We all know someone who has a family cabin “up north.” Family cottages, cabins, and hunting land are a common estate planning concern in Wisconsin. The current owners want to preserve a place full of fun and memories for future generations.

Unfortunately, the way these properties naturally pass under the law does not fit the needs of every family and that can lead to trouble. For example, picture the current owners of a cottage have four children, if the cottage were to pass to their children without any planning, the children would then co-own it as tenants in common. Each co-owner would own an equal share of the property. It sounds simple, but what if one child wants to sell the property immediately and another wants to keep it in the family for future generations?

Under a tenancy in common, each owner can transfer their interest in the property independently of the other co-owners. This can lead to complications when one co-owner dies, goes through a divorce or has a collection action brought against them by creditors. Additionally, a co-tenant may ask the court to partition the property. A partition action could result in the property being split into separate parcels or a forced sale. Even if all co-owners wish to continue to own the property together, the statutory framework for sharing property and its expenses leaves much to be desired.

Common planning tools for co-ownership of property include Trusts and Limited Liability Companies (LLCs). Both Trusts and LLCs can alleviate common ownership problems but, between these options, an LLC is more flexible and often better suited for long-term planning.

What is an LLC?
An LLC is a business entity with one or more owners, known as members. When an LLC is set up for a shared family property, the LLC holds the property rather than the individual owners. The LLC operates according to an Operating Agreement, which outlines the rights and obligations of the members, how the LLC will be managed, and how decisions will be made.

Benefits of an LLC for Shared Family Properties:

Management of the Property
The Operating Agreement may lay out a framework for scheduling the use of the property, how the property will be maintained and decorated, and how shared expenses will be allocated and paid. The agreement may also determine who has a vote in these decisions. An LLC may also appoint a manager to be responsible for making sure that financial matters are managed, for example, they may propose a budget to the members and ensure that bills are paid.

 Provisions for Exit Strategies and Nonpayment
Sometimes a person inheriting a property would rather sell their interest. The Operating Agreement can provide these members the option to sell their interest back to the LLC according to an affordable structure. Additionally, the agreement may also address those members who do not contribute to shared bills or assessments. Provisions may include restricting the use of the property until payments are made.

 Restrictions on Transfer of Ownership
As discussed above, under a tenancy in common, an owner may transfer their interest in the property to another person or file a mortgage against their interest. The Operating Agreement may restrict owners from encumbering the property. It can also dictate permitted transferees. This means that an owner can be kept from transferring their property to someone outside the family as may otherwise happen at their death or divorce.

Tax Planning and Gifting
Family cottage LLCs may be used as a vehicle for gifting to avoid gift and estate taxes. LLCs allow for the gifting of units of ownership over several years. This can provide an opportunity to transfer interest in a way that avoids gift and estate tax.

 Liability Shield
As the name suggests, a limited liability company also can provide owners with a certain degree of liability protection from certain occurrences.

 Overall, LLCs can be individually tailored to suit unique scenarios for shared family properties. They can provide a great deal of flexibility for change as the need arises and offer many different protections for the owners of a property. If you are intersted in setting up an LLC for your family cabin please contact one of our experienced business attorneys.

The benefit to renting over owning is avoiding unexpected repair costs, in contrast, it can mean having to wait for the landlord to make repairs. Who is responsible for making repairs and how long a landlord can take to make a repair depends on the issue. While a landlord is required to “promptly” make repairs for issues that affect the habitability of a living space, Wisconsin law does not provide a set amount of time in which a landlord must make repairs.

Of course, it is best if you never have to deal with a leaky faucet or a glitchy thermostat. If you tour a space and find things in need of maintenance or repair, you should make note of any problems and request that the landlord fix them. Any promises made by the landlord to a prospective tenant regarding cleaning, repairing, or improving the unit should be made in writing and specify a date or time-period in which the fixes are to be completed. Apart from being legally binding, having a set date for the fixes can create a sense of urgency for the landlord and peace of mind for the tenant.

A Landlord’s Responsibilities

It can be difficult to spot defects in a unit before living in it. Fortunately, landlords do have a responsibility to disclose to tenants any documented or uncorrected building code violations that pose a threat to a tenant’s health or safety if the landlord is aware of them. This requirement of disclosure only covers the following habitability conditions:

• If the unit lacks hot or cold running water;
• If the heating system is not in safe operating condition or is incapable of maintaining at least 67 degrees in living areas;
• If the unit is not served by electricity or components of the electrical system are not in safe operating condition;
• If there are structural or other conditions on the premises that could pose a substantial health or safety hazard; and
• If the plumbing or sewage disposal facilities are not in good operating condition.

All of the above listed systems (heating, plumbing, electrical, and structure) are within the landlord’s sphere of responsibility. Additionally, the landlord must maintain common areas like hallways and laundry rooms in good condition. While a tenant is usually responsible for unreasonable damages the tenant themselves caused, a landlord still has a duty to innocent tenants in these situations to maintain the common areas. A landlord must also provide and maintain carbon monoxide and smoke detectors.

A Tenant’s Responsibilities

As mentioned above, a tenant is responsible for repairing or paying for the repair of damages caused by the themselves or their guests. To prevent damages to the unit, the tenant must keep the thermostat set at a reasonable temperature that will prevent freezing of pipes and keep the unit in a safe and sanitary condition. Part of keeping the unit in sanitary conditions includes maintaining a level of cleanliness that prevents infestations. If pest infestations are caused by the actions or inactions of the tenant, the tenant may have the duty to remediate the problem or pay for the remediation and repairs.

A tenant is also responsible for minor repairs to keep the unit in good working order, like changing lightbulbs or replacing batteries in smoke detectors.

A Timeline for Repairs

Repair or replacement of a non-working smoke detector, with batteries, is one of the few fixes that the law places timeline on. When a landlord is given notice of a faulty smoke detector, they have five days to fix it. Landlords are not given a set amount of time to fix other defects.

Remedies for Tenants

• Wisconsin Statutes do provide some remedy to tenants if the landlord does not promptly make repairs to defects that affect habitability of a unit. A tenant may break their lease and move out if a unit becomes untenantable. A unit is untenantable if the conditions that exist are so poor as to affect the tenant’s health, safety, or impose an undue hardship on the tenant. If the tenant must move out, the tenant is not responsible for the rent payments after the unit became untenantable. Even if the tenant does not move out, rent abates, meaning it is decreased by an amount proportional to the amount the tenant is deprived of the full, normal use of the premises. As a tenant, the problem with these remedies is that they may not result in the desired repair of the unit. It can also be difficult to quantify when a premises became untenantable or what dollar amount of rent abatement corresponds with an unrepaired defect.
• It is preferable for a tenant to work with a landlord to have repairs made on a reasonable schedule. Creating a paper trail is an important step. Tenants should request repairs in writing to keep track of what the issue is and how long repairs are taking. If the landlord does not make repairs in a reasonable timeframe, the tenant may consider contacting the local building inspector or the Wisconsin Department of Safety and Professional Services.

If the landlord still refuses to make repairs, please contact one of our experienced attorneys who can help you take the right steps in pursuing remedies like rent abatement. The Tenant Resource Center may also be able to provide information or support.