Wis. Admin. Code Real Estate Examining Board REEB 24.07 - Inspection and disclosure duties
(1) INSPECTION OF
REAL ESTATE.
(a)
General
requirement. A licensee, when engaging in real estate practice that
involves real estate improved with a structure, shall conduct a reasonably
competent and diligent inspection of accessible areas of the structure and
immediately surrounding areas of the property to detect observable, material
adverse facts. A licensee, when engaging in real estate practice that involves
vacant land, shall, if the vacant land is accessible, conduct a reasonably
competent and diligent inspection of the vacant land to detect observable
material adverse facts.
(b)
Listing firm. When listing real estate and prior to execution
of the listing contract, a licensee shall inspect the real estate as required
by sub. (1), and shall make inquiries of the seller on the condition of the
structure, mechanical systems and other relevant aspects of the property as
applicable. The licensee shall request that the seller provide a written
response to the licensee's inquiry.
(c)
Other licensees.
Licensees, other than listing firms, shall inspect the real estate as required
by sub. (1) prior to or during a showing of the property, unless the licensee
is not given access for a showing.
(d)
Specific conduct regarding
inspections. A reasonably competent and diligent inspection of real
estate improved with a structure does not require the operation of mechanical
equipment; the opening of panels, doors or covers for access to mechanical
systems; or the moving of furniture, boxes or other property; nor does it
require a licensee to observe areas of the property for which entry presents an
unreasonable risk of injury or areas accessible only by ladder, by crawling or
other equivalent means of access. A licensee is not required to retain third
party inspectors or investigators to complete a reasonably competent and
diligent inspection. A reasonably competent and diligent inspection of vacant
land does not require an observation of the entire property, but shall include,
if given access, an observation of the property from at least one point on or
adjacent to the property.
(2) DISCLOSURE OF MATERIAL ADVERSE FACTS. A
licensee may not exaggerate or misrepresent facts in the practice of real
estate. A licensee, when engaging in real estate practice, shall disclose to
each party, in writing and in a timely fashion, all material adverse facts that
the licensee knows and that the party does not know or cannot discover through
a reasonably vigilant observation, unless the disclosure of the material
adverse fact is prohibited by law. This provision is not limited to the
condition of the property, but includes other material adverse facts in the
transaction.
Note: Certain "material adverse facts", as defined in s. REEB 24.02(12), may not be disclosed by law. For example, unless specifically authorized by a seller, a licensee may not disclose to a potential buyer the actual minimum sales price the seller will accept. See s. 452.133(1) (d), Stats.
(3) DISCLOSURE OF INFORMATION SUGGESTING
MATERIAL ADVERSE FACTS. A licensee, when engaging in real estate practice, who
becomes aware of information suggesting the possibility of material adverse
facts to the transaction, is practicing competently if the licensee discloses
to the parties the information suggesting the possibility of material adverse
facts to the transaction in writing and in a timely fashion, recommends the
parties obtain expert assistance to inspect or investigate for possible
material adverse facts to the transaction, and, if directed by the parties,
drafts appropriate inspection or investigation contingencies. This provision is
not limited to the condition of the property, but includes other material
adverse facts to the transaction, including defects and conditions included
within the report form under ss.
709.03 and
709.033,
Stats. A licensee is not required to retain third party inspectors or
investigators to perform investigations of information suggesting the
possibility of a material adverse fact to the transaction.
(4) DISCLOSURE OF SIDE AGREEMENTS. A
licensee, when engaging in real estate practice, who becomes aware of the fact
that a party to the transaction has not disclosed that party's entire agreement
regarding the transaction to that party's secured lender, shall disclose this
fact, in writing and in a timely manner, to the party's secured
lender.
(5) RELIANCE UPON THIRD
PARTY INSPECTIONS AND INVESTIGATIONS. If a licensee or a party in a transaction
engages the services of a qualified third party to conduct a property
inspection or investigation of material facts, the licensee may rely on the
results of the inspection or investigation providing the licensee obtains a
written report of the inspection or investigation and delivers a copy of the
report to all parties in a timely manner.
(6) INCONSISTENCIES. If a licensee's
reasonably competent and diligent inspection reveals facts materially
inconsistent with or materially contradictory to the seller's statements
provided under sub. (1) (a), or the inspection or investigation report of a
third party, the inconsistency shall be disclosed in writing and in a timely
manner to the parties.
(7) FALSE
INFORMATION. Licensees shall not knowingly give false information about another
licensee or property listed with another licensee.
(8) DISCLOSURE OF AGENCY.
(a)
General requirements.
1. A firm or licensee shall provide a written
disclosure statement as prescribed under s.
452.135,
Stats.
1r. If a firm is negotiating
on behalf of a party who is not the client of another firm and the negotiations
are related to real estate primarily intended for use as a residential property
containing one to 4 dwelling units, the firm shall request the party's signed
acknowledgement that the party has received a copy of the written disclosure
statement.
2. Licensees acting as
agents of potential buyers of real estate that is used or intended to be used
principally for one to 4 family residential purposes, who are negotiating
directly with the seller or who are aware that the owner of the real estate has
granted a listing firm the exclusive right to sell, shall notify the seller or
the listing firm, as applicable, of the licensee's buyer agency relationship at
the earlier of all of the following:
a. The
first contact with the seller or the listing firm where information regarding
the seller or transaction is being exchanged.
b. A showing of the property.
c. Any other negotiation with the seller or
the listing firm.
3.
When the nature of a licensee's representation of a client or customer changes
such that it makes the initial disclosure that was provided under s.
452.135,
Stats., incomplete, misleading, or inaccurate, the licensee shall provide the
customer or client with a new disclosure, as required in s.
452.135,
Stats.
(b)
Agency agreements.
1. Firms
and the licensees associated with the firm shall explain to their clients the
responsibilities of listing agents, buyer's agents, and subagents before
entering into an agency agreement.
2. No firm or licensees associated with the
firm may permit other firms to act as subagents in a transaction unless the
firm's client has authorized the use of a subagent in the agency
agreement.
(c)
Written proposals. Licensees shall state, in the offer to
purchase, the lease, the option to purchase, or the exchange agreement, whom
the licensee represents as an agent in a transaction.
(d)
Disclosure statements.
1. A listing firm shall provide a disclosure
statement to a customer as required in s.
452.135(1),
Stats., to the buyer if negotiations are being conducted directly with the
buyer and not through a buyer's firm. This requirement may be waived if the
buyer's firm has an exclusive right to locate buyer agency agreement that
includes a provision removing the exclusive right to negotiate.
2. A buyer's firm shall provide a disclosure
statement to a customer as required in s.
452.135(1),
Stats., to a seller if negotiations are being conducted directly with the
seller and not through a seller's firm, unless the seller has waived the firm's
duty to negotiate under s.
452.133(6),
Stats.
3. A subagent shall provide
a disclosure statement to a customer as required in s.
452.135(1),
Stats., with whom the subagent is working but not to the principal firm's
client.
4. A principal firm is not
required to provide a disclosure statement to a customer as required in s.
452.135(1),
Stats., to a customer of their subagents.
(e)
Agency agreements for lease and
property management contracts.
1. A
licensee who is entering into agency agreements for lease or property
management contracts shall provide to the client the disclosure statement as
required in s.
452.135(2),
Stats.
2. A licensee shall provide
to prospective tenants a disclosure statement as required in s.
452.135(1),
Stats., when negotiating the terms of a lease on behalf of the
client.
Notes
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