By Maggie Seifert and Cheri Hipenbecker of Knight Barry Title, Inc.
September 27, 2017
The Wisconsin 2017 Budget Bill (“Budget Bill”)
enacted on September 21, 2017 as 2017 Wisconsin Act 59, repeals Wisconsin’s Rental
Unit Energy Efficiency program (“the Program”) as set forth in Wisconsin
Statutes §101.122 and related sections1.
Background – First a little background. The Program
was originally part of a larger piece of legislation responding to the US energy
crisis in the late 1970’s when, at the time, building codes were being revised
nationwide to increase energy efficiency standards, requiring additional
insulation, higher R-values for windows, adequate air sealing and generally
creating a nice thermal envelope for new buildings. But Wisconsin took this
effort one step further; rather than imposing energy efficiency requirement
only for buildings constructed after 1978 the Program required owners of
residential rental units built prior to December 1, 1978 to bring rental units
into compliance with minimum energy efficiency requirements before ownership of
the rental unit could be transferred. Section 101.122 directed the Department
of Industry, Labor and Human Resources (now the Department of Safety and
Professional Services) to adopt rules establishing the minimum energy
efficiency requirements for such rental units and the steps for compliance.
Those rules can currently be found in the Wisconsin Administrative Code –
Chapter SPS 367 – Rental Unit Energy Efficiency.
The primary monitoring and enforcement
mechanism for §101.122 was the provision in §101.122(6) prohibiting a Wisconsin
Register of Deeds from accepting a deed or other real estate ownership
conveyance for recording without a: (i) certificate
under §101.122(4)(a), (ii) waiver
under §101.122(4)(b), or (iii) stipulation
under §101.122(4)(c). The certificate
is a certificate from a certified inspector that the unit meets the energy
efficiency requirements that are delineated in SPS 367.11 and 367.12. The waiver is a waiver of the energy
efficiency requirements if the residential rental unit is to be demolished
within 2 years. The stipulation is a
stipulation by the new owner of the residential rental unit under which the new
owner agrees to bring the unit into compliance within 1 year of the ownership
Real Estate Conveyances Post Budget Bill – The Budget Bill repeals §101.122 in
its entirety, with the repeal taking effect on the first day of the 4th
month after publication of the Budget Bill. The publication date is September
22, 2017; thus, a deed or other ownership conveyance document submitted to a
Wisconsin Register of Deeds on or after January 1, 2018 will not require a
certificate, waiver or stipulation under §101.122.
In speaking with the Department of
Safety and Professional Services (“DSPS”) and representatives of the Registers
of Deeds Association on September 27th, for interim transaction
between now and January 1, 2018 which fall within the Program, the parties in
the transaction should either obtain a certificate under §101.122(4)(a) or when
completing the Real Estate Transfer Return (eRETR) choose exemption W-11 other
(Program elimination). Thus DSPS and the Registers of Deeds will no longer be
processing waivers or stipulations.
Even though §101.122 is repealed as of
January 1, 2018 and certificates, waivers or stipulations will not be required
after that date, a question remains regarding open stipulations and waivers
recorded pre-2018 – will those open stipulations or waivers need to be
satisfied? The Budget Bill is not entirely clear on this point so real estate
professionals are asking our State Representatives to clarify legislatively that
such open stipulations and waivers after January 1, 2018 are null and void and shall be of no further force or
effect; thus there would be no need to satisfy open stipulations and waivers.
Stay tuned for more information. In the interim, as with transactions between
now and January 1, 2018, for transactions where an open stipulation or
waiver is on record and a compliance certificate is not obtained, DSPS and the
Registers of Deeds suggest choosing exemption W-11 other (Program elimination)
on the eRETR.
That brings to light a final issue – when will
the eRETR be updated by the Wisconsin Department of Revenue to delete the
questions regarding the Program? In response to questions from the authors, the
Department of Revenue has indicated that they either will have the eRETR timely
updated or they will publish a work around pending the update.
Wisconsin Act 59 is available here: https://docs.legis.wisconsin.gov/2017/related/acts/59.pdf