January 6, 2010 - Introduced by Representatives Hebl, Turner, Pocan and Bies,
cosponsored by Senator Risser. Referred to Committee on Housing.
AB647,2,11
1An Act to repeal 703.28 (1m), 703.28 (2) and 703.29;
to renumber and amend
2703.115 (1), 703.13 (4), 703.13 (7) (b), 703.13 (7) (c), 703.13 (7) (d), 703.25 (3),
3703.34 (intro.) (except 703.34 (title)), 703.34 (1), 703.34 (2), 703.34 (3) and
4703.365 (7);
to amend 703.02 (5), 703.02 (6), 703.02 (6m), 703.02 (12), 703.02
5(14g), 703.02 (15), 703.02 (16), 703.03, 703.04, 703.05, 703.06, 703.07 (2), 703.08
6(1) (intro.), 703.08 (2) (intro.), 703.08 (3), 703.09 (1c), 703.09 (2), 703.10 (1),
7703.10 (2) (d), 703.10 (2) (f), 703.10 (4), 703.10 (6), 703.105 (1m), 703.105 (2),
8703.12, 703.13 (2), 703.13 (5) (a), 703.13 (5) (b), 703.13 (5m) (a) 3., 703.13 (5m)
9(b), 703.13 (6) (b), 703.13 (6) (c), 703.13 (6) (e), 703.13 (8) (b), 703.13 (8) (c),
10703.14 (1), 703.15 (2) (a), 703.15 (2) (b), 703.15 (2) (c) 1. (intro.), 703.15 (2) (c)
111. a., 703.15 (2) (c) 1. b., 703.15 (2) (c) 1. c., 703.15 (2) (c) 2., 703.15 (2) (d), 703.15
12(2) (e), 703.15 (2) (f), 703.15 (3) (a) (intro.), 703.15 (3) (a) 1., 703.15 (3) (a) 2.,
13703.15 (3) (a) 3., 703.15 (3) (b) (intro.), 703.15 (4) (d) 1., 703.15 (4) (e), 703.155
14(1), 703.155 (2), 703.16 (1), 703.16 (2) (b), 703.161 (2) (intro.), 703.165 (2),
1703.165 (3), 703.165 (5) (c), 703.165 (7), 703.17 (1), 703.18 (2) (b), 703.19 (3)
2(intro.), 703.19 (3) (b), 703.19 (3) (c), 703.20 (1), 703.22 (title), 703.22 (2), 703.22
3(3), 703.24 (2), 703.26 (1), 703.26 (2) (a), 703.26 (3) (a), 703.28 (1), 703.33 (1)
4(intro.), 703.34 (title), 703.365 (1) (b), 703.365 (4) (b), 709.02 (2) (intro.) and
5709.02 (2) (d);
to repeal and recreate 703.365 (6); and
to create 703.02 (9c),
6703.02 (9d), 703.09 (3) (bm), 703.115 (1c), 703.13 (4) (b), 703.13 (4) (c), 703.13
7(4) (d), 703.13 (4) (e), 703.13 (7) (b) 1., 703.13 (7) (cm), 703.13 (7) (dm), 703.15
8(2) (c) 3., 703.15 (6), 703.161 (2) (g), 703.161 (3), 703.25 (3) (b), 703.275 (4m),
9703.28 (2m), 703.28 (3), 703.28 (4), 703.33 (9), 703.34 (2m), 703.365 (10),
10703.365 (11) and 703.365 (12) of the statutes;
relating to: miscellaneous
11modifications to the condominium laws.
Analysis by the Legislative Reference Bureau
This bill makes a number of miscellaneous changes to the condominium
provisions in current law, including the following:
1. Under current law, residential real property may not be converted to a
condominium unless the owner gives notice of the conversion to each tenant. Then,
for 60 days after the notice, a tenant has the first right to purchase the unit if offered
for sale and generally may not be required to vacate the property for 120 days after
the notice. The bill clarifies that these provisions apply only to residential tenants.
