Archive for category Evictions

A Legal Explanation To Landlords About Who Can Appear In Eviction Court on Behalf of a LLC and Why

Apr 21

Posted by Tristan R. Pettit, Esq. in Evictions, LLC's | 6 Comments

In the last few months I have been asked by many landlords why Milwaukee County will not allow members of an LLC to represent the LLC in eviction court.  I would like to address this issue with the hope that I can shed some light on this subject.

First, let’s deal with the elephant in the room which happens to be wearing a suit and carrying a briefcase (and writing this blog post that you are reading).  Yes, I am a lawyer.  Yes, I am hired by landlords to handle their evictions (among many other landlord-tenant law matters).  And, yes, I stand to gain more clients and generate more income, if courts do not allow a landlord to represent an LLC in legal matters.  All of this is very much true.

Despite this, I hope that those of you that have gotten to know me, also know that I take my role as the President of the AASEW very seriously.  Even if a specific policy hurts my wallet, if it will benefit members of the AASEW, then I will support it and advocate for it. 

The AASEW’s Board of Directors has discussed this issue at length since September of 2009, when Milwaukee County began its enforcement on non-lawyer’s representing LLC’s in eviction court.  After a thorough analysis, the Board determined that if this issue were to be pursued legally it would result in a loss.  The Board also realized, quite pragmatically, that such a loss would hurt landlords in counties outside of Milwaukee where LLC members are currently still being allowed to represent a LLC in court.

A good place to start discussion of this issue is with a review of basic business entity law.  The primary trait of any business entity, whether a corporation or a limited liability company (LLC), is its existence completely separate from its owners.  An owner, member, director, or officer of a business entity is distinct from the entity itself.  A business entity – and going forward I will refer only to the LLC – has its own separate legal existence.  It is this principle that protects a member of a LLC from liability for the actions, negligence, or debts of the LLC.  While a sole proprietor or general partner is liable for the debts and liabilities of the business to the full extent of the individual’s personal assets, that is not the case with a LLC.  It is this liability protection that makes a LLC a good vehicle for holding rental property.  It is this “separateness” that is pivotal to the analysis of this issue.

The liability protection that a member of an LLC receives from his/her personal assets is a huge benefit to the member.  It is because of this benefit, that there has been such a huge increase in the number of LLC’s being created lately.  However, as with everything in life, there is both a good and a bad side — a benefit and an inconvenience. 

In the case of Jadair v. U.S. Fire Insurance Co., 209 Wis. 2d 187, 562 N.W.2d 401 (1977), the Wisconsin Supreme Court held that “only lawyers can appear on behalf of, or perform legal services for corporations in legal proceedings before Wisconsin Courts.”  The Jadair Court’s reasoning, when boiled down to the basics, is that an individual cannot embrace the limited liability aspects of a business entity when it is beneficial to them and then at the same time avoid the consequences of that limited liability when it becomes inconvenient. 

On one hand, the benefit of a LLC is the limited liability to the individual member based on the underlying concept that the business entity is separate from the individual person.  On the other hand, the inconvenience of a LLC is that since it is a separate legal entity from its individual member/s, said individual/s cannot speak on behalf of the LLC in court because they are separate and distinct from the entity itself.

The Jadair case dealt specifically with corporations – not LLC’s.  Nonetheless, the similarities between a corporation and a LLC when it comes to the issue of limited liability are many.  It is important to note that the Jadair case also dealt with a large claims lawsuit – not a small claims matter such as an eviction.

There is a big difference between small claims civil procedure and large claims civil procedure. 

One major difference is that small claims court is much more relaxed when it comes to rules.  For instance, in small claims cases the rules of evidence are not applicable for the most part.  Additionally, small claims cases are usually completed in months instead of years like with large claims.  They are separate animals.

As such, sec. 799.06(2) of the Wisconsin Statutes, governing small claims court procedure, allows a full-time authorized employee of a business entity to appear in court on behalf of that entity.  This option is not available in large claims court.  In all large claims cases a business entity must be represented by an attorney.

