Looking back to 2011, what topics most often came up on the Hotline? Some of the most frequent inquiries involved email delivery in the offers, listing protection, personal purchases and leasing property for sale.

Email delivery

Are the Addendum D and Electronic Consent needed in a new residential, condominium or vacant land offer to purchase? With these offers, does an agent still need to email the consent form and have it emailed back?

When using electronic documents in a Wisconsin real estate transaction, compliance with federal E-Sign and Wisconsin E-Commerce laws requires two steps: 

1. Obtain electronic consent from parties who are consumers. The consumer must be using a computer to give electronic consent via email or on a website. If email is used, the WRA “Consent for Use of Electronic Documents and Signatures in Consumer Real Estate Transactions” or other electronic consent complying with federal law must make an entire round trip from agent to the consumer and back again electronically. 
2. Indicate in the offer to purchase that email is an authorized method of delivery. For the recently updated offers, email delivery is a preprinted option that the parties may choose. Insertion of an email address for a party in the delivery section is a representation that the party has provided electronic consent.

Therefore, the new offers eliminate the need to use the WRA Addendum D but do not eliminate the requirement for electronic consent from consumers who are parties. 

A common practice is for agents writing offers to use their email address on line 54 of the WB-11 Residential Offer to Purchase and the email address for the listing agent on line 53. This occurs with and without prior electronic consent from the parties. Is this appropriate? 

1. If the listing agent receives an offer to purchase and the cooperating agent has inserted the listing agent’s email address in the email delivery section, the listing agent’s next step is as follows: 
2. If the seller has already given electronic consent and agrees to email delivery in the offer, then the listing agent does not need to take any additional steps. 
3. If the seller has not given electronic consent but is willing to have email delivery in the offer, then the listing agent must obtain the seller’s electronic consent before the seller may agree to the terms of the offer. 

If the seller has not given electronic consent and does not want to use email delivery in the offer, then the listing agent would prepare a WB-44 Counter-Offer to remove email as a form of delivery. 

If the seller or buyer cannot receive email or do not have an email address, then they cannot provide electronic consent and therefore cannot agree to email as form of delivery. This is true even if the party’s agent has email; electronic consent is required from the consumer prior to including email as a form of delivery regardless of whose email address is inserted in the offer. 

Email delivery resources: “Behind the Curtain: E-Commerce and E-Sign Exposed” in the June 2010 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun10/BehindCurtain, the “Best of the Legal Hotline” article regarding electronic delivery in the November 2008 Wisconsin Real Estate Magazine online at www.wra.org/WREM/Nov08/ElectronicDelivery, and the E-Commerce resources at www.wra.org/Resources/BusPractice/E-Commerce_Resources. 

Protected buyers

An agent is writing an offer on a house that was listed by a previous broker and is now listed with a second broker. The buyer is a protected buyer from the first listing. When the agent writes the offer, who presents it to the seller?

Buyers may be protected for listing protection in one of four ways. If (1) the buyer submitted a written offer to purchase or (2) negotiated directly with the seller, the listing protection is automatic for the first listing broker. If, during the term of the listing, the buyer (3) attended an individual showing or (4) “negotiated” with a broker, the buyer will be protected only if the listing broker delivered the buyer’s name to the seller no later than three days after the expiration of the first listing contract. “Negotiated,” for these purposes, means that the buyer discussed the potential terms upon which the buyer might acquire an interest in the property.

If the buyer were protected under the first listing, the first listing broker would have, in essence, a one-party listing for the protected buyer during the one-year override period. Any offer the buyer writes is to be presented to the seller by the first listing broker. The first listing broker would earn the listing commission if this offer is accepted and closes. As a courtesy, the agent may wish to inform the current listing broker if the seller accepts this offer.

It is prudent for this cooperating broker to enter into a written co-broke commission agreement with the first listing broker. This is because the first listing broker’s offer of cooperation and compensation has ended. Listing protection protects the listing broker’s commission but does not extend to a broker working with the buyer for the first time.

See pages 8-10 of the February 2004 Legal Update, “Listing Procedures for the Prudent Broker,” at www.wra.org/LU0402 for further discussion of listing protection issues. 

If a property has been foreclosed and the bank is trying to sell it, do the names of protected buyers go directly to the bank and continue to be protected?

The protected buyers list relates to the original listing between the owner and the first listing broker. Title has been conveyed via the sheriff’s deed and the bank is the new seller. If the bank lists the property, there are no automatically protected or excluded buyers because the bank did not have the prior listing. Some banks may, if they know the identity of previous buyers, use that list to begin their marketing or may exclude those buyers from their listing so the bank may try to sell directly to one of them without broker involvement. 

Personal purchases

A real estate salesperson is looking to purchase a property for herself. Does the MLS agreement between various companies apply even if the agent is writing the offer herself or does she need to make the commission a part of the offer in order to receive compensation?

Under the law of agency, the agent is prohibited from competing with the principal. A licensee can be either a principal or an agent in a transaction, but conflicts of interest occur when a licensee tries to be both. When acting as a buyer, the licensee is a principal in the transaction and not the agent for anyone. Therefore, the buyer/licensee should not collect a commission from the seller because the buyer/licensee cannot perform services on behalf of the seller with undivided loyalty when the licensee has his or her own interest as the buyer at stake. It is also inconsistent for a buyer/licensee to act as his or her own agent and collect a commission for representing oneself. Instead, a buyer/licensee can negotiate a buyer’s incentive to be paid by the listing broker or the seller. This incentive can be for the amount of the co-broke commission which would otherwise be paid to the selling broker in the transaction. 

The buyer’s incentive should be properly documented in writing before closing, preferably before the offer to purchase is executed. An incentive from the listing broker should be documented as a separate agreement between the licensee/buyer and the listing broker. Under the SPS’s interpretation of Wis. Admin. Code § REEB 24.05(4), the seller also must consent in writing to this incentive no later than the time that the offer is accepted, so a recitation in the offer regarding the incentive from the listing broker to the licensee/buyer may be the most efficient way to meet this requirement and avoid any possible SPS enforcement actions. 

See the “Best of the Legal Hotline: Personal Purchases & Sales,” in the March 2004 edition of the Wisconsin Real Estate Magazine, online at www.wra.org/WREM/March04/LegalHotline and pages 12-13 of the March 2008 Legal Update, “Running a Real Estate Office,” at www.wra.org/LU0803. 

Lease listings

The agent procures a buyer who enters into a lease and an option to purchase with the seller. Can the agent secure a commission via the lease or must the agent wait to see if buyer executes the option before the end of the lease to collect a sales commission?

The sale and the lease of a property involve two separate types of interests in real estate, and this transaction involves two types of brokerage services: the lease of the property and the sale of the property. The broker must have the authority to provide each type of service in order to earn any corresponding commission.
If the broker had a lease listing, the broker would have clear authority to provide leasing services and earn commission for the lease. If the seller wants additional leasing services, the listing may be modified or the broker may enter into a WB-37 Exclusive Listing Contract for Lease of Real Property. 

Information about lease listings is available in the December 2010 Wisconsin Real Estate Magazine at www.wra.org/WREM/Dec10 and the July 2008 Legal Update, “Using Land Contracts and Leases with Options,” at www.wra.org/LU0807.

Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.