Vol. 71, No. 11, November 1998
Further Defining the Duties
of a Land Contract Vendor
Cases subsequent to Greenberg
In reviewing cases subsequent to the supreme court decision
where Greenberg has been cited, essentially the case stands
for the following proposition: In Wisconsin, under the doctrine
of equitable conversion, a land contract vendee is the beneficial
owner of the property from the time the land contract is executed,
and as such, enjoys the rights and sustains the burdens of ownership.
To the extent that property is conveyed under a standard land
contract, the vendor does not retain any ownership "sticks"
or rights other than the bare legal title, because the bundle
is basically transferred to the vendee. The land contract vendee
thus possesses the sole beneficial ownership interest in the
property to which the contract refers.
Greenberg
and Milwaukee building code violations
Recently, the context of the Greenberg case has arisen
in building code prosecutions in the city of Milwaukee. In City
of Milwaukee v. Leslie & Co.14
the issue was whether a land contract vendor was an owner of
real estate under applicable municipal codes so as to subject
the vendor, as owner, to prosecution when the property subject
to the land contract fell into disrepair and became violative
of the municipal codes. In Leslie & Co. the standard
form Wisconsin land contract was used and further provided that
the sale was in an "as is" condition, and that the
vendee was responsible for any building code violations that
may be on the property. Although Leslie & Co. had
conveyed the property to another party, the city claimed that
Leslie & Co. was the owner, and thus responsible for
the building code violations. The court agreed, asserting that
the difference between Greenberg and the case at hand
was based in statutory definitions. In Greenberg "owner"
was never statutorily defined, and common law constructions had
to be relied upon. In Leslie & Co., however, "ownership"
was defined to include anyone who had equitable or legal title.
Thus, the court found that Leslie & Co., as vendor,
was an owner for purposes of enforcing the building and zoning
code.
Public policy considerations
In Greenberg the city of Milwaukee advanced public
policy reasons for encouraging the court to make a broad interpretation
of the razing statute. The city maintained that a land contract
vendor maintains de facto control of property under and pursuant
to a land contract. In addition, the city maintained that failing
to hold a land contract vendor personally liable under the razing
statute would have a devastating impact upon the city's ability
to enforce building codes.
Similarly, the court in Leslie & Co. also discussed
public policy considerations. The court noted that in certain
instances, land contracts may be used where buyers have limited
credit-worthiness, and thus a reduced ability to maintain a property.
Holding a vendor liable would also make the vendor consider more
carefully the capabilities of the vendee relative to entering
into a land contract. The supreme court in Greenberg,
however, was not persuaded by the city's public policy arguments.
The court maintained that to the extent the parties entered into
a standard land contract that normally consists of a covenant
not to commit waste, such contract merely serves as further evidence
that the vendee, and not the vendor, exercises control over the
property. However, to the extent the vendor and vendee, by contractual
agreement, attempt to alter the common law rights and duties
imposed upon them, such alterations must be brought to the court's
attention for further determination.
In Greenberg the court, absent a statement of legislative
intent, saw no reason to defeat the intentions of the parties
to a standard land contract by creating an exception to the equitable
conversion doctrine. The court concluded that the razing statute
imposes personal liability on the person who owns the property
razed, and not the person who, at an earlier time, might have
allowed the property to deteriorate.
Conclusion
Greenberg serves as a restatement by the court of the
characteristics of ownership that pass between the vendor and
vendee in a standard form land contract. In essence, it is a
reaffirmation of the age-old common law concept of equitable
conversion. Greenberg did nothing to upset the concept
of equitable conversion as it related to the use of the Wisconsin
standard form land contract relative to the obligations and responsibilities
of vendors as imposed by the razing statute. Rather, it maintained
historically the respective responsibilities and duties of vendor
and vendee relative to the equitable transfer of title. In the
razing statutes, the term "owner" was not statutorily
defined, and as such, the court chose to follow the common law
rules of equitable conversion to determine and resolve the issues
of ownership.
However, in Leslie & Co. the term "owner"
is clearly defined in the building code to include one who has
either legal or equitable title. Thus in that instance, both
parties to a land contract statutorily have potential liability.
![Greenberg](/SiteCollectionImages/WisconsinLawyer/1998/11/greenberg.jpg)
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Martin J. Greenberg, Marquette 1971, has been
practicing real estate law for 27 years. He was an associate
and now is an adjunct professor of law at Marquette University
Law School, having taught courses in property, real estate taxation,
and real estate investment. He has had the opportunity to use
land contracts in both an academic and real world setting, but
his greatest challenge in this area came when he was sued by
the city of Milwaukee. He continues his practice with Deutch
& Greenberg in Milwaukee. |
As Greenberg first stated and Leslie & Co.
further illustrated, the rights and responsibilities that a vendor
and vendee each possess as parties to a land contract are determined
by statutory construction when the term "owner" is
defined. The razing statutes in Greenberg failed to do
so and thus the common law principles of equitable conversion
were used instead, relieving the vendor of liability. Conversely,
the building code ordinances in Leslie & Co. defined
"owner" sufficiently to include both the vendor and
vendee in liability arising out of land contracts. Thus, the
principles established by Greenberg serve as a cautionary
reminder that when using the standard form land contract in Wisconsin,
should problems arise, the rights and duties of the vendor and
the vendee are somewhat flexible in that the understanding of
"ownership" may change depending upon the governing
statutes.
Endnotes
1 City of Milwaukee v. Greenberg,
157 Wis. 2d 326, 459 N.W.2d 588 (Ct. App. 1990).
2 City of Milwaukee v. Greenberg,
163 Wis. 2d 28, 471 N.W.2d 33 (1991).
3 Rees v. Ludington, 13
Wis. 308 (1860).
4 Williamson v. Neeves,
94 Wis. 656, 69 N.W. 806 (1897).
5 Tobler v. Door County,
158 Wis. 2d 19, 461 N.W.2d 775 (1990).
6 Mitchell Aero Inc. v. City
of Milwaukee, 42 Wis. 2d 656, 662, 168 N.W.2d 183 (1969).
7 Evans-Lee Co. v. Hoton,
190 Wis. 207, 211, 208 N.W. 872 (1926).
8 Edwards and McCulloch v. Mosher,
88 Wis. 670, 60 N.W. 264 (1894).
9 In re Catfish River Drainage
District, 176 Wis. 607, 187 N.W. 673 (1922).
10 Freimann v. Cumming,
185 Wis. 88, 200 N.W. 662 (1924).
11 Ritchie v. Green Bay,
215 Wis. 433, 254 N.W. 113 (1934).
12 Mueller v. Novelty Dye Works,
273 Wis. 501, 78 N.W.2d 881 (1956).
13 American Motors Corp. v.
Kenosha, 274 Wis. 315, 319-20, 80 N.W.2d 36 (1957); aff'd
356 U.S. 21 (1958); Wall v. Dep't of Revenue, 157 Wis.
2d 1, 8, 458 N.W.2d 814 (Ct. App. 1990).
14 City of Milwaukee v. Leslie
& Co., Municipal Case No. 93076552.
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