New legislation that would significantly improve the way landlords can screen potential tenants is making its way through the Legislature. Perhaps more importantly, the legislation (Senate Bill 107 and Assembly Bill 155) would also standardize the residential rental marketplace in Wisconsin by having state law preempt local ordinances governing landlord-tenant relations. The bill has the strong support from apartment associations and landlord organizations across the state, but is intensely opposed by tenant rights organizations and municipalities that support local control over such matters. The Wisconsin REALTORS® Association supports the legislation because it provides needed authority for property owners and managers to fairly review a prospective tenant’s financial, rental and legal background to protect themselves as well as other tenants.
The legislation prohibits a municipality from placing limitations on a landlord’s use of important information when reviewing the background of prospective tenants, including:
Tenant’s Financial Condition – Monthly household income, occupation and credit information are important indicators of a prospective tenant’s ability to meet the monthly rent obligation along with other expenses (water, electric and gas). If a prospective tenant has a poor history of paying bills or meeting financial obligations on a consistent basis, the landlord should be aware of this fact before entering into a lease. Quality screening necessitates this basic information.
Legal Issues – Court records are equally important indicators of a prospective tenant’s suitability for a specific rental property. In Wisconsin, landlords have the ability to check on the prospective tenant’s rental history through CCAP (the Consolidated Court Automation Programs). If the applicant has a record of failing to pay rent, utilities or other issues related to rental property, especially eviction, the landlord should know this in advance of any lease agreement. Tenants may also use CCAP to review prospective landlords as well.
Prospective Tenant Showings – The legislation would allow landlords and property managers to show property to a prospective tenant and enter into a lease agreement with new tenants while the current tenant is living in the property. Any such arrangement must be acceptable to the current tenant and the landlord, and both sides must cooperate to allow the owner to find and sign new tenants. If landlords are not allowed to show a property before a lease expires, the end result is an empty apartment. This provision allows for an orderly transition between the current occupant and a new occupant.
The legislation does not impact existing federal, state and county fair housing laws dealing with discrimination.
The WRA believes SB 107 and AB155 remove unnecessary limitations some Wisconsin communities have placed on the ability of residential landlords and property managers to properly screen prospective tenants. Many, if not most, landlords and property owners are small “mom and pop” operations that tend to operate on very small profit margins. One bad tenant or an unnecessarily empty unit can seriously jeopardize their financial situation in any given property. While this legislation is controversial, in the end, good screening is an essential ingredient for a successful residential lease agreement between a property owner and a renter.
The legislation has passed the state Senate and will be taken up by the state Assembly soon.
Michael Theo is Senior Vice President of Legal and Public Affairs for the WRA.