Archive for category Rental Agreements

Wisconsin Supreme Court Rules Against Landlord in Maryland Arms Case and Chooses To Avoid Answering The Bigger Question

Jul 14

Posted by Tristan R. Pettit, Esq. in Caselaw, Rental Agreements, Tenant Damage | 6 Comments

The Wisconsin Supreme Court filed its opinion in this very important case on July 7, 2010.  While the majority opinion ruled against the landlord it did not go so far as to say that a landlord and tenant could not allocate liability for damage (when neither party was negligent in causing the damage) in their rental agreement. 

If you would like to review the specific facts of the case and the arguments made by both sides please revisit my posts of May 29, 2009 and October 15, 2009.

The Court was split, so there is a majority opinion, a concurring opinion, and a dissenting opinion.  So if you are brave enough you can read all three opinions which encompass 37 pages and can be read here.  The Wisconsin Law Journal provides a very good summary of the decision if  you are not feeling ambitious enough to read all 37 pages.

As an attorney who primarily represents landlords, I must admit that I had a mix of emotions after I finished reading the opinion.  I was upset that the majority opinion held that the landlord should be responsible for damage to his rental property that was caused by the tenant leaving her hair dryer plugged in overnight.  I was also frustrated by the fact that the major issue in the case — whether or not a landlord and tenant can allocate liability through the language of the rental agreement — was not addressed by the majority opinion, thus providing little guidance to landlords in the future.  On the other hand I was also grateful that the majority decided to “pass the buck” and not address this issue becasue, quite frankly, if the majority had addressed that issue, I believe they would have said “no” a landlord cannot allocate liability on a tenant for damage that was not casued by the negligence of the tenant.

The majority opinion held that the landlord should be held responsible for the damage because the rental agreement (which was drafted by the landlord) was ambiguous when it came to who would be held liable for damage in a situation where neither the tenant not the landlord were negligent in causing the damage.  The majority rested its decision on a very well established principle of contract law that any ambiguity in a contract  should be construed against the drafter of the contract.  The majority said that since the contract terms did not unambiguously state that the tenant would be liable for the damage under the specific fact situation in this case, then the landlord should be liable for the damage.

The majority declined to address the very important issue that the AASEW and other landlord associations were concerned about in this case — whether a landlord can add a lease provision assigning liability to a tenant for damages (when the damages is not caused by the tenant’s negligence) or whether doing so would be a violation of Wis. Stat. sec. 704.07.  So essentially the “Supremes” chose to dodge the issue, which in effect means that nothing prevetns a landlord from allocating liability to a tenant for such damage in a rental agreement under similar facts.  What this also means is that should a landlord make such an allocation and hold a tenant responsible for similar damage, the tenant can argue that such contract language violates sec. 704.07, and the courts will have no guidance as to how to rule. 

It was a missed opportunity by the Supremes to add to Wisconsin Landlord-Tenant law.  However, based, on the tortured analysis (my view) of the majority opinion, if the court had addressed the allocation of liability issue it would have most likely resulted in a holding that would not allow a landlord and tenant to allocate liability — which would have been even worse.  So in the end maybe it was best that the issue was not addressed.

Justice Ziegler, who agreed with the majority opinion, wrote a concurring opinion to add that  her view of Wisconsin law is that a landlord and tenant are not prohibited from allocating liability by contract as long as it is done clearly (i.e. no ambiguity) and is otherwise enforceable by law.

The dissenting opinion, which begins on page 18 and is authored by Justice Prosser, stated that not only are a landlord and tenant allowed to allocate liability in a rental agreement but that that is exactly what the parties to this lawsuit did and that the majority opinion is ignoring the clear meanign of the language in the rental agreement.  The dissent did not find the lease to be ambiguous at all.  The dissent, quite correctly in my opinion, points out the absurd nature of the majority opinion by saying that ”imposing responsibility on the landlord for damage caused by a tenant, when the landlord cannot control risks created by the tenant” (like keeping a hair dryer plugged in overnight) defies economic logic.

The dissent, being very pragmatic, actually takes the time to address what the practical effect the majority decision will have on landlords by stating, “When the landlord is made responsible for abnormal damages that is actually caused by tenants, the landlord must spread the resulting expense among all tenants by charging higher rent.  When a tenant is made liable for damage that is caused by that tenant, the landlord is better able to control rent and the tenant has an economic incentive for prudent stewardship of the premises.” 

Which of the three opinions seem more reasonable and logical to you?

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BLOG COMMENT: What If Tenant Does Not Give You Proper Notice To Vacate? . . . and Other Questions.

