Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - June 15, 2009 1.) Disclosure - Environmental & Health Issues; Offer to Purchase - Testing Asbestos cannot be identified simply by looking at it unless it is labeled, so the only way to know for sure is to get a sample analyzed. Generally only asbestos material that is damaged or will be disturbed need be tested. Undisturbed asbestos which is in good condition generally will not release asbestos fibers and may best be handled by leaving it alone. Problems with friable or damaged asbestos may be treated by either repair or removal. Repair usually consists of sealing or covering the asbestos material. However, under the newly revised asbestos rules in Wisconsin that went into effect on May 1, 2009, vermiculite insulation is assumed to be asbestos-containing material unless proven otherwise in accordance with EPA recommended sampling and analysis protocols specific to vermiculite insulation. At this time, EPA has not yet published official guidance for sampling and testing vermiculite insulation for the presence of asbestos fibers. Therefore, vermiculite insulation must be treated as asbestos-containing material. This may necessitate the use of certified asbestos workers for any projects disturbing or impacting the insulation. Information about the new asbestos rules and certification requirements for asbestos workers is found at http://www.dhs.wisconsin.gov/asbestos/. Given the apparent presence of insulation containing vermiculite, the seller should amend the real estate condition report for subsequent transactions to include the information the seller now knows from the home inspection report. If the seller does not disclose to buyers, that task may fall to the real estate licensee. An agent arguably should disclose the features potentially containing asbestos (insulation apparently containing vermiculite) as information suggesting the possibility of material adverse facts and direct the parties to the appropriate experts for further information and investigation. Wis. Admin. Code § RL 24.07(3) states that a licensee will be practicing competently if the licensee makes timely written disclosure of the information suggesting the material adverse fact to all parties to the transaction, recommends the parties obtain expert assistance to inspect or investigate for the possible material adverse fact, and, if directed by the parties, draft appropriate inspection or investigation contingencies. The duty to disclose has priority over any duty owed to the client. Whether the presence of vermiculate insulation, which is presumed to contain asbestos, constitutes a fact a licensee needs to disclose as an adverse material fact is a judgment that only the licensee can make after considering all of the facts and circumstances in the situation. If the agent, as a competent licensee, knows that this fact: (1) has a significant adverse affect on the value of the property; (2) significantly reduces the structural integrity of the property; (3) presents a significant health risk to the occupants of the property; or (4) is information that indicates that a party to the transaction is not able to or does not intend to meet their obligations under the contract, then the issue constitutes an adverse fact. If a party to the transaction were to so indicate, or if a competent licensee would generally recognize that this fact is of such importance that it would affect a reasonable party's decision to enter into a contract or would affect the party's decision about the terms of the contract, the fact is both adverse and material. If this fact is both adverse and material, then Wis. Admin. Code § RL 24.07(2) requires the licensee to timely disclose the fact in writing to all parties to the transaction, even if the client would direct the licensee not to disclose. READ MORE ABOUT IT: 2.) Disclosure - Underground/Aboveground Storage Tanks (USTs/ASTs) QUESTION: The broker is working with a client who the broker believes took out an underground storage tank (UST) without using a certified remover. The broker is going to have the sellers disclose this to the potential buyer. What are the ramifications to the new owners if the prior owner didn't properly remove the UST? ANSWER: An out of service UST used for storing heating oil or an out of service UST of 1,100 gallons or less used for storing motor fuel for noncommercial purposes is required by Wisconsin law to be registered and closed (usually removed) by a certified tank professional. According to the Department of Commerce (DComm), which administers the UST regulations, a certified UST remover can give estimates for the work needed to be done to comply with the UST regulations, handle the notifications and paperwork required, remove and properly dispose of the UST and generally see that the job is done properly. If the UST is removed without complying with the UST regulations, licensees will generally be obligated to disclose this fact to all parties pursuant to Wis. Admin. Code § RL 24.07(2), and buyer financing may be jeopardized without expert confirmation that there was no leakage or contamination from the improperly removed UST. On the DComm UST Closure page (http://commerce.wi.gov/ER/ER-BST-Closure.html) it indicates that:
