Condo Review: Listings

The WB-4 Residential Condominium Listing Contract is very similar to the WB-1 Residential Listing Contract but includes several key differences that sellers and licensees should understand. Listing a condominium often involves additional disclosure requirements, amenities that may affect pricing, and potential transfer restrictions imposed by the condominium association. Below are five important things to know before listing a condominium using the WB-4 Residential Condominium Listing Contract — Exclusive Right to Sell.

Condo disclosure materials

One of the biggest differences between the WB-1 Residential Listing Contract and the WB-4 Residential Condominium Listing Contract is the seller’s obligation to provide condominium disclosure materials. The seller must provide these materials within 10 days of acceptance of the offer, but no later than 15 days before closing.

Condominium disclosure materials include association bylaws, articles of incorporation, management contracts or other contracts affecting condominium maintenance, annual operating budgets and an executive summary. The seller must also provide any leases to which the buyer or the association will be a party, information regarding contemplated expansions of the condominium, and a unit floor plan showing the location of common elements.

These disclosures are required by Wisconsin law, making it important for sellers to begin collecting the information before listing the property. Wisconsin law also requires condominium associations to provide disclosure materials upon request. It is important to note that small condominiums with 12 units or fewer may have abbreviated condominium documents.

Common elements, storage and parking

Another important consideration when listing a condominium is identifying which amenities are included with the unit. Condominium units frequently include separate storage units or storage lockers for owners. Parking spaces in condominiums can be comment elements, limited common elements or even separately deeded parcels of real estate.

Condominiums may also offer common elements and amenities available to all owners, such as game rooms, pools, saunas, fitness centers and other shared spaces.

Sellers and listing agents should identify which common elements, storage units and parking spaces are associated with the unit. Condominium owners should also consult the condominium association to determine the amount and frequency of condominium association fees.

Real estate condition report

When a seller is completing a real estate condition report (RECR) for a condominium, Wis. Stat. § 709.03 provides that when the property is a condominium unit, the property to which the RECR applies is the condominium unit, the common elements of the condominium and any limited common elements that may be used only by the owner of the condominium unit being transferred. Wis. Stat. § 709.02(2) requires the seller to also furnish a condominium addendum to the RECR and a copy of the executive summary along with the RECR.

Potential buyer requests

Although sellers must provide a lengthy list of condominium disclosure materials, buyers may request additional information through the WB-14 Residential Condominium Offer to Purchase.

Requested information may include condominium association financial statements, minutes from unit owner and condominium board meetings, information regarding special assessments, and any unpaid assessments related to the unit. Buyers may also request common element inspection reports and information regarding pending litigation involving the condominium association.

While sellers are not required to provide this information unless requested by the buyer, it may be beneficial for sellers to know how to obtain the information if needed based on the terms of the buyer’s offer. Licensees should help sellers understand these potential requests and recommend the seller contact the condominium association to help in locating these documents.

Condominium association right of first refusal

Sellers should also determine whether the condominium association has a right of first refusal relating to the unit. A right of first refusal allows the holder of the right to match a third-party offer and purchase the unit on the same terms.

Sellers should understand whether any party holds a right of first refusal affecting the property and disclose that information to potential buyers so buyers can make informed decisions.

For more information about all things condo, see the WRA’s condo law resources webpage.