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| Q. Asbestos. A visual inspection by a home inspector revealed potential asbestos in the basement. The buyer is trying to force the seller to remove a pipe that is coated with the material. The seller has agreed to have it encapsulated. Does the buyer have any legal grounds to make the seller remove the insulation on the pipe? |
| A. Asbestos cannot be identified simply by looking at it unless it is labeled, so the only way to be certain is to get a sample analyzed. Authorization for testing requires a separate testing contingency because the home inspection does not provide for asbestos testing. Thus, the parties may wish to amend the Offer to include an asbestos testing contingency. Although the home inspection may have disclosed the asbestos, the seller may not be required to repair or remove the asbestos depending on the circumstances.
Generally, undisturbed asbestos that is in good condition will not release asbestos fibers and may best be handled by leaving it alone. Problems with friable or damaged asbestos may be treated by either repair or removal. Repair usually consists of sealing or covering the asbestos material. See Legal Update 01.04, or the EPA asbestos page at www.epa.gov/asbestos or contact the local health department for further information about asbestos |
| Q. An offer was accepted with an asbestos testing contingency. The contingency stated that if asbestos was found, the seller would cure to a good and workmanlike manner. Asbestos was found around the pipes-is this a defect? If it is not stated specifically in the offer that it be abated by a licensed person, can the seller encapsulate it himself? |
| A. The buyer and seller must examine the facts and the condition of the asbestos to determine if the existence of asbestos is a defect. Depending on the type of asbestos, its condition, its location, and the buyer's plans, there is a possibility that the existence of asbestos is not a defect.
State regulations do not apply to encapsulation if done by the owner-occupant in his or her home. Per the terms of the offer, the seller is required to do the work in a good and workmanlike manner, and the buyer may inspect the work prior to closing. The buyer and the seller should consult with DHFS at (608) 261-6876 regarding safe work practices and testing procedures. |
| Q. An initial buyer tested for asbestos, but the transaction subsequently fell apart. The seller then went in and pulled out all the asbestos without following any safe work practices. The seller will not disclose this on the real estate condition report. Does the broker need to disclose? |
| A. Although sellers are not required to use certified personnel to remove asbestos, safety procedures must be followed to ensure safe removal. The seller may have created a hazardous situation, depending on his removal technique. If there is information that presents the possibility of a significant health risk to the occupants of the property, real estate licensees should make full disclosure of a seller's activity with asbestos as a potential material adverse fact disclosure. The parties may be referred to the local health department or an asbestos professional for more information about how to proceed given the seller's removal. |
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Partnership for Success Winners
by Debbi Conrad
The WRA Equal Opportunity Committee is pleased to announce that Ms. Regina Rhyne from Madison and Mr. Sowande Nadeem from Milwaukee have been selected for Partnership for Success Awards.
Regina Rhyne is working towards her sales license and works part-time managing rental property for Enterprise Real Estate of Madison. Her sponsoring broker is Roy Schenk. Regina has degrees from MATC and the University of Wisconsin (a bachelor's in sociology & master's in urban planning). She has worked in numerous fields and jobs, including the State of Wisconsin Vocational Rehabilitation Department. Regina has extensive experience in local politics, and her confidence and enthusiasm are reflected in the four different part-time jobs she presently holds.
Sowande Nadeem has had his sales license since 1998 and works for Ogden & Company in Milwaukee. His sponsoring broker is Chris Howard. Sowande has worked in auto sales, as a certified nursing assistant, and in real estate construction and investment. He is committed to pursuing a career in real estate sales and is presently attending the MATC brokers program in Milwaukee. Ogden & Company has an exceptional "up and running" program where a mentor is selected to closely supervise or monitor the new agent as he or she performs a prescribed set of weekly activities designed to give the new agent experience in various aspects of real estate sales process.
Our congratulations go to Regina Rhyne and Roy Schenk of Enterprise Real Estate Madison, and Sowande Nadeem and Chris Howard of Ogden & Company for creating such an outstanding opportunity for success in the real estate profession!
Rather than taking a traditional scholarship approach, the Partnership for Success program forges a partnership between the applicant, the sponsoring broker, the local or regional board or association, and the WRA. In this program, applicants must be of a minority race, color, or national origin, and must demonstrate a commitment to becoming successful real estate licensees. The sponsoring broker provides a mentor and in-house training for the program recipient to optimize the success of the new licensee.
