In 2022, the Wisconsin legislature adopted additional provisions to the Condominium Ownership Act that affect all Wisconsin condominium associations.  Because the new statutes require condominium associations to take affirmative action, your association needs to be aware and get prepared.

The changes are found in Wis. Stat. Section 703.20, primarily.  The language regarding the financial and operational records condominium associations were required to keep per Section 703.20 used to be very general in nature, so much so that for our condo association clients who were nonstock corporations, we would look to provisions in the Nonstock Corporations Act (specifically, Sections 181.1601-.1603) for greater detail and guidance on the records that associations should keep.  With the recent changes to Section 703.20, this is no longer the case; in fact, Section 703.20(5) now states that those nonstock corporate records statutes (Sections 181.1601-.1603) no longer apply to condominium associations.

What Every Condo Association Needs to Know

The statutes are now much more specific about the records condominium associations are required to keep on hand and at the ready.  Specifically, all of the following items you need to have on hand going back six (6) years:

  • Minutes of owners’ meetings and board meetings.
  • Records of any actions taken without a meeting (by written ballot of the owners, or by informal action of the board).
  • Detailed bookkeeping records showing an itemization of all receipts and expenditures affecting common elements.
  • Annual budgets, which include (1) anticipated common expenses and amounts to be allocated to reserve account(s); (2) the amount and purpose of any other association expenditure; (3) the amount in the reserve account(s); (4) any common surpluses; (5) the amount/source of any income other than assessments; and (6) the amount of any assessments to be levied against the owners and the purpose of the assessment(s).
    • Financial statements
    • Bank statements and account statements, including reserve accounts
    • Income and expense statements
    • Insurance polices
    • Audit of the association’s records (if one has been done)
    • Contracts entered into in the last six (6) years (and bids obtained going back three (3) years)
    • Invoices and expense-related records

Part of the reason that condominium associations need to keep the above records at the ready is that Section 703.20 now includes a provision that describes the unit owners’ rights to inspect and copy all of the above-described records going back six (6) years.  The new language states that a unit owner, on 10 days’ written notice to the association, is entitled to inspect all of these records and make copies if they wish.  The statute provides a few exceptions to what unit owners are allowed to see, however.  Unit owners are not entitled to inspect (1) records protected by attorney-client privilege or the association attorney’s work product; (2) personnel records; (3) records of another owner’s violation(s); (4) records of another owner’s assessment payment/nonpayment; or (5) financial records related to the initial construction of the condominium project (because the association is not required to maintain those, period).  Subject to those few exceptions, every other record listed above, however, going back six (6) years, is fair game for unit owner inspection.  The association can redact the excepted/protected information before allowing the unit owner to inspect the records, and the association can charge the owner (a) a reasonable cost of the copies; or (b) the cost of labor and materials to provide the copies but no more than the actual cost or $150, whichever is less.

What Every LARGE (100+ units) Condo Association Needs to Know

In addition to the above, condominium associations with 100 or more units have another requirement: beginning on April 1, 2023, they will need to maintain an internet website that houses all of the association records listed above and provides password-protected access to the unit owners and employees/managers of the association.  The website can either be owned/maintained directly by the association or can be operated by a third-party provider (like the association’s property management company).  So, if you are a large condo association with 100 or more units, and you don’t have a website, now is the time to get one set up so you can comply with this new law.

Finally, the Thing about Audits…

It used to be that the statutes were silent as to an association’s requirement to conduct financial audits of its records, and we only had to worry about audit requirements if the association’s governing documents required it.  Not anymore.  Section 703.20 now specifies that if the association receives a written request of a majority of the owners, the association must have an independent audit done at the association’s expense.  The statute also states that during the period of Declarant control and one year after, just three unit owners or 10% of the non-declarant owned units (whichever is less) can make the written request for an audit at the association’s expense.  In both cases (before and after Declarant control), the cost shifts to the requesting owners if an audit was done within 36 months of the request. Heeding these statutory changes—being aware and being prepared—will keep your Association ahead of the game and out of trouble.