SB865: Bill Text

LRB-5567/1

KRP&ARG:amn&wlj

2021 - 2022 LEGISLATURE

2021 Senate BILL 865

January 13, 2022 - Introduced by Senator Ballweg, cosponsored by Representatives Brooks, Allen, Kuglitsch, Krug and Subeck. Referred to Committee on Housing, Commerce and Trade.

SB865,1,4 An Act to create 182.01 (7) and 710.18 of the statutes; relating to: regulating homeowners' associations and requiring the Department of Financial Institutions to create a filing system for notices filed by homeowners' associations.

Analysis by the Legislative Reference Bureau

This bill creates requirements for and restrictions on the authority of certain homeowners' associations.

Applicability

The bill applies to a homeowners' association only if all of the following apply:

1. The homeowners' association is an entity that is created to manage or regulate, or to enforce covenants and restrictions for, real estate that includes at least one residential lot (residential planned community).

2. The residential planned community is described in covenants and restrictions that a) provide for such management, regulation, or enforcement by the homeowners' association; and b) provide for restrictions on or requirements for residential lots that run with the land, such as restrictions or requirements regarding allowable structures; building setbacks; architectural standards; fence restrictions; or the use, occupancy, appearance, or maintenance of property.

3. Substantially all of the members, stockholders, or other owners of the homeowners' association are owners of residential lots that are part of the residential planned community.

Public access to covenants and restrictions

The bill specifies that the covenants and restrictions for a residential planned community that has a homeowners' association must be recorded with the register of deeds in every county in which the residential planned community is located. The bill also provides that, if the homeowners' association for a residential planned community maintains an Internet site on which information related to the residential planned community is available to the public, the homeowners' association must post the covenants and restrictions on that Internet site.

Public information regarding homeowners' associations

The bill requires a homeowners' association to give public notice of certain information, including the name and contact information for an individual who is authorized to provide information on behalf of the homeowners' association, by filing with the Department of Financial Institutions a notice containing the information. The bill requires each homeowners' association to annually file a renewal notice with DFI and, if any information contained in a notice changes, to file an amended notice with DFI within 30 days to update the information.

The bill requires DFI to establish and maintain a statewide searchable filing system for these notices. DFI may establish a fee not exceeding $25 for filing a notice, but the public must be allowed to search the system's database of filings without charge. DFI must also prescribe a form for filing notices with DFI.

The bill provides that, if a homeowners' association fails to file a required notice, the homeowners' association may not, during the period of noncompliance, charge any late fees or other fines for unpaid assessments owed by residential lot owners or charge any fees in connection with transfers of ownership of residential lots.

Notices of homeowners' association meetings

The bill requires a homeowners' association to provide notice of any meeting of the homeowners' association at least 48 hours before the meeting. Under the bill, a homeowners' association must provide notice as specified in the covenants and restrictions for the residential planned community or, if the covenants and restrictions do not specify how notice is provided, by providing notice to residential lot owners by doing all of the following: 1) providing written notice; 2) sending notice to owners' last-known electronic mail addresses; 3) sending notice by 1st class mail to owners' last-known post-office addresses; 4) posting notice on an Internet site on which the homeowners' association posts other information related to the residential planned community, if applicable; and 5) posting notice in at least one improved area accessible to all owners, if applicable.

Limitation on fees for providing documentation

The bill limits the amount a homeowners' association may charge a residential lot owner for furnishing copies of the covenants and restrictions or other information and documentation related to the residential planned community. Under the bill, a homeowners' association is not required to furnish copies, but, if the homeowners' association does so, it may not charge more than the actual costs of furnishing the copies or $50, whichever is less. The bill allows a homeowners' association to charge a higher amount if the covenants and restrictions authorize it.

