AB781: Bill Text

Note: The procedure for relocating boundaries between adjoining condominium units also provides that if the adjoining unit owners have specified in the written application a reasonable allocation, as determined by the board of directors, of the number of votes in the association or liabilities for future common expenses not specially assessed that pertain to the units, an amendment to the condominium instruments is to reflect those reallocations. This bill provides that an amendment to a declaration under this provision is adopted in the same manner as described in paragraph 2 of the Note immediately above.

AB781, s. 23 Section 23 . 703.13 (8) of the statutes is created to read:

AB781,15,13 703.13 (8) Merger of units. (a) If any condominium instruments expressly permit the merger of 2 or more adjoining units into one unit, a merger shall be made in accordance with this subsection and any restrictions and limitations specified in the condominium instruments.

AB781,16,11 (b) If the unit owners of adjoining units that may be merged desire to merge the units, the unit owners, after 30 days' written notice to all other unit owners, shall prepare and execute appropriate instruments under this subsection. An amendment to the condominium instruments shall assign a new identifying number to the new unit created by the merger of the units and shall allocate to the new unit all of the undivided interest in the common elements and rights to use the limited common elements and the votes in the association formerly appertaining to the separate units. The amendment shall reflect an allocation to the new unit of the liability for common expenses and rights to common surpluses formerly appertaining to the separate units. An amendment to a declaration under this paragraph shall be adopted either under s. 703.09 (2) or by the written consent of the owners of the units to be merged, the mortgagees of those units, if any, and the board of directors of the association.

AB781,16,16 (c) Plats and plans showing the boundaries and dimensions of the new unit together with the new identifying number or letter shall be prepared. The plats and plans shall be certified as to their accuracy and compliance with this subsection by a civil engineer, architect, or licensed land surveyor authorized to practice in this state.

AB781,16,24 (d) After appropriate instruments have been prepared and executed, they shall be delivered promptly to the owner or owners of the merged unit upon payment by the owner or owners of all reasonable costs for their preparation. Those instruments are effective when executed by the owner or owners of the merged unit and recorded in the office of the register of deeds of the county where the property is located. The recording of the instruments is conclusive evidence that the merger did not violate any restriction or limitation specified by the condominium instruments and that any reallocations made under this subsection were reasonable.

Note: Provides a procedure for merging adjoining condominium units based on current procedures for: relocating boundaries between adjoining condominium units [s. 703.13 (6), stats.]; and separation of a unit into one or more units [s. 703.13 (7), stats.]. The procedure includes a simplified means of amending the declaration.

AB781, s. 24 Section 24. 703.15 (1) of the statutes is amended to read:

AB781,17,9 703.15 (1) Legal entity. The affairs of every condominium shall be governed by an association which that, even if unincorporated, is constituted a legal entity for all purposes. Except for matters reserved to the association members or unit owners by this chapter, the declaration, or the bylaws, all policy and operational decisions of the association, including interpretation of the condominium instruments, bylaws, rules, and other documents relating to the condominium or the association, shall be made by its board of directors. This subsection does not affect the deference accorded to, or the standard of review of, an action of the board of directors by a court.

Note: Clarifies the prevailing, but not always known, view of the role of the association board of directors: with the exception of matters reserved to association members or unit owners by ch. 703, the declaration, or bylaws, all policy and operational decisions of the association are made by the board. Policy and operational decisions include, but are not limited to, interpretation of condominium instruments, bylaws, rules, and other documents relating to the condominium or the association.

AB781, s. 25 Section 25. 703.15 (3) (b) 1. of the statutes is amended to read:

AB781,17,13 703.15 (3) (b) 1. Make contracts and incur liabilities , including borrowing funds in the name of the association in the manner specified in the bylaws under s. 703.10 (2) (f).

Note: For illustrative purposes, expressly provides that a condominium association, subject to any restrictions and limitations specified by the declaration, may borrow funds in the name of the association in the manner specified in the bylaws as part of its general authority to make contracts and incur liabilities. The exercise of this authority by an association is subject to current s. 703.25, relating to the tort and contract liability of an association.

AB781, s. 26 Section 26. 703.15 (3) (b) 8. of the statutes is created to read:

AB781,17,16 703.15 (3) (b) 8. Purchase goods and services jointly with other condominium associations or other persons.

Note: Expressly authorizes a condominium association, subject to any restrictions and limitations specified by the declaration, to purchase goods and services jointly with other condominium associations or other persons.

