More Changes to Wisconsin’s Landlord-Tenant Laws Emerge

On March 21, 2012, 2011 Wisconsin Act 143 was signed into law. Act 143 adds to the changes made to the state’s landlord-tenant laws in 2011 Wisconsin Act 108. It is important to note that a number of the aspects of the new law apply to both residential and commercial leases.

Moratoriums on Evictions No Longer Enforceable
Act 143 addresses proposals raised by some municipal officials to impose moratoriums on certain types of evictions. The new law provides that municipalities shall not enforce or enact any ordinance that imposes a moratorium on evictions. This section applies to both residential and commercial leases.

Disposing of a Tenant’s Personal Property
Under Act 143, unless the landlord and tenant have otherwise agreed in writing, the landlord may assume that any personal property left behind by a tenant after move-out is abandoned provided the landlord has notified the tenant prior to entering into (or renewing) the lease that the landlord does not intend to store the tenant’s property. It is important to emphasize that these new provisions only apply in the absence of a separate agreement between the landlord and tenant.

If the landlord has so notified the tenant then the landlord may dispose of the property in any manner (determined in the landlord’s sole discretion), including public or private sale. The landlord may, if he or she chooses, donate the proceeds of the sale to the Department of Administration. Act 143 creates an exception for a tenant’s prescription medication or medical equipment. If any prescription medication or medical equipment is left behind, the landlord must hold the property for seven days from the date it is discovered, before disposal. If the tenant requests the property be returned within that seven day period, the landlord must promptly return it to the tenant. The landlord is also required to notify a tenant at the time of the rental agreement (or at renewal) if he or she does not intend to store any of the tenant’s abandoned personal property. If this notice is not given the landlord will have to comply with the statutory requirements that had previously been in place with respect to the storage of abandoned tenant property.

If the personal property is a mobile home, manufactured home, or vehicle, the landlord must notify the tenant and any secured party with an interest in such property of the landlord’s intent to dispose of the property. The tenant and the secured party have a right of redemption with respect to these types of property which must expire before they can be disposed of.

These new requirements apply to both commercial and residential leases however they do not apply to self storage facility leases. The statutes had previously required the landlord to store personal property which a tenant left behind for a period of thirty days before disposal and to give tenant advance notice that the landlord intended to dispose of the property. Many landlords found these requirements frustrating and impractical because typically a tenant would take the items that were valuable with them and leave behind the worthless items.

Due to the new provisions it is important for landlords to either (a) provide the advance notice of the landlord’s intention not to store the abandoned property; or (b) directly address in the lease agreement what the landlord may do with the property that is left behind by a tenant.

Disclosure of Violations and Check-In Sheets
Act 143 requires landlords to disclose to prospective tenants, before lease agreements are signed or money changes hands, any building or housing code violations that (a) the landlord knows about, (b) affects the prospective lease space or common area, (c) are a significant threat to health or safety, and (d) have not been corrected. All four of these requirements must be met for the disclosure obligation to apply. These requirements may be waived by an express provision in commercial leases but may not be waived in residential tenancies.

For a new residential rental agreement (not a renewal), landlords are now required to provide a standardized check-in sheet with an itemized description of the condition of the premises at the time of check-in. Tenants are required to return the completed check-in sheet within seven days. Act 143 does not provide a penalty for non-compliance with this new provision however landlords should expect that a tenant may use a failure to provide a check in form under the new law as a defense in any dispute regarding damage to a residential unit. This is a requirement that previously was imposed by a few municipalities and now applies statewide.

Damages for Failure to Vacate
Act 143 clarifies that in the event a tenant remains in possession of the leased premises beyond the end of the lease term without the landlord’s consent, the landlord is entitled to recover damages. In the absence of proof to the contrary Act 143 sets these damages at an amount that is at least twice the rental value for the space apportioned on a daily basis for the duration of the possession beyond the lease term. Rental value may not be less than the amount the tenant paid for the prior rental period including expenses the tenant was obligated to pay such as property taxes, insurance, and maintenance and repairs. These requirements do not place a cap on the amount a landlord may recover rather they set a base. This corrects some confusion in the drafting of the previous version of statute which addressed these issues.

New Security Deposit Requirements
A number of restrictions related to security deposits in both residential and commercial tenancies have been created by Act 143.

First there are additional documentation requirements if a landlord wishes to withhold all or part of the security deposit for things other that (a) tenant damage, waste, or neglect of the premises, (b) unpaid rent, (c) unpaid utility service amounts, or (d) unpaid municipal permit fees. Items (a) and (b) will cover most of the things that landlords commonly charge against security deposits. If a landlord wishes to charge amounts which fall in categories other than those identified in items (a)-(d) above then the landlord must have the tenant sign a separate document entitled “NONSTANDARD RENTAL PROVISIONS” which must list each additional item for which the landlord will have the right to withhold from a security deposit. The landlord is further obligated to discuss each of the additional items with the tenant.

Second the landlord must now return the full amount of any security deposit, less any amounts that are lawfully withheld, within 21 days of the end of the tenancy. This requirement previously had only applied to residential leases but now applies to all leases. The 21 day deadline will make it more difficult to recover for problems that reveal themselves only after the 21 day period has expired. This also means that landlords should not delay their inspection of a vacated space or their calculation of whether a tenant has paid all his or her obligations because of this tight deadline.

DATCP Provision
Act 143 provides that any violation of Wisconsin Statutes Chapter 704 “may also constitute unfair methods of competition or unfair trade practices under Wis. Stat. s. 100.20.” It is not clear what the use of the word “may” here means however it is likely that tenants who are parties to lease disputes will attempt to use this new provision to make the remedies in Wis. Stat. § 100.20 available. These remedies include double damages and attorney fee recovery and so the insertion of this provision in Act 143 may change the negotiating dynamics and settlement value of these disputes.