READ MORE ABOUT IT: 3.) Disclosure - Abandoned well QUESTION: The broker has a property with a well in a shed that is no longer used. The seller is amending the Real Estate Condition Report (RECR). Does she have to have the well abandoned? ANSWER: The abandoned well likely must be removed. Any well inspections done in conjunction with a transaction must be conducted by a licensed well driller or a licensed pump installer. Master plumbers can no longer legally perform well inspections. Any un-used or non complying wells must be identified as violations of Chapter NR 812 of the Wisconsin Administrative Code. Any identified well is required to be properly filled and sealed with approved materials using prescribed methods. An individual employed by a Wisconsin licensed well driller or pump installer is required to do the well filling and sealing. Once the well has been filled and sealed, the contractor doing the work is required to submit a report of the work done, to the Department of Natural Resources (DNR). Reports that have been submitted to the DNR are available for viewing at http://dnr.wi.gov/wars/search.aspx. A list of Wisconsin licensed well drillers and pump installers is available online at http://dnr.wi.gov/org/water/dwg/Contacts.htm. READ MORE ABOUT IT: 4.) Agency - Buyer Agency Agreement QUESTION: The buyer wrote an offer in December with a buyer's agent. The buyer's agent did not keep in contact with the buyer and the buyer agency agreement expired. The broker knows that there is an extension to the contract if the buyer wrote an offer on any property during the term of the buyer agency agreement. The buyer is refusing to go back to the buyer's agent. Since December there has been a price reduction on the property and the buyer has been working with one of the broker's agents since February. The buyer wants to write another offer on the property. What is the protection under the buyer agency agreement? ANSWER: The WB-36 Buyer Agency/Tenant Representation Agreement follows the pattern established in the residential listing contract for listing protection. In the case where the buyer or buyer's broker submits an offer to purchase on a property during the term of the WB-36, that property will automatically be protected for one year after the buyer agency agreement ends. If an offer has not been submitted, then the buyer's agent would have had to deliver the property description to the buyer no later than three days after expiration of the buyer agency agreement in order to protect the property. If a former buyer/client would wish to go back to purchase a protected property during the one-year extension period, the former buyer's broker would have the exclusive right to represent the buyer as a buyer's agent in the negotiations for that property. The broker's right to compensation would be determined according to the standards set out in the original buyer agency agreement. The broker's agent now working with the buyer may draft another offer to purchase on the property as long as the agent does not serve as a buyer's agent. The agent may earn the MLS offer of compensation if the former buyer's agent has not maintained a series of events resulting in the sale of the property to the buyer. MLS compensation is based upon procuring cause and is independent of the commission earned by the buyer's agent per the WB-36. The buyer may owe the former buyer's agent's fee if the extension of agreement terms apply to the property. The buyer may be referred to private legal counsel for advice regarding their rights and obligations based on the prior buyer agency agreement. 5.) General Real Estate - Miscellaneous Issues QUESTION: A seller wants the broker to offer his condominium unit for an auction with sealed bids and a minimal bid of $200,000. He wants the broker to advertise and hold some open houses and then he will select the bid he will accept on June 28th. Is the broker able to do that? There will not be an actual "auction" that would need an auctioneer. It is all with closed bids. The broker will be inviting all members of the MLS to participate with their potential customers/clients, etc. Anything else to be aware of? ANSWER: Just because there is no exchange of verbal bids does not necessarily mean there is no auction. Whether a process involving, for example, sealed written bids may be an auction requiring a registered auctioneer may be determined by examining the definition of "auction" in Wis. Stat. Chapter 480. Keys to look for in a sealed written bids process are whether there is more than one round of bids and whether it is the seller or some other person who accepts the highest or best bid. If there is a series of bids or if someone other than the seller accepts the best offer, it may be wise to consult with an attorney to see whether the process is an auction requiring a registered auctioneer. A real estate broker who advertises real estate for sale by using a sealed bid would not be conducting an auction if there is no "acceptance" by the real estate broker of the highest or most favorable offer and the seller accepts whatever bid he or she chooses. Debbi Conrad |