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Legal Matters
Best of the Legal Hotline
Working with Addenda
by Debbi Conrad and Tracy
Rucka
The following questions about addenda to the offer to purchase were recently asked of the Legal Hotline:
| Q. Addendum for Individual Transaction
- A broker recently submitted an offer in which she had drafted her own addendum. The other
REALTORŪ involved has stated that she doesn't think that the broker can draft an addendum on her own-it needs to be on a preprinted form. The broker does not think that the Addendum A or other pre-printed addenda included the provisions requested by the parties and needed for the particular transaction. Can the broker draft a specialized addendum for this transaction on Addendum A using the blank lines, even though she would not be using any of the preprinted language? |
| A. Addenda are used in transactions where the Department of Regulation and Licensing's approved forms do not meet all the needs of the parties in the transaction and the parties want to negotiate additional terms and conditions for the sale of real estate. Wis. Admin. Code § RL 16.06(8) indicates that, "A licensee shall use approved forms and prepare addenda in such a manner as to adequately accomplish the contractual intent of the person for whom the licensee uses the forms and prepares the addenda."
The broker may prepare her own property-specific addendum for use in a particular transaction to reflect the agreement of the parties. It is not necessary for the broker to use a preprinted addendum form. The broker may type up her own addendum on a blank sheet of paper or use the WRA form called "BLANKAD," which is a blank addendum found in the WRA ZipForm library. Such an addendum would be designed for the particular transaction and not printed up or used by other agents in other transactions.
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| Q. Broker/Company's Own Addendum A
- A local company has created its own Addendum A. With regard to testing, the addendum provides, "Buyers shall have the right to perform any and all tests they deem necessary to satisfy themselves as to the condition of the property as long as said tests and accompanying reports/objections to the test results comply with the dates and provisions contained within the offer to purchase." Is this acceptable? Does this allow any tests any time the buyer wishes without time restrictions or definitions? |
| A. License law rules allow the use of pre-prepared addenda, like a company's Addendum A that is used routinely in numerous transactions, with certain limitations. The extent of the limitations is determined by whether the addendum changes non-optional provisions in a DRL-approved form.
Wis. Admin. Code § RL 16.05(4) and (5) provide as follows:
(4) Except as provided in sub. (5), a licensee may use a pre-prepared addendum form and attach it to an approved form under the following circumstances:
(a) The addendum has been prepared by the broker or the broker's attorney; and
(b) The addendum is incorporated by reference into the approved form and the approved form and the addendum are properly related to one another; and
(c) The addendum relates to the blanks on an approved form; or alters or supplants optional provisions within an approved form.
(5) A licensee may use a pre-prepared addendum which supplants or alters the printed provisions of an approved form only if:
(a) The addendum has been drafted by an attorney who is identified on the addendum;
(b) There are no optional or multiple choice provisions in the addendum;
(c) There are no blanks or fill-in provisions in the addendum except for spaces for the signatures of the parties and those items required under par. (d); and,
(d) The addendum is incorporated by reference into the approved form and the approved form and the addendum are properly related to one another.
The content of the addenda is subject to negotiation between the buyer and seller. Due to the broad scope of the language used in this addenda, the buyer may have authority to do any testing at any time. Whether this is acceptable to the seller will be the seller's determination. Arguably the seller would want to counter, remove or limit the authority to test as proposed by the buyer.
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| Q. Signing/Initialing Addenda
- Addenda accompanying an offer to purchase. When an addendum is incorporated into an offer, does it need to be signed? |
| A. Although most addenda forms are set up to be signed or initialed to acknowledge receipt, what is critical to the contract is whether the addenda were incorporated into the contract by reference. For example, see line 316 of the WB-11 Residential Offer to Purchase. That is what will determine whether the addenda are or are not included in the contract.
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| Q. When an offer is countered, the seller just initials the offer and a counter-offer is prepared and signed. If there are addenda with the counter-offer, do they need to be initialed since there will be signatures on the counter-offer? Some brokers seem to think that if a party signs an addendum that means that they accept those terms. |
| A. Initialing addenda pages is a prudent practice to indicate that the parties have all received all of the pages of the contract. This is not required by law for most addenda, like an Addendum A. The exception is a LBP disclosure addendum like a WRA Addendum S-federal law requires that all parties and agents sign the LBP addendum before the offer to purchase is accepted.
Read what an addendum says above the signature/initialing lines. In most cases, signing or initialing an addendum does not mean that the party is accepting or agreeing to the provisions in the addendum.
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| Q. Addenda Optional - The pros and cons of using an Addendum A. |
| A. The use of an Addendum A is optional-it is not a required form and it is not a DRL-approved form. The needs of the parties to the transaction will determine, on a case-by-case basis, what addenda should be used to best express the intent of the parties.
