Archive for category Security Deposit

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

Jan 3

Posted by Tristan R. Pettit, Esq. in AASEW, City of Milwaukee, Collections, Credit Checks, De Novo Hearings, Earnest Money, Emergency Assistance, Evictions, Execution of Writ, Fair Housing / Discrimination, Holdover Damages, Landlord Liability, Late Fees, Lead-Based Paint, Milwaukee County, Mitigation of Damages / Re-Renting, Notices, Pets, Property Management, Protected Classes, Reasonable Accomodations, Reasonable Modifications, Rejecting Rental Applicants, Rental Agreements, Rental Documents, Right of Entry, Roommates, Screening Tenants, Security Deposit, Self-Help Evictions, Seminars, Small Claims Court, Smoke Detectors, State of Wisconsin, Tenant Damage, Untenantability, Walkthroughs | 2 Comments

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

Sep 22

Posted by Tristan R. Pettit, Esq. in Collections, Joint & Several Liability, Rental Agreements, Roommates, Security Deposit | 6 Comments

I receive many calls from landlords who have questions and concerns involving issues involving their tenant roommates.  While the problems are often factualy 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 copromisors 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 seperately, 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 inadvertantly 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 roomate 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 then 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 knowledgable about Landlord-Tenant Law.

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

May 5

Posted by Tristan R. Pettit, Esq. in Security Deposit, Tenant Damage | 10 Comments

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

——-

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

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The Ever Important Security Deposit Transmittal Letter (or “21 Day Letter”)

Mar 17

Posted by Admin in Security Deposit, Seminars | 2 Comments

Aside from evictions, issues regarding the failure to properly return a tenant’s security deposit are, in my opinion, the single most litigated area in landlord-tenant law.

In Wisconsin, if a tenant has deposited a security deposit to his/her landlord as part of a residential tenancy, the  landlord must comply with one of two options within 21 days after the tenant “surrenders” the landlord’s rental unit:

1.   Return the tenant’s security deposit, or

2.   Send the tenant a security deposit transmittal letter (which I refer to as a “21 day letter”) explaining how the tenant’s security deposit was applied.

Unfortunately too many landlords have gotten themselves into trouble when it comes to the issue of returning a tenant’s security deposit.  While there are many ways to screw up, most of the mistakes that landlords make regarding this topic fall into one of three categories.

First, a landlord makes improper deductions from the tenant’s security deposit.

Second, the 21 day letter is sent late.

Third, the 21 day letter is not sent at all.

 Failure to abide by ATCP 134.06 of the Wisconsin Administrative Code – which deals with security deposits in residential tenancies — can result in the tenant being awarded double damages and attorneys fees. 

A little over a year ago I wrote a  post on the topic of how to draft a legal 21 day letter to your tenant.  Due to the continued popularity of that post I thought it would be helpful to include a video clip from a seminar that I presentedawhile back on this important topic.

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SECURITY DEPOSIT TRANSMITTAL LETTERS: How To Draft A Legal 21-Day Letter

Mar 4

Posted by Tristan R. Pettit, Esq. in ATCP 134, Security Deposit | 22 Comments

Security deposit withholding issues are the second most litigated area in landlord tenant law after evictions.  If a landlord makes improper deduction from a tenant’s security deposit, pursuant to ATCP 134 and §100.20, Wis. Stats., the tenant may sue the landlord for double damages and attorney’s fees.  There are numerous published Court of Appeals decisions in Wisconsin dealing with this exact issue.  I would like to offer a few suggestions to landlords which will hopefully keep you from making any improper security deposit deductions.

First, we need to address some basics . . .

A security deposit is defined as “any payment that is given to a landlord as security for the performance of the tenants obligations under the rental agreement.” ATCP 134.01(11).

ATCP 134.06(2), states that “within 21 days after a tenant surrenders the rental property, the landlord shall deliver or mail to the tenant the full amount of any security deposit held by the landlord, less any amounts properly withheld by the landlord.”

If you would like to know what a landlord may legally deduct from a tenant’s security deposit you will want to read my Jan. 17th post.

ATCP 134.06(4), states “If any portion of a security deposit is withheld by the landlord, the landlord shall, within the time period and manner prescribed in sub.(2) – 21 days — deliver or mail to the tenant a written statement accounting for all amounts withheld.  The statement shall describe each item of physical damages or other claim made against the security deposit, and the amount withheld as reasonable compensation for each item or claim.”

