoken with Sen. Lassee’s office regarding these two major problems and I will keep you informed if and when anything is done about them.

And yes, I will be reviewing all of Wisconsin Legal Blank’s forms in the near future and making the necessary revisions – if needed – and will let you know when they will be available : )

Landlord’s Omnibus Bill — with Amendments — To Be Signed Into Law Today

One of the biggest pieces of pro-Landlord legislation in quite some time was passed by the Wisconsin Senate and adopted by the Assembly recently and will be signed into law by Governor Walker today.  Unfortunately some of the pro-Landlord provisions were amended, diluted, or removed.

I am certainly not denouncing this new law.  Many aspects of it will be very helpful to landlords.  I just wish that more time had been allowed — the bill was fast-tracked — to allow for more discussion, thought and input and allowing for more notice.  For instance, many of us in the rental industry were given one day advance notice before the public hearing on the bill which prevented many of us from attending.

I will attempt to summarize the new law in this post.  As this new law plays out in the “real world” I am sure that I will be devoting additional blog posts to each provision in more detail.

The proposed effective date of this new law is March 31, 2012.  So many of us will need to make some additions and/or modifications to our rental documents prior to that date.

 

Bankground of Legislation

The Landlord’s mnibus bill (Senate Bill 466) was put on the “fast track” for reasons unknown to me.  It was introduced on February 13, 2012 by Senator Lassee.  A Substitute Amendement 1 was offered by Senator Lassee on February 29, 2012.  Senator Waangard then offered the first amendment to the Substitute Amendment on March 6th which was passed March 13th.  Senator Lassee then offered a second amendment to the Substitute Amendment on March 12th which was passed on March 13th.  The bill will be signed into law by Governor Walker today – March 21st.  Approximately one month from introduction to passage into law is very fast for the legislative process.

The key provisions of the new law are:

 

1.   Moratorium on Evictions

This provision of the original bill remained untouched by the Substitute Amendment and the two amendments to the Substitute Amendment.  The new law prohibits any municipality from imposing a moratorium on eviction actions.   If a municipality has a current ordinance that contradicts this new law it cannnot be enforced.

We now must hope that individual counties, courts, and commissioners adhere to this law.  While I don’t anticipate courts ignoring this new law, I do anticipate court’s continuing to use the “stay” provisions of sec. 799.44(3) to give tenants additional time to vacate during the holidays.  So while municipalities will no longer be allowed to impose moratoriums, courts can still prevent evictions during holidays, creating the same result.

 

2.   Severability of Rental Agreement Provisions

The original bill stated that any provision could be severed from the agreement.  So if a landlord inadvertantly included a provision that was found to be improper or retaliatory in nature it could be removed and the remainder of the agreement could be enforced.

The Substitute Amendment diluted the above considerably by adding that if a rental agreement contains one of the “7 Deadly Sins” set forth in ATCP 134.08, the inclusion of any of those provisions cannot be removed and will render the entire rental agreement void and therefore unenforceable.

Amendment 1 to the Substitute Amendment went a step further and added an 8th illegal provision that if included in a rental agreement will cause the rental agreement to be void.  The new illegal provision would include any language that allows a landlord to terminate a tenant’s tenancy if a crime is committed in or on the rental property, even if the tenant couldn’t reasonably have prevented the crime.

So in the end, the new law only allows the severability of certain rental provisions.  If your rental agreement contains one of the 7 prohibited provisions set forth in ATCP 134.08 or the new prohibited provision created by this new law, your rental agreement will still be be void and unenforceable.  Essentially, the new law takes the regulation ATCP 134.08 and codifies it into law.

More tragic is what the “8th Deady Sin” has most likely done to some other pro-Landlord legislation that I had hoped would become law — the “Crime-Free Lease Addendum” bill.  If you read my prior post on the Crime-Free Lease Addendum bill you will see that this 8th Deadly Sin language effectively decapitates this proposed bill.  This is a major disappointment as I believe that had the Crime-Free Lease Addendum bill been passed it would have been the most significant piece of pro-Landlord legislation in years.  Instead the “odds and ends” Landlord Omnibus bill seems to have killed it.  Hopefully, I am wrong and it can be resurrected.

 

3.   Dispostion of Tenant’s Abandoned Property

Once again, the original version of this bill was awesome.  It stated that any personal property left behind by a tenant could be considered abandoned and disposed of immediately in the landlord’s discretion.

The Substitute Amendment modified the original bill by adding that any medical prescriptions and/or medical equipment left behind by the tenant must be held by the Landlord for 7 days.  The Substitute Amendment also added that written notice must be sent to the tenant (and any secured party) prior to disposing of any titled vehicles or mobile homes deemed abandoned.  I could live with both of those modifications.