Suspension of rights for failure to pay assessments; notice required

The bill requires a homeowners' association to provide written notice to a residential lot owner before the homeowners' association suspends the owner's rights for failure to timely pay assessments or other amounts owed to the homeowners' association. The notice must identify the rights the homeowners' association intends to suspend and the actions the owner may take to avoid that suspension. The bill allows a homeowners' association to suspend rights without notice if the covenants and restrictions for the residential planned community authorize such action.

Providing payoff statements

The bill requires a homeowners' association to provide a residential lot owner a payoff statement within 10 business days after the owner requests. Under the bill, the homeowners' association must provide one payoff statement without charge during any two-month period and may charge a fee not to exceed $25 for each additional payoff statement provided during that two-month period. The bill allows a homeowners' association to charge a fee for the first payoff statement if the homeowners' association follows certain procedures, including holding a meeting and adopting a written resolution.

The bill specifies that, if a homeowners' association fails to provide a payoff statement by the 10-business-day deadline, the homeowners' association is liable to the residential lot owner that requested the payoff statement for any actual damages causes by that failure or $350, whichever is less.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB865,1 Section 1. 182.01 (7) of the statutes is created to read:

SB865,3,7 182.01 (7) Homeowners' association filing system. (a) The department shall establish and maintain a statewide searchable filing system for notices filed under s. 710.18 (3) (e). The department shall design the system to function in a manner similar to the department's corporate record filing system, including display of search result information in a manner similar to the way search results are displayed in the department's corporate record filing system.

SB865,4,3 (b) The department may establish a fee not exceeding $25 for filing a notice under s. 710.18 (3) (e). The department's system shall allow public users to search the system's database of filings without charge.

SB865,4,5 (c) The department shall prescribe a form for filing notices under s. 710.18 (3) (e) that includes all information specified in s. 710.18 (3) (e) 1. to 4.

SB865,2 Section 2. 710.18 of the statutes is created to read:

SB865,4,8 710.18 Homeowners' associations; regulation. (1) Definitions. In this section:

SB865,4,12 (a) “Assessment" means a regular or special charge or fee for common expenses, or a charge, fee, or fine against a specific residential lot or residential lot owner, that an association is authorized to levy or impose under the covenants and restrictions for a residential planned community.

SB865,4,19 (b) “Association” means an entity that is created to manage or regulate, or to enforce covenants and restrictions for, a residential planned community and that consists of members, stockholders, or other owners substantially all of whom are owners of residential lots that are part of the residential planned community. “Association” includes a management company acting on behalf of the entity. “Association” does not include a condominium association, as defined in s. 703.02 (1m).

SB865,4,22 (c) 1. “Covenants and restrictions” means a declaration, covenant, or other instrument, including any amendments to the declaration, covenant, or instrument, that describes a residential planned community and that does all of the following:

SB865,5,2 a. Provides for restrictions on or requirements for residential lots that are part of the residential planned community, such as restrictions or requirements regarding allowable structures; building setbacks; architectural standards; fence restrictions; or the use, occupancy, appearance, or maintenance of property.

SB865,5,5 b. Provides that the residential planned community is managed or regulated by an association or that an association enforces the instrument on behalf of the residential planned community.

SB865,5,7 c. Provides that the restrictions or requirements described under subd. 1. a. run with the land.

SB865,5,9 2. “Covenants and restrictions” does not include a condominium declaration, as defined in s. 703.02 (8).

SB865,5,11 (d) “Residential lot” means a parcel of residential real estate that is part of a residential planned community. “Residential lot” does not include an outlot.

SB865,5,14 (e) “Residential lot owner” means a person, or combination of persons, that holds legal title to a residential lot in a residential planned community or that has equitable ownership as a land contract vendee.

SB865,5,16 (f) “Residential planned community” means real estate that includes one or more residential lots and that is described in covenants and restrictions.

SB865,5,21 (2) Covenants and restrictions. (a) Recording required. If an association is created to manage or regulate, or to enforce covenants and restrictions for, a residential planned community, the covenants and restrictions shall be recorded with the register of deeds in every county in which the residential planned community is located.