A recent Wisconsin law change in Wisconsin has a big impact for those interested in investment property in Wisconsin. As part of the Wisconsin biannual budget signed into law in September 2017, the State of Wisconsin has discontinued its “rental weatherization” program. This program required either a Seller or Buyer of residential real estate to ensure that the property met certain energy efficiency standards such as the installation of storm windows and proper insulation on hot water pipes. Typically, the party responsible for bringing the property into compliance with the weatherization code in a real estate transaction is negotiated in the property sales contract.
To ensure that the weatherization standards were met, on each transfer of real estate, the party responsible for bringing the property up to code was required to have a document recorded with the deed transferring the real estate. If the Seller was responsible, they would have to obtain and record what is called a “Certificate of Compliance”. A Certificate of Compliance required the Seller to hire an inspector to determine whether the property was up to code, and if it was not, incur the cost of bringing the property up to code in order for the inspector to issue the Certificate. If the Buyer was responsible, they were required to execute a “Stipulation Agreement” in order for the Register of Deeds to accept the deed transferring the property to the Buyer. A Stipulation Agreement required the Buyer to obtain a Certificate of Compliance within one year of purchasing the property. This program has now been eliminated so neither party is responsible for doing so.
Though in many situations taking steps to improve energy efficiency may still be more cost-effective for residential real estate investors, this change gives property owners more flexibility in determining what improvements are necessary and when they should be made. This change may encourage more investment in residential real estate in the state.
Though this eliminates one consideration for those interested in investment properties, there are many other legal considerations you may not be aware of when entering the process of purchasing investment properties. If you are looking to begin investing in residential real estate or looking to expand your current portfolio, contact the attorneys at Schober Schober & Mitchell, S.C. We will be happy to help.