60-Day Notices and a Final Word on Distressed Properties

If you never have been to a city council meeting, you really should go sometime. The process is nothing less than fascinating, and there are times when there is a true entertainment value to the whole thing. Some meetings are boring with an agenda of items that will get little discussion and the evening ends with a long round of 12-0 votes. Last night was not one of those nights.

First, the Federal Building was on the agenda, as two separate agenda items. I did get a chance to address the council with my concerns, but that is not what today’s blog post is about. (As a hint though, it IS what tomorrow’s radio show will be about.) The final agenda item that generated a fair volume of discussion was the proposed sewer rate increase. In between those two items, was a recommendation to separate Break Away from their entertainment license for the next three months.

When I got to City Hall, there was a sign in the lobby that pointed toward council chambers indicating the meeting would be from 7:00 PM to 8:30 PM. I took one look at that sign and laughed…. 8:30 PM with this agenda… someone has spent too much time outside in the sub-zero temperatures. It was pushing 10 PM before the meeting adjourned.

However, this blog post is not about that… on last Thursday’s Dr Rent Show preview blog post, I did not really have time to summarize the previous week’s radio show. I had promised to do that over the weekend, but needless to say 13 ½ “ of snow that managed to break 3 snow blowers, the ABS system on the plow truck, cause a hydraulic leak on the tractor and break a snow shovel got in the way.

So… back to the Radio show that I did on December 2nd. First we answered a series of questions about requiring a 60-Day notice to end a rental agreement… nothing in the law addresses this type of notice, so is it legal and enforceable. And of course, my favorite answer is…. Maybe.

60-Day Notice to End a Lease for a Term – MAYBE. When a lease ends, it ends. Period. If the lease ends October 31st, and the tenant leaves, you cannot automatically hold them responsible for a longer term. If the tenant vacates at the end of the lease, but gives no notice, the landlord cannot hold them responsible for an additional 60 days. This would constitute an automatic renewal. The reason why I say maybe is because if the landlord provided the tenant with a reminder notice in writing… if between August 1st and August 15th the landlord gave the tenant a written reminder that if they were going to leave at the end of the lease term, they needed to give notice by September 1st… then yes… the landlord could in fact enforce the automatic renewal.

60-Day Notice to End a Month-to-Month Term – PROBABLY. Although the normal notice for a periodic (month-to-month term) is 28 days, Wisconsin law does allow for the landlord and tenant to agree to other terms. So, if the written agreement between the parties indicate that the month-to-month term has a 60 day notice requirement, that would be enforceable. The reason for the probably answer and not a straight yes is because all too often, month-to-month terms are verbal in nature. If there is a verbal agreement for a month-to-month term with 60-Day notice, the landlord would only be able to enforce that notice requirement if they could prove in court that such notice requirement existed. This is hard to do when there is nothing in writing to back it up – this is why I strongly discourage verbal agreements.

60-Day Notice to End a Lease that is being Held-over – I BELIEVE YES. This is actually the question that prompted the entire discussion. So, with a written agreement, the 60-Day notice for a lease would be considered an automatic renewal, but a 60-Day notice in a written month-to-month agreement would be allowed under Wisconsin law. What if it was a year lease, that lease ended. The tenant remained and therefore the lease agreement turned into a month-to-month holdover agreement. Would the 60-Day notice requirement in the original lease be valid. I believe yes because when a rental agreement goes from a set term to a holdover, all of the terms of the original agreement remain in effect. Although there are issues with the automatic renewal provisions within the lease with that notice requirement, the lease renewed through a holdover agreement between the parties, which is covered in state law. The tenant wasn’t forced to renew, they chose to through their actions. This converted it to a month to month, and since the written agreement established a 60-Day notice…. In my personal opinion – that would be enforceable.

Are we completely confused? Don’t feel bad. This question didn’t actually come from a landlord or tenant – it came from an attorney wanting to know my two cents on how I would personally interpret that situation.

In the main topic of the December 2nd radio show, we finished our distressed property discussion. This has been something we have been working on for a few shows now. We started by talking about the various terms used when dealing with distressed properties. We then covered the steps a property goes through when it is being foreclosed. We looked at the different times in the process that you can get involved. We also talked about some hidden costs that need to be addressed. We then looked at some of the different ways to get involved, including short sales, buying the paper, and buying the property at a sheriff sale. That is where we then picked up this topic.

The final way to purchase a distressed property is directly from the bank once the entire foreclosure action has been completed. This is by far the safest way to do things. Often, banks list their inventory of REO properties through agents and you go through the same steps you would in a more conventional transactions. Many of the hidden costs are gone because the bank issues a warranty deed. In addition, you are able to actually inspect the property prior to the sale and therefore have a better idea of what repairs might be needed. Of course, because the bank has gone through the work of clearing the title and paying any back taxes, this is the most expensive way to get into the sale. Remember, in real estate (as in life), safe = expensive.

We also talked about how to research the property no matter how you were going to get involved in its purchase. One of the most important things you can do is drive by the property. Of course, the condition of the inside of the property is much more relevant than the outside… and often that is not possible. However, if you can inspect the interior, you can make a smarter investment decision. Experienced people know how to get inside of vacant properties… but I will warn you now… often those methods are not exactly legal. If you get arrested for breaking and entering – that is on you.. I don’t want any one to say I told you to do it…

Other research is easily done with a call to the city or county… learning about the assessed value of the property, how long the current owners have owned it, what they paid for it, how much the taxes are, what are the total amount of taxes due. More in depth research such as learning about all other liens that are on the property may require a preliminary title search would could cost some money. But if you are going to gamble with tens of thousands of dollars on a real estate deal, a $100 or so for a preliminary title search is normally money well spent.

Basically… knowledge is power. The more you know, the less risk you are taking. Cash is king. You don’t always need cash to do these sales, but the more you can work without financing contingencies, the more opportunities are available to you. Is not what you know but who you know… often it is about relationships… often some of the best opportunities never hit the open market and they are learned about through word of mouth.

And finally – and most importantly – If it looks too good to be true, it probably is. If you see that you are the only one bidding on a $200,000 property that is going for less than $10,000… it is almost certainly possible that people have been doing this for a lot longer than you know something that you don’t and there is a reason they are not trying to jump in on this opportunity.

Tomorrow… I will let you know what this week’s Dr. Rent radio show will cover. (Hint – the Federal Building). I will also summarize what we talked about on the December 8th radio show.

Until then… HAPPY RENTING!

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About drrent

Wausau, Wisconsin Landlord, past president of the Wisconsin Apartment Association, Host of the Dr Rent Radio Show on WNRB-LP, 93.3 FM, Wausau, WI
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