2. Current law provides that a property may be subjected to the condominium
form of ownership if the sole or all owners join in the execution and recording of a
condominium declaration in accordance with the condominium provisions. The bill
provides that any first mortgagee must also join in, consistent with current practice,
and that a plat of the condominium must also be recorded. The bill provides that,
for purposes of receiving notices or giving approvals under the condominium
provisions, the term "mortgagee" includes the party servicing the mortgage or land
contract. The bill also provides that if a mortgagee's consent or approval is required
for any action related to the condominium and the mortgagee cannot be contacted
with reasonable diligence, the condominium association (association) may seek
approval from a court to proceed with the action. In deciding the matter, the court
must consider whether the action is needed to permit the effective management and
operation of the condominium and the action's impact on the value of the units as
security for mortgages on the units.
3. Under current law, a unit is defined as a part of a condominium intended for
any type of independent use. In response to the holding in ABKA Ltd. Partnership
v. DNR, 2002 WI 106, 255 Wis. 2d 486, 648 N.W. 2d 854, the bill clarifies that a unit
may be of any size and for any use.
4. Current law requires that a seller of a condominium unit make certain
disclosures to the purchaser before the sale closing by furnishing copies of certain
documents. The bill specifically limits these disclosures to sales of residential units
and authorizes them to be made electronically if the purchaser properly consents to
that method.
5. The bill provides that if one or more units of a condominium are removed
from the condominium or destroyed and not rebuilt, the percentage interests in the
common elements must be adjusted to maintain the same ratio of those interests in
the remaining units. Likewise, the bill provides that if a condominium plat shows
a building with a specified number of units but the building is constructed in such
a way that precludes it from containing all of the units, the percentage interests
appertaining to the units not constructed must be added on a pro rata basis to the
remaining units. Any change to the percentage interests in the common elements
must be done by an amendment to the declaration.
6. The bill makes some modifications to the procedures for relocating mutual
boundaries of adjoining units, merging adjoining units, and separating a unit into
two or more units of the existing condominium, and provides for separating a unit
into two or more ownership interests by subjecting the unit itself to the condominium
form of ownership.
7. Current law provides that a unit owner may not make any alteration that
would jeopardize the soundness or safety of the property or reduce its value or change
the exterior appearance of a unit or any other portion of the condominium that is not
a part of the unit. The bill additionally prohibits a unit owner from making any
alteration that would interfere with the condition or operation of the mechanical
systems affecting property that is not a part of the unit. The bill also clarifies that
each occupant of a unit, as well as the unit owner, must comply with the bylaws and
rules adopted under the bylaws.
8. Current law provides that a unit owner may not change the exterior
appearance of his or her unit without the permission of the board of directors of the
association. The bill provides that if a unit owner makes alterations within his or
her unit that involve changing the configuration of the rooms, the unit owner must
file plans with the association showing the reconfiguration.
9. Current law provides that a bylaw or rule may not prohibit a unit owner from
displaying the American flag or from displaying in his or her condominium a sign
related to a political candidate or a referendum question, but that the size and
location may be regulated. The bill clarifies that a political sign may not be
prohibited in a unit owner's unit, and provides that the display of such a sign or a
flag may be limited to those parts of the condominium over which the unit owner has
the exclusive right to use.
10. Current law provides that, if an amendment to a condominium declaration
has the effect of reducing the value of a unit owner's interest in any common element
and increasing the value of another unit owner's interest in the common element, the
other unit owner must compensate the unit owner whose interest was decreased in
value. The bill provides that any action to recover this compensation must be
commenced no later than one year after the amendment is recorded, or be barred.
11. Current law provides that title to a condominium unit is not rendered
unmarketable by any provision of the bylaws. The bill provides that title is not
rendered unmarketable because the unit is subject to the terms of a declaration, plat,
bylaws, or rules.
12. Current law provides that a county may adopt an ordinance requiring local
municipal review of condominium instruments before recording and that the review
must be completed within ten days or the instrument is approved for recording. The
bill clarifies that the instrument is approved for recording, after the time has passed,
without any signature of the reviewer or any certification that it has been reviewed
or approved. The bill also provides that a condominium instrument includes a
correction instrument and a removal instrument for purposes of local municipal
review of condominium instruments before recording.
