Four Cases Important to REALTORS®

 Tom Larson  |    September 27, 2007

Over the next nine months, the Wisconsin Supreme Court will hear several cases that are important to property owners and the real estate industry. These cases involve legal issues ranging from economic development to property tax records to the constitutionality of zoning ordinances. Because the Court’s decisions in these cases could have a direct impact on the state’s real estate industry, the Wisconsin REALTORS® Association has filed an amicus (“friend of the court”) brief in each of these cases. An amicus brief allows the WRA to communicate with the court on various issues without taking sides in the particular case.

Economic Development Corporations Subject to Open Meetings/Records Laws 

In State v. Beaver Dam Area Development Corporation, the Wisconsin Supreme Court will decide whether the Beaver Dam Area Development Corporation (BDADC), a non-profit corporation organized as a private entity to promote business development around the city of Beaver Dam, is a quasi-government entity that is subject to open meetings and records laws. The primary responsibility of EDCs is to attract private companies and new economic development opportunities to their respective communities. The communications between the EDC and private companies are often confidential so that competitors are not aware of the companies’ future plans.

Like other economic development corporations (EDC), the BDADC is (a) comprised of a majority of private citizens (business owners, bankers, real estate professionals, etc.), with one or two local government officials serving as board members, but who have no voting authority on EDC matters; (b) funded primarily by the private sector; and (c) contract with both public and private entities to provide economic development services.

Why This Case is Important – If EDCs are subject to the open meetings and open records laws, private companies would be reluctant to work with EDCs and may be less likely to locate in Wisconsin. This could have a devastating impact on jobs and our local economies.

Applying Open Records Law to Property Assessment Records 

In WIREdata, Inc. v. Village of Sussex, et al, WIREdata, a wholly owned subsidiary of the Multiple Listing Service, Inc., requested property assessment records from several communities for purposes of sharing the information with members of the MLS. Independent contractors who maintained the files electronically in a computer database performed the assessments in each of these communities. The assessor denied WIREdata’s requests and indicated that WIREdata could (a) purchase the records for lump sum payment of $6,000 plus additional costs for each property identified and placed restrictions on WIREdata’s use of the data, or (b) receive the records in a PDF format. WIREdata sued the communities and their assessors claiming violations of Wisconsin’s open records law.

Why This Case is Important – The ability to obtain public records and property-related data in a usable format from local units of government is important to REALTORS® and other members of the real estate industry, who provide consumers with information about the costs associated with owning real estate.

Application of the Economic Loss Doctrine to Residential Real Estate 

In Below v. Norton, a buyer discovered after she moved into her home that the sewer line between her home and the street was broken. The seller had represented no plumbing defects on the real estate condition report. The buyer filed a lawsuit, alleging, among other things, that the seller had engaged in intentional misrepresentation, negligent misrepresentation, and misrepresentation in advertising. The trial court dismissed all the misrepresentation claims based upon the “economic loss doctrine,” which prohibits parties from receiving damages for misrepresentation claims unless such damages were specifically agreed to in the contract between the parties.

Why This Case is Important – Application of the economic loss doctrine to residential offers to purchase would substantially limit the remedies available to most parties. This may lead to more parties misrepresenting defects, an increased need for inspections and testing, increased costs for homebuyers, and increased expectations for real estate brokers.

Ripeness of Declaratory Judgment Actions 

In Walter Olson v. Town of Cottage Grove, the town of Cottage Grove enacted a zoning ordinance that establishes a community-wide transfer of development rights (TDR) program. The town conditioned its approval of Walter Olson’s subdivision plat upon the condition that Olson purchase and transfer 10 development rights to the town and county. This would require Olson to purchase 350 acres of farmland at a cost of approximately $750,000. Olson filed a declaratory judgment action against the town, asking the court to invalidate the TDR ordinance on constitutional grounds. The circuit court ruled that Olson had not yet incurred any financial injury and, therefore, his case was not yet ripe for review. The court of appeals rejected the circuit court’s ruling, holding that a property owner can test the validity of an ordinance prior to incurring an injury.

Why This Case is Important – If property owners do not have the ability to ask a court to determine whether an ordinance is legal or constitutional before submitting a formal development proposal to the community and having it formally rejected, property owners will be required to waste considerable time and money in preparing development proposals just to determine their rights under zoning ordinances and other land-use regulations.

For more information on these or other cases, please contact Tom Larson ( at (608) 212-0066.

Tom Larson is Director of Regulatory and Legislative Affairs for the WRA.

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