Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - April
14, 2008 SPECIAL REALTOR® ALERT: DRL APPROVES FORMS USE
EMERGENCY RULE On April 8, 2008 Department of Regulation and Licensing
Secretary Jackson signed the order adopting the following emergency
rule relating to the use of approved forms for real estate practice
(strikeouts indicate deletions; underlining indicates additions): (1) A licensee who reproduces or arranges for printing a contractual form prepared and approved by the department pursuant to s. 452.05 (1) (b), Stats.:
(a) Shall assure that the numbering of
lines,
(b) May not reproduce the form in such
a manner that optional provisions are left out and blank
(c) Shall indicate that the form is reproduced by the licensee's firm, stating its address and telephone number at an appropriate place on the form.
(d) May not add
additional blank lines
(e) Shall retain the department's approval statement and date in the upper left corner exactly as these appear on the department's form. (f) Shall assure that the formatting of the form is substantially identical to that on the department's form.
The purpose of the emergency rule is to prohibit the altering of Department-approved forms in a manner that blank lines containing inserted provisions are placed between provisions of the approved form text in such a manner as to create the appearance and implication that they are approved by the Department. The emergency rule does not change the ability to use the blank lines provided in the approved forms or to attach an addendum as authorized under § RL 16.06 (4) and (5). The end result is that Department-approved forms may not be substantively altered and that additional lines may not be added to the forms. The emergency rule will become effective on April 16, 2008 upon publication in the Wisconsin State Journal, the official state newspaper.
1.) Disclosure - As Is QUESTION: In the last 18 months, a broker who specializes in finding foreclosed and distressed properties for investors has seen a large increase in the number of licensees listing REOs. Some of these licensees are not disclosing blatant adverse facts when they list these properties. When asked why they did not disclose the material adverse facts, their response is, "it's a foreclosure, so it is sold 'as is.'" Apparently some of these agents do not go to the property to inspect it - or send out non-licensees to look at the property -- and don't disclose any defects that they may have observed, e.g., mold on walls or foundation bulge or crack, etc. Doesn't a broker listing a property being sold "as is" still need to disclose material adverse facts? ANSWER: From the licensee's standpoint, Wis. Admin. Code § RL 24.07 requires licensees to perform reasonably competent and diligent property inspections and disclose potential adverse material facts to the parties in writing. This duty is not waived in "as is" sales. In fact, where the buyer is purchasing as is it is very important for the buyer to know the condition of the property. Generally the buyer has professionals inspect the property as a condition of the offer to purchase, but this does not excuse the agent from his or her duty to assure that all known adverse material facts are disclosed in writing to the buyer and that all affirmative statements are in fact true. Generally, an "as is" clause alerts the buyer that he or she is responsible to determine the condition of the property being purchased. The use of an "as is" clause, however, does not necessarily mean that the seller may still not need to make some disclosures about the property. First, the seller has the duty to exercise ordinary care in refraining from any act which would cause foreseeable harm to another or create an unreasonable risk to others. Second, the seller may be liable for misrepresentation if he or she actively conceals a defect or prevents a buyer from investigating the property and discovering the defect. Third, the seller may be liable if he or she makes false affirmative statements about the property, as was shown in the Grube v. Daun case summarized on page 8 of Legal Update 93.04. Finally, the seller may be liable in an "as is" situation if he or she fails to disclose material conditions which the buyer is in a poor position to discover, as discussed in the Green Springs Farms case (see page 9 of Legal Update 93.04). Thus the use of an "as is" clause is not always going to be an escape for the seller from all disclosures. Brokers should make sure that their agents all are inspecting the REO properties they are listing and disclosing material adverse facts in writing to the parties READ MORE ABOUT IT: 2.) Commissions - Bonuses QUESTION: Could you please tell me the "Industry Standard" in dealing with "bonuses" on a commission? Is a broker/owner allowed to take a percentage of an agent's bonus working as a buyer's agent in selling a home? Is the standard different if the bonus comes from the selling (listing) agent or the sellers themselves? ANSWER: Wis. Stat. § 452.14 (3)(f) prohibits a salesperson from accepting payment for services in a real estate transaction from anyone but the salesperson's broker. Accepting a bonus directly from another broker could place the salesperson's license in jeopardy. Therefore, the payment must be through the salesperson's broker and may be subject to any commission arrangements between them. In other words, the broker may provide in office policy that the broker retains a certain percentage of bonuses received by the company's agents in transactions. The Code of Ethics, in Standard of Practice 16-15, states that in cooperative transactions, a REALTOR® shall compensate the principal broker and shall not compensate or offer to compensate (directly or indirectly, including bonuses), any licensees employed by/affiliated with another REALTOR®, without the prior express knowledge and consent of the cooperating REALTOR® broker. A seller may offer a commission incentive or bonus to get a property sold, but the law affects how a salesperson may accept it. Wis. Stat. § 452.14 (3)(f) prohibits a salesperson from accepting payment for services in a real estate transaction from anyone but the salesperson's broker. Accepting a bonus directly from a seller could place the salesperson's license in jeopardy. Therefore, the payment must be through the salesperson's broker and may be subject to any commission arrangements between them. READ MORE ABOUT IT:
REMEMBER YOUR SAFETY ALWAYS COMES
FIRST: If you found yourself alone in a property with a client who wanted to harm you or rob you, what would you do? Would you put up a fight or try to escape? It isn't pleasant to think about, but it's important to know the facts. Experts agree that when escape is an option that is the route you should take. While every REALTOR® should take a basic self-defense course, the primary goal in any incident is to escape from the danger and call for help. When faced with potentially menacing behavior, you should first try to find a discrete way of removing yourself from the situation. Try to avoid triggering the emotion a predator might use to justify an attack. For example, you can say that you need to step outside to make a phone call and then don't come back inside. If an attack does occur, trust yourself and stay as calm as possible. Think rationally and evaluate your options. There is no single right way to respond to a confrontation, because each situation is different. Your response should depend on the circumstances: the location of the attack, your personal resources, the characteristics of your assailant and the presence of weapons. There are many strategies that are effective, but you must rely on your own judgment to choose the best one. No resistance: . Stalling for time: Appear to go along with the
attacker. This might give you time to assess the situation. When his
guard is down, try to escape. Verbal assertiveness: Physical resistance: Observation: (Source: North Carolina Association of REALTORS®)
Strengthen Your Skills by Earning
Your ABR® Designation - April 23-24, 2008 in Appleton - taught by
Mel Check Attend the upcoming ABR® course and strengthen your
understanding of: Complete your ABR Elective course by attending
the Foreclosure Opportunities for Buyer/Clients taught by Dave Sayas on
April 25, 2008.
NEW FORMS MANDATORY JULY 1 Just a reminder that the new WB1, Residential Listing Contract, and WB36, Buyer Agency/Tenant Representation Agreement, are mandatory July 1, 2008. Forms are available for purchase at http://www.wra.org/forms (WB01T and WB36T) or by calling 1-800-279-1972. Copies are available through ZipForm also. A line-by-line video explanation of the forms by Attorney Dave Sayas can be viewed at http://www.wra.org/formsupdate. This Wisconsin REALTORS® Association Best of the Legal Hotline service is provided for you by the WRA's Legal Affairs Department. The service should be considered a general statement of applicable legal principles. Given this format, it is impossible to fully address all potential legal issues which might apply in any particular situation. A determination of any individual's legal rights in a transaction can only be obtained after complete analysis of the law and its applicability to the particular fact situation. Please contact the WRA Legal Hotline if additional information is needed, or private counsel, if legal advice is needed. Thank you for using the Wisconsin REALTORS® Association Best of the Legal Hotline service. Debbi Conrad |