Apr 5

Posted by Tristan R. Pettit, Esq. in ATCP 134, Rental Agreements | 3 Comments

I recently received a very good question through my blog but because it was posted under my “About The Author” section I don’t think enough people would see it so I decided to reprint it as a post.

THE QUESTION:

Good Morning,
I will start by saying thank you for this forum, I find it very helpful and one of a kind.  I know you must be very busy but I was hoping you could point me in the right direction regarding a question I have.  I am a landlord and I had tenants move without giving a 90 day notice which was one of the provisions I set within their lease.  I think this is a breach of contract and if so can I to take them to court?  Would it still be filed by small claims, and is there a time limit I must file within?  Can I even file for this?  Thanks for your time.

THE ANSWER:

Thank you for your kind words and I am happy to hear that my blog is helpful to you.

You did not mention if your rental agreement was a periodic tenancy (month to month or something similar) or a lease for term (1 year lease etc.).  I will assume that it is the latter.

If a tenant breaks a lease for term and moves out prior to the ending of the term a landlord has a duty to make reasonable efforts to re-rent the unit.  The tenant will remain responsible for paying rent if the landlord is unable to find a tenant to re-rent.  The tenant will also be responsible for paying the costs incurred by the landlord to re-rent the unit.  The applicable statute dealing with this issue is Sec. 704.29, Wis. Stats.

If you have a term lease that states the tenant must give 90 days notice if they plan to move out at the end of the lease term and the tenant completes the lease term and then moves out but fails to give the landlord notice then you have an entirely different situation then when a tenant breaks a lease and moves out early.  In this situation the tenant completed the full term and actually did not breach the lease.  Because it was a lease for term and the tenant completed the full term of the lease the landlord cannot hold the tenant responsible for an additional 3 month’s of rent (over and above the lease term) just becasue the tenant failed to give the 90 day notice — the reason being that the tenant did complete the term of the lease.  Such a notice provision in lease is legal and are included to assist the landlord so that the landlord will be alerted by the tenant if the tenant intend to leave at the end of the term BUT a landlord should not solely rely on the tenant to provide that notice.  It is the landlord’s job to determine whether or not a tenant intends to enter into a new lease after the full term of the initial lease is completed.

It is good practice for a landlord to send a reminder to the tenant prior to the 90 days notice period (or whatever notice is set forth in the rental agreement) and either (1) advise the tenant that the lease will not be renewed and providing the tenant with move out instructions, or (2) include a new lease and ask the tenant to sign the documents and return them within X days if they intend to stay for another term.  If the tenant does not return the newly signed lease to the landlord within the requisite time period then the landlord may choose to follow up with a telephone call to the tenant if s/he wants to but it is not necessary and the landlord may assume that the tenant will not be renewing the lease and the landlord should began to advertise and make efforts to re-rent.

To try and hold the tenant responsible for an additional 90 days rent beyond the completed rental term because the tenant did not provide the landlord with the 90 day notice that they would be vacating at the end of their lease would be in violation of both ATCP 134.09(3) and Sec. 704.15, Wis. Stats., regarding “automatic renewal clauses.”

To address the second issue that you raised in your comment (assuming it is not moot because of the above answer) small claims has jurisdiction over any civil lawsuits that are seeking $5,000 or less in damages.  So if you were attempting to collect 3 months of rent from a tenant (and they have already moved out thus negating the need to file an eviction) then as long as the 3 month’s of rent is less then $5,000 you would file that collection action in small claims.  See sec. 799.01(d), Wis. Stats.  If you were seeking damages greater than $5,000 then you would need to file suit in large claims and pay the higher filing fee.

Addressing the next issue raised in your comment, individual persons are allowed to represent themselves in court whether in large claims or small claims (whether or not that is advisable is a separate question that I will not address).  Business entitites (corporations, LLC’s etc.) are not allowed to be represented in large claims lawsuits by a non-attorney — you would need to hire a lawyer to represent your business entity in large claims. 

In small claims actions, the law carves out a small exception and will allow a business entity to be represented in court by a full-time employee of the business entity.  Sec. 799.06(2), Wis. Stats.  Milwaukee – more than any other county – is enforcing this strictly and requires a copy of a W2 from the employee issued by the entity to verify this.  Managing members or sole members of an LLC are not considered to be a full-time employee of the LLC unless they are paid income by the LLC.

For additional discussion on this topic please refer to my May 15, 2009 post, July 21, 2009 post, July 30, 2009 post, and Sept. 2, 2009 post.

