Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - September 21, 2009
Agents holding open houses or showing for-sale properties by themselves can be a target for violent crime. The possible threat seems magnified as of late, with so many foreclosed homes on the market that offer a whole new set of personal-safety concerns. According to former agent Tracey Hawkins, who now runs the Kansas City-based business Safety and Security Source, real estate professionals trying to sell bank-owned homes could run up against defiant squatters occupying an abandoned property; angry and aggressive former homeowners who blame the agent for the loss of their dwelling; or equally angry and aggressive neighbors upset about the problems that foreclosures draw to their communities, such as eyesores and crime. Beyond the human threat, Realtors marketing foreclosures could encounter deserted dogs that may be hungry and, therefore, vicious. They could also come in contact with such environmental hazards as mold and dangerous chemicals left over from former methamphetamine labs. Additionally, because these properties attract looters who strip the homes of their fixtures and appliances, a practitioner could possibly walk into a crime-in-progress. As always, there also is the possibility that the "client" of a showing could actually become the perpetrator of a violent act against the Realtor. To protect themselves, agents should carry pepper spray or some other kind of self-defense product with them at all times; meet prospective customers in an office setting before showing them a property; and, finally, demand identification from them and photograph it.
1.) Advertising - Sold Signs After receiving complaints regarding the improper use of sold signs in the 1990’s, the Real Estate Board of the Department of Regulation and Licensing (REB) adopted an interpretation of the rule against misleading advertising (Wis. Admin. Code § RL 24.04) that sold signs could only be put on a property after the transaction closed. On further consideration, the REB proposed a rule allowing sold signs and other signs which would have the result of slowing or stopping sales activities on the property to be posted only after all contingencies are cleared and if the seller approved. It was finally decided not to adopt a new rule but to rely on the misleading advertising rule. In the 1990’s it was expected that enforcement of § RL 24.04 would follow the lines then set by the REB: a sold or similar sign may be posted only when all contingencies have been met or removed and the seller has given approval knowing that it means the property will be off the market. Times have changed and different people populate the REB and the DRL. One current goal of regulated real estate is to promote transparency for consumers. Under current standards and interpretations, and depending upon the facts and circumstances, if the information on a sign suggests to the public that the property is sold, the practice may arguably be misleading advertising in violation of license law and the Code of Ethics. Wis. Admin. Code § RL 24.04(1) requires that advertising not be false, deceptive or misleading. Article 12 of the Code of Ethics requires REALTORS® to be careful to present a true picture in their advertising and representations to the public. Before the closing, it is more appropriate to use a sign or sign riders that say “contract pending,” “accepted offer” or similar language that is more reflective of the actual status of a transaction awaiting closing. 2.) Agency - Cooperation Duties QUESTION: Can a seller, in an Amendment to Listing Contract form (after property has been listed), state that another broker will not be allowed to show their property? ANSWER: Yes, assuming the listing broker accepts the seller’s proposed amendment. In the Cooperation, Access to Property and Offer Presentation section on page 1 of the listing contract, the seller agrees that the broker will cooperate and work with other agents in marketing the property, including subagents and buyer's brokers, except as specified in the blank line near the end of this section. This is consistent with Article 22 of the Code of Ethics Article 22, which provides that REALTORS® shall cooperate with other brokers unless cooperation is not in the seller's best interests. Similarly, Wis. Admin. Code § RL 24.13(2)(a) provides that listing brokers shall permit all buyers and their agents access to a listed property for showings unless such access is contrary to the seller's specific written instructions. The 2008 listing instructs the seller to, “Note any brokers with whom Broker shall not cooperate, any brokers or buyers who shall not be allowed to attend showings, and the specific terms of offers which should not be submitted to Seller.” If this has not been done in the listing contract, it may be done in the WB-42 Amendment to Listing Contract. The listing broker will need to assure that the other broker is made aware of the seller’s restriction. 3.) Offer to Purchase - Closing Issues QUESTION: The seller has an accepted offer to purchase. Line 44 of the offer says closing will be held, “no later then October 5, 2009 unless another date is agreed to in writing.” Through conversations with the buyer's broker, the closing is now scheduled for October 6, 2009 (1 day later). Is it required in every case to get an amendment drafted and signed when the closing is to take place after the original date in the contract? If not required, would it be prudent practice to do so? In this particular case, the seller doesn't really care that is has been pushed back and is glad to have the extra day. Lastly, if an amendment is required in this case, does it matter which broker initiates it? Obviously, the buyer's broker does not seem inclined to write this up even though it is his buyer who would be in breach. Or, is this an issue the listing broker does not have to deal with since it does not affect the seller's rights? ANSWER: Wis. Admin. Code § RL 24.08, as well as Article 9 of the Code of Ethics, provides that licensees shall put all offers and commitments regarding the transaction in writing. Wis. Admin. Code § RL 24.08 further dictates that the exact agreement of the parties be documented in writing. An amendment to modify the closing date may be drafted by either broker to reflect the new agreement of the parties. Failing to amend the closing date leaves both parties open to a claim by the other party that there is a breach of contract when the transaction does not close on or before the date specified in the offer. 4.) Disclosure - Lead-Based Paint QUESTION: The broker received an offer on a condominium unit that was built in 1997. The property is being sold by a Power of Attorney. The cooperating agent included a clause in the offer that states, “Acceptance of this offer is expressly conditioned upon the seller and the listing agent confirming the accuracy of the information set forth in Addendum S by signing the same.” The listing broker was informed that they are obligated to “comply” with the request. ANSWER: Federal lead-based paint (LBP) law dictates, as of December 6, 1996, that no offers on residential housing built prior to 1978 can be accepted without the mandatory LBP disclosure. The WRA Addendum S was drafted to meet this regulatory mandates. Some companies have office policies requiring the use of LBP addenda in all residential transactions, but this is not required by federal law. 5.) Landlord/Tenants - Miscellaneous QUESTION: The broker has been approached by a commercial developer that mostly deals with leasing commercial business office and retail properties. He would like the broker to be the listing broker to lease out retail/office space. Does the broker have the proper licensing to do this? Is there some sort of commercial licensing needed or is a current license as a Wisconsin real estate broker and salesperson needed? The broker understands he may want to get some commercial certifications to increase knowledge of the commercial market, but is this required by law to do these transactions? ANSWER: The Wisconsin Department of Regulation and Licensing issues real estate salespersons and real estate broker licenses. There is no separate credential for commercial practice in Wisconsin. The broker must comply with Wisconsin law and practice with competence. Working with an experienced commercial broker or a mentor with commercial experience is suggested to assure competent practice. When a licensee engages the assistance of another who is competent, any person engaged to provide such assistance must be identified along with his or her contribution per Wis. Admin. Code § RL 24.03. Debbi Conrad |