Does a Grisly Past Require Disclosure? (A Special Spooky Halloween Post)

I came across this interesting article discussing what is required in real estate disclosure.  The question posed is whether a murder (or other similarly distasteful occurrence) are required to be disclosed by sellers to buyers in a real estate condition report or other, similar documents.

Believe it or not, I’ve had a client who needed to sell a property where something like this happened.  In Wisconsin specifically, a real estate condition report is required to be given to a buyer pursuant to section 709.02 of Wisconsin Statutes. Generally, a seller must disclose any “defects” that they are aware of.  A defect means a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that, if not repaired, removed or replaced, would significantly shorten or adversely affect the expected normal life of the premises.  The question is whether a murder on the property, for example, would have a significant adverse effect on the value of the property.

In my opinion, the question is fact specific, and is a hard one to answer.  Certainly, to some people, they would not buy the property at any price if they knew something like that happened on the property.  Others probably wouldn’t care.  This also raises another question: Where do you draw the line?  Is a murder the only thing that would need to be disclosed?  If the murder was widely publicized or particularly brutal, does that change things? What if a prior owner was arrested for child pornography? Domestic abuse?  Drug manufacturing?

If there is no physical damage to the property that would impair its value, and there was nothing concrete to indicate that the future value of the property would be impaired by the past actions, it is my opinion that the real estate condition report does not require disclosure in Wisconsin.  I’m not aware of any appellate or supreme court cases in Wisconsin have dealt with the specific issue.  Of course, if the buyers specifically ask the question, then the sellers need to answer honestly.  Additionally,  it’s not a bad idea for sellers to err on the side of caution and disclose anything that might be an issue up front.  Honesty is always the best policy.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Do You Know Where Your Land Is Going When You Die?

Do you know how your jointly-held real estate is titled?  I think if I surveyed 100 clients, 90 of them would have no idea.  It is not uncommon that someone wouldn’t know the answer to the question, especially if they have not used an attorney in a real estate transaction before.  I can’t tell you how many times a client didn’t know that there was more than one way to hold title to jointly owned real estate.  Mostly, an option is never presented if an attorney is not handling the transaction.

If you own property with a spouse, real estate is typically owned as “survivorship marital property”.  This means that when one spouse dies, title passes to the survivor.  A simple form would be filed with the register of deeds in the county where the land is located to remove the decedent from the title.  This is fairly standard and obvious, and not really the point of this article.  The issues that occur in joint ownership occur when the owners are not married.

If you own real estate with a non-spouse, there are two ways in which property is typically held.  One is as “Tenants-in-Common”.  If two owners have own real estate as Tenants-in-Common, each owns an undivided one-half interest in the property.  When Owner A dies, his/her one-half interest will pass pursuant to his/her wishes (typically via will or intestacy).  The surviving owner, Owner B, will continue to own his/her one-half interest with the new owners owning the other one-half.

The second common way jointly owned real estate is typically held is “Joint Tenancy”.  Here, if there are two owners that hold property as joint tenants, when Owner A dies, his/her interest will pass to Owner B.  This is accomplished exactly like the survivorship marital property example above.

There are positives and negatives to these forms of ownership, and I have not addressed the majority of them in this post.  Be certain that you have a plan if you decide to purchase real estate with another person, especially if that person isn’t your spouse.  You need to know the consequences of your form ownership before it is too late.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

BUYER BEWARE: Don’t Overpay for Your Deed

Our office drafts and files many real estate documents, including various deeds.  On occasion, after filing the deeds, our clients will receive an important looking bill in the mail with large bold print stating “DEED PROCESSING NOTICE” or something similar.  The notice will accurately state the date that a deed was filed, list the correct address of the property (which are easily obtainable thorough public records), and contain some other important looking information and numbers which I can only describe as complete gibberish.  The notice goes on to give you a “Compliance Response Date” and tells you that you must pay this fee to receive a copy of your deed and a “Complete Property Profile”.  The notice I have in front of me has a fee of $83.00.

DO NOT PAY THIS FEE!  The solicitation is a scam.  I should be careful in calling it a scam, because if you actually read the entire notice, it tells you over and over again that it is a scam.  While the company may be providing a service in obtaining a deed for you, you can obtain this information for about $5 on your own.  That $5 fee assumes that you won’t be receiving the original deed that was just filed on your behalf in the mail for free, or don’t already have it in your possession, both of which are likely.  In addition, I have no idea what a “property profile” is, and it isn’t explained anywhere.

This notice is very clever and very official looking.  I can see how someone who is unfamiliar with real estate transactions could be fooled into paying the fee.  If you receive any notice like this, please disregard it.  If you need a copy of your deed, contact the register of deeds in your county, or the attorney or title company that handled your transaction.  If you aren’t sure if the notice you have received is legitimate, contact your attorney before sending any money or information.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Wisconsin’s New Medicaid Law: A Word of Caution

The latest state budget, signed into law in June, included a number of important changes to Wisconsin’s Medicaid Program.  Rather than totally reinventing the wheel, I want to provide a link to the excellent series of blog posts written by an attorney in southern Wisconsin, which explains various parts of the new law.

