If you are in the process of purchasing a new home, or have just purchased one, you may have encountered offers for a home warranty – but what exactly is a home warranty? Home warranties provide discounted repair and/or replacement services for components within your home, such as your heating, air conditioning, electrical, appliances, and sometimes even pool or garage door components. Home warranties are intended for items such as a broken water heater or an appliance repair. Essentially, a home warranty can cover things that your homeowner’s insurance would not (more on what homeowner’s insurance covers below). However, homeowners should clearly read their home warranty to understand what is covered, as many warranties do not provide coverage for repairs or replacements that can be attributed to a lack of maintenance. Rather, home warranties are often meant to cover unexpected repairs.

Do I need a home warranty?

The decision on whether to have or forego a home warranty is completely optional and situational. It is not a legal nor lender requirement that a home owner have a home warranty. When contemplating whether or not you should purchase a home warranty, here are some things to take into consideration.

First, do you have an emergency fund in place sufficient to cover unexpected home repairs? Consider what would happen if you needed to purchase a new refrigerator within the first year of owning your home, or even worse, an expensive air conditioning replacement – if this is something that you could not afford as an out-of-pocket expense, then it may be worth considering whether a home warranty could assist with the cost of an expensive and unexpected repair or replacement. Home warranties on average range from $300-$1,200 per year depending on the plan and components of the house.

Second, consider how old your home’s components are and what condition they are in. If you had a home inspection done, your home inspector will likely have gauged the remaining life of some of your components, so it may be worth taking a look at your inspection report. However, even brand new home components can unexpectedly go out – consider whether any of those components come with warranties of their own.

Third, what condition is your home in? If there are components that were already not functioning when you purchased the home, a home warranty will not assist with their repair or replacement. Review different home warranty plans and their exclusions to understand what would and would not be covered. For example, many home warranty plans contain exclusions for improper installation, mold, code violations, and structural home components (such as foundation cracks, roof repairs, etc.). If many of the repairs you need would not be covered, then you may able to work with the seller to negotiate the repairs or a credit to do the repairs yourself, assuming you have not already closed on the home.

How is a Home Warranty Different From Homeowner’s Insurance?

Home warranties are intended to cover the components of your home, such as plumbing, HVAC, and electrical. Homeowners insurance, on the other hand, covers damage to the actual structure of the home itself due to events outside the control of the owner, in most cases, such as a damaged roof due to a tree falling, fire or damage resulting from a natural disaster. If you have lending on your home, your lender will require you to have homeowner’s insurance, whereas the lender will not require you to have a home warranty. As always, it is best practice to thoroughly read any homeowners insurance policy or home warranty plan to understand what is and is not covered.

Schedule a consultation with Wynn at Law, LLC today to discuss the home buying process

Also see our related blog post, Five Things I Wish I Knew as a First Time Home Buyer. Contact Wynn at Law, LLC today for a consultation at 262-725-0175 or visit our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has offices conveniently located in Salem, Delavan, and Lake Geneva, Wisconsin.

The post Home Owner Education: Home Warranties vs. Home Insurance appeared first on Wynn at Law, LLC.

This situation is quite common – property is often bought jointly, with both party’s names on the title. (See our blog “Ways to Take Title to Real Estate” for more info). For example, you and significant other, a sibling, or even a business partner may jointly hold title to real estate. But what happens when joint owners can’t agree? Situations like this may arise in the context of a deteriorated business relationship, a breakup, inherited property, or from frustrated interests – i.e. one party wants to sell and the other party does not. When co-owners cannot come to an agreement on their own, seeking a partition action from the court may be necessary.

What is a partition action?

A partition action is a court-ordered process in which the court orders either a forced sale of the property (partition by sale) or divides the property into separate parcels, giving each party an equal interest (partition in kind). Partitions in kind are not always possible, such as when a non-marital couple jointly own a house on a single parcel – the house cannot be divided equally, thus the court would be more inclined to order a partition by sale.

In a partition by sale, there will be a judicial sale of the property, resulting in each party receiving their fractional share. The fractional share is determined by the equity that each party put into the property. Thus, if one party put in $60K, and the other put in $40K, the sale proceeds would be distributed according to the party’s 60/40 interest. However, the court has broad powers in partitioning property and may consider other factors such as: who was making mortgage payments (or lack thereof), improvement payments, who is making more use of the property, who is paying the taxes, etc.

