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COMPREHENSIVE GUIDE FOR NAVIGATING WISCONSIN INVESTOR-RESIDENT LAWS

COMPREHENSIVE GUIDE FOR NAVIGATING WISCONSIN INVESTOR-RESIDENT LAWS
By Performance Asset Management Tuesday, November 21, 2023

What to Know About Wisconsin Investor-Resident Laws

*Investor-Resident Relations in Wisconsin are regulated by Wis. Stat. ch. 704, and Wis. Adm. Code ch. ATCP 134.

Wisconsin investor-resident Laws govern the rights and responsibilities of both investors and residents in the state, providing a legal framework to ensure fair and lawful interactions between the two parties. These laws cover various aspects of the investor-resident relationship, including (but not limited to) lease agreements, security deposits, eviction procedures, and maintenance responsibilities. It is essential to note that while the state establishes the basic legal framework, there may be variations at the county level.

Counties across Wisconsin may have additional regulations or specific requirements that investors and residents must adhere to, creating a nuanced landscape of rules and regulations. Therefore, individuals engaged in leasing or renting property in Wisconsin should be aware of both state and local laws to ensure compliance.

Housing providers who breach these laws may face a variety of consequences, such as fines, court costs, and attorney’s fees. Housing providers may also be obliged to pay back rent to residents who have been relocated as a result of the infringement in specific situations.

Local Ordinances

Local government ordinances are not prohibited or nullified by the Residential Rental Practices rules in ATCP 134, but investors and residents must comply with both the local ordinances and the Residential Rental Practices rules.

Why These Laws Are Important to Investors

Housing providers who are aware of these laws can avoid breaking its standards and the penalties that may occur. Risk management is an important aspect of being a successful home provider, and the more you know about the regulations that govern us, the more risk you can avoid. The more risk you can avoid, the better housing provider you can be to the citizens in Wisconsin.

Why These Laws Are Important to Residents

The purpose of these laws is to protect and promote its citizens’ public health, safety, and welfare, to establish the rights and obligations of residents and investors in the rental process, and to encourage residents and investors to maintain and improve the quality of housing.

The Residential Rental Practices Rule

ATCP 134.01, the Residential Rental Practices rule, applies to business practices related to the rental of most residential properties in this state, except when a person lives in a place operated by a public or private institution, a hotel, motel, boarding house, rooming house, or similar lodging for less than 60 days, or a government property.

Lease/Rental Agreements

Rental Application Process

Before renting out a property, property owners in Wisconsin must follow certain guidelines when it comes to the rental application process. Here are some key points to keep in mind:

Fair Housing Laws

Property owners must comply with fair housing laws, which prohibit discrimination based on race, color, national origin, religion, sex, familial status, or disability. It is illegal to deny a rental application based on any of these protected characteristics.

Owners should be aware that these laws apply to all stages of the rental process, from advertising to eviction. Any violation of these laws can result in severe penalties, including fines and legal action.

To learn more about Wisconsin’s Fair Housing Law & Complaint Process, visit the WI Department of Workforce Development website.  

Application Fees

Most, if not all, rental applications come with an application fee. It is important to note that these fees are (usually) non-refundable, even if the applicant is not approved for the rental.

You should be transparent about these fees from the beginning of the application process. It is also advisable to provide a receipt for the application fee to avoid any potential disputes.

Background Checks and Credit Reports

As a property owner, you have the right to conduct background checks and request credit reports from potential residents. However, they must obtain written consent from the applicant before doing so. Additionally, owners must provide a copy of the background check or credit report to the applicant if requested.

Furthermore, property owners must comply with the Fair Credit Reporting Act (FCRA) when conducting background checks and credit reports. This includes providing the applicant with a copy of the report and a summary of their rights under the FCRA if the property owner takes adverse action based on the information.

Denying an Application

If a property owner decides to deny a rental application, they must provide a written notice to the applicant stating the reason for the denial. It is important to have a legitimate reason for denial to avoid any potential legal issues.

Additionally, property owners cannot deny an application based on factors that are protected under fair housing laws (stated above). If an applicant believes they have been unfairly denied, they may file a complaint with th

If a rental agreement or any of the investor’s rules or regulations are in writing, an investor must give a resident a chance to read the rental agreement before the resident decides to rent from that investor. The investor and resident must agree on the essential terms of the tenancy before they sign a rental agreement. Once the parties sign a written agreement, the resident must receive a copy of the entire agreement.

