Landlords have long been frustrated when tenants fail to pay their municipal utility bills. While not paying the rent or other utilities and obligations is bad enough, the municipal utilities can bestow an additional surprise for the property owner when October 15 rolls around. At that time, the landlord may receive the gift of a lien on the landlord’s property courtesy of that tenant who did not pay his or her utility bills and who has racked up a delinquency. If the landlord does not pay the tenant’s delinquency and have the lien removed from the property, the past-due charges plus interest and penalty fees can end up on the landlord’s real estate tax bill for the year. But landlords now have a way to fight back.
Landlords were pleased when 2013 Wis. Act 274 was passed by the legislature and signed into law last year. Unfortunately they were forced to wait to see some of the benefits of this legislation go into effect because the effective date was January 1, 2015. That time is now upon us.
Limiting a landlord's liability
This legislation was aimed at limiting a landlord’s responsibility for a tenant’s unpaid municipal water and electric bills as well as making tenants more accountable for their own delinquencies. Municipal public utilities, as a part of municipal government, have the legal authority to take municipal utility service bills that have not been paid by October 15 and place them as a lien on the property served. In the case of rental property, this means the unpaid utility bills of a tenant become liens on the landlord’s property.
Tenant’s delinquency is landlord’s property lien
To help landlords manage this problem, prior law allowed a landlord to inform a municipal utility of the name and address of a tenant who was responsible for payment of bills for utility service to a rental dwelling unit. The municipal utility then was required to give the landlord notice on October 15 when unpaid utility charges were accruing for the rental dwelling unit. The notice stated the amount of the arrearage and advised that the municipal utility could assess penalties and collect the arrearages and penalties through the property tax system if all amounts were not paid by November 15. All amounts remaining unpaid as of November 16 became a lien on the landlord’s property. This procedure failed to hold the tenant accountable and still placed the burden on the landlord.
Legislative relief for landlords
Wis. Stat § 66.0809, as amended by 2013 Wis. Act 274, allows landlords to limit financial exposure by holding tenants more accountable for their unpaid bills. The key to triggering the new measures is that the landlord must give the following to the municipal water or electric utility in writing:
- The name and address of the owner.
- The name and address of the tenant responsible to pay the utility charges.
- If requested, a copy of the lease or rental agreement.
It would be wise for landlords to check with any municipal utility providing services to their properties to learn how this information must be conveyed to the utility. Various utilities may have policies specifying how they will accept this required information — such as verbally, in writing, in a formal agreement or on a specific form.
Required 14-day notice of tenant delinquency
A municipal utility must send bills for service to a customer who is a tenant in the tenant’s own name and must provide landlords with notice within 14 days after a tenant fails to make a payment. A utility may comply with this 14-day notice electronically if the landlord has opted to receive electronic notices as provided in Wis. Stat. § 66.0809(5)(c).
If a tenant vacates the premises while the utility bill is in arrears, the landlord may, within 21 days, give the municipal utility written notice advising of the date when the tenant vacated the property and the tenant’s forwarding address. If the landlord provides this information, the utility must continue to send past-due notices to the tenant at the forwarding address until the charges are paid or the utility begins the tax lien process, as required under Wis. Stat. § 66.0809 (5)(am).
October 15 notice
On October 15, the municipal utility must provide a notice to both the tenant and the landlord indicating that the delinquencies will become a lien on the property. This notice advises that if the past-due amount is not paid before November 1, a penalty of 10 percent will be added. If the past-due amount and penalties are not paid by November 15, that amount is levied as a tax against the property served. In addition, the utility also has a lien on the tenant’s personal property in the amount of the past-due amount and penalties effective October 15.
If the tenant pays the past-due amount and penalties by November 15, the lien is automatically extinguished. If the tenant does not pay the past-due amount and penalties by November 15, the utility can file notice of the lien with the circuit court, and the lien would then appear on the Wisconsin Circuit Court Access (CCAP) website. Utilities may not take this step, though, should they not wish to pay the lien filing fees as well as transfer and satisfaction filing fees. The utilities will, however, file a listing of all tenant delinquencies with the clerk of court by December 16.
The notice also informs the tenant that the lien will transfer to the landlord if the landlord pays the amount due, and that the landlord can then file the lien against the tenant’s property with the clerk of courts. Once that lien is filed, it will appear on CCAP. The landlord can pursue legal action to enforce the lien and collect the amount owed. Thus, future landlords will be aware of the tenant’s utility payment history on CCAP, and tenants will be discouraged from not paying their utility bills. Note that filing fees are involved in this process. The Wisconsin Circuit Court’s filing fees table shows that this would be $5 to docket a lien, or a satisfaction or assignment of the lien. Visit www.wicourts.gov/courts/circuit/docs/fees.pdf to see the table.
Provisions applicable in all cases
The following provisions applied starting April 16, 2014, regardless of whether a landlord has asked to be notified when the tenant's municipal utility charges become past due and regardless of whether the municipal utility uses the tax lien procedure to collect unpaid charges:
- Upon the request of the landlord, a municipal utility must disclose whether a new or prospective tenant has outstanding past-due charges for service provided by the utility in that tenant’s name at a different address.
- A municipal utility may require a prospective customer to submit an application for water or electric service.
- It is not unreasonable or unjustly discriminatory for a municipal utility to adopt application, deposit, disconnection or collection rules and practices that distinguish between customers based on whether the customer owns or leases the property receiving utility service.
Disconnection of a tenant's electrical service
Beginning 14 days after receiving notice that the tenant has municipal electric bill arrearages, the landlord can request the tenant’s electric utility service be shut off. Upon receipt of the request, the municipal utility must notify the tenant that electric service to the premises will be terminated if all past-due charges are not paid in full within 10 days. If the past-due charges remain unpaid 14 days after the utility gave the notice, then the municipal utility is required to shut off the electric service to the rental unit unless prohibited under the Public Service Commission (PSC) rules. PSC rules prohibit the disconnection of electric utility service, for example, during the winter months between November 15 and April 15, during heat emergencies, if disconnection of service will aggravate an existing medical or protective services emergency, if the customer is in compliance with a deferred payment agreement, and while a dispute over the amount of arrears is under investigation by the PSC. See Wis. Stat. § 66.0809(5)(bm).
The requirement to disconnect service only applies if the municipal public utility uses the tax roll process to collect unpaid electric charges. The landlord-requested disconnection provision does not apply to water or gas service.
Resources
Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.