Madison, Wisconsin: security deposit interest

Madison General Ordinances § 32.07(3), headed "Rent Credit," required a landlord to give a yearly credit at the interest rate the Wisconsin Department of Financial Institutions announces for money held in real-estate escrow accounts, running from the day the deposit was paid until it was returned or accounted for. Wisconsin then preempted the field: 2011 Wisconsin Act 108 created Wis. Stat. § 66.0104, whose subsection (2)(b) bars a municipality from placing security-deposit requirements on a landlord beyond the state's administrative rules, and whose subsection (3)(a) provides that an inconsistent ordinance in effect on December 21, 2011 "does not apply and may not be enforced." Madison never repealed § 32.07(3). The state simply switched it off, so a reader who opens the current Madison code finds a live-looking duty that no landlord owes and no tenant can enforce.

Madison deposit interest at a glance

The rate history

Madison never picked the number. The credit had to equal "the State of Wisconsin Department of Financial Institutions' (DFI) announced interest rate to be paid by Wisconsin's financial institutions for money held in escrow accounts for real estate." The rate applied was the announced rate on the date the security deposit was paid, or an earnest money deposit was applied toward it, and then the rate in effect on each annual anniversary after that. The mayor was directed to make the current rate and the previous twenty years' rates available at the city clerk's office, the building inspection division, Madison public libraries and on the city's website.

Accrual and payment

The credit ran yearly, from the date the security deposit was paid — or earnest money was applied toward it under § 32.10(2)(b) — to the date the deposit was returned or accounted for under § 32.07(8). If it was not credited against the last month's rent annually or otherwise given to the tenant before the tenancy ended, it had to be paid to the tenant or accounted for in writing within twenty-one days after the tenant surrendered the premises. The amount and the date it was received had to be stated in the lease and in every renewal, or given to the tenant in writing when the rental agreement was made. Voluntary prepayments of rent under § 32.07(2)(e) were exempt.

Who and what is covered

The subsection applied to security deposits under chapter 32, Madison's landlord and tenant chapter, and took effect January 1, 2004. It was last amended in October 2008, three years before the state preemption reached it.

How this interacts with state law

Wisconsin took the subject away from its cities. Wis. Stat. § 66.0104(2)(b) provides that no city, village, town or county may enact an ordinance placing requirements on a residential landlord with respect to security deposits, earnest money, or pretenancy or posttenancy inspections beyond the requirements in the state's administrative rules on residential rental practices. Subsection (3)(a) then reaches backwards: if a municipality "has in effect on December 21, 2011, an ordinance that is inconsistent with sub. (2) (a) or (b), the ordinance does not apply and may not be enforced." That is a statutory switching-off of a rule already on the books, not merely a ban on new ones, which is why Madison's text survives on the page with no force behind it. The date comes from 2011 Wisconsin Act 108, enacted December 7, 2011 and published December 20, 2011, and is written into the statute itself. The Wisconsin Court of Appeals has read the provision the same way: in a published decision it described Wis. Stat. § 66.0104(2)(b) as prohibiting local ordinances from imposing security deposit requirements that are additional to the requirements under the state's administrative rules on residential rental practices, and § 66.0104(3)(a) as providing that an ordinance inconsistent with that subsection does not apply and may not be enforced.

Notes and caveats

• Dead text, still printed in the current code — This is the trap. Section 32.07(3) is not an archived version or an old copy — it is in Madison's current official code, in ordinary type, alongside rules that do apply, with its 2003 recreation and 2008 amendment lines attached and nothing to say it stopped operating. A tenant or landlord reading the code has no way to tell from the page that state law voided it in 2011. The chapter carries only a general editor's note saying a number of its provisions are affected by recent state legislation and pointing readers to 2011 Wisconsin Act 108, 2011 Wisconsin Act 143 and 2013 Wisconsin Act 76.
• It is filed under "Rent Credit," not interest — Madison called the payment a rent credit rather than interest, though the rate it used is expressly an interest rate. That naming has two effects worth knowing: someone searching the code for the word "interest" under a heading about interest will miss the rule entirely, and someone who does find it inside a section headed "Security Deposit Refund Procedures" will reasonably read it as current law.
• The city never repealed it — Madison's own legislative record carries no measure of any kind touching § 32.07 or security deposits after 2011. What the city did do in response to the state act was revise its tenant and landlord rights pamphlet — a February 2012 item described as changes based on 2011 Act 108. The ordinance itself was left where it was.
• The rest of chapter 32 sits under the same ceiling — Chapter 32 still contains a full security-deposit regime: definitions, refund procedures with a twenty-one-day clock and withholding rules, a separate earnest-money regime, prohibited practices and a voluntary best-practices certification programme. All of it is subject to the same limit in § 66.0104(2)(b) — anything requiring more of a landlord than the state's administrative rules on residential rental practices does not apply and may not be enforced. Which particular provisions beyond the rent credit fall on which side of that line is a separate comparison, and is not answered here.

Cite this page: "Landlord Atlas, Madison, Wisconsin: security deposit interest (verified August 28, 2026), landlordatlas.com/laws/deposit-interest/wisconsin/madison/" — free to cite and quote with a link (how these records are verified).

Citations

• Madison General Ordinances ch. 32 (Landlord and Tenant), incl. § 32.07(3) 'Rent Credit' · § 32.07(3) (verified 2026) Official source
• Wis. Stat. § 66.0104 (Prohibiting ordinances that place certain limits or requirements on landlords) · (2)(b), (3)(a) (verified 2026) Official source
• 2011 Wisconsin Act 108 (enrolled) (verified 2026) Official source
• State v. Lasecki, 2020 WI App 36 (Wis. Ct. App., published; construing § 66.0104(2)(b) and (3)(a)) · ¶¶ 34-35 (verified 2026) Official source

How this record was verified: Madison General Ordinances chapter 32 (Landlord and Tenant) read in full from the city's official code as codified through ORD-26-00040, published August 3, 2026, with all eight occurrences of the word 'interest' in the chapter enumerated in context and § 32.07(3) read verbatim with its amendment history line; Wis. Stat. § 66.0104 read in full on the Legislature's site, including subsection (2)(b), the voiding dates in subsection (3) and the History line; the enrolled text of 2011 Wisconsin Act 108 read for its enactment and publication dates; and the city's own legislative record queried for every matter touching § 32.07, security deposits, rent credit, chapter 32 and Act 108 since 2011.

This page records local law on deposit interest. The statewide position — Wisconsin requires no interest on a residential security deposit, and the widely circulated claim that a Wisconsin landlord owes five percent a year after the first year is false. — lives on the Wisconsin deposit-interest page with its own citations and verification date.