Sunday, August 9, 2015

Buying Residential Property From An Estate

My mother has been a widowed empty nester for over 15 years, yet she still lives in the same 3 bedroom, 1.5 bathroom home in Wauwatosa that she's owned for the past 35 years. Someday, we may convince her that she should downsize. If not, she will own that home for the rest of her life and either my sister or I will have to sell it. Selling my childhood home understandably worries me. Will I have to sign a Real Estate Condition Report for a property that I haven't lived in since 1999?

Unfortunately for me, the answer appears to be "yes." While Wis. Stat. s. 709.01(2) specifically exempts "personal representatives" from that chapter's Real Estate Condition Report requirement, that exemption only applies if the personal representative "never occupied the property transferred." I occupied my childhood home continuously from 1979 until 1994 and then sporadically for the next 5 years.

As I've discussed before, I often see sellers abuse s. 709.01(2)'s exemptions. When buying a residential property from an estate, buyers need to insist on receiving a completed Real Estate Condition Report from the personal representative unless the personal representative represents in writing that she has never occupied the property.

Real Estate Condition Reports are not the only potential source of liability for personal representatives selling residential property. Sellers of residential property have a common law duty to disclose all material defects. See Ollerman v. O'Rourke Company, Inc., 94 Wis. 2d 17, 288 N.W.2d 95 (1980). Personal representatives can also get themselves in trouble when they cheap out on needed basement or roof repairs or paint over signs that the basement or roof leaks. As I discussed in a recent post, such acts of concealment can qualify as representations even when the seller has not made any written representations about the condition of a property. See Novell v. Migliaccio, 2010 WI App 67, 325 Wis. 2d 230, 783 N.W.2d 897.

Trouble is, circuit court judges tend to be particularly prejudiced against real estate misrepresentation cases when the defendant is a personal representative of an estate. Such sellers get to play the sympathy card regardless of what their motivations were at the time that they sold mom's home without disclosing the engineering report recommending major foundation repairs. While I can certainly identify and sympathize with the loss of a parent, that's no excuse for sticking another family with your family's repair bills.

In light of this reality, however, buyers of residential property from an estate need to be particularly vigilant. They should research what work has been done on the property through checking the building inspection file at city hall. Buyers of such properties should always get a home inspection and should also get a specialized foundation and/or roof inspection. While sellers are almost always in the best position to provide information about their home's condition, that rule often does not hold true for personal representatives of an estate. While I could tell you all about the Great Tosa Flood of 1997, a licensed home inspector would be able to provide a buyer with far more relevant information about my mother's home than I ever could.