Is it really haunted?
The broker has a listing for a cabin that was recently featured on a TV show that indicated it may be haunted. What is the broker’s disclosure obligation?
Wis. Stat. 452.23(2)(a) states that a licensee is not required to disclose that a property “was the site of a specific act or occurrence, if the act or occurrence had no effect on the physical condition of the property or any structure located on the property.” This statute is intended to apply to “stigmatized properties” that have been or are the site of a murder, suicide, a haunting or another notorious event that does not physically damage the property. If the event resulted in physical damage, the seller would normally be required to disclose the defect on the Wis. Stat. § 709.03 Residential Real Estate Condition Report (RECR) form unless the buyer had waived the report or the transaction was exempt from Wis. Stat. Chapter 709.
Even if there is no physical damage, there may be a sort of psychological damage present. Most agents realize that the buyer will probably find out about the event or occurrence anyway, typically from a neighbor. For that reason, real estate agents may encourage sellers to let them disclose problems in the home’s history in order to avoid potential disputes.
The question of whether the seller must disclose a murder or a haunting that leaves no physical damage is less clear. On the RECR, the seller is asked to disclose conditions that would have a significant adverse effect on the value of the property. Although it is not easily quantified, it is possible that a brutal murder or a haunting could significantly affect property values or an owner’s ability to resell a property. The broker may refer the seller to private legal counsel with any questions relating to the seller’s obligation to disclose.
Broker’s duty to disclose lot line issues in an “as-is” sale
The agent listed an REO property, a small cabin in the woods. There is a good chance this house is encroaching on an adjacent lot because it appears from the county aerial map that the lot line runs right through the middle of the house. The asset manager confirmed the people who lost the property owned the adjacent lot, but the lot was not included in the foreclosure. The listing agent suggested that the bank have a survey done, but the asset manager has refused because the property will be sold “as-is.” The broker heard that because this is REO, and will be sold “as-is,” the broker does not need to disclose. Is that true?
No. The broker is not relieved of the duty to disclose material adverse facts just because there will be an “as-is” sale. The duty to disclose material adverse facts and information suggesting material adverse facts is the broker’s duty in all transactions according to Wisconsin law and Administrative Code rules. The duty is independent of any seller disclosure or choice to sell with an "as-is" clause in an offer.
If the listing agent has reason to believe the structure is encroaching on the adjacent property, the licensee may be required to disclose this information as a material adverse fact. The licensee is not expected to interpret the aerial photos and conclude if the building is encroaching because, per Wis. Admin. Code § REEB 24.03(2)(d), licensees are not required to have the technical knowledge, skills or training possessed by competent third-party inspectors and investigators of real estate and related areas. The agent may disclose the possible encroachment and recommend the seller obtain a survey contingency or a buyer draft an offer subject to a survey as appropriate. Wis. Admin. Code § REEB 24.07(2) requires the licensee to timely disclose the facts in writing to all parties to the transaction, even if the client would direct the licensee not to disclose or the property will be sold “as-is.”
More information about disclosures and a sample material adverse fact disclosure letter is available in on page 26 of the October 2009 Legal Update, “Diligent Disclosure,” at www.wra.org/LU0910. The material adverse fact disclosure form is also available on zipForm.
Listing the hunting shack
If a hunting shack sits on an area of hunting land of 40 to 80 acres, should the broker use a vacant land listing contract or a residential listing contract? Would the new Vacant Land Disclosure Report (VLDR) be used or a Real Estate Condition Report?
For the listing and offer to purchase, the licensee should use whichever department-approved form best matches the transaction with the fewest number of changes or modifications. There is no right or wrong answer. It is a matter of the licensee’s judgment as to which form best fits the individual circumstances.
In a situation where there is a hunting shack, it is possible that a RECR would be used if the hunting shack is a dwelling unit. 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 was considered a building because the VLDR does not have to be used unless there is land with no buildings. The term “building” is not defined in Chapter 709 of the statutes, but in the dictionary, “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.”
The VLDR is required to be used for offers accepted on or after July 1, 2012, if the property is land with no buildings. The seller could certainly use a VLDR on an optional basis in this transaction, if desired. For additional information, see the May 2012 Legal Update, “Vacant Land Disclosure Report,” online at www.wra.org/LU1205.
Listing cabin with no city sewer
The buyer is looking at purchasing a cabin located miles from municipal water and sewer services. Who regulates private onsite wastewater treatment systems (POWTS), and what should the buyer consider before buying?
Education is the key when it comes to purchasing properties with POWTS and private wells. The WRA Addendum B has been designed to address many well and septic requirements for rural property sales. In addition, brokers working with buyers on rural property must be aware of any local requirements for POWTS. Many municipalities are beginning to enact their own rules and ordinances regulating POWTS and other property features, so it is best that the parties check with county and municipal zoning authorities to see if there might be additional septic and well requirements that may apply to the property. For instance, in a few counties, POWTS inspections are required when a property is sold and the inspector is required to submit a copy of his or her report to the municipality. Educational information about POWTS is available at www.wra.org/dsps_powts.
Landlocked hunting property
The buyer is looking at a hunting cabin and hunting land. When the buyer asked about access to the property, the broker said it may be landlocked. When buying or selling land, doesn’t the parcel legally have to have an access point for ingress and egress?
There are lots that do not have legal access and are considered landlocked. These parcels may be sold; the valuation of the property may be problematic if there is no legal access. Landlocked parcels may not, however, be created by land divisions.
When considering the purchase of a landlocked parcel, the offer may be drafted contingent upon either the buyer or seller obtaining a means of legal access. Generally the adjacent property owners are contacted in an attempt to negotiate an easement, which would be drafted by an attorney. If none of the adjacent property owners are willing to grant an easement, Wis. Stat. § 82.27 sets forth a procedure for owners of landlocked property to seek access from the town. This requires an affidavit from the property owner, then notice and a public hearing, with the costs of the notice paid by the applicant. The town is not obligated, however, to provide access if it determines construction of a road is not in the public interest.
Frequently a private settlement in these matters can be more beneficial to property owners than the process under the statute. If the town lays a road, anyone will be able to travel on that road. On the other hand, a private agreement could limit traffic by limiting access. Further, the town road is likely to involve more land than would be necessary for private access. The owner across whose land the town road will be placed will receive “damages” from the town, but this price may be less than that price the landlocked property owner would be willing to pay for private access.
From the landlocked property owner’s view, the laying of a town road also means considerable expense. The town not only can recover the expenses of its attorney (whether or not a road is ordered), it can also charge back for surveyor expenses and appraisal fees, and “advantages” to the landlocked property owner. Advantages are deemed to occur because the property should now be worth more with access. The town normally will build the expense of the road construction into the total advantages charged. The town is not required to perform any roadwork until the fees are paid.
Read more about this in the article, “Landlocked Parcels: A Way Out?” in the June 2004 issue of Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun04/LandlockedParcels.
Tracy Rucka is Director of Professional Standards and Practices for the WRA.