Your final question, asks if there is a time limit in which you must file a lawsuit against your tenants for failure to give the requisite 90 day notice to you prior to vacating.  As I mentioned above, depending on your specific fact situation and the type of rental agreement you are using, you may not even have a claim against your tenant for the 3 month’s rent.  However, assuming you do have a claim it would be a claim for breach of contract and the statute of limitations for breach of contract claim is 6 years from the date of the breach.

I hope that helps

T

NEW LANDLORD FORM NOW AVAILABLE REGARDING TENANT’S RESPONSIBILITY FOR LAWN CUTTING AND SNOW REMOVAL

Mar 23

Posted by Tristan R. Pettit, Esq. in Rental Agreements, Rental Documents | No Comments

I have recently completed drafting a new form for landlords to use that is now being sold at Wisconsin Legal Blank Co., Inc.

Addendum To Residential Rental Agreement: Responsibility for Yard Care and Exterior Upkeep

Form #985 is entitled Addendum To Residential Rental Agreement.  This document sets forth a tenant’s responsibility for yard care and exterior upkeep of the rental property.  This form should only be used if the landlord is renting out a single-family home or a duplex and wishes the tenant to be responsible for yard care and exterior upkeep (such as snow and ice removal and the cutting the lawn).  This form should not be used for multi-unit apartment buildings. 

This document addresses the following tenant responsibilities:

1.   Snow and ice removal

2.   Cutting of grass

3.   Disposal of garbage

4.   Disposal of recyclables

5.   Removal of litter/debris

6.   Special pick-up of large items

7.   Exterior lighting

8.   Porches

9.   Windows

10.   Damage to exterior

11.   Parking of vehicles

12.   Washing of vehicles

13.   Swimming/wading pools

14.   Watering of grass, and

15.   Yard tools

This form states that if the tenant fails to perform any of the listed duties that the landlord can choose to do the work  himself or herself or hire someone to complete the work and that the tenant will be responsible for repayment of any and all associated costs.  Additionally the form indicates that failure to complete the listed duties is a material breach of the rental agreement and may be grounds for eviction.

This addendum is a nonstandard rental provision document (refer to ATCP 134.06(3)(b)) and as such it allows a landlord to deduct the actual costs incurred by the landlord (should the tenant fail to complete the duties) from the tenant’s security deposit.

It is important to remember that form #985 is just that — a form.  Some of the paragraphs may not be applicable to your specific situation.  Some landlords may decide that they do not want the tenant to perform some of the listed work.  In that case the landlord should cross out the provisions that are not applicable and then initial the change and have the tenant also initial the change. 

There will be other situations where a landlord may want the tenant to be responsible for additional duties which are not listed in the form.  In that case the landlord should attach a separate sheet which will list the additional duties.  This attachment should clearly be labeled as page two of the Addendum To Residential Rental Agreement: Responsibility for Yard Care and Exterior Upkeep and should also be signed and dated by all adult tenants.  As always, if you are unsure whether any additional provisions that you add to this form are allowed under Wisconsin landlord-tenant law, you should have those additions reviewed by an experienced landlord-tenant law attorney.

Since many landlords of duplexes and single-family rentals do require their tenants to perform yard care and other related duties, it is my hope that this form will assist landlords in specifying in writing what duties the tenant will be responsible for and what will happen if the tenant shirks those responsibilities.

I would like to thank Attorney Heiner Giese for his review and suggestions to this form.

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Wisc. Legal Blank Co.’s New & Improved Residential Rental Agreement Is Now Available.

Feb 7

Posted by Tristan R. Pettit, Esq. in Rental Agreements, Rental Documents | No Comments

I wanted to alert anyone that is currently using the Residential Rental Agreement that is sold at Wisconsin Legal Blank Co, Inc. (and even those of you who don’t : ) that the new and improved version is now available ans is being sold at WLB.

I completed the revisions to the updated Agreement last week.  The new version indicates a revision date of 1/4/10 whereas the prior version had a revision date of 1/31/07.

Some of the changes include:

1.   I retitled the document “Residential Rental Agreement” — believe it or not I have seen this document improperly used for commercial properties (Note: I will be drafting a form Commercial Lease in the ensuing months for WLB).

2.   I attempted (and think that I succeeded) in removing all legalese from the Agreement in order to make it more understandable for everyone.  So you no longer need to read “heretofore” “therein” “hereof” and wonder to yourself “what the heck does that mean?”

3.   I eliminated some of the “fill in the blank” sections that were causing confusion for some landlords and property managers.  The eliminated sections were not really necessary anyways – so they’re outta there.