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| Q. Are there any mandatory addenda that are needed with a residential offer? |
| A. Yes, the real estate condition report (RECR) is required by Wis. Stat. Chapt. 709 if the property includes one-to-four dwelling units. In addition, a LPB addendum is required by the federal LBP disclosure law if the property is target housing (any housing constructed prior to 1978, except housing for the elderly or persons with disabilities -unless any child who is less than six years of age resides or is expected to reside in such housing-or any dwelling with no bedrooms).
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| Q. RECR - The buyers submitted an offer to purchase with the seller's real estate condition report (RECR). The caller has not had buyers sign the RECR. Is the condition report part of the offer to purchase? |
| A. The DRL-approved offers to purchase, such as the WB-11 Residential Offer to Purchase, are designed to incorporate a RECR into an offer to purchase by reference regardless of whether the buyer signs the RECR. The buyer's signature on the RECR simply confirms that the buyer has received the RECR.
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| Q. LBP - When the salesperson wrote an offer last fall, the listing broker did not provide an Addendum S completed by the seller. The buyers were not interested in having a LBP inspection and the salesperson gave them the LBP pamphlet and information. The salesperson completed an Addendum S, which the buyer signed and initialed to indicate that he was waiving an inspection. The offer was presented and at that time, the sellers also signed the addendum. Was this appropriate? |
| A. Yes, a buyer may initiate a lead based paint addendum. No offers on residential housing built prior to 1978 can be accepted without a properly completed and signed LBP disclosure addendum that has been incorporated into the offer. When a buyer has received no LBP information, the buyer could prepare the addendum, assuming that seller has no notice or knowledge of any LBP. If this assumption is incorrect, the seller would need to counter the offer and provide the seller's LBP information and any supporting documentation. See Legal Update 99.08 for further discussion regarding the use of Addenda S.
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Fair Housing Conference April 3 & 4
by Debbi Conrad
The Wisconsin Fair Housing Network is holding its 17th Fair Housing Conference on April 4 and 5, 2003 at the Country Inn Hotel & Conference Center in Waukesha.
On Thursday, April 3, 2003, a free session, "Fair Housing: You Be the Judge," will run from 6:30 - 8:00 p.m. and is open to the public. This is a popular, interactive presentation of actual fair housing cases with the audience playing the role of housing discrimination complaint investigator.
On Friday, April 4, nationally known fair housing experts will discuss current fair housing topics including land-use, Smart Growth and affordable housing; how to combat predatory and unfair lending; and fair housing case law and enforcement actions. Governor Jim Doyle has been invited to be the featured luncheon speaker. After lunch, the panel will discuss how these issues can be most effectively addressed in Wisconsin. The schedule of events runs from 8:45 a.m. - 3:30 p.m. on Friday. For program details, go to
www.wra.org/pdf/education/Fair_Housing_Brochure.pdf.
The conference fee is $35 for early registration and $40 thereafter. Registrations must be received by 5 p.m. on Tuesday, April 1, 2003 for early registration pricing. The cost includes lunch. To register online or to print a conference brochure/registration form from the Web site, go to
www.wra.org/pdf/education/Fair_Housing_Brochure.pdf. You also can contact the WRA and request a conference brochure/registration form. The form may be mailed to the Wisconsin
REALTORSŪ Association, 4801 Forest Run Rd., Ste. 201, Madison, WI 53704-7337 or faxed to (608) 242-2279. Telephone registrations may be made by calling (800) 279-1972 or, in Madison, 241-2047. Registrants must use credit cards for fax, telephone or online registrations. Checks are accepted with mailed registrations. Only cash or checks will be accepted at the door. No refunds due to cancellations, please.
Hotel rooms may be reserved at the Country Inn Hotel for $89 for a single or double occupancy by calling (800) 247-6640. A block of rooms is being held until March 4, 2003.
The Wisconsin Fair Housing Network is a coalition of representatives of public and private organizations and agencies, including the WRA, dedicated to the promotion of fair housing throughout Wisconsin.
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Case Law Summaries
Limits Imposed on Review of Fence Viewers' Decision: Tomaszewski v. Giera
(No. 02-2409, Ct. App. 2003)
Giera (G) and Tomaszewski (T) are adjoining rural landowners. When the fence along the common property line between their properties deteriorated, the landowners discussed building a new fence.
Wis. Stat. Chapt. 90 (www.legis.state.wi.us/statutes/Stat0090.pdf) requires the owners of adjoining land used for farming or grazing to jointly construct and maintain fences between their lands. If one owner fails to build or maintain his or her share of the fence, the neighboring landowner may complain to the fence viewers, who are the town supervisors, city aldermen or village trustees. If the fence viewers determine that the fence has not been properly built or maintained, they direct the delinquent owner to repair or rebuild the fence within a reasonable time. If the owner does not comply, the neighboring owner may repair or rebuild the fence and have the fence viewers determine the delinquent owner's share of the costs. If the delinquent owner does not pay, the neighboring owner can then file a certificate of the fence viewers' determination with the town clerk and receive payment from the town treasury. The town will then place a tax lien on the delinquent owner's property to reimburse the fence repair costs.