This a very complex topic, so most people who don’t have hands on experience with Medicaid are probably going to have a difficult time understanding why the law change is so important. I would like to leave you with this piece of advice: If you or your spouse, or your parents are on Medicaid, are in need of Medicaid now, or might need it in the future, it is vital that you contact an attorney who understands this area of law. There are new procedures in place that affect one’s ability to sell a home, which were not in place previously. In addition, the new Wisconsin laws seem to require that if a Medicaid applicant wants to transfer the family farm or other business to a family member, it must be done with a cash sale at fair market value, in order to pass muster. Doing things incorrectly can have even more wide-ranging and long lasting effects than before, so contacting an attorney who can deal with these issues has never been more important.  It is possible that much of this new law will be struck down if challenged in court, which will only further confuse planning in the future.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

 

Things Aren’t Always As They Seem

When helping a client in a real estate transaction, one of the many things we ask for is the most recent deed to the property.  Inevitably, the client can’t find the deed and says: “Why do you need a copy of my deed? The description is right on the tax bill?”

Very infrequently, if the property is a home in a well platted area of a municipality, or has been the subject of a recent Certified Survey Map, the legal description can be determined from the tax bill. (Ex. Lot 1, Block 3, Smith’s Plat, City of Anywhere, Outagamie County, Wisconsin).

Most of the time, especially in the case of agricultural property, the descriptions are much more complex, and might have a tax bill that reads as follows: “SEC 3 T32N R15E PRT E1/2 NW DAF LT3 CSM V13P109 I V656P578 EX V987P65 EX V934P512 V887P298&876 11.26A”.  Obviously, that information is rather useless in drafting a deed or other recordable document.  In order to do a good job in determining the correct legal description, we need to review all of the documents listed (and sometimes documents referred to within documents) in order to make sure the description is correct.  Often a description will refer to what is called a “metes and bounds” description, which means it will refer to specific distance measurements, directions, bearings and angles of each property line.  A true legal description of the tax bill gibberish above might be pages in length.

Hiring an attorney that is trained in this area, and understands how to review real estate documents and interpret a complex metes and bounds description is important to make sure you are transferring the correct property.  Doing so ensures that you will avoid future conflicts involving boundary disputes.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Buying and Selling Vacant Land: A Warning

I am going to try to discuss a few items that seem to occur quite often in our real estate practice that many people don’t know or don’t understand.  The first topic I wanted to discuss is the potential issues that can arise in seemingly simple real estate transactions.  For now, I’m going to limit this discussion to vacant land, because there are whole sets of different potential issues with residential or commercial real estate.

The rules regarding real estate vary wildly from place to place, so there isn’t a simple way to give you direction on what issues there may be.  There is not one set of rules to govern every scenario.  In fact, it is very possible you could own two pieces of property next to each other that are subject to different rules and regulations.

I’m sure your question is “How do I know if I have a problem?”.  The first step is understanding exactly what you are attempting to do.  Are you selling 10 acres of land from a larger 40 acre parcel?  What is the buyer planning to do with it?  Is it going to be recreational land?  Is it going to be used for farming?  Is there going to be a home, cabin or building erected on it?  Knowing this going into your attorney’s office will help them understand your goals.

The second step will be to understand where the property is located (town/city/county), how it is zoned (exclusive agricultural, residential, etc.), and whether other rules may apply based on these facts.  After that is determined, your attorney can review this information and decide whether your stated goals fit with the property.  If not, the next step is to find out how to remedy the problem.

One issue we run into frequently is that in Outagmie County, a Certified Survey Map is required to divide any existing tax parcel of land.  This is true no matter what the buyer plans to do with the property afterwards.  The catch is that some locales have lot size requirement, or restrictions on land use with the existing zoning.  A municipality may not sign off on the CSM if these requirements aren’t met.  Before spending hundreds and possibly thousands of dollars on a survey, it is a good idea to know the answer to these questions ahead of time.  These issues can sometimes be remedied by petitioning the proper authority for a zoning variance or change in zoning, or by changing the terms of the offer to purchase to fit the necessary requirements.

If you are a buyer who is purchasing property for a specific purpose, it is important to know that you can use the property for this purpose.  As a seller, it is also important to know what a buyer could and could not do, especially if you are asked to guarantee a specific purpose.  If these issues aren’t addressed properly prior to sale, a buyer can get stuck with property it doesn’t want, and a seller could get stuck with a lawsuit.

