November 1, 2004, is the overall effective date for the new revisions to the Wisconsin condominium law. However, various provisions and the use of some new forms have varying initial applicability dates. The following hotline questions and answers highlight some of the new provisions and forms as well as the dates when the new forms must be used. Visit the Condo Law REALTOR Resource page for more resources.
Use of new forms
An agent has the updated condo forms, but does not see mandatory use dates on them. When must real estate agents start using these forms in condominium transactions?
The new Executive Summary form, the Condominium Addendum to Real Estate Condition Report (RECR), the Statutory Reserve Account Statement, the Addendum to WB-4 Residential Condominium Listing Contract and WB-14 Residential Condominium Offer to Purchase and the Residential Condominium Concepts handout are all optional forms developed by the WRA to implement the new changes to the condominium law.
They are not Department of Regulation and Licensing (DRL)-approved forms, so they do not have mandatory use dates. The chart below, however, indicates when the use of these or similar forms will be required in residential condominium unit transactions.
A broker was told that there is a new condominium offer that is effective November 1, 2004, and that if there are any offers pending on condominiums that are closing after November 1, the offers have to be rewritten on the new form. Is this correct?
No, there are no plans for revising the DRL-approved residential condominium offer to purchase form. The Addendum to WB-4 Residential Condominium Listing Contract and WB-14 Residential Condominium Offer to Purchase may be used to update the condominium listing contract and offer. These forms educate the parties and the brokers about new condominium law provisions that apply during the offer to purchase process.
Condominium addendum to the Real Estate Condition Report
A newly built condominium does not require an RECR since it is a new construction. Must a developer fill out the new Condominium Addendum to RECR for new construction condominiums? If an RECR is not required, then is the new addendum to RECR also not required?
Wis. Stat § 709.01(1) indicates that an RECR is not required for new construction if the property has not been inhabited. Wis. Stat § 709.02(2) provides that the owner shall furnish the condominium addendum to the RECR, "in addition to and at the same time as" the RECR itself. Therefore, a Condominium Addendum to the RECR is not required unless an RECR is required.
The Condominium Addendum to the RECR should be used in transactions where the offer to purchase is accepted on or after November 1, 2004, without the Executive Summary if the Executive Summary has not yet become mandatory for that condominium (May 1, 2005 or June 1, 2006).
Condominium reserves
Is there a new rule that each condo association must have a certain amount of money in reserve funds?
The new legislation creates the concept of a "statutory reserve account" (SRA). Generally, a declarant or association must establish an SRA to fully or partially fund repairs and replacements of the common elements, unless the declarant or association elects not to establish one. New condominiums (beginning November 1, 2004) and existing condominiums (by May 1, 2006) will be forced to consider whether or not they should set up an SRA to pay for the repair and replacement of roofs, siding and other common elements. An association may at any time elect to establish an SRA or terminate an SRA, with the written consent of a majority of the unit votes. Each time a declarant or association opts in or opts out of SRA, a Statutory Reserve Account Statement is to be filed with the register of deeds. Existing condominiums setting up a new SRA need not catch up to the amounts they would have had if the unit owners had been assessed for replacement reserves since the condominium was established. For additional information, see the June 2004 Legal Update, "Condominium Law Revisions," at www.wra.org/LU0406.
Condominium disclosure materials
Does the revised condominium law include a new procedure for situations where the seller delivers an incomplete set of disclosure materials to the buyer?
Under prior law, a buyer could unilaterally rescind the offer at any time if he or she did not receive complete condominium disclosure materials. The buyer's five-business-day right to rescind was not triggered until the buyer received all of the required information, so a buyer could wait and decide to rescind the offer immediately before or at closing.
Beginning with transactions closing on or after November 1, 2004, if the buyer receives all of the condominium disclosure documents required by § 703.33(1), he or she will have five business days to rescind the offer in writing, without stating any reason and without liability, as before. If the buyer receives disclosure materials that include the cover sheet but are missing one or more required documents, he or she will have five business days to either rescind the offer in writing or request that the seller deliver the missing documents. If the buyer neither rescinds nor requests missing documents, the delivered materials will be deemed satisfactory and he or she will have no further right to rescind based upon those materials.
The seller has five business days to deliver the requested documents. The buyer may rescind the sale within five business days following the earlier of the buyer's receipt of the requested missing documents or the seller's deadline for delivering the documents.
New condominium conversion procedure
What is the mandatory waiting time for recording the condominium documents after giving notice of conversion to the tenants?
Under the existing condominium conversion process, the owner gives a 120-days written notice to each tenant. The owner has to wait 120 days before recording the condominium documents and officially converting the property to condominium ownership. A tenant had the "exclusive option to purchase" his or her unit for the first 60 days after the notice is delivered, seemingly prohibiting any advance sale of units to third parties during the 60 days.
Under the revised Wis. Stat. § 703.08, a property may be converted to a condominium as soon as the tenants are given notice of the conversion. During the 60 days immediately after the conversion notice is delivered to tenants, the tenants have the "first right to purchase" their units if the units are offered for sale. The tenant buys his or her unit at the price at which the unit is offered for sale, the purchase price in any accepted offer to purchase or the price otherwise agreed to by the tenant and the seller.
Tenants continue to have the right to remain in their units for at least 120 days unless they breach their leases or fail to pay rent. Tenants with leases extending beyond the 120 days may occupy the unit until the lease term ends. Tenants with a lease that ends before the 120 days have passed have an automatic lease extension until the end of the 120 days.
The tenant may waive his or her occupancy right, first right to purchase or both, in writing. The revisions to § 703.08 are effective beginning with conversion notices delivered to tenants on or after November 1, 2004.
See Legal Update 04.06, "Condominium Law Revisions," at www.wra.org/LU0406, and the WRA Condo Law Resource Page at www.wra.org/condolaw for comprehensive coverage of the changes to Wisconsin condominium law.
Editor’s note: The DRL became the DSPS in 2011. Information above may not be current.