Legal Landmines in Vacant Land and Lot Sales
Erik H. Monson, Coyne, Schultz, Becker & Bauer, S.C.

I.              Introduction

Attorneys face many challenges when representing buyers or sellers in vacant land and lot sales. One challenge is avoiding legal “landmines” that can result in claims and/or lawsuits. This article identifies and explores three types of vacant land that can have legal landmines buried beneath them: (1) forested land; (2) petroleum brownfields; and (3) adversely possessed land.

II.            Are You Seeing the Forest for the Trees? 

Forested land presents unique challenges and corresponding liability risks. Wisconsin has a Managed Forest Law which regulates most aspects of forest resources, and the products derived from those resources.[i] Many of these regulations apply to privately-owned forest land.^[ii]

When involved in the sale of forested land, be aware that a previous or current owner may have registered or entered portions of the subject property into a forest land management plan.[iii] Forest land management regulations can limit building or expansion options, expose an unwitting buyer to substantial monetary penalties, and result in the loss of preferential property tax rates if prior management plans are not continued or if construction is undertaken in registered or protected land.[iv]

When representing a client involved in a transaction for forested land, counsel should find out whether land is, has been, or may be enrolled in any forest land management program. While title insurance may alert the parties, this is often received too late in the transaction to make any difference. A real estate tax summary or tax history may also show a tax-preferred managed forest land (“MFL”) status as well. Counsel should not, however, expect a land survey to reveal a property’s MFL status.

On the seller’s side, there is most likely an MFL disclosure obligation - the specificity of which is beyond the scope of this article. The disclosure, however, may be difficult to discern, especially for an attorney with limited experience in forested land transactions. 

On the buyer’s side, counsel should appreciate the nuances attendant to purchasing even partially forested land. Wis. Stat. § 77.88(2)(ac)-(c) provides that when purchasing managed land, the buyer must either file a form to continue under the previous management plan or be subject to an order withdrawing the property from the management plan and assessing a withdrawal tax and fee.[v] As a result, failing to advise a client whether the property is registered as MFL and the costs associated with allowing the protected status to lapse versus the restrictions that will be on the property for continuing under the plan presents a liability risk.

Attorneys are well-advised to inquire about potential forest land management regulations and programs, investigate and report any potential issues to the client, and inform the client as to the possible risks. The client’s first notice of MFL status should not be when they receive a five-figure tax bill or penalty for inadvertently removing their land from a managed forest program.

III.          Get the History: Brownfields and Other Contaminants 

A petroleum brownfield is a property upon which expansion, redevelopment or reuse may be complicated by the presence or perceived presence of petroleum contamination.^[vi] A significant portion of brownfields are former gas stations that occupied very small parcels throughout communities, along major roadways, or at intersections in neighborhoods.^[vii] Converting these sites can be challenging, as they are frequently contaminated by petroleum that has leaked from Underground Storage Tanks (USTs).

The attorney exercising reasonable skill and care should obtain (or advise the client to obtain) a history and/or receive disclosures sufficient to determine what a vacant parcel (and any contiguous parcels) used to be before it was offered for sale. There are currently over 450,000 (known) USTs in the United States that store petroleum or hazardous substances.^[viii] Wisconsin alone has nearly 3,000 known “open” and active brownfield redevelopment plans.[ix] Forty years ago there were no federal UST regulations, and most USTs were made of bare steel, which tended to corrode, allowing contents to contaminate the soil, adjacent property, and groundwater.[x] These can present significant issues for buyers. There are also potential brownfields grants and tax benefits which are outside the scope of this article but are important to know to advise a buyer.

In representing a buyer of a parcel of vacant land, an attorney should obtain information sufficient to ascertain what the vacant or recently developed property used to be. A brownfield may not be readily apparent to a prospective buyer and the first time they discover that the property is potentially contaminated should not be after they purchase it. Many states and local governments have lists or inventories on their web pages of brownfield properties within their jurisdictions to aid in obtaining a parcel’s history.[xi] 

If the subject parcel had a business that may have stored petroleum products, there is a risk of contamination and needed cleanup costs. While a gas or service station may have only occupied a small parcel, all bets (i.e., cleanup estimates) should be considered “off” if the subject property was part of a larger tract of land upon which a factory, mill, shipyard, transit station or junkyard was located. The EPA estimates that the average cost to simply develop a brownfield remediation plan for a larger project range from $50,000.00 to $175,000.00.^[xii] Given the costs associated with purchasing a brownfield, counsel would be well advised to make sure that his or her buyers are aware of such risks.

