Prevent Landlord Bankruptcy

LEGISLATION

LRB 2188/2555

It addresses a dangerous precedent set by the Wisconsin Court of Appeals by voiding a lease and awarding tenant relief under the Wisconsin Consumer Act and fair business practices.​

Koble v. Marquardt Case

A dispute between a landlord and tenant ended in an eviction of the tenant for failure to pay rent. The tenant countersued, arguing that the lease was void due to it not including Notice of Abuse Protection language. This language is required by law to be included in all leases. The local circuit court, and eventually the Wisconsin Court of Appeals set a dangerous precedent by voiding a lease and awarding tenants relief under both the Wisconsin Consumer Act and Fair Business Practices laws. The landlord had to pay back to the tenant double all the rent paid under the lease, plus attorney fees and court costs.

The case is now precedent for lower courts; therefore, it’s the law.

Holding the Line on Property Taxes

And just recently, the case is now being accepted by the Supreme Court of Wisconsin.

There are currently several cases popping up throughout Wisconsin using the precedent as the basis for an argument against landlords.

The Housing Authority of City of Milwaukee (HACM) is a landlord via the Merrill Park LLC. As a landlord, Merrill Park LLC evicted a tenant for non-payment of rent – after two years. The court relied on the Koble verdict to conclude the lease was void due to the abandonment clause. The abandonment clause was not at issue, and the lease included all the necessary language required by law.

The tenant won the case, the landlord – in this case – the City of Milwaukee – lost and received none of the two-years of rent owed.

If applied broadly, this ruling could bankrupt landlords, both small and large. This will further exacerbate the housing crisis in Wisconsin.

The WRA strongly supports the urgent need for legislation to provide certainty in landlord tenant law. LRB 2188/2555 creates a legislative fix to the Koble v. Marquardt decision.

LRB 2188/2555 will strengthen tenant protections while maintaining clear legal boundaries for landlords, preventing unfair lease terms, and ensuring compliance with existing consumer protection laws with four key provisions:

  • Voidable Residential Rental Agreements – The legislation amends Wis. Stat. § 704.44 to clarify residential rental agreements containing any of the listed prohibited “10 deadly sin” provisions—such as penalizing tenants for calling emergency services or waiving landlord responsibilities—are voidable at the tenant’s discretion.
  • Tenant Remedies for Violations – A new section, Wis. Stat. § 704.445, allows tenants to either remove unenforceable provisions while keeping the rest of the lease or void the entire rental agreement, converting the relationship to a periodic tenancy (e.g., month-to-month) with the same payment terms.
  • Limited Damages for Prohibited Provisions – If a lease is found to contain an illegal provision, the tenant remedies under the Wisconsin Landlord-Tenant Code and Wisconsin’s consumer protection laws (Wis. Stats. § 100.20(5), § 704.95, and Wis. Admin. Code Ch. ATCP 134). This can include suing for damages up to twice the amount of the financial loss directly caused by the violation, plus costs and a reasonable attorney’s fee.
  • Clarification of Landlord-Tenant Laws – The legislation creates a new subsection under Wis. Stat. § 421.103 to explicitly state that Wisconsin’s Consumer Code (Chapters 421-427) does not apply to landlord-tenant relationships, ensuring landlord-tenant matters remain governed by Chapter 704 and related regulations.

If action is not taken the rental market in Wisconsin may suffer severe harm:

  • Severe Financial Risk for Landlords – The Koble decision creates an unprecedented financial burden on landlords by requiring the full return of rent payments, double damages, and attorney fees if a lease contains any of the prohibited provisions under Wis. Stat. § 704.44. Many landlords unknowingly use rental agreements that violate these provisions, putting them at risk of bankruptcy and forcing property owners out of the rental market.
  • Increase in Litigation – The ruling incentivizes tenants to challenge leases, leading to a surge in lawsuits against landlords. This increase in litigation will not only burden the court system but also raise legal costs for landlords, creating further financial instability and discouraging investment in rental housing.
  • Reduction in Available Rental Housing – The financial and legal risks associated with Koble will drive small and mid-sized landlords out of business, reducing rental housing supply in Wisconsin. This could leave tenants with fewer housing options and drive-up rental costs due to decreased competition.
  • Negative Impact on Property Values – As landlords face financial losses and potential bankruptcy, properties may be sold at a loss, converted to non-rental uses, or foreclosed upon. This could lead to declining property values in affected communities, weakening local tax bases and reducing municipal revenue.
  • Threat to Housing Stability – If landlords exit the market due to financial strain, tenants may face sudden displacement and uncertainty regarding their housing options. The instability created by mass landlord withdrawals could exacerbate Wisconsin’s existing housing challenges, making affordable rental housing even harder to find.