Everyone should have a favorite quote about dodgeball. One of my favorite dodgeball quotes is not surprisingly from a movie called “Dodgeball.” The quote is: “If you can dodge a wrench, you can dodge a ball.”

If you think about this quote, it obviously has a broader application than just dodgeball. Under this philosophy, as you can do one step — whatever that step may be, you will be able to achieve the next. Therefore, if you can use zipForm^®, you can help position yourself to dodge a potential lawsuit.

What on earth am I talking about? Well, it’s somewhat straightforward.

In 2014, the WRA worked with zipForm^® to create a fillable Real Estate Condition Report (RECR). Therefore in zipForm^®, you can send the RECR to the seller to complete electronically and send back to you, the listing agent. If you’re an agent who uses Digital Ink and have not made use of this new form, I encourage you do to so because it serves as another way to prove the seller completed the form — and not you as their listing agent.  

Why is the RECR important? 

The electronic RECR is vital because it helps protect you and your company from any suggestion(s) that you completed the form on behalf of the seller and discourages discussion as to whether the seller should or should not disclose something on the RECR. 

The RECR is to be completed by the seller. The law surrounding the RECR is entitled: Wisconsin Statute Chapter 709 “Disclosures by Owners of Real Estate.” The law does NOT say, “Disclosures by Owners of Real Estate with the Help of their Real Estate Agent or Disclosures by Owners of Real Estate Only if the Real Estate Agent Agrees to the Response.” 

Sellers are responsible for completing the RECR to the best of their ability regarding any defects. On the other hand, real estate licensees have their own disclosures to make of any information suggesting a material adverse fact or knowledge of a material adverse fact. For instance, if the seller does not disclose a defect and the agent knows about the defect and considers it a material adverse fact, the licensee is responsible for making that information known in writing to all interested parties in a timely manner. 

I am often asked, “What is a timely manner?” I often say, “As quickly as you can draft the disclosure and provide it to all the interested parties.” This disclosure is required even if the seller directs you to not disclose the information. If a seller doesn’t disclose or refuses to disclose something that the real estate licensee believes is a material adverse fact, then the licensee must disclose. Disclosure of a material adverse fact is a duty owed to all parties regardless of whether the consumer is a client or customer. When a conflict exists where a seller client tells you not to disclose something, duties to all parties trump duties to the client if you and your company believe the information suggests or is a known material adverse fact. 

If the seller cannot complete the RECR on his or her own, for example because of a sight impairment, the seller should ask a family member, a friend or an attorney to complete the RECR. The listing agent should AVOID AT ALL COSTS completing the form for the seller. 

There is a great risk of a listing agent assisting or answering questions for the seller as to the completion of the RECR. The listing agent should not encourage or discourage a seller from making a specific disclosure. Each attorney that may be consulted as to whether an item needs to be disclosed on the RECR may provide a differing legal opinion to the seller. Some attorneys believe that sellers should provide a full disclosure of what happened and what was done to repair the issues; other attorneys believe the seller should be very precise in what they disclose and assist the seller in drafting minimal disclosure; while other attorneys believe if the item is not a defect at the time of completing the RECR, then it is not a defect at all and disclosure is not required.

If an agent tells a seller whether or not to disclose a defect, or how to draft the explanation for said disclosure, then the agent arguably is providing legal advice to the seller. This could be deemed legal advice because the RECR provides a definition of “defect”; if the agent says not to disclose an issue on the form or that it does not require disclosure, then the agent is effectively providing a legal interpretation as to when the definition of “defect” applies.

How the fillable RECR works

When you send the seller the RECR via Digital Ink, you remove a great deal of risk of the seller asking you for assistance and/or asking you to fill out the form. You simply send the RECR to the seller via Digital Ink, the seller receives the RECR, completes it, and the form is sent back to you through the Digital Ink program. This process will help to reduce risk of liability because the company can show the blank form was sent to the seller, then returned completed. Evidence thus shows the agent did not complete the form on behalf of the seller. 

Digital Ink's transactional history is anther way to provide evidence that the seller both received and sent back the form through the Digital Ink program. Digital Ink shows when you sent the document to the consumer, when electronic consent was given by the consumer, and when the consumer sent the document back through the Digital Ink system. Even if the agent sends the RECR to the seller via Digital Ink and the seller completes electronically but prints and hands it to the agent, the agent still benefits from being able to show the RECR was sent to the seller via Digital Ink, completed by the seller and then provided to the agent. 

So, do you think you can dodge a wrench?

Resources

See Legal Update 02.07, "Duty to Disclose," at www.wra.org/LU0207 and the October 2009 Legal Update, "Diligent Disclosure," at www.wra.org/LU0910 for further discussion of seller disclosure obligations.

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