In the past, Milwaukee County would ask a non-attorney that appeared in small claims court representing a LLC if they were a full-time employee.  If the individual answered “yes,” then that individual was allowed to represent the LLC in Milwaukee County small claims court.  This is still the normal operating procedure for many small claims courts outside of Milwaukee County.  Some counties require the full-time employee to complete an Affidavit of Full-Time Employee where the employee swears under oath (and penalty of perjury) that they are a full-time employee of the business entity.  Other counties are more lax and don’t require the affidavit.

The Jadair case has been around since 1977 and sec. 799.06(2) has been around even longer.  So there has been no change in the law.  Rather Milwaukee County began more aggressively enforcing the law that was already on the books regarding this issue in September of 2009

I am unsure why Milwaukee County decided to begin enforcing sec 799.06(2) in the fall of 2009.  For those conspiracy theorists out there, I can assure you that the lawyers did not lobby for this change.  Nonetheless, after posting notice of this enforcement change for several months, on September 1, 2009, Milwaukee County began to actively enforce sec. 799.06(2).  If an individual wanting to represent a LLC in small claims court cannot provide proof of full-time employee status, such as a W2 or paycheck, they are told that they needed to hire a lawyer going forward.

As many of you know, most LLC’s that hold rental property do not have any full-time employees.  Most LLC’s holding rental property are single member LLC’s.  Most members of an LLC do not receive a salary from the LLC thus they have no paycheck or W2 that they can provide to the court to prove that they are a full-time employee. 

Additionally, many landlords – to limit liability exposure even more – have opted to hold only one rental property in a single LLC.  Thus, an individual who has many rental properties and chooses to put them into separate LLC’s may be the sole member of many, many LLC’s.  So even if that person was a full-time employee of one LLC, s/he could not be a full-time employee of all of them.

Currently there is no Wisconsin appellate court decision that requires a lawyer to represent a LLC in court.  However, as alluded to earlier, the reasoning in Jadair, which held that a corporation must be represented by an attorney, would very likely be applicable to a LLC as well.  So any landlord that would decide to appeal a Milwaukee County decision on this issue would more than likely lose his/her appeal based on sec. 799.06(2) and the reasoning of the Jadair case.

Additionally, as I mentioned before, many counties are currently not enforcing sec. 799.06(2) with as much vigor as Milwaukee County has been doing.  As a result, many landlords outside of Milwaukee County are able to represent a LLC in court despite not being a lawyer.  While this is not legally correct, it is happening.  

It should be noted that Washington County has recently begun to enforce this statute as well and now requirs a LLC to hire an attorney if they do not have a full-time authorized employee of the LLC to appear on its behalf.  Eventually I assume that this trend will spread to other counties, as what happens in Milwaukee often ends up being followed elsewhere.

So to pursue this matter legally – since it would more than likely result in a loss — would also harm landlords outside of Milwaukee County because if the issue were to be appealed, and if the appellate decision were to be published, then all counties would be required to abide by the holding of the appellate court.

While I am well aware that the enforcement of sec. 799.06(2), Wis. Stats., causes a financial hardship for landlords that hold rental property in a LLC, I hope that the above explanation – at the very least – helps those affected to better understand the issues involved.

The end result is that if an individual landlord wants to be able to pursue his/her own evictions without hiring a lawyer, than s/he should hold his/her rental property in his/her individual name rather than in a LLC.  However, by doing so, a landlord will lose the liability protection afforded by holding rental property in a LLC or other business entity.  As the old saying goes, landlords will need to “pick their poison.”

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New Rule In Milwaukee County Eviction Court Will Limit The Number of New Evictions to 80 Per Day

Mar 2

Posted by Tristan R. Pettit, Esq. in Evictions, Milwaukee County | 2 Comments

In an effort to eliminate the congestion in eviction court, Milwaukee County has imposed a limit of 80 new eviction cases per day.  In the past there have been days in which over 300 new eviction cases were scheduled to be heard in the same afternoon, which often became unmanageble.

