The Best of the Legal Hotline: Contract Laws

Who signs what?


 Debbi Conrad  |    January 30, 2004
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The following recent Legal Hotline questions address the issue of which parties are required to sign listing contracts, offers and other transaction documents.

Who signs: listings vs. offers

A broker is listing a home that is owned by three people. Must all three sign the listing contract? 

The listing contract must be signed by someone agreeing to pay a commission. The law does not require that all the owners sign a listing contract in order for the listing contract to be enforceable against the owner who does sign. Therefore, one owner signing a listing can be liable for a commission to a broker who successfully procures a buyer even if other owners are also on title. However, in the real world, a listing contract without the signature of all owners is a disaster waiting to happen. Prior to accepting a listing signed by fewer than all sellers, counsel should be obtained regarding myriad potential problems including disclosure duties owed to the other sellers and prospective purchasers, homestead law, marital property law, etc.

An agent has a listing that is in a life estate. The life estate owner has six children who hold the remainder interest. The life estate owner has moved into assisted living and they have all agreed on listing the home. When an offer is received, will one signature suffice for acceptance, or do all seven have to sign? 

Unlike the listing contract, all owners must sign the offer to purchase to create a valid real estate conveyance, per Wis. Stat. § 706.02. It may be more efficient to use a power of attorney so that one person could sign on behalf of the group. Another option would be to counter any offers received to create more time for gathering the signatures of the seven owners.

Husbands and wives

Regarding homestead rights, the agent took a listing with the wife only. The husband moved into the property after he married the wife. Both the husband and the wife live in the listed home. What documents must the husband sign to sell the home, if any? 

The property is homestead so both spouses must sign any offer to purchase and the deed, per Wis. Stat. § 706.02(1)(f). Interestingly, a property is defined as homestead if both spouses live there or even if only one spouse resides in the property. Both spouses must sign offers and deeds whenever a property is classified as homestead.

This question is in regards to marital property. On the title work it states that the property is held as survivorship marital property. Can the husband sell it without the wife's signature? 

This will depend upon the type of property involved and which spouse(s) has management and control. If the property is not homestead property and the property is titled in the names "Mr. Seller or Mrs. Seller, husband and wife, as survivorship marital property," then either Mr. Seller or Mrs. Seller could exercise management and control and individually convey title. If the title says "Mr. Seller and Mrs. Seller, husband and wife, as survivorship marital property," or if the property is homestead, then both spouses must execute any offer to purchase and the deed.

The listing agent has received an offer from a married couple purchasing the property for their personal residence. However, only one name and signature appears on the offer and counter offer, which has been accepted. Is this a valid offer? If not, can the counter offer be withdrawn until the other spouse signs? 

Married persons may acquire property in the name of only one spouse. A binding offer will be created provided the offer to purchase is in one name and that buyer signs the offer to purchase. It is up to the buyers to decide, with the advice of their attorney, if desired, if they wish to hold title in the name of only one spouse.

A broker listed a commercial real estate/business property where the deed is in the wife's name. She and her husband are going through a divorce. Who should sign the deed? 

In general, if investment/commercial property (non-homestead) is owned only in one spouse's name, only that person needs to sign the deed. There may be marital property issues involved in this situation, but that is for their divorce attorneys to sort out.

A seller signed an offer for both himself and his wife. He said that he had his wife's authority to sign for her and that she would sign later. The wife never came in to sign and now she does not want to sell the home and wants to void the contract. The buyer is proceeding to closing. Is there a valid, binding offer? 

Unless the husband has proper authority to sign for the wife, i.e. a power of attorney, both sellers must accept the offer in writing to satisfy the § 706.02 requirements for a real estate conveyance. Spouses do not have automatic authority to sign for each other.

Powers of attorney

The sellers countered the offer from the buyer. The counter-offer was signed and sent back, but the cooperating agent signed the buyer's name and put "per telephone call." The agent does not have a power of attorney for the buyer, who is in the hospital. As far as the listing agent is concerned, there is no accepted offer until it is signed by the buyer. 

The listing agent is correct because the cooperating agent has no power of attorney from the buyer. Signing documents for parties is not an ordinary part of a broker's authority as an agent, nor is it a good idea or practice for brokers to seek or accept this authority. Long distance communication has inherent misunderstanding. It is better to shift this authority to the party's attorney or a relative. Also, in this day of overnight mail, faxes and email, documents can be sent, discussed by phone, and returned in a very short time.

The power of attorney authority to sign for another should be given in writing, preferably notarized, with the fullest possible instructions from the authorizing party. When signing documents, the Power-of-Attorney (POA) should comply with Wis. Stat. § 706.03(1), which provides that both the party's name and the POA's name must appear with an indication of authority (such as "Seller X by B, authorized agent" or "B, as agent on behalf of Seller X").

A licensee is working with a buyer who was trying to purchase vacant land. When he could not get the desired zoning, the buyer decided to cancel the offer. The buyer lives two hours away and does not have access to a fax, so he asked the licensee to sign the CAMR for him and initial it. Can the licensee do this? 

Unless the licensee has actual authority, i.e. a POA, the licensee may not sign for the buyer. The Department of Regulation and Licensing (DRL) has disciplined and sanctioned real estate licensees for signing for a client or customer without proper authority.

Addenda

Is it necessary for a seller to initial Addendum B (when it is included in an offer) when countering the offer? In the past, the broker generally would have the seller initial the Addendum B, even if a counter-offer will be used to change the information in the addendum. What is correct and appropriate? 

The initialing of addenda in an offer to purchase is designed to show the party has received the addenda. It is prudent practice to have buyers and sellers acknowledge receipt by initialing addenda, even though the parties may create a legally enforceable contract by incorporating the addenda into the offer by reference. Initialing the documents will be helpful if anyone ever questions whether all the pages were in fact received by all parties and thus included in the contract.

 Editor’s note: The DRL became the DSPS in 2011. Information above may not be current.

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