13. While under current law a declarant may reserve the right to expand a
condominium by subjecting additional property to the declaration, the bill provides
that a declarant may include in the original declaration a right to expand the
condominium by adding land or more units or both, and that if more units are added
the percentage of undivided interests in the common elements must be reallocated
among all the units.
14. Under current law, a declarant must establish an association to govern the
condominium no later than the date of the first conveyance of a unit to a purchaser,
and the association must be organized as a profit or nonprofit corporation or as an
unincorporated association. The bill provides that an association shall immediately
exist as an unincorporated association as of the date of the first conveyance of a unit
to a purchaser, unless the declarant has organized an association as a nonprofit
corporation before the first conveyance; that after the first conveyance the
association may be organized as a nonprofit corporation only with the consent of all
the unit owners; and that the declarant shall operate the association until the
declarant transfers control of it to the unit owners.
15. The bill clarifies that the period of declarant control of the association may
not exceed ten years for an expandable condominium, three years for any other
condominium, or thirty days after the conveyance to purchasers of 75 percent of the
common element interest, if that is earlier, and that the declarant may transfer
control of the association before the mandatory expiration of that period. The bill
provides that the declarant must turn over all association records and accounts to
the association directors when declarant control of the association ends. Under
current law, the unit owners must elect at least 25 percent of the directors of the
executive board of the association before the conveyance to purchasers of 25 percent
of the common element interest and elect at least 33 1/3 percent of the directors
before the conveyance of 50 percent of the common element interest. The bill changes
this election requirement to at least 25 percent of the directors within 30 days after
the conveyance of 25 percent of the common element interest and at least 33 1/3
percent of the directors within 30 days after the conveyance of 50 percent of the
common element interest. The bill provides that any statute of limitations affecting
the association's right of action against the declarant is tolled until declarant control
ends.
16. Currently, condominium bylaws must provide that the terms of at least
one-third of the elected directors must expire annually. The bill changes this so that
the bylaws must provide that a term of an elected director may not exceed three
years.
17. Current law requires an association to adopt and distribute to all unit
owners an annual budget that includes specified information, such as all anticipated
common expenses. The bill requires that each budget distributed to a unit owner
include the amount assessed to the owner's unit for common expenses.
18. Current law provides that an association must obtain insurance for the
property against loss or damage and that the premiums are common expenses.
Under the bill, an association must obtain insurance unless the declaration provides
otherwise, such as requiring the unit owners to obtain the insurance coverage. The
insurance may include reasonable deductibles, and the association must determine
whether the deductible will be paid as a common expense or how it will be allocated
if not.
19. Current law provides that in a voluntary grant of a unit, the grantee is
jointly and severally liable with the grantor for all unpaid assessments with respect
to the unit for which a statement of lien is recorded. The bill provides that this
applies to all grants other than one resulting from foreclosure of a first mortgage on
the unit, and changes the reference to "recorded" to "filed," since statements of lien
are filed. Under current law, an unpaid assessment constitutes a lien on the unit on
which it is assessed if a statement of lien is filed within two years after the date the
assessment becomes due. The bill changes the time within which a statement of lien
must be filed to three years after the last installment of the assessment becomes due.
Current law provides that such a lien may be enforced in the same manner and
subject to the same requirements as a foreclosure of mortgages on real property in
this state. The bill clarifies that this includes the reductions in the time for
redeeming the property if the party foreclosing waives a deficiency judgment.
20. Current law provides for condominiums to merge. The bill specifies
requirements for the plat of the resultant condominium when two or more
condominiums merge, such as identifying the plat of every condominium that is
included in the merger by name and recording data and identifying units both by
their designations in the merged condominiums and in the resultant condominium.
21. Current law provides that all of the unit owners may remove a part or all
of the condominium property from the condominium provisions of the statutes by
recording a removal instrument; that if a merger of two or more condominiums would
result in a new plat for the resultant condominium, the merged condominiums must
first be removed from the condominium provisions of the statutes by recording a
removal instrument; and that condominium property removed from the
condominium provisions of the statutes is deemed to be owned in common by the unit
owners. The bill modifies these provisions.