This new limit only applies to new case filings for eviction cases (the 1st cause of action) for return of the property.  This new limit does not include evidentiary hearings, adjourned matters, or return dates for 2nd and 3rd causes of actions (for money damages).

I was informed that the Clerk of Courts will be keeping a running tally of eviction cases scheduled for each return date/initial appearance.  Once that tally reaches 80, no more cases will be allowed to be filed for that same return date.

While I understand the reasoning for this new policy, I do have some concerns.  I agree that eviction court can become unmanageable due to the high volume of cases.  Us “regulars”  to eviction court have had to spend much of our lives sitting and waiting in good ol’ room 400 of the Milwaukee County Courthouse due to the high volume.  Despite that I have always had my cases completed before 5 pm.

I work for several clients that have a high volume of evictions each month.  One client in particular easily has 40 evictions per month and has topped out at 66 evictions on more than one occassion.  In order to keep costs down for such clients I schedule all of that client’s evictions to be heard on the same day.  This limits the amount of fees that they client has to pay me and allows them to only spend one day per month in court. 

This new policy may prevent that client, and other landlords similarily situated, from having all of their cases heard on the same day — thus increasing their costs and encroaching on their valuable time.  Let’s face it evicting a tenant is a a money-loser to a landlord.  It is a necessary evil that they would like to keep to a minimum if at all possible.

Another foreseeable issue would be the landlord that has a smaller number of evictions each month – say 10 — who wants to have them all heard on one day in eviction court.  What will happen when s/he goes to file the evictions and is told that there are only 3 spots left for evictions on the day s/he wanted to appear in court?  That landlord weill either have to scheduled his/her 7 remaining evictions on a different day or choose to postpone all 10 evictions to another day in order to have them all heard at once.  The former option wil require the landlord to spend 2 days in eviction court.  the latter option will result in a non-paying tenant having additional time to live rent free.  Either option causes the landlord money.

So while I understand the motivation for this new rule I am not sure that it will benefit Milwaukee County landlords.  We will have to wait and see.

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5 Day Notice Terminating Tenancy for Drug or Gang Nuisance In Wisconsin

Feb 23

Posted by Admin in Drug / Gang Nuisance, Evictions, Notices | 9 Comments

I thought I would try something new with this blog post.  I’ve imbedded a video clip from a seminar that I have given in the past.  Let me know what you think.

This clip focuses on a very specific – and often misunderstood —  type of 5 day notice in Wisconsin called a 5 Day Notice  for gang and/or drug nuisance. 

There are only very specific instances in which a landlord is legally allowed to serve a tenant with a 5 Day Notice for Drug/Gang Nuisance — the video clip above explains when this special type of notice can be used.

A 5 Day Notices for Drug /Gang nuisance does not allow the tenant the ability to cure the breach.  Gang/Drug nuisance  notices are the only 5 day notice in Wisconsin that does not allow the tenant the opportunity to cure the breach.

Click here for a printable table that summarizes the various types of notices that a residential landlord in Wisconsin can serve on his tenant.

If you need more information on how to serve a notice on your tenant, including the 5 Day Notice for Drug/Gang Nuisance, you should refer to my earlier post on that topic.

If you would like to learn more about landlord-tenant law please consider attending Landlord Boot Camp which is sponsored by the Apartment Association of Southeastern Wisconsin, Inc.  I will presenting this all-day seminar on Saturday, February 26, 2011 from 8:30 am – 5:30 pm.  Contact Paulette at 414-276-7378 or paulette@apartmentassoc.org to register.

