The Wisconsin Supreme Court in Below v. Norton, 2008 WI 77, 751 N.W. 2d 351, expanded the reach of the Economic Loss Doctrine (ELD) to bar claims of fraud and intentional misrepresentation in residential real estate transactions. The Wisconsin Legislature has fought back:
"In addition to any other remedies available under law, a transferee in a residential real estate transaction may maintain an action in tort against the real estate transferor for fraud committed, or an intentional misrepresentation made, by the transferor in the residential real estate transaction." Please see the full text of the Senate Bill here: http://www.legis.state.wi.us/insession/insessiondocs/docs/SB-9.pdf
This new legislation does three (3) things: 1) it protects purchasers of land in WI, without creating the duty to draft veracity warranties as was required by Below. 2) it strengthens the ELD as to all other contracts. Below came down July 1, 2008 and by January 21, 2009, the Senate was working to overturn this decision. ELD decisions in commercial real estate contracts came down long before Below, but no such legislation has been created and passed for commercial protection. 3) Creates an arbitrary deadline for the cessation of fraud. The first two effects are self-explanatory, the third desires further comment.
The legislation (creating Wis. Stat. § 895.10) includes a provision that this statute will not apply retroactively, but will apply to transactions that close on the effective date of the legislation. As Governor Jim Doyle signed the legislation on April 8, 2009, all falsehoods told before that date are immune, but after are punishable by tort. Yes, according to Below you can go after a seller for "false advertising" carrying far lessor penalties and a greatly shorter statute of limitations. So, for the next six (6) years, attorneys in this state must remember the magical April 8, 2009 deadline in determining whether tort actions can occur.
Thursday, April 9, 2009
Tuesday, April 7, 2009
Tenant Rights in Wisconsin Foreclosures
The Wisconsin Legislature passed 2009 Senate Bill 62, which was signed into law as 2009 Wisconsin Act 2 on February 19, 2009. For full text of the Act, click here: http://www.legis.state.wi.us/2009/data/acts/09Act2.pdf.
This Act changed many laws in the State, however one is of particular importance and interest to me. The Act created Wisconsin Statute § 846.35 Protections for tenants in foreclosure actions. The title gives you a good idea of what this is about.
In looking at the newly enacted § 846.35 (1), it requires that the foreclosing plaintiff must give notices to tenants in the subject property at different points in the litigation. This makes sense. These required notices must be given within 5 days of the start of the foreclosure action, within 5 days of the grant of a foreclosure judgment, and notice of the date and time for the judicial confirmation of the sheriff’s sale. I find these to be appropriate times for the tenant to be informed of the progress.
The Statute goes on to discuss how a plaintiff must give these notices. The first option is to personally serve each tenant pursuant to Wis. Stat. § 801.11 (1), in an manner similar to the serving of a complaint. The second is to send the notice via certified mail, with notice completed upon mailing.
Finally, the Statute delineates that each tenant that did not receive a notice may receive $250, plus reasonable attorney fees, from the plaintiff, with a maximum of one award (two missed notices does not entitle a tenant to $500).
So why does this new statute make my skin crawl? Three reasons. First, the Legislature has not defined to whom this applies. Second, it appears that a tenant may force a plaintiff to pay them, even when the plaintiff does nothing wrong. And third, how does a mortgage holder know the names of the tenants?
The wording of the first portion of the statute states "If residential rental property is the subject of a foreclosure action, the plaintiff shall provide the following notices at the following times to the tenants who are in possession of each rental unit when a notice is given." However, in looking at the penalty provision, it states "the court shall award the tenant to whom the notice should have been given $250 in damages, plus reasonable attorneys fees." There is an inherent contradiction: tenants vs. tenant.
Wisconsin courts recognize that when the Legislature puts specific language in a statute, the courts must construe the statute to not make any portion of it meaningless. As such, the difference between tenant and tenants may be significant.
Presume that three students are renting an apartment in a building that is being foreclosed upon. Does the foreclosing plaintiff need to give notice to each of the three students? The requirement for notices requires that notices be given to the tenants (plural) in possession of each rental unit (singular). It appears that the Legislature is requiring that notice be given to each tenant. Especially when you consider the punitive sentence allowing the tenant (singular) to whom the notice should have been given to recover damages. This gives further credence to the each tenant must receive notice theory.
However, in all of Chapter 846, there is not a definition of tenant. Consider the possibility that a husband and wife enter into a lease and later produce a child. The leased premises begins to be foreclosed upon, to whom must the plaintiff give notices? Under the above analysis, it appears that both the husband and wife must be given notices. But what about baby? Does the baby need to be placed on the lease in order to have tenant rights?
