Every year, there is a group of questions that are frequently asked on the WRA's Legal Hotline. Here are a few of the most popular questions you asked in 2015.
Personal property versus fixtures
The buyers saw a property after the sellers vacated. The agent drafted the offer to include all the appliances that were listed in the MLS listing. After closing, the listing agent sent an email stating that the water softener in the property is rented and the water softener company needs to know if the buyer will continue the rental or if the company should remove the water softener. The buyers are upset because they believed the water softener was included in the sale. Are the buyers entitled to a water softener in the property as part of the terms of the offer to purchase?
Per the definition of fixtures on lines 185-195 of the WB-11 Residential Offer to Purchase, the water softener is a fixture — it is included because it is a water heater or treatment system, per line 190. Lines 194-195 warn, “CAUTION: Exclude any Fixtures to be retained by Seller or which are rented (e.g., water softener or other water conditioning systems, home entertainment and satellite dish components, L.P. tanks, etc.) on lines 17-18.”
The offer determines the agreement between the buyer and seller. The information in the MLS data sheet or marketing materials does not bind the parties. The parties may wish to review the note at lines 21-22 of the offer to purchase, which states, “The terms of this Offer, not the listing contract or marketing materials, determine what items are included/excluded.” Therefore to exclude the rented water softener from the sale, that detail should be written into the offer as an exclusion on lines 17-18. Without excluding the water softener, it was included in the purchase.
The seller has a variety of choices in this situation. For example, the seller might purchase the water softener or a comparable softener for the buyer. The seller may also request that the listing broker assist the seller in fulfilling the terms of the offer to purchase by providing the water softener included in the offer or a similar model acceptable to the buyers. See pages 11-12 of the November 2003 Legal Update, “Overcoming Residential Transaction Obstacles,” at www.wra.org/LU0311.
Advertising another broker's listings
How can an agent advertise another broker’s listing when using social media? What are the rules and obligations? An agent wants to share data sheets and photos of another broker’s listing on her Facebook page. Can the agent do this if she discloses they are not her listing?
The agent must have consent to advertise listings from other brokers or firms because an agent may not advertise the listings of other brokers without permission. If the listing broker and seller have given consent, the agent would be correct to clearly indicate that the agent is not the listing agent.
The same rules apply to social media as to print advertising. The fact the information is going out via an electronic means does not change the Wisconsin Administrative Code advertising rules, the applicability of the Code of Ethics, or the need for compliance with MLS copyright rules.
If the information or photographs are obtained from the MLS, they may only be used with authority or consent per the MLS rules. The MLS rules provide that MLS property listing data may be distributed based upon the interest of prospective purchasers. It is intended that listing data be provided to prospective purchasers with a bona fide interest in purchasing or in which the participant is seeking to promote interest. Factors include how closely the types of properties are in accord with the prospective purchaser's expressed desires and ability to purchase.
Consider whether the information is being used in a “pull” or “push” scenario. “Pull” is when a prospective purchaser has expressed interest in a specific property or type of property; the broker may pull out MLS information in response to the purchaser’s request. “Push” is when the broker is selecting information about properties for a general promotion or marketing piece. The broker should not arbitrarily push MLS information because this does not comply with the reproduction restrictions in the MLS rules. When a broker submits listing information to the MLS, it is for the clearly defined and limited purpose of disseminating that information to other MLS participants. The MLS allows participants, upon the request of a potential purchaser or tenant, to provide information obtained from the MLS. See the Use of Copyrighted MLS Compilation provisions of the MLS Rules and Regulations.
The Internet Data Exchange (IDX) allows a limited electronic display of other participants' listings. When operating a public website or applications for mobile devices, the participant must comply with IDX rules. The IDX rules do not apply to the use of other brokers’ listings on a Facebook page or other social media.
For more information about real estate advertising, see the August 2015 Legal Update, “Real Estate Advertising Content,” at www.wra.org/LU1508 and the October 2015 Legal Update, “Real Estate Advertising Methods,” at www.wra.org/LU1510.
Contract signatures for divorced sellers
The agent is working with sellers who are going through a divorce. The wife was not on the title. Does the agent need her signature for binding acceptance on the offer and also 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. The broker would need to provide a broker disclosure to customers form to the nonsigning spouse, if she does not sign the listing contract. 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 and marital property law.
Unlike the listing contract, all owners must sign the offer to purchase to create a valid real estate conveyance, per Wis. Stat. § 706.02. When the property is homestead, both spouses must sign any offer to purchase and the deed, per Wis. Stat. § 706.02(1)(f). A property is defined as a 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. See pages 4-7 of the June 2007 Legal Update, “Ownership and Title Pointers for Brokers,” at www.wra.org/LU0706 for further discussion of homestead and marital property issues.
Electronic signatures
There are several apps that allow for documents to be signed on iPads and other mobile devices with the finger or a stylus directly on the documents pulled into the app. What is needed from the customer/client to allow this type of technology to be used for signatures in this way? Does electronic consent cover the use of this type of technology?
Signatures created by the use of a finger or stylus on a tablet are electronic signatures. Before using electronic signatures in a consumer transaction, parties need to provide electronic consent. To comply with federal and state law, electronic consent means giving the party mandatory disclosures such as the right to withdraw consent at any time, the right to receive paper documents at any time, and the right to limit the consent to just one transaction. The party giving electronic consent also has to demonstrate the hardware and software capabilities as required by federal law. When using zipForm and Digital Ink, the parties will provide legal and complete electronic consent using click-throughs before being able to sign their documents. If you do not use zipForm and Digital Ink, follow the procedures found at www.wra.org/ecommerce as well as the WRA's LegalTalks video at www.wra.org/LegalTalks/ElectronicDisclosure for additional ways to obtain electronic consent.
Inspections with "as-is" transactions
The buyer’s offer includes inspection and testing contingencies. The seller provided a Real Estate Condition Report as well as a counter-offer that states the property is being sold “as-is.” Does the “as-is” sale of the property take away the buyer’s ability to inspect, test or back out of the sale if the inspection shows a major defect that was not disclosed on the RECR?
When purchasing an “as-is” property, it is very important for a buyer to learn as much as possible about the condition of the property. Consequently, the buyer may include testing and inspection contingencies in the offer. The inclusion of “as-is” does not preclude the buyer from conducting testing and inspections per the contract.
When a property is sold “as-is,” it generally means that the seller will not make property condition disclosures and will not cure defects. However, it is not unusual to see the offer say “as-is” in transactions where the seller has already made disclosures, and some “as-is” sellers end up making some repairs. “As-is” means that if the buyer goes through to closing and defects are later found, the buyer cannot go back to the seller for any compensation. The seller’s use of “as-is” does not relieve the seller from making disclosures about the property because the seller has the duty to exercise ordinary care in refraining from any act that would cause foreseeable harm to another or create an unreasonable risk to others. Even when listing the property as “as-is,” the seller may be liable for misrepresentation if he or she actively conceals a defect or prevents a buyer from investigating the property and discovering the defect. Additionally, under Wisconsin law, the seller may be liable if he or she makes false affirmative statements about the property. Because the use of an “as-is” clause is not always going to be an escape for the seller from all disclosures, the broker may recommend the seller consult with legal counsel.
From the licensee's standpoint, Wis. Admin. Code § REEB 24.07 requires that licensees perform reasonably competent and diligent property inspections and disclose material adverse facts and potential adverse facts to the parties in writing.
This requirement still applies and is not waived in “as-is” sales. Generally, the buyer has expert inspectors inspect the property as a condition of the offer to purchase, but this does not excuse the licensee from his or her duty to assure that all known material adverse facts are disclosed in writing to the buyer.
See pages 16-19 of the October 2009 Legal Update, “Diligent Disclosure,” at www.wra.org/LU0910, the July 2002 Legal Update, “Duty to Disclose,” at www.wra.org/LU0207, and “Buyer Barred from Claim of Misrepresentation in As-Is Purchase” in the September 2009 Wisconsin Real Estate Magazine at www.wra.org/WREM/Sept09/As-IsPurchase.
Tracy Rucka is Director of Professional Standards and Practices for the WRA.