April 12, 2016Client Alert

No More TOS Inspection Ordinances: Wisconsin Changes the Law of Municipal Ordinances Requiring Inspections of Private Property

The most recent biannual Wisconsin budget bill signed into law by Governor Walker on July 12, 2015, contained a provision which was not much noticed before its passage, but made a significant change in the way many residential closings occur. The new law prohibits local governments from imposing or enforcing Time of Sale (TOS) requirements on the sale of real estate properties. The most common example is a requirement that a home owner pay a fee, pass a building code inspection or secure a certificate of compliance prior to the sale closing. These local ordinances are now illegal and thus, unenforceable.

More recently, 2015 Wisconsin Act 176, enacted on February 29, 2016, expanded the law and created a similar prohibition against local ordinances that impose a fee, require an inspection or mandate securing a code compliance certificate or similar document, prior to the purchase of a home, or prior to a new occupancy of a home. Further, Act 176 also prohibited local ordinances which require rental properties or rental units to be routinely inspected without an administrative warrant, or require certification, code inspection or repairs on each change of occupancy. This series of statutory changes to Wisconsin real property law therefore reduces the instances in which local building inspectors may inspect private property.

Although these local ordinances initially required limited inspections, such as making certain that the downspouts of a home are not draining rainwater into the sanitary sewer system, the number and breadth of the ordinances have grown exponentially over the last few years, exceeding health and safety concerns. In some of the strictest communities, the process includes arbitrary and unpredictable enforcement, repeated inspections with new requirements added to the list, mandated cosmetic changes and required the entire housing stock of that municipality be brought up to current codes, regardless of the “as is” nature of the contract between the parties and regardless of whether the house was “grandfathered” by existing building codes.

Because the new laws rendered these ordinances unenforceable, but many remain on the books, clients should be careful to insert language in any offers to purchase or adapt to these new laws.

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