How can I file a partition action?

Before you can file a partition action, you should be aware of how you and your co-owner(s) hold title and examine any agreements, contracts, wills, or trusts concerning the property, which may place limitations on partition. For example, if the property you seek to partition was part of an inheritance by will, the will should be consulted to determine whether the decedent placed any limitations on the property – for example, the decedent may have prohibited a partition by sale with the intention of keeping the property in the family.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

The post I bought a house with my significant other; we were never married, and now we broke up. What happens to the house? appeared first on Wynn at Law, LLC.

Credit reports are generated by three credit reporting agencies (CRAs) – Equifax, Experian, and TransUnion. Your credit report may vary depending on which agency the report comes from, as creditors can choose which bureau to report to and not all creditors report to every bureau. To pull your credit report for free from any of the CRAs, visit annualcreditreport.com.

What is Included in a Credit Report?

Contrary to popular belief, most credit reports do not contain your credit score without paying an additional fee. Rather, a credit report contains information related to your borrowing and payback history, as well as other information valuable to lenders. For example, it is typical to find the following types of information on your report:

• Past and current credit accounts/loans,
• Payment history – such as on-time, missed, or late payments (including amounts in collections)
• Foreclosures and repossessions,
• Bankruptcies,
• Past and present addresses,
• Relevant public record information such as liens, civil suits, and judgments, and
• Companies who have accessed your credit report

Why Would I Need to Access My Credit Report?

a. Applying for a loan

It is a good idea to access your credit report prior to applying for a loan or any other large credit-related purchase. This allows you to be prepared for what your lender will see and make sure that the report is accurate. It is not uncommon for a credit report to contain errors, which is why it is recommended to check your report from all three agencies at least once a year.

b. Scanning your report for errors

Any errors on your report can be disputed with the credit bureau who issued the report, the company whose information is inaccurate, or with the Consumer Financial Protection Bureau (CFPB). The CFPB recommends first disputing the error with the credit agency (Experian, Equifax, or TransUnion) by explaining the error and providing any supporting documentation. The CFPB’s website provides sample templates for filing disputes and other helpful dispute-related information, which can be accessed here. If the agency finds an error, it will report the error to the other two agencies.

What About Credit Scores – How Do I Find Mine and What Affects It?

The three credit agencies discussed above also create a credit score, which is a 3-digit number ranging from 300 to 850. Credit scores can also be accessed by most credit card companies/lenders. However, each agency’s credit reporting algorithm is different, which will result in different scores.

One well-known credit scoring agency is FICO, which generates a FICO-score. A FICO-score is the same thing as a credit score, just based on FICO’s credit reporting algorithm. The FICO scoring system is similar to most other credit scoring companies and thus a helpful guide for what factors affect your score. Under this system, there are 5 key factors[1]:

1. 35% of your score is based on your payment history:
   • Includes late payments – the later they are, the worse for your score
   • Includes accounts sent to collections
   • Includes bankruptcies, liens, foreclosures, and other public info
   • Takes into account the time the time since a missed payment and frequency of missed payments
2. 30% is based on your credit utilization:
   • Calculated by comparing your available credit to the amount you utilize – lower utilization is better for your score
3. 15% is based on the length of your credit history:
   • Old accounts can help boost your score
4. 10% is based on new credit accounts/ how many total accounts you have open:
   • Opening new accounts requires a lender to do a hard inquiry, which can temporarily lower your score
   • Opening may new accounts within a short period of time may lower your score
5. 10% is based on the types of credit you have (your credit diversity):
   • It is better for your score to have a mix of accounts – such as a mortgage loan, car loan, and credit card loan

What is the Deal With “Freezing” my Credit and When Should I do That?

A credit freeze temporarily stops lenders from accessing your credit report. People may freeze their credit if they have been the victim of fraud and are worried that the fraudster is attempting to open new accounts in their name. Freezing your credit will not lower your score and is free to do, but you must remember to un-freeze your credit (and dispute any fraud on your report) prior to opening a new account. To freeze your account, visit each of the three agencies’ websites and follow the instructions.

Conclusion

The best advice when dealing with your credit report and credit score is to be proactive – check what is on your report regularly and make sure it is accurate, dispute errors, and initiate a credit freeze when necessary. Do not be passive when it comes to your credit – investing in your financial health requires more than checking your score.

