Under current law, if the common elements of a condominium are damaged to
an extent more than available insurance proceeds, the unit owners may choose to
partition the condominium property, rather than repair or reconstruct the damaged
common elements. Currently, if the condominium property is partitioned, the
proceeds of sale and available insurance proceeds are divided among the unit owners
in proportion to their percentage interest in the common elements.
The bill provides that, for a condominium created after the effective date of the
bill, the declaration of the condominium may provide for the use of an alternative
procedure for determining the unit owners' respective shares of the proceeds after
partition. If the declaration provides for use of the alternative procedure, upon
partition of the condominium property, an appraiser must determine the fair market
value of each unit as the unit existed immediately prior to the damage, and each unit
owner's share of the proceeds after partition will be a percentage calculated by
dividing the fair market value of the unit owner's unit by the fair market value of all
units in the condominium as they existed immediately prior to the damage.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB818,1
1Section
1. 703.09 (1) (c) of the statutes is amended to read:
AB818,4,42
703.09
(1) (c) A
general description of each unit, including its perimeters,
3location
, and any other data sufficient to identify
it the unit with reasonable
4certainty.
AB818,2
5Section
2. 703.09 (2) of the statutes is amended to read:
AB818,5,66
703.09
(2) Except as provided in sub. (4) and ss. 703.093, 703.13 (6) (c) and (d)
7and (8) (b), and 703.26, a condominium declaration may be amended with the written
8consent of at least two-thirds of the aggregate of the votes established under sub. (1)
9(f) or a greater percentage if provided in the declaration. An amendment becomes
10effective when it is recorded in the same manner as the declaration. The document
11submitting the amendment for recording shall state that the required consents and
12approvals for the amendment were received.
A
Except as provided in sub. (2m), a
1unit owner's written consent is not effective unless it is approved in writing by the
2first mortgagee of the unit, or the holder of an equivalent security interest, if any.
3Approval from the first mortgage lender or equivalent security interest holder, or the
4person servicing the first mortgage loan or its equivalent on a unit, constitutes
5approval of the first mortgagee or equivalent security interest holder under this
6subsection.
AB818,3
7Section
3. 703.09 (2m) of the statutes is created to read:
AB818,5,118
703.09
(2m) (a) In this subsection, “first mortgagee" means the first mortgagee
9of a unit or the holder of an equivalent security interest, the first mortgage lender
10on a unit or the equivalent security interest holder, or the person servicing the first
11mortgage loan or its equivalent on a unit.
AB818,5,1412
(b) A unit owner, or the association on behalf of a unit owner, may obtain the
13approval required under sub. (2) by providing written notice of the amendment to the
14first mortgagee that includes all of the following:
AB818,5,1515
1. A copy of the amendment.
AB818,5,1616
2. A request for approval or disapproval of the amendment.
AB818,5,1817
3. A form upon which the first mortgagee may indicate its approval or
18disapproval of the amendment.
AB818,5,2219
4. A statement that, if the first mortgagee fails to complete and return the form
20described under subd. 3. or otherwise disapprove the amendment in writing within
2160 days from the date of mailing of the notice, the first mortgagee is considered to
22have given its approval of the amendment.
AB818,6,423
(c) The unit owner or association shall deliver the notice under par. (b) by
24certified or registered mail or by 1st class mail to the last-known address of the first
25mortgagee. If no other address is known to the unit owner or association, the unit
1owner or association may deliver the notice to the address of the first mortgagee as
2the address appears on the mortgage or equivalent security instrument and to the
3address to which the unit owner sends any periodic payments on the first mortgage
4loan or its equivalent.
AB818,6,85
(d) If the first mortgagee fails to complete and return the form described under
6par. (b) 3. or otherwise disapprove the amendment in writing within 60 days after
7the unit owner or association mails the notice under par. (c), the first mortgagee is
8considered to have given its approval of the amendment as required under sub. (2).
