By Attorney Tristan R. Pettit

This is a long blog post, but I sincerely hope that you take the time to read it all the way until the end. It is very important that you know what you will be facing soon. This may be one of the biggest, if not the biggest, issues facing the residential rental industry in the last 30 years that I have been a practicing attorney representing many of you.

The Koble Investments case (“Koble”) which is a Wisconsin Court of Appeals case from District III, was published this week and is now law in the State of Wisconsin. The Court’s holding in Koble is that if a landlord has a void lease (i.e., the lease contains one of the “10 Deadly Sins” as set forth in Wis. Stat. § 704.44) the remedy is for the complete disgorgement of all rent previously paid to the landlord.

Stated another way, if you have a provision in your lease that violates any of the “10 Deadly Sins” as set forth in Wis. Stat. 704.44, your lease is void and unenforceable, and you must now return all rent that you received from the tenant during the tenant’s entire tenancy.

As you can imagine, this remedy could completely wipe out small to mid-size landlords in Wisconsin and if many tenants in a large rental complex come together to sue a larger landlord seeking reimbursement of all rent paid or join in a class action lawsuit against a larger landlord, they too could be seriously damaged.

While the landlord in the Koble case will be petitioning the Supreme Court of Wisconsin to accept and decide this case and hopefully overturn the Court of Appeals, the Wisconsin Supreme Court only accepts a limited number of cases each year and is not obligated to take the Koble case. Additionally, the landlord in Koble at both the circuit court level and at the Court of Appeals level did not raise the best argument available to him which was that if your lease is void, it automatically defaults to a month-to-month tenancy per Wis. Stat. 704.01(2) and therefore the tenant must still pay the landlord rent and that the landlord should not be required to return all rent received from the tenant throughout the tenant’s tenancy.

Additionally, the landlord in Koble also waived the argument that having a void lease, which can occur unintentionally, is not the same as an auto repair shop failing to obtain a customer’s permission to repair damage in the customer’s car and provide an estimate of the cost of that repair to the customer prior to commencing the repair work (which is what the same Wisconsin Court of Appeals held in an unpublished case in 2023). Furthermore, the landlord in Koble, failed to develop an argument against the remedy of returning all rent received during the entire tenancy back to the tenant and failed to advise the court that such a holding would decimate a large part of the residential rental industry in Wisconsin.

Since the above arguments were not raised by the landlord in Koble, or were waived, those arguments are essentially lost and cannot be raised by the parties. Thus, the burden falls on the various Landlord Trade Associations throughout the state to take action and provide this information and raise these arguments to the Wisconsin Supreme Court by filing an amicus (“friends of the court”) brief requesting that the Wisconsin Supreme Court accept the case and render a just decision based on the actual law before permanently damaging the residential rental industry in the state.

The publication of the Koble case is very detrimental to all Wisconsin landlords because tenants and their attorneys will now have an even greater reason to argue that all rental leases that they have entered into with their landlord or property management company in the last six (6) years are void and contrary to Wis. Stat. § 704.44.

Tenants have no reason not to raise such an argument every chance they get, because if they prevail, they will receive a windfall of several thousands of dollars and have been able to live for free for months if not years. And if they are not able to convince the court to rule in their favor, their case is just dismissed and there is no penalty to the tenant.

So, I anticipate that we will see even more tenants trying to attack landlords’ rental documents arguing that they are void then we have already encountered since May of 2023. Because of such arguments, I have had to revise the rental agreement and other rental documents that I draft for Wisconsin Legal Blank two times in the last year, just to be safe, not because I think that they contain any language that violates any of the “10 Deadly Sins.”

I have made the revisions to protect you as it is always better to be safe than be sorry. You must ensure that you are using the most current version of both the Residential Rental Agreement and the Rules and Regulations form that I draft, and which are sold at Wisconsin Legal Blank, which are dated October 20, 2023. The most current Nonstandard Rental Provisions document, which I also revised out of an abundance of caution, is dated March 4, 2024.

No one can foresee what arguments will be made by tenants against their landlord’s rental documents in the future, but rest assured, the arguments will come. It may be necessary for you to have your rental documents reviewed and revised to ensure that you do not have any language that violates any of the “10 Deadly Sins” as set forth in Wis. Stat. § 704.44.

Just as important, if you happen to be on the wrong end of one of these cases and the tenant is arguing that your rental documents are void and unenforceable and that you should be required to return all rent that the tenant has paid to you during their entire tenancy, please make sure to contact the Rental Property Association of Wisconsin, Inc. or your local landlord trade association.

Also make sure that you retain an attorney to represent you that understands and is knowledgeable about Wisconsin landlord-tenant law as there are arguments and defenses that can and should be raised that unfortunately were not raised in Koble.