Wisconsin Security Deposit Laws in 2024

Introduction to Wisconsin Security Deposit Laws

Security deposits are an important part of the rental process in Wisconsin. A security deposit is money paid by a tenant to a landlord at the beginning of a rental agreement to provide financial security in case the tenant fails to pay rent or causes damage to the property. Landlords have the right to use security deposit funds to cover any unpaid rent or repairs needed at the end of the tenancy.

The security deposit creates a financial incentive for tenants to fulfill the terms of their lease and take good care of the rental property. It can help avoid disputes between landlords and tenants by providing a dedicated fund to draw from to cover legitimate expenses. The deposit also gives the landlord peace of mind that money will be available to make repairs or handle other tenant-caused issues. 

In Wisconsin, security deposits are governed by Wisconsin Legislature Chapter 704, specifically section 704.28. This law outlines the regulations surrounding legal deductions, interest payments, and procedures for security deposit returns. It aims to create standardized rules and protections for landlords and tenants when dealing with security deposits in residential rentals across the state. Understanding the provisions of this law is crucial for both parties to avoid deposit disputes.

Maximum Security Deposit Amount in Wisconsin 

In Wisconsin, landlords are restricted in how much they can charge for a security deposit. State law limits security deposits to no more than one month's rent for unfurnished properties. For furnished properties, landlords can charge up to two months' rent as a security deposit. 

These maximum amounts apply regardless of whether the rental agreement is for a fixed term or month-to-month. Landlords cannot require tenants to pay additional pet deposits, cleaning fees, redecorating fees or other charges under the guise of a security deposit. The total amount collected as a security deposit cannot exceed one or two month's rent.

Landlords also cannot increase the security deposit amount during the course of a tenancy. If rent increases during the lease term, the landlord cannot demand more money for the security deposit. The maximum deposit is based on the rent amount at the beginning of the lease.

Some rental properties may be exempt from security deposit restrictions under Wisconsin law. Owner-occupied units of three units or less do not have to comply with statutory limits on security deposits. College dormitories and other student housing arrangements are also typically exempt. But the vast majority of standard residential rental properties in Wisconsin must follow the state's security deposit rules and cannot exceed the maximum amounts.

Deadline for Security Deposit Return in Wisconsin  

In Wisconsin, landlords are required to return security deposits to tenants within 21 days after the tenancy ends. This 21 day timeline applies regardless of whether the tenant moves out at the end of a lease or the landlord terminates the tenancy. 

If the full security deposit is not returned to the tenant within 21 days, the landlord forfeits the right to withhold any portion of the deposit. Even if damages or unpaid rent exist, failure to return the deposit within 21 days means the landlord must return the full security deposit amount to the tenant.

After 21 days, the tenant can send a written demand to the landlord requesting the full security deposit amount. If the landlord still does not return the full deposit within 7 days of receiving the demand, the tenant can file a lawsuit against the landlord for double the amount wrongfully withheld, plus court costs and reasonable attorney fees.

The 21 day security deposit return requirement under Wisconsin law provides an important protection for tenants. Landlords should prioritize inspecting the unit, documenting any damages, and returning the deposit within 21 days to avoid steep penalties. Tenants should also send a written demand letter if the deadline passes to recover their full deposit plus damages quickly through the courts.

Allowable Security Deposit Deductions in Wisconsin 

Wisconsin landlords are permitted to legally deduct from a tenant's security deposit for unpaid rent, utility bills, and damages beyond normal wear and tear. These standard deductions are authorized under state statute 704.28.

However, deductions for other expenses like carpet cleaning, painting, or early termination fees can only be taken if specifically agreed to in the lease. Wisconsin law prohibits landlords from deducting costs that stem from normal wear and tear over the course of a tenancy.

Some common legal reasons a Wisconsin landlord may deduct from the security deposit include:

• Unpaid rent or late fees
• Utility bills left in the landlord's name
• Costs to repair damages beyond ordinary use like broken windows, damaged walls, or stained carpeting
• Rekeying costs if the tenant fails to return all keys
• Removal and storage of any abandoned personal property

Landlords cannot deduct from the security deposit for normal wear and tear no matter what the lease says. Examples of normal wear that cannot be charged include:

• Faded paint, worn carpeting, or scuffed floors
• Minor dents, scrapes, or scratches to walls and woodwork
• Stains on older sinks, tubs, and toilets 
• Closet and cabinet doors that don't close perfectly from swelling and contracting

If the landlord seeks to deduct for any damages beyond normal wear, they must provide invoices and evidence like photos. Tenants should thoroughly inspect and document the condition at move-in to prevent unfair charges.

Normal Wear and Tear vs. Damages in Wisconsin

Normal wear and tear refers to the natural deterioration that occurs from the intended use of a rental property over time. Landlords in Wisconsin cannot deduct costs from the security deposit to repair or replace items that are merely showing signs of normal wear and tear.

