On July 12, 2015, Governor Walker signed the 2015-2017 state budget into law (2015 Wis. Act 55). One provision of great importance to the real estate industry is the new restriction on local time of sale (TOS) requirements (section 4595c).
What is a TOS requirement?
A TOS requirement is an obligation that must be performed prior to closing when a property is sold; essentially it’s a condition of closing imposed by local government. For example, a city requirement that the property must be inspected by a city inspector and noted items repaired before the property can be sold, or a community requirement that a multi-family property must be retrofitted for sprinklers prior to the sale of the property.
How do TOS requirements impact real estate transactions?
While some TOS requirements appear minor on the surface, others are more significant such as requiring a property owner to pave a gravel driveway prior to the sale of their property. TOS requirements often create confusing and complex hurdles resulting in delayed closings and additional costs.
What is the new law?
- Newly created Wis. Stat. § 706.22 stops local governments (cities, villages, counties, towns, etc.) from creating or enforcing TOS requirements.
- Bars local governments from restricting the owner from selling or transferring title by requiring compliance with an ordinance or paying a related fee at the TOS.
- The prohibition applies to the sale, refinancing, transferring of title before, at the time of the event or within a certain period of time after the event.
- Bans a TOS requirement related to the following: inspections; improvements or repairs; removing junk or debris; mowing or pruning; performance of maintenance or upkeep activities; weatherproofing; upgrading electrical systems; replacing or installing fixtures or other items; and actions relating to compliance with building codes or other property condition standards.
- Existing TOS requirements are unenforceable.
- Statewide TOS requirements could still be imposed
When do the restrictions on local TOS requirements go into effect?
The restrictions on local TOS requirements go into effect on Tuesday, July 14, 2015. Beginning on this date, local governments may no longer enforce new or preexisting TOS requirements.
How does the new law impact transactions that are currently in progress?
Beginning Tuesday, July 14, 2015, preexisting TOS requirements cannot be enforced. Accordingly, any transaction that is currently in progress would arguably not be subject to preexisting or new TOS requirements. (Note — Any disputes as to the applicability of a TOS requirement to a specific transaction should be referred to independent legal counsel.)
What should REALTORS® if a local government continues to enforce a TOS requirement after the effective date of the new law?
REALTORS® should inform the local officials about the new law prohibiting the enforcement of local TOS requirements (new and preexisting) and provide them with a copy of it. (See attachment below.) (Note — Any disputes as to the applicability of a TOS requirement to a specific transaction should be referred to independent legal counsel.)
For more information, please see:
- Section 4595c on pages 591-592 of Act 55 is located at http://www.wra.org/budtos
- Time of Sale Requirements: Coming to a Community Near You? October 2014 in the
Wisconsin Real Estate Magazine at www.wra.org/WREM/Oct14/TOS/?terms=time%20of%20sale%20requirements