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SMALL CLAIMS BENCH/BAR MEETING: Milwaukee County Gives Clarification Regarding Including Late Fees In 5 Day Notices and Other Issues

Dec 9

Posted by Tristan R. Pettit, Esq. in Evictions, Late Fees, Milwaukee County, Notices | 3 Comments

The Milwaukee County Small Claims court has reinstituted its monthly Bench/Bar meetings.  These meetings allow the Milwaukee County Small Claims Court, including Judge Jane Carroll (presiding small claims judge) and the court commissioners, to come together with attorneys that appear regularly in small claims court, to discuss issues and concerns.

The most recent small claims bench/bar meeting was held on Monday, December 6, 2010.  I was able to attend the meeting and found it to be very insightful.  The meeting was attended by attorneys for tenants (Legal Action of Wisconsin, Inc.), attorneys for landlords (myself and a few others), the attorney for the AASEW, court commissioners, small claims judge, and other court staff.  The overall response to the meeting was very good and Judge Carroll indicated that another meeting would be scheduled in January. 

It was very enlightening — and helpful — to hear everyone discuss issues of concern and to learn the thought process behind certain rules and procedures in small claims court.

For those of you that could not attend the meeting, I have attempted to provide a summary of the discussion, below:

-  Judge Carroll explained that she felt that nothing was wrong with a landlord including a late fee in a 5 day notice as long as the tenant was under a lease for a term as opposed to a month to month or other periodic tenancy.

Back in March of 2009 or so, when Judge Siefert was still the small claims judge, evictions were being dismissed if the landlord included late fees in the 5 day notice which was served on the tenant.  Here is a post on that topic that I previously wrote.

It was origianlly explained to me several months ago, that the reason for this new policy was that the court was now reading the statute very strictly, and sec. 704.17(1), Wis. Stats. (regarding notices in month to month situations and other periodic tenancies) and sec. 704.17(2), Wis. Stats. (regarding notices in leases for a specific term) said that a 5 day notice could be given to a tenant for failure to pay “rent.”  “Rent” was strictly interpreted to include rent — not late fees, security deposit amounts not paid, damages owed etc.

The discussion on this issue at the bench/bar meeting clarified that the court considered a tenant’s failure to pay a late fee to be a “breach of a covenant or condition of the tenant’s agreement” rather than a failure to pay rent and therefore a landlord would need to use a different 5 day notice — one for breach other than failure to pay rent — as opposed to a 5 day notice for failure to pay rent, in that particular cotext.

Judge Carroll said that she saw no problem with a landlord combining the two notices, as long as the tenant was under a lease for term, thus allowing a landlord to include a late fee in a 5 day notice for failure to pay rent. 

The combining of notices (to include a late fee and the past due rent amount) would NOT be allowed (and could result in the dismissal of an eviction) if the tenant was under a periodic tenancy, such as a month to month tenancy.  The reason for this distinction is that the Wisconsin Statutes do not allow a landlord to serve a tenant with a 5 day notice for the breach of lease for other than non-payment of rent.  If there is a breach of the lease for anything other than the non-payment of rent, in a month to month or other periodic tenancy, the Wisconsin Statutes require that a 14 day notice be used.

The court further explained that if a tenant was under a month to month or other periodic tenancy, that a landlord could combine the notices (failure to pay rent and breach of agreement other than failure to pay rent) into a 14 day notice if the landlord wanted to include a late fee along with the rent owed.  It should be noted however that 14 day notices do not allow a tenant the opportunity to cure the breach.

If this sounds confusing to you, you are not alone – IT IS CONFUSING!!  This is an example of the minutia of the law.

A quick summary:

1.  It is OK to include a late fee in a 5 day notice for failure to pay rent as long as the tenant is under a lease for term (as opposed to a periodic tenancy like a month to month).

2.  It is NOT OK to include a late fee in a 5 day notice for failure to pay rent if the tenant is a month to month tenant.  In that case the 5 day can only list rent owed OR the landlord should use a 14 day notice if the landlord wants to include a late fee.

Truthfully, I think the above will cause more confusion for landlords that are representing themselves (pro se) and for attorneys who do not specialize in landlord-tenant law.  To keep things simple I am still going to reccomend that my Milwaukee County landlord clients not include late fees in their 5 day notices.