Understand, that the rules do not require rental agreements to be in writing. Verbal rental agreements are traditional in many parts of the rental industry. Existing statutes allow verbal rental agreements and leases, Wis. Stat. sec. 704.01(1) and (3).

Receipts for Resident Payments

The investor must give the resident a written receipt when they take a cash payment for earnest money, a security deposit, or rent. If the resident pays with a check, the investor doesn’t need to give a receipt unless the resident asks for one. (ATCP 134.03(2))

Prohibited Rental Agreement Terms

Rental agreements are VOID if they include any of the following terms:

  • Allows an investor to increase rent, decrease services, evict, refuse to renew a lease, or threaten any action after a resident contacts law enforcement, health services, or safety services. (ATCP 134.08(1))
  • Allows the investor to evict the resident without following legal procedures. (ATCP 134.08(2))
  • Accelerates rent payments or waives the investor’s obligation to try to reduce damages if a resident breaches or defaults on their agreement. The investor can’t require the resident to pay future rent immediately. The investor must try to re-rent the apartment. (ATCP 134.08(3))
  • Requires the resident to pay any legal fees the investor incurs from any dispute related to the rental agreement. This doesn’t stop the investor or resident from getting court-ordered legal fees. (ATCP 134.08(4))
  • Allows the investor to “confess judgment” against the resident, meaning the resident has to agree with any lease violation accusations made by the investor. (ATCP 134.08(5))
  • Says the investor is not responsible for any property damage or personal injury caused by the investor’s negligence. (ATCP 134.08(6))
  • Says the resident is responsible for personal injuries from things outside their control, or for property damage caused by natural disasters or people other than the resident or their guests. (ATCP 134.08(7))
  • Waives any legal requirement that the investor must provide a habitable property or maintain the property during the tenancy. residents can’t give up their right to safe and habitable housing. (ATCP 134.08(8))
  • Allows the investor to end the tenancy if a crime was committed on the property and the resident or someone living with the resident is a victim of that crime. (ATCP 134.08(9))
  • Allows the investor to end the tenancy for a crime related to the property, and the agreement doesn’t include the required notice. (ATCP 134.08(10))

Code Violations and Conditions

Local housing codes establish the standards that rental housing must meet but do not protect all rental housing in Wisconsin. Before entering into a rental agreement, an investor must disclose to a prospective resident any building or housing code violations, as well as structural or other conditions in the rental unit or premises that constitute a substantial hazard to the health or safety of the resident. investors often require residents to pay utility charges separate from the rent. A resident must know if utility charges are included in the rent before signing a rental agreement. (ATCP 134.04(2))

Utility Charges

Investors often ask residents to pay utilities separately from rent. Before choosing a place, a resident should know if utilities are included in the rent. This helps them understand the total rent cost. According to ATCP 134.04(3), investors must tell potential residents if utilities aren’t included in the rent. residents should know this before signing a lease or paying any money like a deposit.

If utilities aren’t included in the rent and there aren’t separate meters for each unit, investors must explain how they’ll split the utility costs between the units. (ATCP 134.04(3))

Security Deposits

The rules require that the investor provide written notice to the resident that they have at least seven days to inspect and document any preexisting damages or defects and that the investor provide a list of any physical damages for which the investor withheld money from the previous resident’s security deposit. The rules provide that the investor must return the security deposit to the resident’s last known address within 21 days after the end of the rental agreement unless the investor re-rents the unit before the end of the rental agreement.

An investor may withhold money from a resident’s security deposit only for the following reasons: damage, waste, neglect of the premises, nonpayment of rent, and nonpayment of government utility charges. The rule allows investors and residents to negotiate a “Nonstandard Rental Provision” that allows the investor to withhold the security deposit for other reasons than those listed above, with some exceptions. However, an investor may not deduct the cost of routine carpet cleaning from the security deposit.

The investor must give the resident an itemized written statement of accounting for the security deposit, which must have two entries for each deduction. If the resident fails to leave a forwarding address, the investor may still withhold some or all of the security deposit.

The investor is required to provide a written list of damages within 5 days of a resident moving out.

Earnest Money Deposits

Earnest money deposits are given to an investor by prospective residents to protect the investor from possible costs or losses if the prospective resident decides not to rent from the investor.

When an investor accepts an earnest money deposit from a prospective resident, they must return the full amount to the applicant by the end of the first business day, unless they reject the application, refuse to enter into a rental agreement or fail to approve the application within three business days. If a resident withdraws their application, the investor may withhold money from the earnest money deposit for lost rent but must make reasonable efforts to re-rent the premises to mitigate damages. ATCP 134.05

Prohibited Practices

Advertising or Renting Condemned Premises

Investors cannot advertise or rent a property that’s not suitable for people to live in. If the property is condemned or there’s a notice of such, investors cannot rent it out. Once all necessary repairs are made and the property meets local safety standards, it can be advertised for rent. (ATCP 134.09(1))

Unauthorized Entry

The law allows investors to enter a rented property only under certain conditions. If there’s a special agreement (Non-Standard Rental Provision) between investor and resident, entry under additional circumstances can be permitted. However, without the resident’s permission, investors can’t freely enter the property. The law only allows investors to enter without prior approval in a few specific situations. (ATCP 134.09(2))

Automatic Lease Renewal

Investors must remind residents about an automatic lease renewal 15 to 30 days before the resident’s final decision. If they don’t, the renewal isn’t valid. (ATCP 134.09(3))

Confiscating Personal Property

Investors can’t keep a resident’s belongings unless the law allows it. (ATCP 134.09(4))

Retaliatory Eviction

Investors can’t punish residents for reporting violations or asserting resident rights. This includes increasing rent, decreasing services, refusing to renew a lease, evicting, or threatening to do these. (ATCP 134.09(5))

Failure to Deliver Possession

Investors must allow residents to move in at the agreed time unless something is out of their control. (ATCP 134.09(6))

Self-Help Eviction

Investors can’t force residents out without following the legal eviction process. This includes disconnecting utilities, changing locks, or removing doors. (ATCP 134.09(7))

Late Rent Fees and Penalties

Investors can only charge late fees if it’s in the rental agreement. If a resident pays late rent, the payment must first cover any current rent due before covering a late fee. (ATCP 134.09(8))

Misrepresentations

Investors are prohibited from lying about the property or agreement to get a resident to sign. They can’t misrepresent the unit, hide extra charges, or use “bait and switch” tactics. (ATCP 134.09(9))

Right-To-Entry

If allowed, the investor can enter the property by following these steps:

  1. Give the resident a 12-hour notice beforehand;
  2. Enter at reasonable hours for these purposes:
    • Checking the property;
    • Fixing things;
    • Showing the property to possible residents or buyers;
    • For reasons approved by Non-Standard Rental Provision.

If an investor comes in while you’re renting, they have to let anyone inside know they’re there. They could knock or ring the doorbell. If anyone is there when the investor comes in, the investor has to say who they are before they come in.

Non- Standard Rental Provisions

Wisconsin law requires that investors put certain provisions separately so that a resident will see them, and understand that their rights are being removed by this section. If an investor wants to do these certain things, they HAVE to be in a Non-Standard Rental Provision.

Identification of Investor or Authorized Agents

Investors must provide in writing the contact details of the people responsible for rent collection and property management. residents should be able to reach these people easily.

Investors must also provide the details of the property owner or a person who can accept legal documents for them. This address (not a P.O. Box) must be in Wisconsin. If any changes occur, the investor must notify within 10 business days.

However, these rules don’t apply to owner-occupied buildings with up to four units. In these situations, the investor lives in the building, so the resident knows who to contact. (ATCP 134.04(1))

Maintenance and Repairs

In order to address problems with building maintenance, the investor must provide a contact person for rent collection, maintenance, and legal papers. The contact person must be located within the State of Wisconsin.

Investors are obligated to maintain the property in compliance with housing codes. residents must promptly report any needed repairs to the investor. Additionally, there are some minor repairs and maintenance residents are responsible for.

Investor Repair Obligations

  • Make sure heating, plumbing, electrical systems, and building structures are in good shape. (Wis. Stat. 704.07(2)(a))
  • Keep shared spaces like hallways, storage rooms, laundry rooms, parking areas, and yards tidy and safe. (Wis. Stat. 704.07(2)(a)1)
  • Look after all equipment given, including all appliances. (Wis. Stat. 704.07(2)(a)2)
  • Follow all local housing rules. If a resident damages something, it doesn’t remove your duty to keep the place maintained for other residents. (Wis. Stat. 704.07(2)(a)5)
  • Put a working smoke detector on every floor, including the basement. If a resident reports a broken smoke detector, fix it within five days. (Wis. Stat. 101.145)
  • Install and look after carbon monoxide detectors in all new and most existing homes. (Wis. Stat. 101.149)

Resident Repair Obligations

  • Do small fixes like changing light bulbs. (Wis. Stat. 704.07(3)(b))
  • Keep the apartment clean and safe.
  • Make sure smoke detectors work. If not, tell the investor in writing. (Wis. Stat. 101.145)
  • Follow all local housing rules. (Wis. Stat. 704.07(3)(c))
  • Set the thermostat to a reasonable temperature to stop pipes from freezing.
  • Fix damages caused by you or your guests, or pay the investor to do it. (Wis. Stat. 704.07(3)(a))

Promises to Repair

ATCP 134.07, The investor must specify in writing when they will complete repairs, cleaning, or improvements, and must give the resident a copy of these promises. Repairs must be completed on time, and the investor must tell the resident if something happens to delay the repairs.

If your investor made a written or verbal promise to repair but has not followed through, you may file a complaint with Consumer Protection by calling (800) 422-7128.

Terminating Tenancy/Risk of Eviction

Wis. Stat., sec. 704.17, An investor may evict a resident who does not pay their rent, pays only part of their rent, or pays the rent late. An investor may also evict a resident who breaks the rules or terms of the rental agreement.

Residents can get a 5-day or 14-day written notice to leave the property:

  • 5-day “Fix” Notice: This notice from the investor gives the resident five days to fix the issue or move out. If the resident fixes it, they can stay. If not, the investor can start eviction steps under Wis. Stat. ch. 799.
  • 14-day Notice: This notice says that the resident has to leave because they broke the rental agreement. This notice doesn’t let the resident pay rent or fix the problem.

For month-to-month renters, if you don’t pay rent or break the rules, your investor can give you a 14-day notice without first giving a 5-day notice to fix the issue.

For renters with a lease of one year or less, if you don’t pay rent on time, the investor must first give a 5-day notice. This gives you a chance to fix the problem before the investor can start eviction proceedings. If you fix it but are late on rent again within 12 months, then the investor can give a 14-day notice without a chance to fix it.

If you get the proper notice but don’t leave, the investor can start eviction proceedings in Small Claims Court. You have the right to go to court to fight the eviction. If you don’t go to court, the investor can automatically get the eviction order. The investor can’t take your things or use force to make you leave until the judge orders an eviction.

Also, if the court decides you stayed in the rental unit wrongfully, the court can order you to pay the investor double the rent (calculated daily) for each day you stayed unlawfully.

Criminal Activity

Wis. Stat. sec. 704.17(3m), An investor may serve a 5-day Notice to vacate the premises without an option to stay if the resident threatens the health or safety of other residents or immediate neighbors.

A resident who is accused of criminal activity or drug-related criminal activity may seek legal advice/volunteer clinic or resident resource center.

Discrimination

Both investors and residents are protected against discrimination based on race, color, religion, sex, national origin, ancestry, disability, lawful source of income, marital status, and more.

To learn more, please visit the U.S. Department of Housing and Urban Development website to read about The Fair Housing Act.

Penalties for Violating Residential Practice Rule

If the department finds any violations, they try to resolve them amicably. But, if needed, they will enforce penalties. The penalties a court imposes depend on the severity of the violations and resulting harm.

Under Wis. Stat. sec. 100.26(6), penalties can range from $100 to $10,000 per violation. Criminal charges may also be filed, leading to fines from $25 to $5,000 per violation, or a year in jail, or both.

In addition, the court may issue a warning to not repeat these violations and may order restitution to the victim. Anyone affected can also file a private lawsuit to recover any losses caused by these violations.

The Department of Agriculture, Trade, and Consumer Protection investigates violations of the Residential Rental Practices rules. If prosecution is required, they cooperate with the Wisconsin Department of Justice or the local District Attorney.

Resources

Residents and investors can access resources provided by local agencies or organizations that specialize in housing matters.

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