Looking back on 2014, what topics most often came up on the Hotline? Some of the most frequent inquiries involved email delivery in the offers, protected buyers, inspection contingency notices and amendments, service animals, party incentives, and landlord disposition of abandoned personal property.
Electronic consent and Addendum D
When working with buyers, is it necessary to fill out the electronic consent documents “Consent for Use of Electronic Documents and Signatures in Consumer Real Estate Transactions” and “Addendum D — Electronic Document Delivery — 2008 — [WRA-ADD]” for each separate property an offer to purchase is submitted for?
The WRA Addendum D is used to modify any contract that does not include email delivery language. The Consent for Use of Electronic Documents and Signatures in Consumer Real Estate Transactions (Consent for Use) contains the federally required disclosure information and consent that must be obtained electronically from a consumer who wants to use electronic documents, signatures and email delivery in transactions.
Step 1: Consent must be obtained electronically via email or on a website. When used electronically, the Consent for Use at www.wra.org/eCommerce allows consumers to demonstrate they can receive, save and send documents electronically, as federal law requires, and to consent electronically to the use of electronic documents, electronic signatures and email delivery. The Consent for Use should not appear in the transaction in printed form nor be signed with a wet signature. It would not accompany an offer. Electronic consent also may be accomplished using the consent built into zipLogix Digital Ink or similar services that comply with federal law.
Step 2: The parties authorize electronic delivery and identify the email address(es) for use in their contract(s). Addendum D is not needed in the updated offers (residential, residential condominium, vacant land, commercial and business), but may be needed for listing contracts and buyer agency agreements. Addendum D is no longer needed once the particular contract is modified to include email delivery language, but the federal law requirement for electronic consent for consumers is constant.
It is not necessary to complete a Consent for Use for each property unless the buyer limits his or her consent to one property.
Electronic consent resources
WRA LegalTalks video series about electronic consent: www.wra.org/LegalTalks/Ecommerce.
“10 Things You Should Know about Email Delivery,” in the July 2011 Wisconsin Real Estate Magazine: www.wra.org/WREM/Jul11/10Things.
“Best of the Legal Hotline: Electronic Delivery” in the November 2008 Wisconsin Real Estate Magazine: www.wra.org/WREM/Nov08/ElectronicDelivery.
Protected buyer lists
A listing agent submitted a list of protected buyers to the seller but only stated the agent's name and “client.” The date and time of showings and other negotiations, as well as the client's name are not included. Are these considered protected buyers?
The seller may be referred to the first listing broker and legal counsel regarding the first broker's rights. The second broker may not give the seller legal advice or make conclusions about whether any specific buyer has been properly protected.
The general rule is that the buyer needs to be named with specificity. In Dunn & Stringer Inv. Co. v. Krauss, 264 Wis. 615, 60 N.W.2d 346 (1953), the court found that the seller's actual knowledge of the prospective buyer's identity was not enough. In that transaction, the broker worked with Helmer Miller and his son Howard Miller. The seller knew that the broker worked with both Millers. Prior to the expiration of the listing, the broker filed with the seller a list of protected buyers, including "Herman Miller," which everyone understood was intended to be Helmer Miller. The seller later sold to Howard. When the broker sued for commission, the court found against him because Howard's name was not on the list. The court stated that the listing contract provision regarding protected parties would be read strictly against the broker; in other words, the broker would have to comply with every provision to the letter.
An exception to the rule arises under the language of the WB listing contracts when a selling agent cannot legally provide the name of the buyer because the buyer indicated that his or her name is confidential information on the agency disclosure form or in some other manner, preferably in writing. Under those circumstances, delivery of a notice identifying the broker with whom the buyer negotiated and the date(s) of showings or other negotiations fulfills the "delivery of the buyer's name" requirement.
If the listing agent provided the cooperating agent's or broker's name and other identifying information regarding the showing or other negotiations, then listing protection may have been established if this was done because that buyer had requested confidentiality. If this information was provided in lieu of the buyer's name for any other reason, then the establishment of listing protection is unlikely.
Protected buyer resources
- October 2007 Legal Update, "WB-1 Listing Contract "2008 Revisions": www.wra.org/LU0710.
- February 2004 Legal Update, "Listing Procedures for the Prudent Broker": www.wra.org/LU0402.
Inspection contingency notice and/or amendment?
After the home inspection, the buyer submitted a notice and amendment together; the amendment said if the seller agrees to the amendment, the notice is null and void. The seller rejected the amendment. The buyer also sent the inspection reports — but not the notice —right after the inspection. How to proceed?
Per lines 407-408 of the WB-11 Residential Offer to Purchase, the buyer is required to promptly provide copies of all inspection and testing reports. This requirement is independent from giving a notice of defects. In the event the buyer has provided the inspection report prior to issuing a notice of defects, the buyer is not required to give an additional copy of the inspection report when issuing notice. The WB-11 on lines 421-423 only requires that the notice of defects and the copy of the inspection report be delivered before the deadline on line 421.
