SI CHI01140.110 Wisconsin Oral Life Estates
(Updated – 10/2005)
A. Oral Life Estates in Real Property
It is generally true that under Wisconsin law a life estate in real property must be written to be valid. Specifically, transactions pertaining to land must comply with 706 et seq. of the Wisconsin statutes, which provides that:
1. Transactions under s. 706.001 (1) shall not be valid unless evidenced by a conveyance that satisfies all of the following:
(a) Identifies the parties; and
(b) Identifies the land; and
(c) Identifies the interest conveyed, and any material term, condition, reservation, exception or contingency upon which the interest is to arise, continue or be extinguished, limited or encumbered; and
(d) Is signed by or on behalf of each of the grantors; and
(e) Is signed by or on behalf of all parties, if a lease or contract to convey; and…
(Wis. Stat. Ann 706.02). Notwithstanding the above, Wisconsin courts have recognized oral life interests in real property where the grantor has reserved a life estate even though a deed, absolute on its face, has been delivered to the grantee.
Wisconsin law further provides the remedy of reformation by deed where both parties reached an
agreement; intended that the agreement be included in the written expression of the agreement; and the oral agreement was not included in the written document because of mutual mistakes of the parties (Wis. Stat. Ann. 706.04(1)).
Wisconsin also provides broad equitable remedies from the strict statute of frauds requirement. Wis. Stat. Ann. 706.04 provides that an oral agreement once proved may be enforced if substantial possession or use of the premises has been permitted after termination of a prior right (Wis. Stat. Ann. 706.04(3)(a)). Similarly, an oral agreement may be enforced if a party partially or substantially performs his part of the bargain in the contract. To find otherwise, would allow the other party to be unjustly enriched as a result of the first party's action (Wis. Stat. Ann. 706.04(2).
Moreover, recordation is not necessary to make a transfer of an interest in real property valid (Wis. Stat. Ann. 706.08). Generally, a conveyance of land which is otherwise valid passes title from the grantor to the grantee although it has not been recorded. Wisconsin, as in many other states, provides for an exception to this general rule, namely, the title of one who holds an unrecorded deed is void as against a person who, in good faith and for a valuable consideration, purchases the same property and records the conveyance first (Wis. Stat. Ann. 706.08). However, until that occurs the unrecorded deed is valid.
As the above discussion indicates, a “hard and fast” rule concerning the validity of oral life estates in real property is virtually impossible to formulate. Although a life estate must generally be written to be valid, there are enough exceptions to that rule to suggest that a case by case analysis is necessary to determine the validity of oral life estates in real property in Wisconsin.
B. Oral Life Estates in Personal Property
The Wisconsin statutes specifically provide for the creation of life estates in personal property. See Wis. Stat. Ann. 700.02(3), 700.01(5). While, the statutory section discussed above, 706.et seq. which requires conveyances of property to be written only applies to real property, the Statute of Frauds applies to the sale of goods or personal property. “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale, other than the money in which the price is to be paid, investment securities (ch. 408) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty…. See Wis. Stat. Ann. 402.105(1)(c).
The Statute of Frauds, (Wis. Stat. Ann. 402.201(1)), relating to the sale of goods provides in relevant part:
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this subsection beyond the quantity of goods shown in such writing.
Thus, the Statute of Frauds, (Wis. Stat. Ann. 402.201(1)), requires a contract for the sale of goods for $500 or more to be evidenced b a written document. Nevertheless, Wisconsin courts have upheld oral agreements involving personal property valued at more than $500 where there has been part performance. Consequently, a party may be estopped from asserting the statute of frauds by his or her conduct. Specifically, the doctrine of part performance allows a court in equity to enforce a contract that does not comply with the status of frauds if the party seeking enforcement has rendered partial performance of the contract. As a practical matter, there probably will be very few transactions creating life estates in personal property which do not exceed $500. Nonetheless, a life estate in personal property involving less than $500 need not be written to be valid in Wisconsin.
The POMS provides that a life estate interest can be established by a contract, will, or other legal document. However, the explanation following this requirement indicates that oral life estates or other ownership interests should be referred to the Office of Regional Chief Counsel for an opinion.
C. Referral of Questionable Cases to the Regional Office
If you encounter a case involving an oral life estate in Wisconsin that can not be resolved based on the above information, refer the case to MOS-CRSI/SSI, SSI Team. The SSI Team will review the case and provide you with guidance on resolving the issue.