The Best of the Legal Hotline: New Forms, New Questions


 Tracy Rucka  |    June 11, 2008
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The following questions have been asked recently about the new WB-1 Residential Listing Contract and the new WB-36 Buyer Agency/Tenant Representation Agreement.

What is the mandatory-use date?

The mandatory-use date for the 2008 WB-1 Residential Listing Contract and the 2008 WB-36 Buyer Agency/Tenant Representation Agreement is July 1, 2008.

Does anything need to be done to update existing listings and buyer agency agreements?

No, licensees are not required to change existing listings or buyer agency agreements. For new listings and buyer agency relationships, all licensees must use the new forms for residential listings and buyer agency agreements beginning July 1, 2008.

What if an agent or broker uses an old form after July 1, 2008?

The agent or broker completing the outdated form may be subject to an allegation of incompetent practice. Wis. Admin. Code ¬ß RL 16.06(7) indicates that, ‚ÄúA licensee shall use the latest approved version of an approved form.‚ÄĚ

Brokers may destroy hard copies of outdated forms. Outdated forms will be removed from the zipForm library on June 25. NOTE: The library change is automatic for zipForm Online users. zipForm Desktop users will need to download a forms update.

Use of email

Does the new residential listing or buyer agency agreement allow for email delivery of documents?

Even though there is a place for the parties to include email addresses, the use of email for the delivery of documents is not automatic. Brokers may create addenda or add authorization for email delivery in the additional provisions portion of the listing contract. Brokers may refer to the February 2008 Legal Update, ‚ÄúElectronic Commerce and Email Delivery,‚ÄĚ at www.wra.org/LU0802 for more information about electronic commerce and addenda that may be used for consent to use electronic documents in real estate transactions. Remember that any consumer must give consent electronically (i.e., via email) before providing for email delivery in any contract.

Broker disclosure to clients

Now that the Broker Disclosure to Clients is a part of the WB-36 Buyer Agency/Tenant Representation Agreement, does the buyer’s agent have to give the listing broker a copy of the Broker Disclosure to Clients?

The 2008 WB-36 Buyer Agency/Tenant Representation Agreement now contains the statutorily required Broker Disclosure to Clients language. Pursuant to § RL 24.07, a buyer’s agent is required to disclose agency upon first contact with the seller or the listing broker and line 1 of the offer to purchase then reconfirms this agency relationship. The buyer’s agent is not required to provide an agency disclosure form to the listing broker. It is not the listing broker’s responsibility to maintain copies of another broker’s Broker Disclosure to Clients forms.

Early termination

How can a seller terminate a listing when the listing provides that neither the broker nor the seller has the legal right to unilaterally terminate the listing absent a material breach by the other party? How does the 2008 WB-1 listing contract change termination situations?

A new provision in the Termination of Listing section provides, ‚ÄúSeller and Broker agree that any termination of this Listing by either Party before the date stated on line 260 shall be indicated to the other Party in writing and shall not be effective until delivered to the other Party in accordance with lines 197-201. CAUTION: Early termination of this Listing may be a breach of contract, causing the terminating Party to potentially be liable for damages.‚ÄĚ The listing is a personal service contract and the seller has the power to terminate the listing at any time. A termination without cause may subject the seller to a claim for damages. The law allows a broker to seek damages, which may include reimbursement for expenses. Expenses may be for items such as the cost of advertisement and an amount for the broker‚Äôs time and services.

See the Broker Supervision Newsletter, online at www.wra.org/BSNApr08, for more information about early termination of the 2008 listing.

Blank spaces

The new 2008 residential listing and buyer agency contracts have some white spaces on some of the pages. Can a licensee use these spaces to include additional terms and conditions into the state-approved forms?