Under the bill, all or any part of the condominium property may be removed
from the condominium provisions of the statutes by recording a removal instrument
as an amendment to the declaration and an addendum to the plat. If all of the
property is being removed, all unit owners must approve, and, upon removal from
the provisions, the property is owned in common by the unit owners. If less than all
of the property is being removed, the removal instrument must be signed by unit
owners holding at least 80 percent of the aggregate votes, including all the owners
of the units being removed, and must specify the part of the property being removed,
who will own the property being removed after its removal, and the consideration,
if any, being given to the association for the removal. If the property will be owned
differently from the manner in which it was owned before removal, the removal
instrument must contain language conveying the property.
22. Under current law, a small condominium is one with 12 or fewer units.
Certain provisions of the condominium statutes apply specifically and exclusively to
those small condominiums that elect to be subject to them (electing small
condominiums), as well as the general condominium provisions that are not in
conflict with the specific provisions. All general condominium provisions apply to
small condominiums that do not elect to be subject to the specific small condominium
provisions, except that current law provides that the general provisions related to
expanding a condominium do not apply to any small condominium. The bill prohibits
a declaration for a small condominium from providing that the general provisions
related to expanding a condominium do apply.
Current law sets out arbitration procedures if the board of an association of an
electing small condominium does not approve an expenditure or action proposed by
a unit owner or if a unit owner objects to an expenditure or action proposed by the
board. The bill modifies this arbitration process. Under the bill, any operational
decision in an electing small condominium may be submitted to arbitration if the
required majority for the action cannot be achieved or if the proposed action would
involve unbudgeted expenditures in excess of $2,500 per unit in any one year or in
excess of $5,000 overall. In addition, if a unit owner in an electing small
condominium proposes an action or expenditure by the association and the
association does not adopt the unit owner's proposal, cannot achieve the majority
necessary to take an action, or levies assessments for unbudgeted expenditures in
excess of $2,500 per unit in any one year or in excess of $5,000 overall, the unit owner
may request reconsideration and, if not satisfied with the result, submit the matter
to arbitration. The results of the arbitration are final, and the association must pay
the costs if the unit owner's challenge is upheld, and the unit owner must pay the
costs if the challenge is denied.
The bill requires the declaration for any small condominium to designate one
of the unit owners as the resident agent and to specify how real estate taxes for the
year the small condominium is created will be divided if different from the
percentage interests in the common elements. The bill provides that any
improvement, decoration, or repair to the exterior of any two-unit small
condominium must be agreed to by the owners of both of the units and that, if they
do not agree, the matter may be submitted to the board of directors and that the
decision of the board of directors may be challenged in an arbitration proceeding.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB647, s. 1
1Section
1. 703.02 (5) of the statutes is amended to read:
AB647,7,42
703.02
(5) "Condominium instruments" mean the declaration, plats
, and plans
3of a condominium
, as amended from time to time, together with any attached
4exhibits or schedules.
AB647, s. 2
5Section
2. 703.02 (6) of the statutes is amended to read:
AB647,7,106
703.02
(6) "Conversion condominium" means
property that includes a
7structure
which that, before the recording of a condominium declaration, was wholly
8or partially occupied by persons other than those who have contracted for the
9purchase of condominium units and those who occupy with the consent of the
10purchasers.
AB647, s. 3
11Section
3. 703.02 (6m) of the statutes is amended to read:
AB647,7,1612
703.02
(6m) "Correction instrument" means an instrument drafted by a
13licensed land surveyor that complies with the requirements of s. 59.43 (2m) and that,
14upon recording, corrects an error in a condominium plat
or updates a condominium
15plat for changes that do not require an addendum. "Correction instrument" does not
16include an instrument of conveyance.
AB647, s. 4
17Section
4. 703.02 (9c) of the statutes is created to read:
AB647,7,1918
703.02
(9c) "First mortgage" includes a security interest that is equivalent to
19a first mortgage.
AB647, s. 5
20Section
5. 703.02 (9d) of the statutes is created to read:
AB647,8,2
1703.02
(9d) "First mortgagee" includes a holder of a security interest that is
2equivalent to a first mortgage.
AB647, s. 6
3Section
6. 703.02 (12) of the statutes is amended to read:
AB647,8,74
703.02
(12) "Mortgagee" means the holder of any recorded mortgage
5encumbering one or more units or a land contract vendor
and, for purposes of
6receiving notices or giving approvals, includes the party servicing the mortgage or
7land contract.
