In Sam F & B v. Molepske (Ct. App. 2007, Appeal No. 2007AP1294), the buyers submitted a WB-14 Residential Condominium Offer to Purchase. The sellers countered, and the buyers accepted the counter-offer. The offer required that $50,000 in earnest money be deposited with the real estate company that drafted the contract (the Brokerage). An agent of the Brokerage (Agent) was listed as the buyer's recipient for delivery on lines 32-33 of the offer, and as the seller’s recipient for delivery in lines 30-31.

Wis. Stat. § 703.33 requires that condominium buyers be given five business days from receipt of the required condominium disclosure materials to rescind the contract. On January 12, the required disclosure documents were personally delivered to the Agent, as the buyer's recipient for delivery, but the buyers did not actually receive the documents until January 23 at their winter home in Florida. On January 24, the buyers attempted to rescind their offer, notifying the Agent and the seller that they disapproved of the disclosure materials.

The sellers objected and sued for the earnest money as liquidated damages, per the contract. The court found for the sellers, concluding the offer unambiguously designated the Agent as the buyer's recipient for delivery. Because the Agent received the documents on January 12 and the buyers did not rescind until January 24, the court concluded the rescission was late and ineffective, entitling the sellers to the $50,000 liquidated damages provided in the offer. On appeal, the Court of Appeals affirmed.

The buyers asserted that under the condominium statutes only personal receipt by the purchaser starts the rescission clock running. Designating a delivery agent, they claimed, is akin to a prohibited waiver of rights under § 703.33(6).

Both the circuit court and the Court of Appeals concluded that the offer unambiguously designated the Agent as the buyers’ recipient for delivery. The courts interpreted this to mean that delivery was effective by “giving the document or written notice personally” to the Agent. The Agent’s receipt of the disclosures, not the buyers’ receipt in Florida, started the clock on the time frame for rescission according to the courts.

Is the court’s decision correct? 

Wis. Stat. § 703.33(4) allows buyers to rescind an offer within five business days of receipt of the condominium disclosure documents. That language is mirrored in the WB-14 at lines 92-94. The fact that the language refers to a buyer receiving the documents indicates that the intent is to have the documents in the hands of the buyer. Delivery to an agent, even if that agent is named at lines 32-33 of the offer, may accomplish delivery to the buyer, but does not constitute “receipt by the buyer.” Delivery and receipt are two different standards. Consequently, the five business days arguably begin once the buyer actually receives the documents. The intent of the statute is to allow the buyer, not the buyer's agent, the opportunity to review the documents. Accordingly, there is reason to believe that a different court might decide this issue differently. This decision was not published and thus does not have any precedential value or binding effect on future courts faced with this issue.

Did the Agent act appropriately? 

The opinion does not give all of the facts, so a specific judgment cannot be made. In general, when an agent agrees to be named as the buyer’s recipient for delivery, the agent and broker accept the responsibility to handle documents mailed or delivered to the broker on behalf of the party in a timely and professional manner.

REALTOR^® practice tip: Acceptance of these roles creates new responsibilities to make sure that notices and other documents received on behalf of a party are promptly and competently processed and presented to the party. An agent typically must act swiftly because the party often is required to give a quick response to the other party. There may be liability on the part of a broker who fails to timely process and deliver critical materials.

See the discussion of the offer delivery provisions on Pages 4-5 of Legal Update 01.11, “Best of the Legal Hotline – Offer to Purchase Provisions,” online at www.wra.org/LU0111.

Debbi Conrad is Director of Legal Affairs for the WRA.