Posts Tagged ‘wisconsin cabin’

Conservation Easement: A Beautiful Thing

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A conservation easement is an interest in real property. It is established by agreement between a landowner and a qualified private land conservation organization (often called a “land trust”) or a government organization (often the DNR). It is put in place to restrict the exercise of rights otherwise held by a landowner in order to achieve stated conservation purposes.

The most recent Conservation Easement project underway here at our office presents a great story. Our Clients are both nature buffs. They truly love the outdoors and they want to make a difference in society.

After thinking it through, they decided that the best way to accomplish that goal was by donating 75 acres to a local nonprofit Audubon society. They also made the land subject to a conservation easement to be held by a Madison area land trust.

The Property contains areas of prairie grassland and oak woods/oak savanna. The public will have access to the property for bird-watching, hiking and other educational and recreational activities.

The preservation of this slice of heaven for the scenic enjoyment by and the outdoor education of the public is very important to the Landowner. What a terrific thing for the people of Wisconsin and beyond.


Balancing the Family Cabin Chore List

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If you share a family cabin, then you’ve no doubt faced the issue of who handles the chores. Keeping up a family cabin is hard and when multiple people are involved, determining who is responsible for what chore can get confusing. A family cabin limited liability company, or cabin LLC, can add structure and accountability that can help conquer the chore dilemma.

The methods used by cabin LLC members for assigning and tracking chores are as unique as the families themselves. Many cabin owners use a chore chart to track chore progress. Those charts work well and usually assure that no chores slip through the cracks.  A few interesting chore sharing and assignment ideas appear below.

One family that recently put together a cabin LLC for the family cabin decided on a task-based approach to tackle this issue. The family members thought about it and decided to divide up chores based on the skills the family members have. According to the family, it’s always a good idea to let people play to their strengths. Some folks are simply better at one thing and weak at others.  They split up the work task by task to let each person totally take ownership of a few areas. For example, some people hate doing the interior cleaning but can take care of leaves, gutters and mowing with no problem. If the family members can limit the chores they have to the tasks that they can stand, it will make the cabin chore time a little happier for everyone.

Another family used a time-based approach in its cabin LLC. They estimated the time it takes to do each task and made sure that each party is spending the similar amount of their cabin use time towards cabin upkeep.  This family thought this would be the most equitable way to allocate the responsibility for various chores. Under their system, cabin LLC members can always do the same tasks, or rotate them to keep it interesting. Setting chores out this way ensures that one person doesn’t spend forever on the hard tasks while others float by with quick chores done only once in a while.

A family with a cabin in northern Wisconsin likes to rotate the responsibility for seasonal chores. This is an interesting strategy. The idea here is that each person takes a bundle of chores on in total. For example, one family member or family branch handles the spring cabin opening in a given year and does everything. Yes, even the pier installation in that ice cold lake water. The next year another family member or family branch takes that on. It’s a lot of work for that short period, but allows the other people involved to get a real break where they don’t need to even think about cleaning or preparing the cabin at all.

No matter how you split up the chores, everyone in the family will need a break once in a while.  Frankly, with shared cabin ownership, some kindness and understanding with the other family members will keep the cabin ownership positive, resulting in warmhearted memories that will last for generations.


Can a Family Cabin Agreement Help My Family To Stay Out Of Court?

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We think so.

Imagine if a family member no longer wants to be a part-owner of the family cabin.  He wants out.  You do not want to pay him his asking price.  A falling out occurs. Other regretful actions transpire.

If your family doesn’t have some mechanism in place to deal with this impasse, a court proceeding may be the only option. However, there are sound reasons why you should try to avoid using litigation to settle your cabin related disputes.

Why should you avoid a court solution?

While a court process may take several months, the impasse will certainly be resolved.  However, family relationships chill dramatically after a lawsuit is filed, and without question, attorney fees and court costs are likely to be substantial.

In Wisconsin, there is another problem. An action of this nature will appear on the internet via the Wisconsin Circuit Court Access webpage. This means that the world will know about your family cabin fracas.

You might also be facing a “partition action” which is a legal atomic bomb. A partition of property is voluntarily if all the real estate owners agree to the division of property. However, if they don’t, after one party files a partition action, a judge can order a division or “partition” of the property. A partition action can be started unilaterally by any family member who owns an interest in the cabin.

There are two types of partition that a court may consider. A “partition in kind” severs the individual interest of the joint owners.  The owners end up each controlling an individual portion of the property. The second type of partition is a “partition by sale” and is more commonly used.  A partition by sale is accomplished by selling the entire property and dividing the proceeds among the owners.