The bottom line is that there are consequences and potential roadblocks to what might seem like a simple real estate transaction, and the above example is merely scratching the surface.   An attorney can save you a significant amount of money by guiding you through the potential issues before they happen, and either fixing them, or helping you decide the transaction isn’t right for you.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Line In The Sand (or grass)

I came across this article written by the owner of a survey company that I think does a good job of explaining why surveys are important.  While I don’t agree that a survey is needed as often as your blacktop driveway needs to be sealed, I do agree they aren’t done nearly enough.

I have had the pleasure (really!) of representing parties on both sides of lot line disputes.  These disputes are often incredibly costly and emotional.  To make matters worse, often the opponents are neighbors that will have to see each other nearly every day when the dispute is over.

Lot line disputes arise in a number of different scenarios, and a survey isn’t going to prevent many of them from happening.  However, sometimes a survey can prevent a problem, or solve an existing one.  First, getting a survey done before or as you are purchasing real estate is never a bad idea.  At least the survey could prevent YOU from becoming involved in a dispute.  If there is a problem, perhaps the person selling you the lot will be forced to solve it for you, or you could use the knowledge to back out of the deal. 

Second, if you are building a fence, or planting trees or bushes near the lot line, a survey should be done.  Most lot disputes that I have dealt with have involved a fence or tree in the wrong place.  A survey would let you know exactly where the lot line is. 

Finally, if there is an ongoing dispute, talk to the other party and have a survey done so you both know exactly where the lot line is, and not where you THINK it is.  Knowledge is power, and it could help resolve the problem.  Even if the surveyor needs to come out later to change the line after a compromise is reached, it is hard to work something out if nobody knows the truth. 

 The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Real Estate Closing Costs: What is Typical?

When a real estate transaction is set to close, there are costs that need to be paid by the buyer and the seller.  These costs can always be negotiated and shifted in the offer to purchase, however, there is what I would call a typical definition of who pays what.

BUYER

  • Filing fee for deed (Currently $30 in Wisconsin)
  • Any costs associated with financing (i.e. fees charged by lender, which can be many different things, but might include: Lender’s Title Insurance Policy, Cost of Lender’s appraisal, administrative/document preparation fees, recording fee for mortgage, prepaid interest/escrow)
  • Own Attorney Fees

SELLER

  • Costs of Owner’s Title Insurance Policy
  • State of Wisconsin Real Estate Transfer Fee (0.3% of the sales price)
  • Own Attorney Fees
  • Real Estate Agent Commission (could depend on listing contract)
  • Prorated Real Estate Taxes through the date of closing

 The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

What Can I Do With All This Stuff?

In our landlord-tenant practice, a question that inevitably comes up in nearly every eviction action is: “The tenant left a bunch of things in the apartment.  Can I sell it?  Can I throw it out?  What can I do with all this stuff?”

Prior to April 1, 2012, and the passing of 2011 Wisconsin Act 143, the answer was one that landlord’s did not like to hear.  Landlords were required to hold the tenant’s property for at least 30 days after providing a written notice to the tenant.

After the new law, as long as the tenant is provided with notice in writing (presumably in the lease, or an addendum to the lease), the landlord does not need to store the property and can dispose of it at their discretion immediately.  If this notice is not in the lease signed by the tenant, the old way of storing property would still apply.

It is now easier for landlords to remove abandoned personal property from their premises and re-lease them, assuming language is included in the lease to provide for the disposal of personal property.

 The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

Option vs. Right of First Refusal: Which is it?

One of the things we try to do with this blog is to clear up common misconceptions, and wade through some of the legalese that is used.  Today, I want to highlight the difference between an “Option” and a “Right of First Refusal”.  These terms are used by clients interchangeably, even though they are far different.

First, I want to start out by laying the groundwork for the rest of the article.  At all times, I will be discussing options and rights of first refusal in the context of buying real estate.  There are many, many different ways that these types of agreements could be used, but our practice deals mainly in the real estate context, so that will be the focus here.

An “option” is a document that gives someone the opportunity to buy real estate.  A typical option would have a specific time frame, and a specific price, or some way to determine the price during the time frame.  An option is not subject to the real estate owner’s desire to sell.  In other words, the person with an enforceable option can exercise it whenever he or she wants.

A “right of first refusal” is a document that gives someone the opportunity to buy real estate, if and when the owner wants to sell.  The “first refusal” comes in when the seller receives an offer they wish to accept.  The person holding the right would then have a period of time in which to match the offer, or pay the price which is determined in the right of first refusal.  Many times, the right of first refusal is effective as long as the person granting the right of first refusal continues to own the real estate.  Usually, if the person holding the right of first refusal does not exercise it, the right terminates and the owner is free to sell to whomever they want as long as the price does not go down.

As you can see, the “option” and “right of first refusal” are different in that the real estate owner has no choice but to sell on one hand, and is actively trying to sell on the other.  Which document is right for you depends on your individual circumstances.

 The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.  No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.