The process of returning and, if need be, withholding a security deposit from a tenant is not as simple as one may think. There is a specific process required for Wisconsin landlords. Only certain amounts may be withheld from the tenant’s security deposit and a detailed summary of any security deposit withholding must be provided to the tenant.
A failure to follow the correct procedures related to returning and withholding security deposits of a tenant may expose a landlord to unwanted liability. In fact, a landlord that violates its obligations regarding the returning and withholding of a security deposit may be sued directly under Wis. Stat. § 100.20 (5), and the tenant that suffers a monetary loss because of the landlords violations may recover twice the amount of any monetary loss, together with costs and reasonable attorneys’ fees. Therefore, it should be any landlord’s practice to zealously follow their statutory obligations as to not expose themselves to any liability.
Returning a Security Deposit in Wisconsin
A landlord is required to return a tenant’s security deposit, less any money that is rightfully withheld, twenty-one (21) days after any of the following events:
- If the tenant vacates the premises on the termination date of the rental agreement, the date on which the rental agreement terminates.
- If the tenant vacates the premises or is evicted before termination of the rental agreement, the date on which the tenant’s rental agreement terminates or, if the landlord re-rents the premises before the tenant’s rental agreement terminates, the date on which the new tenant’s tenancy begins.
- If the tenant vacates the premises or is evicted after the termination of the rental agreement, the date on which the landlord learns that the tenant has vacated the premises or has been removed from the premises under Wisconsin Statute section 799.45(2).
(Wis. Stat. Admin. Code § ATCP 134.06(2)(a)-(c)).
Additionally, as it relates to returning a security deposit via check, a landlord is no longer required to make a security deposit return check payable to all tenants listed on the lease if there is no designated payee. Without a designated payee, there is no legislative requirement about to whom the security deposit should be returned.
Finally, a tenant’s acceptance of partial return of a security deposit may constitute a waiver of the full amount owed.
Withholding Security Deposits in Wisconsin
Withholding amounts from a security deposit can be done through two different avenues: (1) statutory withholdings; and (2) nonstandard rental provisions.
Under Wis. Stat. Admin. Code § ATCP 134.06(3), when a landlord returns a security deposit to a tenant after the tenant vacates the premises, the landlord may withhold from the full amount of the security deposit only amounts reasonably necessary to pay for any of the following:
- Tenant damage, waste, or neglect of the premises.
- Unpaid rent for which the tenant is legally responsible.
- Payment that the tenant owes under the rental agreement for utility service provided by the landlord but not included in the rent.
- Payment that the tenant owes for direct utility service provided by a government-owned utility, to the extent that the landlord becomes liable for the tenant’s nonpayment.
- Unpaid monthly municipal permit fees assessed against the tenant by a local unit of government, to the extent that the landlord becomes liable for the tenant’s nonpayment.
- Any other payment for a reason provided in a nonstandard rental provision document.
It is important to note, however, several exceptions exist with respect to withholding for “tenant damage, waste, or neglect” and “unpaid rent for which the tenant is legally responsible.” A landlord may not withhold any amount for damages related to normal wear and tear of a property. Additionally, any damages for unpaid rent are subject to mitigation by the landlord.
Finally, except with respect to normal wear and tear, “a rental agreement may include one or more nonstandard rental provisions that authorize the landlord to withhold amounts from the tenant’s security deposit for reasons not specified [by statute]. Any such nonstandard rental provisions shall be provided to the tenant in a separate written document entitled “NONSTANDARD RENTAL PROVISIONS.” Wis. Stat. Admin. Code § ATCP 134.06(3)(b).
Security Deposit Withholding Statement
A landlord should remember that they must provide a written statement accounting for all amounts withheld from a tenant’s security deposit. Specifically, the written statement must describe each item of physical damage or other claim made against the security deposit that our being withheld. Additionally, the written statement must include the amount withheld as reasonable compensation for each item or claim.
While returning a security deposit may seem easy, the process is important. Without following a process, a landlord may expose themselves to unwanted liability.
If you are a landlord and have questions or concerns regarding returning or withholding a security deposit please contact our trusted Gerbers Law attorneys here in Green Bay at (920) 499-5700.