When DATCP Deleted “Application Considered” From The Definition of Earnest Money: Application Costs and Fees are no longer Earnest Money

For years, Wisconsin’s residential rental rules said something very direct about earnest money under the Department of Agriculture, Trade and Consumer Protection (DATCP) earnest money definition under ATCP 134.02(3) : if a prospective tenant gave money to a landlord for the option of renting later, or for having the person’s rental application considered, that money was “earnest money.” The old administrative code did not hide the ball. It expressly included application-stage money in the definition. Rental application considered has been deleted and replaced with rental agreement considered.

Today, Wis. Admin. Code § ATCP 134.02(3) still defines “earnest money deposit” broadly as payments or deposits “however denominated or described,” but the operative phrase is different. The current definition now ties earnest money to money given for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord. The phrase “for having a rental application considered by the landlord” is gone.

That change matters because the phrase DATCP inserted — “rental agreement” — is not undefined. Wisconsin statutes separately define it. Under Wis. Stat. § 704.01(3m), a “rental agreement” means an oral or written agreement between landlord and tenant for the rental or lease of a specific dwelling unit or premises, in which the parties agree on the essential terms of the tenancy, such as rent. The statute also says a “rental agreement” does not include an agreement to enter into a rental agreement in the future. In other words, Wisconsin law distinguishes between an actual tenancy agreement and the earlier stage where people are merely exploring whether they might make one later.

That is the heart of the present problem.

Under the old rule, the definitional trigger was clear: if money was paid so the landlord would consider the application, that was earnest money. Under the current rule, the trigger is no longer “application.” It is “rental agreement.” Once the law makes that substitution, the ordinary reader is entitled to ask a basic question: What happened to application-consideration money? If the landlord has not yet decided whether to deal with the applicant, has not proposed essential terms, and may not even have a lease form on the table, what exactly is the “rental agreement” being considered?

The phrase “however denominated or described” does not solve that problem. That phrase remained in the definition before and after the rewrite. Its function is to stop relabeling games. It tells landlords and tenants that the legal character of the payment does not depend on whether it is called a fee, deposit, administrative charge, reservation amount, or something else. But that phrase does not answer the separate question of scope. Scope depends on what the payment is for. Before 2015, the answer expressly included application consideration. After 2015, the answer expressly refers to the option of entering a rental agreement in the future or to having a rental agreement considered. So the anti-labeling language stayed the same, while the substantive object of the payment changed.

This is why the deletion cannot be brushed aside as a stylistic edit. If DATCP had wanted to preserve the old meaning exactly, it could have retained the application language. Instead, the rule now uses a narrower and more contract-centered phrase. That is especially important because the statutory definition of “rental agreement” is itself narrower than a bare application process. A rental agreement requires a specific unit and agreement on essential tenancy terms. The statute also says a rental agreement does not include a mere agreement to enter one later. That statutory backdrop makes the deletion of “application considered” more significant, not less.

The shift also changes the way the definition reads in real life.

Consider two very different landlords. One landlord uses a standard preprinted lease form, has the unit identified, and presents a concrete proposed set of terms. In that situation, money tendered while the parties evaluate that proposal can more naturally be described as money paid for having a rental agreement considered. There is at least a recognizable proposed agreement on the table. By contrast, another landlord may have no standard lease at all and may be deciding terms only after talking with the applicant. In that setting, if money is paid only so the landlord can decide whether to deal with the person or whether negotiations should even begin, the payment looks much more like money for having an application considered than money for having a rental agreement considered. The old definition comfortably covered both kinds of cases. The current definition fits the first much more naturally than the second.

That does not automatically answer every legal dispute. But it does establish something important: the text changed in a way that creates a new ambiguity. Before the rewrite, the rule directly told the public that application-consideration money was earnest money. After the rewrite, the rule no longer says that. And because chapter 704 already contains a specific statutory definition of “rental agreement,” the deletion cannot be dismissed as meaningless. The new text invites a narrower reading than the old one did.

The statutory history strengthens that point. Wisconsin’s statutory definition of “rental agreement” was already in chapter 704 before the 2015 ATCP rewrite; the Legislature’s 2009 statutory materials show the same core definition, and the history line for § 704.01 lists prior legislative acts dating back to 1983, 1993, and 2007. So when DATCP changed the earnest-money definition in 2015, it did so against the backdrop of an existing statutory definition that already tied “rental agreement” to a specific unit and essential agreed terms. DATCP therefore did not insert the phrase into a vacuum. It inserted a phrase that already carried a narrower legal meaning.

For tenants and tenant advocates, the key takeaway is not simply that DATCP changed wording. It is that DATCP changed the wording from a screening-stage concept to a contract-stage concept. “Application considered” and “rental agreement considered” are not interchangeable ideas. An application asks whether the landlord will consider the person. A rental agreement, as Wisconsin statutes define it, exists only when the parties have agreed on the essential terms for a specific unit. Those are different legal stages, and the 2015 rewrite moved the definition from the first toward the second.

That is why this deletion deserves attention. It changed the plain-language notice the rule gives to both landlords and tenants. Under the old language, a reader could tell immediately that money paid for application consideration was earnest money. Under the current language, a reader now has to ask whether there is actually a “rental agreement” present for consideration, or merely an application and a possibility of future negotiations. That is not a trivial drafting question. It goes to the basic scope of the definition itself.

For the Wisconsin Tenant Union, the policy issue is straightforward. If DATCP intends the law to continue treating application-consideration money as earnest money, then the simplest and clearest solution would be to say so directly in the definition. If DATCP does not intend that result, then the public needs equally direct clarification explaining that the 2015 rewrite narrowed the definition and that application-stage fees now occupy a different category. What should not continue is the current uncertainty, where the old phrase has been deleted but the consequences of its deletion remain unclear to the people who actually live under the rule.

THE FOLLOWING LETTER WAS SENT TO THE DATCP FOR CLARIFICATION AND THIS ARTICLE WILL BE UPDATED WHEN THE DATCP RESPONDS

Following our conversation, and in light of your request that I seek clarification directly from DATCP, I reviewed the current and prior versions of the administrative code, the statutory definition of “rental agreement” in Wis. Stat. § 704.01(3m), the relevant rulemaking history, and DATCP’s current public guidance. Based on that review, I respectfully submit this request for written clarification concerning the current definition of “earnest money deposit” in Wis. Admin. Code § ATCP 134.02(3) and, specifically, DATCP’s decision to delete the phrase “for having a rental application considered by the landlord” from the former definition and replace it with the phrase “for having a rental agreement considered by a landlord.”[1]

This request is prompted by a substantial interpretive concern. The prior version of ch. ATCP 134 expressly defined earnest money deposit to include money paid for the option of entering into a rental agreement in the future or for having a rental application considered by the landlord. The archived Wisconsin Legislature materials reflect that wording, and the Wisconsin Court of Appeals quoted that same language in Harris, Luck, Rubin v. Turenske, 208 Wis. 2d 370, 561 N.W.2d 350 (Ct. App. 1996).[2] By contrast, the current version of § ATCP 134.02(3) still uses the phrase “however denominated or described,” but it no longer refers to application consideration. Instead, it now refers to payments or deposits given in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord.[1]

That change appears legally significant because Wisconsin statutes separately define “rental agreement.” Under Wis. Stat. § 704.01(3m), a “rental agreement” means an oral or written agreement between a landlord and tenant for the rental or lease of a specific dwelling unit or premises, in which the landlord and tenant agree on the essential terms of the tenancy, such as rent. The statute further provides that a “rental agreement” includes a lease, but does not include an agreement to enter into a rental agreement in the future.[3] Thus, under current Wisconsin law, “rental agreement” is not an undefined colloquial phrase; it is a statutory term with a specific and relatively narrow meaning.

Accordingly, the present wording creates a serious question whether money paid solely so that a landlord may review a person’s application and decide whether the landlord even wishes to negotiate with that person at all still falls within the definition of earnest money. At that stage, there may be no specific proposed rental agreement, no agreed essential terms, and, in many cases, no lease form or concrete rental proposal yet present for consideration. The prior definition directly answered that situation by using the phrase “rental application considered.” The current definition no longer does so.[1][2]

This concern is heightened by the history and context of the 2015 rewrite. The Wisconsin Legislature’s materials for CR 14-038 show that ch. ATCP 134 was repealed and recreated effective November 1, 2015.[4] The related scope statement described the project as making “only limited changes” needed to resolve inconsistencies with revised chapter 704.[5] That context suggests that conformity with chapter 704 was an express concern in the rewrite, which in turn makes the statutory definition of “rental agreement” in § 704.01(3m) especially important when interpreting the revised definition of “earnest money deposit.”[3][5]

