Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - August 4,
2008 IMPORTANT NOTICE RE: DRL LICENSES & RENEWALS Wisconsin Attorney General J.B. Van Hollen issued an Attorney General's Opinion (OAG-3-07) stating that the "DRL is prohibited from granting any professional license or credential to an alien who is present in the United States illegally." In order to comply with the Attorney General's directive and federal law governing the issuance of state professional licenses and credentials, a new requirement went into effect on August 1, 2008. The DRL will require applicants who are seeking licensure and licensees who are seeking renewal of their licenses or credentials to declare whether they are a citizen or national of the United States or a qualified alien or nonimmigrant lawfully present in the United States. This new requirement will apply to all new applications
received by the DRL after August 1, 2008 and will apply when all
current license or credential holders renew. This requirement applies
not only to real estate brokers and salespersons, but also to
appraisers, home inspectors and all others receiving a license or
credential from the DRL. 1.) Listing Contracts - Termination/Withdrawal QUESTION: In March 2008 the broker took a listing for a couple selling their rental property. At the time of the listing, the seller chose a list price of $149,900 which the broker felt at that time was fair based on market data, and due to the number of calls from other agents, seemed to be a very fair price. There have been, on average, one or two showings per week since the home was listed. ALL of the feedback from buyers indicated that the property needed many cosmetic updates, which were items the broker pointed out to the seller at the first meeting at the home, at the time the listing contract was executed and on two other occasions. The seller told the broker last week that they were finally going to take care of the updates. As of yesterday, however, none of the upgrades had been completed, and the property now visually appears to be in a state of neglect. The sellers have also informed the broker that they may decide to turn the property over to their lender and let them do a short sale, or they may decide to go back to a FSBO to avoid commission. Does the listing broker have any recourse for a commission since it appears that the sellers are doing whatever they can to avoid a sale under the current listing contract? ANSWER: If the seller is deemed to be in breach of contract for
failing to cooperate with marketing efforts, the court will not award a
commission to the listing broker (the court is reluctant to assume
there would have been a sale had the seller not been in breach).
However, the court may award damages for the seller's breach -
typically computed as the broker's actual expenses incurred in the
marketing the property and a reasonable value for the broker's time on
behalf of the seller. In the alternative, the broker and the seller are
free to negotiate an amount to be paid by the seller as compensation to
the broker for allowing the seller to terminate the listing contract
early. 2.) General Real Estate - Foreclosure QUESTION: An agent has a buyer who is going to look at a home that is in foreclosure. The buyer has pre-approval from a bank. On the MLS it states a buyer must be pre-approved by another specific lender, even cash offers. Is this legal? ANSWER: A seller may condition the sale to mortgage pre-approval per a certain lender. In this case the seller is requiring pre approval by a specific lender, but is not requiring the loan to be through that lender nor is their any cost to the pre-approval. 3.) Agency - Commissions/Incentives QUESTION: The buyer's agent's client went off on his own and got an accepted offer on a FSBO. The purpose was to buy a house for his daughter. When confronted about the buyer agency fee, he said he would either put the property in his daughter's name or have her write a new offer (purportedly voiding his offer) to avoid commission. Can the buyer avoid paying the broker in this manner? ANSWER: The success fee provisions at lines 26-29 of the 2008 WB-36 Buyer Agency Agreement state, "If this Agreement calls for a success fee, it is agreed that Broker has earned the success fee if, during the term of this Agreement (or any extension of it), Buyer or any person acting on behalf of Buyer acquires an interest in property or enters into an enforceable written contract between owner and Buyer to acquire an interest in property, at any terms and price acceptable to owner and Buyer(emphasis added)." This means that the buyer cannot evade payment of the buyer's broker's fee just by having his family member or solely-owned corporation purchase the property or obtain the interest in property for the purposes of later conveying it to the buyer or employing it for his or her beneficial use. 4.) Mortgage Banking/Finance - General Finance QUESTION: Re: 2008-2009 First-Time Homebuyer Tax Credit. Does the tax credit ($7,500 max.) create a refund if the homebuyer does not owe any tax on their 2008 federal income tax return? ANSWER: Yes, the tax credit (10% of value of house) offsets whatever the tax owed is when the homebuyer files his or her 2008 income tax returns and will increase the refund if no tax was due. Keep in mind this is really an interest-free loan because the amount of the credit must be paid back in 15 annual installments beginning two years after the home is purchased. The homebuyer receives the benefit of this credit - which might be a refund check - when 2008 tax returns are filed in 2009, not at the time of closing when the extra money would generally be most useful. Debbi Conrad |