The contents of the Vacant Land Disclosure Report (VLDR) have been enhanced and reorganized by 2017 Wisconsin Act 338, with the result that a new, updated version of the VLDR will start being used July 1, 2018. The following are things you should know about the updated VLDR as well as some of the significant topics that trigger interesting discussions for the parties.

The VLDR is shiny and new, effective July 1, 2018

Just like its cousin, the new Real Estate Condition Report (RECR), the new version of the VLDR must be used for reports that are first furnished to buyers on or after July 1, 2018. For any reports already given out before July 1, there is no need to go back and amend the report or provide a new form.

The new VLDR addresses substantially the same topics as the prior version, but the property condition topics are now presented in the form of a question. The questions have been organized and grouped together by category, complete with headings, and there is a small section of blank lines after each category grouping to make it easier for the seller to explain any “yes” answers without jumping to the end of the form. Statements in the prior version that included a cluster of multiple issues have been broken apart into multiple questions that will make it easier for the property owner to understand and answer. The VLDR now has separate category groupings for Environmental; Wells, Septic Systems, Storage Tanks; Taxes, Special Assessments, Permits, Etc.; Land Use; and Additional Information, which in reality is a miscellaneous information category. The VLDR generally must be completed by all persons who transfer Wisconsin real estate that does not include any buildings, whether broker-assisted or FSBO, or they risk buyer rescission of the offer to purchase or other contract for sale.

Vacant land with no buildings

Wis. Stat. §§ 709.033 and 709.03(5)(b) indicate that the VLDR must be used if the transaction relates to land only with no structure that might be deemed a “building.” The term “building” is not defined in Chapter 709 of the statutes; but in the dictionary, a building is defined as “a structure that has a roof and walls and stands more or less permanently in one place” or “a usually roofed and walled structure built for permanent use.” Thus, if there is an outbuilding, or even a dilapidated outhouse on the property, the VLDR need not be used because there is a building on the property. Use of the VLDR in such situations would be optional. 

Land with a hunting shack or cabin

If hunting land of 40 acres has a hunting shack, what condition report, if any, would a seller have complete? It is possible that a RECR would be used if the hunting shack is a dwelling unit. A RECR must be used if there are one to four dwelling units on the property. A “dwelling unit” is a structure or part of a structure used or intended to be used as a home, residence or sleeping place by one person or by two or more persons maintaining a common household, to the exclusion of all others.

The seller would not be required to use a VLDR presuming the shack is considered a building because the VLDR does not have to be used unless there is land with no buildings. If the hunting shack is really just a supply hut where items are stored, a seller is not required to provide any condition report. 

Subsoil or fill issues

When a vacant lot or parcel is being sold where the buyer presumably will build a home or other structure, the buyer and his builder want to know if there will be any subsoil issues or obstacles to contend with when the foundation is dug. Question B4 in the Environmental grouping of the new VLDR addresses subsoil conditions as follows:

Are you aware of subsoil conditions that would significantly increase the cost of development, including, but not limited to, subsurface foundations or waste material; any type of fill; dumpsites where pesticides, herbicides, fertilizer, or other toxic or hazardous materials or containers for these materials were disposed of in violation of manufacturer or government guidelines or other laws regulating such disposal; high groundwater; adverse soil conditions, such as low load−bearing capacity, earth or soil movement, settling, upheavals, or slides; excessive rocks or rock formations; or other soil problems?

A seller who does not complete a VLDR has not successfully ducked the issue because the seller in the WB-13 Vacant Land Offer to Purchase represents he has no notice or knowledge of “Conditions Affecting the Property or Transaction,” which includes at lines 248-252 essentially the same subsoil conditions. A seller who does not answer the question in the VLDR and explain any “yes” response, or disclose subsoil concerns in the offer, may find himself the defendant in a lawsuit brought by the buyer. 

Dam provisions

The seller’s property is on a river and is in an association for a dam. The association pays for repairs and maintenance.  Question E13 in the Land Use grouping of the VLDR asks:

Are you aware of a dam that is totally or partially located on the property or that an ownership in a dam that is not located on the property will be transferred with the property because it is owned collectively by members of a homeowners’ association, lake district, or similar group? (If “yes,” contact the Wisconsin Department of Natural Resources to find out if dam transfer requirements or agency orders apply.)