A buyer may issue a notice of defects and an amendment simultaneously. The seller would then consider each document on its merits. Per the offer, once a notice of defects is delivered, the offer will become null and void if the seller does not have the right to cure or if the seller does not give written notice of the seller's election to cure the defects. That is why it is important for the simultaneous amendment to contain language to tie up the notice "loose end." The language used in the amendment might have more accurately stated that the parties agree the notice is withdrawn upon acceptance of the amendment, but that appears to be the intention of the null and void language that was used. Because this seller rejected the amendment, the seller must still address the buyer's notice of defects or the offer will become null and void by passage of time per line 433 of the WB-11.
Inspection contingency resources
Service animals
A broker asks potential tenants whether they have pets. The broker has noticed an increase in the number of potential tenants claiming to have one or multiple service animals. The broker knows that service animals are, under law, considered an extension of the person and cannot be subject to the guidelines and rules that apply to regular pets. How can the broker make the tenants prove that these animals are in fact service animals?
The federal Fair Housing Act protects the right of people with physical or mental disabilities to keep support animals, even when a landlord's policy explicitly prohibits pets. The law generally requires the owner or property manager to make an exception to the no-pet policy as a reasonable accommodation as long as it does not constitute an undue financial or administrative burden for the landlord or fundamentally alter the nature of the housing. A reasonable accommodation is a change in rules, policies, practices or services so that a person with a disability will have an equal opportunity to use a dwelling.
If a tenant needs a support animal, she should request a reasonable accommodation, preferably in writing, from the owner/property manager. The request should state the disability, if it is not readily apparent, and indicate a relationship between her ability to function and the assistance of the animal. In addition, the tenant should include a letter or prescription from an appropriate professional, such as a therapist or physician, verifying the need for the support animal. The prospective tenant need not disclose the details of the disability nor provide a detailed medical history, but the need for the animal and how it assists the person should be clear. Federal fair housing law does not require registration or credentials for service or support animals.
Service animal resources
Incentives
A local service club is holding an auction and plans to raffle off items from local businesses. Can a real estate broker provide a certificate for a home warranty? The certificate entitles the holder to a "XYZ home warranty" if the person lists property with the broker.
Assuming the service club’s raffle is legally organized, the issue is how to properly word this incentive. Incentives may be offered to induce consumers to sell or purchase real estate. Seller or buyer incentives can be offered in any amount as cash or as personal property such as a home warranty plan, a savings bond, a gift certificate, an appliance or some other item. Such incentives should be clearly documented in advance, prior to closing, so the party has a clear and thorough understanding of the incentive's terms and conditions. This advance documentation establishes that it is not a fee-splitting arrangement with a non-licensee, which would be illegal under Wisconsin law.
Standard of Practice 12-3 of the REALTOR® Code of Ethics provides: "REALTORS® shall be careful at all times to present a true picture in their advertising and representations to the public." Standard of Practice 12-3 states, "The offering of premiums, prizes, merchandise discounts or other inducements to list, sell, purchase, or lease is not, in itself, unethical even if receipt of the benefit is contingent on listing, selling, purchasing, or leasing through the REALTOR® making the offer. However, REALTORS® must exercise care and candor in any such advertising or other public or private representations so that any party interested in receiving or otherwise benefiting from the offer will have clear, thorough, advance understanding of all the terms and conditions of the offer."
This standard assumes the omission of even one detail may cause the certificate to present less than a true picture. This may be disputable should someone bring an ethics complaint. The issue would be whether there is a true picture of the offered incentive in the certificate. Avoid stating "see broker for details" because this suggests that less than a true picture has been disclosed.
Incentives resources
Landlord disposition of abandoned personal property
A tenant was evicted and left behind personal property. The personal representative of the landlord’s estate handled the rental and eviction. This was an oral, periodic rental agreement, and it is unknown whether the landlord provided written notice stating that he would not store personal property the tenant left behind.
The personal representative removed and stored the property according to the 2009 process and asked the tenant several times in writing to remove the personal property. The tenant also received written notice regarding an upcoming auction. What are the obligations of the landlord/personal representative if the tenant demands the property back before the auction?
Under the 2009 version of Wis. Stat. § 704.05, the tenant has 30 days after personal service or mailing of the written auction notice to pay the landlord's storage and other charges and repossess the property. If not, the landlord would sell the property and sell the proceeds, minus the costs of the sale and storage charges, to the Department of Administration (DOA). Proceeds cannot be applied toward back rent.
Under the 2009 process, the landlord may:
- Store the property, on or off the premises, with a lien on the property for the cost of removal and storage.
- Give the tenant a notice of the landlord’s intent to sell or dispose of the property by other appropriate means with the proceeds going to the DOA if not claimed by the tenant.
- Store the personal property without a lien and return it to the tenant.
Disposal by method 1 or 2 requires timely written notice to the tenant of the impending actions. The landlord should review the 2009 version of Wis. Stat. § 704.05 at docs.legis.wisconsin.gov/2009/statutes/statutes/704/05.
Property disposal resources
Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.