Chapter 703

703.161 Note NOTE: 2003 Wis. Act 283, which affected this section, contains extensive explanatory notes.

703.163 703.163 Statutory reserve account.

703.163(1) (1) Definitions. In this section:

703.163(1)(a) (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.

703.163(1)(b) (b) “Statutory reserve account” means a separate account established under this section to hold reserve funds.

703.163(1)(c) (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.

703.163(2) (2) Application; other reserve accounts not affected.

703.163(2)(a) (a)

703.163(2)(a)1. 1. Except as provided in subds. 2. and 3., this section applies to condominiums consisting exclusively of units that are restricted to residential uses.

703.163(2)(a)2. 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.

703.163(2)(a)3. 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.

703.163(2)(b) (b) This section does not affect a reserve account or a similar account existing on November 1, 2004, or a reserve account or similar account established on or after November 1, 2004, that is not a statutory reserve account.

703.163(3) (3) New condominiums; establishment of statutory reserve account by declarant.

703.163(3)(a) (a) Except as provided in par. (c), the declarant of a condominium that is created on or after November 1, 2004, 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.

703.163(3)(b) (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.

703.163(3)(c) (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.

703.163(4) (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.

703.163(5) (5) Existing condominiums; statutory reserve account unless elect otherwise. The association for a condominium created before November 1, 2004, shall, within 18 months after November 1, 2004, 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 a majority 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.

703.163(6) (6) Election by association to establish or terminate statutory reserve account.

703.163(6)(a) (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.

703.163(6)(b) (b) An association may, at any time with the written consent of a majority 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).

703.163(6)(c) (c) Upon the establishment or termination of a statutory reserve account, the association shall execute a statutory reserve account statement.

703.163(7) (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:

703.163(7)(a) (a) The reserve funds currently in the statutory reserve account.

703.163(7)(b) (b) The estimated cost of repairing or replacing common elements, other than routine maintenance.

703.163(7)(c) (c) The estimated remaining useful life of common elements.

703.163(7)(d) (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.

703.163(7)(e) (e) Any other factor that the association considers relevant.

703.163(8) (8) Use of statutory reserve account.

703.163(8)(a) (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.

703.163(8)(b) (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.

703.163(9) (9) Permitted investment of reserve funds. Reserve funds may be invested in any of the investments listed under s. 66.0603 (1m) (a).

703.163(10) (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.

703.163(11) (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, shall be prepared in the standard format for recorded documents under s. 59.43 (2m) and (5) (a), shall comply with s. 706.05 (2) (a) and (b), and shall be recorded with the register of deeds of the county where the condominium instruments are recorded.

703.163 History History: 2003 a. 283; 2021 a. 168.

703.163 Note NOTE: 2003 Wis. Act 283, which affected this section, contains extensive explanatory notes.

703.165 703.165 Lien for unpaid common expenses, unpaid damages, and unpaid penalties.

703.165(1) (1) Definition. In this section, “assessments” means regular and special assessments for common expenses and charges, fines, or assessments against specific units or unit owners for damages to the condominium or for penalties for violations of the declaration, bylaws, or association rules.

703.165(2) (2) Liability for assessments. A unit owner shall be liable for all assessments, or installments 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.

703.165(3) (3) Assessments constitute lien. All assessments, until paid, together with interest on them and actual costs of collection, constitute a lien on the units on which they are assessed, if a statement of lien is filed within 2 years after the date the assessment becomes due. The lien is effective against a unit at the time the assessment became due regardless of when within the 2-year period it is filed. A statement of condominium lien is filed with the clerk of circuit court of the county where the unit is located, stating the description of the unit, the name of the record owner, the amount due and the period for which the assessment was due. The clerk of circuit court shall index the statement of condominium lien under the name of the record owner in the judgment and lien docket. The statement of condominium lien shall be signed and verified by an officer or agent of the association as specified in the bylaws and then may be filed. On full payment of the assessment for which the lien is claimed, the unit owner shall be entitled to a satisfaction of the lien that may be filed with the clerk of circuit court.

703.165(4) (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. The grantee is not liable for, nor shall the unit conveyed be subject to a lien that is not filed under sub. (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 that is not filed under sub. (3) prior to the request for the statement against the grantee.

703.165(5) (5) Priority of lien. A lien under this section is prior to all other liens except the following:

703.165(5)(a) (a) Liens of general and special taxes.

703.165(5)(b) (b) All sums unpaid on a first mortgage recorded prior to the making of the assessment.

703.165(5)(c) (c) Construction liens filed prior to the making of the assessment.

703.165(5)(d) (d) All sums unpaid on any mortgage loan made under s. 45.80, 1989 stats.

703.165(5)(e) (e) A lien under s. 292.31 (8) (i) or 292.81.

703.165(6) (6) Interest on unpaid assessment. Any assessment, or installment thereof, not paid when due shall bear interest, at the option of the association, from the date when due until paid at a rate not exceeding the highest rate permitted by law as stated in the bylaws.

703.165(7) (7) Enforcement of lien. A lien may be enforced and foreclosed by an association or any other person specified in the bylaws, in the same manner, and subject to the same requirements, as a foreclosure of mortgages on real property in this state. An association may recover costs and actual attorney fees. An association may, unless prohibited by the declaration, bid on the unit at foreclosure sale and acquire, hold, lease, mortgage and convey the unit. Suit to recover a money judgment for unpaid common expenses shall be maintainable without foreclosing or waiving the lien securing the same. Suit for any deficiency following foreclosure may be maintained in the same proceeding. No action may be brought to foreclose the lien unless brought within 3 years following the recording of the statement of condominium lien. No action may be brought to foreclose the lien except after 10 days’ prior written notice to the unit owner given by registered mail, return receipt requested, to the address of the unit owner shown on the books of the association.

703.165(8) (8) Form of statement of condominium lien. A statement of condominium lien is sufficient for the purposes of this chapter if it contains the following information and is substantially in the following form:

Statement of Condominium Lien

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.

Association

By: ..........................

Officer’s title (or agent)

Address

Phone number

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.

...............................

Officer (or agent)

703.165 History History: 2003 a. 283 ss. 31, 34; 2003 a. 326; 2017 a. 333; 2017 a. 365 s. 111; 2021 a. 168.

703.165 Note NOTE: 2003 Wis. Act 283, which affected this section, contains extensive explanatory notes.

703.165 Annotation A condominium land contract recorded before the making of an assessment lien has priority as a first mortgage under s. 703.16 (6) (b) [now sub. (5) (b)]. Towne Realty, Inc. v. Edwards, 156 Wis. 2d 344, 456 N.W.2d 651 (Ct. App. 1990).

703.165 Annotation In a foreclosure action under s. 703.16 (8) [now sub. (7)] based on a failure to pay condominium fees, s. 846.10 (1) could not be applied sensibly to require a statement of installments to become due because monthly assessments were in varying amounts. The 12-month redemption period under s. 846.10 (2) is applicable to such foreclosures. Geneva National Community Ass’n v. Friedman, 228 Wis. 2d 572, 598 N.W.2d 600 (Ct. App. 1999), 98-1010.

703.165 Annotation Sub. (5) (b) does not mean that the first mortgage recorded is the only mortgage lien superior to a condominium lien when the terms of the first recorded mortgage clearly stated that it was subordinate to another mortgage and the condominium lien was recorded after both mortgages. Sub. (5) (b) states that “a” first mortgage recorded prior to a condominium assessment is the only mortgage lien superior to a condominium lien. The statute does not say “the” first mortgage recorded prior to a condominium assessment is the only mortgage lien that is superior to a condominium lien. U.S. Bank, N.A. v. Landa, 2011 WI App 135, 337 Wis. 2d 179, 804 N.W.2d 835, 10-0303.

703.165 Annotation The language in sub. (2) pertaining to voluntary grants of property has no bearing on an involuntary grant, such as a sheriff’s sale. In this case, the foreclosure judgment forever barred and foreclosed all right and interest of the condominium association in and to the property. A condominium association policy could not survive a foreclosure action to the extent it restricts a current owner’s use of condominium facilities based on the failure of the prior owners to pay their debts. Such a policy ties the debts of the prior owners to the units, in violation of well-established foreclosure law. Walworth State Bank v. Abbey Springs Condominium Ass’n, 2016 WI 30, 368 Wis. 2d 72, 878 N.W.2d 170, 14-0940.

703.17 703.17 Insurance.

703.17(1) (1) An association shall obtain insurance for the property against loss or damage by fire and such other hazards for not less than full replacement value of the property insured and a liability policy covering all claims commonly insured against. Insurance coverage shall be written on the property in the name of the association as trustee for each of the unit owners in the percentages established in the declaration. Premiums shall be common expenses. Provisions for such insurance shall be without prejudice to the right of each unit owner to insure his or her own unit for personal benefit.

703.17(2) (2) Insurance proceeds shall first be disbursed by the trustees for the repair or restoration of the damaged common elements, and the unit owners and mortgagees shall not be entitled to receive payment of any portion of the insurance proceeds unless the association has determined not to rebuild, or the court has ordered partition of the condominium property, or there is a surplus of insurance proceeds after the common elements have been completely repaired or restored.

703.17 History History: 1977 c. 407; 1985 a. 332.

703.18 703.18 Repair or reconstruction.

703.18(1) (1) A declaration shall provide for the repair or reconstruction of the common elements in the event of damage to all or part of the common elements of the condominium.

703.18(2) (2) 

703.18(2)(a) (a) Unless otherwise provided in the declaration, in the event of damage to or destruction of common elements of a condominium, the association shall promptly undertake to repair or reconstruct it to a condition compatible with the remainder of the condominium. All cost of the repair or reconstruction in excess of available insurance proceeds shall be a common expense.

703.18(2)(b) (b) However, if a condominium is damaged to an extent more than the available insurance proceeds, the condominium shall be subject to an action for partition upon obtaining the written consent of the unit owners having 75 percent or more of the votes. In the case of partition, the net proceeds of sale together with any net proceeds of insurance shall be considered as one fund and shall be divided among all unit owners in proportion to their percentage interests in the common elements, and shall be distributed in accordance with the priority of interests in each unit.

703.18 History History: 1977 c. 407.

703.19 703.19 Eminent domain.

703.19(1) (1) Definition. In this section, “taking under the power of eminent domain” includes any sale in settlement of any pending or threatened condemnation proceeding.

703.19(2) (2) Allocation of award; provisions in declaration or bylaws. A declaration or bylaws may provide for an allocation of any award for a taking under the power of eminent domain of all or part of the condominium. A declaration or bylaws also may provide for:

703.19(2)(a) (a) Reapportionment or other change of the percentage interests appurtenant to each unit remaining after any taking; and

703.19(2)(b) (b) Rebuilding, relocation or restoration of any improvements so taken in whole or in part.

703.19(3) (3) Allocation of award; in absence of provisions in declaration or bylaws. Unless otherwise provided for in a declaration or bylaws, any damages for a taking of all or part of a condominium shall be awarded as follows:

703.19(3)(a) (a) Every unit owner is entitled to the entire award for the taking of all or part of their respective unit and for consequential damages to their unit.

703.19(3)(b) (b) Any award for the taking of limited common elements shall be allocated to the unit owners of the units to which the use of those limited common elements is restricted in proportion to their respective percentage interests in the common elements.

703.19(3)(c) (c) In the event no reconstruction is undertaken, any award for the taking of common elements shall be allocated to all unit owners in proportion to their respective percentage interests in the common elements.

703.19(4) (4) Reconstruction following taking. Following the taking of all or a part of the common elements, an association shall promptly undertake to restore the improvements of the common elements to an architectural whole compatible with the existing structure. Any costs of such restoration in excess of the condemnation award shall be a common expense. However, if the taking under the power of eminent domain is to the extent where the remaining condominium portion has been diminished to the extent that reconstruction or restoration is not practical, a condominium shall be subject to an action for partition upon obtaining the written consent of the unit owners having 75 percent or more of the vote. In the case of partition, the net proceeds of sale, together with any net proceeds of the award for taking, shall be considered as one fund and shall be divided among all unit owners in proportion to their percentage interest in the common elements and shall be distributed in accordance with the priority of interests in each unit.

703.19(5) (5) Adjustment of percentage interests following taking; effect of taking on votes appurtenant to unit. Following the taking of all or a part of any unit, the percentage interests appurtenant to the unit shall be adjusted in proportion as provided in the condominium instruments or bylaws. The association promptly shall prepare and record an amendment reflecting the new percentage interests appurtenant to the unit. Subject to sub. (7), following the taking of part of a unit, the votes appurtenant to that unit shall be appurtenant to the remainder of that unit, and following the taking of all of a unit, the right to vote appurtenant to the unit shall terminate.

703.19(6) (6) Priority in distribution of damages for each unit. All damages for each unit shall be distributed in accordance with the priority of interests at law or in equity in each respective unit.

703.19(7) (7) Taking not to include percentage interests or votes. A taking of all or part of a unit may not include any of the percentage interests or votes appurtenant to the unit.