Posts Tagged Screening Tenants

Housing Choice Vouchers (Section 8 Rent Assistance) Are Not A “Lawful Source of Income” In Wisconsin

Aug 13

Posted by Tristan R. Pettit, Esq. in Fair Housing / Discrimination, Protected Classes, Screening Tenants | 8 Comments

I am often asked whether or not a landlord is able to legally decline to rent to a tenant that is receiving “rent assistance.”   I believe that the primary reason that landlords are unsure of the answer to this question  is because Wisconsin’s Open Housing Act (Sec. 106.50, Wis. Stats.) prohibits a landlord from discriminating against a tenant or a prospective tennat based on their ”lawful source of income.”  For more information on Wisconsin’s protected classes you should read my prior post entitled “FAIR HOUSING – Part 1:  What Are The Protected Classes?”

The Housing Choice Vouchers Program (previously referred to as Section 8 Rent Assistance) is a voluntary federal program that assists very low-income families, the elderly, and the disabled to locate housing in the private market.  Housing Choice Vouchers are administered locally by public housing agencies (PHA’s).  The PHA’s receive federal funds from the U.S. Department of Housing and Urban Development (HUD) to administer the voucher program.  If a landlord accepts a tenant who is enrolled in the Housing Choice Voucher Program then the local PHA will pay a housing subsidy (to cover a portion of the tenant’s rent) directly to the landlord.  The tenant then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program.  For more information on the program please go to the Housing Choice Vouchers Fact Sheet which is located on HUD’s website.  The federal regulations that cover this program can be found at 24 CFR Part 982.

An earlier version of the Wisconsin Administrative Code defined “lawful source of income” as including “lawful compensation or lawful remuneration in exchange for goods or services provided, profit from financial investments, any negotiable draft, coupon, or voucher representing monetary value such as food stamps, social security, public assistance or unemployment compensation benefits.  Sec. IND 89.01(8), Wisc. Admin. Code.  (Please Note that this section of the Code is no longer available).  Lawful source of income would also include child support payments, family support payments (i.e.  alimony).

Under the above definition it would seem that “rent assistance” would be considered to be a lawful source of income, however the Seventh Circuit Court of Appeals — which includes Wisconsin — held otherwise in the 1995 case of Knapp v. Eagle Property Management Corp., 54 F.3d 1272, 63 USLW 2750 (1995).

The court in Knapp specifically held that rent assistance vouchers are NOT considered to be a lawful source of income under Wisconsin’s Open Housing Act.  The court reasoned that the Section 8 voucher “does not equate” to the other forms of aid mentioned above.  The Court explained that of the types of income enumerated in the regulation, that rent assistance vouchers would be the most like food stamps — but yet they are still very different.  Unlike food stamps, rent assistance vouchers do not have a montary value independant of the voucher holder and the apartment sought.  Additionally, unlike other forms of support, the local housing authority that administers the federal program makes the rent assistance payments directly to the landlord, rather than to the voucher holder.

The Knapp Court did acknowledge that while rent assistance vouchers could arguably be included within the definition of “lawful source of income”  under the Wisconsin Statutes, that they would “decline to ascribe such an intent to the state legislature because of the potential problems in doing so.”

The primary problem that the Court was referring to is that if section 8 vouchers were to be considered a “lawful source of income” then Wisconsin would in essence be making the Section 8 program mandatory for all Wisconsin landlords.  As mentioned above the federal program is voluntary.  The court felt that it would be wrong to allow a state to make a voluntary federal program mandatory without the legislature clearly stating that that was its intent.

Thus, it is because of the Seventh Circuit Court of Appeal’s holding in Knapp that landlords in Wisconsin are legally allowed to refuse to rent to a prospective tenant that is on “rent assistance.”

ADDED after reviewing comment:  PLEASE NOTE THAT SOME MUNICIPALITIES HAVE DECIDED TO MAKE RECIPIENTS OF HOUSING CHOICE VOUCHERS PROTECTED — So it is always important to check the local ordinances in which you hold property as local municipalities are allowed to create additional protected classes.  Dane County and the City of Madison are notable for doing this.

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AASEW’s Response to Rep. Schneider’s CCAP Legislation Can Be Found at www.DefeatAB340.org

Jul 20

Posted by Tristan R. Pettit, Esq. in AASEW, CCAP, Rep. Marlin Schneider, Screening Tenants | 5 Comments

For those of you that have been following my blog, you are well aware that State Rep. Marlin Schneider (D-Wisconsin Rapids) has introduced yet another bill attempting to restrict the public’s access to CCAP.  This new bill also will remove certain information from even being included on CCAP.  My prior blogs on this topic can be read here, here and here.

