Everybody Wants to Rule the World

A reminder of the rule changes effective July 1, 2016


 Cori Lamont  |    November 10, 2016
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Statutory changes are made through the legislative process, which involves getting a bill in the state Capitol in Madison introduced, conducting committee hearings, a vote on both the Senate and Assembly floor, all while lobbying legislators about the bill. While equally impactful to the daily lives of Wisconsin citizens and industry professionals, administrative rules changes occur through the respective state agency that regulates the matter. For instance, the Real Estate Examining Board (REEB), which is part of the Department of Safety and Professional Services (DSPS), promulgates rules directly impacting the real estate profession. Specifically, the REEB promulgates REEB 11, 12, 15, 16, 17, 18, 23, 24 and 25. 

Real estate licensees are obligated to follow federal and state statutes, administrative rules, office policy, and if the licensee is REALTOR®, the REALTOR® Code of Ethics. Therefore, the state statutes set forth the law, and then by administrative rule, the REEB may promulgate rules further clarifying portions of the statutes. The administrative rules cannot eliminate or contradict the law set forth in the statutes. 

A number of changes were made to Wisconsin Statute Chapter 452, which substantially impacts the real estate profession. For more information, see the April 2016 Legal Update, “License Law Modernization 2016,” at www.wra.org/LU1604 and the June 2016 Wisconsin Real Estate Magazine article, “Changes to Wisconsin Statute Chapter 452: Frequently Asked Questions” atwww.wra.org/Chap452FAQ

Due to the numerous changes made in the legislature to Wis. Stat. Chap. 452 and the concern of inconsistent information from the updated statute to the obsolete administrative rule, the Wis. Stat. Chap. 452 legislation statutorily provided the REEB the authority to circumvent the traditional rule-making process for those administrative rules directly impacted by the Wis. Stat. Chap. 452. So, the REEB was given the authority to modify the administrative rules via the emergency rule process. The emergency rule process allows for an expedited rule-making process. The nonemergency or traditional rule-making process takes anywhere from 18 to 24 months. Allowing the REEB the authority to change administrative rules quickly offered certainty for real estate licensees as to practice parameters. 

Several rules were recently modified due this process. The emergency rules had an effective date of July 1, 2016, and therefore were applicable as of that date — the same date as the majority of the Wis. Stat. Chap. 452 changes. All emergency rules will expire at some time, and because of this, are most often moved toward becoming permanent changes to the rule. 

Each change, along with a simple and brief summary, is provided for your reference. Unless otherwise noted, all the rules have been modified to maintain consistent terminology used with Wis. Stat. Chap. 452. These noted rule changes will become permanent sometime in 2017.

REEB 11: Definitions

While REEB 11 always contained some definitions, it never included all of the definitions relevant to real estate practice. Therefore, the REEB’s goal was to include the definitions used throughout rules REEB 12 to 25 directly impacting and addressing real estate practice within REEB 11. Furthermore, the definitions match those included in Wis. Stat. Chap. 452. 

For instance, REEB 11 now also includes the definition of “agency agreement,” “associated with a firm,” “associated with a subagent,” “firm” and “member of licensee’s immediate family.” 

REEB 12: Applications 

  • Includes an opportunity for the REEB to charge $68 for a predetermination, which is the process that allows potential applicants to ask the board about the possibility of obtaining a real estate license due to a criminal indiscretion in their past. 
  • Allows the $68 fee to be applied toward the real estate license application fee if application is made within one year of determination. See Wis. Admin. Code § REEB 12.011(1)(am). 

REEB 15: Record retention 

While Wis. Stat. Chap. 452 affords a real estate firm to retain documents electronically in Wis. Stat. § 452.42, REEB 15 further delineates what that record retention looks like. The rule clearly: 

  • Permits the ability to retain documents electronically or digitally. See Wis. Admin. Code § REEB 15.04(1).
  • In addition to requiring the licensee to promptly provide exact and complete copies of any document utilized in real estate practice, the licensee must promptly provide an exact and complete copy of any document prepared or received by the licensee. See Wis. Admin. Code § REEB 15.02(1). 
  • Includes a clarification that licensees must promptly distribute exact and complete copies to the parties of not only the lease but also the rental agreement upon the execution of either. See Wis. Admin. Code § REEB 15.02(3).
  • Provides that a broker or salesperson shall promptly distribute an exact and complete copy of a listing contract or agency agreement that has been accepted and signed by all parties to the client when the client signs an agency agreement. See newly created Wis. Admin. Code § REEB 15.02(4).
  • Establishes a two-year record retention period unless required by federal law such as the lead-based paint law, or unless there is an active or ongoing REEB investigation. See the box of Wis. Admin. Code § REEB 15.04(1) in the next column. 
  • Confirms the REEB cannot require copies of documents and records to be submitted beyond the retention period. See Wis. Admin. Code § REEB 15.04(1).
  • Requires as per the statute for licensees associated with the firm to timely submit documents and records related to the transaction to the firm in a timely manner. See Wis. Admin. Code § REEB 15.04(2).
  • Repealed Wis. Admin. Code § REEB 15.03 – Copies of closing statements. Due to the modernization of the real estate transaction, real estate firms and their agents should not be responsible for ensuring a complete copy of the party’s closing statement is delivered to them.

Therefore, the language was removed from the rule. 

REEB 16: Approved forms and legal advice 

  • Creates a consistency with the statute in the definitional use of “use of form” to reflect the reference to instruction rather than intent since firms and their agents cannot understand a parties’ true intent since they cannot read their minds. However, agents are able to complete forms for the purpose of accomplishing the instruction of a party in a real estate transaction. See Wis. Admin. Code § § REEB 16.02(5) and 16.06(8). 
  • Clarifies that in addition to government forms, licensees have the ability to use also use quasi-government forms — such as Homepath, as well as tribal agency forms — such as Oneida Nation. See Wis. Admin. Code § § REEB 16.03(1)(d) and (e). 

REEB 17: Licensees associated with a firm 

The majority of this rule has been repealed because Wis. Stat. Chap. 452 now includes supervision language. 

  • The title of the rule was changed from Licensure and Supervision of Employees to Licensees Associated with a Firm.
  • Provides a licensee associated with a firm may personally employ or engage as an independent contractor licensed person only as unlicensed personal assistants. See Wis. Admin. Code § REEB 17.03(2). 
  • Clarifies that a broker shall be associated with only one firm unless the broker is engaging in independent practice or acting as a business representative. See Wis. Admin. Code § REEB 17.03(3). 
  • Confirms a salesperson may engage in real estate practice only when associated with a firm. See Wis. Admin. Code § REEB 17.03(4).

REEB 18: Trust accounts 

The majority of the rule changes include terminology consistent with the statutory references of “firm” and “licensee associated.” Therefore, the majority of the rule changes do not include any significant practice change.

REEB 23: Change of name or address on license, trade name or form of organization 

This change reflects the consistent and appropriate use of licensed business entity in Wis. Stat. Chap. 452. 

REEB 24: Conduct and ethical practices for real estate licensees

  • Clarifies when a licensee is acting as an agent on behalf of any member of the licensee’s immediate family, said disclosure includes when it’s also on behalf of any combination of members of the license’s immediate family. See Wis. Admin. Code § REEB 24.05(2). Immediate family as previously noted is now included in Wis. Admin. Code § REEB 11.02(6m). 
  • Clarifies that individual licensed brokers acting as sole proprietors or licensees associated with a listing firm cannot submit their own personal offer to purchase a property when their firm has the property listed. See Wis. Admin. Code § REEB 24.13(3)(b).

For a copy of the emergency rule impacting § REEB 11 to 25, see docs.legis.wisconsin.gov/code/emergency_rules/all/emr1620. Any language that is not referenced in the emergency rule remains in the administrative rule.

Cori Lamont is Director of Corporate and Regulatory Affairs for the WRA.

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