Aug 22

A thread from one of the rental property email list I subscribe to begins with a question regarding a lease that was invalidated due to a provision requiring the tenant to pay the landlord’s attorney contrary to  Wisconsin ATCP 134. Below is a follow up question:

So if the tenancy is disolved and i can not enforce the lease but shouldnt i be able to enforce the damages they did? otherwise this allows tenannts to be sneaky. not pay rent and damage and walk away better.

My response was as follows (cleaned up a bit from the original):

This is a very tricky area.  If the damages and deposit deductions fall within the statue §704.07(3)(a) or administrative law ATCP 134.06(3)(a) 1 through 5, but not 134.06(3)(a)6 or 134.06(3)(b), then often your claim on the damages portion will be accepted.

However the tenant may be entitled to double damages plus attorney fees due to your illegal lease provision requiring them to pay your attorney fees.  There are a couple of published Wisconsin cases on the subject of invalid rental agreements listed further down in this post. By the time a tenant friendly judge is done with you, it usually isn’t pretty.  Double damages and reasonable attorney fees are statutory if you lose on the ATCP violation per §100.20(5).

Reasonable attorney fees does not mean the amount charged to you will be what you consider reasonable, but rather even if the tenant has a free legal aid or pro bono attorney you will still have to pay the going rate for the attorney even though the tenant wasn’t actually billed.

If this is in court you should seriously consider hiring an attorney knowledgeable  in landlord tenant law now rather than slugging it our yourself. I  have met owners who have had stupid little cases turn into tens of thousands of dollars. And while collecting a judgment from a tenant is often difficult, the same cannot be said of collecting against a property owner.  No life is not fair, especially if you chose the life of a landlord.

Now to minimize potential future damage

First step – get an attorney who knows Wisconsin landlord tenant law inside and out to draft a good lease or use the one from Wisconsin Legal Blank, without being tempted to draft a “cleaver” addendum.  In the long run you would be better off with a more aggressive custom rental agreement than the” standard” one. A bit more money upfront, but over the long run you will be glad you spent it.   Really there is no standard rental agreement in WI.

Next – get all of your current tenants on the new leases that don’t violate the “seven deadly sins” of ATCP 134.08. Show the tenant the advantage of the new lease, whether it is extending the term at the same rate or just that the bad language that was removed.

Your attorney can help you draft a letter that explains the reason for the replacement agreement.

Or you can do  as we do when we have taken over properties with bad rental agreements.  Give the tenant a letter that says something like: ‘The rental agreement that you signed with the prior landlord has all kinds of draconian things in it that are contrary to how we treat our tenants, such as the provision requiring you to pay his attorney if he had to take you to court. So here is our standard rental agreement that replaces the one you are on.  Read it over. You  will find it is the same rent as you were paying and expires at the same time as the prior lease.  It just removes the provisions we find contrary to how we do business.  We are doing this because it appears that you are a great tenant (whether that is true or not) and want you to be happy, and stay with us for a long time’

Even if you gave them the bad lease you could do something similar.  (example only) ‘I got the rental agreement we had you sign from [the another landlord / off the internet/found in a box of Cracker Jacks®. ] I was reading it over this weekend and said to myself ‘Wow, this is terrible. I can’t believe anyone would sign something like this.  We don’t treat our tenants like this.  So I am replacing the existing agreement with a shinny new one at the same rent but without the draconian terms because I am a really great landlord who treats my tenants well.’

Now as you are trying to digest all of this you are probably thinking ‘Where do you find the laws that effect me?’   Below are the important ones from this post. I have a page of links I use all  the time posted here.

The published Wisconsin Court Cases on invalid rental agreements

  • Baierl d/b/a Supreme Builders v. McTaggart, Wis. Supreme Court, Case #98-3329 (2001). Because a lease contained a provision specifically prohibited by ATCP 134, the landlord could not enforce the lease against the tenant. The court declined to sever the illegal provision and enforce the rest of the lease, because that would undermine the policy behind ATCP 134.
  • Dawson v. Goldammer In Dawson v. Goldammer, 2003 WI App 3 (Dawson I), the court of appeals held that a tenant may seek enforcement of a rental agreement that includes an attorney fee provision that violates Wisconsin Administrative Code section ATCP 134.08(3). In the case at bar, the court held that when a tenant seeks enforcement of such a lease, the tenant can sever the attorney fee provision and enforce the remainder of the lease. The court therefore reversed the part of the circuit court’s judgment that awarded attorney fees to the landlords, but it affirmed the circuit court’s rulings on all other disputed grounds (see ¶ 1).

