Whether you live in a town home, condominium, multi-unit dwelling or own a times share, most of you are part of a Homeowners Association (“HOA”). A HOA is usually run by a board of directors elected by homeowners to oversee the common assets of a property/area, manage its finances, run business affairs, enforce and set rules, and see to the maintenance and upkeep of the area.
In Wisconsin, the Wisconsin Condominium Ownership Act (Wis. Stat. Ch. 703) governs the formation, management, operation, and powers of condominium associations formed under the Act by recording a declaration with the register of deeds of the county where the property is located. Most HOA’s in Wisconsin are organized as nonstock corporations and governed by Wisconsin Nonstock Corporations Act, Wis. Stat. Ch. 181. In addition to state law regulations, the federal government has laws that govern the operation and management of common interest communities (“CIC”) in the state of Wisconsin.
In order to create more transparency for Wisconsin HOA’s, Wisconsin Act 199 (the “Act”) was signed into law in 2021. The Act allows residents living in or purchasing properties within an HOA to have access to the rules and regulations impacting the property.
Effective January 1, 2023, all Wisconsin HOA’s must be aware of the Notice and filing requirements. All HOAs are now required to file specific notices with the Wisconsin Department of Financial Institutions (WDFI) as a result of the 2021 Act. While certain portions of the Act related to publishing and the availability of certain HOA information became effective in March of 2022, the new WDFI filing requirements became effective as of January 1, 2023.
The Act instructed the WDFI to establish a statewide filing system that mirrors the existing WDFI system for corporate records. HOAs will use this filing system to file the newly required public notices under the Act (the “Notice”). The Notice must include the following information about the HOA:
- The name and mailing address of the HOA;
- The name and address of any management company for the HOA;
- The name of the county and municipality where the HOA is located; and
- The name, address, and email or phone number of the authorized individual who is responsible for responding to requests for information about the HOA. These may include obtaining and providing copies of declarations, covenants and restrictions.
All existing HOAs were to have filed their initial Notice as of January 13, 2023. If you are planning on forming a new HOA, then you are required to file a Notice within 30 days after creation of your association.
As of now, the WDFI will only require a Notice to be filed by a HOA, one time. The HOA will however, need to file a renewal Notice each year with the WDFI. Additionally, if any of the information contained in the initial Notice changes, HOAs will be required to file an amendment correcting the information and updating the Notice information on file. These are similar requirements for other business entities in Wisconsin.
If you plan on 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.
What if the HOA forgets to file the Notice or wasn’t aware of the new requirements? Failing to file a Notice carries significant penalties for noncompliance. The HOA may not do any of the following until the Notice if filed:
- Charge a late fee or other fine for any unpaid assessments owed by any residential lot owner;
- Charge a fee in connection with any transfer of ownership of a residential lot that the association would otherwise be authorized to charge under the covenants and restrictions for the residential planned community.
Additionally, any prohibited action taken by an association during a period of noncompliance under this paragraph is void and unenforceable. (https://docs.legis.wisconsin.gov/2021/related/acts/199.pdf)
If you have any questions regarding your HOA or compliance for this Act reach out to our business law team.