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Legal Matters
Best of the Legal Hotline
by Debbi Conrad & Tracy Rucka
| Q. A listing agent told the cooperating
broker that the listing agent was unable to present the offer
because there was no Addendum A and no buyer information sheet.
The Addendum A did not contain any provisions required for the
parties' transaction. Can a broker require an optional form
before presenting an offer? |
| A. The offer to purchase and any counter-offers
should be drafted to express the intent of the parties. The
buyer's wishes dictate what addenda need to be included in the
offer. Unless it is contrary to the seller's instructions,
listing agents are required to submit all offers to purchase to
the seller. The listing agent should notify the seller if
preferred addenda are not included and compare any comparable
provisions. The seller may counter a buyer's offer to include
any addenda required by the seller. A broker's office policy
should not dictate whether a particular addendum must be used in
every offer to purchase. Although that is an easy standard to
apply, it may result in needless or unwanted provisions in the
offer. The proper standard should be subjective and entail what
the parties want in each specific transaction.
Likewise, a seller may request a buyer information sheet, but
they are not legally required. If the seller demands a buyer
information sheet, the seller may instruct the listing broker
not to present offers unless accompanied by such a sheet. See §
RL 24.13(1). Specific seller instructions may be incorporated
into the listing contract or a listing contract addendum. |
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| Q. If the seller
rejects an offer to purchase, can the buyer revive the offer
with a counter-offer or must it be rewritten? |
| A. Either a counter-offer or a new offer may be used
to continue the negotiations. A counter-offer is essentially a
new offer which incorporates many, if not most, of the terms and
provisions of the previous offer. Therefore, the rejection of
the previous offer does not prohibit the drafting and use of a
counter-offer. It is acceptable for the buyer to follow with a
counter-offer immediately after the offer. The parties do not
have to take turns and go back and forth with counter-offers.
One party may submit consecutive counter-offers. |
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| Q. The listing broker
has a condominium unit listed that is used both as a retail
establishment and the seller's residence. A cooperating agent
wants to write the offer, at the request of the buyer, on a
residential offer form, but the listing broker believes that the
offer should be on a residential condominium form, altered to
indicate a commercial condominium unit. If the offer is prepared
as a residential offer to purchase or a residential condominium
offer, how should the listing broker respond? Is she to merely
alert her client to the discrepancy or should the offer be
countered to adjust the language to reflect the commercial
nature of the condominium? |
| A. A licensee should use whichever DRL-approved form
best matches the transaction with the fewest number of changes
or modifications. There is no right or wrong answer. It is a
matter of the licensee's judgment as to what form best fits the
individual circumstances.
A listing broker may not dictate which form the buyer uses or
refuse to present the offer to the seller based upon the choice
of a form, unless the seller directed the listing broker to only
present offers on specific forms. The listing broker must
present all offers to the seller in an objective and unbiased
manner. See § RL 24.13(1) and (3). The listing broker should
explain and compare the differences between the forms and refer
the seller to legal counsel with any legal questions. |
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| Q. An offer was written
with earnest money to "be paid within three days of acceptance."
Time was of the essence in regards to earnest money payment. The
earnest money was received one day late. The seller said
nothing, appeared to accept it, and then waited two or three
weeks. Can the seller still give written notice declaring the
offer null and void? |
| A. The seller must act in a timely manner to assert
the seller's rights to terminate the transaction per the default
provisions of the offer to purchase. If the seller does not give
the termination notice in a timely manner, then the seller may
lose his or her right to terminate the offer. Ideally, the
seller will either immediately issue a notice of termination and
a CAMR to the buyer in reaction to the breach, or tender an
amendment to the offer extending the earnest money deadline.
Either way, the seller's position is stated clearly in writing
so there is no uncertainty or confusion, and the buyer can
determine what response he or she wants to make.
If the seller delays making any response and then later
decides to use the tardy earnest money payment as the basis of a
notice of termination, the buyer may be able to assert equitable
defenses because of the seller's delay. The buyer might assert a
defense based upon laches, unjust enrichment or equitable
reliance. The agent should refer the parties to private legal
counsel for any desired analysis of their legal rights and
claims. |
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| Q. Is a CAMR required to
release earnest money when the offer was never accepted? |
| A. A CAMR is not required. § RL 18.09(1)(a) states,
"A broker who disburses trust funds from his or her real estate
trust account under the following circumstances shall not be
deemed to have violated s. 452.14(3)(i), Stats.: (a) To the
payor upon the rejection, expiration or withdrawal prior to
binding acceptance of an offer to purchase, lease, exchange
agreement or option on real estate or a business opportunity." |
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| Q. The seller had an
accepted an offer a couple of months ago that fell apart. The
seller never signed a CAMR because he was disputing the earnest
money. Now there is another offer on the same property. Can the
seller accept the second offer and close? |
| A. Without an executed CAMR or the advice of legal
counsel, the seller should only accept secondary offers until
the status of the first offer is resolved. Licensees should
refer sellers to their attorneys to review the first transaction
and analyze the seller's obligations under the first contract. |
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| Q. A seller has multiple
offers on a property. One of the offers states that the purchase
price shall be $2,000 more than the highest purchase price on
any other offer submitted to the seller. Is this legal?
|
| A. Yes, it is legal for a buyer to submit an offer to
purchase setting the purchase price based upon the price offered
by other buyers. However, depending on how the offer is drafted,
it may pose problems for real estate licensees. § RL 24.12(1)
prohibits licensees from disclosing the terms and conditions of
one buyer's offer to any other prospective buyer or to any
person with the intent that the information be disclosed to any
other prospective buyer.
The offer to purchase may be drafted to require the seller or
the seller's attorney to provide the buyer with a copy of the
other bona fide offer that will determine the buyer's price. The
buyer's name and other information may be blacked out to protect
the privacy interests of the buyer, or the attorney might choose
to provide an affidavit attesting to the existence of the offer
and the price offered by the buyer. |
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| Q. Several REALTORSŪ in the
area represent third-party and relocation companies. They will
call and give the broker a verbal counter-offer and ask the
broker to present it to her buyer. Is this appropriate? They
will also come back with a verbal multiple counter-offer and ask
for the highest and best offer from the buyer. |
| A. Verbal negotiations are lawful, but if the
proposal is in substance a counter-offer, it must be in writing.
Wis. Stat. §§ 706.02(1)(d) & (g) indicates that the offer is
invalid unless it is in writing, signed by all parties and
delivered back.
In addition, the Wisconsin Administrative Code requires
brokers to put all agreements in writing.
§ RL 24.08 requires licensees to put all listing contracts,
guaranteed sales agreements, buyer agency agreements, offers to
purchase, property management agreements, option contracts,
financial obligations and any other commitments regarding
transactions into writing. Licensees are to express the exact
agreement of the parties unless the parties or their attorneys
complete the writing or unless the writing is outside the scope
of the licensee's authority. |
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Current
Fax Rules for REALTORSŪ and REALTORŪ Associations
by Debbi Conrad
Until January 1, 2005, a company or individual may transmit an
unsolicited faxed advertisement based on one of the following:
- The prior express permission of the fax recipient has been
obtained. REALTORSŪ may continue to use the "Consent
to Fax" form on page 12 or the "Communication
Consent" form on page 13 of the
Legal Update 03.08 for this purpose. Although verbal permission may be sufficient,
prudent practice dictates written consents, especially with
consumers.
- A prior or existing business relationship formed by a voluntary
two-way communication, and based upon the fax recipient's purchase
or financial transaction with the transmitting entity has existed
within the last 18 months. This will cover REALTORŪ relationships
with current and past clients and customers, and with REALTORŪ
associations and multiple listing services.
- A prior or existing business relationship formed by a voluntary
two-way communication, and based upon the fax recipient's inquiry or
application regarding products or services offered by the
transmitting entity within the last three months. This will cover
REALTORŪ relationships with new prospects, and REALTORŪ association
relationships with non-members calling to purchase goods and
services.
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Changes
to Legal Update 03.08 - Federal "Do Not Call," "Do Not Fax"
Regulations
Legal Update 03.08 went to press before the FCC announced that the
effective date for the prior written consent requirement for faxed
advertisements would be delayed until January 1, 2005. Therefore, the
discussion of unsolicited fax advertisements on pages 8-9 and the
Legal Hotline questions revisited on pages 10-11 are incorrect to the
extent that the Update indicates that a prior written consent is the
only way a company can become qualified to legally transmit a faxed
advertisement. Until January 1, 2005, a company may also transmit
faxes advertisements if the transmitting entity has an established
business relationship with the fax recipient. The Legal Update on the
WRA Web site (www.wra.org/LU0308)
has been corrected to reflect these most recent developments.
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National "Do Not Call" Registry
by Debbi Conrad
Prudent REALTORSŪ who engage in cold calling-both within and
outside of Wisconsin-should be planning to access the national "do not
call" registry and download the numbers for the area codes the company
calls. The national registry includes residential and cell phone
numbers. Brokers will be able to register on the Federal Trade
Commission (FTC) Web site at
www.telemarketing.donotcall.gov, receive an account number, and
access the registry beginning September 1, 2003. Real estate brokers
can register and provide the account number to their agents.
The national registry will be sorted by area code. It will be the
responsibility of the broker to update their lists quarterly. Five
area codes will be provided at no charge and additional ones will cost
$25.00 per area code. The FTC will also maintain an Internet page
where a single number may be looked up free of charge.
Enforcement of the federal "do not call" rules and the national
registry will be performed both by the FTC (interstate calls) and the
Federal Communications Commission (FCC) (interstate and intrastate
calls) starting October 1, 2003. Wisconsin REALTORSŪ who continue to
abide by the Wisconsin "do not call" laws and regulations will be in
substantial compliance with the federal rules.
The key to compliance with state and federal law is to obtain a
signed written consent from clients and customers before calling any
residential or cell phone numbers. The consent must state that the
consumer agrees to be called by the broker, give the residential and
cell phone numbers that may be called, and be signed by the consumer.
Brokers may use the "Communication Consent form on page 13 of Legal
Update" 03.08 [www.wra.org/LU0308]
for this purpose. This form requests telephone numbers, facsimile
numbers and e-mail addresses.
There is a "safe harbor" under the federal "do not call" rules for
inadvertent mistakes. If a broker can show, as part of its company's
routine business practice, that it meets all the requirements of the
safe harbor, it will not be subject to civil penalties or sanctions
for mistakenly calling a consumer who has asked for no more calls, or
for calling a person on the national registry. To meet the safe harbor
requirements, a broker must demonstrate that it:
- Has written procedures to comply with the do not call
requirements
- Trains its personnel in those procedures
- Monitors and enforces compliance with these procedures
- Maintains a company-specific list of telephone numbers that it
may not call
- Accesses the national registry no more than three months before
calling any consumer, and maintains records documenting this process
- Any call made in violation of the do not call rules was the
result of an error.
For additional information on the national registry, see
Legal Update 03.08 and the
REALTORŪ Resource page for
Telemarketing Solicitation Rules & the No Call List at the WRA
web site.
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