The Apartment Association of Southeastern Wisconsin (AASEW), a collection of landlords and rental property managers, are strongly opposed to Schenider’s new bill which is entitled AB 340,  and have decided to do something about it.  The AASEW has created a web page that can be found at www.DefeatAB340.org or by clicking here, which contains links to the actual bill as well as links to your state senators and representative so that you can contact them and convey your displeasure with this bill.

Please visit the AASEW’s web page and consider contacting your elected officials to express your views as to AB 340.  You should also forward the link to anyone and everyone you know that may be affected by this legislation. 

If passed, this bill will affect more than just landlords.  Parents, employers, day care providers and more, will be unable to use CCAP without paying an annual fee and having their CCAP searches recorded by the state.  Additionally, you will be unable to learn whether a person has been charged with a crime, found liable in a civil lawsuit, or had an eviction action filed against them – until after the case has been resolved, which is often months or years after the action was filed.

The bill will also allow a person who has information contained on CCAP but which did not result in a convictions or judgment (even if this was the result of a stipulated dismissal) to remove all reference to that information from CCAP.  The concept of open records will be hurt severly should AB 340 pass.

Please do your part to insure that AB340 fails.

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FAIR HOUSING – PART 1: What Are The Protected Classes?

Jul 10

Posted by Tristan R. Pettit, Esq. in Fair Housing / Discrimination, Protected Classes, Screening Tenants | 2 Comments

A large part of my law practice is meeting with and consulting with landlords and management companies with regard to how to avoid trouble. This would include assisting them with the drafting of rental documents and guiding them on the proper notice to use when terminating a tenancy. It also includes consulting with clients with regard to fair housing / discrimination issues.

I enjoy this consulting work as it typically occurs before the landlord is embroiled in a dispute or litigation – thus my client tends to be in a better mood at the consulting stage which puts me in a better mood also.

Recently I have had a lot of calls on topics related to discrimination and fair housing and so I thought that I would devote several posts in the future to topics related to fair housing issues.

The easiest place to start would be to identify the various protected classes under Federal and Wisconsin law.

Federal law (which starts at 42 U.S.C. 3601 et. seq.) has 7 protected classes which are:

1. Race

2. Color

3. National Origin

4. Sex

5. Religion

6. Familial Status

7. Handicap

Wisconsin law (which is found at §106.50(1), Wis. Stats) also includes the above 7 protected classes plus adds an additional 5 more, which include:

1. Marital Status

2. Sexual Orientation

3. Lawful Source of Income

4. Ancestry

5. Age (18 years and older)

It is important for managers and owners to also check their local municipal ordinances as well as because there are some municipalities that have added additional protected classes. The city of Madison for instance also treats convicted criminals, students, and a person’s physical appearance as additional protected classes. You can read more about the City of Madison municipal code – Ch. 32 entitled Landlord and Tenant here.

So if you make a housing decision based on a person’s membership in a protected class you may have discriminated against them. Discrimination in housing covers a wide range of activities such as: refusing to rent to, refusing to discuss rental terms with, refusing to allow the inspection of rental housing, refusing to renew a lease, causing the eviction of, misrepresenting the availability of rental housing, applying different terms or standards, and engaging in harassment, intimidation, or coercion of.  There are many more but you get the general idea.

It is important to remember that a landlord does not need to have the intent to discriminate in order to be found to have engaged in discrimination.  Also be aware that most insurance policies do not cover an owner’s or manager’s discriminatory acts.

Remember that just because someone is a member of a protected class does not mean that you cannot deny them rental or evict them. It only becomes discrimination if you do the above because they are members of a protected class.  So if you are denying a person rental or filing an eviction action against an individual for reasons other then their protected class status then you are not discriminating against them. For example, if a person does not meet your screening criteria because they have been evicted in the past, have no prior rental history, or their gross monthly income is not 3 times the monthly rent (or some other legal screening criteria that you have in place) then it is not discrimination to deny that person rental even though they may also be a member of a protected class.

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CCAP LEGISLATION INTRODUCED YESTERDAY

Jul 9

Posted by Tristan R. Pettit, Esq. in CCAP, Rep. Marlin Schneider, Screening Tenants | 7 Comments

State Rep. Marlin Schneider has introduced his newest piece of legislation yesterday - Assembly Bill 340.   Schneider’s newest bill will once again interfere with a landlord’s ability to properly screen his/her applicants through CCAP.