AB647, s. 7
8Section
7. 703.02 (14g) of the statutes is amended to read:
AB647,8,129
703.02
(14g) "Removal instrument" means an instrument that complies with
10the requirements of s. 59.43 (2m) and that removes property
, either all or a portion
11of a condominium, from the provisions of this chapter upon recording. "Removal
12instrument" does not include an instrument of conveyance.
AB647, s. 8
13Section
8. 703.02 (15) of the statutes is amended to read:
AB647,8,1814
703.02
(15) "Unit" means a part of a condominium intended for any type of
15independent use, including one or more cubicles of air at one or more levels of space
16or one or more rooms or enclosed spaces located on one or more floors, or parts thereof,
17in a building. A unit may
be of any size, may be for any use, and may include 2 or
18more noncontiguous areas.
AB647, s. 9
19Section
9. 703.02 (16) of the statutes is amended to read:
AB647,8,2120
703.02
(16) "Unit number" means the number
identifying designating a unit
21in a declaration.
AB647, s. 10
22Section
10. 703.03 of the statutes is amended to read:
AB647,9,2
23703.03 Application of chapter. This chapter applies only to property, a sole
24owner or all of the owners
, and any first mortgagee, of which submit the property to
1the provisions of this chapter by duly executing and recording a declaration
and plat 2as provided in this chapter.
AB647, s. 11
3Section
11. 703.04 of the statutes is amended to read:
AB647,9,6
4703.04 Status of the units. A unit, together with its undivided interest in the
5common elements
and its other appurtenant interests, for all purposes constitutes
6real property.
AB647, s. 12
7Section
12. 703.05 of the statutes is amended to read:
AB647,9,10
8703.05 Ownership of units. A unit owner is entitled to the exclusive
9ownership and possession of his or her unit
and to the exercise of the rights
10appurtenant to it.
AB647, s. 13
11Section
13. 703.06 of the statutes is amended to read:
AB647,9,18
12703.06 Alterations prohibited. Except as otherwise provided in this
13chapter,
the declaration, or the bylaws, or any rules promulgated under any of them, 14no unit owner may make any alteration that would jeopardize the soundness or
15safety of the property,
interfere with the condition or operation of the mechanical
16systems affecting property that is not a part of the unit, reduce the value
thereof of
17the property, impair any easement or hereditament, or change the exterior
18appearance of a unit or any other portion of the condominium not part of the unit.
AB647, s. 14
19Section
14. 703.07 (2) of the statutes is amended to read:
AB647,9,2520
703.07
(2) A condominium instrument,
and all amendments, addenda and
21certifications of any amendment or addendum to a condominium instrument,
and
22any certification or statement relating to the condominium that must be recorded 23shall be recorded in every county in which any portion of the condominium is located,
24and shall be indexed in the name of the declarant and the name of the condominium.
25Subsequent instruments affecting the title to a unit
which that is physically located
1entirely within a single county shall be recorded only in that county, notwithstanding
2the fact that the common elements are not physically located entirely within that
3county. Subsequent amendments and addenda shall be indexed under the name of
4the condominium.
AB647, s. 15
5Section
15. 703.08 (1) (intro.) of the statutes is amended to read:
AB647,10,136
703.08
(1) (intro.) Residential real property may not be converted to a
7condominium unless the owner of the residential real property gives prior written
8notice of the conversion to each of the
residential tenants of the
building or buildings
9scheduled for conversion structure or structures that are part of the property being
10converted. During the 60-day period immediately following the date of delivery of
11the notice a
residential tenant has the first right to purchase the unit
in which the
12tenant resides, if the unit is offered for sale at any time during that period, for any
13of the following:
AB647, s. 16
14Section
16. 703.08 (2) (intro.) of the statutes is amended to read:
AB647,10,1715
703.08
(2) (intro.) A
residential tenant may not be required to vacate the
16property during the 120-day period immediately following the date of delivery of the
17notice required under sub. (1) except for:
AB647, s. 17
18Section
17. 703.08 (3) of the statutes is amended to read:
AB647,10,2119
703.08
(3) A
residential tenant may waive in writing his or her first right of
20purchase under sub. (1), his or her right to remain on the property under sub. (2), or
21both.
