Legal Matters
Best of the Legal Hotline
Dealing with the Telephone Solicitation Rules
by Debbi Conrad and Tracy Rucka
| Q. Can REALTORSŪ still do cold calling if they have signed up and paid for the non-solicitation directory? |
| A. Registration is only the first step to compliance with the "do not call" rules and regulations. Agents should check with their broker/owners to see what the office policy for calling activities will be given the new no-call rules. No agent can legally make a telephone solicitation call unless the broker is registered with DATCP as a telephone solicitor or the purpose of the call is exempt. The registration fees as well as overview of the do not call rules are found in
Legal Update 02.11.
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| Q. How long may a broker call back buyers based upon previous inquiries? |
| A. Although the new DATCP no call rules allow calls made in response to the call recipient's affirmative request for a call, the rules do not have a timeframe for return calls. Brokers should not assume that an inquiry from a buyer prospect about properties constitutes an affirmative request for return telephone calls. Any request or consent needs to be specific. Brokers should work with their attorneys to create language authorizing follow-up calls, including time parameters.
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| Q. Our company is going to use the WRA language in Legal Update 02.11 to get consent from our clients and customers to call them about transaction issues. Will this language cover us if we call a client or customer about different services our company offers such as moving or concierge services? |
| A. No, the WRA sample language generally is not broad enough to cover additional goods and services that are not part of the transaction. In most cases, auxiliary services like moving services will fall outside of the client relationship and transaction. The company should ask their attorney to draft language that will expressly request these additional services
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| Q. The DATCP rules indicate that licensees may run into trouble if they call clients, customers and prospects at home. May licensees still call these people at work? |
| A. Yes, the DATCP telephone solicitation rules apply only to calls made to residential telephone customers. Licensees should take advantage of every communication opportunity.
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| Q. If someone calls while an agent is on floor time, how can the agent call the person back and follow up with information about properties? |
| A. The agent may verbally ask for permission to call the person back, keep a log of verbal consents and follow up in writing. If a prospect says the agent may call him or her back with information about certain properties, the agent should record the person's name, telephone number, specific consent and other contact information in a log. The agent's conversation with the prospect must be clear and exact because any consent is limited to the purpose of that request. For example, "If you would like me to keep you up to date on any properties (in that price range, neighborhood, size, etc.), what is the best way for me to contact you? If you want me to call you at home, the new telephone no-call rules require that I get an affirmative request from you. (Record contact information and purpose for any requested calls to the home in log.)
It will be very helpful to get additional contact information such as work telephone numbers, fax numbers, e-mail addresses and mailing addresses. These may all be used to full advantage and will come in handy when the agent follows up to secure a written request for telephone calls to the home.
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| Q. Does a FSBO ad in the paper work as permission to call the owner and offer listing services? |
| A. No, the owner's ad arguably invites agents to bring buyers to the owner. It is not an affirmative request for brokers to call and pitch their listing services.
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| Q. If another broker sends a broker the name of a prospective buyer as a referral, may the broker call that prospect? |
| A. No, the broker needs an affirmative request from that prospective buyer. The referral from the other broker does not give this permission. The broker may call the prospect at work, send e-mail, write a letter, knock on the door or transmit a fax, but the broker cannot call the prospect at home.
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| Q. Re: Language to use on an open house register to get permission to call a prospect back. |
| A. Brokers cannot just put a disclaimer on the top of the sign-in sheet and then rely upon the fact that a prospect signed on a later page containing only signatures. The prospects must make an affirmative request and this must be an informed consent. The language requesting follow-up calls about the open house property and/or other properties may need to be repeated on each page. It is also recommended that the prospect have to check a box or circle "yes" or "no" regarding the request for follow-up calls to home.
The language used will be different than the WRA sample language for agency contracts and disclosure forms. In this situation, the prospect may indicate, for example, "The open house host or hostess has my permission to call me at home about the property I have just seen and similar properties on the market." A real estate company's attorney may assist in tailoring language to fit the company's business practices. A procedure for using the language may also be added to the office policy manual.
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Use-Value Changes Effective Jan. 1, 2003
by Rick Staff and Debbi
Conrad
The WRA is revising all variations of Seller Property Condition Reports to include the disclosures required under the revised "use-value" law.