Moving to the manner of serving the notices, there is nothing wrong with personal service pursuant to § 801.11 (1), however it can be expensive for a plaintiff. Personal service of papers can cost between $30 and $75. To perform this three times during the litigation brings the total to between $90 and $225. And as discussed above, it is unclear whether this is per unit or per tenant. Bringing back the three students renting an apartment, the service fees for their one unit could cost upwards of $500 during the litigation.
So, it seems pretty clear that personal service is very costly, so consider the certified mailing method. Certified mail costs approximately $5 per notice. This is a significant cost savings. However, the statute states, "Notice given under this subdivision is considered completed when it is mailed, unless the envelope enclosing the notice is returned unopened to the plaintiff."
Anyone who has received mail returned unopened knows that this process can take some time. So, if the three students are on winter break, the notices are mailed, not accepted (because no one is home to do so), they are returned to the plaintiff (or their attorney). The time period to give the notice has now passed and the plaintiff is deemed to have not given notice, clearly through no fault of their own, and is subject to an award of damages.
Further, certified mail can be refused by the recipient. The Legislature does not put forth a provision regarding refused mail, only unopened mail. So, could a tenant see the Gerbers Law, S.C. envelope for the second notice (knowing that Gerbers Law had sent the first notice), refuse this mail, and then seek damages for failure to give notice? Equity states no, but a strict reading could lead to such a conclusion.
It is hard to imagine a lawsuit for $250 dollars, but with "reasonable attorneys fees" in the balance, there is a possibility that it could be tried.
Finally, as an attorney that has represented financial institutions in foreclosure actions, the foreclosing plaintiff usually does not know the names of all tenants within 5 days of instituting the action. A defendant has 30 days to respond to discovery (and that is when the responses are done timely, which is not always the case). So, a plaintiff may not rely upon the standard discovery to ascertain the names. Then must a plaintiff request this information prior to instituting the action? I do not think that a defendant landlord will be very forthcoming with the information when they receive the "we are going to foreclose on you, but first we need the names of all of your tenants" telephone call.
So then, does this place the onus on the foreclosing plaintiff to keep records of every lease entered into by the defendant? This would create a bureaucratic nightmare for even the smallest of mortgage lenders, let alone the large financial institutions.
While the intent of the Legislature and the statute is good, I feel that there are several glaring issues with the statute that must be addressed.
This Act changed many laws in the State, however one is of particular importance and interest to me. The Act created Wisconsin Statute § 846.35 Protections for tenants in foreclosure actions. The title gives you a good idea of what this is about.
In looking at the newly enacted § 846.35 (1), it requires that the foreclosing plaintiff must give notices to tenants in the subject property at different points in the litigation. This makes sense. These required notices must be given within 5 days of the start of the foreclosure action, within 5 days of the grant of a foreclosure judgment, and notice of the date and time for the judicial confirmation of the sheriff’s sale. I find these to be appropriate times for the tenant to be informed of the progress.
The Statute goes on to discuss how a plaintiff must give these notices. The first option is to personally serve each tenant pursuant to Wis. Stat. § 801.11 (1), in an manner similar to the serving of a complaint. The second is to send the notice via certified mail, with notice completed upon mailing.
Finally, the Statute delineates that each tenant that did not receive a notice may receive $250, plus reasonable attorney fees, from the plaintiff, with a maximum of one award (two missed notices does not entitle a tenant to $500).
So why does this new statute make my skin crawl? Three reasons. First, the Legislature has not defined to whom this applies. Second, it appears that a tenant may force a plaintiff to pay them, even when the plaintiff does nothing wrong. And third, how does a mortgage holder know the names of the tenants?
The wording of the first portion of the statute states "If residential rental property is the subject of a foreclosure action, the plaintiff shall provide the following notices at the following times to the tenants who are in possession of each rental unit when a notice is given." However, in looking at the penalty provision, it states "the court shall award the tenant to whom the notice should have been given $250 in damages, plus reasonable attorneys fees." There is an inherent contradiction: tenants vs. tenant.
Wisconsin courts recognize that when the Legislature puts specific language in a statute, the courts must construe the statute to not make any portion of it meaningless. As such, the difference between tenant and tenants may be significant.
Presume that three students are renting an apartment in a building that is being foreclosed upon. Does the foreclosing plaintiff need to give notice to each of the three students? The requirement for notices requires that notices be given to the tenants (plural) in possession of each rental unit (singular). It appears that the Legislature is requiring that notice be given to each tenant. Especially when you consider the punitive sentence allowing the tenant (singular) to whom the notice should have been given to recover damages. This gives further credence to the each tenant must receive notice theory.
However, in all of Chapter 846, there is not a definition of tenant. Consider the possibility that a husband and wife enter into a lease and later produce a child. The leased premises begins to be foreclosed upon, to whom must the plaintiff give notices? Under the above analysis, it appears that both the husband and wife must be given notices. But what about baby? Does the baby need to be placed on the lease in order to have tenant rights?