Some common examples of normal wear and tear in a rental include:

• Faded paint or wallpaper
• Worn carpeting
• Minor scuffs, scratches or nail holes in walls and woodwork
• Stained sinks, tubs, and toilets from regular use
• Appliances, fixtures, and furnishings that are worn from ordinary use but still functional

Normal wear and tear is distinctly different from negligent, irresponsible, or intentional damage caused by the tenant. Costs to repair or replace damaged items beyond normal wear and tear can be deducted from the security deposit. Examples of tenant-caused damages include:

• Large holes in walls or doors
• Broken appliances or fixtures
• Stained or damaged carpeting beyond normal wear
• Missing or broken window treatments
• Clogged plumbing from misuse
• Damage to floors beyond minor scratches

Distinguishing between normal property aging and excessive damage is important to avoid improper security deposit deductions. Tenants are not responsible for costs related to normal wear, while landlords can deduct legitimate repair and replacement costs for negligent damages beyond ordinary use.

Interest Payment on Security Deposits in Wisconsin

Wisconsin law requires landlords to pay interest on security deposits if certain conditions are met. If a landlord holds a security deposit for more than a year, they must pay the tenant 5% annual interest. This interest payment requirement applies to all standard security deposits. 

Interest begins accruing after the first year of tenancy. For example, if a tenant lives in a rental unit for 3 years and paid a $1000 security deposit, the landlord would owe $150 in interest when returning the deposit (5% of $1000 for each of the 2 years beyond the first year).

Some cities in Wisconsin specify a higher interest rate. For example, landlords in Madison are required to pay interest at a variable rate tied to the passbook savings rate set by the Federal Home Loan Bank of Chicago. Landlords should check local ordinances to determine if a higher city-mandated interest rate applies.

The interest owed on the security deposit belongs to the tenant. Landlords must return the interest payment along with the security deposit within 21 days after tenancy ends. Any deductions made from the original deposit do not reduce the interest payment owed to the tenant.

Disputes and Penalties for Improper Security Deposit Withholding 

If a landlord improperly withholds all or part of a security deposit in Wisconsin, tenants have several options for recourse:

Written Demand Letter

The first step is for the tenant to send a formal demand letter requesting return of the improperly withheld deposit. This letter should identify the specific deposit amount owed and cite the applicable Wisconsin statutes. The tenant should send this letter via certified mail with a return receipt and keep a copy.

Small Claims Court

If the written demand is unsuccessful, the next step is typically for the tenant to file a case in Wisconsin small claims court. The jurisdictional limit is $10,000, which covers most security deposit disputes. Tenants can represent themselves without a lawyer in small claims court. Relevant evidence like the lease agreement, photos, and move-in/move-out checklist should be brought to the hearing.  

Consumer Protection Lawsuit

Tenants may also choose to file a lawsuit against the landlord under Wisconsin consumer protection laws if the withholding was intentional and improper. Tenants can potentially recover double the amount of the deposit plus attorneys fees if the court finds the landlord acted in bad faith.

Complaint to State Authorities

Tenants can file a complaint with Wisconsin's Consumer Protection agency or contact their local city or county for additional support. State authorities can investigate and take action against landlords with multiple violations.  

If a court finds the landlord improperly withheld a security deposit, the landlord may face the following penalties:

• Repayment of the full deposit amount improperly withheld
• Double or treble damages 
• Payment of the tenant's court and attorneys fees
• Fines to the state of $100-$1000 per violation
• Loss of eligibility to take future security deposits

To avoid disputes, landlords should carefully document any damages or rent owed, communicate deductions, and promptly return the remaining deposit balance within 21 days as required by Wisconsin law. Maintaining open communication with tenants can prevent many security deposit problems.

Tips for Tenants to Get Full Deposit Return

When moving out, there are several steps tenants can take to maximize the return of their full security deposit:

Document the condition - Take dated photos and videos when first moving in and again when moving out to prove the condition of the unit. This protects against improper damage claims.

Conduct a walkthrough - Schedule a joint walkthrough with the landlord to identify needed cleaning or repairs. This allows time to address issues. Get any agreements in writing.

Clean thoroughly - Perform deep cleaning including all floors, walls, appliances, windows, cabinets, and fixtures. Landlords can deduct for cleaning. 

Make repairs - Fix any minor damage like holes in walls. Repaint if needed to restore original condition.

Return all keys - Ensure all keys, fobs and any parking passes are returned to the landlord when vacating. Failure to return can lead to deductions.

Provide new address - Supply the landlord with a forwarding address in writing via certified mail. This proves you provided it. 

Request inspection report - Ask the landlord to provide a copy of the move out inspection detailing any damages or cleaning charges.

Dispute improper charges - Review deductions carefully. Push back on any unreasonable or unfair withholding not permitted by law. 

Communicate expectations - Discuss move out and return of deposit with the landlord early. Set expectations to avoid misunderstandings.

