There is a new law in Wisconsin which is focused on getting condominium associations and their unit owners to communicate better before resorting to a lawsuit. The practical effect of the new law is to require the aggrieved party, whether that be the association or an owner, to clearly state their claim and the legal basis for their claim to the other party, in writing, before filing suit. After delivery of such a “notice of claim,” the law encourages the parties to engage in dispute resolution by imposing a 30-day waiting period before a lawsuit can be filed. Here is how it works.
Effective March 5, 2021, the owner of a condominium unit cannot sue their association and, in some circumstances, a condominium association cannot sue a unit owner until:
- One side has notified the other side of the claim, and, in writing, described the issue and the legal basis for their claim
- Presented a proposal for resolving the claim
- Extended an invitation for a direct negotiation conference between the parties.
Then, within ten (10) days of the other side’s receipt of such notice of claim, either side is entitled to request a “direct negotiation conference” by providing at least 3 proposed dates and times for the conference. These dates must be within 30 days of the date of the conference request.
By “direct negotiation conference” the legislature means a meeting between the two sides in which both focus on a good faith attempt to resolve the dispute.
If a unit owner requests that their condo association participate in a direct negotiation conference, the association must participate and the conference must occur within 30 days of the unit owner’s request. If it is the association that requests the conference, the unit owner can either agree to meet or decline. (The law allows a unit owner to decline a conference request because association boards inherently have more power than the unit owner.)
At a direct negotiation conference, both sides are supposed to engage in good faith negotiations to resolve the dispute described in the notice of claim. Each side can participate personally or through a representative who has authority to bind the party they represent.
If the written notice of claim describing the issue, the legal basis for the claim and the proposal for resolving it were delivered, the party with the claim can sue if:
- Neither side asks for a direct negotiation conference
- The parties have a conference but ten (10) days after the conference is held, they still have not found a way to resolve the claim
- One side asks for a direct negotiation conference but no such conference is held within the required 30 day period
- Direct negotiations occur but no resolution is reached and one side notifies the other they are ending attempts by the parties to directly resolve the claim
The motivation for the new law was to address condominium association boards of directors that ignore or refuse to work with a unit owner who raises a claim. The example in the record of the new statute’s adoption was a large condo association in Door County where the board refused owners’ requests to provide information and minutes of meetings dealing with severe use restrictions the board had imposed on owners. In the example, the owners had no choice but to sue their association – at great cost — to obtain the information. However, while the motivation for the bill was leveling the playing field between condo association boards and individual unit owners, in some instances, the requirements of clearly defining, in writing, the legal basis for a claim and requesting to meet to try to negotiate in good faith a resolution, also applies to a claim the association may have against a unit owner.
Be aware though, that a condo association is not required to abide by the new law if the association’s claim is one for unpaid condominium dues, a lien for unpaid condo dues, a violation by a unit owner’s tenant, or if the association files to ask a court for an injunction to impose certain conduct on an owner or their tenant or similar emergency relief.
Also, the new law does not apply to the unit owner or the association if the condominium’s declaration already provides a process for resolving disputes through negotiation, mediation or arbitration.
There is also a section in the new law which provides that if the association and unit owner enter into a written settlement agreement to resolve the claim that was in the written notice, and one of the parties breaches that settlement agreement, the non-breaching party can go straight to court and sue to get a remedy for the breach. Neither party is required to repeat the whole notice of claim and direct negotiation series of steps before suing to enforce the settlement agreement. What’s more, if the non-breaching party sues to remedy the breach of the settlement agreement and prevails, the breaching party must pay all court costs and reasonable attorney fees for both sides.
The new law can be found in Wisconsin Statutes Section 703.245 (Chapter 703 of the Statutes is Wisconsin’s Condominium Law).