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Application of Wisconsin’s New Landlord-Tenant Laws to Commercial Leases

June 14, 2012
Joshua R. Welsh

2011 Wisconsin Act 143 (“Act 143”), which was signed into law on March 21, 2012, was, by all accounts, primarily intended to address residential rental practices in the state of Wisconsin.  Surprisingly, however, it has a wide-reaching application to commercial lease arrangements.  Consequently, parties to commercial leases, particularly landlords, need to be aware of certain new requirements which generally apply to leases entered into and action taken subsequent to March 31, 2012.  A brief bit of background regarding Wisconsin’s landlord-tenant law, as well as a summary of the application—likely unintended application—to commercial lease arrangements, follows below.

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.  This makes sense.  Arguably, residential landlords have more of an opportunity to take advantage of their tenants than commercial landlords.  Even if that were not the case, most would argue that the average commercial tenant is much more likely than the average residential tenant to possess a level of sophistication which diminishes the need for statutory or regulatory oversight.  This distinction was not taken into account in Act 143.

Act 143

The mixed-bag of provisions under Act 143 is likely to leave neither landlords nor tenants completely happy.  To illustrate, highlighted below are select provisions on each side of the ledger.

Landlord-Friendly Provisions

1.     New provisions significantly expanded rights concerning the disposition of personal property left behind by a tenant.

2.     A new statute confirming that rental provisions are severable from a lease agreement.

3.     Modified language in the statue eliminating judicial discretion in awarding damages to a landlord when a tenant fails to vacate.

4.     A clarification that a landlord’s acceptance of past-due rent cannot be used as a basis to dismiss an eviction action.

5.     A new statute eliminating the ability of municipalities to impose moratoriums on eviction actions.

Tenant-Friendly Provisions

1.     Provisions relating to the return of security deposits which previously existed only in ATCP 134 (and, thus, applied only to residential leases) but are now incorporated into Chapter 704, making them applicable to commercial leases.

2.     Provisions creating new rules regarding a landlord’s obligation to disclose code violations.

3.     A new statute specifying that violations of Chapter 704 may constitute unfair methods of competition or unfair trade practices, thus potentially subjecting landlords to the imposition of double damages and attorneys’ fees.

If you have questions regarding Act 143’s specific application to your business, or if you would like additional consultation regarding your commercial 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.