Moving to the manner of serving the notices, there is nothing wrong with personal service pursuant to § 801.11 (1), however it can be expensive for a plaintiff. Personal service of papers can cost between $30 and $75. To perform this three times during the litigation brings the total to between $90 and $225. And as discussed above, it is unclear whether this is per unit or per tenant. Bringing back the three students renting an apartment, the service fees for their one unit could cost upwards of $500 during the litigation.
So, it seems pretty clear that personal service is very costly, so consider the certified mailing method. Certified mail costs approximately $5 per notice. This is a significant cost savings. However, the statute states, "Notice given under this subdivision is considered completed when it is mailed, unless the envelope enclosing the notice is returned unopened to the plaintiff."
Anyone who has received mail returned unopened knows that this process can take some time. So, if the three students are on winter break, the notices are mailed, not accepted (because no one is home to do so), they are returned to the plaintiff (or their attorney). The time period to give the notice has now passed and the plaintiff is deemed to have not given notice, clearly through no fault of their own, and is subject to an award of damages.
Further, certified mail can be refused by the recipient. The Legislature does not put forth a provision regarding refused mail, only unopened mail. So, could a tenant see the Gerbers Law, S.C. envelope for the second notice (knowing that Gerbers Law had sent the first notice), refuse this mail, and then seek damages for failure to give notice? Equity states no, but a strict reading could lead to such a conclusion.
It is hard to imagine a lawsuit for $250 dollars, but with "reasonable attorneys fees" in the balance, there is a possibility that it could be tried.
Finally, as an attorney that has represented financial institutions in foreclosure actions, the foreclosing plaintiff usually does not know the names of all tenants within 5 days of instituting the action. A defendant has 30 days to respond to discovery (and that is when the responses are done timely, which is not always the case). So, a plaintiff may not rely upon the standard discovery to ascertain the names. Then must a plaintiff request this information prior to instituting the action? I do not think that a defendant landlord will be very forthcoming with the information when they receive the "we are going to foreclose on you, but first we need the names of all of your tenants" telephone call.
So then, does this place the onus on the foreclosing plaintiff to keep records of every lease entered into by the defendant? This would create a bureaucratic nightmare for even the smallest of mortgage lenders, let alone the large financial institutions.
While the intent of the Legislature and the statute is good, I feel that there are several glaring issues with the statute that must be addressed.
Sunday, April 5, 2009
Click Here to Accept and Lose All Rights
Social networking sites like Facebook, Twitter, and LinkedIn are becoming a growing way to market not only yourself, but also your business. Further, people now spend more time on these social networking sites than they do writing e-mails. Recently, there was a large outcry over Facebook changing its Terms and Conditions (T&Cs) for using the site. So just what caused the outrage, what are you giving up when using these sites, and what can you do to properly tailor your business’ T&Cs?
When you start to use one of these Social Networking sites, even before you enter your personal information, you must accept that site’s T&Cs. Almost no one ever reads the fine print of these T&Cs (if they read them at all) and, even if they did, many are written in such a way that a layperson could not possibly understand everything they were agreeing to. However, these T&Cs are legally binding contracts you agree to, listing your rights, responsibilities, and the rules or conditions of service.
The outcry involving Facebook occurred not only because the user’s acceptance was given upon the continued use of the site, but because Facebook took a particularly broad license that gave it rights over users' content. This license closely matched users' rights as owners, in addition to content belonging to third parties.
The license that you granted to Facebook was very broad. It covered not only your content on Facebook, but also content you may have linked to from outside of Facebook. This includes photos you may have stored on Flickr or Snapfish, videos from Vimeo, and more. This made Facebook’s new T&Cs particularly invasive. Due to negative press and user scorn, Facebook quickly went back to their old T&Cs.
Most employers today only use Facebook to scout out potential hires. However, a large number of businesses and business people use LinkedIn. LinkedIn works to expand your network among others in your field and geographic area. Unfortunately, LinkedIn’s T&Cs are more overreaching than anything Facebook has tried.
LinkedIn’s T&C language is too wordy to reprint here in full. In sum, it grants a license to LinkedIn that is equivalent to the rights enjoyed by the owner of the original work. This includes the ability to create derivative works and “in any way commercialize” the original work. If you value anything you have created, be it a blog post, a picture, or a business presentation, think twice about putting it on LinkedIn. You are subject to these T&Cs through ANY use of the website, not just upon clicking “accept.”