4.   I retitled the “Guarantee” section to “Co-Signer / Guarantor” is an attempt to make it more clear that landlords/managers do not need to have the resident/tenant sign this section.  This section need only be signed by individuals (other than the tenant) that are guaranteeing that the tenant will meet all of the conditions in  the Agreement.  For example:  a parent would sign as a co-signer/gurantor for a student tenant that is not employed and/or does not have sufficient credit.

5.  I added a sentence that states that if the Landlord provides the Tenant with an Inspection Checklist (a.k.a. “Check-In/Check-Out” form) and the Tenant fails to return it to the Landlord within seven days after the start of the tenancy, that the Tenant will be considered to have accepted the Premises without any exceptions.”

6.   I deleted the fill in the blank lines relating to “Special Provisions” relating to pets.  The purpose for doing this is to alert landlords that there is a separate docuement entitled “Pet Agreement” that they should be using if they are allowing tenants to keep pets  — rather then trying to cram all of that info into 2 lines on the Rental Agreement.”  By being forced — “forced” may be too strong of a word — to use the Pet Agreement a landlord will also notice (on the Pet Agreement form) that s/he may charge the tenant a refundable pet fee and/or a non-refundable pet fee and it will also make the landlord clearly define the specific pet that is being allowed to reside at the Premises.

7.   I clarified the section that dealt with the type of notice that a tenant must provide the Landlord prior to vacting.  The goal was to make this notice process more understandable for the tenant (and therefore less of a headache for landlords).  This revised section will also serve as a default provision should the landlord fail to include another (i.e. longer) notice provision for the tenant.  The section includes both a notice provision for month to month tenants and tenants that are under a lease for term.

8.   I added a section regarding abandoned personal property.  The section states that any personal property that is left at the Premises after the Tenant has vacated will be considered to have no value and to have been abandoned by the Tenant and therefore it may be disposed of by the Landlord, unless the Tenant notifies the Landlord otherwise – in writing – prior to vacating.

9.    I added a new provision regarding a tenant’s responsibility for maintaining and paying for utilities through the end of theiir tenancy or until the last day that the tenant is responsible for paying rent.

10.   I included a new section that defines late fees, security deposits, utility charges and any other penalty or fee set forth in the Agreement as “rent” – much like is done in commercial leases.

11.   I added a provision stating tha the landlord/manager represents that there are no code violations or other conditions affecting the habitability of the Premises unless indicated otherwise in writing.

12.   I added a new section that clarifies who will be responsible for any extermination costs of the Tenant’s unit and under what circumstances.

13.   I included a provision recommending that all Tenants purchase renter’s insurance and explaining why this is reccomended.

14.   I removed the Consent to Assignment or Sub-Lease section.  I removed this section to reinforce the fact that landlords of residential rental properties would be better protected by entering into a new Rental Agreement (and other rental documents) with a new individual that moves into the Premises after a prior tenant was evicted or vacated the unit, rather then to just assigning or sub-leasing the Premises and continuing to use the old tenant’s rental documents.  While this will result in more paperwork for the landlord, the protections that it will provide more than outweigh the additional paper.  A Landlord in this situation should have the new tenant sign all new rental documents especially a new Lead-Based Paint Disclosure statement (and provide the new tenant with a new EPA pamphlet) and have the new tenant sign and/or initial a new Nonstandard Rental Provisions document rather then just relying on the old documents that the prior tenant signed.  Trust me, if you end up in a court battle (i.e. eviction lawsuit or defending a claim that you violated ATCP 134) or facing the wrath of the EPA, you will be thankful that you used the extra paper.

15.   Finally, I cleaned up all of the mispellings, improper grammar, and other typos  — at least I think I did.

I would reccomend that you toss out any old versions of the Rental Agreement that you may have in your possession and the next time that you renew or rent out a rental unit that you use this new and improved Residential Rental Agreement form.

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MARYLAND ARMS CASE WILL BE REVIEWED BY WISCONSIN SUPREME COURT

Oct 15

Posted by Tristan R. Pettit, Esq. in Caselaw, Rental Agreements, Rental Documents | No Comments

In my May 28, 2009 post I wrote about the then recently published Wisconsin Court of Appeals case of Maryland Arms Limited Partnership v. Connell, 2009 WI App 87, __ Wis.2d __, 769 N.W.2d 145. 

This was an important case because a divided Court of Appeals held that a tenant could not be held responsible for the damages that resulted after her hair dryer caused a fire which resulted in thousands of dollars of damage to her landlord’s rental property. 