Schedule a consultation with Wynn at Law, LLC today to discuss your debt relief options and how the options affect your credit report and credit score.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

[1] How are FICO Scores Calculated? | myFICO

The post Credit Reports – How to Find Yours, What To Expect From Your Report, Freezing Your Credit, and More appeared first on Wynn at Law, LLC.

Wisconsin’s Managed Forest Law (MFL) and Forest Crop Law (FCL) programs encourage private landowners to use their property for sustainable forestry by offering reduced property taxes.[1] The MFL program is the only program currently open for enrollment, as the FCL program was closed in 1986. Private landowners have the choice to enroll in the MFL program for either 25 or 50 years.[2] Those enrolled in the program work with the DNR to create a plan to accomplish objectives such as: production of timber trees for harvesting, protection of wildlife, and preservation of recreational activities such as kayaking, swimming, and hiking, in addition to other forest health goals. The production of timber trees is the main objective of the program.

B. Eligibility Requirements

1. To qualify for the MFL program, you must have at least 20 acres of contiguous land, which can either be composed of one 20-acre parcel, or two 10-acre parcels that touch one another.
2. At a minimum, 80% of the MFL land must be capable of producing merchantable timber.[3] The other 20% of the MFL land can be land that is unsuitable for wood production, such as swampy or sandy land.
3. The length of the portion of land that is capable of producing timber must be at least 120 feet wide. Sections less than 120 feet are still permitted, so long as the width ratio is 4 to 1, or less.[4]
4. If the MFL is renewed or entered into the program in 2017 or later, then the land may not contain any buildings, except those used exclusively for storage.^[2] However, if your parcel is larger than 20 acres, you may designate only part of it as MFL land and use the non-MFL land for building purposes. Structures and fixtures needed for sound forestry are allowed, but must be agreed upon with the Wisconsin DNR.[5]
5. The MFL land may not be within a recorded subdivision.[6]
6. The parcel that the MFL parcel falls within must be up-to-date on property taxes.^[2]

C. Public MFL Land Versus Closed MFL Land

MFL land must either be designated as “open” or “closed” to public recreation. If the land is designated as open, then there must be access to the public by foot for the following activities: hunting, fishing, hiking, sight-seeing, and cross-country skiing.[7] There are numerous other requirements for MFL land that is open to the public and what “open to the public by foot” requires.[8] Although open MFL land requires a few more requirements and monitoring efforts, landowners enjoy a lower tax rate than MFL landowners with land designated as “closed”.

If you are interested in finding open MFL land near you, visit the Wisconsin DNR’s Public Access Land Map at the following link: Wisconsin DNR. Although the public does not have to let an owner of open MFL land know that they will be accessing the land, the DNR recommends letting the owner know as a courtesy and also for safety purposes.^[2]

Those who wish to designate their MFL land as “closed” should note that each municipality may only allow up to 320 acres total to be designated as closed. All 320 acres can be under the same ownership, thus pushing new MFL prospects out, unless they designate their land as open. However, MFL owners whose programs took effect on or after April 28, 2004 may modify their “open” or “closed” designation up to 2 times during the term of their program.

D. Management Plan

A management plan is the governing document for a landowner’s participation in the MFL program and is laid out by an initial discussion with a Certified Plan Writer or the Wisconsin DNR itself.  Certified Plan Writers can either work independently of the WDNR or can be contracted by the WDNR. Either way, the management plan must be prepared by a Certified Plan Writer or the department.[9] The management plan contains some mandatory rules, such as harvesting timber per the plan’s standards, tree planting and treatment, soil control, etc.

Failure to comply with the management plan results in a $250 non-compliance fee per mandatory provision, which are collected by the municipality where the land is located. These fees can stack up quickly in the event of more than one mandatory violation and if they are not paid timely.[10] In addition to Certified Plan Writers, local Tax Law Forestry Specialists are available to assist with the questions regarding management plans and to remind landowners of mandatory practices.

E. Perks of the MFL – Forest Certification and Selling Your Trees

Those enrolled in the MFL program can also voluntarily enroll for membership in the “MFL Certified Group”, which allows members to sell timber as “certified” to the open market once timber becomes ready to harvest.^[2] This means that the timber has the seal of being sustainably produced, and enrollment in the group provides members with educational resources. To harvest the timber, a landowner should consult a professional forester, a list of which can be found on the DNR’s website.

