Wisconsin REALTORS® Association - Legal Hotline Hottips
Legal Hottips - October 19, 2009 1.) General Real Estate - Foreclosure The buyer submitted an offer to purchase on a bank-owned (REO) property. Within the attached Addendum A, the buyer asked the seller to contribute a $2,000 closing cost credit. The seller and the buyer agreed on a purchase price and closing date, the only provisions that were countered from the original offer to purchase. The bank/seller later sent an Addendum to Real Estate Purchase Contract (Addendum) that the buyer initialed and agreed to (after review by the buyer’s attorney). Prior to closing, a draft of the closing statement revealed no closing cost credit. The REO seller states it was not part of the additional terms or conditions of the 11-page Addendum and that the terms and conditions of the Addendum prevail over all prior agreements. The buyer claims the credit was never removed from the original agreement contained in the offer, the counter-offer and Addendum A. How to proceed? The parties’ agreement is found in the writings forming this contract – the offer to purchase, the last counter-offer, the Addendum A and the subsequent Addendum to Real Estate Purchase Contract. The challenge is to determine which writing prevails if there is a conflict between two or more writings. The beginning point in this process may be to determine if there is language in the last Addendum signed by the parties that overrides all previous agreements as to the $2,000 credit. If the parties are unable to resolve their differences, they should be directed to their respective legal counsel for advice regarding their possible remedies. 2.) Listing Contracts - Termination/Withdrawal QUESTION: An agent had a listing contract that was valid until the end of the year. Unfortunately, the seller passed away last week. Since then the family has negotiated and accepted an offer directly from a buyer who had previously contacted the agent. Does the agent still have the listing contract or was it terminated upon the death of the seller? ANSWER: The listing contract terminated upon the death of the seller. Because the negotiations and the offer to purchase came after the termination of the listing, the family was free to negotiate directly with the buyer without any obligation to the listing broker. The family can voluntarily pay listing broker but is not legally bound to do so. READ MORE ABOUT IT: 3.) General Real Estate - Condominiums QUESTION: The buyer is investing in condominiums specifically to rent out. There is an accepted offer on a condominium, where the current bylaws provide, “Units may be rented for terms of not less than one month.” This transaction is scheduled to close by the 16th. The broker has been informed that the condominium association is meeting next week to vote on possibly changing the bylaws to prohibit unit rentals. Would this buyer be “grandfathered” and allowed to rent if the closing occurs before the bylaws are changed? And how long does it take to legally change bylaws? ANSWER: According to Wis. Stat. § 703.33(3), condominium documents may not be changed or amended following the delivery of the condominium documents to the purchaser if the change or amendment would materially affect the rights of the purchaser without first obtaining the purchaser’s approval. The amendment to the bylaws would be delivered to the buyer who would have chance over the next 5 business days to rescind the contract without any liability. Once documents making an unacceptable material change are received, the buyer may give written notice of rescission to the seller along with a Cancellation Agreement and Mutual Release (CAMR) without stating a reason and without any liability on the buyer’s part according to § 703.33(4). Wis. Stat. § 703.33(4)(c) provides that the buyer would be entitled to the return of any deposits made pursuant to the offer. If the parties do not agree to the CAMR, they may be referred to private legal counsel for advice on how to proceed. The timing and grandfathering issues are questions for private legal counsel who can review the language in the condominium documents and any amendments. READ MORE ABOUT IT: 4.) Landlord/Tenants - Security Deposits QUESTION: The 21 days for the landlord’s return of a tenant’s security deposit starts when? What if the tenancy technically expires at the end of the month, but the tenant moves out by the 26th and hands over the keys to the landlord. What day does the landlord use to start counting the 21 days for the return of the security deposit? ANSWER: Wis. Admin. Code § ATCP 134.06(2)(b) says if the tenant gave the landlord written notice they had moved out on the 26th, then the 21 days would be counted from the 26th. Otherwise the 21 days begins at the end of the month. Wis. Admin. Code § ATCP 134.06(2)(a) provides that a landlord must return the security deposit (less any amounts withheld) within 21 days after the tenant surrenders the premises. § ATCP 134.06(2)((b) provides,
READ MORE ABOUT IT: 5.) Mortgage Banking/Finance - General Finance QUESTION: Re: The $8,000 first-time homebuyer tax credit for an unmarried couple. One partner owns a house. He wants to sell the house and purchase a new property together with his partner. Would the partner who does not have title to the existing property be eligible for the credit as a first-time homebuyer? ANSWER: The law defines “first-time homebuyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his or her spouse. For example, if a person has not owned a home in the past three years but his or her spouse has owned a principal residence, neither the person nor his or her spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur when a parent jointly purchases a home with a son or daughter or when an unmarried couple purchase a home. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer. READ MORE ABOUT IT: Debbi Conrad |