Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - April 13, 2009 Home Buyer Protection Bill Signed Into Law Stay tuned for further information form the WRA about the new Wis. Stat. § 895.10 permitting buyers to bring misrepresentation and fraud actions in residential real estate transactions.
1.) Offer to Purchase - Closing Issues Both brokers in this transaction have the duty to put the interests of the clients ahead of their own interests under Wis. Stat. § 452.133. If the brokers stand in the way of the seller closing the short sale, they possibly may be sued by the seller. The seller may also sue the title company which appears to be imposing additional standards on this closing without any authority. It should be of no concern to the title company whether the brokers arbitrate commission after the closing. The listing broker should retain an attorney to immediately challenge the actions of the title company, which has no apparent reason to not just pay the commission to the listing broker and close the transaction. 2.) Agency - Licensee Principle QUESTION: The broker has a limited service listing for a residential property and the seller has her real estate license (she is a commercial broker) and will be showing her property. Does the broker need to represent that the seller has a license in the MLS or in flyers for her property? ANSWER: Wis. Admin. Code § RL 24.05(5) provides, "DISCLOSURE OF LICENSURE. Article 4 of the Code of Ethics provides, "REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner's agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser's representative. (Amended 1/00)" Standard of Practice 4-1 indicates that, "For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)" The obligations in play belong to the seller/broker and not to the limited service listing broker, but the broker can certainly assist in ensuring that all needed disclosures are made. While the seller/broker can make the § RL 24.05(5) disclosure verbally upon first contact, including this information in the MLS remarks and in other advertising helps guard against the seller forgetting to tell buyer prospects and agents. The Article 4 obligation is best met with a statement in the offer reciting that the seller has a real estate broker's license, which heads off any claim by a buyer that they didn't see the MLS or disclosures I other documents. 3.) Commissions - Incentives QUESTION: Are buyer's agents allowed to offer their buyers a commission rebate or incentive at or after closing? If so, are there any primary resources that confirm this? ANSWER: Attached is an excerpt from the Department of Regulation and Licensing web site at http://drl.wi.gov/prof/rebr/pfaq.htm#Common: "Q. Are rebates legal in Wisconsin and can a broker rebate a portion of the selling commission they receive? A. There is nothing in the statutes or rules of the board which prohibit a real estate broker from providing a cash payment or other consideration to a buyer in order to induce their purchase of real estate. Providing incentives to prospective buyers or sellers by real estate licensees is not prohibited. Wis. Stats. s. 452.19 prohibits real estate brokers from paying "referral" or "finder's fees" to unlicensed individuals who are not prospective purchasers or sellers. Under this statute an unlicensed person may not receive compensation from a broker for referring others to the broker. You can not be compensated by a broker for referring your friend to a broker as a prospective buyer or seller." 4.) Contract Issues & Forms - Right of First Refusal QUESTION: Buyer A, who has a right of first refusal, receives a copy of a bona fide offer from the seller which discloses that Buyer B knows of the right of first refusal. If Buyer A elects to match Buyer B's offer, does Buyer A's offer have to be a formal offer which matches Buyer B's offer identically or can he send a letter stating he will match all terms and conditions? Also when the time to respond is 7 days from receipt of the notice/offer and the notice/offer was delivered at 3:00 p.m., is the deadline 3:00 pm 7 days later or midnight of the 7th day? ANSWER: The method that Buyer A should use to notify the other parties that Buyer A wishes to exercise his right of first refusal should be spelled out in whatever document is gives him that right. If there is no documentary guidance, Buyer A should probably submit a letter indicating his decision to exercise the right of first refusal and send an Offer to Purchase as well, mirroring the terms of the bona fide offer. With regard to timing, the deadline would be at midnight on the 7th day. 5.) Mortgage Banking/Finance - General Finance QUESTION: What are the best resources for a homeowner facing potential foreclosure? ANSWER: For immediate advice, a homebuyer should call 888-995-HOPE to speak to a counselor on how to avoid foreclosure. This line is available in English and Spanish, 24/7. Or visit www.995hope.org for more information.
For counseling resources, there are nonprofit organizations and other experts dedicated to helping consumers avoid foreclosure can be invaluable. Homeowners at risk should:
Debbi Conrad |