SB587: Bill Text

LRB-4029/2

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2009 - 2010 LEGISLATURE

2009 Senate BILL 587

March 2, 2010 - Introduced by Senators Sullivan, Taylor, Plale, Jauch, Cowles and Darling, cosponsored by Representatives Richards, Hubler, Turner, Molepske Jr., Van Roy, Townsend, Smith, Gunderson, Petersen and Soletski. Referred to Committee on Veterans and Military Affairs, Biotechnology, and Financial Institutions.

SB587,1,8 An Act to repeal 779.32 (3) (c); to amend 779.32 (2) (b), 779.32 (2) (c), 779.32 (3) (intro.), 779.32 (4) (a) (intro.), 779.32 (4) (a) 1., 779.32 (4) (a) 2. a. and b., 779.32 (4) (b) (intro.), 779.32 (4) (b) 4., 779.32 (4) (c), 779.32 (4) (d), 779.32 (4m), 779.32 (8) (a) 1., 779.32 (8) (a) 2., 779.32 (8) (c) 2., 840.11 (1) and 840.11 (2); to repeal and recreate 779.32 (8) (b) and 779.32 (9); and to create 706.085, 779.32 (1) (d), 779.32 (2m), 779.32 (8) (am), 779.32 (10) and 779.32 (11) of the statutes; relating to: commercial real estate liens and recording a correction instrument and a lis pendens.

Analysis by the Legislative Reference Bureau

Correction instruments

Current law provides a procedure whereby a court may, on satisfactory proof, make an order correcting the description of real property in a recorded instrument conveying the property. Current law also provides that correction instruments may be recorded to make certain specified corrections to recorded plats or certified survey maps. Although correcting an error in a previously recorded instrument conveying real property by recording an affidavit making the correction but without court action has been a common practice for many years, the Wisconsin Court of Appeals determined in Smiljanic v. Niedermeyer, 2007 WI App 182, 737 N.W.2d 436, that there is no statutory authority under current law for this method of correction.

This bill provides that an instrument (correction instrument) correcting previously recorded instruments conveying real property may be executed, generally, by a person with personal knowledge of the facts stated in the instrument and recorded in the office of the register of deeds of the county in which the previously recorded instrument is recorded. A correction instrument may correct a legal description; add to, correct, or clarify other information, such as names, dates, and marital status; add an acknowledgment or authentication; or add the consent or subordination of a mortgagee. The bill specifies what information a correction instrument must include and provides that the record of the correction instrument is prima facie evidence of the facts stated in the correction instrument; is presumed to be true, subject to rebuttal; and constitutes record notice affecting the property's chain of title to any purchaser of the property. The bill also validates correction instruments that were recorded before the effective date of the bill.

Lis pendens

Current law provides that any person who applies to a court or municipal governing body for laying out, widening, vacating, or extending a street, alley, or other specified public place must file a notice of pendency of the application and that failure to comply renders all proceedings based on the application void. The bill instead requires the person making the application to submit a lis pendens to the register of deeds for filing or recording and removes the provision that failure to comply renders all proceedings based on the application void.

Current law provides that any final order or resolution based on the application has no effect and is not notice unless a certified copy of the order or resolution contains a full and accurate description of the property and is recorded in the office of the register of deeds. The bill provides that the final order must instead contain a legal description of the property and is not notice unless it is recorded in the office of the register of deeds. The bill also removes a provision in current law that a resolution or order that affects land but for which no application was made has no effect and is not notice unless it is recorded.

Commercial real estate liens

This bill makes numerous changes in the process of obtaining and terminating a commercial real estate lien, which is a lien on real property other than real property that contains eight or fewer dwelling units, that is zoned for residential use but that has no structures, or that is zoned for agriculture.

Currently, if a real estate broker (broker) earns a commission on the sale of commercial real estate, the broker has a lien against the commercial real estate for the unpaid amount of the commission. The bill expands the types of agreements that may give rise to a commercial real estate lien to include an agreement between a broker and a person that grants the broker the right to represent the person in the lease of commercial real estate.

Under current law, to claim a lien against commercial real estate for an unpaid commission, a broker must file or record a written notice of intent to claim the lien at the office of the register of deeds for the county in which the commercial real estate is located and deliver a copy of that notice to the person owing the commission. Under this bill, to obtain a lien, the broker must send written notice to the person who owes the commission of the right to claim the lien and record a written notice of interest in the commercial real estate at the office of the register of deeds for the county in which the commercial real estate is located.

Currently, the lien is perfected when a broker files a notice of lien in the office of the register of deeds for the county in which the commercial real estate is located. Under the bill, the lien is perfected when a broker records the lien in the office of the register of deeds for the county in which the commercial real estate is located.

The bill changes the time period for perfecting a lien involving a written commercial real estate list contract or buyer agency agreement from three days before the conveyance documents are recorded with register of deeds to 30 days after the conveyance documents are recorded with register of deeds.

