July 15, 2015
Few people really understand the importance of legal representation when selling the house or other form of real estate of a deceased person. Yet, the value of having a lawyer on your side during this process cannot be understated. When selling a house or other real estate from a probate estate or trust, having competent and experienced attorneys on your side is crucial.
Real Estate Laws for Selling Property of the Deceased
In the state of Wisconsin, there are very specific laws that cover the sale of a house or other property from an estate or trust. Without a skilled lawyer, such real estate transactions for deceased persons often run afoul of the law – exposing the Personal Representative or Trustee to personal liability and the estate or trust to unnecessary liability.
Give Yourself Peace of Mind
A properly crafted estate plan can give you peace of mind, knowing your assets and family are well protected. Our estate planning lawyers will help you get there.
In this article, our estate planning attorneys will focus on the restrictions placed on a Personal Representative of a probate estate under Wisconsin law when selling real estate. However, many of the ideas and reasoning are the same for sales from a Trust as well.
What is a Probate Estate?
A Probate Estate is a legal procedure in Wisconsin for a deceased person where a Personal Representative is appointed to handle the administration of the decedent’s property.
Wisconsin law assigns the Personal Representative with certain powers and duties including the right to sell the decedent’s property. The capacity to sell that property comes with certain legal restrictions including that the sale offer no warranties, no condition report and no warranty deed (with only very limited exceptions.)
Failure to follow these restrictions can open up both the Personal Representative and the decedent’s probate estate to liability.
No Warranties in a Sale by a Probate Estate
Wisconsin Law prohibits a Personal Representative from giving warranties when selling a house or other real estate. This protects both the Personal Representative from personal liability and the estate process itself.
Should a warranty be given (despite the prohibitions against it), a problem can arise if an issue surrounding the warranty surfaces after the estate is closed. After the estate of the deceased is closed and any money is distributed, the estate would have no wherewithal to cover the warranty issues – thereby exposing the Personal Representative to the liability of that warranty.
This same reasoning applies to sales by a Trustee of a Trust for a deceased person in Wisconsin. Therefore, it is equally important that no warranties are offered in the real estate sale from a decedent’s estate or trust.
The No Warranty Law in Wisconsin
The standard Offer to Purchase contract used for real estate sales in Wisconsin contains many representations and warranties that are not allowed when a Probate Estate is the seller. Wisconsin Statute 860.07 states that a “personal representative has no power to give warranties in any sale” of “property which are binding on the personal representative personally or on the estate of the decedent.”
The only exception to this rule is where the deceased person entered into a contract before death that contained warranties and now the Personal Representative is completing the sale. Even in this exception to the rule, there are limits on the ability to provide warranties and a prohibition against binding the Personal Representative personally.
Therefore, the contract needs to eliminate representations and warranties from the Offer to Purchase and the closing process. Not doing so can open up the Personal Representative or trustee to unnecessary personal liability.
No Real Estate Condition Report
Normally a seller of residential real estate in Wisconsin, such as a house, is required to provide a Real Estate Condition Report listing any defects or other significant issues regarding the condition of the property. However, there is an exception to this general rule when the seller is a Probate Estate.
Wisconsin law provides that a Personal Representative is exempt and does not have to provide a Real Estate Condition Report if the Personal Representative has not occupied the property (Wisconsin Statute 709.01). This statute also applies to Trustees.
Therefore, a Personal Representative should not give a Real Estate Condition Report in a sale from a Probate Estate since the Personal Representative is not required to do so if he or she has not lived on the property.
Providing a Real Estate Condition Report is problematic because it could open up the estate and the Personal Representative to personal liability for misrepresentation.
Therefore it is important that attorneys properly structure the contract to clearly state that a Real Estate Condition Report is not required and will not be provided pursuant to Wisconsin Law.
That said, due to other relevant law, if the Personal Representative actually knows of a defect, our estate planning attorneys will have the Personal Representative disclose the known defect in the Offer to Purchase contract.
Personal Representative’s Deed
Normally, in a standard transaction, the seller provides a Warranty Deed that warrants title to the property for the buyer. However, due to the prohibition on warranties in probate estates (and by reasoning on trusts of deceased persons), a Warranty Deed cannot be provided by the Personal Representative. Instead, the attorneys at Wokwicz Law Offices will use a Personal Representative’s Deed that does not provide for any warranties as to the title and simply transfers whatever ownership the probate estate possesses.
Protecting Yourself and Your Family from Liability
With Wisconsin law, the sale of a deceased person’s house or other property is anything but standard. As such, it is important that you have an experienced and knowledgeable attorney to ensure that the sale complies with the law and does not open up the probate estate or the Personal Representative to personal liability.
At Wokwicz Law Offices, LLC, we can properly guide and assist a Wisconsin trust, or a probate estate house other other real estate sale with competent and experienced legal representation. Please contact us on 262-658-2181 or info@wokwicz.com to schedule an appointment with our estate planning, probate and real estate law attorneys.