Along with the WB-11 Residential Offer to Purchase and the WB-14 Residential Condominium Offer to Purchase, the WB-13 Vacant Land Offer to Purchase has also been revised. The WB-13 shares the same use dates as the WB-11 and WB-14 – optional use date is March 1, 2011 and the mandatory use date is July 1, 2011.
The majority of the WB-13 changes mirror the changes made in the residential offer. For example, this includes revisions to provisions for: agency relationship of drafting licensee (lines 1 and 2 – reflecting 2006 agency law changes); Delivery – including the addition of e-mail; Closing; Closing Prorations; Buyer’s Pre-Closing Walk-Through; Property Damage Between Acceptance and Closing; Definitions; If This Offer is Not Contingent on Financing; Appraisal Contingency; Property Dimensions and Surveys; Earnest Money; Distribution of information; Notice about Sex Offender Registry; Secondary Offer; Title Evidence – including Conveyance of Title, Gap Endorsement, Merchantable Title; Special Assessments; Default; Inspections and Testing; and Inspection Contingency.
This article will focus specifically on the changes unique to the 10-page WB-13 Vacant Land Offer to Purchase. For a detailed discussion of the changes to the WB-13 review the 2011 Vacant Land Offer to Purchase Legal Update.
NEW: GOVERNMENT PROGRAMS CONTINGENCY (LINES 98-110)
This contingency provides the buyer an opportunity to see what federal, state, county and local programs and accompanying fees exist on the property as well as the costs involved if the buyer fails to continue participation in the programs. The inclusion of this contingency was to provide the buyer the opportunity to ask the seller to deliver a list of all conservation, farmland, environmental, governmental or land use programs, agreements, restrictions, conservation easements, etc. that apply to the property (farmland preservation, use value assessments, managed forest, conservation reserve, etc.) along with a list of any pending or deferred penalties, fees, etc ... As stated in the contingency, the buyer has seven (7) days from “actual receipt” (which is defined the offer) of the list and disclosure to terminate based upon those restrictions, programs, fees, etc. that the buyer finds unsatisfactory. A caution included in the contingency reminds the buyer that if the buyer does not terminate the offer, then the buyer is agreeing to continue all of the programs. If the buyer does not do so, the buyer must reimburse the seller for any fees and penalties charged to the seller as a result of the buyer’s failure to participate or adhere to program guidelines and restrictions. This contingency is especially helpful for any buyer wishing to purchase a parcel to develop it.
NEW: MANAGED FOREST LAND CONTINGENCY (LINES 111-120)
Effective Jan. 1, 2011, Wis. Stat. § 710.12 requires sellers to provide buyers with a written disclosure, no later than 10 days after acceptance of the offer, if the property will continue to be subject to a Managed Forest Land (MFL) order after the sale. This disclosure explains that MFL orders remain in effect for 25 or 50 years and that the Department of Natural Resources (DNR) Division of Forestry monitors MFL management plan compliance. In addition, the seller must furnish Division of Forestry contact information and include the mandatory language that appears on lines 117-119 of the WB-13: “Changes you make to property that is subject to an order designating it as managed forest land, or to its use, may jeopardize your benefits under the program or may cause the property to be withdrawn from the program and may result in the assessment of penalties.” Checking the box on line 111 satisfies the required MFL disclosure requirement.
The WRA has created a separate Managed Forest Law – Seller Disclosure form (WRA-MFL) on ZipForm as an alternate way for sellers to satisfy the § 710.12 disclosure requirement. For more information review the February 2011 Wisconsin Real Estate magazine article, “Condition Report Conundrum”, the November, 2010, Wisconsin Real Estate magazine article, “New Disclosure Requirements” and the July, 2010 Legal Update, “Legislative Update 2010”.
NEW: INFORMATION PROVISIONS (LINES 125-145)
The WB-13 now includes basic educational information relating to use value assessments, Farmland Preservation and the Conservation Reserve Program, all of which could trigger a substantial penalty fee. This section also includes information relating to County Shoreland zoning and mitigation plans. While these are not all of the programs or issues that may impact vacant property development, these are the most common. Each brief discussion alerts consumers to the possible concerns and provides resources for more information.