AB818,4
9Section
4. 703.095 of the statutes is amended to read:
AB818,6,21
10703.095 Modification and correction of recorded condominium
11instruments, amendments, and addenda. A recorded condominium instrument,
12amendment
, or addendum may only be modified by recording an amendment,
13addendum
, or correction instrument, or by removal from the provisions of this
14chapter under s. 703.28
(1). The register of deeds may not record
a an amendment,
15addendum, or correction instrument if it does not refer to the
condominium 16instrument
, amendment, or addendum being
modified or corrected
, including the
17document number, and may not record
amendments and addenda an amendment or
18addendum unless
they are it is numbered consecutively
and bear or states that it is
19an amendment and restatement of the condominium instrument being modified or
20corrected, bears the name of the condominium as it appears in the declaration
, and
21identifies all units in the condominium.
AB818,5
22Section
5. 703.115 (1) (b) of the statutes is amended to read:
AB818,7,223
703.115
(1) (b) Provides that a condominium instrument may be rejected only
24if it fails to comply with the applicable requirements of ss. 703.095, 703.11 (2) (a), (c)
,
1and (d) and (3), 703.275 (5)
, and 703.28
(1m) or if the professional land surveyor's
2certificate under s. 703.11 (4) is not attached to or included in the condominium plat.
AB818,6
3Section
6. 703.12 of the statutes is amended to read:
AB818,7,9
4703.12 Description of units. A description in any deed or other instrument
5affecting title to any unit
which, including a conveyance, as defined in s. 706.01 (4),
6that makes reference to the letter or number or other appropriate designation
of the
7unit on the condominium plat together with a reference to the condominium
8instruments
and the name of the condominium as it appears in the declaration shall
9be a good and sufficient description for all purposes.
AB818,7
10Section
7. 703.13 (6) (e) of the statutes is amended to read:
AB818,7,1511
703.13
(6) (e) Plats and plans showing the altered boundaries and the
12dimensions thereof between adjoining units, and their identifying numbers or
13letters, shall be prepared. The plats and plans shall be certified as to their accuracy
14in compliance with this subsection by a
civil engineer, architect, or professional land
15surveyor.
AB818,8
16Section
8. 703.13 (7) (c) of the statutes is amended to read:
AB818,7,2117
703.13
(7) (c) Plats and plans showing the boundaries and dimensions
18separating the new units together with their other boundaries and their new
19identifying numbers or letters shall be prepared. The plats and plans shall be
20certified as to their accuracy and compliance with this subsection by a
civil engineer,
21architect, or professional land surveyor.
AB818,9
22Section
9. 703.13 (8) (c) of the statutes is amended to read:
AB818,8,223
703.13
(8) (c) Plats and plans showing the boundaries and dimensions of the
24new unit together with the new identifying number or letter shall be prepared. The
1plats and plans shall be certified as to their accuracy and compliance with this
2subsection by a
civil engineer, architect, or professional land surveyor.
AB818,10
3Section
10. 703.15 (4) (d) 1. of the statutes is amended to read:
AB818,8,104
703.15
(4) (d) 1.
At Except as provided in par. (dm), at meetings of the
5association
, every unit owner is entitled to cast the number of votes appurtenant to
6his or her the unit owner's unit, as established in the declaration under s. 703.09 (1)
7(f). Unit owners may vote by proxy, but
, the proxy is effective only for a maximum
8period of 180 days following its issuance, unless granted to a mortgagee or lessee.
9If only one of multiple owners of a unit is present at a meeting of the association, the
10owner
that is present is entitled to cast the votes allocated to that unit.
AB818,11
11Section
11. 703.15 (4) (dm) of the statutes is created to read:
AB818,8,1612
703.15
(4) (dm) For a condominium created on or after the effective date of this
13paragraph .... [LRB inserts date], after the expiration of any period of declarant
14control of the association under sub. (2) (c), no unit owner may vote any votes
15appurtenant to a unit at a meeting of the association if, at the time of the meeting,
16the unit is partially or fully exempt from any assessments.