-  Small claims court will NOT be splitting up the 2 pm (initial appearance on evictions) court calandar as it did last year. 

Many of you may recall the attempt by the courts to reduce the amount of people sitting in room 400 during the flu season last year.  The goal was to prevent people from spreading the flu and so the court split the eviction calandar in half and made some landlords appear at 2 pm and others appear at 3 pm. 

If you were a landord or attorney with multiple properties having multiple owners (some with names in the beginning of the alphabet and some toward the end of the alphabet), this often met you were stuck in small claims court even longer than usual.  Even with the splitting of the court’s calandar there were still a lot of people sitting in room 400 at one time - so I’m not sure that the transmission of the flu was really reduced.  I was happy to learn that the court would be forgoing this splitting of the calandar this season.

- The court asked for everyone’s thoughts regarding requiring a landlord to provide written notice to a tenant that defaults on a stipulated dismissal, in all circumstances.

Currently, if a tenant enters into a stipulated dismissal of an eviction action and agrees to either vacate by a date certain or remain in the unit and pay past due rent under a payment plan, and the tenant defaults on the stipulation, a landlord may come to court and file an Affidavit of Default and obtain a judgment of eviction and a writ of restitution WITHOUT having to provide the tenant with any notice.

Under a slightly different scenario, it is the policy of small claims court currently, that if the tenant enters into such a stipulated dismissal outside of court (i.e. signs the stipulation at the office of the landlord) and therefore neither the court nor the landlord’s attorney explains the stipulation to the tenant, and should the tenant default, the landlord MUST provide written notice to the tenant of the default and provide the tenant with the date and time that the landlord will be coming to court to request the judgment of eviction and writ.

Judge Carroll expressed concern that some of these stipulations, notably those that involve payments that will occur several months into the future, should possibly require written notice to the tenant.  Judge Carroll indicated that in some of the stipulated dismissals that she approves in her court (as opposed to those approved by the court commissioners in room 400) she requires the landlord to provide written notice to the tenant of the default, if the default occurs 5 months or more after the stipulation was entered into.  Judge Carroll’s concern was that some tenants would default on the stipulation and think they were working things out with the landlord to remedy the default, only to be surprised when the Sheriff was at the door ready to evict the tenant, thus leaving the tenant little time to move.

Many suggestions and opinions were offerred during the discussion.  I indicated that requiring another level of notice to the tenant would just cause further delay to the landlord in getting possession of his/her rental property and would allow the tenant another opportunity to argue that they didnt receive the “notice” and therefore should have additional time to vacate.  One suggestion was to require landlords to send a letter via regular U.S. mail to the tenant within 48 hours after going into court to file the Affidavit of Default and obtaining the eviction judgment and the writ.  Another suggestion was to require such notice only in situations in which the landlord and tenant modified (orally or in writing) the terms of the stipulated dismissal.  Yet another suggestion was to require such a notice only when the default occurred X number of months after the stipulation was entered into. 

No decision was made to modfify the notice requirements in defaults of stipulated dismissals but the court appreciated everyone’s thoughts and input and indicated that the topic may be addressed again in the future.

- Judge Carroll expressed concern with “proving up” modifications to stipulated dismissals or other agreements.

Judge Carroll indicated that she has witnessed many instances in which a landlord, who has already received a judgment of eviction and a writ, would then attempt to work with a tenant so that they could remain in the unit, rather than executing that writ with the Sheriff.  Nothing is wrong with attempting to work to keep the tenant in the unit in, Judge Carroll explained,but what is a problemis that these agreements are not being put in writing.  To avoid confusion, and possibly additional litigation, she emphasized that any agreement resulting from such negotiations should ber put in writing. Modifications to previosuly enetered into agreements are not being put in writing and this is resulting in the Court seeing a lot of “he said, she said” sitautions.

