AB781: Bill Text

Note: Revises the definition of "small residential condominium" by increasing the maximum number of units from 4 to 12 and eliminating the requirement that all the units be restricted to residential uses. As a result, the defined term is changed to "small condominium". See also Secs. 59 to 61 of the bill, which make related changes to current s. 703.365, relating to small residential condominiums.

The expanded availability of the streamlined regulations for the creation and operation of "small" condominiums under s. 703.365 reflects the utility and acceptance of the regulations, enacted in 1986.

AB781, s. 4 Section 4. 703.06 of the statutes is amended to read:

AB781,3,5 703.06 Alterations prohibited. Except as otherwise provided in this chapter, no unit owner may do make any alteration which that would jeopardize the soundness or safety of the property, reduce the value thereof, or impair any easement or hereditament, or change the exterior appearance of a unit or any other portion of the condominium not part of the unit.

Note: For convenience, adds reference in this section to the general prohibition in s. 703.13 (5) (a) against changing the exterior appearance of a unit or of any other portion of the condominium without permission of the association board of directors.

AB781, s. 5 Section 5. 703.08 (1) of the statutes is renumbered 703.08 (1) (intro.) and amended to read:

AB781,3,14 703.08 (1) (intro.) Residential real property may not be converted to a condominium unless the owner of the residential real property gives 120 days' prior written notice of the conversion to each of the tenants of the building or buildings scheduled for conversion. A tenant has the exclusive option to purchase the unit for a During the 60-day period of 60 days immediately following the date of delivery of the notice a tenant has the first right to purchase the unit, if the unit is offered for sale at any time during that period, for any of the following:

Note: See the Note to Sec. 7, below.

AB781, s. 6 Section 6. 703.08 (1) (a), (b) and (c) of the statutes are created to read:

AB781,3,16 703.08 (1) (a) The price at which the unit is being offered on the market.

AB781,3,17 (b) The price contained in any accepted offer to purchase the unit.

AB781,3,18 (c) The price otherwise agreed to by the tenant and the seller.

Note: See the Note to Sec. 7, below.

AB781, s. 7 Section 7. 703.08 (2) (intro.) of the statutes is amended to read:

AB781,4,3 703.08 (2) (intro.) A tenant may not be required to vacate the property during the 120-day period immediately following the date of delivery of the notice required under sub. (1) except for:

Note: Under current law, residential property may not be converted to a condominium unless the property owner gives 120 days' prior written notice of the conversion to each of the tenants of the building scheduled for conversion. A tenant has the "exclusive option to purchase" the unit for a period of 60 days following the date of delivery of the notice. Sections 5 to 8 of this bill revise current law by:

1. Providing that the property may be converted to a condominium immediately upon completion of the notice requirement, rather than 120 days after notice. However, the tenant's rights relating to occupying and purchasing the property are preserved.

2. Clarifying that during the 60-day period immediately following the date of delivery of the conversion notice, a tenant has the "first right to purchase" (not the "exclusive option to purchase") the unit if the unit is offered for sale at any time during the 60-day period:

a. For the price at which the unit is being offered on the market.

b. For the price contained in any accepted offer to purchase the unit (from any prospective purchaser, not just the tenant).

c. For the price otherwise agreed to by the tenant and the seller.

3. Expressly authorizing the tenant to waive in writing his or her occupancy right and first right to purchase.

AB781, s. 8 Section 8 . 703.08 (3) of the statutes is created to read:

AB781,4,6 703.08 (3) A tenant may waive in writing his or her first right of purchase under sub. (1), his or her right to remain on the property under sub. (2), or both.

Note: See the Note to Sec. 7, above.

AB781, s. 9 Section 9. 703.09 (1) (g) of the statutes is amended to read:

AB781,4,11 703.09 (1) (g) Statement of the purposes for which the building and each of the units are intended and restricted as to use, including any requirement applicable to or restriction on the rental of residential units or reference to any such requirement or restriction in the bylaws.

Note: Requires the condominium declaration to include any requirement applicable to or restriction on the rental of residential condominium units or reference to any such requirement or restriction in the bylaws.

AB781, s. 10 Section 10. 703.09 (1) (h) of the statutes is amended to read:

AB781,5,4 703.09 (1) (h) The name of the person to receive service of process in the cases provided in this chapter, together with the and address of that person and the method by which the association may designate a successor to the person the resident agent under s. 703.23.

Note: Substitutes reference to the "resident agent under s. 703.23" for the current requirement that the declaration include the name of the person "to receive service of process in the cases provided in this chapter". Since s. 703.23, stats., also provides for changing the resident agent, the bill also removes the requirement that the declaration indicate the method by which the association may designate a successor to the person designated to receive service of process.