AB818,12
17Section
12. 703.165 (2) of the statutes is renumbered 703.165 (2) (intro.) and
18amended to read:
AB818,9,219
703.165
(2) Liability for assessments. (intro.) A unit owner shall be liable for
20all assessments, or installments
thereof of assessments, coming due while owning
21a unit, including any assessments coming due during the pendency of any claim by
22the unit owner against the association or during any period in which the unit is not
23occupied by the unit owner or is leased or rented to any other person.
Liability for
24assessments may not be avoided by waiver of the use or enjoyment of any common
25element or by abandonment of the unit for which the assessments are made. Except
1as provided in sub. (4), a grantee of a unit is liable for assessments against a grantor
2under any of the following circumstances:
AB818,9,10
3(a) In a voluntary grant, the grantee shall be jointly and severally liable with
4the grantor for all unpaid assessments against the grantor for
his or her the grantor's 5share of the common expenses up to the time of the voluntary grant for which a
6statement of condominium lien is recorded, without prejudice to the rights of the
7grantee to recover from the grantor the amounts paid by the grantee for such
8assessments.
Liability for assessments may not be avoided by waiver of the use or
9enjoyment of any common element or by abandonment of the unit for which the
10assessments are made.
AB818,13
11Section
13. 703.165 (2) (b) of the statutes is created to read:
AB818,9,2012
703.165
(2) (b) If a first mortgage on a unit was executed on or after the effective
13date of this paragraph .... [LRB inserts date], a mortgagee that becomes the owner
14of the unit following foreclosure of the first mortgage is jointly and severally liable
15with the mortgagor for unpaid assessments against the mortgagor for the
16mortgagor's share of common expenses coming due during the 12 months
17immediately preceding the date on which the foreclosure sale is confirmed under s.
18846.165. Liability of the mortgagee under this paragraph shall not prejudice the
19rights of the mortgagee to recover from the mortgagor any amounts paid by the
20mortgagee for the assessments.
AB818,14
21Section
14. 703.165 (5) (intro.) of the statutes is amended to read:
AB818,9,2322
703.165
(5) Priority of lien. (intro.) A lien under this section is prior to all
23other liens except
the following:
AB818,15
24Section
15. 703.165 (5) (c) of the statutes is amended to read:
AB818,10,2
1703.165
(5) (c)
Mechanic's
Construction liens filed prior to the making of the
2assessment.
AB818,16
3Section 16
. 703.167 of the statutes is created to read:
AB818,10,6
4703.167 Repair or replacement of defective common elements;
5assessments, foreclosures, deeds in lieu, and options of first mortgagees to
6release lien or take title. (1) Definitions. In this section:
AB818,10,87
(a) “Defective common elements” means common elements of a building in a
8condominium that are affected by a defect described under sub. (2) (a).
AB818,10,99
(b) “First mortgage” means a first mortgage described under s. 703.165 (5) (b).
AB818,10,1110
(c) “First mortgagee” means the mortgagee under a first mortgage on a unit,
11or the holder of an equivalent security interest.
AB818,10,17
12(2) Applicability. (a) Subject to par. (b), if a defect is discovered in the common
13elements of a building in a condominium that is related to the initial construction of
14the building or work performed by or for a declarant during any period of declarant
15control of the association under s. 703.15 (2) (c), the association may use the
16procedure under this section to raise the funds necessary to undertake the repair or
17replacement of the defective common elements.
AB818,10,1918
(b) The association may use the procedure under this section only if all of the
19following apply:
AB818,10,2120
1. Any period of declarant control of the association under s. 703.15 (2) (c) has
21expired.
AB818,11,322
2. The association has attempted in good faith to determine the persons that
23may liable for the repair or replacement of the defective common elements, including
24insurers, and for each person the association determines may be liable, either the
25person has refused or is financially unable to undertake or pay for the repair or
1replacement, or the association is unable to locate that person. The association is not
2required to bring any action in circuit court against any person that may be liable
3in order to use the procedure under this section.
AB818,11,74
3. The association has determined that property insurance obtained by the
5association under s. 703.17 does not cover the repair or replacement of the defective
6common elements, or the association's insurer has denied the association's claim for
7coverage under the property insurance policy.