I am also concerned because DATCP’s current public guidance appears to continue using the application-stage concept even though the current rule text no longer does so expressly. DATCP’s current Landlord-Tenant Guide states that an earnest money deposit is money a prospective tenant gives a landlord in return for the option of entering into a rental agreement in the future or so the landlord will consider the person’s application. DATCP’s tenant-rights webpage likewise states, “If an earnest money deposit is required with your rental application,” and then describes the refund rules if the application is rejected.[6] Those materials may reflect DATCP’s present practical interpretation, but they also underscore the ambiguity created by the changed text: the agency’s explanatory materials still use application-centered language, while the current definition itself does not.[1][6]

I further note that the Legislature has limited DATCP’s authority to alter rights and duties arising under chapter 704. Wis. Stat. § 704.95 provides that DATCP may not issue an order or promulgate a rule under § 100.20 that changes any right or duty arising under chapter 704.[7] DATCP’s 2020 final rule materials for amendments to ATCP 134.05(4)(a) expressly recognized that statutory limitation and described that rule amendment as necessary to conform the code to Wis. Stat. § 704.085.[8] In view of § 704.95, the statutory definition of “rental agreement” in § 704.01(3m), and the deletion of “rental application considered” from § ATCP 134.02(3), I respectfully request that DATCP explain its current interpretation in writing.

For that purpose, I would appreciate DATCP’s written response to the following questions:

