Changes in WI Law Empower Condo Owners

Lance E. Duroni
lduroni@kmksc.com
(414) 962-5110

A pair of Wisconsin statutes enacted in recent years has leveled the playing field between condominium owners and their governing associations, requiring greater transparency and creating a mandatory process to resolve disputes short of costly litigation.

Prior to 2020, residents had little recourse besides a lawsuit against a condo association that refused to open its books or negotiate disputes in good faith. Given the disparity in resources between individual condo owners and associations comprising 50 or even 100-plus units, the expense of pursuing a lawsuit left many owners without any palatable options when disputes arose.

Today, however, Wisconsin condo owners have greatly expanded power to take on uncooperative or secretive condo associations, thanks to revisions to Wis. Stat. § 703.20 in 2020, and the addition of Wis. Stat. § 703.245 in 2022.

Section 703.245 requires condo associations to maintain various financial records going back six years and gives residents the right to inspect those records. The required records include receipts and expenditures related to the common elements of the condo building, financial statements, bank statements, contracts and related bids,  and insurance policies, among others.

The statute also empowers a majority of unit-owners in a particular building to demand, subject to certain conditions, that the association pay for an audit of the association’s financial records. Previously, condo owners’ ability to demand an audit was limited to only the time period when the developer maintained control of the property and for one year thereafter.

This increased transparency came on the heels of the addition of an entirely new process for encouraging dialogue and conflict resolution in condo-related disputes. Section 703.20 now requires that, before a unit-owner may sue a condo association or its board of directors, the unit-owner must send a notice outlining its claims to the association. Either side may then call for a so-called “direct negotiation conference,” where the parties must attempt to resolve the dispute in good faith. Only if direct negotiation fails, or if both parties forgo negotiations, can the claim proceed to court.

While the statute cuts both ways, requiring notice of and allowing for direct negotiation of claims by a condo association against a unit-owner as well, only the unit-owner may refuse a request for direct negotiation. Thus, in most disputes, regardless of who is bringing the claim, a unit-owner can force the condo association to the negotiating table prior to litigation.

There are, however, limited exceptions under which condo associations do not have to comply with the notice and direct negotiation requirements, such as claims by the association for unpaid condo dues or for a violation by a unit-owner’s tenant.

Several state lawmakers championed the cause of condo owners after receiving complaints from constituents that had to sue their condo associations to obtain basic financial and governance information or to establish any kind of dialogue on a disputed issue. Numerous complaints in the legislative history centered on a condominium association in Door County that was accused of pushing unnecessary projects  and charging all manner of exorbitant  fees, while denying owners access to the records necessary for them to contest the association’s actions.

Despite these statutes being on the books for several years, some condo boards are still not aware of their requirements (or may claim ignorance). In the hands of experienced counsel, the statutes work together, providing access to financial information that unit-owners can then use to weigh potential claims against their associations. Ultimately, this helps ensure condo owners’ fees are being put to proper use and that condo associations and their boards are following the letter of their governing documents and Wisconsin law.

Condo owners are more equipped now than ever to demand accountability from their governing bodies under Wisconsin law. If you are having a dispute with your condo association, or would like a review of your underlying condo documents or financial records, please contact KMK attorney Lance E. Duroni at lduroni@kmksc.com or 414-962-5110.