Not only is the seller’s disclosure important so the buyer realizes she may need to pay dam maintenance expenses from time to time, but the other issue is whether the seller and buyer need to complete a transfer application or other paperwork with the DNR. Visit https://dnr.wi.gov/topic/dams/ for information. 

Encroachments

Question E13 in the Land Use grouping of the VLDR asks the following and explains to the property owner what is meant by encroachments:

Are you aware of boundary or lot line disputes, encroachments, or encumbrances (including a joint driveway) affecting the property?
Encroachments often involve some type of physical object belonging to one person but partially located on or overlapping on land belonging to another; such as, without limitation, fences, houses, garages, driveways, gardens, and landscaping. Encumbrances include, without limitation, a right or claim of another to a portion of the property or to the use of the property such as a joint driveway, liens, and licenses.

If a neighbor’s shed is encroaching upon the seller’s land, the seller’s disclosure on the VLDR starts the conversation about possible solutions: ask the title company to insure over the encroachment; enlist the help of attorneys and a surveyor and have the neighbor move the shed or have the seller grant the neighbor an easement. 

Farmland preservation conversion

Under the Farmland Preservation Program, notification to the DATCP is required if a property subject to a Farmland Preservation Agreement is sold or transferred, and a conversion fee is due if property is removed from an agreement. Question E11 in the Land Use grouping of the VLDR asks the following and cautions the property owner:

Is all or part of the property subject to or in violation of a farmland preservation agreement?
Early termination of a farmland preservation agreement or removal of land from such an agreement can trigger payment of a conversion fee equal to 3 times the class 1 “use value” of the land. Visit https://datcp.wi.gov/Pages/Programs_Services/FarmlandPreservation.aspx for more information.

Use value assessments

Question E10 in the Land Use grouping explains:

The use value assessment system values agricultural land based on the income that would be generated from its rental for agricultural use rather than its fair market value. When a person converts agricultural land to a non agricultural use (e.g., residential or commercial development), that person may owe a conversion charge. For more information, visit https://www.revenue.wi.gov/Pages/FAQS/slf−useassmt.aspx or 608-266−2486.

It then asks whether the property is assessed under use value, whether a conversion charge has been assessed, and whether there is a deferred conversion charge. Failing to disclose this information may lead to seller liability.

If a buyer intends to buy and develop the farmland or otherwise change the use of the agricultural land being purchased, it may be wise to include a use-value investigation contingency in the buyer’s offer to purchase. The contingency can give the buyer ample time to confer with the local taxing authorities to determine the amount of any use-value conversion charge if the buyer pursues his proposed plans. See the information at www.revenue.wi.gov/DOR%20Publications/pb061.pdf.

Conservation easements

Question E6 in the Land Use grouping of the VLDR asks the following and explains what is meant by a conservation easement:

Are you aware of conservation easements on the property?
A conservation easement is a legal agreement in which a property owner conveys some of the rights associated with ownership of his or her property to an easement holder such as a governmental unit or a qualified nonprofit organization to protect the natural habitat of fish, wildlife, or plants or a similar ecosystem, preserve areas for outdoor recreation or education, or for similar purposes.

In a conservation easement, the property owner sells or gives away some of the rights associated with property ownership such as the right to construct buildings, harvest timber or clear vegetation. In return, the property owner receives compensation. Conservation easements run with the land, so all subsequent owners must abide by the terms of the easement. Information about DNR conservation easement programs is available at https://dnr.wi.gov/topic/lands/realestate/easements.html. 

Burial sites 

Question E17 in the Land Use grouping of the VLDR asks:

Are you aware of one or more burial sites on the property? (For information regarding the presence, preservation, and potential disturbance of burial sites, contact the Wisconsin Historical Society at 800−342−7834 or www.wihist.org/burial−information.)

In Wisconsin, burial sites are any place where human remains are below the surface, including old cemeteries and Native American burial mounds. The burial sites law, Wis. Stat. § 157.70, applies to any property regardless of ownership or the activities conducted. It applies to a developer creating a new subdivision, or a property owner excavating for a pool or house foundation. 

The prior version of the VLDR is discussed in the May 2012 Legal Update, “Vacant Land Disclosure Report” at www.wra.org/LU1205.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.