In virtually all areas of the law a verbal agreement is just as binding as a written one. Real Estate agreements and the exception.
Two people agree to a sale of a car verbally. No written agreement (or handshake) is needed. A verbal agreement has the same strength as a written contract. In this scenario the real problem comes up with the memory of the people. When did they agree the first payment would be made? What was the agreed interest rate? Did the Seller agree to provide new tires before the sale? As you can tell a written agreement in this situation would be helpful to know the details….but is NOT required by law.
In the state of Wisconsin, the law is very different in Real Estate transactions. Under Wisconsin Statute any agreement dealing with the transfer or encumbrance on Real Property MUST be in writing.
There are several reasons. First, is that there are so many details that need to be addressed in a Real Estate transaction (taxes, unpaid electrical bills, driveway easements, well water use agreements, mortgage brokers, etc.) Wisconsin Courts have long took the position that the Courts will not add conditions or language to any contract, unless it must.
In the car sale scenario above the court could, for example, add the interest rate by looking at whatever the current rate was, or what the parties had used as an interest rate in prior sale. But in a Real Estate transaction, the amount of money involved can be huge and the various conditions almost incalculable, so the law requires a written document.
A second reason is that the sale of the car only really involves the two parties and the public has no real interest in the transaction. But for Real Estate, the public has a huge interest. The documents themselves must be filed with the register of Deeds in the county that the property lies. The property must pay taxes each year. The identity of the Owner of Real Estate is public information. Therefore, a written document in needed to clarify the terms of the agreement, to file with the local Register of Deeds and to COMPLY WITH WISCONSIN LAW.
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