First, AB-340 will require most users of CCAP to register and pay an annual fee.  Second, It will also require you to inform an applicant if you denied them rental as a result of information you obtained from CCAP and if you fail to do so you can be fined $1,000.  Finally, and what bothers me most, is that no pending cases (criminal or civil) will appear on CCAP until after the case has been concluded.  So if the person that just applied to rent from you is doing so becasue their current landlord recently filed an eviction against them — you will not be able to learn this from CCAP — until it may be too late.  You also may not learn until after you have already accepted them as a tenant, that a recent applicant was just charged with the manufacture and distribution of a controlled substance.

You can read AB-340 in its entirety here.

If you would like to read my earlier blog posts on this topic go here and here.

No matter what you do I hope that you will consider contacting both your state representative and state senator and express your strong opposition to this piece of legislation.

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Article and Video Regarding Recent Seminar On Advising and Defending Property Owners in Nuisance Actions

Jul 1

Posted by Tristan R. Pettit, Esq. in ATCP 134, Nuisance Properties, Screening Tenants, Seminars | No Comments

 

On May 7, 2009 I spoke at the State Bar of Wisconsin Annual Convention.  I was asked to speak at the Government Lawyer Division’s seminar that focused on the topic of neighborhoods and nuisance properties.  Specifically I was asked to speak on advising and defending property owners that have nuisance properties.

The State Bar recently published a nice article summarizing my seminar presentation which was published through its online Inside Track newsletter.  A link to the article and a short video of my presentation on the topic of written screening criteria is below.

House rules: Landlords knowledgeable of tenancy laws improves condition of rental properties, neighborhoods (from wisbar.org)

Landlord accountability: Advising and defending the property owner
July 1, 2009 — In this video clip, Milwaukee attorney Tristan Pettit explains the importance of the property owner’s consistent use of written criteria when screening potential tenants. Pettit spoke at the Government Lawyers Division program at the State Bar Annual Convention in May. (from wisbar.org)

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SCREENING PROSPECTIVE TENANTS

Apr 17

Posted by Tristan R. Pettit, Esq. in Screening Tenants | No Comments

Screening prospective tenants is the single most important aspect of the rental process regardless of whether you are renting residential or commercial property.  If done properly, screening can save a landlord a lot of money, a lot of time, and a lot of headaches.  Setting up a proper and legal screening process, which includes the drafting of a Rental Application and  written Screening Criteria, can help reduce the need to evict a tenant, defend yourself against a claim that you violated the Wisconsin Administrative Code’s Residential Rental Practices (ATCP 134), defend yourself against a claim for discrimination under the Fair Housing laws, and preserve your property from physical damage.

There are several steps to a good screening process.  First, you must verify that the applicant is who s/he says there are.  The best way to do this is to require each adult  applicant to completely fill out a rental application.  You should also ask each adult to provide you with a valid photo identification.  Request a copy of the applicant’s prior utility bill or cable bill as well.  You want to ensure that the address on the bills is the same as the address listed on the photo identification and the rental application.  You should also obtain the applicant’s date of birth and social security number.  Require that they provide you with any prior names that they have used in the past few years such as maiden names, if they are recently married, or married names if they are recently divorced.  If you are renting to a business entity verify its existence with the Secretary of State’s Department of Financial Institutions.  Obtaining all of this information early will greatly assist you later in the screening process.

Second, have written screening criteria in place before you start accepting rental applications and ensure that your criteria is applied consistently.  Your criteria should set forth the minimum requirements that are necessary to rent your property as well as what will cause an applicant to be denied.  You can provide the written screening criteria to each prospective applicant along with the application, or at the very least, you should memorialize the criteria in writing, date it, and keep it for at least 3 years.  It is important to remember that if you make an exception to your screening criteria for one applicant that you have now lost the protection of having the criteria in the first place —- so avoid making any exceptions.

Your screening criteria should not be subjective.  Rejecting an applicant because they give you a “bad feeling” or because you did not “connect” with them will only run you afoul of Fair Housing laws.  You criteria needs to be objective.  Federal laws contain seven (7) different protected classes and the state of Wisconsin has twelve (12) protected classes.  You may not deny an applicant because they are a member of any of the following protected classes in Wisconsin: race, color, national origin, sex, religion, familial status, handicap, marital status, sexual orientation, lawful source of income, ancestry and age (18 years old and over).  Some local municipalities (the city of Madison comes to mind) have added additional protected classes.  So it is important to check all local ordinances where your rental properties are located prior to drafting your screening criteria.