How you might avoid a court solution?

Be proactive. Create a cabin trust or limited liability company.  A trust or limited liability company (LLC) can govern how the cabin is to be owned and used.

A primary purpose of a cabin trust or LLC agreement is to provide a procedure that kicks in when one owner wants to sell his interest. That procedure typically includes a determination of the fair market value for the seller’s interest. The agreement often includes a provision that requires that the seller sell his share at a discount.  Example: Brother’s 50% share is valued at $100,000. Sister owns the remaining 50% Share and is the buyer. Under the agreement Brother is selling it to Sister for $60,000 because of a 40% discount on sales out of the trust or LLC. The discount makes sense because it provides the financial incentive for the remaining owners to buy you out the seller and chills the seller’s temptation to jump out of the cabin for the cash.

We also see families agreeing to payments over time. Often the payments are spread out over several years so the sale wouldn’t strain the remaining owners’ finances forcing a sale of the cabin. Depending on the family involved, this can be payments made at interest over terms lasting 15 years or more.

The trust and the LLC can also help you avoid the partition action dilemma.  Under Wisconsin law, a trust or LLC is a legal entity.  This means, in effect, that the LLC is a legal person. A trust or LLC can sue and be sued, own property, enter into contracts, and do many of the things that an individual human being can do. Because a trust or LLC is a legal person, the property it owns is the property of the trust or LLC. Because the beneficiaries or members are not co-owners of the real estate, any partition action started would have to be dismissed.

As parties to the agreement, the buyer and seller both know the plan before the transaction occurs. An agreement can help family members keep their perspective, possibly avoiding a dispute before it begins.  If the parties do disagree with the terms of the agreement, an arbitration clause (requiring a private dispute resolution process and sometimes having the loser pay the fees) is used to keep things private and civil.

Not all agreements are created the same.

Avoiding costly litigation is just one of the benefits of using a cabin trust or LLC.  A proper agreement can, among other things, set a plan for scheduling use, sharing expenses, limits on decorating, rentals, and other uses for the cabin.

These agreements tend to follow a pattern but, frankly, no two are alike. Each family has its own set of values and objectives to consider. It takes time and expertise to develop them correctly.  A family should not hesitate to consult with a professional advisor that has experience in this area. A professional advisor can help the family develop an agreement that meets the family’s needs and helps maintain harmony so that the cabin can be enjoyed for many years.

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Cabin Scheduling: Sharing Is Not Always Easy

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Everyone loves the family cabin. Sometimes that love for the family cabin can make it hard to share when there are more than a couple owners involved. Understanding this dynamic, scheduling time at the beloved cabin can be a great challenge.

The owners of a cabin often find it works best to have a formal plan for use of the cabin. A formal plan is normally found in a scheduling system that is part of a limited liability company’s operating agreement.

The scheduling plans used for family cabins are as unique as the families involved. Many families like to rotate weeks. Some families set up a system where a family gets top pick one year, then moves to the bottom of the list. One such system reserves the cabin for five weeks each year for family gatherings and maintenance. The remaining weeks are assigned on a rotational basis and run from Friday afternoon to Friday afternoon. The order of the rotation changes each year.

It is not a bad idea to plan for the holidays and offer a wild card week. Some families like to meet annually at the cabin or local pub to develop rules for use as well, such as no smoking and other restrictions to keep the cabin nice. A plan for dogs and cats is also advisable.  Finally, whether to allow non-family individuals to use or rent the cabin should be discussed and addressed via a written agreement. Cleaning up after one’s self is also popular in these agreements.

Here is some sample scheduling language found in one family’s operating agreement:

Occupancy.  The Cabin shall be used for the personal, non-commercial, enjoyment of the Members, their respective families, and guests.  The Members will make and adjust rules and regulations regarding the use and enjoyment of the Cabin.  Such rules will cast equal burden and benefit on the Members without regard to their membership interest.  Under no circumstances will any Member use the Cabin so as to deprive the other Members of their respective and similar use.

