Pros and Cons of Rental Licensing in Wausau

 

Another week has gone by, and it has been a pretty good one.  Although the Woodchucks dropped a couple of games early in the week (as well as having a bench-clearing brawl inWisconsin Rapids, which there truly is no excuse for), we did have a big win at their last home game.  Tonight is another home game, and in addition to it being mini-bat night, the Fred Mueller Organization of the Night is Junior Achievement, which is something that I have been involved with for 11 years now.

 

Before the rains hit on Monday, I got all of my lawns mowed except for three.  This was a pretty good accomplishment considering last time, it took me nearly a week to get all of my lawns done.  I am hoping the rains stop tomorrow so I can get those last three lawns done on Friday.  I can then spend the entire day on Saturday mowing my lawn.  It normally takes about 3 hours to do my lawn, but I really need to bag it, and as thick as the lawn has been, I am guessing it will be a full 8 hours or so on the tractor this weekend.

 

We also rented out a townhouse, and have a very strong lead for a duplex and aWausauapartment that I am hoping to get applications back on before the end of the week.  So, as weeks go, this one was okay.

 

Yesterday morning I was in class.  The UW Extension’s Rent Smart for Professionals program presented by Attorney Andrew Schmidt was yesterday, and I always attend these.  He takes a number of questions, which I will often borrow for my radio show.  Plus, every now and then I learn something as well.  Most of today’s Dr. Rent Radio Show will cover items that came up in that class.

 

Our main topic has to do with eviction notices.  If you are a tenant, and you get a 5-Day eviction notice, how much time do you really have to move?  As always, before the topic we cover questions.  Questions this week include if you are breaking up with your boyfriend or girlfriend that you let move in with you, can you just throw them out or do they need some kind of notice?  What should a tenant do when the presence of mold is making their apartment uninhabitable?  If the pipes freeze and break in the winter, is this a landlord problem or a tenant problem?  And, a question that didn’t come from the class ties in a little bit with what we talked about a few weeks ago when it comes to carpeting.  A tenant moved out and was told by the landlord at that time that things “looked pretty good.”  20 days later, the tenant gets a bill to replace two rooms of carpeting, can they do this?

 

On last week’s show, we had a number of questions.  Some of them we had covered in the past, like talking about the maximum number of people who can live in an apartment and if there are laws about that.  There are laws, but they vary from city to city.  And you would be surprised just how many people those laws allow.  Most laws are based on a formula that takes into consideration total square footage of living space.  Landlords can set their own requirements (mine is two per bedroom, regardless of gender/age/etc.), as long as those requirements do not adversely and unreasonably impact protected classes.  (HUD has determined the two per bedroom standard to be a fair one, as far as fair housing is concerned.)

 

In a question I got from a tenant, the landlord had to replace a major appliance (an oven for example), because it “wore out.”  The landlord is now billing the tenant for the cost of the new appliance, can they do that?  Maybe.  Why did the appliance “wear out”?  Was it just old and appliances don’t live forever?  Or was their some type of mis-use or abuse by the tenant that caused it to “wear out” before its time?  If it just died of “natural causes”, that would be a landlord expense.  However, if something the tenant did hastened the issue, they could be facing some liability.  The tenant cannot be charged the full replacement cost unless the appliance being replaced is practically new.  Normally, a landlord must take into consideration the normal useful life of the appliance and the tenant can be charged for only that portion of the useful life that was unused.  For example, if an oven lasts 15 years and was 5 years old when it needed to be replaced because of tenant neglect, the tenant can only be charged for the 10 years of life left (or 2/3 the total cost), not the entire replacement cost.

 

We also had a question on notices.  The 28-Day Notice is used to terminate a periodic rental agreement, such as a Month-to-Month agreement.  If there is a one year lease term, can this same notice be used to terminate that agreement before its normal end date?  Only if the lease says it can.  If a lease term is for one year, as long as the tenant is not in default, they have rights for that entire year and if the landlord wants to end the term early, it can ONLY be done with the agreement of the tenant.  The landlord cannot unilaterally end the contract before the lease end date, if the tenant has done nothing to breach the agreement.  However, if the lease grants the landlord this right, that would be the only time this could be done.  This is a common clause to put in a lease if a landlord is renting out a home they are also trying to sell.  They may establish a year lease, but have a clause allowing them to end it early on a certain amount of notice if the property is sold, because without such a clause, the new owner would be held to the terms of that lease and it would make it difficult for someone to purchase that home if they were looking for someplace that they could move into.

 

That tied right into another question, from someone looking to buy a rental property.  The property they looked at was subject to a long-term lease that was extremely favorable to the tenant (no deposit, rent way below market, etc).  They wanted to know if they bought that property, could they renegotiate that lease or would they be stuck with it.  They could always try to renegotiate the terms… but yes, unless the lease says otherwise (or unless a foreclosure is involved), that lease runs with the property and the new landlord must honor it.