AB818,11,108
4. The cost to repair or replace the defective common elements is 20 percent or
9more of the value of the building that is affected by the defect described under par.
10(a).
AB818,11,1311
5. Any reserves maintained by the association for repair and replacement of
12common elements beyond routine maintenance are insufficient to cover the cost to
13repair or replace the defective common elements.
AB818,11,1514
6. The association intends to repair or replace the defective common elements,
15and the cost for that repair or replacement is a common expense.
AB818,11,23
16(3) Levying of assessments; foreclosure for unpaid assessments. (a)
Levying
17of assessments; notice to unit owners. The association shall estimate the total cost
18required to repair or replace the defective common elements and shall levy
19assessments against the unit owners as provided under s. 703.16 (2) (a) to raise the
20funds required to undertake the repair or replacement. The association shall give
21written notice to the unit owners that the association is raising funds under this
22section to repair or replace the defective common elements. The association shall
23include all of the following information in the notice:
AB818,12,3
11. A description of the defect described under sub. (2) (a), an explanation of how
2the defect affects the common elements of the building, and a summary of the work
3necessary to repair or replace the defective common elements.
AB818,12,54
2. A statement of the estimated total cost required to repair or replace the
5defective common elements.
AB818,12,76
3. A breakdown of the approximate cost under subd. 2. that may be assessed
7against each unit owner in one or more increments.
AB818,12,98
4. The date or dates on which the association anticipates levying the
9assessments under subd. 3.
AB818,12,1610
(b)
Refusal by unit owners to pay assessments; foreclosure of condominium
11liens. If a unit owner does not pay an assessment levied under par. (a) or if the unit
12owner notifies the association that the unit owner does not intend to pay the
13assessment, the association may file a statement of condominium lien under s.
14703.165 (3) with respect to the unit owner's unit. The association may foreclose that
15condominium lien as provided under s. 703.165 (7) or accept a deed in lieu of
16foreclosure from the unit owner.
AB818,12,21
17(4) Options of first mortgagees. (a) Notwithstanding s. 703.165 (5) and
18subject to pars. (b) and (h), if the association acquires title to a unit at foreclosure sale
19or by deed in lieu of foreclosure under sub. (3) (b), the association may use the
20procedure under this subsection to require a first mortgagee of the unit to either
21release its first mortgage on the unit or take title to the unit.
AB818,12,2322
(b) The association may use the procedure under this subsection only if all of
23the following apply:
AB818,12,2524
1. There are no liens on the unit other than liens described under s. 703.165
25(5) (a) to (e).
AB818,13,2
12. The first mortgage on the unit was executed on or after the effective date of
2this subdivision .... [LRB inserts date].
AB818,13,63
(c) No later than 2 years after the date of delivery of the notice to unit owners
4under sub. (3) (a), the association may give written notice by certified mail and 1st
5class mail to a first mortgagee of a unit described under par. (a), along with a copy
6of the notice to unit owners, that includes all of the following information:
AB818,13,87
1. A statement that the association is raising funds under this section to repair
8or replace the defective common elements.
AB818,13,109
2. A statement that the association is the owner of the unit and that the first
10mortgagee has a first mortgage on the unit.
AB818,13,1311
3. An explanation of the options available to the first mortgagee under par. (d)
12and a deadline that is at least 60 days from the date on which the notice is sent by
13which the first mortgagee must select one of those options.
AB818,13,1514
(d) No later than the deadline specified in the notice under par. (c), a first
15mortgagee shall do one of the following:
AB818,13,1716
1. Notify the association that the first mortgagee will accept a quit claim deed
17for the unit from the association.
AB818,13,1918
2. Record a release of the first mortgage in the office of the register of deeds and
19notify the association that the lien of the first mortgage has been released.
AB818,13,2120
(e) If a first mortgagee takes the action described under par. (d) 1., all of the
21following apply:
AB818,13,2322
1. The association shall promptly deliver a quit claim deed for the unit to the
23first mortgagee.
