Sale of Real Property Process

Original Issuance Date: May 17, 2018
Last Revision Date: May 17, 2018

1. Policy Purpose

The purpose of this procedure is to outline the requirements UW System Administration must follow when considering the sale of real property as permitted by s. 36.11 (1)(b), Wis. Stats., unless such property is subject to sale by the State of Wisconsin as permitted in s. 16.848 (1)(a), Wis. Stats.

2. Responsible UW System Officer

Senior Associate Vice President for Capital Planning and Budget

3. Background

The Office of Capital Planning and Budget, on behalf of The Board of Regents of the University of Wisconsin, is permitted to sell real property by Regent Policy Document 13-2, Real Property Contracts: Approval, Signature Authority, and Reporting. The sale of agricultural lands for the University of Wisconsin-Madison must follow the method of sale outlined in s. 36.33(2), Wis. Stats.

4. Definitions

ALTA/ASCM Survey Map: A map and legal description of real property developed by a licensed surveyor according to American Land Title Association (ALTA) and the American Congress of Surveying and Mapping (ASCM) minimum standards.

Appraisal: A valuation completed by a licensed real property fee appraiser that determines the Fair Market Value of a property based upon a set of market assumptions. If more than one appraisal is required to establish the acquisition and/or disposition price, the assumptions used as the basis for value must be the same for both.

Certified Survey Map: A map stamped by a licensed surveyor and recorded with the local Registry of Deeds defining ownership, easements, encroachments, and other legal elements of a property. A Certified Survey Map (CSM) can be created when a property requires subdivision prior to acquisition or for aggregation to consolidate ownership.

Deed: A document which conveys ownership, or title, of real property from the grantor (seller) to the grantee (buyer). The two most common deeds used are Warranty and Quitclaim – see definitions below.

Due Diligence: An investigatory period between the offer to purchase and the closing where research is completed on the history, ownership of the property, and state of the property. A preliminary title search is completed, an environmental search is completed, contingencies from the offer are removed, and an appraisal may be commissioned.

Environmental Site Assessment: An evaluation of the environmental history, both man-made and natural, of a site. A Phase I/Environmental Site Assessment (ESA) must be completed to identify if any potential hazardous land uses, or improvements occurred. This includes researching such items as Federal flood information. If hazardous materials are suspected, a Phase II ESA must be completed including soil, air, groundwater or building materials testing.

Offer to Purchase Agreement: An agreement that outlines the terms and conditions of the acquisition. This document can include the purchase price, terms for due diligence, contingencies, the property’s legal description, proposed date to execute the sale, and/or a down payment.

Legal Description: A geographical description of real property that locates a parcel in relation to the public land system. A legal description of the property unambiguously identifies the location, and boundaries.

Quitclaim Deed: A deed which protects the seller from any future claims on ownership or responsibility; there is no guarantee or warranty the buyer has any future claim on the seller. UW System issues only quit claim deeds.

Title Insurance: An insurance policy that prevents financial loss from defects in the recorded ownership of the real property. It protects the buyer, and lender from loss due to liens or title defects.

Title Report: A preliminary report ordered from the title insurance company during the due diligence process. The title report will indicate the presence of any recorded restrictions on the property including covenants, easements, or liens.

Warranty Deed: A deed declaring the seller has clear title, without any unknown encumbrances or liens, on the property being sold. The seller warrants no known issues but may still be held liable for future claims.

5. Procedures

The following process shall be followed by the UW System Office of Capital Planning and Budget in collaboration with affected UW System institutions considering selling Board of Regent real estate. The institution selling the property is responsible for the preparation and costs associated with the sale. Sales costs, which can include environmental studies, surveys, and appraisals, can be deducted from the sale proceeds.

A. Identify Property to be Sold

A property can be sold if it is no longer relevant, does not meet the mission and strategic vision of the university, or the cost to maintain or replace the asset is greater than replacement. Examples include some of the following:

Building

Occupancy in the building is 65% or less
Is not used to capacity regarding either intended use or function
Is rented to another municipality, private individual, or company
Is no longer suitable for the mission and strategic plan, or vision of the university
Is vacant
Requires more investment than warranted

Land

Is not used to capacity regarding either intended use or function
Could be used or re-allocated to better serve a different purpose
Is no longer suitable for the mission and strategic plan, or vision of the university
Does not contain a significant and unique natural resource, or is deed restricted for particular use

B. Preparation for Sale

Once a property has been determined as appropriate to sell, the UW System Office of Capital Planning and Budget shall prepare the property for sale according to the following guidelines:

Contact other institutions or governmental entities to determine if a transfer between institutions is appropriate. The institution or governmental entities will be given two weeks in which to respond.
Determine the property value based on the sale price parameters defined below.
Subdivide the property if necessary. If the property to be sold is part of a larger parcel, the property may need to be subdivided. Subdividing a property includes hiring a surveyor to create a new legal description with a Certified Survey Map (CSM). Depending on the municipality where the property is located, a public hearing or other municipal boards and council agreements may be required.
Determine when to schedule the sale, considering the time of year, use and potential buyers.
Order the preliminary title report to identify the presence of outstanding issues.
Confirm the status of any outstanding public debt used to finance the acquisition, construction, or other improvements with Department of Administration as per s. 36.335 Wis. Stats.
If the property is currently leased, review the lease for possible early termination.
Research the property ownership records for any restrictions on the property sale.

These tasks shall be completed as appropriate before the property is offered for sale.

C. Estimate Sale Price

The UW System Office of Capital Planning and Budget shall engage a real estate appraiser to determine a minimum price to sell the property, preferably with a Member of the Appraisal Institute (MAI) status. The appraisal assignment shall be designed to maximize sale price. The party responsible for the cost of the appraisal shall be negotiated. Thresholds for appraisal assignments are as follows:

If expected sales price is below $10,000, a form appraisal can be used.
If the expected sales price is between $10,000 and $100,000, only one appraisal is required.
If expected sales price is greater than $100,000, two appraisals, the form and type-appropriate based on use, are required. The sales price limit is different than the State Building Commission limits.

The UW System Office of Capital Planning and Budget shall determine a sales price based on the appraisal(s), the sales methodology, and negotiations.

D. Identify Sales Methodology

The UW System Office of Capital Planning and Budget shall select the sales methodology based on the property being sold. Sale methodology options are as follows:

Engage a real estate broker: If the property being offered for sale is specialized, in a competitive market, or a remote geographic area, having the sale managed by a real estate broker who can market the property is recommended. Procurement rules must be followed when hiring a real estate broker.
Competitive bid process: Use this method if there is significant interest in the property.
Advertising the property for sale: Advertise the property in appropriate media outlets and venues.
Other means of sale such as internet auction or unsolicited offer to purchase.

E. Contract to Purchase

The purchaser shall prepare an offer to purchase with detailed terms and conditions of the sale. At a minimum, the offer to purchase shall include confirmation of purchase price, receipt of earnest money, payment terms, contingency based on Board of Regents approval, and closing date.

Only those delegated individuals by the President of the UW System can sign purchase and sale documents.

F. Required Approval

The UW System Office of Capital Planning and Budget shall seek approval from the Board of Regents according to the guidelines in Regent Policy Document 13-2, Real Property Contracts: Signature Authority and Approval.

G. Closing

The following are required for closing on a sale of real property:

Owner’s title insurance. Title commitment is preferred at least two weeks prior to closing for the full purchase price. The buyer’s lender will request a separate title insurance policy on behalf of the buyer.
Quitclaim deed. The Board of Regents issues only quitclaim deeds. If another deed is requested by the buyer, the UW System Office of General Counsel must approve.
Once a closing date has been set, the title company will provide the total amount of funds due including recording fees and sales costs. A purchase order should be created and a check issued, or wire transfer scheduled, if funds are due.
The title company records the deed. If no title company is used, for example a utility purchasing a right of way, the institution is responsible for recording the deed at the County Registrar.
All legal documents, including appraisals and environmental reports, pertaining to the sale should be forwarded to UWSA Office of General Counsel.

H. Proceeds

The following requirements apply to net proceeds from a sale of real property, depending on the sale type:

Property originally acquired using federal funds. The Board of Regents shall reimburse the net proceeds to the federal government as required by federal law and Wis. Stats 36.335.
Property originally acquired through a gift or grant or acquired using gift or grant funds. The Board of Regents shall adhere to any covenants governing the use of the proceeds found within the grant or gift.
Property originally acquired, constructed or subsequently improved using state funds or borrowing. The Board of Regents shall reimburse the net proceeds to the State appropriation account for the amount of any outstanding public debt on the property.
Sale of agricultural land. Net proceeds from the sale of agricultural land shall be deposited into a nonlapsible fund according to the provisions outlined in Wis. Stat. 36.33(4).

Further distribution of proceeds with be determined on a case-by-case basis.

I. Sale Process for Unsolicited Offers to Purchase

In the event that the UW System Office of Capital Planning and Budget, a UW institution or the Board of Regents receives an unsolicited offer to purchase land owned by the university system, the following tasks must be completed and requirements must be met before the sale can be completed:

Determine any deed restrictions, outstanding debt, or covenants which would prevent the sale of the property.
Verify with institution program heads if real property is no longer required for the school or department mission.
Other state agencies should be contacted to determine if a transfer between agencies would be advantageous.
The property must be publicly offered through a Request for Bid (RFB) for a minimum of 30 days.

6. Related Documents

Regent Policy Document 13-2, Real Property Contracts: Signature Authority and Approval

Wis. Stats 36.11(1)(b), Protection of People; Custody and Management of Property

Wis. Stats 36.33, Agricultural lands

7. Procedure History

First approved: May 17, 2018

UW System Administrative Procedure 999.B