This bill: 1) revises the law governing the practice of real estate (real estate
practice law) by real estate brokers, real estate salespersons, and time-share
salespersons; 2) establishes a statute of limitations for filing an action against a real
estate broker or salesperson; and 3) provides that real estate brokers and
salespersons may not be considered "employees" for various purposes.
Changes regarding practice of real estate
Current law regulates the practice of real estate, which can only be practiced
by real estate brokers and real estate salespersons and, to a limited extent,
time-share salespersons. Real estate brokers and salespersons (licensees) are
licensed by the Real Estate Examining Board (REEB), which is attached to the
Department of Safety and Professional Services (DSPS). A real estate broker's
license may be issued to either an individual or a business entity. Time-share
salespersons are registered by the REEB. This bill makes various changes to real
estate practice law, described in further detail as follows:
Terminology and related changes
Current law, in various contexts, refers to "brokers," without qualification, and
contains various references to the "employment" of licensees. The bill eliminates
most references to "employment" in current law and instead refers to licensees as
being "associated with a firm." The bill defines being "associated with a firm" as
having 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. The bill also modifies a number
of references to "brokers" so as to refer more specifically either to firms or to firms
and licensees associated with the firm, or to refer more generally to licensees. The
bill defines "firm" as a licensed individual broker acting as a sole proprietorship or
a licensed broker that is a business entity, such as a corporation, limited liability
company, or partnership.
Current law defines "agency agreement" as a written agreement between a
broker and a client in which the client authorizes the broker to provide brokerage
services to the client and defines "client" as a party to a real estate transaction who
has an agency agreement with a broker for brokerage services. The bill modifies the
definitions of "agency agreement" and "client," as well as other relevant provisions,
to specify that an agency agreement is between a firm and a client and that a client
is a party to a real estate transaction who has an agency agreement with a firm.
Association with firm; independent practice
Current law provides that a licensed salesperson or broker may transfer to the
employment of a licensed broker by paying a transfer fee and filing a transfer form
with the REEB, and provides that no salesperson, time-share salesperson, or broker
may be employed by a broker whose license has been suspended or revoked during
the period of suspension or revocation.
The bill creates more detailed provisions regarding association with a firm and
notification of DSPS. The bill provides that no licensee may provide brokerage
services on behalf of a firm unless: 1) the licensee is associated with the firm; and
2) the licensee has notified DSPS that the licensee is associated with the firm. A
licensee may notify DSPS when the licensee applies for initial licensure or through
the use of a form prescribed by DSPS. The bill requires a licensee that ceases to be
associated with a firm to send written notice to DSPS within ten days after the date
on which the licensee ceases to be associated with the firm and requires a firm that
terminates a licensee to send written notice of that termination to DSPS within ten
days after the termination. The bill also modifies current law to provide that no
licensee may be associated with a firm if the firm's license has been suspended or
revoked during the period of suspension or revocation and that a licensee may
become associated with another firm, provided the licensee is not a party to the
activities causing the suspension or revocation of the firm's license. The bill further
specifies that, if the licensee becomes associated with another firm, the licensee may
not provide brokerage services on behalf of that firm until the licensee has notified
DSPS. The bill also specifies certain consequences that follow if a firm's license is
not renewed, including providing that licensees associated with the firm may not
engage in activities covered by the firm's license on behalf of the firm and specifying
certain notification and termination requirements with respect to such licensees.
The bill provides that a salesperson may be associated with only one firm at a given
time.
Finally, the bill creates provisions addressing independent real estate practice
by brokers, which is not addressed under current law. The bill provides that a broker
who is associated with a firm may also engage in independent real estate practice in
his or her own name or under the name of a licensed broker business entity, if the
broker obtains written approval from, and avoids conflicts of interest with, each firm
with which the broker is associated. The approval must contain certain stipulations,
and the broker must notify DSPS of the name under which the broker will be
engaging in independent practice. The bill provides that a salesperson or time-share
salesperson may not engage in independent real estate practice.
Persons required to be licensed by REEB; registration of time-share
salespersons
Current law provides that no person may engage in or follow the business or
occupation of, or advertise or hold himself or herself out as, or act temporarily or
otherwise as a broker or salesperson without a license issued by the REEB.
The bill clarifies that no such license is required for an individual who, on behalf
of and under the direction of a firm or one or more licensees associated with a firm,
provides the firm or licensee with services that are limited to those that are purely
administrative, clerical, or personal in nature.
Under current law, in addition to licensing brokers and salespersons, the REEB
also registers time-share salespersons. Current law defines "time-share
salesperson" as a person, other than a person licensed as a broker or salesperson, who
is employed by a licensed broker to sell or offer or attempt to negotiate an initial sale
or purchase of a time share but who may not perform any other acts authorized to
be performed by a broker or salesperson.
The bill eliminates registration of time-share salespersons by the REEB at the
end of the current biennial registration period and provides that developers engaged
in the disposal of interests in a time share are not considered brokers and are
therefore not required to be licensed by the REEB.
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:
SB375,1
1Section
1. 73.0301 (1) (a) of the statutes is amended to read:
SB375,8,2
173.0301
(1) (a) "Credential" has the meaning given in s. 440.01 (2) (a)
, but does
2not include a registration as an inactive licensee under s. 452.12 (6) (b).
SB375,2
3Section
2. 108.227 (1) (b) of the statutes is amended to read:
SB375,8,54
108.227
(1) (b) "Credential" has the meaning given in s. 440.01 (2) (a)
, but does
5not include a registration as an inactive licensee under s. 452.12 (6) (b).
SB375,3
6Section
3. 186.113 (19) of the statutes is amended to read:
SB375,8,127
186.113
(19) Client fund accounts. Maintain real estate broker trust accounts
8under s. 452.13 for
brokers who firms, as defined in s. 452.01 (4w), that are eligible
9for membership in the credit union, attorney trust accounts under s. 757.293 for
10attorneys who are eligible for membership in the credit union
, and collection agency
11trust accounts under s. 218.04 (9g) for persons who are eligible for membership in
12the credit union.
SB375,4
13Section
4. 440.03 (11m) (a) (intro.) and 1. of the statutes are consolidated,
14renumbered 440.03 (11m) (a) and amended to read:
SB375,8,2215
440.03
(11m) (a) Each application form for a credential issued or renewed
16under chs. 440 to 480 shall provide a space for the department to require
each of the
17following an applicant for the initial credential or credential renewal, other than an
18individual who does not have a social security number and who submits a statement
19made or subscribed under oath or affirmation as required under par. (am), to provide
20his or her social security number
: 1. An applicant for an initial credential or
21credential renewal. If the applicant is not an individual, the department shall
22require the applicant to provide its federal employer identification number.
SB375,5
23Section
5. 440.03 (11m) (a) 2. of the statutes is repealed.
SB375,6
24Section
6. 440.03 (11m) (am) of the statutes is amended to read:
SB375,9,6
1440.03
(11m) (am) If an applicant specified in par. (a)
1. or 2. is an individual
2who does not have a social security number, the applicant shall submit a statement
3made or subscribed under oath that the applicant does not have a social security
4number. The form of the statement shall be prescribed by the department of children
5and families. A credential or license issued in reliance upon a false statement
6submitted under this paragraph is invalid.
SB375,7
7Section
7. 440.03 (11m) (b) of the statutes is amended to read:
SB375,9,138
440.03
(11m) (b) The real estate examining board shall deny an application for
9an initial credential or deny an application for credential renewal
or for
10reinstatement of an inactive license under s. 452.12 (6) (e) if any information
11required under par. (a) is not included in the application form or, in the case of an
12applicant who is an individual and who does not have a social security number, if the
13statement required under par. (am) is not included with the application form.