AB647, s. 18
22Section
18. 703.09 (1c) of the statutes is amended to read:
AB647,11,223
703.09
(1c) A condominium declaration shall be signed by the owners of the
24property and
by or on behalf of any first mortgagee of the property
or the holder of
1an equivalent security interest in the property in the same manner as required in
2conveyances of real property.
AB647, s. 19
3Section
19. 703.09 (2) of the statutes is amended to read:
AB647,11,164
703.09
(2) Except as
otherwise provided in
sub. (4) and ss. 703.093, 703.13 (6)
5(c) and (d) and (8) (b), and 703.26 this chapter, a condominium declaration may be
6amended with the written consent of at least two-thirds of the aggregate of the votes
7established under sub. (1) (f) or a greater percentage if provided in the declaration.
8An amendment becomes effective when it is recorded in the same manner as the
9declaration. The document submitting the amendment for recording shall state that
10the required consents and approvals for the amendment were received. A unit
11owner's written consent is not effective unless it is approved in writing by the first
12mortgagee of the unit,
or the holder of an equivalent security interest, if any.
13Approval from the first mortgage lender
or equivalent security interest holder, or the
14person servicing the first mortgage loan
or its equivalent on a unit, constitutes
15approval of the first mortgagee
or equivalent security interest holder under this
16subsection.
AB647, s. 20
17Section
20. 703.09 (3) (bm) of the statutes is created to read:
AB647,11,1918
703.09
(3) (bm) Any action to recover compensation under par. (a) shall be
19commenced no later than one year after the amendment is recorded or be barred.
AB647, s. 21
20Section
21. 703.10 (1) of the statutes is amended to read:
AB647,12,421
703.10
(1) Bylaws to govern administration. The administration of every
22condominium shall be governed by bylaws. Every unit owner
and occupant shall
23comply strictly with the bylaws and with the rules adopted under the bylaws, as the
24bylaws or rules are amended from time to time, and with the covenants, conditions
, 25and restrictions set forth in the declaration or in the deed to the unit. Failure to
1comply with any of the bylaws, rules, covenants, conditions
, or restrictions is grounds
2for action to recover sums due, for damages or injunctive relief or both
, maintainable
3by the association or, in a proper case, by an aggrieved unit owner
, or for enforcement
4under s. 703.24.
AB647, s. 22
5Section
22. 703.10 (2) (d) of the statutes is amended to read:
AB647,12,136
703.10
(2) (d) The election by the unit owners of a board of directors of whom
,
7except during the period of declarant control, not more than one is a nonunit owner
,; 8the number of persons constituting the
same and board of directors; that the terms
9of
at least one-third of the
elected directors
shall expire annually, may not exceed 3
10years but that a director may be reelected for successive terms; the powers and duties
11of the board
,; the compensation, if any, of the directors
,; the method of removal from
12office of directors
; and whether or not the board may engage the services of a manager
13or managing agent.
AB647, s. 23
14Section
23. 703.10 (2) (f) of the statutes is amended to read:
AB647,12,1615
703.10
(2) (f) The manner of borrowing money and acquiring and conveying
16property
, if the association is to have these powers.
AB647, s. 24
17Section
24. 703.10 (4) of the statutes is amended to read:
AB647,12,2218
703.10
(4) Prohibiting voting by certain unit owners. The bylaws may contain
19a provision prohibiting any unit owner from voting at a meeting of the association
20if the association has
recorded filed a statement of condominium lien on the person's
21unit and the amount necessary to release the lien has not been paid at the time of
22the meeting.
AB647, s. 25
23Section
25. 703.10 (6) of the statutes is amended to read:
AB647,13,324
703.10
(6) Title to condominium units unaffected by condominium
25instruments or bylaws. Title to a condominium unit is not rendered unmarketable
1or otherwise affected by any provision of the bylaws because the unit is subject to the
2terms of a declaration, a condominium plat, bylaws, or rules, or by reason of any
3failure of the bylaws to comply with the provisions of this chapter.
AB647, s. 26
4Section
26. 703.105 (1m) of the statutes is amended to read: