Facelift Time for WRA Addenda A and B!


 Debbi Conrad  |    June 14, 2021
Facelift

The time has come to freshen the content and complement recent changes to the WB offer forms in the WRA Addendum A to the Offer to Purchase and the WRA Addendum B to the Offer to Purchase. Now that the latest round of updates to the various WB offers to purchase has been substantially completed by the Real Estate Examining Board at the Department of Safety and Professional Services (DSPS), the time has come to get out the scrub brush, wash away the old and revise the Addenda A and B. 

The WRA Addendum A is a general, all-purpose addendum that may be used in an offer with any property type whereas the Addendum B may most often be used with a rural property because of its focus on wells, well water and sanitary systems. To let members know what to expect in these updated addenda, which are both available in zipForm and the WRA forms library subscription, the following overview gives the highlights and a bit of the reasoning and explanation for the changes made.

Addendum A to the offer to purchase  

The revisions to the Addendum A are designed to supplement the content of the offers. Addendum A has been reorganized to loosely follow the sequence of provisions and topics in the various offers to purchase and has grown from two to three pages. 

What’s new? 

  • The 2021 version of the WRA Addendum A adds an optional provision for a Buyer‚Äôs Financing Pre-approval. The buyer must provide a financial institution‚Äôs verification, within five days of acceptance if the default is followed; a different time frame may be filled in the blank.¬†
  • The most obvious addition to the WRA Addendum A comes near the end, on the bottom half of page 3, where the parties may fill in their Contact Information for the Closing Disclosure.
  • One benefit of adding a third page to the WRA Addendum A is that there was room to add Additional Provisions lines at the end of the form.

What’s gone? 

  • The Radon Testing Contingency was removed from the WRA Addendum A because there now is a Radon Testing Contingency in the residential, residential condominium and farm offers.
  • The provision for Underground Storage Tanks and Basement Fuel Oil Tanks was removed, and a new Underground or Aboveground Fuel Storage Tank(s) Currently Not In Use Contingency was added to the WRA Addendum B.

What was improved?

  • The Seller‚Äôs Contribution Provision that may be completed if the seller will provide a closing credit to the buyer with the buyer‚Äôs lender deciding if costs are disallowed.
  • Contractors for Inspections, Tests and Opinions was given a new, more accurate name as it informs the parties that the licensees in the transaction can provide lists of qualified contractors to conduct inspections, testing and investigations requested in the various offer contingencies, as may be needed.
  • The Testing Contingency was reformatted to mirror the procedures and format employed with inspection and testing contingencies in the offers such as the Inspection Contingency and the Radon Testing Contingency. This creates comfort and familiarity for licensees using the form. But be careful when it comes to setting the deadline for obtaining the test report: the licensee drafting the offer can choose a deadline measured after acceptance or before closing, so be sure to fill that one in. If it is missed, never fear, there is a default of 20 days after acceptance. The WRA Addendum A has a safety valve that fills in time frames as 20 days in the absence of a specific default stated within a particular provision.
  • The Map of the Property conforms to the map provision in the vacant land offer. There is a new mechanism that applies when a seller fails to provide a map by the contingency deadline, similar to the Seller Termination in the Financing Commitment Contingency, where the seller may still provide the map after the deadline as long as the buyer has not yet delivered a termination notice.
  • The simplified Flood Insurance Premiums Contingency allows the buyer to explore available flood insurance policies and associated premiums with insurance agents and determine whether their annual flood insurance premium would exceed the amount stated in the contingency, which might be the amount they have learned the seller presently pays.

WRA Addendum B to the offer to purchase  

The 2021 WRA Addendum B to the Offer to Purchase in large part adopts the well inspection, well water testing and POWTS inspection contingencies from the WB-12 Farm Offer to Purchase. This helps achieve consistency for the contractors performing the inspections and tests as well as for the licensees and parties who utilize those provisions. The additional benefit is those provisions have been approved by the DSPS for use with farm properties, which makes them perfect for transactions involving rural properties and other properties not served by municipal sanitary and water systems. 

Well water testing contingency 

There are no major changes to the Well Water Testing Contingency in the WRA Addendum B. The offer is contingent upon safe water results from a state-certified or other qualified lab. The Well Water Contingency automatically calls for the testing of bacteria such as coliform and E.coli, nitrate and arsenic, and the parties may designate other substances the water should be tested for. The default now provides the buyer obtains the reports and pays all costs.

The provision from the 2014 Addendum B whereby the parties could indicate in advance whether the seller may cure using a point of use versus a point of entry remedy was removed as the parties are more likely to want to decide such issues when and if they are confronted with a well water contaminant. 

Well system(s) inspection contingency 

The Well System Inspection Contingency is also substantially the same as in the prior version, making the offer contingent upon the buyer receiving a current report from a Wisconsin-licensed well driller or a Wisconsin-licensed pump installer indicating the well conforms to code on the DNR  Inspection Form #3300-221. The inspector is required to inspect and complete a separate report form for each well found on the property. The default now provides the buyer obtains the reports and pays all costs.

Although not required, the inspector may note observations regarding the condition, capacity or performance of the well and pressure system, including well or pump yield, and the contingency includes a checkbox if this extra information is requested.  

The contingency indicates if the well is inspected, the Well Water Testing Contingency is automatically selected and included in the offer because the well water will be sampled and tested for coliform bacteria that includes E. coli, nitrate and arsenic, as required by law. 

The 2021 WRA Addendum B also includes a new provision for Abandoned Well(s), making the seller responsible to close any abandoned wells if the seller has notice or knowledge or is made aware of abandoned wells. 

POWTS contingency

The Private Sanitary System (POWTS) Inspection Contingency, or POWTS contingency, is different from the in the 2014 Addendum B. The checkboxes for the standards the POWTS was to meet have been eliminated, and the contingency no longer includes verification of vertical separation.

The POWTS Inspection Contingency makes the offer contingent upon the buyer receiving a current written report from either a county sanitarian, licensed master plumber, licensed master plumber-restricted service, licensed plumbing designer, registered engineer, certified POWTS inspector, certified septage operator and/or a certified soil tester, and that the POWTS conforms to the code in effect when the POWTS was installed, is not disapproved for current use, and is hydraulically functional and structurally sound. The default now provides the buyer obtains the reports and pays all costs.

Although Wis. Admin. Code § SPS 383.03 continues to require POWTS maintain a 3-foot or 2-foot minimum vertical separation from limiting conditions such as groundwater or bedrock, that is not a standard the inspector is asked to address in the revised contingency. Vertical separation can be determined in some cases from the county’s written records or by having a certified soils tester make soil borings. But if the system is old or deep in the ground, the inspectors report they cannot determine vertical separation without excavation, which they do not want to do. As a result, the inspectors do not reference vertical separation in their reports unless it was in written records they reviewed. There are no statutes or rules setting standards for POWTS inspections and inspection reports, as there are for wells and well water, so POWTS inspectors have discretion as to the content of their reports and the standards they employ in the conclusions they make. 

Other additions

A new contingency in the 2021 WRA Addendum B addresses underground (UST), aboveground (AST) or basement fuel tank(s) not currently in use and allows the parties to choose which of them shall be responsible for tank closure or removal. If the seller is responsible, the seller must provide written confirmation at least five days before closing, or the buyer can deliver notice making the offer null and void. 

The 2021 Addendum B includes a revised Shared Well Agreement contingency, and a new Shared Driveway Agreement contingency was added for good measure. Because Addendum B grew to three pages, there was ample room for a large section of blank lines for Additional Provisions at the end.

For a deeper dive into the details behind the 2021 WRA Addendum A and Addendum B, see the June 2021 Legal Update, ‚ÄúWRA Addenda A and B 2021,‚ÄĚ at www.wra.org/LU2106.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

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