Two recent Wisconsin Court of Appeals cases raised the question of the appropriate remedy for tenants if their lease is found to be void and unenforceable. In these cases, the tenants claimed their damages amounted to double the amount of rent paid throughout their tenancy plus costs and attorney fees.
This raises two concerns for rental property owners: (1) what can landlords do to make sure they do not have a lease that is void and unenforceable, and (2) what remedies do tenants properly have if they have a void and unenforceable rental agreement.
Void and unenforceable leases
The primary way rental agreements and leases may become void and unenforceable is if they violate one of the so-called “Ten Deadly Sins.” This list of prohibitions appears in both Wis. Stat. § 704.44 and Wis. Admin. Code § ATCP 134.08. Both list 10 prohibited provisions or things that a lease or residential rental agreement cannot do — in other words, the “sins.” These provisions cause the entire rental agreement to become null and void and unenforceable. For example, a lease that says the tenant can be evicted by changing the locks or that the tenant must pay the landlord’s attorney fees if the parties have a legal dispute is null and void.
One of the two most recent additions to the list of sins is a provision that “allows the landlord to terminate the tenancy of a tenant based solely on the commission of a crime in or on the rental property if the tenant, or someone who lawfully resides with the tenant, is the victim, as defined in § 950.02(4), of that crime.” The other recent addition states a rental agreement is void and unenforceable if it allows the landlord to terminate the tenancy of a tenant for criminal activity in relation to the property and it does not include the notice regarding domestic abuse protections required by Wis. Stat. § 704.14.
The applicable law
Wis. Admin. Code § ATCP 134.08 states in relevant part:
“Prohibited rental agreement provisions — rental agreement that contains certain provisions is void. Notwithstanding s. 704.02, Stats., a rental agreement is void and unenforceable if it does any of the following: …
(9) Allows the landlord to terminate the tenancy of a tenant based solely on the commission of a crime in or on the rental property if the tenant, or someone who lawfully resides with the tenant, is a victim, as defined in s. 950.02 (4), Stats., of that crime.
(10) Allows the landlord to terminate the tenancy of a tenant for a crime committed in relation to the rental property and the rental agreement does not include the notice required under s. 704.14, Stats. [Notice of Domestic Abuse Protections]”
The same prohibitions are stated in Wis. Stat. § 704.44.
Wis. Stat. § 100.20 regulates methods of competition and trade practices, and § 100.20(1) prohibits “unfair methods of competition” and “unfair trade practices” in business, which is interpreted to include the practices prohibited by Wis. Admin. Code § ATCP 134.08. In addition, Wis. Stat. § 704.95 states that practices in violation of § 704.44 constitute unfair trade practices under § 110.20. Thus remedies for committing one of the “Ten Deadly Sins” may be found in § 100.20.
Wis. Stat. § 100.20(5) provides in relevant part:
“Any person suffering pecuniary loss because of a violation by any other person of … any order issued under this section may sue for damages … and shall recover twice the amount of such pecuniary loss, together with costs, including a reasonable attorney fee.”
This statute was relied upon by the tenants in the cases who claimed their damages were double the amount of rent paid plus costs and attorney fees.
The cases
Each case involves an instance where one of the “Ten Deadly Sins” was committed. In one case, the lease did not include the Notice of Domestic Abuse Protections; and in the other case, the lease did not include language prohibiting the tenant from being evicted for a crime when the tenant was the victim. The tenants’ attorneys asserted these omissions invalidated the leases. In both cases, the tenants’ lawyers demanded double all rent paid by the tenants during the entire tenancy period plus attorney fees as damages; and in one case, they were successful.
Henchey v. Wausau Landmark Corp. — crime victim language
In Henchey v. Wausau Landmark Corp., the case started out as a dispute regarding parking fees the tenant objected to because he had never been told in advance about the fees. The court found there was insufficient evidence for that claim. However, the tenant also argued the lease was void and unenforceable under Wis. Admin. Code § ATCP 134.08(9) and Wis. Stat. § 704.44(9) because its plain language would allow the landlord to evict a victim of a crime committed on the premises.
The tenant pointed to rental agreement provisions that stated he was:
“4. Not to make or permit use of the Premises (by Tennant [sic] or guests) for any unlawful purpose or any drug/alcohol purpose that would be illegal.
5. To not make excessive noise or engage in activities which unduly disturb neighbors or other Tenants in the building.”
The tenant argued if any tenant or guest does anything illegal or engages in disorderly behavior on the premises, the tenant is in breach and subject to eviction, even if the tenant or anyone residing with them, such as a child or significant other, was a victim of the crime.
The court found that paragraph 4 of the rental agreement would permit the landlord to terminate a tenancy if a tenant used the premises for an unlawful purpose or permitted another to use the premises for an unlawful purpose and a person who lawfully resided with the tenant was a victim thereof. The rental agreement would allow the landlord to terminate the tenancy of a tenant based solely on the commission of a crime in or on the rental property even if the tenant, or someone who lawfully resides with the tenant, was a victim of that crime. Thus, the court held the rental agreement was void and unenforceable under § 704.44(9) and § ATCP 134.08(9). That was despite the fact there was no illegal activity or crime involved in the situation and the landlord did not terminate the tenant’s tenancy — the tenant moved out voluntarily, and no eviction was involved.
As far as the remedy, the Court of Appeals ruled the appropriate remedy was the return of all rent paid under the rental agreement, without any offset for the value of the benefit the tenant received from living in the apartment. The court ruled the tenant is entitled to double damages on this claim as well as costs and reasonable attorney fees, based on Wis. Stat. § 100.20(5).
This unpublished case is not a legal precedent but might have a persuasive effect in future cases brought by tenants. This case was settled and will not be heard by the Wisconsin Supreme Court, but it is likely tenant advocates will make the same arguments in other cases.
Hoffman v. Gribble
— no notice of domestic abuse protections
In the other case, Hoffman v. Gribble, the court found for the landlord under similar circumstances. The lease required that the tenant “obey all lawful orders, rules, and regulations of all governmental authorities.” But the lease did not contain a Notice of Domestic Abuse Protections as required by Wis. Stat. § 704.14.
The tenant argued the lease was void and unenforceable because Wis. Admin. Code § ATCP 134.08(10) provides a lease is “void and unenforceable” if it allows the landlord to terminate the tenancy of a tenant for a crime committed in relation to the rental property and the rental agreement does not include the Notice of Domestic Abuse Protections. The tenant did not experience domestic violence during the term of the lease, and the landlord did not terminate the tenancy; there was no crime committed in relation to the rental property.
The circuit court concluded that although the lease violated the statutory and administrative code provisions, the tenant failed to show he incurred a pecuniary loss as a result of the violation and therefore was not entitled to damages under § 100.20(5). The tenant appealed to the Wisconsin Court of Appeals. The court of appeals affirmed because the tenant had not shown a nexus or causal relationship between the violation and any pecuniary loss. They had not shown a pecuniary loss “because of a violation” as required by Wis. Stat. § 100.20(5) and thus could not seek damages under that provision.
The tenant argued he was entitled to damages under Wis. Stat. § 100.20(5) equal to double the total amount paid to the landlord in connection with the lease, which was for two years at $18,000 rent for one year, totaling $36,000. The landlord argued the tenant’s complaint should be dismissed because the tenant had not shown a pecuniary loss caused by the failure to include the domestic abuse protection notice in the lease.
The tenant’s attorney asked the Supreme Court to review this case, but the Supreme Court declined. This unpublished case, which also is not legal precedent, might have a persuasive effect in defense of a landlord facing this type of case. Tenant advocates likely will be making similar arguments in future eviction cases with the hope that they can recover all rent paid by their tenant/clients. This case provides landlords with the argument of why such damages are not obtainable under § 110.20(5) when there is no pecuniary loss resulting from a “Ten Deadly Sins” violation.
Protection for landlords
These cases highlight the need for landlords and property managers to make sure all leases and rental agreements are up to date and there is nothing included or omitted that would commit any of the “Ten Deadly Sins.”
First, they should make sure any lease or rental agreement they are using includes the Notice of Domestic Abuse Protections as required by Wis. Stat. § 704.14. This is already in most rental contracts.
Second, they may wish to add a statement to their lease or rental agreement that says:
“No provision in this Rental Agreement authorizes landlord to terminate the tenancy of a tenant based solely on the commission of a crime in or on the rental property if the tenant, or someone who lawfully resides with the tenant, is the victim, as defined by Wis. Stat. § 950.02(4), of that crime.”
Some standard Wisconsin leases have or will soon have the required provisions. The WRA Residential Lease does have the type of language needed regarding victims of crimes, but the lease has been modified to tighten up that language. The WRA also has revised the WRA Residential Rental Contract and the WRA Rental Agreement Notice to add victim of crime exclusionary language. These updated forms are available in Transactions (zipForm Edition) and the WRA PDF Forms Library subscription.
WRA Rental Agreement Notice
The WRA Rental Agreement Notice was designed to be used if the rental agreement is verbal, such as a month-to-month tenancy with no written agreement, or a verbal lease, to give written notice when required by the statutes. While there is a logistic inconsistency in providing a notice containing provisions that must be in writing in an agreement that is verbal, there is no reason to presume that the statutorily required written notices were intended only for those with a written agreement and not for those, for instance, with a verbal month-to-month tenancy. The courts have not ruled on this issue to the best of our knowledge. The Rental Agreement Notice covers disposal of personal property left behind, the Notice of Domestic Abuse Protections, the Sex Offender Notice and now the protection for the victim of crime language.
Using the Rental Agreement Notice form
The Rental Agreement Notice may be used to amend leases and rental agreements if the landlord or property manager is using forms that have not been updated to include these important notices. Use the Rental Agreement Notice as an attachment to an amendment such as the WRA Amendment to Residential Lease or Residential Rental Contract
The Rental Agreement Notice also may be used for verbal rental agreements, such as a month-to-month tenancy at the inception of the tenancy. Landlords should keep records of when the notice is given if the tenant does not sign and return the form
The Rental Agreement Notice also may be used for renewals — when a rental agreement is renewed. One way to do this may be to use the WRA form WRA-RAG, Lease Guaranty/Renewal/ Sublease/Assignment. The Renewal section starting at line 20 may be completed, and the Rental Agreement Notice may be referenced and incorporated on the blank lines at lines 22-25.
For further discussion about the Rental Agreement Notice, see pages 6-7 of the February 2014 Legal Update, “Implementing 2014 Landlord/Tenant Legislation,” at www.wra.org/LU1402.
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