F. Selling or Transferring Designated MFL Land

Sellers of real estate enrolled in the MFL program are required to disclose the status of the MFL land to prospective buyers in either the residential or vacant land condition report. After a property sale is completed, the new owner must either file a transfer form to keep the land designated as MFL or voluntarily withdraw from the program within 30 days.[11]

A seller has 10 days after acceptance of the land purchase contract to provide the buyer with required information involving: a disclosure stating that the land will continue to be enrolled in the MFL program, the program’s length (25 or 50 years), and a disclosure informing the buyer that the DNR will continue to monitor the forest for compliance with the MFL plan.^[2]

Buyers and/or sellers are entitled to withdrawal from the program at any time, but are subject to withdrawal fees, discussed below.

G. Withdrawing from the MFL Program and Associated Fees

Withdrawal from the MFL program may either be voluntary or involuntary. Voluntary withdraws may occur at any time, but are subject to a withdraw tax, which can be significant. The withdraw tax is typically calculated by multiplying the tax rate the property was subject to in the year prior by the assessed value of the land in the year prior, and then multiplying that number either by 10 or the number of years that the property was part of the MFL program, whichever number is fewer.[12] However, the withdraw tax can be calculated in a different manner, as it depends on how the land was entered into the MFL program.^[2]

Voluntary withdraws can also be accomplished for only part of the MFL land, such as if the owner wishes to construct on part of the MFL land. This type of construction withdraw is subject to a few more conditions, which can be found in Wisconsin Statute § 77.88(3)(b). The Wisconsin Department of Revenue can help landowners estimate the withdraw tax, but such service is subject to a fee.[13]

An involuntary withdrawal may occur for violation of the stipulated MFL obligations, such as constructing a building on productive forest land, and is subject to a $300 withdrawal fee in addition to a withdrawal tax.^[2] In addition, each failure to comply with a forestry practice, as specified in an owner’s management plan, is subject to a $250 noncompliance assessment.[14] For more information on withdrawing from the MFL program, landowners are encouraged to contact their local Tax Law Forestry Specialist.

Conclusion:

If you own land that you are considering enrolling in the MFL program, reach out to a Certified Plan Writer (CPW) to discover your options. CPWs are required as part of the process, so it is not a bad idea to consult one early to ensure that all requirements are met. If you are in the market for land and find out that it is part of the MFL program, make sure you understand what the requirements of the program are and what the withdraw taxes will be, if applicable. Tax Law Forestry Specialists are also helpful resources to understand the MFL program’s implication on property taxes.  A list of CPW’s and Tax Law Forestry Specialists, as well as more information on the MFL program can be found on the DNR’s website: https://dnr.wisconsin.gov/topic/ForestLandowners

While Wynn at Law does not assist with the enrollment or withdraw of MFL land, we assist with the purchase or sale of land that is enrolled in the program.

Schedule a consultation with Wynn at Law, LLC today to discuss the purchase or sale of real estate that is enrolled in the MFL program.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

Sources:

[1] Wisconsin Department of Natural Resources website. Managed Forest Law | | Wisconsin DNR

[2] Wisconsin Department of Natural Resources Program Summary 972b04e8-4a3e-49f8-aaee-fb537b0a7d51.pdf (widencdn.net)

[3] Wis. Admin. Code § NR 46.17(1)(a)

[4] Wis. Admin Code. § NR 46.17(2)

[5] Wis. Admin Code § NR 46.17(3)(c)

[6] Wis. Admin Code § NR 46.15(18)

[7] Wis. Admin Code. § NR 46.20(1); Wis. Stat. 77.83(2)(a)

[8] See Wis. Admin. Code § NR 46.20; See also Wis. Stat. §77.83(2)

[9] Wis. Stat. 77.82(3)

[10] See Wis. Stat. 77.876(1)-(2)

[11] Wis. Admin Code § NR 46.23(1)

[12] Wis. Stat. § 77.88(5)

[13] https://www.revenue.wi.gov/DORForms/pr-296f.pdf

[14] Wis. Stat. § 77.876

The post How Wisconsin’s Managed Forest Law Program Works and Who Qualifies appeared first on Wynn at Law, LLC.

