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Wisconsin’s New Landlord-Tenant Laws: Part II

January 2, 2014
Joshua R. Welsh

Joshua R. Welsh

In 2012 I posted an article discussing Wisconsin’s then-new landlord-tenant laws, which were signed into law on March 21, 2012 as Act 143.  That article discussed some of the unintended consequences of Act 143, including its likely unintended application to commercial leases.  As the article predicted, neither landlords nor tenants were terribly happy with the new legislation.

Landlords now have a reason to be much happier.

Wisconsin’s (new) new landlord tenant laws were signed into law on December 12, 2013, as 2013 Wisconsin Act 76.  Act 76 makes significant changes to existing laws.  Nearly all of the changes are favorable to landlords.  Commercial landlords can now breathe a sigh of relief: some of the unintended consequences of Act 143 have been remedied.

Despite being very favorable to landlords in general, Act 76 does impose a requirement that residential landlords insert a new provision in their leases, as discussed below.  In light of this, and in order to more fully take advantage of some of the new rules, landlords, particularly residential landlords, should consider rewriting or at least modifying their lease agreements.

Background

Wisconsin law relating to leasing arrangements and landlord-tenant relationships is generally contained in Chapter 704 of the Wisconsin Statutes, entitled “Landlord and Tenant” and Chapter ATCP 134 of the Wisconsin Administrative Code, entitled “Residential Rental Practices.” As their respective titles suggest, Chapter 704, with some exceptions, generally applies to both commercial and residential leases and ATCP 134 provides additional rules for residential leases.  2012 Act 143 blurred these lines; 2013 Act 76 restores some order.

 Act 76

As mentioned above, Act 76 makes extensive changes and is generally consistent in its favorability to landlords.  Here is a brief summary:

1.     Restrictions on Local Municipalities.  The new law limits a municipality’s right to adopt local ordinances which overlay state and federal requirements.  For instance, it prohibits municipal laws which limit a tenant’s liability for damages occurring during the tenant’s occupancy.  It also prohibits a municipality from enacting an ordinance which requires the landlord to communicate to the municipality any information concerning the landlord or the tenant unless such information is required under federal or state law, is required of all residential property owners or is solely in order to allow for contact with the owner of the property.  The final exception appears to account for, and continue to permit, municipal “rental recording” ordinances.

2.     Towing Vehicles.  Act 76 adds a provision to Chapter 349 of the Wisconsin statutes which expands a landlord’s right to have vehicles towed if they are impermissibly parked on the leased premises.
 
3.     Abandoned Property.  Act 143 had previously expanded landlords’ rights to remove and dispose of abandoned property from the leased premises.  Act 76 clarifies a landlord’s rights in this regard.  Specifically, it expands “abandoned property” to include any property left behind when a tenant removes or is evicted from the premises.  Perhaps more notable (and to the joy of landlords and practitioners), it eliminates a provision which required landlords to provide notice to tenants of an intent to dispose of abandoned property at both the inception and renewal of a lease.  Now, a landlord is only required to provide written notice of such intent when the tenant enters into a lease, saving landlords the headache of addressing this issue in connection with standard lease renewals.

4.     Allocation of Risk of Damages.  New Act 76 potentially significantly expands a tenant’s liability for damages occurring during its lease term.  While ostensibly the new provision was added to specifically make a tenant liable for insect infestation, it potentially goes much further.  It broadens a tenant’s risk for liability from damages attributable to its own negligence to damages resulting from any “acts or inaction” on the part of the tenant.  So, the standard elements required to prove negligence are apparently no longer part of the analysis.  This subtle language change and its corresponding allocation of risk is potentially significant.  Notably, it’s not immediately clear how this provision now reconciles with other statutory provisions, including §704.44(7)(b), which says that a residential lease is void if it contains a provision which imposes liability on a tenant for damage caused by “persons other than the tenant or the tenant’s guests or invitees,” i.e., third parties.  Can a lease now make a tenant responsible for damages caused by third parties in circumstances where the tenant’s “inaction” allowed such damage to occur?  Also, while a discussion of how insurance coverage plays into this analysis is a discussion for another time, suffice it to say here that this risk allocation arguably does not allocate risk to the party best able to insure it.

