AB456: Bill Text

Duties of REEB licensees

Current law details various duties that are owed by brokers to parties to real estate transactions, including duties that are owed to all parties in a transaction, duties that are owed only to clients, and the duties of a "subagent" firm that is engaged by a principal firm to provide brokerage services in a transaction but that is not associated with the principal firm. Current law also contains prohibitions against licensees engaging in certain conduct.

The bill makes various changes to these duties, including providing that the duties and prohibitions apply to firms, but that: 1) the duties also extend to each licensee associated with that firm; and 2) each licensee associated with a firm owes the same duties owed by a firm. The bill also modifies statutory disclosure statements that are required to be provided to customers and clients of licensees and contain statements of the duties owed by licensees to customers and clients.

Supervision of REEB licensees

Current law requires each broker to supervise, and be responsible for, the brokerage services provided on behalf of the broker by licensees employed by the broker and requires the REEB to promulgate rules that specify the supervisory duties of brokers for the purpose of this provision.

The bill does the following with respect to supervision of and responsibility for the acts of licensees:

1. Instead provides that a firm is responsible for the brokerage services provided on behalf of the firm by a licensee associated with the firm only to the extent that the firm fails to comply with statutory supervision requirements and any additional rules promulgated by the REEB.

2. Creates statutory provisions regarding the supervision of licensees, including requiring review of documents and the receipt and disbursement of client funds and provisions with respect to the designation and responsibilities of supervising brokers for licensees, as well as provisions addressing responsibilities of licensees. The bill provides that a firm is responsible for the custody and safety of all documents and records relating to real estate transactions that are submitted to the firm.

Business representatives for firms

Current law provides that a license may be issued by the REEB to a business entity if the business entity has at least one business representative licensed as a broker and that the license issued to the business entity entitles each business representative of the business entity who is a licensed broker to act as a broker on behalf of the business entity. Current law defines "business representative" to mean a director, manager, member, officer, owner, or partner of a business entity.

The bill specifically provides that only a broker's license may be issued to a business entity. The bill also specifies that a broker may act as a business representative for more than one business entity if the broker obtains the express, written consent of each business entity for which the broker desires to act as a business representative and that a broker may act as a broker on behalf of each business entity for which it is serving as a business representative.

Use of unlicensed personal assistants

The bill creates provisions addressing the use of "unlicensed personal assistants" by a licensee associated with a firm, which is not addressed under current law. The bill requires a licensee associated with a firm, prior to engaging an individual to serve as an unlicensed personal assistant, to enter into a written agreement with the licensee's firm, setting forth the duties of the unlicensed personal assistant, the manner in which the unlicensed personal assistant will be compensated for his or her services, and the responsibilities of the licensee and the firm with respect to supervision of the unlicensed personal assistant's activities. The bill, however, prohibits an unlicensed personal assistant from assisting a licensee at an open house for the sale of real estate or a business without the direct, on-premises supervision and presence of a licensee, and from providing any services at an open house for which a license from the REEB is required. The bill defines "unlicensed personal assistant" as an individual who is employed only to provide services for which a license is not required under this chapter, including an individual who in fact possesses a license issued by the REEB.

Other changes regarding practice of real estate

1. Current law contains provisions allowing brokers and salespersons to register as inactive licensees prior to November 1, 1995. This bill repeals these provisions.

2. Current law provides that any person who is a resident of this state and 18 years of age or over may apply to be indentured to a licensed resident broker in accordance with rules promulgated by the REEB (apprenticeship). The bill repeals this provision concerning apprenticeship.

3. Current law allows the REEB to promulgate rules establishing a procedure that allows an individual who is not licensed by the REEB to apply to the REEB for a binding determination of whether the individual would be disqualified from obtaining a license due to his or her criminal record. The bill allows the REEB to require a fee to be paid to DSPS for such a determination in an amount necessary to cover the cost of making the determination.

4. The bill requires a licensee to retain documents or records related to a transaction, as determined by the REEB, in accordance with any rules promulgated by the REEB. The bill provides that records described in this section may be retained in an electronic file format.

5. The bill requires that, if a licensee is associated with a firm, all fees or commission and all compensation for a referral or as a finder's fee be paid to the firm.

6. In State ex rel. Reynolds v. Dinger, 14 Wis. 2d 193 (1961), the supreme court sanctioned a rule of the Real Estate Brokers' Board (the predecessor to the REEB) that permitted the use of standardized forms by brokers in transferring the titles of the real estate of their clients, holding that although the rule permitted, to a limited extent, the practice of law by nonlawyers, the court would not hold the rule to be invalid under its constitutional authority to regulate the practice of law. The bill codifies the court's holding, providing that licensees may use forms approved by the REEB. The bill provides that a licensee may not provide advice or opinions concerning the legal rights or obligations of parties to a transaction, the legal effect of a specific contract or conveyance, or the state of title to real estate, but that a licensee may provide a general explanation of the provisions in a form approved by the REEB to the parties to a transaction at the time of completing the form or when delivering an approved form for the seller's or buyer's acceptance.

Other changes

Limitation on actions

Current law provides for limitations on when various types of actions may be brought, including that an action upon any contract, obligation, or liability or an action to recover damages for an injury to real or personal property must be commenced within six years after the cause of action accrues or be barred.

The bill provides that, notwithstanding these other periods of limitation, an action concerning any act or omission of a licensee relating to the provision of brokerage services by the licensee shall be commenced within two years after whichever of the following that applies occurs first: 1) a transaction is completed or closed; 2) an agency agreement is terminated; or 3) an unconsummated transaction is terminated or expires.

Definition of "employee"

Certain employment laws, including the family and medical leave law, the unemployment insurance law, the worker's compensation law, and the fair employment law, as well as the tax withholding law, apply only with respect to "employers" and "employees."

The bill provides that, notwithstanding the applicable definitions or meanings of employee under any law, and in any action or proceeding under the common law, a licensee may not be considered an employee of a firm if: 1) a written agreement has been entered into with the firm that provides that the licensee may not be treated as an employee for federal and state tax purposes; and 2) 75 percent or more of the annual compensation related to sales or output paid by the firm to the licensee pursuant to the agreement is directly related to the brokerage services performed by the licensee on behalf of the firm.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB456,1 Section 1. 73.0301 (1) (a) of the statutes is amended to read:

AB456,8,2 73.0301 (1) (a) "Credential" has the meaning given in s. 440.01 (2) (a), but does not include a registration as an inactive licensee under s. 452.12 (6) (b).

AB456,2 Section 2. 108.227 (1) (b) of the statutes is amended to read:

AB456,8,5 108.227 (1) (b) "Credential" has the meaning given in s. 440.01 (2) (a), but does not include a registration as an inactive licensee under s. 452.12 (6) (b).

AB456,3 Section 3. 186.113 (19) of the statutes is amended to read:

AB456,8,12 186.113 (19) Client fund accounts. Maintain real estate broker trust accounts under s. 452.13 for brokers who firms, as defined in s. 452.01 (4w), that are eligible for membership in the credit union, attorney trust accounts under s. 757.293 for attorneys who are eligible for membership in the credit union, and collection agency trust accounts under s. 218.04 (9g) for persons who are eligible for membership in the credit union.

AB456,4 Section 4. 440.03 (11m) (a) (intro.) and 1. of the statutes are consolidated, renumbered 440.03 (11m) (a) and amended to read:

AB456,8,22 440.03 (11m) (a) Each application form for a credential issued or renewed under chs. 440 to 480 shall provide a space for the department to require each of the following an applicant for the initial credential or credential renewal, other than an individual who does not have a social security number and who submits a statement made or subscribed under oath or affirmation as required under par. (am), to provide his or her social security number: 1. An applicant for an initial credential or credential renewal. If the applicant is not an individual, the department shall require the applicant to provide its federal employer identification number.

AB456,5 Section 5. 440.03 (11m) (a) 2. of the statutes is repealed.

AB456,6 Section 6. 440.03 (11m) (am) of the statutes is amended to read:

AB456,9,6 440.03 (11m) (am) If an applicant specified in par. (a) 1. or 2. is an individual who does not have a social security number, the applicant shall submit a statement made or subscribed under oath that the applicant does not have a social security number. The form of the statement shall be prescribed by the department of children and families. A credential or license issued in reliance upon a false statement submitted under this paragraph is invalid.

AB456,7 Section 7. 440.03 (11m) (b) of the statutes is amended to read:

AB456,9,13 440.03 (11m) (b) The real estate examining board shall deny an application for an initial credential or deny an application for credential renewal or for reinstatement of an inactive license under s. 452.12 (6) (e) if any information required under par. (a) is not included in the application form or, in the case of an applicant who is an individual and who does not have a social security number, if the statement required under par. (am) is not included with the application form.

AB456,8 Section 8. 440.03 (11m) (c) of the statutes is amended to read:

AB456,9,22 440.03 (11m) (c) The department of safety and professional services may not disclose a social security number obtained under par. (a) to any person except the coordinated licensure information system under s. 441.50 (7); the department of children and families for purposes of administering s. 49.22; and, for a social security number obtained under par. (a) 1., the department of revenue for the purpose of requesting certifications under s. 73.0301 and administering state taxes and the department of workforce development for the purpose of requesting certifications under s. 108.227.

AB456,9 Section 9. 440.03 (13) (b) 72. of the statutes is repealed.

AB456,10 Section 10. 440.08 (2) (a) 69. of the statutes is repealed.

