The Best of the Legal Hotline: Ethics Edition

Truth: Since the beginning, the REALTOR® Code of Ethics has embraced the culture of telling the truth.

 Tracy Rucka  |    March 30, 2017

How many buyers? 

A broker was talking to an agent who said he uses the WB-46 Multiple Counter Proposal for one buyer all the time. Can the seller give a WB-46 to only one buyer? 

It would not be truthful for the agent to claim there are multiple buyers when in fact there is only one buyer interested in the property. When looking at the first sentence of the multiple counter-proposal, the operative word is “other.” 

“A Multiple Counter-Proposal is being made by Seller to one or more other prospective buyers.” (Italics added.) 

Because line 1 of the WB-46 states proposals are made to one or more other buyers, this means there are two or more buyers to which the seller is delivering multiple counter-proposals, not one alone. 

If the seller wished to submit a nonbinding proposal to just one buyer, a WB-46 could be used if it was modified to eliminate all references to multiple buyers, for example, lines 1-3. An affirmative statement that only one multiple counter-proposal is being issued is also advisable. A licensee involved in such a transaction could be subject to liability for misrepresentation if the buyer wasn’t clearly informed in writing that only one buyer was receiving the multiple counter-proposal.

Puffing or truth? 

When can a broker make claims about being “number one” or the “best” in advertising? 

According to Wis. Admin. Code § REEB 24.04, licensees must advertise in a manner that is not false, deceptive or misleading. Similarly Article 12 of the Code of Ethics states REALTORS® must be truthful in their real estate communications. The line between false advertising and puffing is not always clear. In general, puffing is considered a statement or claim that is subjective or possibly an exaggeration.

There is a recent Wisconsin case that sheds some light on the discussion. The case opinion indicates that agents sometimes exaggerate the benefits of property features or components to make the sale, and such “puffery” is not the basis for a lawsuit when those exaggerations turn out to be untrue because they are opinions that cannot be substantiated or refuted, for example, the property “is the best” or of “premium quality.” But puffery has boundaries, and specific, factual representations or technical statements capable of factual confirmation can give rise to liability as misrepresentations of fact. In Wisconsin, a salesperson engages in puffery when he or she gives voice to “the exaggerations reasonably to be expected of a seller as to the degree of quality of his product, the truth or falsity of which cannot be precisely determined.” Puffery is “not capable of being substantiated or refuted.” A salesperson who simply declares that his product is “the best” or similar is not representing a fact at all, let alone misrepresenting one. Rather, the salesperson is merely delivering a nebulous, abstract, highly generalized pitch. See United Concrete v. Red-D-Mix, 2013 WI 72, 349 Wis. 2d 587, 836 N.W.2d 807 for more information.

Is it true? Also known as "check your MLS sheets" 

The buyer has an accepted offer on a new construction property. The listing agent provided the MLS sheet, which stated that the property included central air conditioning. The buyer viewed the home twice prior to the accepted offer. During the inspection, the buyer asked the inspector about the air conditioning unit. The inspector revealed that the air conditioning unit was not on the property. The buyer may not want to continue with the purchase unless an air conditioning unit is installed. Is the broker responsible for the mistake on the MLS sheet? 

A Wisconsin licensee can be found liable to a buyer for inaccurate statements made by the broker that appear to the buyer to have been made from the broker’s own personal knowledge. In Wisconsin, the law provides that an inexperienced buyer should be entitled to rely on the factual statements made by a professional. Accordingly, when a broker receives data from the seller, the city treasurer’s office or another third party, and restates the information in the MLS data sheet or in other advertising as if it were fact, the broker may be responsible for the accuracy of the information. Accordingly, it is recommended that REALTORS® specifically attribute data used in advertisements, such as acreage, square footage and assessed values, to their source, and/or use general disclaimers. Disclaimers may not, however, provide certain and absolute protection in all cases. 

REALTORS® should use general disclaimers on all advertisements and MLS sheets to avoid the presumption that all statements made by a licensee have been verified and are personally known to be true by the licensee. It is generally recommended that data sheet disclaimers contain language to the effect that the stated information was provided by the seller and other third parties and has not been verified by the broker unless otherwise indicated.

Truthful broker disclosures in "as-is" sales

The broker is taking a listing on a foreclosure property. The REO seller is refusing to provide a real estate condition report (RECR) and wants to sell "as-is." The seller does not want the broker to disclose information about items the broker thinks are defects. Is this legal? 

At the time of the listing, the broker is required to ask the seller to provide a written statement regarding property conditions in the RECR. If the seller elects or chooses not to complete a RECR, the broker may refer the seller to legal counsel about the implications of selling “as-is” with no RECR. The broker will inform the seller of the broker’s obligation to make timely written disclosure of material adverse facts regarding the property condition or the transaction. Notwithstanding the seller’s request, the broker has a duty to provide brokerage services honestly and fairly.


1913 Ethics of the Real Estate Profession:
2017 Code of Ethics:

Advertising resources

"As-is" resources

Tracy Rucka is Director of Professional Standards and Practices for the WRA. 
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