Timeshare registration/real estate licensees 

The licensed real estate salesperson is employed by a real estate broker. Does the agent need to register as a timeshare salesperson in order to provide brokerage services relating to the listing, sale or purchase of timeshares in Wisconsin? Is it good to seek out timeshare salespersons to assist with transactions if the agent is uncomfortable acting alone?

A timeshare salesperson is an individual, other than a person licensed as a real estate broker or salesperson, who is employed by a licensed broker to sell, offer or attempt to negotiate the initial sale or purchase of a timeshare or campground space. A timeshare salesperson may not perform any other brokerage acts under Wis. Stat. Chapter 452.

A licensed salesperson employed by a broker already has the authority to provide normal brokerage services with respect to timeshares in Wisconsin without any further registration or designation. The standards for competent practice in Wis. Admin. Code § RL 24.03(2) require a salesperson to seek assistance from another professional with timeshare experience if the salesperson is uncomfortable with timeshare sales, so getting help from a timeshare salesperson is a good idea.

An owner of a timeshare asked the agent about finding someone to sell his timeshare in Wisconsin Dells. The owner tried an online service where you pay up front and lost money. Can the agent list the timeshare? Are there approved forms for timeshare sales?

The agent should first determine if the seller has the timeshare currently listed. If the seller has already entered into an exclusive right to sell listing for their timeshare, the best action may be to encourage the seller to contact an attorney.

If not already listed, the agent may list the timeshare using the WB-8 Timeshare Listing Contract. The broker may review the MLS rules to determine if the MLS includes a timeshare category for listings. Under Wis. Stat., licensees can only use timeshare listing purchase contracts approved by the Department of Regulation and Licensing containing certain elements specified in the statutes. Currently there is one listing contract, the WB-8 Timeshare Listing, and two timeshare contracts, the WB-26 Timeshare Contract (Sale by Developer) and the WB-27 Timeshare Contract (Resale by Non-Developer), approved by the Department of Regulation and Licensing for the sale of the timeshares. See the March 2002 Legal Update, “Timeshare Transactions” at www.wra.org/LU0203 for more information about timeshare sales.

The timeshare owner has had problems with the timeshare manager. The manager will not return calls and has deducted funds from the owner’s accounts for maintenance fees, etc.

A real estate licensee may not provide consumers with legal advice. There are attorneys who specialize in timeshare sales and issues relating to the management of timeshares. Legal counsel may review the timeshare documents with the owner to determine whether the fees that were deducted were authorized. The State Bar provides consumers the ability to search for attorneys in their specialized fields. Visit www.legalexplorer.com/lawyer/lawyer-talk.asp.

Is a seller required to provide a Real Estate Condition Report (RECR) for a timeshare?

Wis. Stat. § 709.01 requires all persons who transfer real property located in this state, including a condominium unit and timeshare property, to complete a RECR. In the WB-8 Timeshare Listing Contract, the seller agrees to complete the RECR provided by the listing broker to the best of the seller’s ability.

Out-of-state sales 

A broker has a friend with a timeshare in Florida. Can the broker list and sell it?

Wisconsin licensees can list and sell timeshare property in Wisconsin, but it becomes a bit trickier when the property is located outside of Wisconsin. It has been the understanding of the WRA that a Wisconsin real estate license permits an individual to negotiate with another for a commission, money or other thing of value, the sale, purchase, rental or exchange of an interest in real estate. According to the National Association of REALTORS^®, Wisconsin, Florida and 22 other states are classified as physical location states. That means, for example, that a licensee from another state may work on a transaction involving property in Wisconsin and receive commission as long as the licensee remains physically in the state where he or she is licensed. The licensee from another state may not visit the property in Wisconsin or negotiate face-to-face in Wisconsin.

Each state’s laws control the real estate license activities that occur within that state. To determine exactly what is permitted in a transaction involving a property located in another state requires an analysis of those laws. NAR’s report regarding license portability can be reviewed (see www.realtor.org/rmomag.NSF/pages/lawjuly05?OpenDocument). The broker would be best served if his or her attorney reviewed real estate license law in the other state(s) and determined if the Wisconsin licensee’s participation in the contemplated transaction would be allowed under that state’s law.

If permitted under the state’s law, all of the Wisconsin licensee’s work in negotiating the sale must be conducted in Wisconsin. Out-of-state work (for example, showings) must be conducted by a state licensee if the broker is not also licensed in the other state. Information about Florida timeshare sales is available at www.myfloridalicense.com/dbpr/lsc/LSCMHTimeshareFAQResales.html.

A recent unpublished Wisconsin Court of Appeals District IV decision has indicated that one would have to be licensed in the state where the property is located to engage in a transaction for the sale of the property (at least as it relates to Wisconsin and Iowa, the states that were involved in the case). The Court noted that the Iowa law that the parties presented to the Court did not relieve a broker working in a transaction for the purchase of an Iowa property from needing to have an Iowa real estate license, even if the Wisconsin broker’s actions might be allowed under Wisconsin law. To read more about the case, see Restaino Bunbury & Associates, Inc. v. Assisted Living Concepts, Inc. (Ct. App. No. 2008AP2334, 2009) online at www.wisbar.org/res/capp/2009/2008ap002334.htm.

Timeshare licenses 

What is the difference between a timeshare unit and a timeshare license?

In 2007 the Wisconsin Legislature modified Wis. Stat. Ch. 707 to allow the creation and sale of timeshare licenses. A “timeshare license” is defined as a right to occupy a unit or any of several units under a license or lease agreement during at least four separated periods over at least four years, including renewal options, not coupled with an interest in property.

Fractional ownership 

A seller has approached the broker and wants to sell his fractional interest in a resort property. Can the broker list and sell this interest? 

There are many faces to fractional ownership: ownership by tenants in common, tenancy-in-common (TIC) and stock ownership in a corporation that owns real estate, to name a few. Before a real estate licensee provides real estate brokerage services to sell the owner’s interest it must be determined what is being sold: an actual interest in real property, stock in a corporation or some other type of interest. 

When two or more individuals want to purchase property together they may take title to real estate as tenants in common. An individual may sell his or her ownership interest in the property. Before listing such an interest the broker may have the seller consult with legal counsel to produce any operating agreements or buy/sell conditions that the owners may have executed with respect to the property. When marketing such an interest, the broker must clearly disclose that only the interest of one tenant-in-common is being sold. 

A TIC is another, more formal, form of undivided fractional interest in a property. In the past decade or so, this form of ownership has been used in new and different ways, resulting in different considerations and cautions for REALTORS^® working with a TIC. Some TICs are residential and may be sold by licensees, while other investment or commercial TICs are classified as securities, not real estate interests, and are regulated by the U.S. Securities and Exchange Commission (SEC).

While a real estate license allows the licensee to act as a real estate broker or salesperson, it does not necessarily entitle the licensee to negotiate the sale of an incorporated business where the transfer is to be made by transfer of the controlling stock. The sale of stock is normally a securities transaction and may require a securities broker-dealer’s license. Due to recent changes to the Wisconsin Uniform Securities Law, there no longer is statutory exemption from securities broker-dealer registration for real estate brokers whose securities transactions are isolated transactions incidental to their real estate business.

More information about ownership and title issues are available in the June 2007 Legal Update, “Ownership and Title Pointers for Brokers” at www.wra.org/lu0706.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.