In the last legislative session, one of WRA’s legislative priorities that helped to create transparency for Wisconsin homeowners associations (HOAs) was signed into law as 2021 Wis. Act 199 (Act 199). Act 199 allows residents living in or purchasing properties within an HOA to have access to the rules and regulations impacting the property. 

And since HOAs can regulate the use of and have a great impact on property owners’ rights, the WRA created three new documents described in this article to help consumers have a better understanding of HOAs. 

Consumer brochure: “Homeowners Associations: What You Need to Know Before You Buy” 

This educational brochure helps the consumer understand an HOA, how it can enforce rules and regulations, and how an HOA can require certain fees to be paid or penalties charged. 

An excerpt from the brochure emphasizing to the consumer the importance of reviewing the HOA rules and regulations provides: 

“Before purchasing a property subject to an HOA, you should verify the rules and regulations regarding any use, repair, improvement, structure or remodeling you may desire after purchasing the property, if material, and become familiar with the fees and assessments the HOA has the power to charge.”

Notice form: “Notice of Homeowners Associations” 

This form further underscores the power of the HOA and that buyers understand and acknowledge that the only way to determine how the HOA regulates the use of the property and what fees are assessed by the HOA, is by the buyer or their attorney reviewing the rules and regulations. Additionally, the notice form reminds the buyer that the real estate firm and its agent recommend obtaining and reviewing copies of the rules and regulations and addressing any legal questions to their attorney. Moreover, the form highlights that the real estate firm and the agent are not permitted to provide legal advice to the consumer about the consumer’s rights. 

Lastly, the form has the buyer acknowledge and agree to the following: 

• The buyer has been informed of the Wisconsin Department of Financial Institutions (DFI) website where the buyer can find contact information for the HOA. 
• The buyer has been informed the offer can be drafted to include a contingency to allow review of the rules and regulations within a certain amount of time and have a right to rescind within a certain number of days. 
• The buyer has read this document in its entirety.
• The buyer has been informed of the importance of reviewing the HOA rules and regulations before writing an offer to purchase and the potential consequences for failure to comply with the rules and regulations associated with purchasing a property within an HOA.

Addendum HOA to the Offer to Purchase  

This addendum offers buyers the opportunity to include contingencies related to HOA fees as well as covenants and restrictions in the offer to purchase.

The WRA’s Addendum HOA includes the following optional contingencies for the buyer. 

The first contingency requires the seller provide the buyer, in writing, the amount of any HOA fees payable to the HOA. 

HOMEOWNERS ASSOCIATION FEES CONTINGENCY: Seller shall, within ________ days of acceptance (“10” if left blank) of this Offer, provide written notice to Buyer of the amount of any HOA fees payable by an owner of the Property. Seller shall include all fees the HOA is authorized to charge in the written notice: any regular or periodic payments, including any past due amounts owed with respect to the Property, as well as fees charged at other times such as upon conveyance of the Property, a request for documents, a request for pay-off statements, fines for noncompliance, etc. This contingency shall be deemed satisfied, unless Buyer delivers to Seller, within _______ days (“5” if left blank) of the deadline for delivery of Seller’s written notice, a written notice terminating this Offer. This Offer shall be terminated if Buyer delivers written notice to Seller, within 5 days of the delivery deadline, stating Seller failed to deliver written notice regarding HOA fees by the stated deadline.

The second contingency requires the seller to delivery to the buyer all the formal documents regulating the HOA within a certain number of days and an opportunity for the buyer to terminate under certain circumstances. 

RULES AND REGULATIONS CONTINGENCY: Seller shall deliver to Buyer all applicable HOA Rules and Regulations within _______ days of acceptance (“10” if left blank) of this Offer. This contingency shall be deemed satisfied unless Buyer delivers to Seller, within _______ days (“5” if left blank) of the deadline for Seller’s delivery of said documents, a notice terminating this Offer. For purposes of this contingency, Buyer’s right of termination of the Offer shall be limited to delivery of those Rules and Regulations of which Buyer did not have actual notice, or written copies, at the time of submitting the Offer. This Offer shall be terminated if Buyer delivers written notice to Seller, within 5 days of the delivery deadline, stating Seller failed to deliver the HOA Rules and Regulations by the stated deadline. 

These new resources will be available for your use later this month. The consumer brochure will be accessible on the WRA’s consumer brochure webpage at www.wra.org/consumerbrochures, while the notice and addendum will be available in Transactions (zipForm Edition) as well as the WRA PDF forms library for library subscribers. 

Learn more about Act 199 and the HOA law in the WRA’s August 2022 Legal Update, “The Regulation of Homeowners Associations,” at www.wra.org/LU2208.