One potential pitfall of being a new landlord is not reviewing your state’s landlord tenant law for important sections such as security deposits, thinking that you know how it works. It’s not always as simple as requesting a deposit, depositing the funds, and then dealing with the return of the deposit when that time comes. How you handle the deposit upfront is critically important in most states, and Wisconsin is no exception to that general rule.
Amount of deposit
Wisconsin does not have a limit on the amount of the security deposit. However, any prepaid rent accepted by the landlord in excess of one month’s rent is considered part of the security deposit.
Referred to as “check-in procedures” in the Wisconsin statutes (ATCP 134.06), this process allows the tenant to, within seven days of move-in, provide a list of preexisting defects to the landlord and also request a list of physical damages or defects, if any, charged to the previous tenant’s security deposit. The landlord is not required to disclose the identity of the previous tenant or the amounts withheld from the previous tenant’s security deposit.
Applicable withholding items
So, what can be withheld from the security deposit? The general rule is damage beyond normal wear and tear, but here’s a list of approved items in Wisconsin:
- Tenant damage, waste, or neglect.
- Unpaid rent.
- Unpaid utility payments for utilities provided by the landlord and not included in rent.
- Payment for utility services provided directly by tenant, if the landlord becomes liable for unpaid amounts.
- Unpaid monthly municipal permit fees assessed against tenant by a municipality under Wis. Stat. § 66.0435(3), to the extent that Landlord becomes liable for tenant’s nonpayment.
- Any other payment to comply with a provision in a nonstandard rental provision document attached to the rental agreement.
Returning the deposit
Landlords tell us that this is the most controversial part of landlording, since almost every tenant expects to get their full security deposit back, regardless of the condition of your property. Here’s some advice: Be upfront with your new tenants at lease signing and once they give notice to move out about what constitutes a charge against the deposit. Provide examples of damage and cleanliness that would cause you to withhold a portion of the deposit.
In Wisconsin landlords have 21 days to return the deposit either in full or in part to the tenant, and if damages were taken from the deposit also provide an itemized list of amounts withheld. The itemized list must describe each item of physical damages or other claim made against the security deposit, and the amount withheld as reasonable compensation for each item or claim.