Personal Use Allocation and Non-proportional Expenses.  At the Annual Meeting each year, the Members shall determine an allocation of personal use by weeks for the upcoming calendar year.  Each Member shall pick on a rotating basis which weeks he or she wishes to reserve for personal use.  Each week shall be deemed to run from Sunday at noon to the following Sunday at noon.  The year shall be divided initially into nine holiday weeks which include the following:  Easter, Memorial Day, 4th of July, Labor Day, Columbus Day, Thanksgiving, Christmas, New Year’s Day, and wild card week.  The balance of the year represents 43 weeks and shall be allocated after the initial eleven holiday weeks have been selected.  The wild card week can be any week of the year other than those holiday weeks listed.  The selection process shall operate in the following manner for the holiday weeks:

  • Each Member is entitled to three choices among the 9 holiday weeks.
  • The Members will rotate who gets the first choice each year, with each Member moving down one position and the Member in the third position moving to first position in the subsequent year.
  • For the balance of the 43 weeks, the procedure is to repeat the selection process that was done for the holidays.
  • At the annual meeting in December of each year, there will be adjustments made to the weekly stays, which normally run from Sunday at noon to the following Sunday at noon. These adjustments are to be made in light of the Thanksgiving holiday, in which it is anticipated that the week would flow from the Wednesday at noon preceding Thanksgiving Day to the following Wednesday, and that the following week would be a long week.  Also, holiday weeks for Christmas, New Year’s Day and the Fourth of July may be adjusted, depending on the day of the week in which the holiday falls.

The attorney-in-fact for the Company shall maintain the schedule of usage for the Cabin.

Rental of Cabin.  Notwithstanding the intent of the Members that the Cabin is primarily for their personal use, it is acknowledged and understood that the Company may permit, within the limitations of further specified rules and regulations to be promulgated, individuals other than the Members to use the Cabin.

Such third parties will sometimes be charged rent and sometimes will not be charged rent.  Relative to such third-party use of the Cabin, it is agreed that rental of the Cabin to third parties for purposes of obtaining rental income shall be ancillary rather than a primary goal of the Company.

The rental rate to be charged to third parties shall be set by the affirmative vote of a majority of the Members and shall initially be set at annual or special meetings of members at $1500 per week (or if rented on a daily basis, $200 per night for Monday through Thursday nights and $250 per night for Friday, Saturday, and Sunday nights).  These rates can be changed by the affirmative majority vote or advance written approval of the holders of a majority of the percentage interests in the company without necessitating a written amendment to this Agreement.

The Members agree that from time to time third parties, such as family or friends of the Members, or business associates or contacts of the Members may be granted permission by one or more of the Members to use the Cabin on a rent-free basis.  Such rent-free use is intended to allow the Members to use the Cabin in a courtesy fashion, and the Member extending such courtesy to the third party shall be considered to have personally used the Cabin during the period of time when the third party is occupying the Cabin rent-free.  Nevertheless, the Member permitting such use shall be responsible for arranging post-use cleaning service.

The Members also agree that Members will have to pay rent on “rentable weeks”. The “rentable weeks” in each calendar year will be set by the affirmative vote of a majority of the Members at the annual meetings of Members. The rental rate for Members shall initially be set at $1,000 per week. Any changes to the rental rate to be charged to Members and family and friends of Members shall be made by the affirmative vote of a majority of the Members at annual or special meetings of Members.

Third-party and Member rental income will be placed in the Company checking account to be used as all other monies in the account are used. Such third-party and Member rental income shall operate to reduce proportionately the funds and additional capital needed from the Members.  An accounting of such revenues shall be provided periodically by the attorney-in-fact.

Restrictions.  Smoking in the Cabin shall be absolutely prohibited.  Any guests shall be told emphatically not to smoke in the Cabin.  The purpose of this provision is to respect the health of the Members and guests of the Cabin. Domesticated animals are allowed in and around the Cabin so long as the animals are kept according to local laws and ordinances (including leash laws) and the party with the animals cleans up after them.

Any cleaning expenses required to alleviate the damage and odor caused by a violation shall be borne by the Member who is using the Family Cabin or permitting rent-free use of a third party at the time of the violation. Paying guests will charged for any cleaning expenses required to alleviate the damage and odor caused by a violation.

Expectation for Sharing of Chores.  Understanding that some Members may use the Cabin more than others, the Members who intend to use the Cabin on a routine basis will be responsible for routine chores, including, but not limited to, mowing, snow removal, and opening and closing up the Cabin at the end of the season.

Departure/Cleaning.  To maintain the value of the Cabin, each Member is responsible for leaving the Cabin clean, including kitchen, refrigerator, bathrooms, and all other areas.  An overnight supply of toilet paper and paper towels should be left for the next guests.

The language above is a sample.  Please keep in mind that every family is unique. This is just one family’s idea on how to schedule a cabin and to memorialize the schedule in writing. We are sharing it to help spark discussion between family members that co-own a vacation property.  It is for your information and is not intended as legal advice.