I will refer to this written statement interchangeably as either the “security deposit transmittal letter” or the “21-day letter.”

According to ATCP 134 all prepaid rent in excess of one month is legally considered to be a security deposit.  So if you require a new tenant to pay first and last months rent plus a security deposit, legally the security deposit will also include the last month’s rent

Essentially a landlord must either return a tenant’s security deposit or send the tenant an itemization of how the tenant’s security deposit was applied within 21 days after the tenant surrenders the premises.  This is mandatory.  No matter what the situation – even if you are legally entitled to keep all of the tenant’s security deposit – you must still send the tenant a letter explaining to them why you can legally keep it and how it was applied.  There is no situation in which you should not be sending the 21-day letter to a vacating residential tenant in Wisconsin.  Even if common sense tells you it is not necessary (i.e. the tenant told me to use his/her security deposit to pay for the last month’s rent) you should still send out the letter.  If you are wrong the ramification may be expensive.  Be safe – send the letter each and every time. Read the rest of this entry »

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What May A Wisconsin Landlord Legally Deduct From A Tenant’s Security Deposit?

Jan 17

Posted by Tristan R. Pettit, Esq. in ATCP 134, Security Deposit | 50 Comments

I have received many calls from both landlords and managers over the years asking me if they are legally allowed to deduct X, Y, or Z from a tenant’s security deposit.  I fielded such a question just last week – sounds like a good topic for a blog post.

Wisconsin Administrative Code, ATCP 134.06(3) states that a landlord may deduct from a tenant’s security deposit for the following:

1.   Damage, waste, or neglect of the unit

2.   Unpaid rent

3.   Unpaid utilities for which the tenant is responsible

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

5.   Unpaid mobile home parking fees which a local unit of government has assessed against the tenant (to the extent that the landlord becomes liable for the tenant’s nonpayment), and

6.   Other reasons as set forth in a document entitled “Nonstandard Rental Provisions.”

For the majority of landlords and managers out there, items #4 and #5 are not often applicable, so I will focus my attention on the remaining items.

Damage, Waste or Neglect:   There is no bright line rule or definition of what constitutes damage, waste, or neglect.  This is determined on a case-by-case basis and each court commissioner or judge may have a different view on the topic.  The best way to prove that a tenant damaged, wasted or neglected your rental property is to (1) use a “Check-In Check-Out” form and (2) take lots of photographs.

If you want to hold a tenant responsible for damage that they caused to your rental unit then you must first demonstrate that the damage was not pre-existing.  To do this you should take photos of the entire rental unit prior to a tenant moving in.  You should also complete a Check-In form yourself prior to the tenant moving in.  Essentially a Check-In form lists the various rooms and areas of the rental unit and provides space for you to note any damage or problems.  Once the tenant has moved in you should then provide the tenant with a blank Check-In form and ask them to complete it fully, date it, and sign it and then return it to you promptly. Read the rest of this entry »

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Landlords Should Not Play Games With Tenants’ Security Deposits

Jan 7

Posted by Tristan R. Pettit, Esq. in ATCP 134, Caselaw, Security Deposit, Tenant Damage | 29 Comments

A new landlord-tenant decision has been reccomended for publication.  The case of Boelter v. Tschantz involves a tenant suing her past landlord for double damages and attorney’s fees for making improper deductions from her security deposit.  
 
The essential facts are as follows:

1.   Tschantz (the landlord) withheld money from the tenant’s security deposit.

2.   The key deductions that were made were: (1) $323.84 for the tenant’s water bill and (2) $85 to repair a clogged toilet.

3.   After withholding a portion of the tenant’s security deposit to pay her water bill, the landlord then failed to pay the bill timely.  As such, the tenant opted to pay the utility directly to avoid late fees. 

4.   The landlord then sent a refund check to the tenant — three weeks later — for the amount that he deducted from her security deposit to cover the water bill along with a Post-It note that said “Oh, too bad no double damages for you.” 

5.   The landlord then stopped payment on the check prior to the tenant cashing it.

The Court of Appeals held that the landlord violated ATCP 134 as a result of his “game-playing” with the tenant’s security deposit. 

First violation of ATCP 134:  The court held that it was unreasonable for the landlord to withhold money from his tenant’s security deposit in order to pay her water bill and then not use that money to pay the water bill timely.  The court specifically stated, “A landlord cannot indefinitely retain a deposit — merely as a deposit — after a tenant vacates.”  Read the rest of this entry »

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