2024 Brings Change to the WB Forms

Six things to know to prepare for the new year.

 Cori Lamont, WRA Senior Director of Legal and Public Affairs  |    November 01, 2023

As discussed in the October 2023 magazine, the WRA legal team recently created the WRA Addendum C to help further boost consumer transparency as to commission in the listing, buyer agency and tenant representation agreements. Simultaneously, the WRA proposed changes be made to the WB forms. These changes were presented to the Department of Safety and Professional Services (DSPS) Forms Advisory Council, a group of attorneys, brokers and salespersons. Any recommended changes are then presented to the Real Estate Examining Board (REEB) for approval. At its October 19, 2023, meeting, the REEB approved the changes.

In addition to the changes listed before in the listing and buyer agency agreements, the offers to purchase will also include the wire fraud notice.

The legal team will provide more information in the future contained in the Legal Hottips, Legal Update and at www.wra.org/formsupdate, but in the meantime, this article provides a quick review of the changes. 

Which forms will be affected by these changes? 

Listing contracts

  • WB-1 — Residential Listing Contract — Exclusive Right to Sell 
  • WB-2 — Farm Listing Contract — Exclusive Right to Sell
  • WB-3 — Vacant Land Listing Contract — Exclusive Right to Sell
  • WB-4 — Residential Condominium Listing Contract — Exclusive Right to Sell
  • WB-5 — Commercial Listing Contract — Exclusive Right to Sell
  • WB-6 — Business Listing Contract — Exclusive Right to Sell
  • WB-37 — Lease Listing Contract — Exclusive Right to Sell

Buyer agency agreements

  • WB-36 Buyer Agency Agreement 
  • WB-38 Commercial Buyer Agency/Tenant Representation Agreement

Tenant representation agreement

  • WB-39 Tenant Representation Agreement

What are the optional and mandatory use dates? 

The optional use date is December 1, 2023, while the mandatory use date is January 1, 2024. 

Offers to purchase

As a reminder, the following offers will include the wire fraud notice and share the same mandatory use date of January 1, 2024:

  • WB-11 — Residential Offer to Purchase
  • WB-12 — Farm Offer to Purchase
  • WB-13 — Vacant Land Offer to Purchase
  • WB-14 — Residential Condominium Offer to Purchase
  • WB-15 — Commercial Offer to Purchase
  • WB-16 — Offer to Purchase — Business With Real Estate
  • WB-17 — Offer to Purchase — Business Without Real Estate
  • WB-24 — Option to Purchase
  • WB-47 — Amendment to Buyer Agency/Tenant Representation Agreement

Greater transparency to consumers 

Commissions and commission splits are negotiable. The free market establishes real estate broker commission costs within markets based on influences such as service, consumer preference and what the market can bear. A variety of commission models and business models exist 
in marketplaces throughout Wisconsin. 

The current WB forms provide a great deal of transparency and flexibility for consumers about commission. Read more about this in the October 2023 Wisconsin Real Estate Magazine at www.wra.org/WREM/Oct23/HowToC/Foreword.

To further increase consumer transparency and education, the following consumer-friendly language is modified based on the type of contract and included in the WB listing and buyer agency agreements: 

The Seller and the Firm agree the Firm’s commission shall be _________________.

The remaining language of the listing and agency agreement will remain the same. The forms also receive a bit of a modification relating to the compensation to others. 

The Firm offers the following commission to cooperating firms working with buyers such as subagents and buyer’s firms: _________________. (Exceptions if any):  _________________. 
There is no standard market commission rate. Commissions and types of service may vary by firm and are negotiable based on the firm you hire. Compensation to others may be offered to firms acting as subagents and firms representing buyers as incentive to participate in the sale of firms’ listings through multiple listing services or in compensation agreements.

Stronger recommendation for dispute resolution  

Alternative dispute resolution often reduces costs because it avoids court proceedings. Currently, the WB listing and agency agreements state in broad terms that if a dispute cannot be resolved through mutual agreement, “the parties may consider judicial resolution in court or may consider alternative dispute resolution. Alternative dispute resolution may include mediation and binding arbitration.” See lines 60-61 of the WB-1 Residential Listing Contract.  

The new language strongly encourages mediation and arbitration first but does not require either. 

The Parties understand that if there is a dispute about this Listing or an alleged breach, and the Parties cannot resolve the dispute by mutual agreement, the Parties may consider alternative dispute resolution instead of judicial resolution in court. Alternative dispute resolution may include mediation and binding arbitration. Should the Parties desire to submit any potential dispute to alternative dispute resolution, it is recommended that the Parties add such in Additional Provisions or in an Addendum.

A note about the two-year limitation on liability

Real estate transactions are fraught with frivolous litigation against the real estate firm due to a “deep pocket” perception of the real estate firm and agent. Such litigation costs consumers, real estate firms and real estate agents considerable time and costs. Effective March 4, 2016, Wis. Stat. § 452.142 reduced the time frame a real estate licensee could be sued relating to brokerage services from six years to two years after closing.

Before the creation of Wis. Stat. § 452.142, real estate licensees were vulnerable to litigation relating to a written contract for six years. Therefore, a real estate licensee as well as their firm could be sued based upon a listing, buyer agency agreement or offer to purchase anytime within a six-year period after closing on a transaction or termination of a listing or buyer agency agreement.

The legislature intended to create a two-year limitation for when a lawsuit could be commenced against a firm and its agents relating to brokerage services provided. This intention is further supported by legislative history. 

However, in recent years, there have been attempts to circumvent Wis. Stat. § 452.142. Former clients and customers are claiming the firm and agent should be financially responsible after the two-year time frame if the client or customer is held legally responsible in the litigation with the party that purchased or sold the property. Wis. Stat. § 452.142(2) states that the two-year period of limitation applicable to actions against real estate licensees “may not be reduced by agreement.” Therefore, the contract cannot reduce the two-year period.  

A note educating everyone about the existence and the time frame for litigation will now be included in the WB listing and buyer agency agreements.

NOTE: Section 452.142, Stats., places a time limit on the commencement of legal actions arising out of this Agreement.

Wire fraud notice   

Just like the WB offers to purchase, the listing contracts, buyer agency agreements and tenant representation agreements will all now include a new Wire Fraud Warning near the signature lines. This warning aims to educate consumers using consumer-friendly language about why it’s crucial to refrain from wiring funds for their transaction without personally obtaining independent verification from a trustworthy, known source that the wire instructions they are about to use are indeed correct. 

Wire Fraud is a real and serious risk. Never trust wiring instructions sent via email. Funds wired to a fraudulent account are often impossible to recover.

Criminals are hacking emails and sending fake wiring instructions by impersonating a real estate agent, Firm, lender, title company, attorney or other source connected to your transaction. These communications are convincing and professional in appearance but are created to steal your money. The fake wiring instructions may even be mistakenly forwarded to you by a legitimate source. 

DO NOT initiate ANY wire transfer until you confirm wiring instructions IN PERSON or by YOU calling a verified number of the entity involved in the transfer of funds. Never use contact information provided by any suspicious communication. 

Real estate agents and Firms ARE NOT responsible for the transmission, forwarding, or verification of any wiring or money transfer instructions.

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