MODIFICATION: CONDITIONS AFFECTING THE PROPERTY OR TRANSACTION (LINES 163-187; 246-278)
Currently sellers of vacant land are not required to complete a condition report. For more information regarding proposed legislation requiring vacant land sellers to complete a condition report, read Tom Larson’s article on page 26 - the list of the Conditions Affecting the Property or Transaction in the revised WB-13 comes from the WRA’s optional Seller Disclosure Report – Vacant Land. These are concerns that might arise with regard to vacant land, including vacant land in rural settings. The following highlights new items added to the list in the WB-13.
- Item j - relates to contamination or unsafe conditions resulting from pesticides, herbicides, fertilizer, radon, radium, lead, arsenic or other hazardous substances on the property;
- Item k - covers the production of meth or other hazardous or toxic substances;
- Item m - relates to well defects and well water contaminants such as E. coli, nitrates, atrazine, etc.;
- Item n - relates to septic system defects and out-of-service POWTS not properly closed;
- Item p - relates to Brownfields, contaminated land and remediated soils;
- Item r - addresses potpourri of homeowners associations, areas shared with others, zoning violations, nonconforming uses, conservation easements, restrictive covenants or other instances of use of the property by non-owners (other than recorded utility easements);
- Item s - asks whether the property is in a special purpose district like a drainage district, lake district, sanitary district, etc. that can impose fees;
- Item t - covers government regulations requiring repairs, alterations or corrections;
- Item u - relates to property tax increases, reassessments and special assessments;
- Item v - is for burial sites, artifacts, mineral rights, endangered species and orchards;
- Item w - is about flooding, standing water, drainage problems or other water issues;
- Item x - covers material damage from fire, wind, floods, erosion, etc.;
- Item y - looks at odor, water intrusion, noise, etc. from neighboring property;
- Item z - crop damage, diseased trees and injured livestock;
- Item aa - touches on manure storage facilities;
- Item bb - addresses impact fees or other conditions that would increase the cost of development or reduce the property value;
- Item cc - relates to shoreland zoning mitigation plans; and
- Item dd - is about use value assessments.
NEW AND MODIFICATION: PROPOSED USE CONTINGENCIES (LINES 306-350)
As in the previous version the vacant land offer continues to include an overall heading for a Proposed Use Contingency with sub-categories below, also referred to as an umbrella contingency. However, several improvements have been made in the revised WB-13. The introductory section to this umbrella contingency states the buyer’s proposed use on lines 306-308 that is referenced in the sub-contingencies below on lines 314-350. This introductory umbrella language also states the checked provisions below are deemed satisfied unless the buyer delivers written notice to the seller specifying those sub-contingencies that cannot be satisfied, accompanied by written evidence substantiating why the indicated provisions cannot be satisfied. If the buyer provides this written notice, the offer is then null and void.
This part of the WB-13 includes a formatting facelift as well. Each of the sub-contingencies on lines 314-350 includes a check box and heading as well as additional boxes and blank lines to be completed, if applicable, within the sub-contingency.
NEW: ZONING CLASSIFICATION CONFIRMATION (LINES 314-316): this may be an important inclusion for any buyer concerned with the zoning or availability of a zoning variance before moving forward with his or her plans. This sub-contingency allows the buyer to verify the zoning represented by seller and confirms that the zoning will allow the buyer’s proposed use stated on lines 306-308.
SUBSOILS (LINES 317-320): this sub-contingency permits the buyer to address any concerns with adverse subsoil conditions such as buried foundations or construction materials, organic or non-organic fill, dumpsite use, buried containers containing hazardous or toxic materials, high groundwater tables, soils with a low load-bearing capacity or excessive rock that may impede or increase the costs of development.
PRIVATE ONSITE WASTERWATER TREATMENT SYSTEM (POWTS) SUITABILITY (LINES 321-328): this sub-contingency allows the buyer to obtain written evidence from a certified soils tester that the soils and other conditions meet the applicable code requirements for the installation of a POWTS suitable for the buyer’s proposed property use.