The practical effect of failing to memorialize such agreements or modifications often results in the scenario below:

At some point in time the landlord decides to stop working with the tenant to keep them in the rental unit, and tenders the writ to the Sheriff.  The Sheriff gives the tenant a 24 hour notice before executing the writ which causes the tenant to run into court and file a motion to reopen the judgment of eviction. The tenant argues that while a writ was granted to the landlord, since that time the landlord began to work with the tenant to allow them to remain in the unit.  The landlord told the tenant that they could stay if they did X and Y (or at least that is what the tenant “heard”) and the tenant has done X and Y, so the landlord should not be allowed to have the writ executed becasue of the new agreement.  The court then schedules a hearing on the tenant’s motion to reopen the eviction judgment — which results in a stay of the execution of the writ.  The landlord now has to appear in court again and both the tenant and the landlord have differernt versions of their discussions and the court has to sort through all of this — with nothing in writing to support either side’s argument.

The court understands that landlords would often like keep a tenant if possible, and that is the reason for a landlord attempting to “work with”  a tenant even after a writ has been obtained.  But as Judge Carroll pointed out, because these modification are not put in writing there is often disagreements as to what was agreed to between the parties.

My thoughts on this issue are simple: (1) If you have a writ, execute it and remove the tenant from your rental property — the time for trying to work with the tenant so that they can remain in the unit is long past if you have filed an eviction action against them, in my opinion, or (2) if you still want to work with the tenant so that they can remain in the unit at this late date  —– put the agreement in writing, using  clear and simple terms tht the tenant, the landlord, and the court, can understand and interpret.

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Milwaukee County Eviction Court Schedule For The Holidays

Dec 7

Posted by Tristan R. Pettit, Esq. in Evictions, Milwaukee County | 2 Comments

For those of you scheduling evictions in Milwaukee County, eviction court will be closed on the following days:

- Thursday, December 23, 2010

- Friday, December 24, 2010

- Thursday, December 30, 2010

- Friday, December 31, 2010

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Self-Help Evictions (or Why You Should Not Remove The Roof In An Attempt To Evict Your Tenant)

Oct 29

Posted by Tristan R. Pettit, Esq. in ATCP 134, Evictions, Self-Help Evictions | No Comments

I apologize for the delay in drafting a new post but this has been a crazy week with two trials in the early part of the week and another one tomorrow  (all tenants fighting evictions and none of these trials have been or will be easy).  But enough with the excuses . . .

I saw a recent article about a landlord in Lusaka, Zambia (Africa) that actually attempted to evict his tenants by physically removing the roof (which was made of iron sheets) to the home.  The article states that the landlord “may not have followed the proper procedures to evict the tenant.”  No kidding . . . . really, I’m sure it would be illegal to remove the roof to a rental unit in order to evict a tenant in any country (but I am just guessing).

I’m certainly no expert in Zambian landlord-tenant law but I do know that in Wisconsin, if a landlord tried attempted to evict a tenant by removing the roof to the rental property, that the landlord would be opening himself/herself up to liability for engaging in what is commonly referred to as “self-help eviction.”

Self-help eviction is a genreal term that refers to any attempt to remove a tenant from a rental property other than through the judicial eviction process and the use of the Sheriff.

In Wisconsin, the only way to legally remove a tenant (that refuses to leave) is through the judicial eviction process.  Once the landlord obtains a judgment of eviction and is issued the writ of restitution, should the tenant still fail to vacate the unit, the only legal avenue that the landlord has to reclaim his/her real estate in Milwaukee County is to execute the writ with the Sheriff.

Yes, you heard me correctly! Even if the court has ordered the tenant out of the rental unit, and the tenant intentionally ignore the court’s order, the landlord still cannot force the tenant out of his/her property.  The landlord must engage the services of the Sheriff to forcibly evict the tenant.

