Wisconsin Security Deposit Collections & Holdings

Wisconsin Security Deposit Collections & Holdings

Last Updated: January 20, 2023 by Ashley Porter

To learn about laws on security deposit returns in Wisconsin, click here.

Maximum Security Deposit Allowed in Wisconsin

There is no limit on the maximum security deposit in Wisconsin. Many states have a limit on the amount of security deposit that can be collected, but Wisconsin does not.

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State law prevents local governments from enacting rules regarding security deposits that exceed the state rules. Some cities have security deposit laws that were written before the state law and are now unenforceable, like in Madison and Fitchburg. There, the local ordinances limit the maximum security deposit but are superseded by state law.

Can Landlords Charge an Additional Pet Deposit in Wisconsin?

In Wisconsin, landlords can charge a pet deposit, except for service dogs and emotional support animals. If a landlord collects a pet deposit, it must be handled according to the rules of security deposits.

How Much Rent Can a Landlord Collect Upfront in Wisconsin?

There is no limit on the amount of rent that can be collected upfront in Wisconsin. Many states have a limit on the amount of rent that can be collected at once, but Wisconsin does not.

Security Deposit Collections in Wisconsin

When collecting a security deposit, landlords in Wisconsin must provide a receipt, notify the tenant of their right to an initial inspection, provide a move-in checklist, and make specific disclosures regarding the rental unit.

Do Landlords Have to Provide a Receipt for the Security Deposit in Wisconsin?

Yes, landlords in Wisconsin must provide a receipt for the security deposit that includes the purpose of the payment and the amount.

If the tenant uses a check that states the purpose of the payment, the landlord is not required to provide a receipt unless requested by the tenant.

What Obligations Do Landlords Have to Establish the Condition at Move-in in Wisconsin?

When collecting a security deposit in Wisconsin, landlords must notify tenants of:

  • Their right to an initial inspection and/or list of damages
  • Additional utility costs
  • Non-typical security deposit deductions
  • Existing violations or conditions affecting the habitability of the rental unit

Initial Inspection: At the time a security deposit is collected, landlords must provide tenants with a check-in sheet and notify tenants in writing of their right to do the following within 7 days after the start of the tenancy:

  • The tenant can conduct an initial inspection and notify the landlord of any damages or defects to the rental unit
  • The tenant can also request a list of damages or defects, if any, deducted from the previous tenant’s security deposit, whether or not they were repaired (landlords can require tenants to request this in writing)

If the tenant requests a list of previous damages or defects, the landlord must provide it within 30 days after the tenant makes the request or 7 days after the landlord notifies the previous tenant of security deposit deductions, whichever is later.

The landlord is not required to disclose the identity of the previous tenant or the amounts withheld from the security deposit.

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The Tenant Resource Center’s Check-In Form can be used to fulfill the requirement (although this specific template is not required by law).

Utilities: If the cost of water, heat, and/or electricity is not included in the rent, landlords must disclose that to the tenant when collecting a security deposit. If the rental units are not individually metered, the landlord must disclose how the charges will be calculated.

Non-standard deductions: If landlords want to make deductions from the security deposit that are not automatically granted by law (e.g. late rent fees), they must be disclosed to the tenant in a separate written document titled “NONSTANDARD RENTAL PROVISIONS” provided to the tenant before they sign the lease agreement.

For more information on the Nonstandard Rental Provisions form, see our page on Security Deposit Returns & Deductions in Wisconsin.

Violations: Landlords must disclose any building and housing code violations that:

  • They are aware of
  • Affect the rental unit or common areas
  • Present a significant threat to the tenant’s health or safety
  • Have not been corrected

Habitability: Landlords must disclose any of the following conditions affecting habitability that the landlord is aware of or could discover through a reasonable inspection:

  • The rental unit lacks hot or cold running water
  • The rental unit’s heating source is not in safe operating condition or unable to maintain a minimum temperature of 67° F
  • The rental unit is not connected to electricity or any components of the electrical system are not in safe operating condition
  • The rental unit has no plumbing or sewage disposal facilities or they are not in good operating condition
  • Any part of the rental unit is unsafe

Security Deposit Holdings in Wisconsin

Wisconsin law does not require landlords to hold security deposits separate from other funds. Some other states mandate how and where security deposits are held, but Wisconsin does not.

Are Tenants Entitled to Interest on Their Security Deposit in Wisconsin?

Wisconsin law does not require landlords to provide interest on held security deposits and state law prohibits local governments from enacting rules that require landlords to provide interest.

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Madison and Fitchburg laws (which predate the statewide preemption) require landlords to provide an annual “rent credit.” Madison’s City Attorney has stated that a rent credit provision violates state law and cannot be enforced.

How Are Security Deposits Accounted for in Wisconsin?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Wisconsin?

When a property is sold in Wisconsin, the original landlord must either:

  • Transfer the deposit to the new owner and notify the tenant of their name and address; or
  • Return the deposit to the tenant and notify the new owner that the deposit has been returned

Sources

Security Deposit Collections in Other States