Use-Value Assessment of Agricultural Land
Under the use-value assessment method of assessing Wisconsin agricultural land for property tax purposes, farmland is assessed based upon its agricultural productivity rather than its potential for development or fair market value. In a use-value system, the use of the land is the most important factor in determining its assessed value. If the use of agricultural land assessed under the use-value system is changed to a nonagricultural use, so that the property is no longer classified and valued as agricultural land, the then-current owner must pay a penalty. In other words, if the buyer of agricultural land assessed under the use-value system changes the use of the land, the buyer may have to pay the penalty. The use-value system seems to be in a constant state of flux as the Wisconsin Department of Revenue has once again amended the law governing use-value assessments of agricultural land (a summary of all of the changes may be found online at
www.dor.state.wi.us/news/021008.html). The changes, which are effective Jan. 1, 2003, have a significant impact in terms of the disclosures that must be made by
REALTORSŪ
Key Point: Under prior law, sellers were obligated to disclose if the property had been assessed under the use-value system. Effective Jan. 1, 2003, sellers must also disclose if the land is subject to a penalty under the use-value system or if a penalty on the property has been deferred.
REALTORŪ Practice Tip: Although not specifically required by the use-value law, sellers and
REALTORSŪ should also disclose that buyers who purchase and change the use of agricultural property assessed under the use-value system may be subject to a potentially substantial penalty, given that such a penalty would likely be considered a material adverse fact. The WRA is in the process of updating its forms to reflect these changes.
REALTORŪ Practice Tip: The WRA's real estate condition report (RECR) forms each include an item in the "Additional Information" section that asks the seller to indicate whether land sold with the property has been valued under the use-value assessment system. Language is being added to these forms to prompt sellers to disclose whether there is a penalty or a deferred penalty if there is agricultural property under the use-value system. Revised forms will be available on ZipForms and in printed copies of the vacant land condition reports around the end of the year.
REALTORŪ Practice Tip: If a buyer intends to buy and develop the farmland or otherwise change the use of the agricultural land being purchased, the buyer's offer to purchase should include an investigation contingency. The contingency should give the buyer ample time to confer with the local taxing authorities to determine the amount of any use-value penalty and obtain any other pertinent tax information.
For additional information about the changes to the use-value law for 2003, go to http://www.dor.state. wi.us/news/ 021003.html or to
www.wra.org/online_pubs/wr0902/wr0902. htm.
REALTORŪ Resource Page-Use-Value
Assessment: This page includes Wisconsin REALTORŪ articles, Legal Hotline Hottips, Wisconsin Department of Revenue resources, and legislative information.
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NAR Standards of Practice Amendments
by Rick Staff and Debbi
Conrad
New Rules for REALTORŪ Cooperation
At the November 2002 NAR meetings, several amendments to the
REALTORŪ Code of Ethics were enacted and will take effect on Jan. 1, 2003. The most significant changes made include revised Standards of Practice regulating the conduct of a licensee in a position to work with a buyer who is a party to a buyer agency agreement, and governing a listing broker's disclosures to his or her prospective client regarding the terms of the compensation that will be offered to cooperating brokers.
Working With Buyers Who are Parties to Buyer Agency Agreements: Standard of Practice 16-13
Standard of Practice 16-13, revised effective January 1, 2003 to add the second paragraph, states:
"All dealings concerning property exclusively listed, or with buyer/tenants who are subject to an exclusive agreement shall be carried on with the client's agent or broker, and not with the client, except with the consent of the client's agent or broker or except where such dealings are initiated by the client. (Adopted 1/93, Amended 1/98)
Before providing substantive services (such as writing a purchase offer or presenting a CMA) to prospective purchasers, sellers, tenants or landlords ("prospects"),
REALTORSŪ shall ask prospects whether they are parties to any exclusive representation agreement.
REALTORSŪ shall not knowingly provide substantive services concerning a prospective transaction to prospects who are parties to exclusive representation agreements, except with the consent of the prospects' exclusive representatives or at the direction of prospects."
The first question raised by the amendment is the meaning of the term "exclusive representation agreement." In Wisconsin, the DRL-approved listing contracts give listing brokers the exclusive right to sell and market a property. Such a listing contract is certainly an "exclusive representation agreement." Therefore, Wisconsin licensees may not provide significant services to property owners without first asking whether the owner is a party to a listing contract. If the owner is subject to a listing, the licensee cannot provide substantive brokerage services without the consent of the listing broker or upon the direction of the owner.
However, the vast majority of buyer agency agreements in Wisconsin only provide exclusivity in the sense that the broker who is a party to the buyer agency agreement is the only buyer's broker that the buyer may work with throughout the term of the contract. The buyer may still work with and negotiate directly with owners and owner's agents (subagents). Because it is not clear whether the DRL-approved buyer agency agreements constitute "exclusive representation agreements," the WRA legal staff conferred with the NAR Legal Department. NAR has advised that an "exclusive representation agreement" is intended to include agency agreements where just one broker has been retained to work on behalf of the client. Accordingly, Wisconsin WB-36 buyer agency agreements would be viewed by NAR as "exclusive representation agreements."