It is illegal in Wisconsin for a landlord to engage in self-help eviction.  Examples of self-help eviction would include the following:

1.   Changing the locks to the rental unit.

2.   Cutting off all utilities to the unit.

3.   Removing the outside door to the rental unit.

4.   Taking all of the tenant’s belongings and putting them out on the curb.

5.   Harassing the tenant in order to make them leave.

6.  Removing the roof to the rental unit . . .

Wisconsin Administrative Code, ATCP 134.09(7), entitled Prohibited Practices, states that, “No landlord may exclude, forcibly evict or constructively evict a tenant from a dwelling unit, other than by an eviction procedure specified under ch. 799, Wis. Stats.”

ATCP 134.08 (1), which lists prohibited rental provisions, also prohibits a landlord from including a clause in his or her rental agreement that authorizes the eviction of a tenant from a unit other than by the judicial eviction proceeding set forth in Ch. 799, Wis. Stats.

Many municipalities, such as Milwaukee and Madision, also have local ordinance that also prohibit self-help evictions.

While Chapter 704 of the Wisconsin Statutes does not specifically prohibit non-judicial forms of eviction, its legislative history states that the procedures for eviction set forth in Ch. 704 and Ch. 799 (Small Claims Procedure) are the exclusive means of conducting an eviction.

I believe (and hope) that most landlords understand that they cannot forcibly remove a tenant from a rental unit on their own.  I think that most landlords no that if a tenant will not leave voluntarily that they must file an eviction lawsuit against the tenant.  What I think many landlords do not understand however, is that after they have filed the eviction and obtained a judgement of eviction ordering the tenant to vacate the rental property, that if the tenant still refuses to leave, that the only legal avenue the landlord has is to execute the writ of restitution with the Sheriff.  This understandably upsets landlords because it results in additional time, delay and money.  In Milwaukee County it costs $125 to hire the Sheriff to evict the tenant and requires the posting of approximately $350 with a moving company. 

Despite this additional cost and aggravation, this is the law in Wisconsin.  I would alert any landlord that is thinking of skipping this part of the eviction process, and resort to self-help, to strongly reconsider.

The penalties for engaging in a self help eviction are sever.  A violation of ATCP 134, which precludes self-help eviction, allows the tenant to sue the landlord for double his/her damages and recover his/her attorney’s fees.

So if you find yourself on the wrong end of a lawsuit for self-help eviction you could end up paying the tenant’s damages times two, the tenant’s attorney’s fees, all associated court costs, along with your own attorney’s fees.  Trust me, I have defended several landlords in lawsuits alleging self-help eviction and the outcome can be very expensive.  Even if the landlord prevails in the end and a judge or jury decides that there was no self-help eviction, the costs in time and attorney’s fees to defend against the lawsuit can be substantial.  Don’t risk it.

I always encourage my clients to error on the side of caution.  If you are unsure whether or not a tenant has vacated the unit then you should file an eviction lawsuit and retain the services of the Sheriff to return the property back to you.  If you use the Sheriff’s services and the Sheriff removes the tenant, or otherwise determines that the unit has been abandoned, should a tenant later decide to file a lawsuit for illegal eviction s/he will need to sue the Sheriff, not the landlord.  Using the Sheriff is a big CYA.

So the moral of this blog post is simple — if you want your tenant to leave your rental property you should not remove the roof of the rental unit : )

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What Is The Effect On The Eviction Process If A Tenant Files Bankruptcy?

Sep 15

Posted by Tristan R. Pettit, Esq. in Bankruptcy, Evictions | 43 Comments

I have had a number of people ask me over the last several months to address what effect a tenant filing bankruptcy has on the eviction of that tenant.  I have been delaying writing that blog post and I apologize for that.  Bankruptcy is a tricky area of the law, and I am by no means an expert in bankruptcy law, but I will attempt to provide you with a general summary of how a tenant filing bankruptcy effects a landlord’s attempt to evict that tenant.