IV.          Getting Less than Your Client Bargained for: Adverse Possession

When representing a buyer of vacant land, the attorney should advise his or her client to take note of anything that indicates long-term activity of adjacent owners on the subject property. An adjacent property owner’s actual, continuous, open, hostile, and exclusive use of any part of the subject property for the requisite statutory period—20 years[xiii]—can result in the adjacent property owner being the true “owner” of part of the subject property.

Adverse possession is a principle of real estate law whereby a person gains legal title to real property by the adverse use of it. The elements of an adverse possession claim are: (1) actual use; (2) hostile use; (3) open and notorious use; (4) exclusive use; and (5) continuous use for the statutory period.^[xiv] 

Actual use requires physical acts.^[xv] The acts must demonstrate dominion and control over the area claimed. These acts must be the ordinary use of which the land is capable and such as an owner would make it.[xvi] Such acts may include enclosing, cultivating, and/or improving the land.[xvii] 

Hostile use does not require hatred or ill will. Hostility means that one person in possession claims exclusive right thereto and their actual possession prevents the assumption of possession in the true owner.^[xviii] If the elements of open, notorious, continuous, and exclusive possession are satisfied, Wisconsin law presumes the element of hostile intent.[xix] However, the adverse possessor must intend to claim title to the property for its use to be considered “hostile.”[xx] 

Open and notorious use requires use which is sufficiently open and obvious to apprise the true owner if, in a change of property and in the exercise of reasonable diligence, of the fact and intention to usurp the possession of the owner’s property.[xxi] “Open and notorious use” does not require that the true owner knows about the use; however, if the true owner has actual knowledge of the adverse possessor’s use, this element is satisfied.^[xxii]

Exclusive use requires use of the area to be excluded from the true owner. The adverse possessor cannot claim to share the disputed property with the true owner – they must be the only in possession of the land.[xxiii] If the true owner is in actual possession of a part of the land claimed in adverse possession, they have constructive possession of all the land not in actual possession of the intruder.[xxiv] A claimant need not exclude all individuals and may allow others to occasionally use the property without abandoning their claim of adverse possession.[xxv]

Continuous use requires continuous, uninterrupted use, without lapse, for the entire statutory period.^[xxvi] Intermittent or sporadic use will not satisfy this element.^[xxvii] Use of a parcel is continuous and uninterrupted when an adverse possessor comes into possession of the parcel from their predecessor in interest and continues to actually use it (i.e., if a parent’s interest in a property passes to their child without interruption, use is continuous).[xxviii] 

In general, the party claiming title by adverse possession bears the burden of proving all elements by clear and positive evidence.^[xxix] The evidence will be strictly construed against the adverse possessor and all reasonable inferences will be drawn in favor of the true owner.[xxx] However, despite this high bar to overcome, the risks of an adverse possession claim cannot be overlooked, especially in light of the significant consequences of doing so, i.e., loss of the property and a potential claim/lawsuit. 

If the attorney is faced with the prospect of an adverse possession claim, he or she should advise the client not to make an offer – assuming the disputed portion is at all material to the client. The buyer needs to be aware of the risks presented by placing an offer upon a property which is subject to a claim of adverse possession, and the potential they could lose some of the property they are attempting to purchase. While the burden of proof is on the adverse possessor, an attorney representing a buyer should advise their client to have the seller resolve the dispute prior to the sale being made (and advise them of the risks of not doing so).

If representing the seller, and a claim or threat of adverse possession is made, it should be disclosed to the potential buyer.[xxxi] Even without a direct claim or threat, if the adverse possessor’s use gives the titleholder “reasonable notice” that they are asserting ownership and the titleholder does nothing, that failure to respond may result in losing title.[xxxii]

V.            Conclusion

Vacant land sales hold legal landmines for the parties and for counsel representing them. With the above in mind, performing the necessary due diligence, conveying the relevant information, and providing informed advice as to the risks and benefits of action (or inaction), it is hoped that the reader will be less likely to be the subject of claims arising from vacant land sales. 

A version of this Article was published in the Litigation Blog by the Litigation Section of the State Bar of Wisconsin on June 17, 2024. 

Author Biography:

Erik H. Monson is a shareholder in the firm of Coyne, Schultz, Becker and Bauer, S.C. in Madison, Wisconsin. His practice is civil litigation with a focus on professional liability defense and the defense of professionals before licensing boards. Erik received his law degree from The Ohio State University in 1998 and his undergraduate degree, magna cum laude, from the University of Wisconsin - Milwaukee in 1995. Erik has tried cases throughout Wisconsin, including Columbia, Dane, Dodge, Grant, Iowa, Juneau, Kenosha, Portage and Waupaca Counties. He has been named to Wisconsin’s “Super Lawyers Rising Stars” list several times. Erik is a member of the Wisconsin Bar Association, Dane County Bar Association, Wisconsin Defense Counsel, and the James E. Doyle American Inns of Court.