What to Know Before Using Your Property as an Airbnb, VRBO, or Other Short-Term Rental In Wisconsin:

1. Know Wisconsin State Law Governing Short-Term Rentals

In 2017, Wisconsin enacted a new short-term rental law to combat restrictions that municipalities and other local governments were placing on short-term rentals. The law defines short-term rentals as those for residential dwellings that are offered for rent for less than 30 consecutive days.[1] This law is codified as Wisconsin Statute 66.1014, and has been termed the “Right to Rent Law” as one of its main purposes is to prevent “political subdivisions” (defined as: cities, towns, villages, or counties – which will be referred to as “municipalities” in this blog) from prohibiting property owners from renting their residences for seven consecutive days or longer. Therefore, municipalities can place restrictions on rentals that are shorter than 7 days, so long as they do not conflict with State law. Municipalities may also place restrictions on rentals that are between 7 and 29 consecutive days, but these restrictions must still allow a short-term rental host to rent for at least 180 days a year. The Right to Rent law also requires anyone who rents their residence for more than 10 nights a year to purchase a touring rooming house license from the Department of Agriculture, Trade and Consumer Protection (DATCP). These licenses cost $110 per year and require a one-time inspection fee of $300.[2] The law allows municipalities to also require their own licenses, which must be purchased in addition to the DATCP license to lawfully conduct short-term rentals. The last state player in the short-term rental game is the Wisconsin Department of Revenue, which requires an owner of a short-term rental to report and pay Wisconsin state sales tax on rentals.[3] Websites like Airbnb and VRBO will collect and remit the sales tax for you.[4]^,[5]  These websites also collect other county and local taxes, if applicable. Essentially, the Right to Rent law sets the framework for what laws municipalities may enact. The law encourages municipalities to enact their own ordinances on short term rentals to limit nuisances and keep residents happy. Each municipality can choose its own registration and inspection requirements, fees, and other limitations. This is why it is extremely important to know your municipality’s short-term rental requirements.

2. Know Your County and Municipality’s Laws and Ordinances Governing Short-Term Rentals

Before going straight to renting your home, first consider whether your county has any restrictions. Walworth County has its own ordinance, which requires short-term rental owners to obtain a County License.[6] The County License has a $500 fee for the first year and a $200 annual renewal fee thereafter.[7]^,[8] Along with the County license, an owner must submit the property rules that apply to the rental, which have certain requirements of their own.[9] Keep in mind that Walworth County and the State of Wisconsin have additional requirements for short-term rentals that are serviced by a private septic system, serviced by a private well, and located on a lake. To ensure that all County requirements are met, be sure to read up on Walworth County’s Code of Ordinances and consult the County’s Land Use and Resource Management Department. Other municipal code regulations on short-term rentals that may apply include:

• Proof of property and liability insurance,
• Number of parking spaces that must be offered,
• Proof of floor plan specifications,
• Fire inspection,
• Business registration,
• Nuisance regulations,
• Quiet time hours,
• Local property manager requirements

3. Know Your Homeowner Association’s Restrictions on Short-Term Rentals

Something you may have noticed about the Right to Rent law is that the definition of “political subdivision” does not include a homeowner’s association. This means that associations can place complete restrictions on short-term rentals. The trend with associations within Walworth County seems to be placing a ban on short-term rentals altogether to stay consistent with the association’s goals and other rules. Banking on using a residence located within an association as a short-term rental is risky, as the association could vote to prohibit short-terms rentals in the future. If your residence is part of a homeowner’s association, you should make sure to read the association’s rules and bylaws. Another thing to look out for are associations that are currently inactive – the creation of a homeowner’s association should show up on the title work that is ordered when you purchase or sell a residence. An inactive association is still an association that can be brought back to life by its members, whether those members are composed of the owners of residences within a subdivision plat or a developer. If your residence is part of an association, this is the first place you should look to in determining whether a short-term rental is allowed.

