May 30

From the Wisconsin Realtor Association Featuring Attorneys Tristan Pettit and Jennifer Hayden

May 29

In Milwaukee County, evictions hearings will resume on Thursday, May 28 — starting with the 300 cases that were filed before the moratorium went into effect. However, [Judge] Colon says new cases may not be heard in Milwaukee County until late June or early July.

WI Governor Tony Evers initiated a $25M rent assist program that will help a lot to avoid evictions. Those checks are being administered by local organizations. Here the organization is SDC. The first payments will be issued mid-June.

WI Unemployment has a backlog of 700,000 people who have not received their checks, many of whom’s applications have not been processed.
Eviction courts are not ready yet. Judge Colon has stated new filings will be heard in late June, early July.

For all of these reasons, owners should be prepared to work with their tenants. Not just for the tenants’ sake, not just because it is the right thing to do in many cases, but also because it is often the best decision for your business as well.

May 24

I was invited by TMJ4 to talk about the end of the WI eviction moratorium on Friday. I cannot find a link to the show, but here are my notes and a picture from when my granddaughter happened to catch the broadcast when she was watching tv. It must have been one of her homeschooling assignments. 😉

My notes for the interview. Unfortunately I was not able to make all my comments.

How are you working with tenants?

Most important is communication. Tenants need to talk to their landlords. The sooner the better.

Our company has posted a list of resources for tenants on our website at:
ApartmentsMIlwaukee.com/r/  

Despite dire predictions by attorneys for Legal Action, we do not anticipate a large increase in overall evictions.

What may be surprising to some, rental owners do not like evictions. It is in both parties best interest for a resolution.  Successful landlords need successful tenants. Every eviction is costly to landlords in terms of lost rent and often damages.  Evictions are costly to tenants as it impacts their future housing and is disruptive to their lives.

If tenants have resources to pay rent, then there will be no eviction crises when the moratorium is lifted.  Governor Evers just announced $25M Wisconsin Rental Assistance Program will go a long ways to providing those resources and preventing many evictions.  

Most owners did not charge late fees for April, well before the prohibition against late fees was issued.  

We are seeing greater than 85% of tenants have paid their rent in full for April and May and generally timely.

As would be expected, some tenant took advantage of the moratorium and did not pay rent when they had an ability to do so.  Many people are in better financial position today than they were three months ago due to the enhanced federal unemployment and stimulus money.  

Our company and many other landlords are working with Mediate Milwaukee to attempt to resolve some of these issues without filing for eviction.

Are you worried about how the rest of the year looks?

Absolutely. Landlords need to collect their rents in order to survive. If landlords do not survive, tenants and municipalities suffer.

The real fear is, unless something dramatically changes, that August and September will be far worse due to the expiration of the enhanced federal unemployment, the stimulus money being spent, and those employers who received the SBA Payroll Protection Program grants will no longer be required to keep those employees.

Any substantial disruption in rent collections will cause an impact on not only the property owners, but also on future rental housing costs.

Milwaukee and other communities have recently furloughed employees due to COVID’s impact on their budget.  This comes well before we will see the impact of COVID on payment of property taxes, sewer and water and reductions in collections of other city fees.    

We can look at  2008 and see how that impacted Milwaukee’s housing for years after. The City ended up foreclosing on hundreds of properties, with many having been vandalized to the point they were razed.  Milwaukee continues to have a huge number of tax foreclosures today, even in what was one of the best economies in history. It will only get worse now due to COVID.  This is not only a burden to the cities but also reduces future housing choices for tenants.

Picture of one of Sherrena (from Desmond’s EVICTED) properties on 10th & Center that was foreclosed upon shortly after the 2008 crises.  It burned in April 2018 and was finally razed in November 2019. (Photo by Heiner Giese)

There are predictions that the COVID housing impact will be far worse than the Great Recession. The 2008 bubble was predictable and the build up to it was over a couple of years.  Many people in the housing industry realized the prices of real estate at the time was unsustainable and those people were not harmed. 

COVID brought the economy to a sudden and unpredictable stop.  No one was prepared, and many businesses will not return.  

What resources are available to landlords?

Not many.

Landlords with very specific mortgages may forgo payments, but interest may still occur.  Mortgages are only a fraction of the operating costs.  Nearly an equal amount is paid to the municipalities in taxes, sewer, water, and other fees.  Maintenance is a large portion of the owners’ expenditures as is insurance and other operating costs.

Here is an infograph from the National Apartment Association:

May 14

My life is too exciting, so I skimmed through the HERO ACT proposal hoping the 1,815 page document would put me to sleep  Unfortunately it did not.
https://docs.house.gov/billsthisweek/20200511/BILLS-116hr6800ih.pdf

Cliff Notes version:
No late fees, scheduled repayment periods, no evictions for a year, extra Rent Assist and emergency assistance, ten times penalties for violations.  Bad for landlords and mortgage providers

[P]age 934 [L]ine22 
SEC. 110201. EMERGENCY RENTAL ASSISTANCE.
(a) AUTHORIZATION OF APPROPRIATIONS.—There is 24 authorized to be appropriated to the Secretary of Housing and Urban Development (referred to in this section as the ‘‘Secretary’’) $100,000,000,000 for an additional amount for grants under the Emergency Solutions Grants program under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371 et seq.), to remain available until expended (subject to subsections (d) and (n) of this section), to be used for providing short or medium-term assistance with rent and rent-related costs (including tenant-paid utility costs, utility- and rent arrears, fees charged for those arrears, and security and utility deposits) in accordance with paragraphs (4) and (5) of section 415(a) of such Act (42 U.S.C. 11374(a)) and this section.

P 961 L5
SEC. 110203. PROTECTING RENTERS AND HOMEOWNERS FROM EVICTIONS AND FORECLOSURES.

(b) MORATORIUM.—During the period beginning on the date of the enactment of this Act and ending 12 months after such date of enactment, the lessor of a covered dwelling located in such State may not make, or cause to be made, any filing with the court of jurisdiction to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges.

All rentals are covered, not just those with Rent Assist or Federal backed mortgages :P966 L1

(1) COVERED DWELLING.—The term ‘covered dwelling’ means a dwelling that is occupied by a tenant

(A) pursuant to a residential lease; or

(B) without a lease or with a lease terminable at will under State law.

P1004 L16
(b) TENANT-BASED SECTION 8 RENTAL ASSISTANCE.—There is authorized to be appropriated for an additional amount for fiscal year 2020 for the tenant-based rental assistance under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o))  $3,000,000,000, to remain available until September 30, 2021, of which not more than $500,000,000 may be used for administrative fees under section 8(q) of such Act (42 24 U.S.C. 1437f(q)).

P1037
SEC. 110402. RESTRICTIONS ON COLLECTIONS OF CON2 SUMER DEBT DURING A NATIONAL DISASTER OR EMERGENCY.


(1) COVERED PERIOD.—The term ‘covered period’ means the period beginning on the date of enactment of this section and ending 120 days after the end of the incident period for the emergency declared on March 13, 2020, by the President under section 501 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 4121 et seq.) relating to the Coronavirus Disease 2019 (COVID-19) pandemic.

P1038
(1) IN GENERAL.—Notwithstanding any other provision of law, no debt collector may, during a covered period—

P1039
(D) commence or continue an action to evict a consumer from real or personal property for nonpayment;

P1040
(e) VIOLATIONS.—Any person or government entity that violates this section shall be liable to the applicable consumer as provided under section 813, except that, for purposes of applying section 813

(1) such person or government entity shall be deemed a debt collector, as such term is defined for purposes of section 813; and  

(2) each dollar figure in such section shall be deemed to be 10 times the dollar figure specified.

May 12

The AASEW has done a lot of great things for the industry and sustainable rental housing.

One that benefited many owners was the change to Sheriff moves to eliminate the mover, which is a large portion of the costs.  

Our attorneys, working against their own personal interest, changed the law to allow LLCs to be represented by a member or agent, rather than requiring an attorney. This saves a lot of money as well as making the case less confrontational.

Here are the laws passed through the work of the AASEW in:

2018  https://bit.ly/3bryZ0Y
2016  https://bit.ly/2Lj7NXM
2014  https://bit.ly/3dCRRM1
2012  https://bit.ly/2zx3NQZ

It is important that we work together as an industry for the betterment of all.

Apr 17

I have a number of people ask me about the prior post stating there is an eviction moratorium for Section 8 Voucher recipients. Below is the analysis from the Congressional Research Service.

https://crsreports.congress.gov/product/pdf/IN/IN11320

Eviction and Rental Payment Protections

CARES Act Section 4024(b) prohibits landlords of certain rental “covered dwellings” from initiating eviction proceedings or “charg[ing] fees, penalties, or other charges” against a tenant for the nonpayment of rent. These protections extend for 120 days from enactment (March 27, 2020).

Section 4024(c) requires landlords of the same properties to provide tenants at least 30 days-notice before they must vacate the property. It also bars those landlords from issuing a notice to vacate during the 120- day period. In contrast to the eviction and late fee protections of Section 4024(b), which are expressly limited to nonpayment, Section 4024(c) does not expressly tie the notice to vacate requirement to a particular cause. Thus, Section 4024(c) arguably prohibits landlords from being able to force a tenant to vacate a covered dwelling for nonpayment or any other reason until August 23, 2020 (i.e., 120 days after enactment, plus 30 days after notice is provided).

Section 4024(b)’s and (c)’s protections, however, do not absolve tenants of their legal responsibilities to pay rent. Tenants who do not pay rent during the eviction grace period may still face financial and legal liabilities, including eviction, after the moratorium ends.

What properties does the CARES Act protect?

The CARES Act’s eviction protections only apply to “covered dwellings,” which are rental units in properties: (1) that participate in federal assistance programs, (2) are subject to a “federally backed mortgage loan,” or (3) are subject to a “federally backed multifamily mortgage loan.”

Covered federal assistance programs include most rental assistance and housing grant programs, including public housing, Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, rural housing programs, and the Low Income Housing Tax Credit (LIHTC) program.

A “federally backed mortgage loan” is a single-family (1-4 units) residential mortgage owned or securitized by Fannie Mae or Freddie Mac or insured, guaranteed, or otherwise assisted by the federal government. The term includes mortgages insured by the Federal Housing Administration and the Department of Veterans Affairs, and the Department of Agriculture’s direct and guaranteed loans. The act defines a “federally backed multifamily mortgage loan” almost identically to “federally backed mortgage loan” except that it applies to properties designed for five or more families.

Researchers estimate that roughly 12.3 million rental units have federally backed financing, representing 28% of renters.

Apr 16

The CARES Act includes a 120-day moratorium on evictions, late fees and other penalties for properties with federally backed mortgages (Freddie Mac/ Fannie Mae/ FHA /VA / HUD), beginning March 27th.

These prohibitions also extend to tenants receiving Section 8 vouchers.

Owners of properties with the government backed mortgages or tenants on rent assist are prohibited from serving eviction notices or filing evictions until July 25th. The law also requires a 30 day notice to evict, effectively not allowing evictions until August 24th.

This does not apply to tenants that are not receiving rent assist or living in a federally mortgaged property.

That said we are not charging late fees during this unprecedented time and urge other owners to do the same, because it its the right thing.

In WI you cannot evict or give notice for nonpayment to any tenant until 5/27/2020. The rent is, however, still due.

I will argue that it is in not only the tenants’, but also your best interest to work on payment plans for tenants who fell behind because of loss of income when you factor in the costs of unit turns.

Try mediation if you are having trouble working out a reasonable repayment plan. Maybe try meditation too. 🤔

We posted a bunch of resources to help tenants get through this at: https://apartmentsmilwaukee.com/r/

You can copy the page content into an email to your tenants, and edit out our contact info.

Apr 08

https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=406450

H.R. 6321 includes provisions to protect consumers, renters, homeowners, and people experiencing homelessness, including a bill from Congressman Jesus “Chuy” Garcia’s (D-IL) to place a temporary nationwide ban on landlords filing evictions on renters.

Without assistance to the property owners we will see failures and abandonment which will exceed the 2008 financial crises.

Cities like Milwaukee, with only 41.8% homeownership, will be crippled as rental property owners stop paying taxes, sewer and water. Add to that the cost incurred when the municipality has to maintain and sometimes raze tax foreclosed homes.

I had noted there was an uptick in tax foreclosures in Milwaukee hitting MLS in the last two months, that is well prior to any COVID impact.

Mar 29

[Governor Evers] suspended evictions this week, and the bill calls for banning landlords from moving to evict tenants for nonpayment during a public health emergency and the 45 days after it’s over.

Links to legislation in article

Feb 15

Two bills being proposed by the WI legislature. One allows for eviction moratoriums, the other restricts using eviction records for screening. This emphases the dangers that face our industry if we are not actively involved legislatively.

Bills like this, if passed, increase the cost of housing for tenants who pay their rent as the rent losses will be spread across the entire tenant population.

Back in the early nineties there was a Christmas eviction moratorium that basically allowed tenants who did not pay December rent to stay until mid to late January. We fought it and defeated it. It made to the New York Times.
https://www.nytimes.com/1991/12/29/us/scrooge-visits-tenants-in-milwaukee.html

WI Proposed Law Allowing for Eviction Moratoriums

http://docs.legis.wisconsin.gov/raw/proposal/2019/-0131

Analysis by the Legislative Reference Bureau
Under current law, no city, village, town, or county may enact or enforce an ordinance that imposes a moratorium on a landlord from pursuing an eviction action against a tenant of the landlord’s residential or commercial property.

This bill repeals that provision.


WI Proposed Law Restricting Use of Eviction Records for Screening

http://docs.legis.wisconsin.gov/raw/proposal/2019/-0201

Analysis by the Legislative Reference Bureau

This bill provides that it is discrimination under the state open housing law to do any of the following:

1. Inquire, whether orally or in writing, of a prospective tenant or any other individual about any eviction of a prospective tenant that occurred more than five years prior. The bill prohibits a prospective tenant from being asked about prior evictions unless the prospective tenant is informed that evictions more than five years old need not be disclosed.

2. Refuse to rent housing to an individual, or otherwise treat an individual unequally in the terms, conditions, or privileges of rental of housing, because of an eviction of the individual that occurred more than five years prior to the date of a rental application.

The open housing law is administered by the Department of Workforce Development, which receives, investigates, and evaluates complaints of violations and may order relief in appropriate cases. Persons who allege a violation of the open housing law may also bring a civil action.

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