Foreclosure equity theft

• Case: Tyler v. Hennepin County (Minnesota)
• Status: U.S. Supreme Court heard arguments heard on April 26.

On March 2, 2023, the WRA filed an amicus brief with the U.S. Supreme Court on the issue of foreclosure equity theft.

Under the Fifth Amendment of the U.S. Constitution, the government is prohibited from taking property for a public purpose without just compensation. In 2022, the WRA helped enact a new law, 2021 Wis. Act 216, that eliminates the ability of counties in Wisconsin to keep the net proceeds in a property tax foreclosure sale.

Despite the passage of Act 216, Wisconsin case law still maintains that as long as the property owner receives sufficient notice of a tax foreclosure action to satisfy due process requirements, a taking does not occur when the government retains any net proceeds. Therefore, the WRA submitted an amicus curiae brief, also known as a “friend of the court” brief, to ensure both the common law and statutory rights of property owners are protected.

Seller disclosure

• Case: Pagoudis v. Keidl (2020AP225)
• Status: Decided. The Wisconsin Supreme Court dismissed the case against Pagoudis and Kearns and remanded the case back to the lower court regarding Sead.

On February 16, 2022, the WRA filed an amicus brief with the Wisconsin Supreme Court to support that sellers should not be held liable to subsequent buyers for information contained in a real estate condition report provided in a previous transaction, and that commonly owned limited liability companies (LLCs) should be treated as separate entities.

In 2017, Louis Pagoudis wrote an offer to purchase on a property as “Louis or assigns” on the Keidl family’s 20 acres of land, which included a house, farmland and a building site for a pole barn. Sead Properties LLC closed on the property on April 24, 2017. In October 2017, Sead transferred the property to Kerns Management LLC. Pagoudis owns and operates both Sead and Kerns. In August 2019, Sead, Kerns and Pagoudis filed a lawsuit against the Keidls for misrepresentation, among other things.

The consequence of the appellate court decision would arguably subject sellers to indefinite liability even when the seller had no contractual relationship with the party. The court’s decision to treat commonly owned LLCs as separate entities has significant consequences for individuals in Wisconsin. Most Wisconsin LLCs are single-member entities, and many individuals have multiple LLCs for liability protection. This ruling would have had far-reaching implications for Wisconsinites statewide.

On April 4, 2023, the Wisconsin Supreme Court dismissed the case against Pagoudis and Kearns and remanded the case to the lower court regarding Sead’s rights against Keidl. 

Bird glass 

• Case: City of Madison Bird Glass Ordinance (2022AP001468)
• Status: On appeal, Court of Appeals District 4.

In July 2021, the Wisconsin Institute for Law & Liberty (WILL) filed a lawsuit against the city of Madison on behalf of the WRA and four other coalition parties: the Associated Builders and Contractors of Wisconsin Inc., Commercial Association of REALTORS® Wisconsin Inc., NAIOP Wisconsin Chapter Inc., and the Wisconsin Builders Association. This lawsuit challenged the city’s bird-safe glass ordinance.

In 2020, the city of Madison adopted an ordinance that new buildings over 10,000 square feet must meet new bird-safe glass treatment requirements. Adding bird-safe glass to a project increases the cost for developers and building owners, and this cost is often passed on to tenants.

However, Wisconsin’s uniform building code established in 2014 provides that no city “may enact or enforce an ordinance that creates minimum standards for constructing, altering or adding to buildings unless the ordinance ‘strictly conforms’ to the uniform dwelling code.” See SPS § 361.03 (5)(a)1. The coalition argued the city of Madison’s ordinance undercuts and disregards Wisconsin’s uniform building code.

The Dane County Circuit Court ruled in favor of the city of Madison, holding the ordinance was valid. The coalition appealed, and this case has been appealed. Oral arguments were heard on April 26, 2023, before the Court of Appeals District 4.

Local ordinances

Time of sale ordinances

Manitowoc county 

• Status: Lawsuit has been filed. 

The ordinance requiring a full Private Onsite Wastewater Treatment System (POWTS) inspection after transfer of property violates Wis. Stat. § 706.22. While the county amended the ordinance to no longer prohibit occupancy if there is not a time-of-sale POWTS inspection, the ordinance still imposes restrictions — such as lawsuits, fines, jail and liens — if the buyer does not conduct the inspection.

Short-term rental ordinances

Case: Wisconsin REALTORS^® Association, INC. v. Polk County (2023CV072)

• Status: Lawsuit filed in circuit court

On March 20, 2023, the WRF filed a lawsuit in circuit court against Polk County. The ordinance requires short-term rentals of no more than seven days per month within the months of May through September. This requirement is a violation of Wis. Stat. § 66.1014. 

City of Stevens Point 

• Status: Waiting for a lawsuit to be filed. 

This ordinance requires a short-term rental tourist rooming house to be the owner’s primary residence and be occupied by the owner during the time of the rental — requirements that violate Wis. Stat. § 66.1014. The WRA Legal Action Committee approved financial support for legal services related to filing a lawsuit to challenge the city of Stevens Point’s tourist rooming house ordinance. 

Village of Plover 

• Status: Waiting for a lawsuit to be filed.

This ordinance requires a short-term rental tourist rooming house to be the owner’s primary residence, which violates Wis. Stat. § 66.1014. The WRA Legal Action Committee approved financial support for legal services related to filing a lawsuit to challenge Plover’s short-term rental ordinance.

Town of Rib Mountain 

• Status: Waiting for a lawsuit to be filed.

This ordinance requires short-term rentals to be owner-occupied for a certain number of days and violates Wis. Stat. § 66.1014. The WRA’s Legal Action Committee approved financial support for legal services related to filing a lawsuit to challenge the town of Rib Mountain’s short-term rental ordinance. 

Village of Sister Bay 

• Status: Waiting for a lawsuit to be filed.

This ordinance prohibits short-term rentals in R-2 multifamily residential zoning districts, which violates Wis. Stat. § 66.1014. The WRA Legal Action Committee approved financial support for legal services related to filing a lawsuit to challenge the Sister Bay short-term rental ordinance. 

The Legal Action Program works for you

If you believe a local ordinance or an action infringes upon property rights or your business, the WRA’s Legal Action Program may be able to help. Learn more and contact the program at legalaction.wra.org.