4. Consider the Advantages and Disadvantages of Short-Term Renting

If you are considering using your property as a short-term rental, not only should you make sure that you are abiding by state law, local law, and any homeowner’s association restrictions, but you should also consider the advantages and disadvantages of short-term renting. Financially, short-term renting can not only brings in more income than a long-term rental, but also may allow rental owners to claim tax deduction benefits for things such as property maintenance, insurance, and utilities. Additionally, as a short-term renter, you can be flexible and choose to rent as much or as little as possible. While the financial freedom and flexibility that comes with short-term renting is quite enticing to those looking to begin their short-term rental journey, you should also be aware of some disadvantages. Unfortunately, short-term rentals can drive up housing prices. Also, as this blog has shown, the laws regarding short-term rentals can vary between municipalities, which means that if you have multiple rentals in different locations, you will have to keep track of each municipality’s rules to avoid potential expensive fees. A third downfall is the noise and nuisances that rental properties may create – noise violations, theft, and property damage to name a few. Lastly, be sure to check your homeowner’s insurance policy as some insurance carriers will not cover any damage that occurs at a property when the home is being used as a short term rental.

Conclusion

Wynn at Law, LLC assists clients who are looking to purchase property to be used as a short-term rental, clients selling short term rentals and clients who are purchasing property already used as one. Attorney Shannon Wynn or Attorney Ciara Doherty can help navigate buyers as to where to look to ensure a short-term rental is allowed, can review and explain title work that may have restrictions on short-term renting, and can help buyers feel empowered and informed throughout the entire process.

Schedule a consultation with Wynn at Law, LLC today to discuss the purchase or sale of short-term rented real estate.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

SOURCES: [1] Wis. Stat. 66.0615(dk)

[2] DATCP Home Tourist Rooming Houses (wi.gov)

[3] DOR Homeowners and Individuals Selling Short-Term Lodging (wi.gov)

[4] Collection and remittance of taxes and lodging taxes | Help (vrbo.com)

[5] Occupancy tax collection and remittance by Airbnb in Wisconsin – Airbnb Help Center

[6] Walworth County, Wisconsin Code of Ordinances. Chapter 26, Art. VII. ARTICLE VII. – OFFERING A RESIDENTIAL DWELLING AS A SHORT TERM RENTAL | Code of Ordinances | Walworth County, WI | Municode Library

[7] Wisconsin Division (walworth.wi.us)

[8] Wisconsin Division (walworth.wi.us)

[9] See Walworth County Code of Ordinances, Chapter 26, Art VII, Sec. 26-343.

What to Know Before Using Your Property as an Airbnb, VRBO, or Other Short-Term Rental In Wisconsin:

1. Know Wisconsin State Law Governing Short-Term Rentals

In 2017, Wisconsin enacted a new short-term rental law to combat restrictions that municipalities and other local governments were placing on short-term rentals. The law defines short-term rentals as those for residential dwellings that are offered for rent for less than 30 consecutive days.[1] This law is codified as Wisconsin Statute 66.1014, and has been termed the “Right to Rent Law” as one of its main purposes is to prevent “political subdivisions” (defined as: cities, towns, villages, or counties – which will be referred to as “municipalities” in this blog) from prohibiting property owners from renting their residences for seven consecutive days or longer. Therefore, municipalities can place restrictions on rentals that are shorter than 7 days, so long as they do not conflict with State law. Municipalities may also place restrictions on rentals that are between 7 and 29 consecutive days, but these restrictions must still allow a short-term rental host to rent for at least 180 days a year. The Right to Rent law also requires anyone who rents their residence for more than 10 nights a year to purchase a touring rooming house license from the Department of Agriculture, Trade and Consumer Protection (DATCP). These licenses cost $110 per year and require a one-time inspection fee of $300.[2] The law allows municipalities to also require their own licenses, which must be purchased in addition to the DATCP license to lawfully conduct short-term rentals. The last state player in the short-term rental game is the Wisconsin Department of Revenue, which requires an owner of a short-term rental to report and pay Wisconsin state sales tax on rentals.[3] Websites like Airbnb and VRBO will collect and remit the sales tax for you.[4]^,[5]  These websites also collect other county and local taxes, if applicable. Essentially, the Right to Rent law sets the framework for what laws municipalities may enact. The law encourages municipalities to enact their own ordinances on short term rentals to limit nuisances and keep residents happy. Each municipality can choose its own registration and inspection requirements, fees, and other limitations. This is why it is extremely important to know your municipality’s short-term rental requirements.

