Jul 31

Attorney General J.B. Van Hollen Issues Formal Opinion Concerning Residential Lease Provisions Requiring Departing Tenants to Pay for Carpet Cleaning

MADISON — Attorney General J.B. Van Hollen today issued an opinion to Department of Agriculture, Trade and Consumer Protection Secretary Ben Brancel in which Van Hollen concluded that Wisconsin law does not prohibit residential lease provisions that require a departing tenant to pay for routine carpet cleaning. Van Hollen determined that such a provision is not in conflict with a landlord’s statutory duty to maintain the premises “in a reasonable state of repair” under Wis. Stat. 704.07(2). Because routine carpet cleaning is not a statutorily-imposed obligation of a landlord, assigning this responsibility to a tenant through a contractual provision does not render a rental agreement void.

The full opinion letter is here:


NOTE: This opinion does NOT permit the deduction of the carpet cleaning from a security deposit.

So then what does this do for owners?

Very little to collect extra money from tenants.  However, it forecloses tenants’ arguments that we had a common law duty to clean between tenants, i.e. cleaning is not part of a reasonable state of repairs.

I can also see this being used when DNS issues orders for housekeeping on the owner rather than the tenant.

It also clarifies you can have a lease that requires a tenant to clean when they move. You just have to bill them outside of the deposit.

Bottom line:  Personally I  never felt an across-the-board fee for carpet cleaning was anything more than a fee for moving out, which is probably a bad business practice even if it were legal.  Cost should be imposed on those tenants that do not leave the place reasonably well, while those that take care of the place should be treated in a manner they would rent from you again or tell their friends to do so.

Jul 19

Last Milwaukee Channel 12 did a piece on landlords renting to sex offenders and receiving state checks for the rent.

Our company screening criteria rejects sex offenders, but there is a larger question out there that will someday impact all of us.

So these guys, well usually guys, I think there are a few female teachers on the list as well,  are arrested, sentenced to a specific term, do the time and ….  drum roll please … are released.

Now what?

They have served the sentence.  They have to live somewhere after prison, but where?  The near universal answer is ‘Not, next to me!’

If we (society) do not get out in front of this question I anticipate legislation one of these days that will force rental owners and condo associations to accept sex offenders as well as other dangerous criminals.   Madison/Dane County already have laws that restrict screening for criminal activity, making criminals a protected housing class.  Currently sex offenders are exempt from the Madison ordinance.

In Miami  sex offenders lived in a tent city under the Julia Tuttle Causeway (bridge) between the mainland and South Beach as it was the only place that was far enough away from schools, parks, day cares etc that they could legally live in Miami-Dade County.

The ACLU sued Miami over their ordinance.  The Councilman who created the ordinance banning sex offenders from the county ultimately applied for and received federal stimulus fund money  to house the sex offenders in a trailer park filled with kids at a cost of a $1,000 per month per offender. If you read this and it made no sense then you read it correctly.

The answer?

I’m not smart enough to know the answer, just smart enough to see the question and know that any answer arrived at will put rental owners in a tough spot.

Jul 18

Sometime you read something so fundamentally interesting that you wish you were the one smart enough to figure it out so you could write about it yourself. Here’s one of those. 

Expected Value Calculations – Millionaire’s math

Most people don’t think in terms of EV, and it’s costing them a lot of money.

If you’re not familiar with EV, you’re probably asking, “okay, what is EV, and how can I use it to make more money?”. Even people who are familiar with EV have sent me emails asking how they can apply it to business to make more profitable decisions.

Read the full post by Billy Murphy at ForeverJobless.com

Jul 10

You look at conversions such as the knitting factory being turned into loft apartments on the near Southside and you wonder ‘How could they afford to do this, in this market?’

The answer is Low Income Tax Credit Financing.  A brief overview is you design a project, go to the state (WHEDA) and apply for tax credits.  If all goes well you and you are approved,  receive federal income tax credits.  There is a formula based on the amount you spend, the number of units that are reserved for occupants below the county median income and a bunch of other factors.

These credits will be far in excess of what a normal investor/developer can personally use.  So they “syndicate” the tax credits to an investment group.  The investors get income tax saving in exchange for the money you need to put the project together.

It is a very competitive application process.  It is a very intense process. It is a fairly expensive process.  If you are looking for an easy dollar, you are looking the wrong way.  I speak from the experience of having tried and failed at obtaining tax credit financing to create accessible infill housing on the near north and near south sides of Milwaukee a bit over a decade ago.

But if you can break into this market you can do well, while doing good.

So it was a decade ago and I haven’t tried since, so why bring it up today?  The July Apartment Association meeting features Keith Broadnax of Great Lakes Capital Fund, one of the tax credit financing investment groups.  Years later I still find this was an intriguing opportunity. Maybe someone in attendance will become the next Gorman and Company.  😉

When: Monday, July 15, 2013 at 7:00 p.m.

WhereThe Best Western, 1005 S. Moorland Road, Brookfield 53005

Who:  Keith Broadnax of the Cap Fund

Cost:  Free for current AASEW members, $25 for guests and expired members.




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