T rebuilt what he believed was his share of the fence. When G did not rebuild his share, T hired a contractor to build G's share at a cost of $2,400. T submitted the bill to the fence viewers and G for collection. G told the town board that he did not believe that T had built the correct share of the fence to the proper midpoint and that the contractor's bill was too high, so the town's fence viewers went out to view the fence. They determined that the fence was not built to the proper boundary midpoint, and that G only owed T $950 for the fence, based on fence material prices at a local hardware store and thirty-two hours labor at $15 an hour.
T filed a small claims action against G to recover the actual costs of building G's share of the fence. The court found that G was responsible for 1,100 feet of the fence, and that the contractor's fee was the fair market value for the fence. G was ordered to pay $1,998. G appealed to the Wisconsin Court of Appeals.
The court agreed with G that Wis. Stat. § 90.11 is the exclusive remedy for an aggrieved party under the fence law. That means that the proper redress for an owner dissatisfied with the fence viewers' decision is a common law certiorari action. In common law certiorari, the circuit court does not take evidence on the merits of the case. Rather, the scope of review is limited to whether the fence viewers acted according to the law and whether their decision was reasonable, based upon the record presented to the fence viewers.
Here the trial court did not limit itself to this review-it held a trial and heard testimony. This was beyond the scope of what it should have considered. Therefore, the court sent the matter back to the circuit court with instructions to conduct a proper certiorari review of the fence viewers' decision.
H REALTORŪ Practice Tips: Disputes concerning rural boundary fence construction and maintenance should be resolved by carefully following the provisions of Wisconsin fence law. The decision of the fence viewers carries great weight and is subject to only limited appeal.
Town Supervisors Not Required to Grant § 80.13 Petition for Laying a Town Road: Tagatz v. Township of Crystal
Lake, 2001 WI App 80, 243 Wis. 2d 108, 626 N.W.2d 23.
The owner's parcel had been assessed as a nonbuildable lot. He attempted to purchase an easement from his neighbors to build an access road to his property across his neighbors' land. He was unable to make such a purchase, so he petitioned under Wis. Stat. § 80.13 to ask the Town supervisors to lay out an access road to his land. The Town supervisors held a hearing on the owner's petition and denied it, concluding that the road requested by the owner was not in the public interest. The owner sued in the circuit court, and the court construed Wis. Stat. § 80.13(3) to require the Town to build a road to a landlocked parcel if asked to do so. The Town appealed the trial court's judgment requiring the Town to lay out a road to the owner's landlocked property.
The owner, relies upon the language in Wis. Stat. § 80.13(3), which provides in part, "The supervisors shall meet at the appointed time and place and shall then in their discretion proceed to lay out such highway of not more than three nor less than two rods in width to such real estate...." The owner argues that the words "in their discretion" apply only to the width of the road and to its location and do not give the Town discretion whether to lay out such a road.
The Court of Appeals, however, concluded that the words "in their discretion" do not apply merely to the width of the road or its location. Wis. Stat. § 80.13(3) is unambiguous, and authorizes the Town to decide whether to lay out a road. To preclude a town board from exercising its discretion could require town taxpayers to pay for roads to parcels even smaller or less buildable than the owner's parcel. Thus, the court held that the Town has discretion under Wis. Stat. § 80.13(3) to decide whether it is in the public interest to build a road to a landlocked parcel.
H REALTORŪ Practice Tips: Owners of landlocked parcels should first try to negotiate with the adjoining owners for an access easement. Under § 80.13, the petitioner's request may be denied. If it is granted, the petitioner may be forced to pay all legal, appraisal and surveyor fees, making § 80.13 an expensive remedy.
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Feedback Wanted On Legal Dept. Programs
Over the next several months WRA members will be asked to provide feedback on a variety of WRA Legal Department activities. Some feedback requests will come in the form of surveys, others using less formal methods. Please respond to the requests if time permits as your feedback allows us to deliver better quality services. You may contact Rick Staff, WRA General Counsel at any time and comment about any of the Legal Department programs, products or services. The best way to contact Rick is by e-mail to
rickstaff@wra.org. The programs you may wish to comment on include the Legal Hotline (including your interaction with any of the Hotline attorneys), the Legal Updates, the DR Hottips, the Equal Opportunity programs of the WRA, or any of the educational programs using Legal Department staff as speakers/instructors. In the next couple of months, two task forces will be asking for your feedback on their work product relative to license law revisions and potential reformatting of the next generation of real estate forms. Changes of this magnitude cannot be made without member input but your input is equally important on the day-to-day services that we provide.
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