1. What Is a Wisconsin Commercial Lease Agreement?
2. The Impact of Act 143 on Commercial Leases
3. ATCP and Tenant Security Deposits
4. How to Commercial Landlords Can Protect Their Interests

What Is a Wisconsin Commercial Lease Agreement?

Wisconsin commercial lease agreement is a contract between a tenant and landlord for leasing a business property in the state.

Laws regarding these agreements have been affected by the recent passage of Wisconsin Administrative Code's ATCP 134, which contains provisions that apply to commercial landlord-tenant agreements.

While typically much less regulated than residential landlord-tenant law, there are two laws on the books that do refer to commercial landlord-tenant agreements. One instance is found in ATCP 134, which stipulates that this piece of legislation does apply to commercial leases unless two conditions exist: there was no written agreement between the parties in place, and the lease was silent regarding certain issues.

The Impact of Act 143 on Commercial Leases

The precursor to Act 143, namely Senate Bill 466, was drafted to include commercial landlord-tenant agreements, and Act 143 did not address the provisions found in that bill other than to stipulate in an amendment to Act 143 that a rental agreement will be deemed void if it contains certain prohibited language.

Therefore, Act 143, as a successor to Bill 466, does, in fact, apply to both commercial and residential landlord-tenant agreements. Among the provisions that apply to both are those that address the following issues:

  • Establishes a moratorium on evictions of tenants.
  • Addresses severability of rental agreement provisions.
  • Establishes procedures for the disposition of abandoned property.
  • Allows for landlords to be awarded holdover damages when called for.
  • Establishes procedures and rights regarding the receipt of past due rents.
  • Sets parameters regarding when landlords may withhold security deposits and methods for returning deposits to tenants.
  • Sets conditions when a violation of Chapter 704 may be treated as an unfair trade practice.

ATCP and Tenant Security Deposits

With the inclusion of ATCP 134 to Chapter 704, the same rules that apply to the treatment of security deposits for residential landlord-tenant leases exist in the commercial space as well. Before ATCP 134, there were no laws on the books in regard to how a landlord could deal with issues such as:

  • The amount of a tenant’s security deposit that could be withheld in the situation after a tenant vacates the property
  • When the landlord had to return the deposit.

Now, ATCP 134 provides that the landlord can only withhold all or any of the deposit only if certain conditions exist. These are:

  • There is established damage caused by destruction or neglect of the property or if there is waste left behind that the landlord must clean or remove.
  • There is unpaid rent at the time the tenant vacated the property.
  • Utilities that were the responsibility of the tenant per the terms of the lease agreement are unpaid.
  • If the landlord is determined to be liable for unpaid permit fees assessed against the tenant.
  • Any payments promised in the lease agreement that falls outside the provisions of a standard commercial landlord-tenant lease.

How to Commercial Landlords Can Protect Their Interests

The best way that commercial landlords can do the utmost to avoid serious tenant issues is by working with legal counsel experienced in commercial lease agreement law. With a professionally prepared lease, key issues are negotiated with the tenant and the agreement is entered into with each party understanding their rights and the remedies they may seek in the event the lease is breached.

In particular, the terms and conditions in a commercial lease addressing tenant breaches cover the following issues:

  • Failure to pay rent or other fees assigned to the tenant under the lease. It is important that the lease contains language allowing the landlord to continue to collect rent according to the terms of the contract even if the tenant vacates the property.
  • Failing to open and operate a business according to the terms set forth. This may come into play in a mall or shopping center where the appearance of vacant or non-operating businesses can affect a landlord’s ability to attract new tenants.
  • Using the property for purposes other than agreed to in the lease.
  • Filing for bankruptcy. In this case, the lease may stipulate that the landlord is treated as a secured creditor.
  • Using the property as a means of securing credit with other commercial interests.
  • Failing to keep the property in quality condition.

Even with a commercial lease in place that provides for every conceivable tenant breach, it should be understood that Wisconsin law requires that in order to receive damages, the landlord must establish that reasonable actions were taken to minimize the possible breach of the lease.

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