Accepting this interpretation, this means that any licensee who is in a position to offer to write an offer for a buyer prospect must first ask the buyer if the buyer is a party to a buyer agency agreement. If a
REALTORŪ is the agent manning an open house or a friend or relative of a buyer prospect, the
REALTORŪ may not write an offer for that buyer prospect without first asking the prospect whether he or she is a party to a buyer agency agreement.
If the prospect is a party to a buyer agency agreement, that does not necessarily mean that the
REALTORŪ cannot write the offer for the prospect-that will be a question of the
REALTORŪ's professional conduct standards and perhaps an office policy manual issue. NAR has indicated, however, that it is permissible for the
REALTORŪ to ask the prospect if he or she would like the REALTORŪ to write an offer to purchase. This will be helpful in situations where the buyer's agent is absent and the buyer is ready to draft an offer.
Disclosures to Prospective Listing Contract Clients: Amended Standard of Practice 1-12
Standard of Practice 1-12, as revised effective Jan. 1, 2003, states, "When entering into listing contracts,
REALTORSŪ must advise sellers/landlords of: 1) The REALTORSŪ's company policies regarding cooperation and the amount(s) of any compensation that will be offered to subagents, buyer/tenant agents, and/or brokers acting in legally recognized non-agency capacities ..."
This amendment dramatically changes the concept long-observed in Wisconsin that a listing broker is not required to disclose his or her compensation policies to sellers or others. This amendment requires brokers to disclose the company's cooperation policies and the compensation amounts that will be offered to cooperating brokers to the owner when entering into a listing contract.
The WRA legal staff also posed a question to NAR concerning this amended standard of practice. When asked how extensive this disclosure of compensation amounts needed to be, NAR advised that brokers should disclose their MLS compensation splits, tell the owner if they have policy letter compensation agreements with various brokers, and indicate that the owner may see a copy of the policy letters upon request. This should be manageable for those brokers who offer a wide range of compensation arrangements through policy letters. Brokers should consider disclosing the compensation offered in their policy letters if it is substantially different than the MLS compensation or if the primary means of offering compensation in the market area is by policy letter.
The amendments to Standards of Practice 16-13 and 1-12 go into effect on Jan. 1, 2003. For further information, go to
www.realtor.org.
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Legal Action Update
by Debbi Conrad
The following is an update on some of the issues that have recently come before the WRA Legal Action Committee. The first two items update the information reported in the
October 2002 issue of the Wisconsin
REALTORŪ
1. Broker Listing Protection Commission
As you may recall, a REALTORŪ had a WB-3 Vacant Land Listing Contract (mandatory use date April 7, 1995) on a parcel of land that was ultimately purchased by a government agency after the listing had expired. The
REALTORŪ claimed her commission based upon listing protection. She had discussed the property, including price, zoning and improvements, during a 20-minute conversation with a government representative. The
REALTORŪ sued the seller for her $100,000 commission, but lost before the trial court. The broker and her attorney applied to the Legal Action Program, requesting that the WRA file an amicus brief with the Wisconsin Court of Appeals. The brief was to explain the DRL definition of negotiation that appears in the DRL-approved listing contracts. The committee authorized up to $3,000 for the amicus brief.
Development-The broker and her attorney decided to discontinue the appeal. Both the broker and her attorney thanked the committee for its favorable action in this matter and indicated that the WRA's commitment made a difference and was most appreciated.
2. Use of Extraterritorial Plat Approval Power to Zone: The Woods v. City of Madison
The Woods submitted a preliminary plat to the City of Madison for approval under its extraterritorial plat approval jurisdiction. The city rejected the plat because it promotes some commercial uses in an area that is predominately agricultural. The Woods relied upon the Gordie Boucher case, a 1993 published Court of Appeals decision, which held that the City of Madison could not use its extraterritorial plat approval powers to regulate land use and thus, in effect, engage in zoning. Gordie Boucher is an important precedent because it stands for the principle that zoning decisions must be made using the zoning process, not the plat approval process. Cities may not attempt to "go in the back door" and use their extraterritorial plat approval powers to exert extraterritorial zoning control without giving notice to land owners, holding hearings, and creating a joint zoning commission including representatives from the town board. The WRA Legal Action Committee authorized $10,000 for the WRA's amicus curiae brief and an additional $10,000 for oral argument.
Development-Tom Larson and Debbi Conrad attended the oral argument and were gratified to see that at least three of the seven justices had apparently embraced the WRA's due process arguments. Two of the justices seemed to support the city and two were largely quiet. It appeared that the WRA amicus brief and oral argument made an impact on the court! We are waiting for the court's decision next spring to see the final extent of that success.
3. Telephone Solicitation Litigation
The recently enacted Wis. Stat. § 100.52 directs the Department of Agriculture, Trade and Consumer Protection (DATCP) to promulgate rules that establish a no call list and require persons or companies that use | 