Questions for Written Clarification

1. Does DATCP interpret the deletion of “for having a rental application considered by the landlord” from the definition of “earnest money deposit” as a substantive change or as a non-substantive wording change?[1][2]
2. If DATCP regards the deletion as non-substantive, what is DATCP’s explanation for replacing “rental application” with “rental agreement” rather than retaining the former text?[1][2]
3. If DATCP regards the deletion as substantive, what category or categories of payments did DATCP intend to remove from the definition of earnest money deposit?[1][2]
4. Does DATCP interpret the phrase “for having a rental agreement considered by a landlord” in current § ATCP 134.02(3) to require that some concrete proposed rental agreement, lease form, or proposed essential tenancy terms already exist for consideration?[1][3]
5. If DATCP does not require the existence of some concrete proposed rental agreement or proposed essential terms, what exactly is the “rental agreement” being “considered” when no such agreement or terms are yet present?[1][3]
6. Does DATCP agree that, under Wis. Stat. § 704.01(3m), a “rental agreement” requires a specific dwelling unit or premises and agreement on the essential terms of tenancy, and that the statute expressly excludes an agreement merely to enter a rental agreement in the future?[3]
7. If DATCP agrees with the statutory definition in § 704.01(3m), how does DATCP reconcile that definition with any interpretation that would continue to classify pure application-consideration money as earnest money even when no rental agreement is yet present for consideration?[1][3]
8. Does DATCP interpret the current phrase “for the option of entering into a rental agreement in the future” as covering one category of earnest money, and the phrase “for having a rental agreement considered by a landlord” as a separate second category?[1]
9. If DATCP views those as separate categories, where does DATCP place a payment made solely so the landlord may determine whether he or she wishes to deal with the applicant at all, before any lease terms are proposed?[1][3]
10. Does DATCP distinguish between:
    a. money paid for consideration of an application,
    b. money paid for a third-party credit report,
    c. money paid for a third-party background report, and
    d. money paid in connection with a concrete proposed lease transaction?[1][6][8]
11. If DATCP does distinguish among those categories, which of them does DATCP regard as expressly authorized under current statewide Wisconsin law?[1][3][8]
12. Does DATCP’s present position remain that a compliant third-party credit-check fee is not earnest money, while money paid for the landlord’s own consideration of an application still is earnest money?[1][6][8]
13. If DATCP’s answer to Question 12 is yes, what is DATCP’s textual basis for that distinction after the deletion of the phrase “rental application considered”?[1][2]
14. Does DATCP believe a landlord may lawfully charge for the landlord’s own time spent reviewing an application, deciding whether to negotiate, checking public information, contacting references, or otherwise screening an applicant, apart from actual third-party report costs?[6][8]
15. If DATCP believes such a charge is lawful, what statute or rule expressly authorizes it? If DATCP believes such a charge is unlawful, does DATCP regard it as unlawful because it is unauthorized, because it is actually earnest money, or for some other reason?[1][3][8]
16. DATCP’s current Landlord-Tenant Guide states that earnest money includes money given so the landlord will consider the person’s application. Does DATCP regard that statement as an accurate statement of the current text of § ATCP 134.02(3)?[1][6]
17. If DATCP believes the Guide remains accurate, how does DATCP reconcile the Guide’s application-based wording with the current definition’s replacement of “rental application” with “rental agreement”?[1][2][6]
18. DATCP’s tenant-rights page refers to earnest money required “with your rental application.” Does DATCP intend that statement to reflect a formal legal interpretation of current law, a practical consumer explanation, or both?[6]
19. Does DATCP acknowledge that the current definition gives less direct definitional notice than the pre-2015 definition gave regarding whether money paid for consideration of an application is earnest money?[1][2]
20. Does DATCP interpret the current phrase “however denominated or described” as preserving the pre-2015 breadth of the definition even though the specific application language was removed?[1][2]
21. If DATCP answers yes to Question 20, how does DATCP distinguish between anti-labeling breadth and the separate issue of the substantive scope of the payments covered by the definition?[1][2]
22. During the CR 14-038 rulemaking, was the change from “rental application considered” to “rental agreement considered” intended to harmonize ch. ATCP 134 with chapter 704, including § 704.01(3m)?[4][5]
23. Did DATCP receive any public comment or internal analysis during the CR 14-038 process specifically addressing the deletion of “rental application considered” from the definition of earnest money?[4][5]
24. If DATCP has internal memoranda, interpretive guidance, staff complaint-handling guidance, or other documents explaining DATCP’s current interpretation of the changed definition, will DATCP provide those materials or identify them?[4][6][8]
25. Does DATCP believe that reading “rental agreement considered” as though it still meant “rental application considered” would effectively reinsert deleted language by interpretation rather than by text?[1][2]
26. If DATCP believes the answer to Question 25 is no, what limiting principle prevents the phrase “rental agreement considered” from expanding to cover every preliminary application-stage payment, even where no proposed rental agreement or essential terms yet exist?[1][3]
27. Does DATCP distinguish between landlords who use a standard preexisting lease form and landlords who do not have a standard rental agreement and decide terms only after discussion with the applicant?[1][3]
28. If DATCP does distinguish between those types of landlords, does DATCP agree that a payment made while considering a standard lease for an identified unit is materially different from a payment made before any lease terms exist, where the landlord is merely deciding whether negotiations should begin?[1][3]
29. In a complaint involving a landlord who has no standard lease, no proposed essential terms, and who takes money only to decide whether he wishes to proceed to negotiations, does DATCP classify that payment as earnest money under the current definition? If yes, why?[1][3]
30. In DATCP’s view, does the current law permit a distinction between:
    a. a landlord with a concrete proposed rental agreement for a specific unit, and
    b. a landlord who has not yet decided whether to negotiate at all?[1][3]
31. Does DATCP believe additional clarification by bulletin, FAQ, revised Guide language, advisory opinion, or future rulemaking is warranted because of the deletion of the application language and the continuing use of application-based wording in DATCP’s public materials?[4][6]
32. If DATCP does not believe clarification is warranted, what is DATCP’s position as to why the current text of § ATCP 134.02(3), standing alone, gives sufficient notice to landlords and tenants about whether pure application-consideration money is still earnest money?[1][2]

I also request clarification regarding background-check charges. The current definition of “earnest money deposit” expressly excludes a compliant “credit check fee,” but does not use equally explicit language for background-check charges, even though Wis. Stat. § 704.085(2) separately addresses certain background-check costs and DATCP later amended ATCP 134.05(4)(a) to conform the rule to that statute. Because the prior application-based language has been deleted, it appears important to know whether DATCP now understands credit-report costs and background-check costs as separate statutory screening categories outside the earnest-money definition, and whether that same reasoning affects any remaining claim that pure application-consideration money is still earnest money.

33.  The current definition of “earnest money deposit” in § ATCP 134.02(3) expressly states that the term does not include “a credit check fee charged in compliance with sub. (4).” Why does the definition expressly identify a credit check fee, but not expressly identify a background check fee, even though Wis. Stat. § 704.085(2) separately addresses certain background-check charges?

34.  Is DATCP’s position that a lawful background-check charge is excluded from the definition of “earnest money deposit” only because it falls within the screening-fee structure of § 704.085 and the conforming amendments to ATCP 134.05(4), rather than because it ever fell within the now-deleted phrase “for having a rental application considered by the landlord”?