No, when using DRL-approved forms, REALTORS¬ģ must be aware that they are prohibited from altering the forms and must place additional material in the blank lines provided on the approved forms or use addenda. The Department of Regulation and Licensing approved an emergency rule to prohibit the altering of DRL-approved forms ‚Äď by placing blank lines containing inserted provisions between provisions of the approved form text ‚Äď in such a way as to create the appearance and implication that the changes are approved by the DRL. The emergency rule does not change the ability to use the blank lines provided in the approved forms or to attach an addendum as authorized under ¬ß RL 16.06 (4) and (5). The end result is that DRL-approved forms may not be substantively altered and that additional lines may not be added to the forms.

Compensation to others

The new listing provides ‚ÄúBroker offers the following commission to cooperating brokers: ________. (Exceptions if any):_______.‚ÄĚ How should a broker complete the new Compensation to Others provisions in the 2008 WB-1 Residential Listing Contract?

The completion of the Compensation to Others provision will be determined by each company‚Äôs individual policy about compensation to other brokers. The provision must be completed to give the seller an honest understanding of the company‚Äôs policies. For example, it may include the amount that will be offered in the MLS, and reference existing policy letters offering compensation to non-MLS brokers as well as other compensation agreements entered into with cooperating brokers. Any variations from the MLS offer of compensation should also be addressed. More information about completing the Compensation to Others provision and how to avoid antitrust violations is available in Legal Update 07.10, ‚ÄúWB-1 Listing Contract ‚Äď 2008 Revisions,‚ÄĚ available online at www.wra.org/LU0710.

Excluded properties

How does a broker complete the Excluded Properties provisions in the new WB-36?

The Excluded Properties section is where the broker and the buyer set the range and applicability of the entire agreement. There are four basic categories of properties that a buyer may want to exclude from the buyer agency agreement.

  • Properties seen with another buyer‚Äôs agent
  • Properties seen with a subagent or seller‚Äôs agent
  • Properties under contract
  • Properties of no interest to the buyer (by location or type)

If a buyer has had a previous buyer agency relationship, the former buyer‚Äôs agent may have created property protection for certain properties. Therefore, the beginning of the section may be completed to exclude property subject to the previous buyer‚Äôs agent‚Äôs property protection. The second buyer‚Äôs agent may fill in any date that marks the end of the exclusion ‚Äď the end of the property protection period.

If the buyer has viewed properties with a subagent or a seller’s agent who would be procuring cause, the buyer’s agent may exclude these properties from the buyer agency agreement. The properties may be listed by address and include the end date of any exclusion period.

When a buyer has an existing offer to purchase on property, the property subject to the offer may be excluded from the buyer agency agreement.

Once any of the aforementioned properties are excluded, the broker and the buyer can turn to describing the general property type in which the buyer is interested by excluding properties, in general terms, that are of no interest to the buyer and thus may be excluded from the WB-36.

For example, the buyer agency agreement may exclude properties in a radius of more than 50 miles from a given location, or outside a particular county or city. The buyer may also exclude properties by type (i.e., exclude commercial, new construction, vacant acreage, etc.)

Some buyer’s agents will include broad exclusions in the WB-36 and then use an independent worksheet to set more specific parameters to focus the buyer’s agent’s search. For example, the exclusion may be by location and the search parameters could include the number of bedrooms or bathrooms or other property characteristics important to the buyer.

Additional examples are available in Legal Update 07.11, ‚ÄúWB-36 Buyer Agency Agreement,‚ÄĚ online at www.wra.org/LU0711.

One property

If a buyer wants the buyer’s agent to limit the buyer agency agreement to one property, how should they complete the WB-36?

The Excluded Properties section may be completed to indicate that all properties except the specific one identified are excluded from the agreement.
As an alternative, it may be stated in additional provisions that the agreement pertains only to the identified property and that the broker cannot earn any fees or compensation under the agreement if the buyer purchases any other property during the term of the agreement.

Tracy Rucka is a Staff Attorney for the WRA.

Editor's note: The DRL became the DSPS in 2011. Information above may not be current.

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