AB781, s. 27 Section 27. 703.15 (4) (d) 1. of the statutes is amended to read:

AB781,18,8 703.15 (4) (d) 1. At meetings of the association every unit owner is entitled to cast the number of votes appurtenant to his or her unit, as established in the declaration under s. 703.09 (1) (f). Unit owners may vote by proxy, but, the proxy is effective only for a maximum period of 180 days following its issuance, unless granted to a mortgagee or lessee. If only one of multiple owners of a unit is present at a meeting of the association, the owner is entitled to cast the votes allocated to that unit.

Note: For convenience, indicates by cross-reference that the number of votes appurtenant to a condominium unit is established in the declaration.

AB781, s. 28 Section 28. 703.155 (7) of the statutes is created to read:

AB781,18,14 703.155 (7) Representation of condominium or noncondominium property. A master association may represent condominium or noncondominium property on behalf of one or more condominiums and property under a different form of ownership or for the benefit of the unit owners of one or more condominiums and the owners of other property.

Note: Clarifies the authority of a master association to represent either condominium property or noncondominium property: (a) on behalf of one or more condominiums and property under a different form of ownership; or (b) for the benefit of the unit owners of one or more condominiums and the owners of other property.

AB781, s. 29 Section 29. 703.16 (2) of the statutes is renumbered 703.16 (2) (a).

AB781, s. 30 Section 30. 703.16 (2) (b) of the statutes is created to read:

AB781,19,3 703.16 (2) (b) During the period of declarant control of the association under s. 703.15 (2) (c), if any unit owned by the declarant is exempt from assessments for common expenses until the unit is sold, the total amount assessed against units that are not exempt from assessments may not exceed the amount that equals nonexempt units' projected percentage share of common expenses, based on the anticipated common expenses set forth in the annual budget under s. 703.161 (2) (a). The declarant is liable for the balance of the actual common expenses.

Note: Provides that, during the period of declarant control, if a unit owned by the declarant is exempt from assessments for common expenses until the unit is sold, the total amount that may be assessed against units that are not exempt from assessments may not exceed the units' projected percentage share of common expenses; the declarant is liable for the balance of the actual expenses.

AB781, s. 31 Section 31 . 703.16 (3) to (9) of the statutes are renumbered 703.165 (2) to (8), and 703.165 (2), (4), (5) (intro.) and (8) (form), as renumbered, are amended to read:

AB781,19,17 703.165 (2) Liability for assessments. A unit owner shall be liable for all assessments, or instalments thereof, coming due while owning a unit , including any assessments coming due during the pendency of any claim by the unit owner against the association or during any period in which the unit is not occupied by the unit owner or is leased or rented to any other person. In a voluntary grant, the grantee shall be jointly and severally liable with the grantor for all unpaid assessments against the grantor for his or her share of the common expenses up to the time of the voluntary grant for which a statement of condominium lien is recorded, without prejudice to the rights of the grantee to recover from the grantor the amounts paid by the grantee for such assessments. Liability for assessments may not be avoided by waiver of the use or enjoyment of any common element or by abandonment of the unit for which the assessments are made.

Note: Expressly provides that a condominium unit owner is liable for any assessments coming due during the pendency of any claim by the unit owner against the association or during any period the unit is not occupied by the unit owner or is leased or rented to any other person. While the new language is within the scope of current language, it is added for clarification.

AB781,20,6 (4) Statement. Any grantee of a unit is entitled to a statement from the association or the executive board, setting forth the amount of unpaid assessments against the grantor and the. The grantee is not liable for, nor shall the unit conveyed be subject to a lien which that is not filed under sub. (4) (3) for, any unpaid assessment against the grantor in excess of the amount set forth in the statement. If an association or a board of directors does not provide such a statement within 10 business days after the grantee's request, they are barred from claiming under any lien which that is not filed under sub. (4) (3) prior to the request for the statement against the grantee.

AB781,20,10 (5) Priority of lien. (intro.) All sums assessed by an association but unpaid for the share of the common expenses chargeable to any unit constitutes a lien on the unit and on the undivided interest in the common elements appurtenant thereto A lien under this section is prior to all other liens except:

AB781,20,11 (8) (form)

AB781,20,12 Statement of Condominium Lien

AB781,20,18 This is to certify that .................... owner(s) of unit No. ..... in .................... Condominium (is) (are) indebted to the association in the amount of $.......... as of .........., .... (year) for (his) (her) (its) (their) (proportionate share of common expenses of the Condominium) (damages to the condominium) (penalties for violation of condominium declaration, bylaws, or rules) for the period from (date) to (date), plus interest thereon at the rate of ....%, costs of collection, and actual attorney fees.

AB781,20,19 Association

AB781,20,20 By: ..........................

AB781,20,21 Officer's title (or agent)

AB781,20,22 Address

AB781,20,23 Phone number

AB781,21,3 I hereby affirm under penalties of perjury that the information contained in the foregoing Statement of Condominium Lien is true and correct to the best of my knowledge, information, and belief.

AB781,21,4 ...............................

AB781,21,5 Officer (or agent)

Note: See Sec. 34 of the bill, which creates an expanded definition of "assessments" for purposes of the above lien provisions.

AB781, s. 32 Section 32. 703.161 of the statutes is created to read:

AB781,21,8 703.161 Annual budget. (1) Application. This section applies to any condominium that includes at least one unit that is restricted to residential use.

AB781,21,10 (2) Requirement. An association annually shall adopt and distribute to all unit owners an annual budget setting forth all of the following:

AB781,21,13 (a) All anticipated common expenses and any amounts to be allocated to a statutory reserve account under s. 703.163 and to any other funds for future expenditures.

AB781,21,14 (b) The amount and purpose of any other anticipated association expenditure.

AB781,21,16 (c) The amount in any statutory reserve account under s. 703.163 or any other funds held for future expenditures.

AB781,21,17 (d) Any common surpluses.

AB781,21,18 (e) The amount and source of any income, other than unit owner assessments.

AB781,21,20 (f) The aggregate amount of any assessment to be levied against unit owners and the purpose of the assessment.

Note: Requires the condominium association for condominiums that include at least one unit that is restricted to residential use to annually adopt and distribute to all unit owners an annual budget setting forth:

1. All anticipated common expenses and any amounts to be allocated to a statutory reserve account and to any other funds for future expenditures.

2. The amount and purpose of any other anticipated association expenditure.

3. The amount in any statutory reserve account or any other funds held for future expenditures.

4. Any common surpluses.

5. The amount and source of any income, other than unit owner assessments.

6. The aggregate amount of any assessment to be levied against unit owners and the purpose of the assessment.

If there is a statutory reserve account for the condominium, the annual budget must provide reserve funds for the account. See s. 703.163 (8) (intro.), created by Sec. 33 of the bill, below.

AB781, s. 33 Section 33 . 703.163 of the statutes is created to read:

AB781,22,2 703.163 Statutory reserve account. (1) Definitions. In this section:

AB781,22,5 (a) "Reserve funds" means funds derived from assessments against unit owners that are deposited in a statutory reserve account. The term does not include funds for ordinary operations, including amounts held for operational contingencies.

AB781,22,7 (b) "Statutory reserve account" means a separate account established under this section to hold reserve funds.

AB781,22,11 (c) "Statutory reserve account statement" means a statement indicating whether a statutory reserve account has been established for a condominium and, if there is no statutory reserve account, how it is anticipated that future expenditures for the repair and replacement of common elements will be funded.

AB781,22,14 (2) Application; other reserve accounts not affected. (a) 1. Except as provided in subds. 2. and 3., this section applies to condominiums consisting exclusively of units that are restricted to residential uses.

AB781,22,17 2. This section does not apply to a small condominium unless the declarant or the association, with the written consent of a majority of the unit votes, elects to be governed by this section.

AB781,23,2 3. This section applies to a condominium consisting of both residential and nonresidential units if the declarant or the association, with the written consent of a majority of the unit votes of the residential units and a majority of the unit votes of the nonresidential units, elects to be governed by this section.

AB781,23,6 (b) This section does not affect a reserve account or a similar account existing on the effective date of this paragraph .... [revisor inserts date], or a reserve account or similar account established on or after the effective date of this paragraph .... [revisor inserts date], that is not a statutory reserve account.

AB781,23,14 (3) New condominiums; establishment of statutory reserve account by declarant. (a) Except as provided in par. (c), the declarant of a condominium that is created on or after the effective date of this paragraph .... [revisor inserts date], shall establish a statutory reserve account when the condominium is created and shall execute a statutory reserve account statement. The declarant shall determine the annual amount to be assessed unit owners for reserve funds after considering the factors under sub. (7) (a) to (e) and, if the condominium is a conversion condominium with more than 4 units, the report prepared under s. 703.33 (2) (cm) 1.

AB781,24,2 (b) Reserve fund assessments for the reserve account established under par. (a) may first be assessed on a particular unit when a certificate of occupancy has been issued that applies to that unit. The declarant may elect to defer payment of the accrued assessments for a particular unit until the first conveyance of that unit. The declarant may not defer payment of accrued reserve fund assessments for more than 5 years from the date the exterior construction of the building in which the unit is located is completed. The declarant is liable for all reserve fund assessments on a unit that accrue before the unit is conveyed. If there are accrued reserve fund assessments against a unit, the declarant shall disclose in writing to the first purchaser of the unit whether the declarant has included any accrued reserve fund assessments in the purchase price of the unit or, if not included, how any accrued assessment will be paid.

