Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - June 24,
2008 1.) Disclosure - Material Adverse Facts 2.) Offer to Purchase - Delivery QUESTION: The listing broker is working with the seller to respond to an offer. Can the bump clause be modified so that the time would start running when the bump notice is sent to the buyer's agent if agreed to by the buyer and seller in a counter-offer? There is concern about the distance of the buyers from the property (300 miles), and the only authorized forms of delivery are personal delivery to the buyers or faxing to the buyer's agent. ANSWER: Pursuant to the standard language in the WB-11 Residential Offer to Purchase, the bump notice must be delivered using the delivery methods authorized on the first page of the offer. Not only must there be proper delivery, but a second standard must also be met: actual receipt. "Actual receipt" generally means that the buyer has the written notice in his hands, regardless of whether it came by personal delivery, mail or fax. The terms of the contract may be modified to meet the
intent of the parties. For example, it may be advisable to provide that
mail is not an appropriate means of delivering a bump clause notice
because it may take a long time, delaying the process. Alternatively,
the parties may use a delivery standard rather than actual receipt by
the buyer to trigger the timeline. Other variations are to allow actual
receipt by the buyer's agent or delivery to the buyer's agent to be the
event that starts the clock running. So long as the parties agree and
clearly state the triggering event, the DRL-approved offer may be
modified through the use of line-outs, material stated in the
Additional Provisions lines in the form and addenda, and through the
use of counter-offers and amendments as well. 3.) Offer to Purchase - Preclosing Occupancy/Repairs QUESTION: The sale of a property that the agent has listed is to close at the end of the month. Due to the heavy rains there is water in the basement and there may be some mold problems. The buyers no longer want to purchase the property. How to proceed? ANSWER: According to the offer, the seller shall maintain the property in the same condition as of the date of acceptance of the offer. Provided the condition did not exist at the time of the offer and the cost to repair does not exceed 5% of the selling price, the seller shall be obligated to repair the damage. If the damage exceeds 5% of the sales price, the buyers may elect to terminate the contact of sale - see the Property Damage between Acceptance and Closing provisions on lines 115-123 of the WB-11 Offer to Purchase. The buyers may wish to request permission to have their
own qualified inspectors inspect the property to determine the extent
and amount of damage - especially if they do not trust the findings of
the seller as to the extent of damage. In the event the parties cannot
reach a mutual resolution, each party should be directed to their
respective attorneys. 4.) Agency - Switching Agency QUESTION: An agent is switching companies and mentioned to the broker that he would make brief contact with the sellers of the listings he currently has to let them know that he will be leaving the company and will be going to RE/MAX. The broker said that it would be fine if agent tells them he is leaving, but the agent cannot tell them the name of the company he will be going to. Is that correct? ANSWER: The REALTOR® Code of Ethics, in Standard of Practice 16-20 reads: "REALTORS®, prior to or after terminating their relationship with their current firm, shall not induce clients of their current firm to cancel exclusive contractual agreements between the client and that firm." It is debatable whether providing the name of the
agent's new brokerage rises to the level of "inducement" of the seller
to cancel the current listing contract. The context of how that
information is provided would be significant. If the agent and broker
are on good terms, as in this case, it may be prudent to simply have
the broker provide his written approval of the letter that the agent
was planning on mailing, thereby avoiding any issues. 5.) Licensing Issues - Miscellaneous QUESTION: An agent's father-in-law passed away two years ago and the mother-in-law resides in Arizona. They have a cemetery plot in Green Bay. Can a real estate licensee sell this? ANSWER: Every person who sells, solicits the sale, or expects to sell or solicit the sale of 20 or more cemetery lots or mausoleum spaces per year during two consecutive calendar years must register with the Cemetery Board of the Department of Regulation and Licensing pursuant to Wis. Stats. § 440.91. A cemetery salesperson registration requires the written request of a cemetery authority and the payment of a $53 fee. However, a person who solicits the sale of cemetery lots or mausoleum spaces in a cemetery organized, maintained and operated by a town, village, city, church, synagogue or mosque, religious, fraternal or benevolent society or religious order is not required to be registered. The cemetery may have its own conveyance forms that must be used, so licensees should first check with the cemetery. The sale must be entered on the cemetery's deeding system records (see Wis. Stats. § 157.08) and may be recorded with the register of deeds, if desired. If a cemetery has no required forms, vacant-land forms may be appropriate. 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 |