Taking these proactive steps will limit the landlord's ability to unlawfully withhold any portion of the security deposit and increase the chances of full refund. Preventing improper deposit deductions requires tenants clearly communicate, document, and assert their rights under Wisconsin law.

Tenant Rights and Responsibilities in Wisconsin

Tenants in Wisconsin have a number of rights under state law. Some key rights include:

• The right to a habitable rental unit that meets basic standards for safety and sanitation. Landlords must make necessary repairs to maintain habitability.
• Protection from retaliation if a tenant makes a complaint or requests repairs from the landlord. Landlords cannot evict or raise rent solely in retaliation.
• The right to withhold rent in certain situations, such as if a landlord fails to remedy major health or safety violations.
• Privacy and limits on landlord entry without proper notice. Landlords must give 12-24 hours notice before entering, with some exceptions.
• The right to deduct application fees, deposits, and prepaid rent from rent if the landlord fails to deliver possession by the start date.
• Limits on fees and security deposits charged by landlords. Security deposits cannot exceed one month's rent.

Along with these rights, tenants also have responsibilities under Wisconsin law:

• Tenants must pay rent fully and on time as outlined in the lease agreement. 
• Tenants must properly maintain the rental property, keeping it clean and undamaged beyond normal wear and tear.
• Tenants must not disturb neighbors or violate laws and ordinances.
• Tenants should notify the landlord promptly about needed repairs or maintenance issues.
• Tenants must abide by all terms and conditions of the lease, unless found to be unconscionable or against public policy.

In regards to security deposits specifically, Wisconsin law provides tenants the right to full return of their deposit within 21 days after moving out, less any valid deductions itemized in writing by the landlord. Tenants can dispute improper deposit withholdings and recover double damages if the landlord violates the security deposit law.

Landlord Rights and Responsibilities in Wisconsin 

Landlords in Wisconsin have certain rights and responsibilities under state law that govern the landlord-tenant relationship. Here is an overview of key landlord rights and responsibilities as they relate to security deposits:

Landlord Rights

• Screen and select tenants for their rental property, including conducting background checks.
• Establish rental terms like rent, deposits, fees, and lease length in the written rental agreement, within the bounds of state law.  
• Gain access to the rental unit with proper notice for repairs, maintenance, showings, and emergencies.
• Take legal action to terminate a tenancy for nonpayment, lease violations, or other breaches.
• Deduct unpaid rent, damages, and fees from the security deposit, with proper documentation.

Landlord Responsibilities

• Comply with all applicable state, local, and federal laws related to rentals and housing.
• Maintain the rental property in habitable condition and make necessary repairs.
• Provide 24 hours written notice before accessing the rental unit, except in emergencies.  
• Return the security deposit within 21 days after tenancy ends, with an itemized statement of deductions.
• Only make standard deductions for unpaid rent, physical damages, and fees agreed to in the lease. Not deduct for normal wear and tear.
• Pay interest on security deposits held over one year. Interest varies by municipality.  
• Mitigate losses if the tenant abandons or defaults on the lease.
• Avoid illegal retaliation against tenants for exercising their rights.

Following proper security deposit handling procedures according to Wisconsin law is a key landlord responsibility. Mishandling deposits by wrongfully withholding or making improper deductions can lead to penalties and legal action.

Frequently Asked Questions

What is the law on returning security deposits in Wisconsin?

In Wisconsin, landlords are required to return a tenant's security deposit within 21 days after the tenant vacates the property. If there are deductions for damages or other lease violations, the landlord must provide an itemized statement detailing these deductions.

What can be withheld from a security deposit in Wisconsin?

In Wisconsin, landlords can withhold from a security deposit for unpaid rent, damage to the property beyond normal wear and tear, and other breaches of the lease agreement such as unpaid utility bills that the tenant is responsible for.

Can a landlord charge for cleaning in Wisconsin?

Yes, in Wisconsin, a landlord can deduct cleaning costs from the security deposit if the cleaning is necessary to return the rental unit to the same level of cleanliness it was at the start of the tenancy, based on the condition noted in the move-in inspection report.

Can a landlord charge for painting in Wisconsin?

A landlord in Wisconsin can charge for painting if it is necessary to repair damage caused by the tenant that goes beyond normal wear and tear. However, if painting is required due to normal wear and tear, the cost should not be passed onto the tenant.

Do landlords have to paint between tenants in Wisconsin?

There is no specific legal requirement in Wisconsin that landlords must repaint between tenants. It typically depends on the condition of the property and the agreement between the landlord and the new tenant. Repainting may be done as needed based on wear and tear or at the landlord's discretion.

Can landlords charge for carpet cleaning in Wisconsin?

Landlords in Wisconsin can charge for carpet cleaning if the need for such cleaning is due to more than normal wear and tear. If the carpet cleaning is needed to address conditions documented during the move-in inspection that go beyond normal use, the cost can be deducted from the security deposit.