AB781,24,7 (c) The declarant may elect not to establish a statutory reserve account under par. (a) at the time the condominium is created or, at any time thereafter, may elect to terminate a statutory reserve account during the period of declarant control under s. 703.15 (2) (c). An election under this paragraph shall be made by executing a statutory reserve account statement.

AB781,24,16 (4) New condominium; determination by association to establish statutory reserve account. If a declarant has elected under sub. (3) (c) not to establish a statutory reserve account or to terminate an account, establishment of a statutory reserve account shall be addressed at the first annual meeting of the association held after, or at a special meeting of the association held within one year after, the expiration of any period of declarant control under s. 703.15 (2) (c). A statutory reserve account is established under this subsection with the written consent of a majority of the unit votes. If a statutory reserve account is established under this subsection, the association shall execute a statutory reserve account statement.

AB781,25,2 (5) Existing condominiums; statutory reserve account unless elect otherwise. The association for a condominium created before the effective date of this subsection .... [revisor inserts date], shall, within 18 months after the effective date of this subsection .... [revisor inserts date], or within 18 months after the expiration of any period of declarant control under s. 703.15 (2) (c), whichever is later, establish a statutory reserve account unless the association, with the written consent of at least two-thirds of the unit votes, elects not to establish a statutory reserve account. Upon the establishment of or the election not to establish a statutory reserve account, the association shall execute a statutory reserve account statement.

AB781,25,7 (6) Election by association to establish or terminate statutory reserve account. (a) If an association elects not to establish a statutory reserve account under sub. (4) or (5), or if an association elects to terminate a statutory reserve account under par. (b), the association may at any time thereafter elect to establish a statutory reserve account with the written consent of a majority of the unit votes.

AB781,25,12 (b) An association may, at any time with the written consent of at least two-thirds of the unit votes, terminate a statutory reserve account established under par. (a) or sub. (3) (a), (4), or (5) except that a statutory reserve account established by a declarant under sub. (3) (a) may not be terminated until after the expiration of any period of declarant control under s. 703.15 (2) (c).

AB781,25,14 (c) Upon the establishment or termination of a statutory reserve account, the association shall execute a statutory reserve account statement.

AB781,25,19 (7) Reserve fund. If there is a statutory reserve account for the condominium, the annual budget adopted under s. 703.161 shall provide for reserve funds. Reserve funds may be used as provided in sub. (8). The association shall determine the amount to be assessed unit owners for reserve funds after considering all of the following:

AB781,25,20 (a) The reserve funds currently in the statutory reserve account.

AB781,25,22 (b) The estimated cost of repairing or replacing common elements, other than routine maintenance.

AB781,25,23 (c) The estimated remaining useful life of common elements.

AB781,26,3 (d) The approximate proportion of the estimated cost of repairing or replacing common elements that will be covered by the statutory reserve account and the approximate proportion that will be funded by other means.

AB781,26,4 (e) Any other factor that the association considers relevant.

AB781,26,7 (8) Use of statutory reserve account. (a) Except as provided in par. (b), funds in a statutory reserve account may be used for the repair and replacement of common elements, other than routine maintenance.

AB781,26,13 (b) Funds in a statutory reserve account may be used for normal repair or maintenance, customary services, or other operational costs in excess of amounts budgeted and any contingency funds available for these purposes, with the written consent of at least two-thirds of the unit votes. Funds from the statutory reserve account used under this paragraph must be replaced within 3 years from the date of withdrawal.

AB781,26,15 (9) Permitted investment of reserve funds. Reserve funds may be invested in any of the investments listed under s. 66.0603 (1m) (a).

AB781,26,21 (10) Liability immunity. No declarant, unit owner, association, or director, officer, manager, or employee of an association is liable in connection with the establishment or termination of, or decision not to establish or terminate, a statutory reserve account or for any deficiencies in the statutory reserve account that relate to the determination of amounts to be assessed for reserve funds. This subsection is in addition to any other liability protection available under law.

AB781,26,25 (11) Recording of statutory reserve account statement. Each statutory reserve account statement executed under this section shall bear the name of the condominium as it appears on the declaration and shall be recorded with the register of deeds of the county where the condominium instruments are recorded.

Note: Requires a declarant or association to establish a "statutory reserve account" to fully or partially fund repairs and replacements of common elements other than routine maintenance, unless the declarant or association elects not to establish an account.