 

The final question before last week’s topic was the landlord’s duty to mitigate damages.  If a tenant moves before lease end (whether that move was voluntary – such as a job transfer to a different city; or involuntary – they were evicted), the landlord is still entitled to rent through the end of the lease.  However, they can only collect this rent if they make a reasonable effort to re-rent the property.  What would be considered “reasonable” efforts?  There are two things that a court would look at.  First, what would this landlord normally do to re-rent the property when it comes vacant.  Second, what is considered “normal” in that market?  Two big things to remember when it comes to mitigating damages:  if a landlord has similar units to the one in question, the law allows the landlord to rent out those units first; and, if the landlord decides they are through with renting and are going to sell the property instead; putting up a For Sale sign instead of a For Rent sign is NOT mitigating damages.  If a tenant broke their lease and the landlord decides they are not going to try to re-rent it and they are going to try to sell it instead, they can NOT charge the tenant for that rent.

 

The main topic of last week’s program was a summary of our recent Wausau Housing Task Force meeting.  Rental unit licensing is again on the agenda.  Although I am still firmly against it, I am still willing to participate in the discussions.  Personally, licensing will put an undue and expensive burden on good landlords as well as the city, and I personally feel this is completely unneeded when the City has a number of other tools available to them to help eliminate blight that they are choosing not to use.  I feel thatWausau’s blight problem is based more on aggressive enforcement (or lack thereof) than anything else.

 

What we did talk about was the pro’s and con’s of rental licensing.

 

THE FOLLOWING IS THE SUMMARY OF ALL COMMENTS AT THE TASK FORCE MEETING, THESE ARE NOT NECESSARILY THE VIEWS OF DR RENT!

 

Some of the benefits of creating a licensing program would include:

–         It would provide a method to gain entry into the interior of buildings.  It is clear when driving by if the outside of a building isn’t kept to code.  But there is no way to know if the inside is up to code.

–         It would allow the public to know who the landlord of a particular property is.

–         It would generate revenue for the city.

–         It would be a tool to help assist with code compliance.

–         It would result in an overall improvement of rental housing stock, and better units overall.

–         It would not only provide a list of landlords, but potentially break down that list into good landlords and bad landlords (as far as code compliant housing).

–         It has the potential in assisting landlords with bad tenants.

–         In the case of a bad landlord, the city would have the ability to revoke the license, therefore forcing compliance.

 

Of course, with the good there is the bad.  Some of the potential problems with licensing include:

–        Wausaucannot do this with its current staff and additional staff would need to be hired.  It is possible that the expense of the additional staff needed would exceed the additional revenue generated.

–         Occupants of housing that is not code compliant and therefore not able to obtain a rental license could end up homeless.

–         There would be a difficult balance for property inspectors when it came to their normal duties and rental licensing duties.  Would the inspector paid for by license fees ONLY be allowed to work on license issues?

–         Additional expense and procedures could end up punishing good landlords in an effort to punish the bad ones.

–         What would be the time frame needed to do the rental inspections

–         And… can other methods be used to achieve the same results.

 

Another item that I brought up, but that didn’t make the list is that the additional cost of a licensing fee will be passed on to the tenants.  It will make housing inWausaueven less affordable than it is now – andWausauhas some affordability issues.  (Do a public records search for what type of rents are going to be charged at the new tax credit housing projects at the old Zastrow site and theFederalBuilding, those are not what I would personally consider “affordable” rents!)  The reason it didn’t make the list is because rent is set by the market.  Landlords would not increase their rents to cover this fee if the market could not bear that additional cost.  EXACTLY MY POINT!!!  Landlords will need to increase rents, and if the market doesn’t allow that, they will need to decrease their costs, and after property taxes, the biggest cost is maintenance.  So, money spent paying anew cityfee will either A – be passed on to renters, who are the people least able to pay any more than they do now.. or B – take away from money that would be spent on maintenance issues.

 

The final item on the list… can other methods be used to achieve the same results… will be the likely topic of our next meeting.  I chaired the task force that wrote Weston’s Chronic Nuisance Ordinance.  My homework for the next meeting is to have not only copies of Weston’s, but Chronic Nuisance Ordinances from other cities that are working well.  (Of course, throughout all of this, I am firmly on my soap box that enforcement is the key to this all… passing new rules and new ordinances are USELESS unless they will be enforced.  And, I continue to question if these new rules are needed or do we have the tools we already need and it is simply a question of enforcement.)

 

These meetings that discuss licensing are the most … ah.. vigorously discussed, there is push back.. A lot of it.  I was told by Anne Werth (who chairsWausau’s Housing Task Force) that the City Council as well as the public is pushing for licensing.  And I held her to task and specifically asked… is the Council and the public really pushing for licensing?  Or… are they pushing for blighted properties to be brought to code?  She did admit it is the latter.

 

As you can see, you just can miss an episode, there is always so much to learn and discuss.  So, until this evening – HAPPY RENTING!!

 

The Dr. Rent Radio Show is heard Thursday evenings on 93.3 FM, WNRB-LP in the Wausau area from 5 PM to 6 PM.  It can also be heard world-wide on the internet by clicking on the Hmong Radio link at www.wausauhmong.org.

 

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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
This entry was posted in 30-Day Notice, Blight, Chronic Nusiance, Education, Federal Building, Housing Codes, Housing Task Force, Junior Achievement, Questions, Rent Smart, Trolley Apartments, UW-Extension, WNRB, Woodchucks and tagged , , , , , . Bookmark the permalink.

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