However, the amendments to the Substitute Amendment added language that will require landlords to jump through a few hoops.  The new law requires that a landlord provide written notice to the tenant at the time of entering into the rental agreement, and at each renewal of the rental agreement, informing the tenant that the landlord will not hold any property left by the tenant and that such property will be deemed abandoned and will be disposed of.  Failure to provide this written notice to the tenant requires a landlord hold the abandoned property fpr a period of time as set forth in sec. 704.05 (5), Wis. Stats.

Essentially landlords will now be required to add a new language to their rental agreements – and any renewal agreements – advising tenants that any property left behind will be considered abandoned and can be disposed of.  Looks like there will be a revised Rental Agreement being sold at Wisconsin Legal Blank Co., in the near future : )

 

4.   Information Check-In Form

This is one of the provisions of the original bill that I didn’t care for.  A landlord will now be required to provide a standardized information check in sheet to each tenant that contains an itemized description of the premises.  The Substitute Amendment merely added that this form must be given to the tenant at the time of occupancy rather than at the time of signing of the rental agreement.

As I understand this law, this does not just mean that the landlord can give his new tenant a blank Information Check-In form to fill in — which many landlords are already doing.  Rather it means that the landlord must completely and thoroughly fill out the Information Check-In form to adequately describe the condition of the rental unit and give it to the tenant.  So if you are not thorough in your description of the renal unit this document could be used against you by the tenant, after the tenancy has ended.  This new provision of the law will clearly cause additional work for landlords and I fear could harm the less detail-oriented landlords out there when pursuing a tenant for damages to the unit or withholding portions of the tenant’s security deposit for damages.

 

5.   Holdover Damages Are Mandated

The new law requires that landlords be awarded holdover damages.  If a tenant stays in the rental unit beyond his tenancy, the landlord is now legally entitled to – at a minimum – double the daily rent for the time period after the tenancy ended (i.e. the notice expired) until the tenant actually vacates the unit.

This is a positive change because current law (sec. 704.27) only states that a landlord “may” be awarded holdover damages — and some courts would not award landlords these damages.  The new law says that a court “shall” award a landlord holdover damages, at a minimum.

 

6.   Withholding From A Tenant’s Security Deposit

The new law has merely codified the provision of ATCP 134.06(3), which states that a landlord is allowed to withhold the following from a tenant’s security deposit: (a) Tenant damage, waste or neglect of the premises, (b) Unpaid rent for which the tenant is legally responsible, (c) Payment which the tenant owes under the rental agreement for utility service provided by the landlord but not included in the rent, (d) Payment which the tenant owes for direct utility service provided by a government-owned utility, to the extent that the landlord becomes liable for the tenant’s nonpayment, (e) Unpaid mobile home parking fees which a local unit of government has assessed against the tenant to the extent that the landlord becomes liable for the tenant’s nonpayment, (f) Other reasons authorized in the Nonstandard Rental Provisions.

The new law also adopts the portions of ATCP 134.06 which state that a landlord cannot withhold from a tenant’s security deposit for normal “wear and tear” or other losses which the tenant cannot reasonably be held responsible.

 

7.   Timing For Return of Security Deposit

The original bill indicated that in situations where the tenant broke the lease prior to the end of the term that the landlord need not return the security deposit or provide an accounting of how the security deposit was applied until 21 days after the lease term ended or within 21 days of a new tenant taking occupancy.  This langauge is a substantial improvement over current law as it allows a landlord to hold the security deposit until he is able to determine if any future rent will owed by the breaching tenant if the landlord cannot locate a new tenant to re-rent the property to.  I explain this issue in more detail in my earlier post on the Landlord’s Omnibus Bill.

The Substitute Amendment waters this down a bit.  The new law will now codifies ATCP 134.06(2)(a) and states that a landlord shall deliver or mail to a tenant the security deposit or itemization of how the security deposit was applied within 21 days after any of the following: (a) if the tenant vacates on the last day of the rental agreement, the date on which the rental agreement terminates, (b) if the tenant vacates before the end of the rental agreement, then the date on which the rental agreement terminates or, if the unit is re-rented before the end of the rental agreement, then the date on which the new tenancy begins, (c) if the tenant vacates after the last day of the rental agreement, the date on which the landlord learns that the tenant vacated, (d) if the tenant was evicted, the date on which the writ was executed or the date that the landlord learns that the tenant vacated.

So the new law kept the good part of the original bill but by codifying ATCP 134.06(2)(a) the landlord must return a tenant’s security deposit or send out the itemization of how the security deposit was applied earlier than when the original bill stated in situations where the tenant was evicted.

 

8.   Disclosure of Code Violations

The original bill required that a landlord disclose to any prospective tenant any uncorrected building code or housing code violations prior to the signing of a rental agreement, accepting of a security deposit or accepting of earnest money.

The second Amendment to the Substitute Amendment modified the original bill and as a result the new law requires a landlord to disclose to a new tenant any uncorrected building code or housing code violations if the landlord has actual knowledge of the violation (rather than if the landlord had received notice of the violation from a housing code enforcement agency as under the original bill).

Specifically the new law requires the disclosure to the new tenant if the following four conditions are met: (a) landlord has actual knowledge of the violation, (b) the violation affects the rental unit or a common area, (c) the violation presents a significant threat to the tenant’s health or safety, (d) the violation has not been corrected.

 

9.   Request for Repairs

The orginal bill required that a tenant first notify a landlord in writing of any repair or maintenance issue, and then allow adequate time for the landlord to address the issue, before reporting the problem to the building inspector, elected official, or housing code enforement agency.  The Substitute Amendment removed this provision in its entirety so the law has not changed — tenants are allowed to call whomever they want to complain about maintenance issues without any requirement that they first notify the landlord of the problem.

 

10.   Acceptance of Past Due Rent

The new law states that if a landlord has filed an eviction against a tenant and the landlord accepts past due rent from the tenant during the course of the eviction, that the court cannot dismiss the eviction solely based on the landlord’s acceptance of past due rent from the tenant.

I really like this provision of the new law becasue currently, many tenants and their attorneys argue that if an eviction is pending and a landlord accepts past due rent from a tenant, that the landlord’s acceptance of that rent has effectively “waived” the landlord’s right to proceed with the eviction.

 

11.   Tenant Remedies

The Substitute Amendment added that any violation of chapter 704, including the provisions of the new bill, may constitute an unfair trade practice which may allow the tenant to sue a landlord for double damages and attorney’s fees.

I don’t like this new provision of the law for one simple reason.  I believe it will be used by tenants and tenant’s attorneys to seek double damages and attorney’s fees whenever a landlord allegedly violates any provision of chapter 704, whether the violation is a true unfair trade practice violation or not.  Only the provisions of ATCP 134, which will be codified in ch. 704 under this new law, deal with unfair trade practices.  Nonetheless, I anticipate that we will see some very creative arguments by tenant’s and their attorneys as to why a tenant should be awarded double damages and attorney’s fees for violations of chapter 704 that are not unfair trade practice violations.

 

Now we will have to wait and see how this new law “plays out” in the real world of landlording.  Some of the key things everyone will need to address before March 31, 2012, when the law takes effect are:

1.  Make sure any rental agreement you enter into with a tenant after March 31, 2012, does not contain any language that would be in violation of the “8th Deadly Sin” which essentially means eliminating or modifying any language similar to that found in the Crime-Free Lease Addendum.

2.   Make sure to add language in your rental agreement, and any renewal documents, stating that any property left behind by the tenant will be considered to be abandoned and will be disposed of by the landlord without any further notice to tenant (except for medical prescriptions and medical devices, mobile homes and titled vehicles).

3.   Rename your Check-In / Check Out Sheet as “Information Check-In Sheet” and insure that you provide any new tenants with a completed copy of the form thoroughly documenting the condition of the rental unit.

4.   Disclose any code violations that you have actual knowledge of that may present a significant threat to the tenant’s health or safety before entering into a rental agreement or accepting a security deposit or earnest money.

Good Luck Everyone

ADDITION:  3/21/12 – Make sure you read my 3/21/12 post about why I now think this new law will actually hurt landlords more than help them

 

ADDED 4/11/12 — Here is the link to the new law.

 

ADDED 4/11/12 – Here is a link to an article I recently authored on the new law.

 

ADDED 4/11/12 – Here is a link to the newly revised Wisconsin Statutes Chapter 704 re: Landlord and Tenant

 

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New Bills Would Limit Tenant’s Attorney’s Fees When Suing Landlords

There are two new proposed laws that if passed would limit the amount of attorney’s fees that could be awarded to a tenant that has sued his/her landlord for violation of ATCP 134 to 3 times the amount of compensatory damages in Wisconsin.  The proposed legislation (Special Session Assembly Bill 12 & Special Session Senate Bill 12) was introduced by the committee on Senate Organization and the Committee on Assembly Organization at the request of Governor Scott Walker, Senator Rich Zipperer (R) and
Representative Robin Voss (R).

Currently if a tenant sues his landlord for a violation of ATCP 134 – which typically is due to  the landlord’s alleged improper withholding of the tenant’s security deposit – and prevails, the court must award the tenant double damages, the costs of the lawsuit, and the tenant’s reasonable attorney’s fees.  In almost every instance, the tenant’s reasonable attorney’s fees are much larger than the compensatory damages awarded.

In the United States we follow what is referred to as the American Rule which states that a person pays for their own attorney’s fees regardless of the outcome of the lawsuit.  This is very different from the English Rule, which is followed in England, which requires the losing party to pay for the prevailing party’s attorney’s fees in addition to their own.

Despite following the American Rule in the United States, there are certain situations in which a state or federal statute will allow for the shifting of one’s attorney’s fees to th other party.  These statutes are referred to as fee shifting statutes.  Sec. 100.20(5) of the Wisconsin Statutes is an example of a specific type of fee shifting statute, called the private Attorney General statute, which requires that a landlord that has been found to have violated ATCP 134, to pay his tenant two times the tenant’s compensatory damages and the tenant’s reasonable attorney’s fees.

It is argued that the private Attorney General statute, which is codified as sec. 100.20 (5), Wis. Stats., has many purposes, such as: (1) it encourages a tenant that is damaged financially by the acts of their landlord to file a lawsuit to enforce their rights even if the alleged damages are small, (2) it allows a tenant to enforce his own rights as well a well as the public’s rights, (3) it deters improper conduct by landlords, (4) it strengthen the bargaining power of a tenant, and (5) it provides a much needed backup for th State as there are too many violations for the Attorney General’s Office to enforce alone.

These new bills would limit a tenant’s attorney’s fees to 3 times the amount of the compensatory damages awarded in all cases in which only compensatory damages are awarded.  If non-monetary relief is awarded in addition to compensatory damages (such as injunctive or declaratory relief, rescission or modification, or specific performance the court must “presume” that reasonable attorney’s fees do not exceed 3 times the amount of the compensatory damages awarded, however that presumption may b overcome after the court analyzes 13 factors which the bills will allow a court to consider when setting the amount of attorney’s fees.

Critics of the two new bills feel that if passed, they will essentially “gut” Wisconsin’s consumer protection laws.  Their argument is that no attorney will be able to afford to tak a tenant’s smaller damage case due to the limitations of their fees.  As a result, it is argued that tenants will no longer be able to challenge the improper behavior of the landlords and therefore” bad” landlords will be able to do whatever they want and get away with it.

 

UPDATE – 10-28-11 — On Thursday, Oct. 27, 2011 the aforementioned bill was passed by the Senate 17-15 (on a party line vote). The bill was softened a bit to allow for atty. fees greater than 3 times damages to be awarded by a judge BUT the presumption would still be that three times damages is sufficient.

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The Consequences of A Landlord Violating Wisconsin’s Residential Rental Practices (ATCP 134)

The Residential Landlord Tenant relationship is controlled by two main areas of law: (1) Chapter 704 of the Wisconsin Statutes, and (2) the Wisconsin Administrative Code, Chapter ATCP 134 entitled “Residential Rental Practices.”

ATCP 134 sets forth 21 regulations that a landlord must follow in a residential landlord tenant context.   ATCP 134, under its orginal name “Agriculture 134,” was first introduced in May of 1980.  “Ag 134″ was then renamed ATCP (Agriculture, Trade and Consumer Protection) 134 in 1993.  In 1999 there was a complete overhaul of ATCP 134 which resulted in the 21 regulations that we have today.

If you are a landlord and are not familiar with ATCP 134 please take the time to read the chapter — it is only 5 pages long and is relatively easy to understand — it must have been drafted by someone other than a lawyer or government employee  : )

The main remedy available to a tenant that is damaged by a landlord violating ATCP is what is referred to as the “private attorney general” provision.  Essentially, the Wisconsin Statutes allow a party who is injured by a violation of ATCP 134 to “step into the shoes” of the State Attorney General to privately prosecute such violations.

This private attorney general provision, specifically sec. 100.20(5), allows an injured tenant to recover double damages and reimbursement of their actual attorney’s fees against a landlord that has violated ATCP 134.

The State has enumerated several public policy reasons for allowing the private attorney general provision in the residential landlord tenant context, such as:

 1.   It encourages an injured tenant to enforce his/her rights even if the amount of damage is small and the aggrieved tenant does not have the “means” to pay for their own attorney.

2.   A tenant who sues for a violation of ATCP, while clearly enforcing his/her rights, will also be enforcing the public’s rights.

3.   By allowing a tenant the ability to more easily pursue such claims against his/her landlord, it will deter impermissable conduct by landlords and thus strengthen the bargaining power of tenants.

4.   It provides a necessary backup to the State, as the State does not have the time or resources to pursue lawsuits against all landlords who violate the regulations of ATCP 134.

Whatever your thoughts are about the above-reasoning, it is imperative that you become knowledgable about the 21 regulations contained in ATCP 134.  During the course of consulting with landlords and property managers in my job as an attorney, I am always surprised by the number of landlords that have never heard of ATCP 134.

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