Picture this: an agent has a property listed, and the seller has completed the real estate condition report (RECR) to the best of their knowledge. The seller has kept the property in good condition, so they aren’t worried about the property not selling. Suddenly, a storm comes through the area, and a falling tree branch has damaged the gutter and siding of the house. The seller is now wondering what they should do.
Before acceptance
If this happens before the seller has accepted an offer, the seller is required to amend the RECR. If the seller obtains information or becomes aware of any condition that would change a response on a previously completed RECR, the seller shall amend that RECR prior to the acceptance of a contract, per Wis. Stat. § 709.035. The seller may prepare an amendment to the RECR to include this new information, or the seller may draft a new RECR.
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.
The decision to amend the RECR is a discussion the seller should have with private legal counsel.
After acceptance
After there is an accepted offer to purchase, the seller has no obligation to amend the seller's RECR. Providing an amended RECR to a buyer after there is an accepted offer would give the buyer a new two-business-day right to rescind, which is arguably not in the seller's interest after there is an accepted offer.
Instead, the seller would notify the buyer of the damage in writing using a WB-41 Notice Relating to Offer to Purchase. Furthermore, the Property Damage Between Acceptance and Closing provision of the offer would apply. Anytime the seller’s property is damaged after there is an accepted offer, the agents and parties should review this provision for next steps.
Previous deal fell apart
Sometimes sellers have questions about what to disclose after a previous offer is cancelled or terminated. The most commons scenario is this: the buyer gets an accepted offer, the buyer gets an inspection, the buyer can’t get financing, and the parties cancel the contract. Now the seller is marketing the property again, but the seller knows about new defects because of the first buyer’s inspection report. What does this seller do now?
Wis. Stat. § 709.035 would still apply. The seller, after learning about new defects in the inspection report, will have to decide whether to change their answers on the original RECR based on the new information. The seller could add the new information with an amendment to the RECR, draft an entirely new RECR, or attach the first buyer’s inspection report to a RECR amendment.
Unless otherwise agreed to by the seller and the previous buyer, the seller is not prohibited from providing copies of the buyer's inspection reports to other prospective purchasers. Licensees, however, should only provide a copy of the first buyer's inspection report to prospective buyers in limited circumstances.
A licensee may provide a copy of the first buyer’s inspection report if it has been attached by the seller to the RECR or a RECR amendment. If the seller has not attached the first buyer’s inspection report to the RECR, then to guard against any possible confidentiality concerns, the conservative approach says the licensee would not unilaterally provide a second buyer with the first buyer’s inspection report without consent of all parties to the first transaction.
If the second buyer is provided with a copy of the first home inspection report, the new buyer should be advised that the first buyer’s inspection report is given to provide information only. The statutes regulating home inspectors provide the home inspector will not be liable to subsequent buyers for any errors or omissions contained in the first buyer’s inspection report. The new buyer may be advised they should have their own home inspection performed if they want the home inspector to be liable to them for any oversights.
As another possible action, if the seller distributes the previous buyer's inspection report, the seller could redact the buyer's name, address and phone number if that is on the report, and any other identifying information on the report. The redaction of that information helps protect against any confidentiality concerns or claims by the first buyer. It may also be prudent to redact the home inspector's information as the inspector owes no responsibility to and is not liable to new buyers.
Bottom line
In real estate transactions, timely and accurate disclosure is critical, and sellers must carefully consider when and how to amend the RECR based on new information. Handling changes correctly — whether before or after acceptance — helps protect all parties and reduces risk.