Under current law, the broker is required to satisfy a commercial real estate lien if the person owing a commission that is the subject of the lien pays an amount equal to 125 percent of the commission owed into the trust account of the broker or of an attorney who does not represent any party to the dispute, pending resolution of the dispute. This bill adds a mutually agreed third party to those who can receive and hold the money pending resolution of the dispute.

Current law provides that a commercial real estate lien is extinguished if an action to enforce the lien is not commenced within two years after the lien is perfected. Under this bill, a commercial real estate lien is extinguished if a new notice of interest in the commercial real estate is not recorded in the office of the register of deeds for the county in which the commercial real estate is located within two years after the original notice of interest was recorded. Under the bill, a broker may rescind a notice of interest by recording a notice in the office of the register of deeds for the county in which the commercial real estate is located indicating that he or she no longer claims an interest in the commercial real estate.

The bill requires a broker to record a notice rescinding a notice of interest in the commercial real estate if the agreement that created the interest in the commercial real estate is terminated or expires. In addition, under the bill, a broker may waive the lien by signing a written waiver, but no action between any other persons may invalidate the lien, other than the payment in full of the broker's commission.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB587, s. 1 Section 1. 706.085 of the statutes is created to read:

SB587,3,5 706.085 Correction instruments. (1) Entitled to be recorded; purposes. An instrument correcting a previously recorded conveyance shall be entitled to record in accordance with s. 706.05 in the office of the register of deeds of the county in which the conveyance is recorded and shall include one or more of the following:

SB587,4,5 (a) The correction of a legal description, including a distance; angle; direction; bearing; chord; lot, block, unit, or building number or letter; appurtenant easement; section number; township name or number; municipality, county, or state name; range number or meridian; certified survey map number; or subdivision or condominium name.

SB587,4,7 (b) The addition, correction, or clarification of information other than a legal description, including any of the following information:

SB587,4,10 1. A party's name, including the spelling of the name; a first or middle name or initial; a name suffix, such as senior or junior; alternate names by which the party is known; or a description of an entity as a corporation, company, or similar identifier.

SB587,4,11 2. A party's marital status.

SB587,4,12 3. The date on which the conveyance was executed.

SB587,4,13 4. Whether the property is a homestead.

SB587,4,14 5. The tax parcel number.

SB587,4,15 6. The identity of the drafter.

SB587,4,16 7. The recording data for an instrument referenced in the conveyance.

SB587,4,17 8. The nature and purpose of the conveyance.

SB587,4,18 9. The title of the conveyance.

SB587,4,19 10. Facts relating to the acknowledgment or authentication.

SB587,4,20 (c) The addition of an acknowledgment or authentication.

SB587,4,22 (d) The disclaimer by a grantee under a deed of that party's interest in the real property that is the subject of the deed.

SB587,4,23 (e) The addition of a mortgagee's consent or subordination.

SB587,5,2 (2) Execution requirements. (a) A correction instrument shall be acknowledged or authenticated in accordance with s. 706.06 or 706.07. It shall recite the document number of the conveyance, the names of the grantor and grantee, and, if given on the conveyance, the volume and page numbers.

SB587,5,13 (b) 1. Except as otherwise provided in this paragraph, a correction instrument that is executed after the effective date of this subdivision .... [LRB inserts date], may be executed by a person having personal knowledge of the circumstances of the conveyance and of the facts recited in the correction instrument, including the grantor, the grantee, the person who drafted the conveyance that is the subject of the correction instrument, or the person who acted as the settlement agent in the transaction that is the subject of the conveyance, and shall recite the basis for the person's personal knowledge. A correction instrument that was executed before the effective date of this subdivision .... [LRB inserts date], is not rendered ineffective by reason of the instrument's failure to recite that the maker had the knowledge or capacity required under this subdivision.

SB587,5,15 2. A correction instrument that makes the correction under sub. (1) (e) shall be signed by the consenting party, or an heir, successor, or assignee of the party.

SB587,5,17 3. A correction instrument that adds, removes, or replaces a divisible parcel in a conveyance shall be signed by the following persons:

SB587,5,19 a. If the correction instrument supplies a lot, block, unit, or building number or letter that was omitted from a conveyance, by any party identified in subd. 1.

SB587,5,21 b. If a parcel is being added to a conveyance that also correctly conveys other land, only by the grantor.

SB587,5,23 c. If a parcel is being removed from a conveyance that also correctly conveys other land, only by the grantee.

SB587,6,3 d. If a lot or unit number or letter is being corrected and the lot or unit incorrectly recited in the conveyance is also owned by the grantor, only by the grantee.

SB587,6,6 e. If a lot, block, unit, or building number or letter is being corrected and the lot or unit incorrectly recited in the conveyance is not also owned by the grantor, by any party identified in subd. 1.

SB587,6,9 (c) A person who executes and records a correction instrument shall send notice of that fact by 1st class mail to all parties to the transaction that was the subject of the conveyance at their last-known addresses.