AB781, s. 11 Section 11. 703.09 (1) (k) of the statutes is renumbered 703.09 (1c) and amended to read:

AB781,5,10 703.09 (1c) A condominium declaration shall be signed by the owners of the property and any first mortgagee of the property or the holder of an equivalent security interest in the property in the same manner as required in conveyances of real property.

Note: Requires the declaration to be signed by any first mortgagees of the property or the holders of an equivalent security interest, in addition to the owners of the property. This requirement applies only to the declaration submitted for recording under s. 703.07 (1) in order to establish the condominium; it does not apply to amendments to the declaration.

AB781, s. 12 Section 12. 703.09 (1f) of the statutes is created to read:

AB781,6,2 703.09 (1f) A condominium declaration may provide for mandatory arbitration under ch. 788 of disputes arising out of the declaration, bylaws, or rules involving the interests of the declarant, unit owners, association, or board of directors. A mandatory arbitration provision in a declaration constitutes a written agreement between or among the declarant, association, and board to submit to arbitration a dispute covered by the arbitration provision in the declaration. Acceptance of a conveyance of a condominium unit constitutes an agreement by the unit owner to submit to arbitration a dispute covered by an arbitration provision that is included in the declaration at the time of the conveyance.

Note: Expressly allows the declaration to provide for mandatory arbitration under ch. 788, stats., of disputes involving the interests of the declarant, unit owners, association, or board of directors when the disputes arise out of the declaration, bylaws, or rules.

AB781, s. 13 Section 13. 703.09 (1m) of the statutes is created to read:

AB781,6,6 703.09 (1m) (a) In this subsection, "violation" means a failure to comply with the declaration, bylaws, or rules of the condominium association or any act or omission that constitutes grounds for eviction under ch. 704.

AB781,6,18 (b) A condominium declaration may provide that a unit owner, as a condition of the rental or lease of the unit owner's residential unit, grants the association power of attorney to bring an eviction action against a tenant of the unit owner who has committed a violation if the unit owner, after being requested by the association to evict the tenant, fails to take reasonable action to evict the tenant. Giving notice terminating, or not renewing, a tenant's lease or rental agreement within 60 days after an eviction request constitutes reasonable action to evict the tenant for purposes of this subsection. The declaration may specify notice and procedural requirements for the exercise of power of attorney by the association and the allocation of responsibility for eviction-related costs between the unit owner and the association. An eviction action brought by an association is subject to chs. 704 and 799.

AB781,6,21 (c) This subsection applies only to leases or rental agreements that are entered into or renewed after 3 years after the effective date of this paragraph .... [revisor insert date].

Note: Expressly authorizes the condominium declaration to allow the condominium association, under specified circumstances, to bring an eviction action against a tenant who fails to comply with the declaration, bylaws, or association rules or when there are any grounds for eviction under current law (a "violation"). Specifically, a declaration may provide that a unit owner, as a condition of renting or leasing his or her residential unit, grants the association power of attorney to bring an eviction action against a tenant of the unit owner who commits a violation if the unit owner fails to take reasonable action to evict the tenant after being requested to do so by the association. If within 60 days after the eviction request the unit owner gives notice terminating or does not renew the tenant's lease or rental agreement, that constitutes reasonable action to evict a tenant. The declaration may specify notice and procedural requirements for the exercise of power of attorney by the association and the allocation of responsibility for eviction-related costs between the unit owner and the association. An eviction action brought by an association is subject to chs. 704 and 799, stats.

AB781, s. 14 Section 14. 703.09 (2) of the statutes is amended to read:

AB781,7,14 703.09 (2) Except as provided in s. sub. (4) and ss. 703.093, 703.13 (6) (c) and (d) and (8) (b), and 703.26, a condominium declaration may be amended with the written consent of at least two-thirds of the unit owners aggregate of the votes established under sub. (1) (f) or a greater percentage if provided in the declaration. An amendment becomes effective when it is recorded in the same manner as the declaration. The document submitting the amendment for recording shall state that the required consents and approvals for the amendment were received. A unit owner's written consent is not effective unless it is approved in writing by the first mortgagee of the unit, or the holder of an equivalent security interest, if any. Approval from the first mortgage lender or equivalent security interest holder, or the person servicing the first mortgage loan or its equivalent on a unit, constitutes approval of the first mortgagee or equivalent security interest holder under this subsection.

Note: 1. Amends the exception clause to add reference to s. 703.09 (4), created by Sec. 15 of the bill; to s. 703.093, created by Sec. 16 of the bill; and to s. 703.13 (6) (c) and (d) and (8) (b), treated by Secs. 22 and 23 of the bill. The added references contain different declaration amendment procedures than the general procedure contained in s. 703.09 (2).

