Wisconsin REALTORS Win The Fight Against Costly Closing Delays
Hearing a REALTOR® say the words, “It sold!” is typically cause for celebration when your house is on the market. Homeowners are usually relieved to know that they can move on to the next step in their lives. Whether it’s moving their family into a larger house, downsizing as they prepare for retirement or simply the relief of getting out from under an oversized mortgage.
However, Wisconsin’s former Time of Sale Requirements (TOS) meant that residents in the dairy state used to have a stressful and costly list of home repairs to complete before they could celebrate the sale of their home. A TOS is a home repair or improvement that must be performed before buyers and sellers can close on a home. Some of the Wisconsin TOS requirements were large, and some were small, but all made closing on the sale of a home more complicated and created liability for property owners.
The Wisconsin REALTORS® Association (WRA) believed that while the intent of the TOS was a good one, it’s approach was flawed. Tom Larson, Senior Vice President of Legal and Public Affairs said, “Generally, communities impose TOS requirements to address possible health, safety, environmental or aesthetic concerns related to a property. While the concerns themselves and the proposed remedies may be reasonable, requiring the issues to be addressed only when a property is sold is problematic.”
So why didn’t TOS work? The WRA says that one of the reasons is that only a small percentage of properties are sold each year. This means that decades could pass before all the properties that are targeted for upgrades are remedied. “Waiting for a home to be sold in order to bring it up to code or address aesthetic issues is a slow and inefficient approach.” says Larson. “If the community is trying to address a health or safety concern it should be taken care of long before the property is up for sale.”
Larson shares that the other reason TOS wasn’t working was the financial burden that it placed onto homeowners, many of whom weren’t making much of a profit on the sale of their home. “It’s a common misperception that all property owners “make money” when selling their property. With the downturn in the real estate market that occurred several years ago, many homeowners don’t have the money to make expensive repairs or upgrades at closing. Moreover, people are often selling their home because of some adverse change in their life such as a divorce or loss of a job. Imposing an additional financial burden on them only makes a bad situation worse.”
WRA actively worked to address the failings of TOS by meeting with lawmakers to discuss alternative solutions in the hopes that new legislation would be introduced. Their goal was to ensure that Wisconsin communities could find a way to manage home requirements in an ongoing way vs. hitting homeowners with an overwhelming and expensive to-do list at the sale of their home.
The efforts of the WRA ultimately helped to put an end to the costly TOS process. On July 12, 2015, Gov. Walker signed the 2015-17 state budget, 2015 Wis. Act 55, into law. The new budget included a restriction on local time of sale (TOS) requirements. On February 29, 2016, Gov. Walker signed into law 2015 Wis. Act 176, legislation that expanded the scope of the TOS restrictions to also apply to both the time of occupancy and to buyers of real property.