SB375,8
14Section
8. 440.03 (11m) (c) of the statutes is amended to read:
SB375,9,2215
440.03
(11m) (c) The department of safety and professional services may not
16disclose a social security number obtained under par. (a) to any person except the
17coordinated licensure information system under s. 441.50 (7); the department of
18children and families for purposes of administering s. 49.22; and, for a social security
19number obtained under par. (a)
1., the department of revenue for the purpose of
20requesting certifications under s. 73.0301 and administering state taxes and the
21department of workforce development for the purpose of requesting certifications
22under s. 108.227.
SB375,9
23Section
9. 440.03 (13) (b) 72. of the statutes is repealed.
SB375,10
24Section
10. 440.08 (2) (a) 69. of the statutes is repealed.
SB375,11
25Section
11. 440.13 (2) (c) of the statutes is amended to read:
SB375,10,4
1440.13
(2) (c) With respect to a credential granted by a credentialing board, a
2credentialing board shall restrict, limit
, or suspend a credential held by a person or
3deny an application for an initial credential
or for reinstatement of an inactive
4license under s. 452.12 (6) (e) when directed to do so by the department.
SB375,12
5Section
12. 452.01 (1m) of the statutes is amended to read:
SB375,10,86
452.01
(1m) "Agency agreement" means a written agreement between a
broker 7firm and a client in which the client authorizes the
broker firm to provide brokerage
8services to the client.
SB375,13
9Section
13. 452.01 (1o) of the statutes is created to read:
SB375,10,1310
452.01
(1o) "Associated with a firm" means to have been engaged by a firm to
11provide brokerage services to the firm's clients and customers on behalf of the firm
12and under the firm's supervision, including as an employee of the firm or as an
13independent contractor.
SB375,14
14Section
14. 452.01 (1p) of the statutes is created to read:
SB375,10,1615
452.01
(1p) "Associated with a subagent" means to be associated with a firm
16that is engaged as a subagent.
SB375,15
17Section
15. 452.01 (3) (d) of the statutes is amended to read:
SB375,10,1918
452.01
(3) (d) Employees of persons enumerated in pars. (a) to (c)
and, (f)
, and
19(i) when engaged in the specific performance of their duties as such employees.
SB375,16
20Section
16. 452.01 (3) (i) of the statutes is created to read:
SB375,10,2221
452.01
(3) (i) A developer, as defined in s. 707.02 (11), negotiating a transaction
22involving a time share.
SB375,17
23Section
17. 452.01 (3e) of the statutes is amended to read:
SB375,11,3
1452.01
(3e) "Brokerage service" means any service described under sub. (2)
2provided
to a person by a
broker to another person firm and any licensees associated
3with the firm.
SB375,18
4Section
18. 452.01 (3m) of the statutes is amended to read:
SB375,11,65
452.01
(3m) "Client" means a party to a transaction who has an agency
6agreement with a
broker firm for brokerage services.
SB375,19
7Section
19. 452.01 (3s) of the statutes is amended to read:
SB375,11,108
452.01
(3s) "Customer" means a party to a transaction who is provided
9brokerage services by a
broker firm and any licensees associated with the firm but
10who is not a client.
SB375,20
11Section
20. 452.01 (3w) of the statutes is amended to read:
SB375,11,1612
452.01
(3w) "Designated agency" means a multiple representation
13relationship in which each client of the
broker firm in the multiple representation
14relationship receives negotiation services from the
broker firm only from
employees
15of licensees associated with the
broker firm who are not providing negotiation
16services to any other client of the
broker firm in the transaction.
SB375,21
17Section
21. 452.01 (4) of the statutes is amended to read:
SB375,11,2118
452.01
(4) "Disciplinary proceeding" means a proceeding against one or more
19licensees
or registrants in which the board may revoke, suspend, or limit a license
20or registration, reprimand a licensee
or registrant, or assess a forfeiture or require
21education or training under s. 452.14 (4m) or (4r).
SB375,22
22Section
22. 452.01 (4d) of the statutes is repealed.
SB375,23
23Section
23. 452.01 (4h) of the statutes is repealed.
SB375,24
24Section
24. 452.01 (4p) of the statutes is repealed.
SB375,25
25Section
25. 452.01 (4t) of the statutes is repealed.