The Real Estate Examining Board at the Department of Safety and Professional Services (DSPS) has approved an updated version of the WB-11 Residential Offer to Purchase. The optional use date is November 1, 2019, and the mandatory use date is January 1, 2020.
The WRA Forms Committee and the Real Estate Contractual Forms Advisory Committee at the DSPS put in their best efforts to improve upon the 2011 version of the offer and make it more consumer- and user-friendly. Many different ideas were discussed, and sometimes it turned out the better choice was to stay with what was in the 2011 version. Other times, the existing language was improved and clarified to make the transaction a bit easier to process and explain to the parties. And in some instances, new provisions were introduced to keep up with the law and the evolution of real estate practice. The goal is to make offers more intuitive and simpler to navigate. In the course of all this improvement, the 2020 version of the WB-11 grew a little bit and is now 10 pages long.
This article is divided into a three-part discussion, and the following 11 pages are devoted to examining the revisions made to the WB-11. Not all of us are wired to readily embrace change, and new things sometimes may seem a bit off-putting at first, but the WRA will do its best to introduce you to the updated WB-11, walk you through the changes, and make some suggestions for optimizing the new language and new provisions. Buckle up and go with the transactional flow!
The WB-11 is reorganized, and it may look like a completely different contract at first glance, but not to worry! The majority of the offer provisions are substantially the same as before. What is different is the order of the provisions, which have been arranged to approximate the flow of the transaction. The artificial layout of the 2011 version had provisions often out of any logical order, forcing the drafter to jump from page to page if a definition was needed. For example, the Inspection Contingency was on the last page of the 2011 WB-11, but that certainly is not when it happens as you explain a transaction to the parties and work through the steps! Obviously not everyone is going to agree 100 percent on what that sequence should be, but most should find the new format carries them through various provisions as they will typically arise in the transaction.
First page stroll
To best illustrate the transaction sequencing, let’s take a stroll through page 1 of the 2020 WB-11. To start, the first eight lines of the offer are exactly the same as the 2011 version. The drafting agent identifies his or her agency relationship in the transaction, the buyer is named, and the property is described. The Purchase Price comes next — same language, slightly different formatting. Hence there is a nice, familiar launching pad as we take off into the updated offer.
What is included
As one proceeds down the first page, there is a slight departure – no mention of earnest money as is the case in the 2011 offer. Instead, all of the provisions relating to earnest money are gathered together on the second page. The Purchase Price is immediately followed by the Included in Purchase Price provision: “Included in purchase price is the Property, all Fixtures on the Property as of the date stated on line 1 of this Offer (unless excluded at lines 20-23), and the following additional items: ____.” The first difference here is that the 2020 offer refers to the date stated on line 1 of the offer instead of the former language “on the date of this Offer” because that was confusing: was it the date the offer was drafted, signed by the buyer, accepted by the seller, or the binding acceptance day? The clear answer here, and throughout the offer whenever this comes up, is that it is the drafting date on line 1. The other difference, apart from formatting, is there are more than four full lines to write in the additional property, per the request of several WRA members. Next is the note reminding everyone that the offer — and not the MLS, listing contract or marketing materials — determine what is and is not included in the offer. Same note as before, but slightly different placement.
What is not included
Next up is the Not Included in Purchase Price section. In this section, there is a difference: “Not included in purchase price is Seller’s personal property (unless included at lines 12-16) and the following: ___,” followed by almost four full blank lines. The 2020 WB-11 automatically excludes the seller’s personal property unless it is written in as included in the Included in Purchase Price section.
The Not Included in Purchase Price section is immediately followed by “CAUTION: Identify Fixtures that are on the Property (see lines 27-37) to be excluded by Seller or which are rented (e.g., water softeners or other water treatment systems, LP tanks, etc.) and will continue to be owned by the lessor.” This caution is substantially the same as the similarly placed caution in the 2011 offer except that it gives examples of fixtures that may be excluded such as water softeners, water treatment systems and LP tanks.
On the immediately following lines is the definition of “fixture.” Whereas this definition was tucked away in a section of definitions on page 4 of the 2011 offer, the 2020 WB-11 places the fixture definition immediately adjacent to the provisions where it plays a predominant role, that is, Included in Purchase Price and Not Included in Purchase Price. Other definitions that are used throughout the form, such as “Firm,” do still appear in a small section of definitions found on page 8. The definition of fixture is followed by another caution directing the parties to exclude any fixtures the seller will retain or that are rented, and repeating the examples of water softeners or other water treatment systems or LP tanks.
This cohesive sequence of provisions thoroughly addresses what a buyer is to receive in exchange for the indicated purchase price without having to scroll or flip pages to check the fixture definition material.
Next on the first page is Binding Acceptance and Acceptance — nothing changed here except Binding Acceptance is coming first before Acceptance.
Resources
2020 WB-11 Residential Offer to Purchase Form
The 2020 WB-11 Residential Offer to Purchase is available in a copy watermarked “educational use only” on the DSPS website at dsps.wi.gov/Documents/BoardCouncils/REB/Forms/WB11FINALwatermarked.pdf and will be available in a clean, unmarked version on the DSPS website on November 1, 2019. It also will be available from the WRA on zipForm and in the WRA PDF forms library. The WRA will not produce printed copies.
WRA resources
Look for several future WRA LegalTalks videos, Legal Update publications, a new WB-11 episode in the Line by Line video series, and other educational materials coming your way soon. Visit the forms update resource page online at www.wra.org/formsupdate to see the resources currently available.
Hard closing date
The Closing provision calls for the parties to write in a specific date as the closing date in the blank line provided. The preprinted text no longer states the closing date as “on or before ______.” There also is a safety net provision indicating if the stated date falls on a weekend or holiday, the closing will instead be held on the next business day. And for those who were fond of the “on or before ______” language, the blank line for insertion of the date stretches for a line and a half and thus is long enough to write in that phrase or other language, as is desired.
Wire fraud warning
The ever-present danger of wire transfer fraud and other cybercrimes aiming to steal private identification information, personal identities and money have led to the inclusion of a wire fraud warning in the modified offer, at the bottom of the first page directly following the Closing provision.
The caution tells buyers and sellers they should personally contact the title company or other party orchestrating the closing to confirm the details of any wire transfer. This contact should be by telephone or in person, is the responsibility of the parties and does not involve licensees.
The parties should be urged to contact the title company or other closing provider using contact information from an independent source and to not rely on contact information that appears in an email from a party who is purportedly providing wire transfer instructions at the last minute or who is changing the instructions. If that email if from a scammer, the crook has likely made a tiny change to the email address, phone numbers displayed or other contact information such that reliance on those contacts may lead back to the crook and not to the title company. The parties should also be told that they should not use the agents in the transactions as conduits for wire transfer information because having the information relayed through an additional person only increases the possibility of a hack and the opportunities for a crook setting himself up to steal the parties’ money.
The discussion continues
This three-part article continues with the second part of the discussion, which explores clarification revisions made to the WB-11.
See part 2 of this article here.
See all three parts of the article on the following webpages: