Just a Landlord

Governor Walker is scheduled to sign AB568 into law on Monday 2/29/16.  Link to the text of the new 2016 Wisconsin Landlord Tenant  law, ACT 176   This is the third major revision to WI Landlord Tenant Law in three years.

It will take a while to digest all the implications of the new bill, even for those of us who watched it go through the legislative process over the last six months or so.

Some of the highlights:

• The new law allows the termination of a tenancy for criminal activity. Drug dealing is one of the crimes you can evict for, but simple possession or use of drugs is not. Politically, allowing possession was necessary. But it is still disappointing that owners that wish to, still cannot expect drug free housing.  With this new tool to address problems  year leases are practical in more situations than they are today. An advantage of leases is less turn over and that should make neighborhoods more stable. Keep in mind that the Wisconsin protections for domestic abuse victims remain in place.
• Another change affects month to month tenancies – The ability to use 5 Day notices for breaches.  Now when the tenant shows up with a pit bull you can respond with a 5 Day instead of a 14 Day.  An advantage to the tenant is they can correct their mistake and not lose their home.  This may also permit the including of late fees and other charges that the tenant owes on a 5 Day notice.  I will get clarification on this.

There are a bunch of changes that should help keep local governments a bit more in check.  This legislation:

• Prohibits  rental property inspections except upon a complaint or as part of a program of regularly scheduled inspections conducted in compliance with state or federal law.  Think fire inspections.
• Dramatically changes “Reinspection Fee” by limiting the the escalating fee scheme as well as allowing fees only when there was an actual, physical inspection of  the property.  Currently these fees double every 30 Days until they are six times the original fee, plus often there is no actual inspection associated with the fee. This is important as many of the abandoned and foreclosed homes in my neighborhoods appear to have ended up in that state in part due to fees imposed by Milwaukee.  The fees imposed these properties also make it harder for someone to come in, buy the property and put it back in service.
• Prohibits rental property certification or licensing  schemes unless the requirement applies uniformly to all residential rental property owners, including owners of owner-occupied rental property.
• The law still allows for programs such as Milwaukee’s Property Recording Ordinance, but most likely they will no longer be able to charge a fee.
• Prohibits an occupancy or transfer of tenancy fee on a rental unit.

It appears the Metropolitan Omaha Property Owners Association’s lawsuit against their code enforcement will settle favorably for the owners.

1,000 Omaha rental property owners  filed a federal lawsuit in July 2013 alleging arbitrary and capricious enforcement of the city’s housing code.  Speaking to a couple of the owners their complaints are similar to ours, including the city ignoring owner occupied properties in disrepair while enforcing stringently on rental homes.

From the Federal complaint:

The City of Omaha has not adopted any specific rules, regulations, or interpretations of its very broad and general housing code. Instead, the City of Omaha has unlawfully designated the ability to make, interpret, and enforce Omaha housing law (including through unconstitutional means) on a case-by-case basis solely upon the unfettered discretion of each of its code inspectors. The system has no uniformity, consistency, or standard operating procedure and has fostered gross abuses, hardship, and violations of Federal and State Constitutional rights upon Omaha property owners. There are no adequate safeguards or protections in place and Omaha property owners are left without an adequate remedy or meaningful judicial review under State law.

Read the full complaint here.  Link to other case files

The Omaha World-Herald is reporting:

A proposed lawsuit settlement agreement between the City of Omaha and a landlord group faces questions and amendments when it goes before the Omaha City Council on Tuesday.

The agreement would settle a federal lawsuit filed against the city by the Metropolitan Omaha Property Owners Association.

The agreement includes an overhaul of the city’s ordinances and procedures on housing code enforcement.

It also includes a consent decree under which the landlords could haul the city back into U.S. District Court if the city changed those codes or procedures in the future.

Attorney Heiner Giese on behalf of the Apartment Association filed an Amicus brief with the WI Supreme Court supporting the City of Milwaukee Housing Authority in their case against Cobbs. This case was heard by the Supreme Court yesterday.

Basically the case revolves around the federal “one strike and you’re out” rule for Section 8 housing and the state of WI’s notice requirements for lease violations.  The tenant advocates did a good job in selecting a sympathetic case to proceed on.

As most of you know*, in WI you must give a tenant under a lease for a term a five day notice with right to cure for the first lease violation within the term of that lease.  This is fine if perhaps they are a bit noisy one time.  However it fails when there is a criminal act.  Justice Gableman asked the Legal Action attorney to explain how 1st Degree murder be cured as long as the tenant doesn’t do it again.

A link to the oral arguments in front of the Supreme Court is at:

http://www.wiseye.org/Programming/VideoArchive/EventDetail.aspx?evhdid=9392

WI’s laws on lease violations are generally goofy.  You have to give a tenant the right to cure for lease violations including criminal acts under a lease for a term, but you are not permitted to use a 5 Day Breach with right to cure for a month to month tenant even for minor lease violations.  So when your month to month tenant has the radio too loud you have to either ignore it or give them a 14 Day without a right to cure.

One of our Association’s legislative initiatives for 2015 is to change the law to permit a 5 Day with right to cure for month to month tenants as well as allowing for a notice with no right to cure for criminal acts regardless of the length of the rental agreement.

Let’s assume the “broken windows” theory is correct.  It makes sense – order begets order, chaos and disarray breeds more chaos.  It makes sense logically, whether or not you can quantify the results I’ll leave to those much smarter than I.

However,  Milwaukee attempts to repurpose the theory as an argument for greater rental housing code enforcement and nuisance enforcement aimed primarily at rental housing.  In doing so our city has undermined the true message, which is: For the broken windows theory to produce results an entire neighborhood must be held to a standard.  The researchers use “neighborhood order” to describe the goal.

The article is primarily about police and neighbor intervention into petty crime creates order that reduces other petty crime and larger problems.  The words landlord, rent, code enforcement, building inspection do not appear anywhere in the article. Yet, to hear Milwaukee officials speak of the broken window theory, they frame it as a landlord’s responsibly.

A walk down 5th Place, the original target for the expansion of the RIP (rental inspection program), will show a far greater number of owner occupied housing in serious disrepair* than rental houses.  Milwaukee senior assessor Mary Hennen stated under oath a couple of years ago similarly that owner occupied housing in these neighborhoods are often in worse condition than rentals.

As an apparent precursor to the RIP proposal , on September 3rd and 4th,2014 DNS sent a squadron of five inspectors down Fifth Place for a block sweep.  Although the inspectors were able to see and write up some fairly minor problems on rental homes, amazingly when it came to the owner occupied houses on this street these five inspectors missed a dozen failed roofs, half a dozen failed porches, a couple of chimneys that looked about to fall and one house that is failing structurally.  Sixteen owner occupied properties in total that were as bad or worse than the seventeen rentals on the street that received orders. They also missed the two abandoned structures that should have been sent to raze, properties with actual broken windows.  My first two trips down the block had city lots strewn with trash.  I’ll guess that they were afraid someone would point that out in a RIP hearing.  They were clean on my third and forth trip.

Of the two properties that I saw blatant drug dealing coming from on three of my trips down the block this fall, one was owner occupied and the other owned by a guy who lives in the district on 15th and Cleveland. Far from the stereotypical absentee landlord.

If the RIP as well as other code initiatives are truly about stabilizing the neighborhoods, then plans must be in place to address the owner occupied and city owned properties that also drag down the neighborhood.

Tim Ballering

Tim@ApartmentsMilwaukee.com

*I consider serious disrepair as failed roofs, dangerous porches, crumbling chimneys and structural failure.

On Nov 30, 2014, on the ApartmentAssoc Yahoo Group  Bill Lauer wrote:

The previous article entitled “Broken Windows” really isn’t about broken windows.  It is about a theory that first showed up in the early 1980s [Link] and influences many of today’s social policies that impact our businesses every day.  Researchers in New York parked a car with no license plates on it, on a busy street. In a very short period of time, everything of value was stripped from it. Likewise, if a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken. They concluded that somehow the disrepair brought more disrepair.  Likewise, if crimes like jaywalking and panhandling are allowed, then more felonious crimes will follow.

The recent public hearings on the expansion of the Rental Inspection Program indicate several inner-city alders believe that because certain neighborhoods are run down, that crime is attracted to those neighborhoods.  But if memory serves me correctly, these same neighborhoods had huge crime problems before the neighborhoods were runned down.  Could it be that something else attracted the criminal element? Could it be true that because criminals do not maintain property very well that over time, neighborhoods end up in disrepair? They see the disrepair as the fault of greedy landlords, instead of seeing the landlords as the victims of the criminals.

One Alder literally said that the RIP was a tool to break up these “hot spots” of criminal activity. This strategy scatters criminal activity into surrounding neighborhoods rather than deal with the problem where it is. The mayor’s budget hires more building inspectors and reduces the number of armed police, which is contrary to the original research which says that police presence was needed to make positive change.

For the last 20 years, as “hot spots” break up and houses get bulldozed, and criminals need housing, they move into unsuspecting neighborhoods. That is why we are seeing crime increase (again) in Bay View, West Allis, Sherman Park, St, Joe’s area, just to name a few. The strategy employed in the RIP has not worked. But a new generation of politicians refuse to learn the lessons of the past and want to try this stuff again with a new name. They continue to make the buildings the problem rather than the people who live there.

The article is a long read but makes very interesting points that are useful in our discussions with our politicians.  It gives some insight into the crazy policies that are coming from city hall. But most importantly it points to the need for landlords to organize and become vocal about our experience working in Milwaukee.

 Bill Lauer

A reader on the ApartmentAssoc at YahooGroups list asks

What thoughts are there on a Request for a comfort animal with a month to month lease.

Can the lease be terminated under the month to month provision.

Terminating the tenancy due to a legitimate, i.e. they met the requirements of a comfort animal, not that you feel it is legitimate, comfort animal probably is worse than simply rejecting a request as you are now breaking additional rules and statutes.  For example in Wisconsin’s Chapter 704 (Landlord Tenant Statutes)

704.45  Retaliatory conduct in residential tenancies prohibited.

(1) Except as provided in sub. (2), a landlord in a residential tenancy may not increase rent, decrease services, bring an action for possession of the premises, refuse to renew a lease or threaten any of the foregoing, if there is a preponderance of evidence that the action or inaction would not occur but for the landlord’s retaliation against the tenant for doing any of the following:

(a) Making a good faith complaint about a defect in the premises to an elected public official or a local housing code enforcement agency.

(b) Complaining to the landlord about a violation of s. 704.07 or a local housing code applicable to the premises.

(c) Exercising a legal right relating to residential tenancies.

(2) Notwithstanding sub. (1), a landlord may bring an action for possession of the premises if the tenant has not paid rent other than a rent increase prohibited by sub. (1).

(3) This section does not apply to complaints made about defects in the premises caused by the negligence or improper use of the tenant who is affected by the action or inaction.

The real answer is to ask the feds to step in and repair this rule before housing goes to the dogs, including Federally Subsidized Housing.

A person should need something more than a Skype conversation with a doctor in Cali before it is declared that the tenant should have the right to a dog, cat or 20′ python.  Breed should matter, an 80# pit bull “comfort animal” in a complex doesn’t sound like it would be very comforting to the rest of the tenants.  In a single family home I doubt it would be comforting to the neighbors.

Also, what about the rights of others.  My wife has severe allergies to dogs and cats.  A companion animal on a flight we were on that gave her such a bad reaction that they almost landed the plane in Cincinnati.  A flight a month later ended with her leaving the plane on a stretcher after being given an Epipen and oxygen.  While there was no dogs on that flight, the airline confirmed  there was a dog on the flight just prior to ours.  We have not flown since.  I was at the Wall-Mart a couple of months ago a a scraggly animal wearing a “service animal” vest was basically running loose on a 10′ leash.  It walked up and sniffed my leg, which was annoying.  A short time later it licked a baby across the face.  The mom was so angry that I thought the animal owner was going to leave the store in a condition that would require a real service animal. There are valid reasons that owners exclude pets.

Let me be clear that I am talking about people who are using this as a loophole to get around no pet policies and not legitimate trained service animals.  A true service animal is better behaved than most tenants.  The true service animals need to be accepted.

Sewer, water and municipal service fees have become a major operating expense.  I’m sure these runaway fees have lead to the failure of many newer, under capitalized owners.

Last month the law changed on municipal utility charges, making it more practical to have tenants be responsible for these charges.  We owe a lot of thanks to the work done by Gary Goyke in making this law a reality, as well as the support of the members of the Wisconsin Apartment Association, the Apartment Associations of South Central WI and of course the members of the Apartment Association of Southeastern WI

In addition to the potential financial benefit to owners, there is a societal and environmental benefit as this will certainly result in conservation.  No more walking into a unit, only to see the tenant thawing dinner by running cold water over frozen meat for half an hour.  Remember when you paid for heat and would find windows open on sub freezing days or when you paid for hot water and found your basements being used as a laundromat for friends and family.

The most important aspects of the law effect the 2015 billings.  However there are some things we as owners need to do now to ramp up.

First, you cannot bill tenants directly for utilities that are not separately metered.  This means for multiple unit properties the water needs to be separated and an additional meter added.  In older Milwaukee duplexes this is not going to be a major job.  The two plumbing contractors I spoke to felt it would be a $600-1000 per duplex  to separate the water and install a second meter horn.  Remember that in this style building you only need to separate the cold water to the lower unit faucets and toilet as well as the feed to the lower water heater and possibly laundry facilities.

Older side by sides and four families will take more work, read $, as they typically have a single cold feed to the upper units.

Second, for the benefit of tenants, owner occupants and the city’s ability to collect their utility bills; we must urge the city to go to monthly billings

Attorney Tristan Pettit shared the attached doc from the League of Wisconsin Municipalities that should be the first step in the road map to making the change.

Wisconsin’s Act 143 Landlord Omnibus bill has been of great concern to owners that have read the content as well those who have read the Legislative Council memo on the bill.

AASEW Attorney Heiner Geise had researched this a bit and came to the conclusion it is not quite as bad as originally thought.  He received an opinion consistent with his view from the Leg Council.

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The following is a pretty good overview of the new law from Margit Kelley, Staff Attorney at the WISCONSIN LEGISLATIVE COUNCIL   The Legislative Council is a nonpartisan research agency of the Wisconsin Legislature.

Read their full analysis

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The Wisconsin Landlord Tenant Law Omnibus bill was signed into law by Governor Scott Walker around 4 PM March 21st, 2012.  You must be in compliance with the provisions for tenancies  entered into beginning April 1st.

One thing the bill does is add a new prohibited lease provision:

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