In the last 10 years, there has been a great deal of regulatory change at both a federal and state level affecting real estate. For example, on the federal level, the Consumer Financial Protection Bureau (CFPB) will soon change the closing world under the new TRID forms on October 3, 2015. And in 2011 on the state level, the state budget merged the Department of Regulation and Licensing with the Department of Commerce to create the Department of Safety and Professional Services (DSPS). And arguably, one of the most significant changes for licensees on a daily basis was the 2007 movement to update the state-approved (WB) forms beginning what will someday be a regular rotation of updating the forms to reflect market and legal changes in the real estate realm.

As all of this change occurs, have you ever really thought about who is regulating your profession outside of the Capitol? Have you ever been curious as to what that regulatory body does at the DSPS?

Who is the REEB? 

The Real Estate Examining Board (REEB) is a seven-member board comprised of five real estate licensees and two public members. The governor appoints each board member who is also confirmed by the Wisconsin Senate.
To view the REEB roster, visit dsps.wi.gov/Boards-Councils/Agendas/Real-Estate-Examining-Board-Roster. 

What is the role of the REEB? 

The REEB grants real estate licenses, reviews complaints and enforces disciplinary actions against licensees, promulgates rules and enters into reciprocal agreements with other states. In addition, the REEB approves WB forms, establishes education curriculum and requirements for both pre-license and continuing education, and appoints members to the Real Estate Curriculum Examinations Council and the Real Estate Contractual Forms Advisory Committee — both of which are advisory to the REEB.

Current REEB activity

Wisconsin administrative rules
Real estate licensees must comply with applicable Wisconsin statutes — which are laws passed through the legislature, Wisconsin administrative rules — which are rules passed through state agencies such as the REEB or by way of the DSPS, and if the licensee is a REALTOR^®, licensees further must comply with the REALTOR^® Code of Ethics set forth by NAR as well as MLS rules if the REALTOR^® is a member of the MLS.

The REEB’s main objective of administrative rule revisions is modernization. The intent of the modernization is to have rules that better serve the real estate industry and continue to protect the public while having value in real-world application. The following rules are currently being modified and have an impending effective date. A summary of the focus of the changes is provided for your reference. 

Recently approved rules

• REEB 12 — Applications: This rule was modified to include the implementation of the broker experience and felon legislation. For instance, the rule will provide an individual a pre-determination opportunity before taking any steps for licensure. Basically, the individual can ask the REEB if any criminal conviction in their past will prohibit them from achieving licensure before making any investment in education. The effective date is estimated to be October 1, 2015. 
• REEB 24 — Conduct and Ethical Practices for Real Estate Licensees: This rule is changed to match the statutory language allowing the REEB to revoke or suspend a license due to a felony conviction during licensure or discovered after licensure. The effective date is likely early 2016. 
• REEB 25 — Education: This rule is revised in a number of ways affecting the education and related certificates of completion, including updating the pre-license curriculum. The effective date is estimated to be October 1, 2015, however the pre-license curriculum will be effective January 1, 2016. The most noteworthy part of this rule will be the fact that now all real estate licensees, regardless of when they obtained their license, will be required to take continuing education (CE). This requirement applies to new licensees; they must take CE during the same biennium in which they received their license. This will be in effect for the 2015-16 biennium. There is one exemption to this requirement: a salesperson who received a license after October 1 of the even-numbered year of the biennium does not need to take CE for that biennium. For instance, if Laura License receives her salesperson license in November 2016, she is not required to complete CE for the biennium ending December 14, 2016. If Laura, though, receives her salesperson license in August 2016, she will be required to complete CE at renewal no later than December 14, 2016. Brokers, however, will not receive any exemption. Regardless of when the individuals obtain their broker license, they will be required to complete CE for that biennium. 

Current rules being revised

• REEB 15 — Record retention: One of the items this rule change will create is a clear permission for brokers to retain documents electronically and digitally. The effective date will likely be some time in 2016.

To view current DSPS rule projects, go to dsps.wi.gov/Boards-Councils/Rulemaking/Pending-Rule-Projects.

Forms update

Recently approved
All of the following recently approved forms have the optional use date of October 1, 2015, and a mandatory use date of January 1, 2016.

• WB-40 Amendment to Offer to Purchase 
• WB-41 Notice Relating to Offer to Purchase 
• WB-44 Counter-offer 
• WB-45 Cancellation Agreement & Mutual Release 

Keep an eye out for more information in the future, including future magazine articles, Legal Update newsletters and LegalTalks videos as to the changes to these forms. 

Currently being revised
The following forms currently being revised will likely have a mandatory use date of July 1, 2016.

• WB-1 Residential Listing Contract – Exclusive Right to Sell
• WB-42 Amendment to Listing Agreement 

Slated to be revised in the near future

• WB-36 Buyer Agency/Tenant Representation Agreement 
• WB-47 Amendment to Buyer Agency/Tenant Representation Agreement

If you have any comments or suggestions relating to the WB forms, or would like to participate in the WRA’s forms committee, contact Debbi Conrad at dconrad@wra.org.

