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You Will Not Want To Miss AASEW’s Fourth Annual Landlord Boot Camp on Saturday Feb. 25th

Landlording can be pretty complex, with a seemingly never ending myriad of paperwork, rules, landlord-tenant laws and simple mistakes that can cost you thousands of dollars.

The Apartment Association of Southeastern Wisconsin’s Fourth Annual Landlord Boot Camp can help you navigate these treacherous waters and teach you how to run your properties with greater profit and less hassles.

I have given similar landlord-tenant law seminars to fellow attorneys, landlords, and property manager organizations throughout the state for other state-wide semianr companies that charge attendees $300-$400.  This is your opportunity to learn all of the same information at a huge discount through the Apartment Association.

 

Who:   Taught by Attorney Tristan R. Pettit (who drafts the landlord tenant forms for Wisconsin Legal Blank)

When:    Saturday, February 25th, 2012. 8:30 am – 5 pm

Where:   Clarion Hotel 5311 S. Howell Avenue, Milwaukee [Map]

Included:  100 plus page manual/outline to help you put what you learn into practice plus helpful forms.

Cost:  $159 for AASEW members and $249 for non-members.  If you are not a member of AASEW but are a member of another landlord/apartment association the cost to attend will be $199.

Specials: Not a member?  Pay just a dollar more and enjoy a 2012 AASEW membership.

Wisconsin landlord-tenant laws are constantly changing.  To help keep you up to date we offer prior attendees a $50 discount.

Sign up by going to the AASEW’s Landlord Boot Camp landing page where you can sign up online and pay via PayPal.

 

What you will learn at the Apartment Association’s 2012 Landlord Boot Camp

Landlord Boot Camp covers everything that you need to know about residential Landlord Tenant law in Wisconsin, including:

  1. How to properly screen prospective tenants.
  2. How to draft written screening criteria to assist you in the selection process and protect you from discrimination complaints.
  3. How to comply with both federal and state Fair Housing laws including how to handle with “reasonable modifications”  and “reasonable accommodations” requests.
  4. How to legally reject an applicant.
  5. What rental documents you should be using and why.
  6. When you should be using a 5-day notice versus a 14-day notice, 28-day notice, or 30-day notice and how to properly serve the notice on your tenant.
  7. Everything you wanted to know (and probably even more than you wanted to know) about the Residential Rental Practices (ATCP 134) and how to avoid having to pay double damages to your tenant for breaching ATCP 134.
  8. When you are legally allowed to enter your tenant’s apartment.
  9. How to properly draft an eviction summons and complaint.
  10. What to do to keep the commissioner from dismissing your eviction suit.
  11. What you can legally deduct from a security deposit.
  12. How to properly draft a security deposit transmittal / 21 day letter.
  13. How to handle pet damage.
  14. What to do with a tenant’s abandoned property and how this may affect whether or not you file an eviction suit.
  15. How to pursue your ex-tenant for damages to your rental property and past due rent (and whether it is even worth it to do so).

. . .  and much more.  There will also be time for questions and answers.

You get all this for less than you would pay for an hour of an attorney’s time.

Last year’s AASEW Landlord Boot Camp was filled to capacity and we even had to turn a few people away.  So call early to reserve your spot.

Call the Association at (414) 276-7378, email membership@apartmentassoc.org or go to our Landlord Boot Camp landing page to sign up online and reserve your spot.

Remember that “landlording” is a business — so take the time to educate yourself on how to better manage your business and avoid costly errors!

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Landlords Should Treat Tenant Roommates As One Person To Better Understand Joint and Several Liability and Resolve Tenant Disputes

I receive many calls from landlords who have questions and concerns involving issues involving their tenant roommates.  While the problems are often factually different the proper way to analyze the situation and arrive at a resolution to the problem, often depends on the same thing —  something called “joint and several liability.”

Joint and several liability is a legal concept that, according to Black’s Law Dictionary, is defined as “the liability of co-promisors of the same performance when each of them, individually, has the duty of fully performing the obligation.  A liability is said to be joint and several when the creditor may demand payment or sue one or more of the parties to such liability separately, or all of them together at his option.”

Confused yet? Let me try and explain joint and several liability more clearly than Mr. Black did.

Essentially joint and several liability means that each individual tenant is responsible for the full amount of the rent as well as any and all other obligations under the rental agreement.

I think it would be easier for landlords to comprehend the concept of joint and several liability if they would just think of and treat roommates as one person.

Here is an example:

A Landlord enters into a 12 month lease with Tenant A, Tenant B, and Tenant C.  The monthly rent is $750.  The security deposit is also $750.

The Landlord needs to remember that he has one lease with three tenants NOT three separate leases with one tenant.  As such all three tenants are responsible for the full amount of rent.  All three tenants are responsible for abiding by the rules and regulations.  All three tenants are responsible for paying the security deposit.  All three tenants are responsible for paying the full amount of any damages to the rental unit.

Instead of taking $250 from Tenant A, B, and C for rent (or the security deposit), the landlord should insist that rent be paid via one payment for the full amount.  When landlords accept $250 from each tenant, the landlord is inadvertently telling the three tenants that each of them is only responsible for 1/3 of the rent — that is wrong.  Remember treat the roommates as one person – one person pays his entire rent not 1/3 of it.

I know many of you that have tenant roommates are thinking that there is nothing wrong with accepting three separate checks for $250 from your three tenants.  You are correct, nothing is wrong, there is nothing wrong with doing that . . .  AS LONG AS ALL OF THE TENANTS PAY RENT ALL OF THE TIME.  But problems arise is when one tenant falls on hard times and doesn’t have the money to pay rent.  It is at this point that the other two tenants start telling the landlord, “well  we paid my portion of the rent so you can’t evict us.”  WRONG.

Once again, think of roommates as one person.  When you have one tenant (no roommates), that tenant is responsible for paying the entire amount of the rent – not just a portion of it.  The same goes with roommates.  One roommate is not just responsible for paying 1/3 of the rent.  Under joint and several liability, that one tenant roommate is responsible for paying all of the rent if the other tenants don’t pay any rent.  If Tenant A and Tenant B have no money to pay rent, then Tenant C better rise to the occasion and pay the full rent amount or else all three roommates can be evicted.

Tenant roommates do not understand the concept of joint and several liability.  I believe it is in the landlord’s best interest to take the time to teach his tenant roommates about joint and several liability and how it specifically applies to them and their roommate situation.  The best way to do demonstrate joint and several liability to your tenant roommates, after you have had the discussion with them, is to make them write one check for rent.  I tell my roommate tenants that they must pay rent with one check.  I don’t care who pays it but I will only accept one check for the full amount of rent.  The tenants can fight amongst themselves as to how they divide up the rent amount or who owes what to whom.  How they do that should not be the landlord’s concern.  The landlord wants to impress upon his tenant roommates that he expects the full amount of rent each month and if they do that then they can remain as tenants.  If not, then they will be evicted.

So while it may seem a bit much to refuse to take more than one rent check from tenant roommates, I believe by making the tenants understand that they are not responsible for just a “portion” of the rent, a landlord can avoid a lot of problems in the future.

Let’s turn our focus to tenant roommates and the security deposit.  If a landlord makes the mistake of accepting $250 from each of his three tenant roommates to apply to the $750 total security deposit, I believe that the landlord is sending his new tenants the wrong message again.  Whether he is aware of it or not, the landlord has unintentionally informed his tenants that each of them are only responsible for 1/3 of the security deposit and therefore only responsible for 1/3 of any damage to the unit.

How many times have you heard one tenant say that the hole in the wall was caused by the other roommate who came home drunk one night and put his fist through the drywall?  And then the next comment out of that tenant’s mouth was, “so you should take the cost to repair that wall out of his portion of the security deposit.”

Each tenant is jointly and severally liable for paying the total amount of the security deposit and for the total amount of any damage caused to a rental property regardless of which tenant caused the damage.  A tenant roommate is not just responsible for “his portion” of any damage.  Under joint and several liability, if the cost to repair the wall is $500 then the landlord can keep $500 of the security deposit and the three roommates can fight over how to split up the remaining $250.

What if your tenant roommates cause major damage to the rental unit that goes well beyond the security deposit on hand.  Let’s say the damages total $5,000.  Under the concept of joint and several liability, a landlord can choose to sue all three of the tenants for the $5,000 or the landlord can choose to sue only two of them for the $5,000 (the two that are gainfully employed, for example) or the landlord could even opt to sue just one of the three roommates for the entire $5,000.

Assuming the landlord could prove his damages and meet his burden of proof, the court could rightfully enter a judgment of $5,000 against only Tenant A, if that is the only tenant that the landlord sued.  This is true even if it was Tenant C that caused the actual damage.  The landlord could then pursue and collect the entire $5,000 from Tenant A.  It would then be up to Tenant A to sue either Tenant B or Tenant C, or both, if he so chooses.

Please note that joint and several liability does not allow a landlord to obtain a double or triple “windfall.”  A landlord can’t sue each tenant individually for the full $5,000 and end up with three judgments totaling $15,000.  This is why the most practical course of action is typically for the landlord to sue all three tenants for the entire $5,000 and then decide which tenant is more “collectible” (and often more responsible) and pursue the collection of the judgment against only that one tenant.

Now, let’s assume there is no damage to the rental unit after the three tenants move out and therefore the entire security deposit will end up being returned.  How is the landlord to return the security deposit?  Under Wisconsin law, specifically Wisconsin Administrative Code, ATCP 134.06(2)(d), a landlord is required to refund the entire security deposit in one “check, draft or money order made payable to all tenants who are parties to the rental agreement unless the tenants designate a payee in writing.”  So under ATCP 134.06(2)(d), a landlord is required to treat the tenant roommates as one person – by sending them one check made payable to all three of them.  If a landlord ended up writing three separate checks to each of the tenants for 1/3 of the security deposit each, that landlord would be violating Wisconsin law.

So, if a landlord treats his tenant roommate as one person, he will not only be adhering to the concept of joint and several liability, he will make his life as a landlord more simple.  Landlords should not have to get involved in trying to determine which roommate did or didn’t pay “his portion of the rent” nor should a landlord be concerned with which roommate punched a hole in the drywall during a drunken rampage.  It is not our job as landlords to be social workers and resolve disputes amongst roommates.  Nor is it our job to be the judge or jury and determine which roommate was at fault.  Fortunately, the concept of joint and several liability allows a landlord the ability to avoid all of that unnecessary drama.

 

NOTE: If the rental agreement you are currently using does not indicate that all tenants are  “jointly and severally liability” for all obligations under the rental agreement, then it is not a well-written rental agreement and is not worth the paper that it is written on.  If that is the case, you should tear it up at the first possible legal opportunity — i.e. once the term ends if it is a lease or with 28 day’s notice if it is a month to month tenancy.  You should then purchase and start using a rental agreement that states that all tenants are jointly and severally liable.  I hear that the Rental Agreement sold at Wisconsin Legal Blank Company, Inc. is a very good one — someone told me that the author of it is pretty knowledgeable about Landlord-Tenant Law.

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Landlords May Want To Pursue Tenants for Holdover Damages As Well As Other Damages

After a landlord has had her rental property returned through an eviction action or the tenant vacating of their own accord, a landlord has the option of pursuing the ex-tenant for money damages.  I have explained in previous posts, that a typical eviction lawsuit includes three causes of actions against the tenant.  First, return of the rental property (“eviction”).  Second, a claim for past due rent and other fees allowed under the rental agreement.  Third, physical damages to the rental property and holdover damages.

When it comes to the third claim, I often see landlords pursue physical damages to the unit (and cleaning charges) and fail to even consider pursuing holdover damages.  This is often because the landlord is not aware that holdover damages exist and/or she is unfamiliar with them.  Hopefully this blog post will rectify that situation.

Holdover damages are allowed per sec. 704.27,Wis. Stats., which states that if a tenant remains in possession of the rental unit without the consent of the landlord after expiration of the lease or termination of the tenancy, the landlord may recover damages from the tenant for the tenant’s failure to vacate the unit within the time required.

Sec. 704.27 further states that, in absence of proof of greater damages, the landlord may recover a minimum damages amount for the tenant’s holdover of twice the rental value apportioned on a daily basis.

A tenant becomes a “holdover” tenant once their tenancy has been terminated and they remain living in the rental premises without the landlord’s consent.  A tenancy is terminated under any number of scenarios.  For example:

1.    A tenancy terminates when when a 5 day notice for failure to pay rent has been properly served on the tenant and 5 days have passed and the tenant has failed to cure the breach or vacate the rental unit.

2.   A tenancy also is terminated when a 14 day notice to vacate due to breach has been properly served on the tenant and the tenant fails to vacate at the end of the 14 days.

3.   A tenenacy terminates when a tenant is under a month to month tenancy and has been properly served with a 28 day notice and the tenant fails to vacate.

4.   A tenency terminates if a lease expires, no renewal has occurred, and the tenant remains living in the rental unit.

Under all of the above situations, the tenant has now become a “holdover tenant” which entitles a landlord to “holdover damages.”

Holdover damages are much more easy to prove up in court than physical damages.  All a landlord needs to do to prove holdover damages is to establish the date that the tenancy terminated and the date that the tenant actually vacated the rental unit.  The rest is just simple math — calculating the daily rent for the period of the holdover.

When pursuing physical damages to a rental unit, a landlord must prove the following:

1.   That the unit was not previously damaged prior to the tenant moving in — this is often done via photographs, video, testimony, or a check-in check-out sheet, or a combination of any of the above).

2.   That the damages were  caused by the tenant or the tenant’s guests or invitees.

3.    That the damages are actually “damages” and not merely normal “wear and tear.”

Maybe you have experienced this yourself, but I have noticed that tenants are readily willing to admit that they did not pay rent, but they will fight you tooth and nail if you argue that they damaged your rental property or failed to clean it prior to vacating.  Once a tenant learns that you intend to pursue them for damages and cleaning costs, out come the multitude of excuses, such as . . .  I didnt’ break that door, my brother did that when he was drunk, you should sue him  . . .  that urine soaked carpeting was like that when I moved in 5 years ago, must’ve been the prior tenant’s cat that used the carpeting as a litter box (even though the carpet is still physically wet 5 years later) . . . etc. etc.

Since tenants often take issue when a landlord pursues them for physical damages, the landlord is often forced to go through with an evidentiary hearing in order to obtain her judgment.  Add to that, the fact that a tenant has the right, at no additional cost, to request a de novo review of the hearing if they do not like the result, and a landlord can expend a lot of time and money pursuing her damage judgment.

Since most tenants are often “uncollectible” it often does not make practical sense for a landlord to go forward.  She will only lose time and money . . . both of which will never be recovered.  Whetehr or not to pursue money damages against a tenant at all is a decision that only the landlord can make based on their specific situation.

When a landlord pursues holdover damages against a tenant there seems to be fewer requests on the tenant’s part for a damage hearing.  Oftentimes, the court commissioner will explain to the tenant what holdover damages are and that they are “statutory” in nature and thus only require  that one factual issue be determined – when the tenant vacated the rental unit.

This is not to say that a tenant won’t still request a hearing if a landlord pursues only holdover damages against them.  They still might (although the frequency of the request is much less than when a landlord pursues physical damages, in my opinion).  And they certinaly may request a hearing if the landlord pursues both holdover damages and physical damages against them.  Nonetheless, even if an ex-tenant does request a hearing, the time spent prepping for the hearing to prove holdover damages, and the exhibits necessary to be introduced at such a hearing, are much less involved than for a damage seeking physical damages

So while tenants may not like holdover damages, the law provides for them and a landlord has every right to avail herself of them.

ADDED 8/2/11 at 5:53 pm — It should be noted that in Milwaukee County I have been told repeatedly that landlords cannot seek both physical damages to the rental unit and holdover damages against a tenant.  In Milwaukee County, the courts have indicated that it is their interpretationof sec. 704.27 that a landlord may only recover holdover damages if the landlord cannot prove greater physical damages to the unit.  I believe this interpretation of the statute to be incorrect.  I believe — just as the commentor below has stated — that a landlord is entitled to holdover damages of twice the rental value apportioned on a daily value as a minimum for the tenatn’s holdover unless she can prove greater damages for the holdover.  Physical damages should be treated separately.  The language “in absence of greater damages” set forth in sec. 704.27 is not referring to physical damages at all.  Nonetheless, a landlord should be prepared that they may be told to choose to elect either holdover damages or physical damages in Milwaukee County.

The Vincenti v. Stewart, 107 Wis. 2d 651, 321 N.W. 2d 340 (Ct. App. 1982) further addresses this issue.  the Court of Appeals refers to the Committee Comments to sec. 704.27, at pages 654-655 of its decision, and explains that the recovery of twice the rental value only establishes a minimum damages amount for a tenent holding over.  The Court explains that in some circumstances greater damages can be proven as a result of the tenant’s holdover.  It is clear in from the Vincenti opinion that the “greater damages” language refers to greater damages due to the tenant’s holdover only and  NOT greater damages in general (i.e. physical damages to the unit).

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Pursuing a Money Judgement Against An Ex-Tenant . . . Should You Even Bother?

Once you have evicted a tenant and have your property returned to you, you are confronted with the decision of whether to invest the time and money to pursue the ex-tenant for money damages or not.

Some of my landlord clients always pursue the ex-tenant for money judgments.  Of that segment of landlords, some will obtain their judgment, docket the judgment, and then sit on it hoping that the tenant will eventually pay it off (plus 12% interest) when they need to obtain a loan to purchase a home.  Other landlords that I work with will not only obtain the judgment against the tenant but they will  also proactively attempt to collect on that judgment via garnishment actions.

On the opposite end of the spectrum, are landlords that never seek a money judgment against a tenant as they consider it to be a waste of time and would merely result in “throwing good money after bad” because the tenant is not collectible.  Still other landlords opt to try and collect from past tenants via alternative means such as using the service of Rent Recovery Services — which allows you to report the ex-tenant’s debt to the 3 credit bureaus without the need to obtain a judgment.

There are many options for a landlord to choose from when it comes to collecting against an ex-tenant.  There is not one correct option for all situations and for all landlords.   The correct option depends on many factors.  I will sift through all of the information (or the lack thereof)  that my client has about the tenant that could assist in the collection process.  Sometimes a discussion regarding the client’s financial situation is needed.  Determining  my client’s ultimate goal is a must.

It is my personal opinion that time should be taken up front to discuss these matters with a client so that there are no false illusions going forward.  Many landlords are astonished to learn that once they obtain a  judgment that they must spend more time and money to collect on that judgment.  It is important to remember that a judgment is merely a piece of paper saying that your ex-tenant owes you money, it does not mean that you will get paid.  Collecting on a judgment is a whole different ballgame  . . . .  and a different blog post.

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New Law Limits Landlords From Pursuing A Deceased Tenant’s Estate

Governor Doyle recently signed into law 2009 WI Act 323 which creates a new section to Chapter 704 of the Wisconsin Statutes regarding Landlord-Tenant Law.

The new section 704.165, Wis. Stats., is entitled “Termination of Tenancy at Death of Tenant”

Below is a summary of the new law:

1.     If a residential tenant dies and had a term lease, his/her tenancy will be terminated  60 days after the landlord learns of the death or the expiration of the rental term, whichever occurs first.

2.     If a residential tenant dies and was under a periodic tenancy (i.e. month to month) then the tenancy will terminate 60 days after the landlord  becomes aware of the death.  If the deceased tenant’s estate provides proper notice to terminate the tenancy under sec. 704.19, Wis. Stats. then the tenancy may be terminated even earlier as outlined in 704.19, Wis. Stats.

3.     Neither the deceased residential tenant nor his/her estate will be liable for any rent after the tenancy is terminated.

4.     The landlord must still attempt to mitigate the deceased tenant’s damages by making attempts to re-rent the unit before the tenancy terminates.

5.     Nothing in this new section relieves another adult tenant who resides at the rental property (and who did not die) from their obligations under the rental agreement or otherwise.

6.     A landlord may not contact or otherwise communicate with a member of the deceased tenant’s family in an attempt to obtain rent for which the family member has no liability.

7.     This new law first applies to tenancies and rental agreements that are entered into on or after May 12, 2010.

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What Is The Life Expectancy of the Carpet (or Refrigerator or Stove or Hardwood Flooring) In My Rental Unit?

Those of you that have appeared in eviction court in an attempt to obtain a money judgment against a tenant that has damaged your rental unit know that oftentimes the court will not allow you to recover the total cost to replace the damaged item.  Even when the court agrees that the tenant caused the damage there will be times when a landlord cannot obtain the full replacement value.

Often when this occurs it is due to issues surrounding the life expectancy of the item that was damaged.  Whether it is carpet, a stove, mini-blinds, or a hardwood floor, all items have an estimated life expectancy.

If the item is well past it’s life expectancy it would not be fair to award the landlord the full replacement cost because to do so would put the landlord in a better position than s/he was in prior to the item being damaged by the tenant.  To award the landlord the full replacement cost of a damaged item may result in the landlord obtaining what is often referred to as a “windfall” — and courts do not like windfalls.

Let me give you an example to better illustrate.  Assume the following facts:

1.     The carpeting in your rental unit is 5 years old.

2.     The life expectancy of carpeting in a rental unit is 10 years.

3.     The tenant damaged the carpeting by spilling Kool-Aid and cooking oil throughout and in the spots where there are not stains there are cigarette burns as the tenant used the carpet as an ashtray.

4.     The carpeting cannot be repaired and must be replaced.

5.     Total cost to replace the carpeting is $1,000  (I am trying to keep things simple so I don’t confuse myself with the math : )

Under the example above, a court would most likely only allow the landlord to recover $500 in damages against the tenant for the replacement of the carpet.

The reasoning is that since the tenant moved into a rental unit with 5 year old carpeting, the landlord should only be able to recover for damage to a 5 year old carpet.  As such, the court will only allow the landlord to recover a percentage of the actual cost to replace the carpet.  In this example that would be $500 – or half of the actual cost — because the carpet was already 5 years old (out of its expected 10 year life span) when it was damaged.  If the courts allowed the landlord damages of $1,000 then the landlord would be gaining a windfall because (in theory) the landlord would be getting the tenant to pay for the entire cost of brand new carpet (rather than 5 year old carpet).

I know that many of you are snickering as you read this and are saying “the tenant is not going to be pay me anything as they are not collectible and I will never see any money.”  That may be true — and I empathize with you  — but I am merely trying to explain why courts will not allow a landlord to recover all of his/her replacement costs.

In Milwaukee County there has always been an unwritten rule — at least as long as I have been practicing law — that the life expectancy of carpeting in a rental unit is 10 years.  I never knew where that number came from – I just knew that it was used.  Other counties may have assigned a different number to the life of rental carpeting, I don’t know, but in Milwaukee it is 10 years.

I have always wished that there was a resource that I could look to that listed the life expectancies of various items found in a rental unit such as carpeting, mini-blinds, sinks, hardwood floors etc. etc.  I have yet to find such a resource, but while reading the blog of another landlord — John (“Dr. Rent” ) Fischer – I noted mention of a resource that set forth the life expectancies of various household items.  John, who besides being a landlord is also a property manager, blogger, and president of the Wisconsin Apartment Association, was nice enough to provide me with a copy of that resource.

Here is a link to the document that lists the life expectancy of different products or items in the home.

We all know that the life expectancy of items in a rental property are much less than the life expectancy of furnishings in our own homes.  Let’s face it, rightly or wrongly, people do not treat property owned by a landlord as nicely as they would treat the property if they owned it themselves (and had to pay to repair or replace the item themselves if it were damaged).

Nonetheless, having a document that compiles the life expectancy of items contained in an owner-occupied home is still a good starting point.

This information in this document was taken from various sources such as:

- Magazines:  Appliance Magazine (Sept. 2005)

- Specific Manufacturers:  Timberlake Cabinet Co., United States Ceramic Tile Co., Delta Faucet Co., Floortec, Georgia Pacific Corp.

- Associations:  National Wood Flooring Association, American Concrete Pipe Association.

CAUTION:  This information should be used as a general guideline only.  As I mentioned previously, the information provided is for the life expectancy of items in an owner-occupied home — not a rental unit.  Additionally, much of this information is provided by specific manufacturers and may not be the same for the item that you are using in your rental property which might have been manufactured by a different company.

MORE CAUTION:  None of the information in the attached table should be interpreted as a representation, warranty, or guarantee regarding the life expectancy or performance of any individual product or product line.  You should not make a buying decision or product selection based solely on the information contained in this table.

EVEN MORE CAUTION:  The table is not a legal document and cannot and should not be cited in court.

I am merely providing this information to assist landlords who are attempting to determine a reasonable percentage of replacement cost to charge a tenant that has damaged your rental unit.  This information may also assist a newer landlord who does not have years of experience on which to rely when attempting to estimate the life expectancy for certain item in his/her rental property.

Did Your Tenant Write You A Worthless Check? Consider New Restitution Program

One of my earliest blog posts, back when I had just started Tristan’s Landlord-Tenant Law Blog, was about the fact that the City of Milwaukee Police Department had a policy in place where they refused to investigate crimes in which a tenant made their rent payment with a worthless check or stopped payment on the check.  Shortly thereafter I wrote about a new diversion program that was being created to assist landlords in such a situation.

I was attending the February monthly meeting for Milwaukee RING (Real Estate Investors Networking Group) this past Monday and they had a speaker from the company that is now running this new program.  Mr. Rufus McNealy of Financial Crimes Services, LLC (FCS) spoke to us about the diversion/accountability program that is now in full effect. 

Mr. McNealy handed out a very informative guide outlining the program and including the necessary applications to enter into the program.

With the current recession the District Attorney’s Office says that they are receiving more and more complaints of people passing worthless checks.  Due to limited funding, the DA’s office cannot afford to prosecute all of these these crimes.  So the DA’s office and FCS partnered to try to get some of that money back for the victims — and this includes landlords.

The goals of the program are:

1.  Increase the amount of restitution returned to victims of bad checks.

2.   Increase the accountability of all worthless check writers (regardless of the amount of the check).

3.   Educate local merchants about more effective check acceptance procedures.

4.   Reduce the risk of repeat worthless check activity through training.

There is no cost to any landlord that wishes to try this diversion program.  All costs of the program are born by the worthless check writer.

The program will handle the following kinds of checks: NSF, Account Closed, Stop Payment, Refer to Maker, Business to Business, RENT checks, debit card charge backs, ACH (Automatic Clearing House) charge backs, ACH NSF’s and electronic checks received in Milwaukee County that do not exceed $2,500.

The following types of checks will not be handled by the program: second-party checks, payroll checks, checks that are currently in collections with a collection agency or attorney, and promissory notes or any other situation in which there has been agreement to hold the check for deposit or credit extension.

The final two pages of the PDF that I have linked to above are the “Memorandum of Understanding”  which the landlord would review, sign and return to FCS, and a Preliminary Worthless Check Report which the landlord should complete and send to the Milwaukee County DA Program.  Hold on to these two pages . . .  just in case you find yourself in a situation where this program can help you.

Once FCS receives the above info from the landlord the company will attempt to contact the person that passed the bad check.  The criminal will then have the option of (1) entering into the program and paying restitution to the victim or (2) refuse to enter into the program in which case the matter will be sent for potential prosecution.

It is my understanding that FCS is also partnering with Racine County and Kenosha County in addition to Milwaukee County.  FCS is not currently working with Waukesha County.

Those of you that are interested in learning more about this program may contact Mr. McNealy at (414) 393-9385 or visit his company’s website at www.financialcrimes.net

The AASEW has also schedule Mr. McNealy to speak about this program at its May meeting.