What is a Residential Rental Contract?
When it comes to renting a property in Wisconsin, having a clear and legally binding written contract is essential. Section 704 of the Wisconsin Statutes addresses such documents under the heading "Tenancies". 704.07 addresses Residential Rental Contracts, no matter if it’s for a single or multifamily structure. It makes sense, then, for those who rent from you to have in writing the terms of their occupancy. The Wisconsin Realtors Association Residential Rental Contract is a concise, well-thought-out way to get the job done.
What is a Residential Rental Contract?
A Residential Rental Contract is exactly that – a contract between you and your tenant that spells out the conditions of their tenancy. These include rental amounts and schedules, the length of time the contract is in effect, rules and responsibilities for individuals as well as the condition of the premises. This can be a form that you have handwritten terms onto, but using a Pre-printed Residential Rental Contract template (to which a tenant has added initials or signatures as needed), or creating your own lease agreement, gives everything a more professional feel and contributes to more professional actions on both your parts. Also, there are requirements in 704.08 that must be followed before a tenant can be properly evicted from an premises. These are designed to give the tenant the maximum protection possible.
Once in place, a Residential Rental Contract provides a clear definition of how a unit is to be used, if it’s for a fixed term or an open-ended lease and when and how the rental fee is to be paid. It also lets the tenant know if pets, smoking, etc., are allowed. Items such as where garbage is to go , who mows the lawn and what happens if those payments aren’t made are also included.
Why is a Residential Rental Contract important?
By having a Residential Rental Contract in place, you are protecting yourself from any kind of misunderstanding with your tenant. For instance, say you have agreed to allow a puppy, but the rabbit comes with a $200 non-refundable deposit. If the tenant decides to lie about whether there’s a dog or not and you discover 6 months later that there is indeed a puppy, you have no recourse since nothing is in writing. If it turns out the dog destroyed a chair or door, it’s up to the tenant to replace it – if there’s no lease, you have no evidence to compel him to.
What a Residential Rental Contract does is remove chance from the equation. You’re protected if you ever have to go to court over either compensation or the release of the property, while your tenants are equally protected so they don’t get stuck paying fees or penalties because you never got something in writing or changed the terms of the contract halfway through the rental period.
In general, having a contract clearly stating the terms and responsibilities of both parties goes a long way towards avoiding issues. If you’ve asked a tenant to shovel snow, and she refuses, the law is on your side if you need to terminate the agreement, if she refuses to move out, the law is on your side, even though you’ve lost that monthly payment. Without a Residential Rental Contract, though, it’s a real free-for-all, and gives the tenant plenty of options to fight you in court.
We all hope it never comes to this point, we hope, but having a contract lets both parties sleep easier knowing that everything is fair and above-board.
The Wisconsin Realtors Association’s Role
The Wisconsin Realtors Association (WRA) plays a vital role in the creation and revision of the Wisconsin Realtors Association Residential Rental Contract (RR&R). As a trade association, the WRA is dedicated to serving real estate professionals throughout the state of Wisconsin, including entities that decipt themselves as landlords or property managers. To that end, the WRA employs various committees, councils and work groups to assist its members to better provide valuable services to the general public by engaging in comprehensive research and drafting efforts to devise forms and contracts used in real estate transactions. The WRA also employs a residential real estate attorney who monitors developments in the law, legislative trends, proposals and issues that impact landlords and property owners. In 2012, in order to create a revised residential rental contract, the WRA established a committee comprised of real estate professionals across the country consisting of landlords, property managers, rental agents, and investors, together with an attorney specializing in hundreds of evictions. The revised rental contract (RR&R) is the product of these deliberations and extensive research into the most current and relevant information provided by participating real estate attorneys and the Wisconsin Circuit Courts that address landlord-tenant issues.
Features of the WRA Rental Contract
The Wisconsin Realtors Association residential rental contract includes important tenant rights and landlord obligations. Depending on the type of property involved (i.e. a single family home, apartment, etc.), the tenant may or may not have additional rights as well.
