With Minnesota and Wisconsin being so close in proximity, it may be easy to assume there’s lots of overlap in the world of real estate, and in a few ways, there is. Many people who live in MN have cabins in WI or perhaps plan to retire there or vice versa. Certainly, there are many family members who inherit real estate across state borders and are now in the position to sell one of these properties.
However, the overlap mostly stops there. There are numerous differences to keep in mind when helping a client buy or sell a home across these state borders. We chatted with Kate Marlin and Barb Gilmore, Underwriting Counsel for WI and MN respectively, from Old Republic National Title Insurance Company to get their expertise on what real estate professionals should know in these transactions.
Minnesota Title Standards
Minnesota has extensive Title Standards adopted by the State Bar Association. When a new real estate transaction is in the works, a title professional has to review what is known as the “White Pages” that will tell them exactly which documents they need to record to make a legal, official transaction and establish marketable title for the buyer. If errors are made or documents are omitted, the documents can be rejected by the county recorder’s office.
Wisconsin, on the other hand, has only a few state title standards so title insurance examiners and underwriters determine the documents required for closing based on Wisconsin law, prior court decisions and common business practices.
New Build Differences
In Wisconsin, the mortgage priority goes to the lender so long as the construction mortgage in favor of an institutional lender is recorded prior to any filed mechanic’s lien. Essentially, this makes it easier to obtain title insurance on a new build in WI versus MN. In MN, the construction mortgage must be recorded prior to the commencement of any construction on the property, or any mechanic’s liens filed later will likely have priority over the construction mortgage. Not having all of this in order can definitely slow down the closing process, so if you happen to be a WI real estate professional working on a new build in MN, be sure to educate yourself on MN mechanics lien law and have all your ducks in a row.
Never make assumptions
Despite the proximity of our states, the most important thing a real estate professional can do is stay open-minded and willing to learn about the differences across state lines.
“Don’t assume that everything is parallel because it’s probably not,” says Marlin.
And of course, read the schedule B-I requirements in the title insurance commitment issued by the title company involved. “If you’re not reading the commitment until the day before closing, you might not be able to close,” she says. Work with your trusted title company to understand the required documentation, in advance, so that you’re able to refer a client to an outside resource if needed. Lastly, keep open lines of communication with your buyer/seller and other professionals across state lines. Stay in the know about what you need to obtain to make the client’s process as smooth as possible no matter the circumstance.