COVID-19 Landlord and Tenant FAQs

LANDLORD FAQS

Q: My tenant is not paying rent, am I able to evict them?

A: Governor Evers implemented Emergency Order 15: A Temporary Ban on Evictions and Foreclosures. This order has altered the remedies available to landlords for a period of time. Currently, all evictions are suspended until May 27, 2020. Landlords are unable to begin the eviction process despite non-payment of rent by a tenant. There is an exception to this new rule: an eviction that is not based on failure to pay rent accompanied by a reasonable belief of imminent harm to another person. If a landlord has a reasonable belief, supported by affidavit, that a failure to proceed with the eviction will result in an imminent threat of serious physical harm to another person, then they may proceed with an eviction.

Q: Does this order apply to only residential landlords?

A: No, the order applies to both commercial and residential landlords.

Q: Can my tenants simply stop paying rent during this time?

A: A tenant my choose to stop paying rent at this time. However, the emergency order does not absolve them of their responsibilities as a tenant under their lease. During the stay on evictions and notices, a tenant is still responsible for rent, utilities, and all other obligations specified in the lease. If a tenant stops paying rent, make sure to maintain your records, inform the tenant they are behind, and request payment. If the tenant is behind on rent at the end of the emergency stay, then you can proceed with an eviction.

Q: If my tenant does not pay rent, can I still serve them with a notice?

A: No, the stay on evictions is extended to serving a notice. The best thing to do at this time is to try and work with your tenants. This is a difficult time for everyone, being thoughtful and understanding at this time can bolster your property’s image and reputation.

Q: What about the evictions that have already been filed?

A: COVID-19 has brought court proceedings across Wisconsin to a halt. The order does not dismiss or terminate your previously filed eviction, it just delays the proceedings. Make sure to check in on your current cases with your respective courts to see if or when your hearings have been rescheduled.

Q: Has the order affected writs of eviction?

A: Yes. The stay on evictions and notices extends to writs. At this time, no new writs are being issued, and those that have been sent to the sheriff’s office are not being executed. In many cases, if you have already sent the deposits in, they will be refunded upon your request.

Emergency Order 15 issued by Governor Evers has affected landlords and tenants across Wisconsin. With the uncertainty of COVID-19, it is important to stay informed on potential new orders issued by the Government. If you need additional advice or have questions about your rights and remedies as a landlord during this time, please contact Rizzo & Diersen, S.C.

TENANT FAQs

Q: Do I still have to pay rent?

A: Order 15 has stayed all evictions and notices by landlords to tenants. However, you are still responsible for the rent under your lease agreement. If you do not pay rent now, once the stay on evictions is lifted, you may receive an eviction notice from your landlord. If you are struggling to pay rent during these trying times, contact your landlord to see if you can work something out.

Q: I just received an eviction notice from may landlord, what do I do?

A: Due to Governor Evers Emergency Order 15, this notice is not valid. All notices of eviction for failure to pay rent and evictions have been stayed until May 27, 2020. If you received this notice, it is prudent to contact your landlord or community manager to discuss setting up a payment plan or explain your situation.

Q: What if I am already in the middle of an eviction proceeding? Is my eviction no longer allowed?

A: Most courts have pushed back proceedings several months due to Emergency Order 15 and the Safer at Home Order. However, the cases that have been filed prior to the issuance of the order will not be dismissed by the courts and will proceed when the Orders issued by the Governor allow. Be sure to check with the court in which your case was filed to stay updated on your new court dates.

Contractual issues during a pandemic

The current coronavirus pandemic has caused local and national disruptions that will have a short and long term effect. These disruptions have affected our schools, jobs, and businesses. Some of us might be wondering how a contract we signed might be affected by this pandemic. Parties to a contract can attempt to negotiate around these disruptions. But what if the parties cannot come to an agreement? What follows is a description of some legal doctrines that could be implicated in such contractual scenarios.

Force Majeure

A standard clause found in contracts is the force majeure/impossibility clause (hereinafter “force majeure”). Force majeure is when an extreme event beyond the control of the obligor arises and prevents the impacted party from performing the contract. An example of this is when a natural disaster prevents an obligor from delivering goods or services. If the natural disaster prevents the obligor from performing, then the obligor can be excused from performing because of the force majeure event.

