Avoiding Reckless Mistakes When Using "Gross Negligence" In Wisconsin Real Estate Documents

• Jurisdiction: Wisconsin,United States
• Law Firm: Reinhart Boerner Van Deuren s.c.
• Subject Matter: Real Estate and Construction, Real Estate, Landlord & Tenant - Leases
• Author: Mr John Murphy
• Published date: 21 February 2023

Reinhart's real estate attorneys are frequently called upon as local counsel to tailor purchase agreements, commercial leases, loan documents and other real estate documents prepared by out-of-state clients and their principal attorneys to fit the peculiarities of Wisconsin law. One issue that crops up regularly involves the use of the term "gross negligence." Unlike other states, Wisconsin courts have not recognized a distinction between "simple" and "gross" negligence since 1962, in Bielski v. Schulze, 16 Wis. 2d 1, 14-19 (1962).

In our capacity as local counsel, we frequently suggest replacing "gross negligence" with something more appropriate, such as "recklessness." For example, our team recently modified an exception to the borrower's indemnity provision in an out-of-state client's draft lease to swap "gross negligence" with "recklessness" to achieve an appropriate standard for the applicability of that exception. As originally drafted, the provision limited the applicability of the indemnity exception to situations of gross negligence by the...