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Leases and rental agreements are some of the more common contractual relationships that exist in everyday life. Most of us have at sometime
rented a residence, be it a house, apartment, or condominium. These relationships, between landlord and tenant, are often in writing and contain certain basic elements of the agreement, such as amount of rent, amount of security deposit, duration or length of the tenancy, and termination. In this article, I will use the term “lease” generically to refer to any landlord/tenant residential arrangement, although the term actually has a specific legal definition.
There are certain lease provisions which the legislature has prohibited. One such provision has been considered in a recent Wisconsin Supreme Court decision. The case is Baierl v. McTaggert, decided on July 11, 2001. That case concerned a lease which provided that if the landlord had to start legal action against the tenant, the tenant would be liable for all of the landlord’s expenses “including, without limitation, reasonable attorney fees incurred.”
The Wisconsin Administrative Code, at Agriculture, Trade and Consumer Protection (ATCP) section 134.08(3), prohibits any residential lease provision which requires payment of the landlord’s attorney fees. This law has been in existence since 1980. The Court reasoned that a provision requiring the tenant to pay the landlord’s attorney fees would have a “chilling effect” on tenants asserting their legal rights against a landlord.
What the State Supreme Court did with this illegal provision was to declare the entire lease unenforceable. As a result, the landlord was unable to recover its lost rents under the terms of the lease. The Court found that by including the illegal provision, the landlord lost his right to enforce the lease, even though the tenants skipped out six months early. (The landlord did, however, recover certain damages under a separate claim which was not based upon the lease.)
ACTP 134.08 actually lists a number of prohibited lease provisions. Although the Court considered only the attorney fees prohibition, it is likely that all prohibited provisions under that law could render a lease unenforceable. Other prohibited provisions include authorizing eviction by other than court procedures, providing for acceleration of rent payments, or waiving the landlords duty to mitigate damages. There are more.
It should be noted here that the Supreme Court has not created a new claim for tenants against landlords. What this decision says is that landlords could lose some or all of their rights under the lease if that lease contains prohibited provisions. Landlords should review their written leases, or have them reviewed by an attorney who is experienced in landlord/tenant law. |