Accordingly, the WRA waives one year of WRA dues, the local association (if participating in the program) waives any initiation fee and one year of dues, and the WRA pays one year of NAR dues. The WRA also pays six months of MLS fees. In addition, the WRA pays the fees for Quickstart and GRI Course 1 (the recipient may test out of GRI Course 1 by attending Quickstart and passing an exam) or Course 2, as well as hotel accommodations for one course. The fees paid by the WRA must be repaid to the program within three years so that awards may be made to additional deserving recipients. For more information about the Partnership for Success Program, go to www.wra.org/become_realtor/scholarship.htm, or contact Debbi Conrad at the WRA
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Insurability as a Material Adverse Fact?
What do LBP, mold and 60 amp electrical services have in common? They are factors that are causing insurers to rethink how they do business. As insurance companies struggle with a variety of economic challenges, they are faced with hard decisions regarding whether they will write insurance policies on real estate and what risks those policies will cover.
Homeowners, particularly home buyers, have a serious need for information about the insurability of their property, such as coverage exclusions and appropriate deductibles. Real estate licensees are not expected to be experts in insurance matters, so the best advice continues to be to send buyers to their insurance agents for this information.
The significant shift for real estate brokers may be the timing of the recommendation to consult with the insurance agents. Just as it is arguably too late to send a buyer to an attorney after the buyer is committed to a binding offer to purchase, it may be too late to send a buyer to their insurance agent to obtain their insurance binder just prior to closing.
It may be an important service to send a buyer to an insurance agent at the same time they are prequalifying for a mortgage. In the best case, buyers will have information regarding risks commonly excluded from coverage and those property conditions which may need to be addressed in the offer to assure coverage. Once again, brokers are not obligated to be experts in insurance issues. On the other hand, if the broker recognizes that a feature of a property that a buyer is interested may raise insurability problems, a prudent broker will point out the issue and direct the buyer to consult with their insurance agent.
Whether the insurability issue is an adverse material fact remains an open question subject to an analysis of the facts and circumstances of the transaction. To read more about insurability in Wisconsin, see the article below.
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Homeowner's Insurance Update-We're 51st
by Eric Englund, President of the Wisconsin Insurance Alliance
Nationally, homeowner insurance has become a crisis situation in selected areas of the country. Wisconsin has an interesting history of insurance products and coverage. This guest article outlines how the issue impacts Wisconsin.
In a recently released study the National Association of Insurance Commissioners (NAIC) found Wisconsin's average annual homeowners insurance rate of $266 to be the lowest in the country. That's right-out of the 50 states and the District of Columbia we're number 51.
By comparison, the national average is $465. Who is number one? Texas, at $861 per year. Our neighboring states of Michigan, Minnesota, Illinois and Iowa all had higher average homeowners insurance rates than Wisconsin.
Why are Wisconsin's homeowner's insurance rates so affordable? While that is a simple question, the answer is somewhat complex. Among the reasons for homeowners insurance staying so affordable in Wisconsin are:
- There are over 200 insurance companies licensed to sell homeowners insurance in Wisconsin. That many insurers maintain competition in the marketplace.
- Among the insurers licensed to sell homeowners insurance in Wisconsin are a number of Wisconsin-based insurance companies including American Family, West Bend Mutual, Acuity, General Casualty, and Wisconsin Mutual, to name a few. These Wisconsin-based insurers work hard to make certain that their products remain especially affordable in their home state.
- Wisconsin also has over 70 "town mutual" insurance companies whose primary business is to write insurance on rural properties.
- The primary cost of homeowner's insurance is driven by fires and adverse weather. Wisconsin has historically had above average fire protection and has escaped the ravages of extraordinary adverse weather such as hurricanes, excessive tornadoes, etc.
The "new age" issue of mold casts a potential dark cloud on the horizon for homeowners insurance in Wisconsin. To date, the claims have been few and far between. Should Wisconsin respond to the "mold crisis" with the same type of paranoia and overreaction that took place in Texas ... we might possibly see a significant rise in homeowners insurance. This has not been the case yet, and there's optimism among homeowners insurance companies in Wisconsin that there will be continued availability and affordability of this product which is so critical to the home buying public.
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