2. Clarifies that reference to "two-thirds of the unit owners" is to two-thirds of the aggregate of the votes (established under current s. 703.09 (1) (f)). The current reference is ambiguous.

3. Provides that the required mortgagee approval applies to first mortgagees only and must be in writing and that approval by the person serving the first mortgage loan constitutes approval by the first mortgagee.

4. Requires the document submitting the declaration amendment for recording to state that the required consents and approvals for the amendment were received.

See Sec. 16 of the bill for a new alternative procedure for amending the declaration.

AB781, s. 15 Section 15 . 703.09 (4) of the statutes is created to read:

AB781,8,6 703.09 (4) A declarant may assign his or her rights and obligations as a declarant under this chapter by recording an amendment to the declaration that includes the assignment and an acceptance of the assignment that is signed by the assignee and acknowledged. A declarant may not assign under this subsection less than all of his or her rights and obligations as a declarant under this chapter.

Note: Gives express authorization for a declarant to assign all of his or her rights and obligations as a declarant under ch. 703 if the declarant records an amendment to the declaration that includes the assignment and an acceptance of the assignment that is signed by the assignee and acknowledged. Inclusion of this express authority is not intended to imply that a declarant currently may not assign rights and obligations.

AB781, s. 16 Section 16 . 703.093 of the statutes is created to read:

AB781,8,14 703.093 Alternative procedure for amending declaration. (1) As an alternative to s. 703.09 (2), a condominium declaration may be amended under this section if at least two-thirds of the aggregate of the votes established under s. 703.09 (1) (f), or a greater percentage if provided in the declaration, consent to the amendment in writing and those consents are approved by the mortgagees or holders of equivalent security interests in the units. An amendment becomes effective when it is recorded in the same manner as the declaration.

AB781,8,18 (2) The association has 180 days to secure the required consents and approvals under this section, commencing with the recording of an affidavit with the register of deeds of the county in which the condominium is located. The affidavit shall do all of the following:

AB781,8,19 (a) Set forth the text of the proposed amendment.

AB781,9,3 (b) Provide the name and address of the senior executive officer of the association to whom inquiries should be directed with regard to the proposed amendment.

AB781,9,5 (c) State that a notice was sent to each owner of record and each lender of record for each unit of the association on the date the affidavit is recorded.

AB781,9,6 (d) Be signed by the senior executive officer of the association.

AB781,9,11 (3) Notice of a proposed amendment to a declaration under this section shall be mailed on the date the affidavit is recorded under sub. (2) to the owner of each condominium unit and to any mortgagee of, or holder of an equivalent security interest in, each unit, as identified in a title report prepared on the date the notice is sent.

AB781,9,12 (4) The notice mailed under sub. (3) shall do all of the following:

AB781,9,14 (a) Contain a copy of the text of the proposed amendment and a current copy of this section.

AB781,9,19 (b) Include a written ballot to be signed by the unit owner, identifying the unit casting the ballot and identifying each owner of record of that unit as of the date the affidavit is recorded under sub. (2). The ballot shall include a place for any mortgagee or equivalent security interest holder to whom notice is sent under sub. (3) to indicate its approval or objection under sub. (5) (b).

AB781,9,22 (c) State that, if more than one person is an owner of the unit and the owners cannot agree how to cast the ballot, the unit's vote shall be treated as a vote in opposition to the proposed amendment.

AB781,9,25 (d) State that a ballot signed by only one owner shall count as the ballot of that unit, unless more than one ballot is received by the association for that unit, in which case all ballots received for that unit must concur in the vote cast or the ballots, collectively, shall be treated as a vote in opposition to the proposed amendment by that unit.

AB781,10,4 (e) State that the proposed amendment must be voted on as written and that no changes to the proposed amendment may be accomplished by this vote.

AB781,10,6 (f) Include the address to which the completed ballot should be mailed or delivered.

AB781,10,10 (5) (a) The owner of each unit shall vote on the proposed amendment by signing the ballot before a notary public and by mailing the signed and notarized ballot or by personally delivering it to the association of unit owners at the applicable address specified under sub. (4) (f).

AB781,10,14 (b) Each mortgagee or equivalent security interest holder receiving the notice under sub. (3) shall signify its approval or objection to the amendment by having an authorized person sign the ballot before a notary public and by returning the signed, notarized ballot to the association.