Recent REEB disciplinary case

Facts
The individual’s salesperson license was first issued on March 11, 1993, and current through December 14, 2016. On June 19, 2011, the salesperson drafted an offer on behalf of buyers to purchase a residential property located in Minocqua. The salesperson was the listing agent. The offer included a contingency for inspecting and testing the property and a right for the seller to cure any defects. 

On June 30, 2011, following an exchange of counter-offers between the seller and buyers, an agreement was reached for the purchase of the Minocqua property. The accepted counter-offer incorporated into its terms the original offer, which included the contingency for inspection and testing and a right to cure. The contingency afforded the buyers 21 days from the date of acceptance to exercise or waive the inspection contingency. As such, the buyers had until July 21 to provide the salesperson a copy of an inspection report and a list of defects, and the seller had a right to cure any defects prior to closing. The closing date was set for July 30, 2011. 

On July 19, 2011, the salesperson drafted a WB-40 Amendment to Offer to Purchase, which included a provision to extend the inspection contingency deadline until July 25, 2011. The buyers signed the amendment on July 19, 2011, and the seller signed it July 20, 2011. At no time did the seller authorize an extension of the inspection contingency beyond July 25, 2011. At no time prior to July 25, 2011, did the salesperson obtain another written agreement between the buyers and the seller to extend the inspection contingency beyond July 25, 2011. On July 28, 2011, three days following the deadline for the inspection contingency, the inspection report was delivered to the seller and the buyers. Pursuant to the terms of the inspection contingency, by failing to deliver the written report to the seller before the inspection contingency deadline, the buyers waived the right to provide a notice of defects to the seller. The salesperson did not advise the seller that he had the right to cure any defects after receiving the inspection report, which revealed defects. 

On July 29, 2011, after reviewing the inspection report, the buyers informed the salesperson that they would not be closing that weekend per the July 30 closing date because they were concerned about water in the basement and wanted to have a contractor of their choice inspect the property. On August 7, 2011, at 10:55 a.m., the buyers sent an email to the salesperson asserting that no purchase agreement existed and requested the return of their earnest money. Following receipt of that email, the salesperson prepared a WB-45 Cancellation Agreement & Mutual Release (CAMR) without obtaining consent from the seller to do so. On August 7, 2011, at 3:00 p.m., the salesperson sent an email to the buyers with the CAMR attached with instructions to sign it and return to the salesperson. The salesperson represented in that email that she had spoken to the seller and would also be sending the CAMR to the seller as well. The seller did not sign the CAMR as he had no intention of releasing the buyers from their obligation to purchase the Minocqua property.

Violation
Wis. Admin. Code § REEB 24.08 by failing to “put in writing ... all offers to purchase ... and any other commitments regarding transactions, expressing the exact agreement of the parties ...”

Discipline
The salesperson agreed to the following stipulation: Within one year, successful completion of six hours of education on the topic of business ethics. Within 180 days, pay a forfeiture in the amount of $500.00 and costs in the amount of $1,200.00.

What can be learned from this scenario?
First, an agent should not make representations as to communications that did not occur with a party. Secondly, we should take time to remind ourselves of the power and purpose(s) of the WB-45 CAMR.
The WB-45 CAMR essentially does three things:

• The parties agree to cancel the contract.
• Disburse earnest money (if needed).
• Release each other from any future legal litigation. 

This one-page form is arguably the most powerful WB form. In one fell swoop, the transaction can be gone and decimated forever. 

And often the WB-45 CAMR has an appropriate place in a real estate transaction because the parties want to cancel the agreement, disburse earnest money and release each other from any future legal recourse. They want to move on and know that they won’t be vulnerable to litigation relating to that transaction in the future because the WB-45 CAMR basically says for both parties, “it’s over, and you don’t get the right to come back and sue me.” 

A WB-45 CAMR is not a legal requirement to terminate an offer and in some cases may intentionally not be used in order to protect a party's legal rights under a failed transaction — for instance, to reserve the right to sue for damages. A WB-45 CAMR is prudent practice for licensees because it provides a way to have certainty for the parties that a contract is over with, rather than having the parties expect the agents to tell them whether the transaction is over and done, which requires a legal opinion. That is why an attorney's opinion is often stated as the alternative to having the WB-45 CAMR signed by the parties.

For further discussion of CAMR usage, review Legal Update 0.03, “Cancellation Agreement and Mutual Release; and Bill of Sale,” at www.wra.org/LU0003. 

Other REEB disciplinary actions can be found by visiting dsps.wi.gov/Other-Services/Lookup-Orders-Disciplinary online. A search may be conducted by board or license as well as a specific individual’s name, date or county.

Cori Lamont is Director of Corporate and Regulatory Affairs for the WRA.