EASEMENTS AND RESTRICTIONS (LINES 329-332): including this sub-contingency provides the buyer an opportunity to obtain copies of easements, covenants and restrictions affecting the property. In addition, the buyer may obtain a written opinion from a qualified independent third party (for example, an attorney) that none of the easements or restrictions will prevent, significantly delay or significantly increase the cost of the buyer’s proposed use.
APPROVALS (LINES 333-337): this sub-contingency allows the buyer to make the offer contingent on the buyer receiving permits, licenses and other approvals required for the buyer’s specified proposed development. For example, the buyer may wish to make the offer contingent on receiving a liquor license for the proposed tavern.
UTILITIES (LINES 338-342): this permits the buyer to verify in writing the location of various existing utility connections for electric, gas, municipal sewer, water and telephone, etc.
NEW: ACCESS TO PROPERTY (LINES 343-345): this new sub-contingency allows the buyer to address legal access to the property. This may be of significant use to a buyer that is purchasing the property to build on, because a buyer with no legal means of vehicular access to the property (landlocked) may need to purchase additional land or an easement from an adjoining landowner, petition the town board to lay out a highway, or talk to attorney about whether a way of necessity or prescriptive easement (by adverse possession) are present.
NEW: LAND USE APPROVAL (LINES 346-350): licensees should note this new sub-contingency is indeed part of the Proposed Use Contingency. This sub-contingency was intentionally set apart and purposefully placed at the left margin because this sub-contingency has a deadline separate than the deadline provided on line 310 of the umbrella contingency. When reading the language, this sub-contingency clearly references a separate deadline on line 349, but then goes on to clarify that it is still part of the Proposed Use Contingencies by referencing the, “proposed use at lines 306-308.” The reason why the sub-contingency has a separate deadline is simple; generally it will take significantly longer to secure the land use approvals than it will to accomplish the other tasks under the proposed use umbrella. This sub-contingency gives the buyer the opportunity to secure any rezoning, conditional use permits, licenses, variances, as well as building and occupancy permits needed for the buyer’s proposed use.
MODIFICATION: MAP OF THE PROPERTY (LINES 351-364)
While this contingency is not new to the WB-13 it has been substantially improved both with regard to language and function.
As in the previous WB-13, the buyer selects the desired map components. However, there are several new additions including: the requirement that the map must be dated after the date of acceptance of the offer; insertion of minimum and maximum acreage; and cautionary language regarding the cost and time required to obtaining the map.
The contingency fails if the buyer delivers a copy of the map and written notice identifying any encroachment, material inconsistency, or failure to meet the map contingency requirements to the seller within the five days of the earlier the deadline for the map or buyer’s receipt of the map. New language also clearly states that upon delivery of buyer’s notice the offer is null and void.
NEW: PROVISION OF MERCHANTABLE TITLE (LINES 437-441)
While the Title Evidence language of the WB-13 is substantially the same as the WB-11, there are two provisions that are different. Line 438 gives the buyer the ability to choose the deadline for the delivery of the title commitment by inserting a specific number of days after acceptance (“15” if left blank). In the WB-11, the title commitment is due not less than five business days before closing. Since buyers purchasing vacant land typically intend to develop that land now or in the future, this revision gives the buyer’s attorney or the buyer a longer period to review the title commitment and address any title concerns.
NEW: TITLE NOT ACCEPTABLE FOR CLOSING (LINES 442-449)
This is the second Title Evidence subsection where the WB-13 has a new timeline. Blank lines are provided for the deadlines for notifying the seller regarding of any title objections and the seller’s response. Specifically the buyer may insert the number of days the buyer has after delivery of the title commitment to notify seller regarding the buyer’s title objections (“15” if left blank) and the number of days the seller has to deliver notice to buyer of the seller’s election to remove the objections (“5” if left blank). Again, this modification was made to allow the buyer to work through title concerns early on rather than waiting until immediately before closing.
NEW: INSPECTION CONTINGENCY – RIGHT TO CURE (LINES 518-524)
The 2000 version of the WB-13 did not include a right to cure provision within the inspection contingency. The 2011 WB-13 mirrors the WB-11 and now includes a right to cure provision.
Debbi Conrad is Senior Attorney and Director of Legal Affairs and Cori Lamont is Director of Brokerage Regulation and Licensing for the WRA.