First, the tenant has the right to a copy of the rental contract within a reasonable time after signing it. Generally, a reasonable time is 5 days. The right to a copy of the lease or rental contract cannot be waived by the parties. Caution: The tenant should have the right to receive a copy of the lease or rental contract even if he or she has not yet paid the first month’s rent. It is bad practice for a landlord to try to charge the first month’s rent before the tenant has signed the rental contract or even shown his or her intent to rent the premises. However, that is what certain landlords will do regardless of what the law requires.
Second, the lease will contain the names of all adult tenants. In a lease, all adults sign the document and are equally illegibly for the terms of the lease. The Wisconsin Residential Rental Contract requires all adult tenant to sign the lease or rental contract.
Third, the rental product will be available on the date specified in the lease. This usually means that the tenant can move in on the date specified in the lease. Care should be taken that a specific move-in day is not listed in the lease contract since that will make compliance problematic for either the landlord or the tenant. The tenant should be given at least 7 days’ notice if there is any change to the occupancy date.
Fourth, the lease contract will specify the expiration of the lease. If there is no expiration date, a rental contract is treated like a month to month lease. In other words, tenants will have to give each other at least 28 days’ notice to vacate the premises.
Fifth, the rental contract will show the rent due each month. This will allow the tenant to know what to pay each month. The tenant must be given at least 5 days’ notice if the rent due date changes.
Sixth, the property will be kept in good condition. In addition, the tenant has a right to notify the landlord of any problems and the landlord has a duty to remedy such defects as soon as possible.
Seventh, the landlord may enter the premises according to the lease provisions. The period of notice and the rights of landlord to enter the property will be specified in the contract.
Using and Filling Out the WRA Rental Contract
The WRA rental contract should be used by lessors and lesses in Wisconsin for a term of one year or longer. This is a statutory lease similar to the listed rental contract found in the "on-line forms" offered by the Wisconsin Realtors Association (WRA). Note that the listed contract simply incorporates the statutory lease.
There is limited space available in the "fillable fields," that is, where there is a blank line with the typeable text that will be printed directly onto the contract. The key section that often times is confusing for the lessor and/or lessee is the authorized occupants section. The way the law is written is that a rental contract is created if you have something like a dog that is living in the unit, regardless of whether there is a separate written dog contract. To avoid a problem, it is a best practice to include every person that may ever spend the night at the rental (medical or other reasons for grandma, for example) as well as the dog and any other house pet(s).
When you go into court, if the house pet(s) are not listed on the rental contract, the Judge may consider that the house pet(s) are unauthorized. Technically, this means that the significant pet may cause the entire lease to be terminated before it would otherwise end. I have had one case where Judge was kind enough to essentially disregard the issue of the pet living in the unit.
In any event, make sure that you fill out the rental contract completely. If you do not fill out a section, that section can be considered as missing from the contract. In the above example, the lease states that "no one" has the right to reside at the rented unit, so that means that no one can legally live at the space.
Legal Considerations and Common Issues with Rental Contracts
The WRA residential rental contract is not just a standard form, but a legally binding contract, and landlords and tenants in Wisconsin must be careful to follow the terms of the contract as well as state law with regard to Wisconsin residential rentals. Certain things that landlords and tenants may do while completing the contract can have very serious legal repercussions.
A huge pitfall when completing the WRA rental contract is the tendency for tenants and landlords to insert additional pages, addendums, or other wording into the contract to modify the specific terms of the lease. Landlords and tenants risk having the contract declared invalid if language is inserted that contradicts or is inconsistent with the terms of the lease provided in the WRA residential rental contract.
There are also legal obligations that each party must fulfill in order to maintain the WRA residential rental contract. Many landlords do not understand their obligations under the federal Truth in Lending Act ("TILA") and its requirement that a landlord provide a tenant with a "Truth in Lending" disclosure , which shows the total of how much the lease will cost the tenant, if the lease requires the tenant to pay a "fee" for the right to use the property. If the landlord does not fulfill the requirements under this disclosure, it would be in violation of the TILA and the landlord could face penalties.
Some landlords and tenants are unaware of all the laws governing residential rental properties. For instance, if a landlord fails to return the rental security deposit according to Wisconsin law, they may forfeit any or all of their right to keep any part of the security deposit.