As you can see, it pays to read through the T&Cs of various websites rather than just clicking “accept.” However, it is not just social networking sites that require T&Cs. If your business provides pricing information, advice, or almost any other service, you should consider adding a T&C page. Also, it is not as easy as going online and copying Facebook’s T&Cs. First, that is a copyright violation. Second, unless your businesses are identical in every single way, it is doubtful that another company’s T&Cs would fully protect your business.
By having clear and concise T&Cs, it will be evident to both parties what's been agreed to, and will cover the process and remedies if things ever go wrong. An attorney should write these T&Cs; however, if as a business owner you are looking to save during this economy, take the following measures.
First, consider what you need to include on your terms and conditions page. These include issues and concerns, potential problems, and your website’s purpose and limitations. Second, look at the T&Cs pages of websites that are in the same industry as yours. Again, do not copy these directly as it is a violation of copyright law and you most likely will not be completely covered.
Third, after collecting as much information as possible, attempt to express your T&Cs in a clear and concise manner. Remember the T&C is a legal document binding on both parties. The T&Cs should state exactly what your site is about, what service it provides and how it provides that service. Also, be sure to address all legal concerns you might have, and fully explain those liabilities you do and do not accept. Finally, even if you elect to draft the T&Cs, have an attorney carefully review them. If issues arise that are not included in your T&Cs, update them, and be sure to let your customers or users know that updates have been made. An attorney will know the applicable law and be able to guide you if you are attempting to reserve too many rights or if you are giving some away unnecessarily. Further, should the law change, an attorney that drafted or reviewed the T&Cs will be able to alert you to these changes and how they may affect you.
When you start to use one of these Social Networking sites, even before you enter your personal information, you must accept that site’s T&Cs. Almost no one ever reads the fine print of these T&Cs (if they read them at all) and, even if they did, many are written in such a way that a layperson could not possibly understand everything they were agreeing to. However, these T&Cs are legally binding contracts you agree to, listing your rights, responsibilities, and the rules or conditions of service.
The outcry involving Facebook occurred not only because the user’s acceptance was given upon the continued use of the site, but because Facebook took a particularly broad license that gave it rights over users' content. This license closely matched users' rights as owners, in addition to content belonging to third parties.
The license that you granted to Facebook was very broad. It covered not only your content on Facebook, but also content you may have linked to from outside of Facebook. This includes photos you may have stored on Flickr or Snapfish, videos from Vimeo, and more. This made Facebook’s new T&Cs particularly invasive. Due to negative press and user scorn, Facebook quickly went back to their old T&Cs.
Most employers today only use Facebook to scout out potential hires. However, a large number of businesses and business people use LinkedIn. LinkedIn works to expand your network among others in your field and geographic area. Unfortunately, LinkedIn’s T&Cs are more overreaching than anything Facebook has tried.
LinkedIn’s T&C language is too wordy to reprint here in full. In sum, it grants a license to LinkedIn that is equivalent to the rights enjoyed by the owner of the original work. This includes the ability to create derivative works and “in any way commercialize” the original work. If you value anything you have created, be it a blog post, a picture, or a business presentation, think twice about putting it on LinkedIn. You are subject to these T&Cs through ANY use of the website, not just upon clicking “accept.”
As you can see, it pays to read through the T&Cs of various websites rather than just clicking “accept.” However, it is not just social networking sites that require T&Cs. If your business provides pricing information, advice, or almost any other service, you should consider adding a T&C page. Also, it is not as easy as going online and copying Facebook’s T&Cs. First, that is a copyright violation. Second, unless your businesses are identical in every single way, it is doubtful that another company’s T&Cs would fully protect your business.
By having clear and concise T&Cs, it will be evident to both parties what's been agreed to, and will cover the process and remedies if things ever go wrong. An attorney should write these T&Cs; however, if as a business owner you are looking to save during this economy, take the following measures.
First, consider what you need to include on your terms and conditions page. These include issues and concerns, potential problems, and your website’s purpose and limitations. Second, look at the T&Cs pages of websites that are in the same industry as yours. Again, do not copy these directly as it is a violation of copyright law and you most likely will not be completely covered.
Third, after collecting as much information as possible, attempt to express your T&Cs in a clear and concise manner. Remember the T&C is a legal document binding on both parties. The T&Cs should state exactly what your site is about, what service it provides and how it provides that service. Also, be sure to address all legal concerns you might have, and fully explain those liabilities you do and do not accept. Finally, even if you elect to draft the T&Cs, have an attorney carefully review them. If issues arise that are not included in your T&Cs, update them, and be sure to let your customers or users know that updates have been made. An attorney will know the applicable law and be able to guide you if you are attempting to reserve too many rights or if you are giving some away unnecessarily. Further, should the law change, an attorney that drafted or reviewed the T&Cs will be able to alert you to these changes and how they may affect you.
Subscribe to:
Posts (Atom)