Things to consider in a matter that involves force majeure

  1. “Is the extreme event listed in the force majeure clause?”;
    1. If the event is not listed, then the obligor is not excused from performance and will be in breach of the contract if he does not perform even if a non-listed event does occur.
  2. “Which party is bearing most of the principal non-payment obligations?” (whoever is that party is the primary beneficiary of a force majeure clause);
    1. In a sale of goods transaction, the seller bears the principal non-payments obligations and therefore, would want a broad force majeure clause.
  3. “Do the parties have the ability to terminate the contract if a force majeure event continues for a certain length of time?”
  4. “Does the dispute resolution clause (if there is one) apply to the force majeure clause, or does it go straight to the court?”
    1. Research shows that force majeure-related events are typically arbitrated.
  5. “Is the force majeure event covered or excluded by the parties’ insurance policy?”
  6. “What duty does the obligor have to the other party(ies) if a force majeure event occurs? Does he have to mitigate? Notify the obligee(s)?”

List of Force Majeure Events:

  1. Natural disasters (floods, earthquakes, severe weather)
  2. Pandemics, epidemics, quarantines
  3. Violence such as war, terror attacks, civil unrest
  4. Government action (eminent domain, condemnation, changes in laws/regulations, a government’s authority failure to act on a timely basis)
  5. Organized labor activities, strikes
    1. Have to look at if the obligor caused the strike (lockout of employees or bad faith bargaining)
  6. Shortages of power, supplies, transportation, and infrastructure
    1. Have to look at if the obligor caused the shortage or could have planned ahead.

List of Force Majeure Events that are excluded

  1. Changes in economic circumstances
  2. Subcontractor defaults
  3. Equipment failure
  4. Banking system failure

How have Wisconsin Courts interpreted and applied Force Majeure clauses

A Plaintiff argued that a lease continued in effect beyond a date under its force majeure clause.[1] The Plaintiff alleged that the combination of private and governmental inaction constituted a force majeure event.[2] The contract in Goldstein stated that the duration of the lease would be extended for a period equal to the period of force majeure event.[3] The court in Goldstein held that because it is presumed that parties to a contract know what laws and regulations will affect the ability to get a permit; thus, the failure to obtain the permit is not deemed a force majeure event. The court, in this case, also noted that only one party had the right to invoke the force majeure clause, and that was not the Plaintiff.

What if the contract/agreement does not have a “Force Majeure” clause?

Doctrine of Impossibility or Impracticality

If a contract contains no force majeure clause, then the doctrine of impossibility or impracticality might be invoked. These two doctrines excuse the obligor from performing under a contract if the performance is excessively burdensome due to an unforeseeable event that is not within the obligor’s control. 

Although there is not a lot of Wisconsin law precedent regarding the doctrine of impossibility or impracticality, there is Wis. Jury Instruction(JI)—Civil 3062. Which provides that:

“If performance of a contract is possible only if a certain state of facts continues to exist, then a cessation or termination of the state of facts which makes performance impossible will excuse failure to perform. But if performance becomes impossible by reason of contingencies which should have been foreseen by a party, then such party is not excused from the duty to perform.”

            A court would look at the facts and determine if the case satisfies the excessively burdensome standard. The Covid-19 pandemic is a unique circumstance that might allow a party to invoke one of these doctrines. A court would first have to look at a number of factors, some of which are considered in force majeure, to determine if one of the doctrines excuses nonperformance.

Frustration of Purpose Doctrine

 Frustration of purpose doctrine applies to contracts for goods and services. It is different from the doctrine of impossibility/impracticality because it can be invoked in cases where an event fundamentally changes the purpose of the contract. If the principal purpose of the contract is frustrated, at no fault of a contracting party, then the doctrine may apply to excuse nonperformance.  There is a high bar to meet when invoking this doctrine because the frustrating event must have been a primary purpose of entering into the contract. Furthermore, the event at issue must not have been within the risks contemplated by the contract.

            Wisconsin courts have held that to render a contract unenforceable because of a frustration of purpose, it requires that (1) the party’s principal purposes in making the contract is frustrated; (2) without that party’s fault; (3) by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made.[4] The court in In re Estate of Shepard determined a contract was enforceable because a flight instructor could no longer teach a student, due to the student’s death. [5]


Conclusion

Rizzo & Diersen S.C. is here to help you or your business navigate these legal issues. Contact our office at 262-652-5050 with any questions you may have regarding the coronavirus pandemic disruptions.


[1] Goldstein v. Lindner, 2002 WI App 122, ¶ 20

[2] Id. at ¶ 29.

[3] Id. at ¶ 30.

[4] In re Estate of Sheppard, 2010 WI App 105 at ¶ 13.

[5] Id. at ¶ 15.