AB818,14,324
2. The first mortgagee shall credit the fair value of the unit toward the first
25mortgage debt, interest, and costs. If any deficiency remains, the first mortgagee
1may apply to the circuit court for a judgment of deficiency. If there is any surplus,
2the first mortgagee shall pay the surplus into the circuit court, and the circuit court
3shall dispose of the surplus as provided under s. 846.162.
AB818,14,64
(f) If a first mortgagee takes the action described under par. (d) 2., the first
5mortgagee may petition the circuit court for a judgment related to the debt previously
6secured by the first mortgage.
AB818,14,97
(g) If a first mortgagee fails to take any of the actions described under par. (d)
8by the deadline specified in the notice under par. (c), the first mortgage is considered
9released, and the association may commence an action to quiet title to the unit.
AB818,14,1710
(h) If the association acquires title to a unit at foreclosure sale or by deed in lieu
11of foreclosure under sub. (3) (b) and the unit is encumbered by a construction lien
12described under s. 703.165 (5) (c) that is prior to a first mortgage on the unit, the
13association may use the procedure under pars. (c) to (g) to require the holder of the
14construction lien to either release the construction lien on the unit or take title to the
15unit. The association may not use the procedure under this subsection to require a
16first mortgagee of the unit to either release its first mortgage lien on the unit or take
17title to the unit unless the construction lien holder releases the construction lien.
AB818,17
18Section
17. 703.18 (2) (a) and (b) of the statutes are amended to read:
AB818,14,2419
703.18
(2) (a) Unless otherwise provided in the declaration
and except as
20provided in par. (b), in the event of damage to or destruction of common elements of
21a condominium, the association shall promptly undertake to repair or reconstruct
it 22the common elements to a condition compatible with the remainder of the
23condominium. All cost of the repair or reconstruction in excess of available insurance
24proceeds shall be a common expense.
AB818,15,8
1(b)
However, if If a condominium is damaged to an extent more than the
2available insurance proceeds, the condominium shall be subject to an action for
3partition upon obtaining the written consent of the unit owners having 75 percent
4or more of the votes.
In Except as provided in par. (c), in the case of partition, the net
5proceeds of sale together with any net proceeds of insurance shall be considered as
6one fund and shall be divided among all unit owners in proportion to their percentage
7interests in the common elements
, and shall be distributed in accordance with the
8priority of interests in each unit.
AB818,18
9Section
18. 703.18 (2) (c) of the statutes is created to read:
AB818,15,1610
703.18
(2) (c) If the condominium was created on or after the effective date of
11this paragraph .... [LRB inserts date], a declaration may provide that the net
12proceeds under par. (b) shall be divided according to the unit owners' percentage of
13total fair market value as determined by following the procedure set forth in s. 703.28
14(4) (d), except that the appraiser shall determine the fair market value of each unit,
15including the unit's percentage interest in the common elements, as the unit and
16common elements existed immediately prior to the damage described under par. (b).
AB818,19
17Section
19. 703.22 (title), (2) and (3) of the statutes are amended to read:
AB818,15,18
18703.22 (title)
Mechanics'
Construction and suppliers' liens.
AB818,15,21
19(2) Any
mechanics' construction lien or suppliers' lien under subch. I of ch. 779
20arising as a result of repairs to or improvements of a unit by a unit owner shall be
21a lien only against the unit.
AB818,16,6
22(3) Any
mechanics' construction lien or suppliers' lien under subch. I of ch. 779
23arising as a result of repairs to or improvements of the common elements, if
24authorized in writing by the association, shall be paid by the association as a common
25expense and until paid shall be a lien against each unit in proportion to
its the unit's
1percentage interest in the common elements. On payment of the proportionate
2amount by any unit owner to the lienor or on the filing of a written undertaking in
3the manner specified by s. 779.08, the unit owner shall be entitled to a release of
his
4or her the unit owner's unit from the lien
, and the association shall not be entitled
5to assess
his or her the unit owner's unit for payment of the remaining amount due
6for the repairs or improvements.
AB818,20
7Section
20. 703.28 (1) of the statutes is renumbered 703.28 (3) (a).
AB818,21
8Section
21. 703.28 (1m) (intro.) of the statutes is created to read: