Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - June 8, 2009 1.) Offer to Purchase - Financing Contingency The buyer's delivery of a conditional commitment satisfies the delivery provisions of the WB-11 financing contingency. As the contingency is drafted, the seller is not allowed to reject a buyer's commitment because it is conditional. Once delivered, the buyer takes the risk of meeting the commitment conditions to obtain the financing. Although there are benefits to having the buyer sign or otherwise acknowledge the loan commitment, it is not required by the offer to purchase to accomplish delivery. If the loan commitment is not delivered in a timely manner, the seller may elect to terminate the contract per lines 171-172. If the commitment is timely, the seller may offer the primary buyer a Cancellation Agreement and Mutual Release (CAMR) for their consideration, but the buyer is not obligated to agree to the CAMR or sign it. 2.) Offer to Purchase - Option to Purchase QUESTION: An agent has a listing with the seller for the sale condominium units. The seller wants the agent to draw up a rent-to-own contract for one of the listings. The agent is not sure how to do this. The offer would be closing in 13 months. Does the agent prepare a lease and also have the buyer sign an offer to purchase and a company Addendum A? ANSWER: There appears to be two interests in real estate being negotiated between the buyer and the seller; the rental and the sale of the condominium unit. There is no state-approved form for a rent-to-own situation. The condominium documents should be reviewed to make sure there are no prohibitions on unit rental. The parties may structure their agreement in a variety of ways; a lease and an offer to purchase, a lease with an option, an offer with early occupancy or a land contract. The agent may discuss these alternatives with the parties for their consideration. It will then be up to the parties to decide how to structure the transaction. 3.) Agency - Multiple Representation QUESTION: The agent has a listing with the seller with consent to designated agency marked and a buyer agency agreement with consent to designated agency chosen by the buyers. The buyers want to buy the seller's condominium unit. Please advise what steps to take. ANSWER: A single agent cannot provide multiple representation with designated agency representation in this transaction so something will need to be changed with regard to the agency relationships if this transaction is to be pursued. There are several ways that this situation might be resolved, depending upon the preferences of the clients and the agent. Some possible solutions include: a) The buyer or seller (or both) may change his or her consent for representation to multiple representation without designated agency. By operation of law, when both parties have consented to multiple representation (either with or without designated agency) but neither or only one has selected the designated agency component, then the agency relationship for both parties is automatically deemed to be multiple representation without designated agency (dual agency) and the agent may not place the interest of any client ahead of the interest of any other client. b) Another agent in the company may be brought in to represent either the buyer or the seller in the transaction so that everyone can proceed with the multiple representation with designated agency selected by both parties. c) The buyer agency agreement may be modified to exclude the listed property from the agreement. The agent may then proceed to work for the seller as the listing agent, and the agent may provide services to the buyer as a subagent or the buyer may work with an attorney. d) The listing contract may be modified to make the buyer an exception to the listing and the agent then would work as a buyer's agent. The agent may provide brokerage services to the seller as a customer or the seller can work with an attorney. 4.) Listing Contracts - Listing Protection QUESTION: An agent has had a property listed for about 4 months. The property was previously listed with another broker. About 9 months ago there was an offer to purchase written that was contingent on the sale of the buyer's home and the buyers could not sell their home. Now the buyers have sold their home and they have made another offer on the property. There was no list of exclusions or protected buyers given to the agent when he listed the property. The previous listing broker told the seller there is no jeopardy of any commission being owed to the current listing broker. Is this correct? ANSWER: A prudent broker would first ascertain whether the property was previously listed before taking a listing. If there was a prior listing, the listing broker should request a list of protected buyers from the seller and send a written request to the prior broker if the seller does not respond or is uncertain. The listing broker should ask about any list of protected buyers received from the prior listing broker as well as any buyers who submitted offers or had direct discussions with the seller. If the seller has questions about his or her legal rights, these questions must be directed to the seller's attorney. A prudent listing buyer would identify any buyers that a prior listing broker has protected under a prior listing. Buyers may be protected for listing protection in one of four ways. If the buyer (1) submitted a written offer to purchase or (2) negotiated directly with the seller, the listing protection is automatic and the first listing broker would not have been required to perform any additional steps to protect the buyer for the override period. If, during the term of the listing, the buyer (3) attended an individual showing or (4) negotiated with a broker, the buyer will be protected only if the listing broker delivered the buyer's name to the seller within three days of the expiration of the first listing contract. "Negotiated," for these purposes, means that the buyer discussed the potential terms upon which the buyer acquired an interest in the property. If the buyer were protected under the first listing, the prior listing broker would then have, in essence, a one party listing for protected buyers during the override period. The prior listing broker accordingly must present any offer a protected buyer writes to the seller. The prior listing broker will earn the listing commission if this offer is accepted and closes. A licensee who gives a seller legal advice about another broker's contractual rights per another listing contract may be accused of license law and ethical violations. Giving legal advice is prohibited and may violate Wis. Admin. Code § RL 24.06(1) and Article 13 of the Code of Ethics. 5.) General Real Estate - Foreclosure QUESTION: From the time a property goes through the sheriff's sale and the sale is confirmed by the court, how long does the previous owner have to remove all their belongings? ANSWER: At the end of the redemption period, the property is sold at a sheriff's sale to the highest bidder. Advance notice of the sheriff's sale is published in the newspaper once a week for six weeks and the sheriff posts the notice of the sale in six public locations. Sheriff's sales are held at the county court¬house and are open to the public. Approximately one to three weeks after the sheriff's sale, the attorneys for the bank will hold a hearing for the court to confirm the sheriff's sale. The court will normally approve the highest bid. The lender may ask for extra expenses to be added to the judgment and ask for a writ of assistance if it becomes necessary to evict occupants of the property after the sheriff's deed is recorded. The last voluntary move out date will depend on the writ of assistance is issued by the court. Generally a writ of assistance, i.e. the court order directing the sheriff's department to remove any occupants and their possessions from the home, is issued at the judicial confirmation hearing. Debbi Conrad |