Wisconsin Agency and Disclosure

Unit One: Terminology and Agency

Definitions

  • Real Estate License Types: Wisconsin has two types of real estate licenses:

    • Real Estate Salesperson:

    • Initial license title.

    • Operates under a broker, showing properties, negotiating transactions, drafting agreements.

    • Real Estate Broker:

    • Advanced license, legally accountable for real estate transactions.

    • Can operate independently and manage a brokerage.

Real Estate Brokerage

  • Brokers and Salespersons:

    • Those who represent buyers or sellers of real estate.

    • Typically, salespersons work under a broker's license.

  • Commission: Fee charged for facilitating transactions; illegal for unlicensed individuals to receive part of a commission.

  • Net Listing:

    • Seller allows broker to retain any sales amount above a set price.

    • Illegal in Wisconsin.

  • Broker of Record: The responsible individual in a real estate office who oversees transactions and compliance.

Key Terms in Real Estate

  • Real Estate:

    • Includes land, buildings, and natural resources; immovable property.

  • Commercial Real Estate: Used for business purposes; excludes dwellings with less than five units.

  • Property Management: Managing properties on behalf of others, including leasing, maintenance, and rent collection.

  • Subagency: A firm providing brokerage services not directly affiliated with the principal firm, typically on behalf of the seller.

Agency Relationships

  • Agency Relationship: Between licensee and client in real estate dealings.

    • Client: Individual who has an agency relationship with a licensee.

    • Customer: Non-client receiving brokerage services from a licensee.

    • Fiduciary Duty: Licensees act in the best interest of clients through a written agreement.

  • Dual Agency: Wisconsin restricts dual agency unless designated agency structures are in place.

  • Designated Agency: One agent represents the seller, another the buyer, ensuring confidentiality.

Licensee Duties

  • Duties to All Parties:

    • Honesty: Must provide honest services.

    • Confidentiality: Protect information disclosed confidentially.

    • Skill and Care: Use reasonable skill in conducting transactions.

  • Duties to Clients: Includes loyalty, competency, and timely material disclosures.

  • Prohibited Actions:

    • Accepting compensation from non-clients without consent.

    • Representing personal interests in transactions without informing clients.

Termination of Agency Relationships

  • Can be terminated due to mutual agreement, death, insolvency, or completion of terms.

  • Death of a salesperson does not end the agency.

Unit Two: Disclosure Rules

Seller Disclosure Law

  • Disclosure Requirements: Sellers must provide a completed disclosure form detailing property conditions within 10 days of contract acceptance.

  • Real Property Defined: Applies to residential properties, land, and other forms of real estate.

  • Substitution of Information: Allows sellers to replace parts of the disclosure with information from qualified professionals.

  • Liability of Agents: Agents are not liable for disclosure violations unless they had actual knowledge of undisclosed material defects.

Buyer Rights

  • Right to Rescind: If a disclosure form is incomplete or not delivered on time, buyers can rescind contracts within specific timeframes.

  • Condo Seller Disclosure: Additional requirements for condo sellers, such as information on management and fees.

Material Adverse Facts

  • Licensee must disclose all known adverse facts impacting property value or safety.

  • Specific conflicts must be resolved before and during negotiations.

Licensee Duties to Clients

  • Duty to Inspect: Perform competent and capable inspections, disclose all observed defects.

  • Delivery of Disclosure Forms: Ensure timely delivery of all forms related to property disclosures.

  • Avoidance of Discrimination: Licensees must not disclose unlawful discrimination-related information.

Special Considerations

  • Scope of Knowledge: Licensees must disclose knowledge of material defects impacting property value.

  • Confidentiality Exceptions: Licensees are not responsible for disclosing non-physical information unless required by law.

  • Sex Offender Information Release: Should direct clients to the state registry for such inquiries, rather than disclosing independently.

By focusing on these vital concepts, you will have a comprehensive understanding of real estate terminology, agency rules, and disclosure practices in Wisconsin. Ensure to memorize these key elements for your exam preparation.