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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.

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

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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.