Once an individual files bankruptcy (which I will refer to as “BK” for short to prevent having to type the word “bankruptcy” 25,000 more times during this post) all creditors of the debtor (person filing BK) are “stayed” from pursuing the debtor for repayment of any monies owed.  This is referred to as the “automatic stay” and is specifically addressed in Title 11 of the United States Code (U.S.C.) at section 362.  The automatic stay applies whether the individual files for BK under Chapter 7 (liquidation) or under Chapter 13 (reorganization).

There are some exceptions, but for the most part, the “automatic stay” prevents any creditor from attempting to collect a debt from the debtor.  Before a creditor can pursue the debtor for money owed the automatic stay must be “lifted” by the BK court.  So, essentially, you must get permission from the BK court before you can attempt to collect.

The need to seek permission from the BK court applies to a landlord that has not been paid rent by his/her tenant, if the tenant has filed for BK, as well.  Practically speaking, this means that a landlord cannot telephone a tenant to ask when they are going to pay rent that is owed, a landlord cannot draft and serve a 5 Day Notice (or a 14 Day notice) on a tenant, a landlord cannot file an eviction action against a tenant, if the tenant has filed for BK. 

As many of you who have already gone through the eviction process well know, the entire process can take anywhere from several weeks to months to complete.  All the while you have no rent coming in.  If your tenant has filed BK, the process will take even longer. 

In order to “lift” the automatic stay, a landlord must file a Notice of Motion and Motion To Lift The Automatic Stay with the BK court.  There is a filing fee that must be paid.  The tenant/debtor then has a period of time in which to reply to the motion.  Next, a hearing will be scheduled on the motion.  This hearing is typically not even scheduled until after the time has passed for the tenant/debtor to reply to the motion, then due to the BK court’s heaving calandar, the hearing will often be scheduled out several weeks into the future.

In the motion, and at the hearing, the landlord will need to set forth the pertinent facts and law and ask the BK court to lift the stay in order to allow the landlord to serve the tenant with a notice to pay or vacate, and if needed, follow that up with the filing of an eviction.  There are various scenarios that can play out at the hearing – too many to address in this post.  Oftentimes, if the BK court determines it is feasible, the BK court will attempt to broker a deal if the tenant/debtor wants to continue to reside in the unit — this often entails the landlord being strongly persuaded to allow the tenant/debtor to continue residing in the rental unit in exchange for the tenant/debtor agreeing to reimburse the landlord for past due rent via a payment plan.

One exception to the automatic stay that can greatly help landlords, is if the landlord has already obtained a judgment of eviction against a tenant, prior to the tenant filing BK, then the automatic stay does not apply and the landlord is allowed to execute the writ with the Sheriff and have the tenant removed from the rental unit (11 U.S.C. Section 362(b)(22)).  In order for this exception to apply, the judgment of eviction must already have been granted prior to the tenant filing BK.  If no judgment of eviction has been entered, then it is irrelevant whether or not the landlord has already served the 5 Day Notice, filed the eviction lawsuit, had the eviction lawsuit served on the tenant, or already appeared in court —- the automatic stay will still apply. 

It should also be noted that if a landlord has obtained a judgment of eviction prior to the tenant filing BK, this only allows the landlord to proceed with the execution of the writ.  It does not allow the landlord to pursue the tenant for money owed (what is often referred to in Milwaukee County as the 2nd and 3rd casues of action).  If a landlord wishes to obtain a money judgment against the tenant/debtor, s/he would still need to seek relief from the automatic stay from the BK court.

As you can see, a tenant’s BK filing can have a HUGE impact on a landlord’s ability to evict a tenant and recover possession of the rental unit.  Once a tenant has filed for BK, a landlord must stop all attempts at collecting past due rent from the tenant or evicting them.  Failure to abide by the automatic stay can result in a landlord being sanctioned by the BK court and if a landlord ”willfully” violates the automatic stay, the injured party (the tenant/debtor) can recover actual damages from the landlord, including court costs and attorney’s fees, as well as punitive damages.

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