35.  If DATCP’s answer to Question 34 is yes, does DATCP agree that the deletion of “rental application considered” is significant because it means third-party screening charges such as background checks must now stand or fall on their own separate statutory authorization, rather than being swept into the earnest-money definition by application-stage language?

36.  Does DATCP interpret the current definition of “earnest money deposit” to exclude background-check charges even though the definition itself names only a credit check fee? If so, what is the department’s precise textual basis for that conclusion?

37.  If DATCP interprets a lawful background-check charge as excluded from earnest money because of § 704.085(2), does DATCP also agree that a landlord’s own generalized “application review” or “application consideration” charge cannot be treated the same way unless there is separate statutory authorization for it?

38.  Before the deletion of “rental application considered,” DATCP could plausibly treat application-stage payments broadly as earnest money regardless of label. After that deletion, does DATCP agree that third-party credit and background report charges are best understood as separate statutory screening-cost categories, rather than as subtypes of earnest money?

39.  If DATCP believes a compliant background-check fee is not earnest money, does DATCP also agree that the same reasoning cuts against treating a pure application-consideration payment as earnest money now that the application language has been removed from the definition? If DATCP disagrees, please explain the difference in textual terms.

40.  In DATCP’s view, after the deletion of “rental application considered,” are the current pre-tenancy categories best described as:
a. earnest money tied to the option of entering into a rental agreement or having a rental agreement considered,
b. credit-check costs authorized by statute,
c. background-check costs authorized by statute, and
d. some separate category, if any, for a landlord’s own application-review time? Please identify which of those categories DATCP believes are expressly authorized by current law.

41.  Does DATCP believe the current text creates an asymmetry by expressly excluding a compliant credit check fee from earnest money while relying on statutory cross-reference and implication to exclude a compliant background-check fee?

42.  If DATCP’s position is that a lawful background-check charge is not earnest money because the department’s 2020 amendment to ATCP 134.05(4)(a) harmonized the code with § 704.085, does DATCP agree that the same harmonization principle should be applied to the deletion of “rental application considered” in ATCP 134.02(3) when interpreting whether application-consideration money remains earnest money?

I respectfully request a written response because this issue appears to have practical statewide significance for landlords, tenants, attorneys, consumer advocates, and small-claims courts. The prior definition spoke directly. The current definition does not. If DATCP intends no substantive change, it would be helpful to know how DATCP reconciles that position with the changed text and with Wis. Stat. § 704.01(3m). If DATCP does recognize a substantive change, it would be equally important to know the department’s present view of the resulting legal categories.

Thank you for your attention to this matter.

Footnotes

[1] Wisconsin Legislature materials for Wis. Admin. Code § ATCP 134.02(3) show the current definition of “earnest money deposit” as payments or deposits, however denominated or described, given by a prospective tenant to a landlord in return for the option of entering into a rental agreement in the future, or for having a rental agreement considered by a landlord.

[2] The archived Wisconsin Legislature materials for prior versions of ch. ATCP 134 show that the pre-2015 definition expressly included money given for having a rental application considered by the landlord. The Wisconsin Court of Appeals in Harris, Luck, Rubin v. Turenske quoted that earlier definition.

[3] Wis. Stat. § 704.01(3m) defines “rental agreement” as an oral or written agreement for a specific dwelling unit or premises in which landlord and tenant agree on the essential terms of the tenancy, and provides that a rental agreement does not include an agreement to enter into a rental agreement in the future.

[4] Wisconsin Legislature materials for CR 14-038 show that ch. ATCP 134 was repealed and recreated effective November 1, 2015.

[5] The Legislature’s scope-statement materials for the 2015 DATCP project described the proposal as making “only limited changes” necessary to resolve inconsistencies with revised chapter 704.

[6] DATCP’s current Landlord-Tenant Guide states that earnest money includes money given so the landlord will consider the person’s application, and DATCP’s tenant-rights webpage refers to earnest money required “with your rental application.”

[7] Wis. Stat. § 704.95 limits DATCP’s authority by providing that DATCP may not issue an order or promulgate a rule under § 100.20 that changes any right or duty arising under chapter 704.

[8] DATCP’s 2020 final rule materials for amendments to ATCP 134.05(4)(a) explain that the rule was amended to conform to Wis. Stat. § 704.085 and expressly acknowledge the limitation in § 704.95.