Residential Landlords Face Criminal Liability for Unlawfully Withholding Security Deposit

May 20, 2020

Most landlords are aware of their obligation to provide a tenant with an itemized security deposit withholding form within 21 days after the tenant moves out. If they fail to do so, they risk paying double the amount of the security deposit plus attorney fees. However, the court of appeals in State v. Lasecki, 2018AP2340-CR (May 19, 2020) recently confirmed that a landlord may also face criminal charges for failing to comply with the Wisconsin Administrative Code regarding the deposit withholding statement.

In State v. Lasecki, Troy Lasecki was Ben and Jim’s residential landlord. When Ben and Jim moved out of the property, Lasecki had 21 days to either return their security deposits in full or provide a withholding statement that itemized deductions from the security deposit, pursuant to Wis. Admin. Code § ATCP 134.06(2). After Lasecki withheld the tenants’ security deposits and failed to provide withholding statements within the requisite timeframe, Ben and Jim complained to the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). DATCP contacted Lasecki about the complaint, and Lasecki reportedly failed to cooperate with DATCP’s investigation. The local district attorney’s office subsequently became involved and charged Lasecki with two criminal counts entitled, “Returning Security Deposits.” The criminal complaint alleged that Lasecki violated Wis. Admin. Code § ATCP 134.06(2) and Wis. Stat. §§ 100.20(2) and 100.26(3).

At the criminal trial, Lasecki admitted he received security deposits from the two tenants, but never sent the withholding statements. The jury found Lasecki guilty on both counts, and he was required to pay double the amount of each tenant’s security deposit as restitution. On appeal, Lasecki asserted he was denied due process because he did not have sufficient notice his conduct constituted a crime (among other issues). Specifically, he asserted the State “created” a crime that he was unaware of.

The court of appeals rejected Lasecki’s argument regarding due process and explained that a reasonably prudent landlord would be able to understand a failure to return a security deposit and withholding statement was criminal conduct.  In reaching that holding, the court of appeals traced the applicable codes and statutes, noting specifically:

  • Stat. § 704.28 states that a landlord must deliver a security deposit, less any permitted deductions, within 21 days after the tenant vacates the property.
  • Stat. § 704.95 states that a violation of Wis. Stat. § 704.28 may constitute an unfair trade practice under Wis. Stat. § 100.20.
  • Admin. Code. § ATCP 134.06(4)(a) states that a landlord must provide a withholding statement to the tenant if any amount is withheld from the security deposit, and Wis. Admin. Code § ATCP 134.01 provides that Chapter 134 is adopted under the authority of Wis. Stat. § 100.20.
  • Stat. § 100.26 sets forth the penalties for a violation of Wis. Stat. ch. 100, which includes monetary penalties or imprisonment.

This recent decision confirms that landlords could face both civil and criminal liability for failing to comply with Wis. Stat. § 704.28 and Wis. Admin. Code § ATCP 134.06 if they withhold money from a residential tenant’s security deposit and fail to provide the proper withholding form within the requisite timeframe.

Often times landlords face potential liability under Wis. Stat. § 704.28 and Wis. Admin. Code § ATCP 134.06 because they aren’t given a forwarding address for tenants, they don’t calculate the deadline properly, or they are unsure what needs to be included in the withholding statement. If you are a landlord with questions on how to ensure you comply with Wis. Stat. § 704.28 and Wis. Admin. Code § ATCP 134.06, contact an Axley attorney today for assistance.