AB781,11,4 (6) The association may rely on the list of owners of record set forth in a title report obtained as of the date the affidavit is recorded under sub. (2), unless the association receives a written notice, signed and notarized by both the previous owner and the new owner, advising the association that ownership of the unit has changed. The association shall send a copy of the notice under sub. (3) to the new owner of a unit and any mortgagee or equivalent security interest holder promptly after receiving notice of the transfer of ownership. It is the responsibility of the new unit owner to comply with this section. If the previous owner had voted prior to the change in ownership, the new owner may execute the ballot included in the notice under sub. (3), which ballot, when returned by the new owner, shall supersede and replace any ballot cast by the previous owner if the required approval of any mortgagee or equivalent security interest holder is also timely received. The 180-day period applicable to receipt of the ballot for the unit shall be extended to a date 14 days after the ballot is mailed by the association if the ballot is mailed within 14 days before the end of the 180-day period.

AB781,11,9 (7) Any person acquiring a mortgage or equivalent security interest on a unit after the affidavit is recorded under sub. (2) may notify the association in writing of the mortgage or equivalent security interest lien, identifying the unit on which it holds a lien, and signify its approval of or objection to the proposed amendment to the declaration.

AB781,11,17 (8) If the association receives the required number of consents and approvals from unit owners and mortgagees and equivalent security interest holders within the required time after the affidavit is recorded under sub. (2), the senior executive officer of the association shall record an affidavit in the office of the register of deeds of the county in which the condominium is located, setting forth the facts satisfying the requirements of this section and providing record notice to all interested persons that the declaration has been revised, effective upon the recording of the affidavit, and restating the entire declaration, as amended.

AB781,11,21 (9) The association shall, for a period of 2 years following the recording of the amended declaration under sub. (8), retain on file and make available for inspection at the place where the condominium financial records are maintained all of the following:

AB781,11,22 (a) The title report under sub. (6) relied upon by the association.

AB781,11,23 (b) All of the ballots received by the association from unit owners.

AB781,11,25 (c) All written approvals or objections received by the association from mortgagees and equivalent security interest holders.

Note: Provides an alternative procedure for amending the declaration. The key feature is that the association has 180 days to secure the required consents and approvals and may rely on the list of owners of record contained in a title report at the beginning of the 180-day period. (The current amendment procedure does not include this 180-day "window," but there is no limit on how long the current procedure may take. Provision is made for notice of the proposed amendment to new unit owners and lienholders during the 180-day period and for the new owners and lienholders to cast a ballot replacing the ballot of the previous owner and lienholder. Provision is made to extend the 180-day period 14 days if the ballot is mailed to the new owner and lienholder within 14 days before the end of the 180-day period.

The procedure contains substantial detail concerning the commencement of the 180-day period; required notice; voting by unit owners and lienholders and subsequent unit owners and lienholders; recording the amended declaration; and retention of materials related to the amendment for 2 years.

AB781, s. 17 Section 17. 703.10 (2g) of the statutes is created to read:

AB781,12,5 703.10 (2g) Occupancy requirements for board members. The bylaws may provide that a unit owner may not serve as a director unless the owner occupies his or her unit or may specify the proportion of nonoccupant unit owners who may serve as directors.

Note: Expressly provides that the condominium bylaws may provide that a unit owner may not serve as a director of the condominium association unless the unit owner occupies his or her unit or may specify the proportion of nonoccupant unit owners who may serve as directors. Note that under current s. 703.10 (2) (d), stats., not more than one "nonunit owner" may be on the board.

AB781, s. 18 Section 18. 703.11 (2) (c) of the statutes is amended to read:

AB781,12,11 703.11 (2) (c) Diagrammatic floor plans Plans that show the location of each building located or to be located on the property which show and, if there are units in a building, that show the perimeters, approximate dimensions, floor area approximate square footage, and location of each unit in it the building. Common elements shall be shown graphically to the extent feasible.

Note: Simplifies the required content of a condominium plat by substituting "plans showing the location of each building" for "diagrammatic floor plans of each building", adding "perimeters", and substituting "approximate square footage" for "floor area". Also makes editorial changes. Reference in the revised provision to "plans" is not intended to include the construction plans for the building, including all the separate plans that comprise the construction plans.

AB781, s. 19 Section 19 . 703.11 (5) of the statutes is created to read:

AB781,13,4 703.11 (5) Amendment. Except as provided in s. 703.265, amendment of a condominium plat by an addendum that is not included as part of an amendment to the declaration shall be accomplished in the same manner as an amendment to the declaration under s. 703.09 (2).

Note: Clarifies that an amendment of a condominium plat (addendum) that is not included as part of an amendment to the declaration is to be accomplished in the same manner as an amendment to the declaration.

AB781, s. 20 Section 20 . 703.13 (5) (a) of the statutes is amended to read:

AB781,13,11 703.13 (5) (a) A unit owner may make any improvements or alterations within his or her unit that do not impair the structural integrity or lessen the support of any portion of the condominium and that do not create a nuisance substantially affecting the use and enjoyment of other units or the common elements. A unit owner may not change the exterior appearance of a unit or of any other portion of the condominium without permission of the board of directors of the association.