Madison Landlord Council

New Security Deposit Refund Procedures for Madison-Only Landlords

DFI RATE:
2008	...................................	0.94
2007	...................................	0.94
2006	...................................	0.83
2005	...................................	0.72
2004	...................................	0.81

Madison Landlord Council members worked with then Alder Dorothy Borchardt to change the Security Deposit Interest rate and Security Deposit refund procedures of Madison General Ordinance (32.07).

All lease agreements, signed on or after January 1, 2004, provides that if the landlord collects over 1/2 months rent as security deposit an interest credit is earned for each month the landlord holds the security deposit whether or not the tenant pays the rent on time or is late. No security deposit interest is earned on security deposits of 1/2 months rent (or less).

The security deposit interest credit is based on a fluctuating yearly interest rate, determined by the Wisconsin Department of Financial Institutions (DFI). The landlord must disclose in writing the rent credit for the lease period and specify the date the credit will be received. Whether you provide this information in the body of the lease or in a separate disclosure form we recommend you spell out the computation, for example, Security Deposit $500.00 x 0.72% = $ 3.60 rent credit. (The interest rate in effect on January 1, 2005 through December 31, 2005 was 0.72%.)

The interest rate effective on the date the lease is executed (signed) will carry through for the entire lease period. For example; a lease executed on December 1, 2004 which expires 11/30/2005 will disclose one rent credit computation, for the entire 12 month period, based on the interest rate for the year 2004 0.81%.

For any lease signed prior to December 31, 2003 use 5%

For leases signed on or after January 1, 2004, the interest rate is 0.81%

As of January 1, 2005 use 0.72%.

As of January 1, 2006 use. 0.83%

Required Disclosures:

Disclose in writing the interest rate and computation for each new lease or lease renewal period (when applicable).
Disclose in writing the manner and time the rent credit will be distributed to the tenant.
Sample language:
''The security deposit will earn simple interest at the rate of __________%, calculated from the day the deposit is paid until the deposit is accounted for at termination of the tenancy. The interest will be accounted for in writing within 21 days after surrender of the rental premises.'' (You will have to also include language that describes the time of distribution.)

New Security Deposit Refund Procedures for Fitchburg-Only Landlords
28.04 SECURITY DEPOSIT REFUND PROCEDURES
Rent Credit. The landlord shall provide a rent credit equivalent to the yearly annual interest rate as published by the Public Service Commission for interest rates on consumer deposits. No rent credit shall be payable, however, for any month or months that rent was paid after the date agreed upon in the rental agreement. The landlord has the burden of proving that the rent was not timely paid for any month or months for which he or she asserts that no rent credit should be given. Rent credit shall be paid at least annually or within 21 days after termination of the tenancy, whichever occurs sooner.

Security Deposit Refund Procedures for Fitchburg-Only Landlords
28.04 SECURITY DEPOSIT REFUND PROCEDURES (3) Rent Credit. The landlord shall provide a rent credit equivalent to the yearly annual interest rate as published by the Public Service Commission** for interest rates on consumer deposits. No rent credit shall be payable, however, for any month or months that rent was paid after the date agreed upon in the rental agreement. The landlord has the burden of proving that the rent was not timely paid for any month or months for which he or she asserts that no rent credit should be given. Rent credit shall be paid at least annually or within 21 days after termination of the tenancy, whichever occurs sooner. This was adopted by the Fitchburg Common Council on February 11, 2003.
Go to:
http://psc.wi.gov/consumerinfo/...

**The rate shall be equal to the weekly average yield of one-year United States Treasury securities adjusted for constant maturity for the week ending on or after December 1, made available by the Federal Reserve Board, rounded to the nearest tenth of one percent. Therefore, the PSC sets the interest rate for calendar year 2006 at 4.3 percent. If you have any questions on this matter, please contact Consumer Affairs Analyst Diane Mandell at 608-261-9419 (e-mail address: Diane.Mandell@psc.state.wi.us).