AB456,11 Section 11. 440.13 (2) (c) of the statutes is amended to read:

AB456,10,4 440.13 (2) (c) With respect to a credential granted by a credentialing board, a credentialing board shall restrict, limit, or suspend a credential held by a person or deny an application for an initial credential or for reinstatement of an inactive license under s. 452.12 (6) (e) when directed to do so by the department.

AB456,12 Section 12. 452.01 (1m) of the statutes is amended to read:

AB456,10,8 452.01 (1m) "Agency agreement" means a written agreement between a broker firm and a client in which the client authorizes the broker firm to provide brokerage services to the client.

AB456,13 Section 13. 452.01 (1o) of the statutes is created to read:

AB456,10,13 452.01 (1o) "Associated with a firm" means to have been engaged by a firm to provide brokerage services to the firm's clients and customers on behalf of the firm and under the firm's supervision, including as an employee of the firm or as an independent contractor.

AB456,14 Section 14. 452.01 (1p) of the statutes is created to read:

AB456,10,16 452.01 (1p) "Associated with a subagent" means to be associated with a firm that is engaged as a subagent.

AB456,15 Section 15. 452.01 (3) (d) of the statutes is amended to read:

AB456,10,19 452.01 (3) (d) Employees of persons enumerated in pars. (a) to (c) and, (f), and (i) when engaged in the specific performance of their duties as such employees.

AB456,16 Section 16. 452.01 (3) (i) of the statutes is created to read:

AB456,10,22 452.01 (3) (i) A developer, as defined in s. 707.02 (11), negotiating a transaction involving a time share.

AB456,17 Section 17. 452.01 (3e) of the statutes is amended to read:

AB456,11,3 452.01 (3e) "Brokerage service" means any service described under sub. (2) provided to a person by a broker to another person firm and any licensees associated with the firm.

AB456,18 Section 18. 452.01 (3m) of the statutes is amended to read:

AB456,11,6 452.01 (3m) "Client" means a party to a transaction who has an agency agreement with a broker firm for brokerage services.

AB456,19 Section 19. 452.01 (3s) of the statutes is amended to read:

AB456,11,10 452.01 (3s) "Customer" means a party to a transaction who is provided brokerage services by a broker firm and any licensees associated with the firm but who is not a client.

AB456,20 Section 20. 452.01 (3w) of the statutes is amended to read:

AB456,11,16 452.01 (3w) "Designated agency" means a multiple representation relationship in which each client of the broker firm in the multiple representation relationship receives negotiation services from the broker firm only from employees of licensees associated with the broker firm who are not providing negotiation services to any other client of the broker firm in the transaction.

AB456,21 Section 21. 452.01 (4) of the statutes is amended to read:

AB456,11,21 452.01 (4) "Disciplinary proceeding" means a proceeding against one or more licensees or registrants in which the board may revoke, suspend, or limit a license or registration, reprimand a licensee or registrant, or assess a forfeiture or require education or training under s. 452.14 (4m) or (4r).

AB456,22 Section 22. 452.01 (4d) of the statutes is repealed.

AB456,23 Section 23. 452.01 (4h) of the statutes is repealed.

AB456,24 Section 24. 452.01 (4p) of the statutes is repealed.

AB456,25 Section 25. 452.01 (4t) of the statutes is repealed.

AB456,26 Section 26. 452.01 (4w) of the statutes is created to read:

AB456,12,3 452.01 (4w) "Firm" means a licensed individual broker acting as a sole proprietorship or a licensed broker business entity.

AB456,27 Section 27. 452.01 (4x) of the statutes is created to read:

AB456,12,6 452.01 (4x) "Licensed broker business entity" means a broker licensed under s. 452.12 that is a business entity.

AB456,28 Section 28. 452.01 (4y) of the statutes is created to read:

AB456,12,9 452.01 (4y) "Licensed individual broker" means a broker licensed under s. 452.12 who is an individual.

AB456,29 Section 29. 452.01 (5) of the statutes is amended to read:

AB456,12,12 452.01 (5) "Licensee" means any person licensed or registered under this chapter, other than an inactive licensee registered under s. 452.12 (6).

AB456,30 Section 30 . 452.01 (5) of the statutes, as affected by 2015 Wisconsin Act .... (this act), is amended to read:

AB456,12,16 452.01 (5) "Licensee" means any person licensed or registered under this chapter.

AB456,31 Section 31 . 452.01 (5c) of the statutes is created to read:

AB456,12,19 452.01 (5c) "License number" means a number assigned to a person under s. 452.05 (1) (j).

AB456,32 Section 32. 452.01 (5j) of the statutes is amended to read:

AB456,12,23 452.01 (5j) "Multiple representation relationship" means a relationship between a broker firm and 2 or more of the broker's firm's clients in which the clients are parties in the same transaction.

AB456,33 Section 33. 452.01 (5m) (b) of the statutes is amended to read: