Whether rental property is a side project, your primary business or a professional endeavor, no property owner likes to hear that the tenants are gone, disappeared to goodness knows where, or have “gone bad” and stopped paying rent. Steady rental income from reliable tenants is a blessing, but unfortunately not all are cut from the same cloth. Tenants do sometimes hit a rough patch and just pack up and leave in the middle of the night, stop paying rent or violate other lease terms. The landlord then must go through the messy process of terminating the tenancy.
The tenant dips out before the end of the lease term, leaving the landlord scratching his head over what to do next. The first order of business may be to look for a new tenant. If a tenant breaks the lease, the tenant remains liable for the rent for the balance of the lease term, subject to the landlord’s duty to mitigate as stated in Wis. Stat. §704.29. The tenant will have to pay rent until a new tenant signs a lease and begins paying rent. The landlord may charge the tenant the actual costs associated with re-renting the unit, but not for time spent.
Some tenants who leave early engage in a little self-help rent proration and pay the landlord based only on the number of days they actually occupied the property before their early departure. If the written lease entitles the tenants to occupy the premises until the end of the month, then the landlord is entitled to the full month’s rent. The tenants cannot unilaterally prorate the rent just because they vacated a few days or weeks early, unless such a right is specified in the lease or the landlord agrees. The landlord’s remedy? Wis. Admin. Code § ATCP 134.06(3) (a)(2) provides that a landlord may withhold from a tenant’s security deposit for “ unpaid rent for which the tenant is legally responsible, subject to § 704.29, Stats.”
When Did the Tenant Surrender?
The deadline for returning the security deposit – or what remains after deduction for rent not paid or the documented costs of repairing any damage to the premises – becomes challenging when the tenant vacates early without providing any formal notice. If the tenant turns in the keys six weeks early, when must the security deposit be returned?
Wis. Admin. Code § ATCP 134.06(2)(a) provides that a landlord must return the security deposit - less any amounts withheld - within 21 days after the tenant surrenders the premises. § ATCP 135.06(2)(b) provides that a tenant surrenders the premises on the last day of the rental agreement, except that “if the tenant vacates before the last day of the tenancy and gives the landlord written notice that the tenant has vacated, surrender occurs when the landlord receives the written notice. If the tenant mails the notice to the landlord, the landlord is deemed to have received the notice on the second day after mailing." Failure to comply with the security deposit rules may lead to double damages plus attorney fees.
At this juncture the prudent landlord checks with a local attorney. Some may opine that it is safe to return the security deposit within 21 days of the return of the keys, but others may advise that the 21 days is not triggered until the last day of the rental agreement because returning the keys is not the same thing as giving written notice. It is important to know how this is applied locally because being wrong could be costly.
Sometimes tragedy strikes and a tenant passes away. Wis. Stat. §704.165 provides that if a residential tenant dies, the tenancy is terminated on the earlier of (1) 60 days after the landlord receives notice, is advised or otherwise becomes aware of the tenant’s death, or (2) the expiration of the term of the rental agreement. In the case of the death of a residential periodic tenant or tenant at will, the tenancy is terminated 60 days after the landlord receives notice, is advised or otherwise becomes aware of the tenant’s death. Neither the deceased tenant nor the tenant’s estate is liable for any rent after the termination of the tenancy. A landlord may not approach, contact or communicate with a member of a deceased tenant’s family for the purpose of obtaining rent for which the family member has no liability. The landlord may, however, communicate with the family regarding the removal of the tenant’s personal possessions.
Tenant Not Paying Rent
If a tenant is habitually late or stops paying rent altogether, the landlord may give the tenant notice regarding that deficiency. Landlords must carefully review Wis. Stat. § 704.17.19 to determine what type of notice to use and whether the tenant has the right to cure the default or must simply move out. See pages 5-7 of Legal Update 03.07, “Residential Rental Primer” at www.wra.org/LU0307 for a detailed discussion of which notice form is appropriate depending on the type of tenancy and the kind of default involved.
The WRA has several recently revised notice forms that may be used depending on the circumstances:
WRA-5DRV – 5 Day Notice to Remedy Default or Vacate Premises
WRA-5DVN – 5 Day Notice to Vacate - Nuisance
WRA-14DN – 14 Day Notice Terminating Tenancy
WRA-28DN – 28 Day Notice Terminating Tenancy
WRA-30DN – 30 Day Notice Terminating Tenancy
These notices were updated to remove the “fill-in-the-date” language indicating that the tenant must vacate “on or before __________.” Frequently landlords would fill in a date only to experience a delay in getting the notice served. The result was that the filled-in date was wrong, giving the court grounds to dismiss the case. The language in the updated forms states, “within five days from service hereof,” and thus protects the landlord from making these inadvertent errors.
The next question concerns how the notice will be served. Failing to give notices in strict accordance with Wis. Stat. § 704.21 may give the tenant grounds to defeat the termination of the tenancy or the landlord’s associated claim for rent or other damages. § 704.21(1) provides that the landlord must give the tenant notice by one of the following methods:
§ 704.21(1)(a) “By giving a copy of the notice personally to the tenant or by leaving a copy at the tenant’s usual place of abode in the presence of some competent member of the tenant’s family at least 14 years of age, who is informed of the contents of the notice.”
§ 704.21(1)(b) “By leaving a copy with any competent person apparently in charge of the rented premises or occupying the premises or a part thereof, and by mailing a copy by regular or other mail to the tenant’s last-known address.”
§ 704.21(1)(c) “If notice cannot be given under par. (a) or (b) with reasonable diligence, by affixing a copy of the notice in a conspicuous place on the rented premises where it can be conveniently read and by mailing a copy by regular or other mail to the tenant’s last-known address.” Note: you must use reasonable diligence; it is best to use both regular and certified mail with a certified mail receipt.
§ 704.21(1)(d) “By mailing a copy of the notice by registered or certified mail to the tenant at the tenant’s last-known address.” Note: add two days for service by mail and get a certified mail receipt.
§ 704.21(1)(e) “By serving the tenant as prescribed in s. 801.11 for the service of a summons.”
Notices sent by e-mail are not on this list and will not generate effective service. But § 704.21(5) states, “If notice is not properly given by one of the methods specified in this section, but is actually received by the other party, the notice is deemed to be properly given; but the burden is upon the party alleging actual receipt to prove the fact by clear and convincing evidence.” So electronic delivery might still work in some cases where actual receipt is admitted or can be proved.
Once the notice has been successfully given, if the tenant does not pay the late rent or vacates the premises, then the landlord may proceed to an eviction action in small claims court.
The owner or an attorney may need to file the eviction action and appear in court. Under Wis. Stat. § 799.06(2) either the actual person, the person’s attorney, or a full-time authorized employee of the person must appear in small claims court. The definition of a full-time employee for this purpose is a person on payroll who is an employee of the property owner entity. A landlord which is a limited liability company (LLC), for instance, must be represented by an attorney because most LLC rental property owners receive dividends and are not paid wages.
For basic information regarding small claims actions, see the Basic Guide to Wisconsin Small Claims Actions online at www.wicourts.gov/publications/guides/smallclaimsguide.htm. There also is a self-help small claims website at myforms.wicourts.gov.
See the April 2009 Legal Update, “Wisconsin Rentals” at www.wra.org/LU0904, Legal Update 03.07, “Residential Rental Primer” at www.wra.org/LU0307 and Wis. Stat. chapter 704 at www.legis.state.wi.us/ statutes/Stat0704.pdf for additional information.
Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.