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LRB-2216/1
KRP:jld&ahe
2017 - 2018 LEGISLATURE
January 8, 2018 - Introduced by Representatives Ballweg, Born, Kremer,
Kuglitsch and Tusler, cosponsored by Senator Olsen. Referred to
Committee on Housing and Real Estate.
AB818,1,8 1An Act to renumber 703.28 (1); to renumber and amend 703.165 (2) and
2703.28 (2); to amend 703.09 (1) (c), 703.09 (2), 703.095, 703.115 (1) (b), 703.12,
3703.13 (6) (e), 703.13 (7) (c), 703.13 (8) (c), 703.15 (4) (d) 1., 703.165 (5) (intro.),
4703.165 (5) (c), 703.18 (2) (a) and (b) and 703.22 (title), (2) and (3); and to create
5703.09 (2m), 703.15 (4) (dm), 703.165 (2) (b), 703.167, 703.18 (2) (c), 703.28 (1m)
6(intro.), 703.28 (3) (intro.) and 703.28 (4) of the statutes; relating to: various
7changes to condominium law and rights related to first mortgage security
8interests in condominium units.
Analysis by the Legislative Reference Bureau
This bill makes various changes to condominium law and rights related to first
mortgage security interests in condominium units.
Association procedure for raising funds and requiring first mortgagees to
release liens or accept title to units
The bill creates a procedure that a condominium association may use to raise
funds that it intends to use for the repair or replacement of common elements of a
condominium building that are affected by a defect. The association may use the
procedure only if, among other things, 1) the defect is related to the initial
construction of the building or work performed by or for a declarant during the period

of declarant control of the association; and 2) the cost to repair or replace the defective
common elements is 20 percent or more of the value of the affected building.
Under the procedure, the association must estimate the total cost required to
repair or replace the defective common elements and must levy assessments against
the unit owners to raise those funds. Under the procedure, the association must
notify the unit owners that the association is using the procedure and inform the unit
owners of the approximate cost that may be assessed against each unit owner and
the date or dates that the association anticipates that it may levy those assessments.
The association is not required to levy assessments against all unit owners at the
same time or to levy the entire amount a particular unit owner may be assessed all
at once. Rather, the association may choose to levy the assessments in one or more
increments and on one or more dates determined by the association.
After the association levies an assessment against a unit owner, if the unit
owner fails or refuses to pay the assessment, the association may foreclose the
assessment lien on the unit owner's unit or accept a deed in lieu of foreclosure with
respect to the unit. If the association acquires title to a unit using the procedure and
the unit is subject to a first mortgage lien that was executed after the effective date
of the bill, the association may require the first mortgagee to do one of the following
within 60 days after the association notifies the first mortgagee of its options: 1)
release the first mortgagee's security interest in the unit; or 2) accept a quit claim
deed from the association with respect to the unit.
Liability of first mortgagee for condominium assessments
The bill provides that, if a mortgagee becomes the owner of a unit following
foreclosure of a first mortgage, the mortgagee is jointly and severally liable with the
former unit owner for any unpaid assessments coming due during the 12 months
immediately preceding the date on which the foreclosure sale is confirmed.
Approval of first mortgagee to amendment of condominium declaration
Under current law, a condominium declaration may be amended with the
written consent of at least two-thirds of the total number of votes that may be voted
at meetings of the association of unit owners, or a greater percentage if provided in
the declaration. Also under current law, a unit owner's written consent is not
effective unless it is approved in writing by the first mortgagee of the unit, if any.
The bill creates a procedure under which a unit owner, or the condominium
association on behalf of the unit owner (requester), may obtain that first mortgagee
approval. Under the bill, the requester may deliver written notice of the amendment
by certified or registered mail or first class mail to the last-known address of the first
mortgagee. If the first mortgagee fails to disapprove the amendment in writing
within 60 days after the requester mails the notice, the first mortgagee is considered
to have given its approval.
Certification of plats and plans showing altered unit boundaries
Under current law, if a condominium's documents allow it, unit owners in the
condominium may make any of the following changes to the boundaries of their
units:
1. Unit owners of adjoining units may relocate the mutual boundaries between
those units.

2. A unit owner may separate a unit into two or more units.
3. Unit owners of adjoining units may merge two or more adjoining units into
one unit.
Currently, if unit owners make any of those changes, the condominium
documents must be amended to reflect the altered boundaries, and plats and plans
showing the altered boundaries and unit dimensions must be prepared and certified
as to their accuracy by a civil engineer, architect, or professional land surveyor.
The bill provides that only a professional land surveyor, and not a civil engineer
or architect, may certify the accuracy of those plats and plans.
Right of unit owners to vote at association meetings
Under current law, a unit owner generally is entitled to vote at all meetings of
the condominium association unless 1) the unit owner has failed to furnish the
association with the unit owner's name and current mailing address; or 2) the
association has filed a statement of condominium lien against the unit owner's unit
with respect to unpaid condominium assessments. The bill provides that, for a
condominium created after the effective date of the bill, after the period of declarant
control of the association has expired, no unit owner may vote at a meeting of the
association if, at the time of the meeting, the unit is partially or fully exempt from
any condominium assessments.
Percentage of votes required for removal
The bill provides that, for a condominium created after the effective date of the
bill, if the unit owners of units to which at least 80 percent of the votes are allocated
consent in writing, the condominium property may be removed from the provisions
of the condominium law. In other words, ownership of the property would change
from the condominium form of ownership to ownership in common. The bill also
provides that, if all of the units in a condominium are nonresidential, the declaration
for the condominium may specify a smaller percentage of votes that are required for
removal, except that the percentage may not be less than the percentage of votes
required to amend the condominium's declaration. Under current law, unanimous
consent of all unit owners is required to change the property from the condominium
form of ownership.
Determining ownership interests after removal
Under current law, after condominium property is removed from the provisions
of the condominium law, the unit owners own the property in common with each
former unit owner owning an undivided interest in the property that is equal to the
percentage of undivided interest previously owned by the unit owner in the common
elements of the condominium.
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 former unit owners' respective ownership interests in the
property after removal. If the declaration provides for use of the alternative
procedure, upon removal of the condominium property, an appraiser must determine
the fair market value of each unit, and each unit owner's undivided ownership
interest in the property after removal 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.
Division of proceeds after partition
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:
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