2. Know Your County and Municipality’s Laws and Ordinances Governing Short-Term Rentals

Before going straight to renting your home, first consider whether your county has any restrictions. Walworth County has its own ordinance, which requires short-term rental owners to obtain a County License.[6] The County License has a $500 fee for the first year and a $200 annual renewal fee thereafter.[7]^,[8] Along with the County license, an owner must submit the property rules that apply to the rental, which have certain requirements of their own.[9] Keep in mind that Walworth County and the State of Wisconsin have additional requirements for short-term rentals that are serviced by a private septic system, serviced by a private well, and located on a lake. To ensure that all County requirements are met, be sure to read up on Walworth County’s Code of Ordinances and consult the County’s Land Use and Resource Management Department. Other municipal code regulations on short-term rentals that may apply include:

• Proof of property and liability insurance,
• Number of parking spaces that must be offered,
• Proof of floor plan specifications,
• Fire inspection,
• Business registration,
• Nuisance regulations,
• Quiet time hours,
• Local property manager requirements

3. Know Your Homeowner Association’s Restrictions on Short-Term Rentals

Something you may have noticed about the Right to Rent law is that the definition of “political subdivision” does not include a homeowner’s association. This means that associations can place complete restrictions on short-term rentals. The trend with associations within Walworth County seems to be placing a ban on short-term rentals altogether to stay consistent with the association’s goals and other rules. Banking on using a residence located within an association as a short-term rental is risky, as the association could vote to prohibit short-terms rentals in the future. If your residence is part of a homeowner’s association, you should make sure to read the association’s rules and bylaws. Another thing to look out for are associations that are currently inactive – the creation of a homeowner’s association should show up on the title work that is ordered when you purchase or sell a residence. An inactive association is still an association that can be brought back to life by its members, whether those members are composed of the owners of residences within a subdivision plat or a developer. If your residence is part of an association, this is the first place you should look to in determining whether a short-term rental is allowed.

4. Consider the Advantages and Disadvantages of Short-Term Renting

If you are considering using your property as a short-term rental, not only should you make sure that you are abiding by state law, local law, and any homeowner’s association restrictions, but you should also consider the advantages and disadvantages of short-term renting. Financially, short-term renting can not only brings in more income than a long-term rental, but also may allow rental owners to claim tax deduction benefits for things such as property maintenance, insurance, and utilities. Additionally, as a short-term renter, you can be flexible and choose to rent as much or as little as possible. While the financial freedom and flexibility that comes with short-term renting is quite enticing to those looking to begin their short-term rental journey, you should also be aware of some disadvantages. Unfortunately, short-term rentals can drive up housing prices. Also, as this blog has shown, the laws regarding short-term rentals can vary between municipalities, which means that if you have multiple rentals in different locations, you will have to keep track of each municipality’s rules to avoid potential expensive fees. A third downfall is the noise and nuisances that rental properties may create – noise violations, theft, and property damage to name a few. Lastly, be sure to check your homeowner’s insurance policy as some insurance carriers will not cover any damage that occurs at a property when the home is being used as a short term rental.

Conclusion

Wynn at Law, LLC assists clients who are looking to purchase property to be used as a short-term rental, clients selling short term rentals and clients who are purchasing property already used as one. Attorney Shannon Wynn or Attorney Ciara Doherty can help navigate buyers as to where to look to ensure a short-term rental is allowed, can review and explain title work that may have restrictions on short-term renting, and can help buyers feel empowered and informed throughout the entire process.

Schedule a consultation with Wynn at Law, LLC today to discuss the purchase or sale of short-term rented real estate.

Contact us today for a consultation at 262-725-0175 or our website’s contact page. Wynn at Law, LLC is based in Southern Wisconsin and has three office locations: Lake Geneva, Delavan, and Salem.

SOURCES: [1] Wis. Stat. 66.0615(dk)

[2] DATCP Home Tourist Rooming Houses (wi.gov)

[3] DOR Homeowners and Individuals Selling Short-Term Lodging (wi.gov)

[4] Collection and remittance of taxes and lodging taxes | Help (vrbo.com)

[5] Occupancy tax collection and remittance by Airbnb in Wisconsin – Airbnb Help Center

[6] Walworth County, Wisconsin Code of Ordinances. Chapter 26, Art. VII. ARTICLE VII. – OFFERING A RESIDENTIAL DWELLING AS A SHORT TERM RENTAL | Code of Ordinances | Walworth County, WI | Municode Library

[7] Wisconsin Division (walworth.wi.us)

[8] Wisconsin Division (walworth.wi.us)

[9] See Walworth County Code of Ordinances, Chapter 26, Art VII, Sec. 26-343.

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