Since 1992, Wisconsin law [Wis. Stat. Chapter 709] has generally required residential property owners to disclose “defects” in the property prior to any transfer or sale. The disclosure is made in the form of a written report supplied to the prospective buyer within 10 days of the buyer’s acceptance of the sales contract.

While the disclosures have been a part of Wisconsin real property law now for almost 25 years, questions still arise as to what sorts of issues or matters need to be disclosed. Just as beauty is in the eye of the beholder, so also, it seems, is a defect. What, to the seller, may appear to be a minor blemish may instead be a catastrophic issue to a prospective purchaser.

Chapter 709 Defines “Defects”

Chapter 709 defines “defect” as “a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.”

Chapter 709 Questionnaire

Chapter 709 mandates the use of a questionnaire relating to 27 structural systems, property conditions, and legal status issues. For example, in completing the questionnaire, the owner must disclose whether he or she is aware of defects in, among other things, the:

  • Roof
  • Electrical, plumbing, and heating/air conditioning systems
  • Well, if any
  • Septic system, if any
  • Basement or foundation (including cracks, seepage, or bulges)
  • Structure
  • Mechanical equipment
  • Fireplace

The owner must also disclose if the property:

  • Is serviced by a joint well
  • Is located in a floodplain
  • Has fuel storage or “LP” tanks
  • Is contaminated by toxic or hazardous substances or asbestos
  • Is infested by termites or carpenter ants

Possible Legal “Defects”

In addition to “physical” defects, the seller must also disclose potential matters that could be considered a legal defect to the property. For example, the owner must disclose known legal issues, such as:

  • Property line disputes;
  • Recent tax increases, property reassessment, pending special assessments, zoning violations, or easements; and
  • Whether the property has been designated as a historic site.

“Catch-All” Question Has Sometimes Caused Concern Because of Vagueness

The questionnaire has a “catch-all” query, requiring the disclosure of “other defects” known to the seller. This catch-all query has caused some concern from time to time, since some contend that it is vague.

Does the catch-all query include issues or circumstances that might “stigmatize” the property? A defect, after all, is anything that might significantly affect the value of the property. In some other states, for example, the owner of property may be required to disclose that the property was the site of a traumatic event, such as a murder, suicide, or other criminal activity. In those states, a seller may even be required to disclose that the premises is allegedly haunted by ghosts. Such disclosures are not, however, required in Wisconsin.

Milwaukee Real Property and Commercial Litigation Attorneys

Do you contemplate selling your property? Do you have questions as to whether some conditions meet Chapter 709’s definition of “defect?” Are you involved in a dispute related to the purchase or sale of real estate? Contact the Kerkman Wagner & Dunn, a Milwaukee business litigation firm with more than 50 years of combined legal experience representing business owners in Wisconsin. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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