SB587,6,11 (3) Effect of record. All of the following apply to the record of a correction instrument that complies with this section, or a certified copy of the record:

SB587,6,14 (a) It is prima facie evidence of the facts stated in the instrument; is presumed to be true, subject to rebuttal; and constitutes notice to a purchaser under s. 706.09 of the facts recited in the instrument.

SB587,6,16 (b) It may be asserted by a purchaser for a valuable consideration against any person making an adverse or inconsistent claim under s. 706.09 (1) (i).

SB587,6,21 (4) Previously recorded instruments are valid. Any instrument recorded before the effective date of this subsection .... [LRB inserts date], that purports to correct a previously recorded conveyance and that would have been a valid correction instrument under this section had this section been in effect when the instrument was recorded is hereby validated.

SB587, s. 2 Section 2. 779.32 (1) (d) of the statutes is created to read:

SB587,6,25 779.32 (1) (d) "Tenant representation agreement" means an agency agreement between a broker and a person that grants the broker the right to represent the person in the lease of commercial real estate.

SB587, s. 3 Section 3. 779.32 (2) (b) of the statutes is amended to read:

SB587,7,6 779.32 (2) (b) If the broker has earned a commission under a written commercial real estate buyer agency agreement or tenant representation agreement, the broker has a lien for the unpaid amount of the commission against the commercial real estate, or the interest in commercial real estate, that is acquired as a result of the agreement.

SB587, s. 4 Section 4. 779.32 (2) (c) of the statutes is amended to read:

SB587,7,12 779.32 (2) (c) If the broker has earned compensation from the owner or landlord under a written agreement for the lease or management of commercial real estate or under a tenant representation agreement, the broker has a lien for the unpaid amount of the compensation against the commercial real estate for which the leasing or management services were provided under the agreement.

SB587, s. 5 Section 5. 779.32 (2m) of the statutes is created to read:

SB587,7,20 779.32 (2m) Notice of lien rights. (a) To claim a lien under sub. (2), the broker shall notify the person who owes the commission or compensation described in sub. (2) (a), (b), or (c) in writing of the right to claim a lien under this section. A broker shall include the notice required under this subsection in the commercial real estate listing contract, commercial real estate buyer agreement, tenant representation agreement, or written agreement for the lease or management of commercial real estate.

SB587,7,22 (b) The notice required under this subsection shall be in substantially the following form:

SB587,8,2 NOTICE: A broker has the authority under section 779.32 of the Wisconsin Statutes to file a broker lien for commissions or compensation earned but not paid when due against the commercial real estate, or the interest in the commercial real estate, that is the subject of this agreement.

SB587, s. 6 Section 6. 779.32 (3) (intro.) of the statutes is amended to read:

SB587,8,16 779.32 (3) Notice of intent to claim lien interest. (intro.) A broker has In addition to the requirements of sub. (2m), to claim a lien under sub. (2) (a) or (b) only if, the broker files or records shall record a written notice of intent to claim a lien interest under this section at the office of the register of deeds for the county in which the commercial real estate is located and delivers a copy of the notice to the person owing the commission under sub. (2) (a) or (b). A broker has a lien under sub. (2) (c) only if the broker provides a written notice of intent to claim a lien under this section to the person owing the compensation under sub. (2) (c). All notices . A notice required under this subsection shall contain the name of each party to the agreement under which the lien interest is claimed, the date that the agreement was entered into and a brief description of the commercial real estate on which the lien is intended to be claimed. All notices that is subject to the lien rights. A notice required under this subsection shall be provided within the following time periods:

SB587, s. 7 Section 7. 779.32 (3) (c) of the statutes is repealed.

SB587, s. 8 Section 8. 779.32 (4) (a) (intro.) of the statutes is amended to read:

SB587,8,22 779.32 (4) (a) (intro.) A lien under this section is perfected when a broker files records a notice of lien in the office of the register of deeds for the county in which the commercial real estate is located. The lien must be perfected no later than the following:

SB587, s. 9 Section 9. 779.32 (4) (a) 1. of the statutes is amended to read:

SB587,9,2 779.32 (4) (a) 1. In the case of a lien under sub. (2) (a) or (b), 3 days prior to 30 days after the date that the conveyance documents are recorded with the register of deeds in the county where the real property, that is the subject of the listing contract or buyer agency contract agreement, is located.

SB587, s. 10 Section 10. 779.32 (4) (a) 2. a. and b. of the statutes are amended to read:

SB587,9,8 779.32 (4) (a) 2. a. The date that the broker earns a commission or compensation that gives rise to a lien under this section. For purposes of this subd. 2. a., a commission or compensation is considered earned on the date that payment of it is due under the lease, tenant representation agreement, or management agreement.

SB587,9,13 b. The date that the broker receives notice that he or she has earned a commission or compensation that gives rise to a lien under this section. For purposes of this subd. 2. b., a commission or compensation is considered earned on the date that the payment of it is due under the lease, tenant representation agreement, or management agreement.