Several important changes were made to landlord/tenant law at the end of the 2011-12 legislative session that will cause a few significant changes to the way landlords and property managers interact with tenants.

Does it really say that?

From the flurry of amendments to 2011 Senate Bill 466 near the end of the legislative session emerged 2011 Wis. Act 143, which makes numerous changes to landlord/tenant law, primarily in Wis. Stat. chapter 704. Any time there is new legislation, there will be commentary and speculation over how the new provisions will be interpreted and applied because rarely does any legislation contemplate every possible situation or anticipate each possible wrinkle. But Act 143 has drawn a fair share of immediate attention. One reason is the subject: landlord/tenant law. The landlords have one perspective and tenants have another — that is to be expected. Another reason is the timing: SB 466 was signed into law March 21, 2012 and became effective March 31, 2012. There was little time to evaluate the new provisions before it was time to start taking action.

There are some differences of opinion over how to read and apply a few of the new provisions. Only time will tell how the perplexing provisions are sorted out. The courts may be called upon to decipher the new statutes as they resolve landlord/tenant disputes. Maybe the legislature will be called back into action to clear the air with a trailer bill that smoothes out any rough edges.

In the meantime, the major revisions to Wis. Stat. chapter 704 address the following issues:

The stuff they leave behind

Landlords and property managers have been happy to hear that they will no longer have to store personal property left behind by tenants when they move out or otherwise vacate the premises. Wis. Stat. § 704.05(5) has been overhauled and now provides that landlords may presume that property that the tenants leave behind is abandoned and may dispose of it in any manner that the landlord believes to be appropriate, if and only if, the landlord first has provided written notice to the tenant. This written notice must be provided to the tenant when the tenant enters into or renews a rental agreement and must indicate that the landlord will not store any personal property the tenant leaves behind.

The landlord may dispose of “stuff” left behind by placing it in the dumpster, or the landlord can sell it or find another appropriate disposal method. The landlord can dispose of property left on the premises regardless of whether it is owned by the tenant or someone else. The tenant or any secured party has the right to redeem the property at any time before the landlord has disposed of it, or entered into a contract for its disposition, by payment of any expenses that the landlord has incurred with respect to the disposition of the property.

There are two exceptions to the general rules, one for medical items and one for manufactured homes, mobile homes and titled vehicles. With regard to medical items, the revamped § 704.05(5) indicates that if a tenant leaves prescription medicine or prescription medical equipment behind, the landlord must hold those items for at least seven days after the landlord discovers those items and must promptly return them upon the tenant’s request. If the property left behind is a manufactured home, mobile home or a vehicle of some sort — such as cars, boats, snowmobiles or mopeds — the landlord must give notice before selling it or otherwise disposing of it. Notice must be given to the tenant, and to any secured party that the landlord has actual knowledge of, by regular or certified mail to the last known address.

Action required: Landlord must give written notice when the tenant enters into or renews a rental agreement.

 Applies to/effective date: Rental agreements entered into or renewed on or after March 31, 2012.

Check-in sheets

The new § 704.08 requires a landlord to provide a new residential tenant with a check-in sheet. The tenant will have seven days from the date the tenant commences occupancy to complete and return it to the landlord. This already is a common practice for many landlords and property managers and now it is a statewide requirement. But § 704.08 also says that this “standardized information check-in sheet” that the landlord must provide when the tenant commences occupancy “contains an itemized description of the condition of the premises at the time of check−in.” This appears to require something new: the landlord is to provide a description of the condition the premises at the time the tenant checks in. In other words, this information check-in sheet would be completed by the landlord in some fashion to describe what the condition of the premises was at check-in time, and may be completed by the tenant after the tenant commences occupancy, presumably to make additional comments about the condition of the rental unit and indicate if any description provided by the landlord does not appear to be accurate.

Action required: When the tenant begins occupancy, the landlord must provide the tenant with an information check-in sheet describing the condition of the premises.

 Applies to/effective date: Tenancies beginning on or after March 31, 2012.

What one hand giveth, the other taketh away

The new § 704.02 says that if any provision in a rental agreement is found to be invalid or unenforceable, the rest of the agreement is still in force. This was an apparent response to the Baierl v. McTaggart case (2001 WI 107). There, the Wisconsin Supreme Court held that a landlord who includes a provision specifically prohibited by Wis. Admin. Code § ATCP 134.08(3) in a residential lease may not enforce that lease.

This seems straightforward enough, until you see the new additions to § 704.44 that now is entitled “Residential rental agreement that contains certain provisions is void.” The seven prohibited rental agreement provisions listed in Wis. Admin. Code § ATCP 134.08, referred to as the “Seven Deadly Sins,” now also appear in § 704.44. So what does this mean? A rental agreement that includes a provision included in this list — that now appears in two places — will be void. For example, a lease that says the tenant can be evicted by changing the locks or that the tenant must pay the landlord’s attorney’s fees if the parties have a legal dispute is null and void.

In § 704.44 there actually is an eighth Deadly Sin added to the list. A rental agreement is void and unenforceable if it “allows the landlord to terminate the tenancy of a tenant if a crime is committed in or on the rental property, even if the tenant could not reasonably have prevented the crime.” This appears to say that landlords cannot have rental agreement provisions that say the agreement is terminated if a crime is committed on the premises. It is not clear what impact, if any, the tenant’s ability to prevent the crime has in this provision as written. 

Action required: Make sure that none of the items in § 704.44 are in any rental agreements entered into or renewed on or after March 31, 2012. 

Applies to/effective date: Rental agreements entered into or renewed on or after March 31, 2012.

Transplants from ATCP 134

Several provisions that appear in Wis. Admin. Code chapter ATCP 134 have been added to the statutes. Most of the provisions are substantially similar, but there have been a few modifications in some cases that change applicable law.

• Security deposits: There are provisions listing the reasons for which a landlord may withhold amounts from a tenant’s security deposit and establishing the timing for the return of the security deposit in Wis. Admin. Code § ATCP 134.06(2)-(3). These provisions now also appear in similar language in the new § 704.28. One substantive change of note appears in the new § 704.28(4)(b): if a tenant vacates before the rental agreement termination date, the 21 days for the return of the security deposit begins on the termination date or on the date the landlord re-rents the premises, whichever comes first.
• Disclosure of code violations: The new § 704.07(2)(bm) says that landlords must disclose uncorrected building or housing code violations actually known to the landlord that affect the dwelling unit — or associated common area — being rented and that present a significant threat to the tenant’s health or safety. The disclosure must occur before any earnest money or security deposit is accepted from a tenant. This is narrower than the similar provision in § ATCP 134.04(2)(a) that requires the landlord to show the tenant the violation notices or orders for all uncorrected building and housing code violations impacting the premises.
• Remedies for violations: The new § 704.95 says that “Practices in violation of this chapter may also constitute unfair methods of competition or unfair trade practices under s. 100.20.” This may mean that a practice that violates a provision in chapter 704 of the statutes may be enforced under the unfair methods of competition and trade practices statute. That would mean double damages and reasonable attorney’s fees for a party suffering pecuniary loss.

Action required: Avoid any violations of chapter 704 because there is a risk of double damages plus attorney’s fees per § 704.95

Applies to/effective date: March 31, 2012.

WRA forms

The WRA is in the process of updating its forms to comply with the new landlord/tenant law changes. Addenda for the WRA Residential Lease and Residential Rental Contract have been created and made available for those entering into new agreements on or after March 31, 2012. These are available at www.wra.org/Rental and on zipForm. The WRA also will revamp the WRA Move-In/Move-Out Report and make revisions to the Rental Disclosure Form and Nonstandard Rental Provisions form — watch for information regarding availability.

2011 Wis. Act 143 may be reviewed at docs.legis.wisconsin.gov/2011/related/acts/143 and the updated chapter 704 is found at docs.legis.wisconsin.gov/statutes/statutes/704.pdf. All of these changes apply to commercial as well as residential leases, except for the Seven (Eight) Deadly Sins in § 704.44.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.