A key fact in the case was that the landlord agreed that the tenant was not negligent in causing the fire becasue she had no prior knowledge of the hair dryer being faulty.  Another key fact in the case was that the tenant’s lease contained a provision that stated that the tenant would be responsible for all damages that were in any way caused by the acts of the tenant.  The Court of Appeals held that such a lease provision was void.

The landlord in this case has petitioned the Supreme Court of Wisconsin to review the the case and the “Supremes” have agreed to hear the case.  Oral arguments are to be held on January 6, 2010 and it is expected that a decision will be issued sometime in 2009-2010 term.

One of the main issues that the Wisconsin Supreme Court will have to decide is whether or not a landlord can contractually make a tenant liable for damage in a situation where the tenant is not negligent in causing the damage.

This will be an interesting case to watch and I will keep you updated as I learn more.

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ATCP 134: THE 7 DEADLY SINS – 7 PROHIBITED RENTAL PROVISIONS

Jun 18

Posted by Tristan R. Pettit, Esq. in ATCP 134, Rental Agreements | 16 Comments

Did you know that if you have an illegal provision in your rental agreement that the entire agreement may be unenforceable? Unfortunately this is true. In the case of Baierl v. McTaggart the Wisconsin Supreme Court held that because the landlord’s lease contained an illegal provision, the entire lease could be thrown out. This result can occur even if you never tried to enforce the “illegal” provision as was the case with the landlord in the Baierl case.

In my representation of landlords over the past 14 years, the two most frequent situations in which I have found an illegal provision in a rental agreement were because: (1) the landlord decided to draft his/her own rental agreement and didn’t know that Wisconsin law prohibited him/her from including certain language, and (2) the landlord used a rental agreement that s/he found on the internet that was not drafted by a person knowledgeable about Wisconsin law.

The Wisconsin Administrative Code, Chapter ATCP 134, specifically ATCP 134.08 sets forth the 7 provisions that cannot be included in a Wisconsin residential rental agreement – often referred to as the 7 deadly sins. Read the rest of this entry »

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TIME TO REVIEW YOUR RENTAL DOCUMENTS

Apr 17

Posted by Tristan R. Pettit, Esq. in Rental Agreements, Rental Documents | No Comments

With the new year already upon us, I encourage all property owners and managers to spend some time reviewing their current rental documents so that any needed changes can be made before accepting new applicants.  Below are some questions and ideas that may assist you in your review.

Is the rent amount that you are charging your current tenants in line with the what other similar properties are being rented for in the same neighborhood? If your monthly rental price is “under market” then you should consider increasing your rent. Have your costs of doing business increased over the past year? If so, then you have yet another reason to increase your rent amount as long as the rental market in which your rental property is located can accomodate such an increase.

Does your residential lease contain an automatic renewal clause whereby at the end of the lease term it automatically renews for another lease term or even reverts to a month-to-month tenancy? If the answer is yes, then insure that an automatic renewal or reversion is what you actually want. Many landlords are now opting to have their lease agreements cease at the end of the term. By doing so, the owner or manager now has the inclination and reason to review his/her tenant’s behavior and payment history over the past year and determine whether or not they want that tenant to remain in their property for the next year. It should also be noted that owners using automatic renewal provisions in their leases must also provide written notice of that renewal to the tenant in order for the provision to be enforceable.

In light of your interactions (both good and bad) with your tenants this past year is there a need to add any additional restrictions to your Rules and Regulations? If you have encountered any problem behaviors from your tenants this past year then consider amending your Rules & Regulations to include a new provision addressing the unwanted behavior.

Has your written screening criteria changed during the preceding year? If so, then you will need to update your screening criteria, specifically noting the changes made, and do this is writing. Be sure and save your old screening criteria and also record the date when you stopped using it. Remember, having written screening criteria and applying it consistently is the #1 best defense to any discrimination/Fair Housing complaints.

Have you incurred any additional costs or fees this past year (other than “normal wear and tear” to your property) that you would like to pass on to your tenants? If so, consider adding these costs to your Nonstandard Rental Provisions. By adding the new charges or fees to your NSRP, reviewing those charge with your tenants, and obtaining your tenantss signatures on the NSRP, you will be able to legally deduct these charges from your tenant’s security deposit if needed.

Are you utilizing the Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards form Did you provide a copy of this important document along with a copy of the E.P.A.’s free pamphlet entitled “Protect Your Family From Lead In Your Home” to all of your new tenants this past year? If you are not providing these two documents to all tenants that reside in any of your pre-1978 properties then you are in violation of federal laws and subject to large fines, regardless of whether anyone incurs lead poisoning or not.

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