I have a friend who mailed a certified letter of intent to move. Letter to be recieved before  January 1st. Landlord didn't acknowledge the letter until the tenant wrote another letter in late January asking to use his security deposit as their pay month's rent. Only then did the landlord reply saying the first letter got their too late for the proper 60 day notice. So she's extending the lease out another month (ending March 31st). And that the lease says using of the security deposit as last month's rent is not allowed. 

This was a 1 year lease that changed into a month to month lease that kept all lease requirements for notice to vacate in place. This summer would be 5 years at this residence. Does he paint or put up new blinds?

This friend is willing to pay the actual last month's rent (February) but does not want to pay the extra month (March) knowing he sent the letter. Also, the landlord didn't acknowledge the lalleged one day late letter (says it's postmarked the 2nd). The landlord could have told him the day she recieved the letter saying it was not recieved in time and that it was not the accepted 60 day notice. 

How does my friend proceed as he wants to keep a good credit score?

*I'm not a lawyer, nor am I from WI or familiar with their specific laws*

Generally speaking you can't put clauses into a lease that violates state law.  A 2 second non-scientific google search into Wis. Stat. Ann. § 704.19 says that Wisconsin (I'm assuming your friend also lives there) requires a 28 day notice to terminate a month to month lease.  Once the lease rolled over from a yearly lease, and turned into a month to month lease the 60 day notice to vacate in the lease became irrelevant as state law dictates that only 28 days is now required.  

The landlord is probably correct in the usage of the security deposit as rent, as most states have very very specific rules about what the security deposit can/can't be used for.

Under 704.19(3) at least 28-days notice must be given by a landlord or tenant if they have a year lease or month-to-month lease when wanting to not renew a lease/contract.  From what I know a contract can stipulate a longer notice to vacant (terms), as long as it was agreed upon (in lease contract) by the tenant and landlord.  As I am not a lawyer I would advise your friend to seek advise from legal counsel. 

In some areas the deposit can not be used to cover the last month's rent.  He shouldn't have to paint or do anything other than make sure the place is clean when he leaves.

Originally posted by @Jamie Labrec :

Under 704.19(3) at least 28-days notice must be given by a landlord or tenant if they have a year lease or month-to-month lease when wanting to not renew a lease/contract.  From what I know a contract can stipulate a longer notice to vacant (terms), as long as it was agreed upon (in lease contract) by the tenant and landlord.  As I am not a lawyer I would advise your friend to seek advise from legal counsel. 

 I'm relatively certain that no lease can force a tenant to waive their rights.  If the state law requires a minimum of 28 days notice, then the lease can not force the tenant to waive that right and impose a stricter timeline to provide notice.  The fact that both parties willingly agree to something doesn't matter if the law requires something different, I mean two people could willingly engage in prostitution, but just because they both willingly agree to knock boots for cash doesn't mean its suddenly legal. 

The same can be said about security deposits, if the state law says you can only charge 1.5 months worth of security deposits, then you can't suddenly charge 2 months worth just because you put a clause in your lease that the tenant agreed to.

State law always trumps what is in a lease.  If the law says its 28 days, then its 28 days.  

*I'm still not a lawyer, no legal advise should be implied*