The “Seven deadly sins” per ATCP 134.08 per the Admin Code are:

ATCP 134.08 Prohibited rental agreement provisions.

No rental agreement may:

(1) Authorize the eviction or exclusion of a tenant from the premises, other than by judicial eviction procedures as provided under ch. 799, Stats.

(2) Provide for an acceleration of rent payments in the event of tenant default or breach of obligations under the rental agreement, or otherwise purport to waive the landlord’s obligation to mitigate damages as provided under s. 704.29, Stats.

(3) Require payment, by the tenant, of attorney’s fees or costs incurred by the landlord in any legal action or dispute arising under the rental agreement. This does not prevent the recovery of costs or attorney’s fees by a landlord or tenant pursuant to a court order under ch. 799 or 814, Stats.

(4) Authorize the landlord or any agent of the landlord to confess judgment against the tenant in any action arising under the rental agreement.

(5) Relieve, or purport to relieve the landlord from liability for property damage or personal injury caused by negligent acts or omissions of the landlord. This does not affect ordinary maintenance obligations assumed by a tenant under a rental agreement, in accordance with sub. (7) and s. 704.07, Stats.

(6) Impose, or purport to impose liability on a tenant for:

(a) Personal injury arising from causes clearly beyond the tenant’s control.

(b) Property damage caused by natural disasters, or by persons other than the tenant or the tenant’s guests or invitees. This does not affect ordinary maintenance obligations assumed by a tenant under the rental agreement, in accordance with sub. (7) and s. 704.07, Stats.

(7) Waive any statutory or other legal obligation on the part of the landlord to deliver the premises in a fit or habitable condition, or maintain the premises during tenancy.


(a) A landlord may withhold from a tenant’s security deposit only for the following:

1. Tenant damage, waste or neglect of the premises.

2. Unpaid rent for which the tenant is legally responsible, subject to s. 704.29, Stats.

3. Payment which the tenant owes under the rental agreement for utility service provided by the landlord but not included in the rent.

4. Payment which the tenant owes for direct utility service provided by a government-owned utility, to the extent that the landlord becomes liable for the tenant’s nonpayment.

5. Unpaid mobile home parking fees which a local unit of government has assessed against the tenant under s. 66.0435 (3), Stats., to the extent that the landlord becomes liable for the tenant’s nonpayment.

6. Other reasons authorized in the rental agreement according to par. (b).

(b) A rental agreement may include one or more nonstandard rental provisions which authorize a landlord to withhold from a tenant’s security deposit for reasons not identified under par. (a). The landlord shall include the nonstandard provisions, if any, in a separate written document entitled “NONSTANDARD RENTAL PROVISIONS” which the landlord provides to the tenant. The landlord shall specifically identify and discuss each nonstandard provision with the tenant before the tenant enters into any rental agreement with the landlord. If the tenant signs or initials a nonstandard rental provision, it is rebuttably presumed that the landlord has specifically identified and discussed that nonstandard provision with the tenant, and that the tenant has agreed to it.

2 Responses to “My rental agreement is illegal – now what?”

  1. Troy Barford says:

    I agree tenancy, rental or lease agreements can be a tricky area, although most state laws are based on the Uniform Residential Landlord Tenant Act, they have their own variations. The law related to the state the property resides in not the state that the owner or landlord resides in.

    It is in the owner or landlord’s best interest to get a a lease agreement tailored for their use by an attorney that specialises in residentila property investment. If you find an attorney at or before the stage when you are looking for new tenants, should you run into problems with your tenant you have a resource you can trust that yo can go to.

    If you shop around you will find one that charges reasonable rates. Money spent up front is well spent as it will give you the landlord the protection you need if you ever need it.


  2. Monic says:

    I have a year lease with 2 people on it. Well she moved out and he is still staying in the unit. I have a few questions…

    Do I evict him or keep him on the original lease and keep her on the lease until the lease ends? Or is she off the hook if I let him stay?

    what am I to do?

    Please help… Thank You

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