5.     Check-In Sheets.  In 2012, Act 143 imposed on landlords a requirement that they provide new residential tenants with a check-in sheet containing an itemized description of the condition of the premises.  The tenant could then use the check-in sheet to make its own comments regarding the condition of the premises.  Under new Act 76 the landlord no longer needs to include its own description concerning the condition, it simply needs to provide a check-in sheet for the tenant to do so.
 
6.     Notice of Domestic Abuse Protections.  Despite its overall favorability for landlords, Act 76 does impose one new affirmative obligation.  Residential landlords are now required to insert into their leases specific language notifying tenants of their rights with respect to their lease in circumstances of domestic abuse.  Landlords will need to include this notice in leases entered into or renewed after March 1, 2014, the effective date of Act 76.

7.     Non-Standard Rental Provisions.  Landlords in Wisconsin are prohibited from inserting certain “non-standard” provisions, relating to security deposit withholding, into the lease itself.  Many landlords are unaware that they are required to put these provisions in a separate form titled “NON-STANDARD RENTAL PROVISIONS.”  Under prior law the landlord was required to discuss these provisions with the tenant and to obtain the tenant’s signature next to each provision.  Act 76 removes the “discussion” requirement and allows for tenants to initial the subject provisions.

8.     Commission of Crime.  Prior law prohibited lease provisions which would allow the landlord to terminate a tenancy if a crime was committed, irrespective of whether the tenant could have prevented it.  Act 76 loosens the restriction in this regard.  Now, whether the tenant could have prevented the crime is irrelevant. The only limitation is that the landlord cannot give itself such a broad right to terminate the lease that it could do so even if the tenant is the victim of the crime.  In other words, residential leases can now contain provisions which allow the landlord to terminate the lease in the event of any crime occurring in or on the leased premises (even if the tenant has no way of preventing it) so long as the tenant is not the victim of the crime.
 
9.     Unfair Trade Practices.  New Act 76 corrects what most practitioners perceived as an error in Act 143, relating to the application of unfair trade practice penalties.  A brief background is in order:  Prior to Act 143’s passage in 2012, only violations of ATCP 134 were treated as unfair trade practices under §100.20 of the Wisconsin statutes.  ATCP 134’s specific application to residential rental practices, to the exclusion of commercial rental practices, meant that commercial landlords did not have to worry about prosecution or tenants having a right to double damages and attorneys’ fees.  Act 143 added new § 700.95, which, for the first time, made violations of Chapter 704 subject to the unfair trade practices penalties.  While correspondence out of the State Attorney’s office suggested that the application of 700.95 would be limited, it caused concern for commercial landlords.  Act 76 now steps in to correct the confusion.  It clarifies that the unfair trade practice rules and penalties apply only to § 704.28 (relating to the withholding from and return of security deposits) and § 704.44 (relating to provisions which render residential rental agreements void).  Consequently, commercial landlords are mostly, but not entirely, off the hook—they still need to be careful with how security deposits are handled, lest they trigger an unfair trade practice claim under § 100.20.
 
10.     Judicial Process in Eviction Actions. Act 76 makes relatively substantial changes to Chapter 799 of the Wisconsin statues (Procedures in Small Claims Actions) and related provisions elsewhere in the statutes.  These changes address the judicial process in eviction actions, generally making it easier for landlords to evict tenants.
 
11.     Tenant References.  Finally, Act 76 creates § 895.489 of the statutes to provide immunity for landlords which provide tenant references.  In short, it provides a presumption that the reference is provided in good faith.  The presumption of good faith can only be rebutted by clear and convincing evidence to the contrary.

As discussed above, Act 76 contains a number of provisions which are favorable to landlords.  However, in order to take advantage of many of these provisions they need to be drafted into a written lease.  In addition, Act 76 affirmatively requires landlords to insert a new provision relating to domestic abuse protections.  Consequently, it is a good time for both commercial and residential landlords to modify and improve their existing lease forms.  If you would like additional consultation regarding your lease arrangements, please contact Attorney Joshua Welsh.




The information contained herein is not intended as and should not be construed as legal advice.  Please consult with legal counsel before taking any action based on this information.