The Best of the Legal Hotline

Over the last six months, the WRA Legal Hotline trends have mirrored the unpredictable nature of Wisconsin weather: changing rapidly and covering a wide range of topics. From questions surrounding the inspection contingency in the offer to purchase, to concerns about evolving brokerage practices and antitrust compliance, the inquiries have been as varied as they are important. Issues related to disclosure obligations and the Real Estate Condition Report (RECR) remain a constant theme, while closing-related questions and challenges with delayed or failed transactions have also made frequent appearances. Rounding out the mix are REALTOR® conduct issues and MLS-related confusion, further emphasizing how legal and ethical questions continue to shape how business is done in the field.

An agent is representing a buyer in a transaction. The buyer had a home inspection and did not object to any of the items. The listing agent asked for a copy of the inspection report and said that state law requires the buyer to provide a copy. Is this state law?

The obligation for the buyer to deliver the inspection report to the seller is not state law but a contractual obligation per the default language of the WB-11 Residential Offer to Purchase. Per lines 190-191 of the WB-11 Residential Offer to Purchase, the buyer is required to provide copies of testing and inspection reports to the seller:

“Buyer agrees to promptly provide copies of all inspection and testing reports to Seller.”

Therefore, the buyer should provide the seller with a copy of the inspection report, even if the buyer is not asking for repairs or objecting to items with a notice of defects. 

Why would a buyer need to sign a pre-agency showing agreement before an agent can show the buyer a property?

The National Association of REALTORS^® (NAR) settlement agreement requires an agent to have a written agreement with a buyer before touring a home. One option for that written agreement is the WB-50 Residential Pre-Agency Showing Agreement. This form can be used when the buyer is not yet a customer or a client but is in pre-agency. 

The NAR settlement FAQ webpage includes the following:

“74. What does it mean to tour a home?

• Written buyer agreements are required before a buyer tours a home.
• Touring a home means when the buyer and/or the MLS Participant, or other agent, at the direction of the MLS Participant working with the buyer, enter the house. This includes when the MLS Participant or other agent, at the direction of the MLS Participant, working with the buyer enters the home to provide a live, virtual tour to a buyer not physically present.
• A ‘home’ means a residential property consisting of not less than one or more than four residential dwelling units.” 

How long is a RECR good for? If a RECR is older, is it considered “expired”?

The law does not specify when a RECR would be “expired” for purposes of complying with Wis. Stat. Chapter 709. 

If a seller previously completed a report and learned new information, the seller is supposed to amend their report. If, prior to accepting an offer, a seller obtains information or becomes aware of any condition that would change a response on an already completed RECR, the seller shall amend that RECR. 

Wis. Stat. § 709.035 requires sellers to amend the RECR prior to the acceptance of a contract when they obtain new information or become aware of any condition that would change a response on the original RECR. The seller may prepare an amendment to the RECR to include the new information from an inspection or testing report, or to draft a new RECR that takes into account of the new information.

If the seller does not amend the RECR for the benefit of future buyers, the licensee in the transaction has a duty to disclose material adverse facts to the parties, in writing and in a timely manner. If the seller fails to disclose any defect in an amendment to the RECR despite knowing of a new defect, the seller may be risking a misrepresentation claim from a buyer.

If a buyer would like taxes re-prorated at the end of the year, does the agent check both boxes at lines 366 and 377 in the WB-11 Residential Offer to Purchase?

The “re-prorate” verbiage on line 377 would mean that the initial proration must be done at closing, so it appears that both boxes should be checked if the buyer wants this.

Lines 366-372 of the WB-11 Residential Offer to Purchase provide four options regarding the tax proration formula. One of these choices should be selected for the initial proration at closing. If no box is checked, the default option provides the taxes shall be prorated at closing based on the net general taxes for the preceding year or the current year if available. 

The box on line 377 of the WB-11 allows the parties to re-prorate the taxes. If the parties wish to include the re-proration provision, this box would be checked in addition to the initial proration formula option at lines 366-372 of the WB-11. 

The re-proration provision establishes a post-closing obligation on the part of the parties — not the agents or firms — to re-prorate the taxes based on the actual tax bill for the year of closing. The provision reassures the parties that they can adjust the tax proration done at closing at a later time when the actual tax bill is received. 

An agent heard about a new delayed marketing option in the MLS. Does that replace the Clear Cooperation Policy?

No. The Clear Cooperation Policy itself remains unchanged and in full effect. The Multiple Listing Options for Sellers Policy will work alongside the CCP and other MLS policies to provide sellers and their brokers more options and choices when marketing a property, while also supporting fair housing by providing buyers and their brokers with equal access to important MLS property information.

The following information is provided by NAR in its FAQs on the new policy:

“Is a delayed market exempt listing the same as an office exclusive listing? 

No, an office exclusive listing is an exempt listing where the seller has directed that their property is not disseminated through the MLS and is not publicly marketed.

An office exclusive listing may require submission under local MLS rules but not disseminated to other MLS Participants and Subscribers.

The Multiple Listing Options for Sellers Policy requires listing brokers to obtain a certification from sellers for an office exclusive listing.”