A common misconception is that you cannot reject an applicant who is a smoker, who has a money judgment against them, or who has previously been evicted.  Smokers, debtors, and people with past evictions are not members of a protected class and therefore legal screening criteria can exclude them without violating Wisconsin or federal discrimination laws.  Other examples of proper screening criteria include the following: (1) Applicant must have monthly income of 3 times the monthly rental amount; (2) Applicant must have no unsatisfied money judgments against them; (3) Applicant must have a credit score of at least 600; (4) Applicant must complete all questions on the rental application; failure to answer all questions or provide an acceptable reason for not answering all questions are grounds for denial of your application.

Third, you should run every applicant’s name through Wisconsin’s Consolidated Court Automation Program (CCAP). This website lists all criminal and civil legal actions filed throughout the state.  By becoming adept with CCAP’s search capabilities you will be able to discover if a prior landlord has started an evictions action against your applicant, if your applicant has ever been charged with a crime, or if they have been sued for owing money to someone and whether or not they have satisfied that judgment.  Best of all CCAP is free and open to the public.

Fourth, you should obtain a credit check for applicant that is still under consideration after checking CCAP.  A landlord may require the applicant to pay the actual cost of the credit check up to $20 if they so wish.  In order to charge this fee however you must obtain the credit report from a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis (TransUnion, Experian or Equifax) and you must notify the applicant of the cost before ordering the report and provide them with a copy after it is received.

These four steps for screening and qualifying a prospective applicant for your rental property are the bare minimum that should be done to ensure that you are protecting your investment.

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IMPORTANT WEBSITES TO ASSIST WITH SCREENING TENANTS

Apr 17

Posted by Tristan R. Pettit, Esq. in Screening Tenants | No Comments

As I have mentioned before, the screening process is in my opinion the single most important aspect of the rental process.  Sufficient time should be spent by the landlord to attempt to ensure that the chosen tenant will be able to live up to and abide by the rental agreement.

Below are some websites that I find very helpful during the screening of my tenants.

CCAP – Wisconsin’s Consolidated Court Automation Program – This is a free tool that allows you to access to all state court filings within Wisconsin with the exception of paternity lawsuits and juvenile delinquency petitions.  It includes criminal lawsuits, civil lawsuits including eviction actions, divorces, harassment injunctions, replevins (repossession of vehicles), foreclosures, money judgments etc.

Milwaukee Municipal Court Case Information System (MMCCIS) – This is a free website that allows you to enter a persons name and determine if they have received any municipal tickets in the city of Milwaukee for such things as possessions of drugs, possession of drug paraphenelia, battery, traffic violations etc. It should be noted that receiving a municipal ticket is not the same as being charged with a crime.  Municipal tickets are just civil forfeitures (fines).

Family Watchdog – This is a free website that allows you to search for convicted sex offenders thoughout the United States by name or location.

Wisconsin’s Sex Offender Registry – Run by Wisconsin’s Department of Corrections this free website allows you to search by name or location to determine whether or not a person has been convicted as a sex offender within the state.

PACER – Bankruptcy filings in Eastern District of Wisconsin – This website allows you to search (for a nominal cost) to determine if a person has ever filed a bankruptcy in the Eastern District (includes Milwaukee) of Wisconsin.

Wisconsin Department of Financial Institutions – This free website proves helpful for commercial landlords who want to check the status of a prospective status of a tenant that is a business entity (LLC, SC, INC, LP etc).  It allows you to search its database and willlet you know if such an entity exists and who its registered agent is and his/her address, and whether or not the business entity is delinquent in its filing with the state.

Landlord Services, LLC – This company based in Green Bay is endorsed by the Apartment Association of Wisconsin (AASEW) and will run credit checks on your rental applicants as well as criminal background checks etc.

City of Milwaukee Property Recording Data and Department of Neighborhood Services Property Recording – Both of this sites will allow you to enter an address and find out who owns the property.  This is an especially useful tool when screening applicants and you want to verify that their prior landlord is really their prior landlord – and not a family member or friend who will tell you what a great tenant they are.

SSN Validator:  This site will allow you to enter a social security number and it will provide you basic information such as if the SSN was issued, approximate date that it was issued, state where it was issued, and if the person that it was issued to is deceased.  This information will allow you to better determine if the SSN that an applicant lists on your rental application is legitimate.  Use of this site is free.

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