Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - August 17, 2009 Do You and Your Clients and Customers Understand the EPA Lead Renovation Rules? The Wisconsin Department of Health Services also has a Webcast/Power Point slide show that discusses lead safety during renovations and includes an overview of the EPA's new Lead Renovation, Repairs and Painting Rule. Visit the DHS lead home page at http://dhs.wisconsin.gov/lead/ and click on the link for the EPA's Lead Renovation, Repair, & Painting Rule Webcast. 1.) Title Issues - Miscellaneous Title Issues The seller's obligation to provide clear title is contained in the title evidence provisions at lines 197-212 of the WB-11 Residential Offer to Purchase. Under these provisions the seller is required to provide title evidence not less than three business days before closing. The seller is required to give evi¬dence of title in the form of an owner's policy and pay the costs thereof. The title evidence must show title to the property is merchantable, subject to liens which will be paid out of proceeds and standard title insurance requirements and exceptions. Unless the offer dictates a specific title company the seller may choose. The place of closing provisions on lines 43-44 of the WB-11 identify the location of the closing, not the provider of the owner's policy of title insurance. The WRA has in the past contacted the RESPA office at HUD and asked whether a buyer would lose his right to choose the title insurance company if he drafts the purchase contract without specifying a title insurer but later says that he wants to choose one. HUD did not provide a definitive answer, but did cite section 9 of RESPA, which does not allow a seller of a property (or its agent) to require a buyer, as a condition of selling the property, to purchase owner's title insurance from any particular title company. To avoid any ambiguity or dispute regarding the issue, a buyer who wants the seller to provide title evidence from a certain company should draft the offer accordingly. If the offer remains silent, the RESPA prohibitions of making the offer conditioned upon the use of a certain title company appear not to apply, thereby allowing the seller to choose. 2.) Offer to Purchase - Miscellaneous QUESTION: The broker has an accepted offer on her listing. The offer was drafted through a buyer's agent. The offer is a cash offer, not subject to financing or appraisal. Now the broker has been contacted by an appraiser wanting to appraise the property. The broker said that the offer is not subject to an appraisal and they can schedule it after the closing on August 28, 2009. The buyer's agent insists that the buyers have a legal right to do the appraisal prior to closing. How to proceed? ANSWER: The buyer and the seller each have the legal duty to use good faith and due diligence in completing the terms and conditions of the offer (see lines 228-29 of the WB-11 Residential Offer to Purchase). Additionally, the seller agrees to allow the buyer's inspectors reasonable access to the property if the inspections are necessary to satisfy the contingencies in the offer (see lines 97-98 of the WB-11). In this instance, however, the buyer's offer is not conditioned upon financing or an appraisal, and absent the seller's permission, the appraiser does not have an absolute right to come on the property. 3.) Offer to Purchase - Contingencies QUESTION: According to the WRA Addendum B to the offer to purchase, lines 29-37, a current written report from a county sanitarian, licensed master plumber, licensed master plumber-restricted service, licensed plumbing designer, registered engineer, certified POWTS inspector, certified septage operator, and or a certified soil tester is needed, and if required by the inspector, the POWTS is to be pumped at the time of inspection at the seller's expense. Per the WRA Legal Update 01.08 discussion of the private sanitary system inspection contingency, it states that a POWTS Maintainer can evaluate a septic system. Is this correct? The listing agent says that according to Addendum B, the POWTS maintainer is not qualified to inspect the septic system and the seller will not pay for the pumping either. Who is right and how does the broker proceed when the listing agent says that the buyer's inspector was not qualified to inspect the septic? ANSWER: The Department of Commerce has modified its rules since the publication of Legal Update 01.08. Information regarding the most recent changes is available in the April/May 2008 Legal Update, "Addendum B Revisions: Wells and POWTS." The current WRA Addendum B does not list POWTS Maintainers for inspections because POWTS Maintainers are not authorized to conduct septic inspections. See the following information about the POWTS Maintainer credential from the Department of Commerce web site at http://www.commerce.state.wi.us/sb/SB-DivCreds.html.
Addendum B states that the seller will pay for the septic if required by the inspector. If an unauthorized individual conducted the inspection and required pumping, the seller could challenge the inspection and the fees for pumping. If the parties cannot resolve this septic inspection disagreement, they may be referred to their attorneys for legal advice. 4.) Licensing Issues - Miscellaneous QUESTION: How many properties can a builder or developer sell without being licensed? What about if there is a phase 1 and a phase 2? ANSWER: A license is required under Wis. Stat. Chapter 452 when a person is engaged (wholly or in part) in the business of selling real estate, even if the real estate is personally owned. When selling personally owned real estate, the statute requires the establishment of a "pattern of sales" before licensing is necessary. Five sales in one year or 10 sales in 5 years is presumptive evidence of a pattern of sales. Developers, contractors, and other sellers thus have explicit notice of when it becomes necessary to either list the properties being sold with a licensed real estate broker or obtain a real estate broker's license. An unlicensed individual who proceeds with a pattern of sales without taking either of these measures may be subject to an administrative injunction by the DRL or legal action by the local district attorney. Use of an attorney does not exempt a person from the requirements under the pattern of sales. READ MORE ABOUT IT: 5.) Mortgage Banking/Finance - Loan Originators QUESTION: Can an individual work for one lender as a loan officer and at the same time work for another company as a real estate agent? Can a loan officer who has a real estate license originate FHA loans? ANSWER: No, all loan officers of a FHA approved lender who works on FHA loans must work exclusively for the lender and cannot work as a real estate agent (even on a part time basis) for another company at the same time they are working for the lender. Lender employees, such as loan officers, underwriters, processors and other support personnel must work exclusively for the lender and cannot work (even on a part time basis) for other lenders or other companies engaged in the real estate or mortgage finance business at the same time they are working for the lender. This restriction also applies to income earned as an owner in another company in the mortgage lending, real estate, or a related field. A loan officer who originates FHA loans can have a real estate license, but cannot practice real estate with a broker/company. READ MORE ABOUT IT: Debbi Conrad |