Amendments and Revisions to the WRA Contract
As with many contracts in real estate, the language in the WRA Residential Rental Contract gets reviewed periodically. The last major update to the contract occurred in 2018 and a number of changes were made to further clarify the terms and responsibilities contained within. In fact, the 2018 contract contains many new terms, changes and clarifications. While there are fewer substantive revisions than there were in 2018, there have been several updates made in 2019 in response to situations faced by landlords and tenants during the term of the lease. One notable revision to the Rental Agreement involves the landlord’s failure to fulfill the repair obligations provided under Wis. Stat. § 704.07. If a landlord fails to make necessary repairs after receiving notice from the tenant of the need to do so, the tenant may undertake the repair necessary to address the situation and deduct the cost from future rent owed. A revision to the rental agreement now specifies that tenants may deduct the cost of the repairs from the rent for "the month following receipt of the notice of the repair need." By making this timely rent payment, the tenant may be protected against any negative impact on their credit score and can protect their legal rights to pursue the rest of the claim. Update 5 to the rental agreement instructs landlords in these situations to send an itemized list of the repairs made to the tenant that the tenant may reimburse, as well as supporting documentation that the landlord has completed the repairs and remediation efforts. Another revision made to the rental agreement explains the situation when a property is sold, and the Tenant becomes the Tenant of the new Owner. When this occurs, the original landlord would then be required to put the new landlord’s name on the Rental Agreement via a written amendment signed by all parties (and including the new landlord). Furthermore, the old landlord is required to provide the new landlord with any security deposit that was collected from the tenant.
More changes were made to state laws governing landlord/tenant relationships. For example, with the passage of 2011 Wis. Act 143, landlords could not subjectively assess the security deposit worth by including the cleaning fee in the amount of the security deposit. With the passage of 2013 Wis. Act 76, a landlord must comply with limitations on fees that are assessed for specific actions. Beginning October 1, 2013, landlords are unable to charge: • An application fee exceeding $20 or an amount equal to one month’s rent, whichever is less, for considering a prospective tenant for a rental agreement, unless the charge is for a background check. • Rent and utility charges unless the landlord provides a rent and utility payment schedule, such as a rent schedule which provides the amount of rent due and the due date for each month of the term of the rental agreement.
Through legislation like 2011 Wis. Act 76 and 2013 Wis. Act 143, landlords are prohibited from charging tenants certain fees. The WRA Revised Residential Rental Agreement clearly identifies fees that a tenant cannot be charged, including any re-rental charge upon vacating of the unit for exceeding one month’s rent or any amount equal to one month’s rent by excess over the amount of the tenant’s prepaid rent. It also identifies that landlords are not allowed to charge for procedures where the landlord fails to comply with the rental agreement or place the tenant at risk of rental judgment.
Rental agreements should always include certain items: how much the rent is; the date it is due; how the rent is to be paid; the consequences of failure to pay the rent; and if a tenant must provide any notice to renew or terminate the rental agreement.
However a lease is designed to be more than just a description of the amounts of money involved and what must be done in certain situations. It is important that the lease describe the parties’ responsibilities and other matters. Together, the Lease Agreement and Rental Policy document assure that the relationship between the landlord and tenant are clear so that all parties understand their rights and obligations under the law. Through careful drafting and sound advice, legal counsel can prevent future problems before they arise whenever possible.
Obtaining Help with the WRA Rental Contracts
For landlords and tenants who would like to learn more about the WRA residential rental contract, the WRA provides a number of resources that are readily available. First, the WRA website provides a comprehensive set of frequently asked questions that can help either party better understand their obligations under the rental contract and supplements the above 3 videos . For lawyers, APF provides the Residential Rental Contract Handbook which contains a detailed explanation of each provision of the WRA rental contract, an overview of landlord-tenant law, and over 180 practice pointers and sample forms. For those that have additional questions about drafting language or different issues that they run into with Wisconsin rental contracts, APF also offers telephone consultations with experienced attorneys who specialize in real estate and landlord-tenant law.