SB687: Bill Text

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2017 - 2018 LEGISLATURE

2017 Senate BILL 687

January 4, 2018 - Introduced by Senators Olsen, Cowles, Marklein and Bewley, cosponsored by Representatives Horlacher, R. Brooks, Jacque, Jagler, Katsma, Kremer, Murphy, Wichgers, Spiros and Allen. Referred to Committee on Natural Resources and Energy.

SB687,1,4 An Act to repeal 440.975 (3) (c); to repeal and recreate 709.03 and 709.033; and to create 440.97 (2m) and 440.975 (3) (cm) of the statutes; relating to: real estate disclosure reports, the written reports of home inspectors, and providing an exemption from emergency rule procedures.

Analysis by the Legislative Reference Bureau

This bill updates the real estate disclosure report forms and changes the requirements for a report submitted to a client by a registered home inspector.

Under current law, with certain exceptions, an owner selling residential real property or vacant land must give a prospective buyer a form, known as a real estate condition report for residential real property and known as the vacant land disclosure report for vacant land, on which the owner discloses certain conditions of, and other information about, the real property of which the owner is aware. This bill makes various technical changes to these forms, including grouping questions into substantive categories, providing examples of different types of defects, and providing additional instructions and explanatory material. The updated forms include the disclosures required under current law. In addition to making technical changes, the bill requires additional disclosures regarding the owner's awareness of certain conditions related to the property, including 1) defects related to smoke detectors or carbon monoxide detectors or violations of state or local smoke detector or carbon monoxide detector laws; 2) unsafe levels of mold or other moisture intrusions or conditions; 3) defects in, as opposed to just the presence of, underground or aboveground fuel storage tanks; and 4) burial sites on the property.

The bill also adjusts the contents that a report submitted by a registered home inspector to a client is required to contain. Under the bill, a report by a home inspector must describe each defect detected during a home inspection. The bill defines a “defect” as a condition of any component of an improvement that would significantly impair the health or safety of future occupants or that, if not repaired, removed, or replaced, would significantly shorten or adversely affect the expected normal life of the component of the improvement. The bill also provides that a home inspector may use the term “defect” in a written home inspection report only if the use is consistent with the bill's definition of “defect.”

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

SB687,1 Section 1. 440.97 (2m) of the statutes is created to read:

SB687,2,5 440.97 (2m) “Defect” means a condition of any component of an improvement that would significantly impair the health or safety of future occupants of a property or that, if not repaired, removed, or replaced, would significantly shorten or adversely affect the expected normal life of the component of the improvement.

SB687,2 Section 2. 440.975 (3) (c) of the statutes is repealed.

SB687,3 Section 3. 440.975 (3) (cm) of the statutes is created to read:

SB687,2,12 440.975 (3) (cm) Describes any defect that is detected by the home inspector during his or her home inspection. A home inspector is not required to use the term “defect” in describing a defect in the written report required under this subsection. A home inspector may not use the term “defect” in a written report required under this subsection unless that use is consistent with s. 440.97 (2m).

SB687,4 Section 4. 709.03 of the statutes is repealed and recreated to read:

SB687,2,17 709.03 Residential real estate condition report form. The report required under s. 709.02 with respect to real property, as defined in s. 709.001 (5) (a), shall be in substantially the following form and shall include at least all of the following information:

SB687,3,1 REAL ESTATE CONDITION REPORT

SB687,3,3 DISCLAIMER

SB687,3,10 This condition report concerns the real property located at .... in the .... (city) (village) (town) of ...., county of ...., state of Wisconsin. This report is a disclosure of the condition of that property in compliance with section 709.02 of the Wisconsin Statutes as of .... (month), .... (day), .... (year). It is not a warranty of any kind by the owner or any agents representing any party in this transaction and is not a substitute for any inspections or warranties that the parties may wish to obtain.

SB687,3,14 A buyer who does not receive a fully completed copy of this report within 10 days after the acceptance of the contract of sale or option contract for the above-described real property has the right to rescind that contract (Wis. Stat. s. 709.02), provided the owner is required to provide this report under Wisconsin Statutes chapter 709.

SB687,3,16 NOTICE TO PARTIES REGARDING ADVICE OR INSPECTIONS

SB687,3,22 Real estate licensees may not provide advice or opinions concerning whether or not an item is a defect for the purposes of this report or concerning the legal rights or obligations of parties to a transaction. The parties may wish to obtain professional advice or inspections of the property and to include appropriate provisions in a contract between them with respect to any advice, inspections, defects, or warranties.

SB687,3,24 A. OWNER'S INFORMATION

SB687,3,25 A1. In this form, “aware” means the “owner(s)” have notice or knowledge.

SB687,4,5 A2. In this form, “defect” means a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed, or replaced would significantly shorten or adversely affect the expected normal life of the premises.

SB687,4,7 A3. In this form, “owner" means the person or persons, entity, or organization that owns the above-described real property.

SB687,4,10 An “owner" who transfers real estate containing one to four dwelling units, including a condominium unit and time-share property, by sale, exchange, or land contract is required to complete this report.

SB687,4,16 Exceptions: An “owner” who is a personal representative, trustee, conservator, or fiduciary appointed by or subject to supervision by a court, and who has never occupied the property transferred is not required to complete this report. An “owner” who transfers property that has not been inhabited or who transfers property in a manner that is exempt from the real estate transfer fee is not required to complete this report. (Wis. Stat. s. 709.01)

SB687,4,21 A4. The owner represents that to the best of the owner's knowledge, the responses to the following questions have been accurately checked as “yes,” “ no,” or “not applicable (N/A)” to the property being sold. If the owner responds to any question with “yes,” the owner shall provide, in the additional information area of this form, an explanation of the reason why the response to the question is “yes.”

SB687,4,25 A5. If the transfer is of a condominium unit, the property to which this form applies is the condominium unit, the common elements of the condominium, and any limited common elements that may be used only by the owner of the condominium unit being transferred.

SB687,5,6 A6. The owner discloses the following information with the knowledge that, even though this is not a warranty, prospective buyers may rely on this information in deciding whether and on what terms to purchase the property. The owner hereby authorizes the owner's agents and the agents of any prospective buyer to provide a copy of this report, and to disclose any information in the report, to any person in connection with any actual or anticipated sale of the property.

SB687,5,10 CAUTION: The lists of defects following each question below are examples only and are not the only defects that may properly be disclosed in response to each respective question.

SB687,6,50 B. STRUCTURAL AND MECHANICAL - See PDF for table

SB687,7,23 C. ENVIRONMENTAL - See PDF for table

SB687,8,9 D. WELLS, SEPTIC SYSTEMS, STORAGE TANKS - See PDF for table

SB687,8,83 E. TAXES, SPECIAL ASSESSMENTS, PERMITS, ETC. - See PDF for table

SB687,9,127 F. LAND USE - See PDF for table

SB687,10,105 G. ADDITIONAL INFORMATION - See PDF for table

SB687,10,110 OWNER'S CERTIFICATION

SB687,11,3 NOTE: Wisconsin Statute section 709.035 requires owners who, prior to acceptance of a purchase contract or an option to purchase, obtain information that would change a response on this report to submit a complete amended report or an amendment to the previously completed report to the prospective buyer within 10 days of acceptance.

SB687,11,5 The owner certifies that the information in this report is true and correct to the best of the owner's knowledge as of the date on which the owner signs this report.

SB687,11,6 Owner ................................................ Date ..............

SB687,11,7 Owner ................................................ Date ..............

SB687,11,8 Owner ................................................ Date ..............

SB687,11,10 CERTIFICATION BY PERSON SUPPLYING INFORMATION

SB687,11,14 A person other than the owner certifies that the person supplied information on which the owner relied for this report and that the information is true and correct to the best of the person's knowledge as of the date on which the person signs this report.

SB687,11,15 Person ..................................... Items ....................................... Date .................

SB687,11,16 Person ..................................... Items ....................................... Date .................

SB687,11,17 Person ..................................... Items ....................................... Date .................

SB687,11,19 BUYER'S ACKNOWLEDGEMENT

SB687,11,22 The prospective buyer acknowledges that technical knowledge such as that acquired by professional inspectors may be required to detect certain defects such as the presence of asbestos, building code violations, and floodplain status.

SB687,11,23 I acknowledge receipt of a copy of this statement.

SB687,11,24 Prospective buyer ........................................... Date .................

SB687,11,25 Prospective buyer ........................................... Date .................

SB687,12,1 Prospective buyer ........................................... Date .................

SB687,5 Section 5. 709.033 of the statutes is repealed and recreated to read:

SB687,12,6 709.033 Vacant land disclosure report form. The report required under s. 709.02 with respect to real property, as defined in s. 709.001 (5) (b), shall be in substantially the following form and shall include at least all of the following information:

SB687,12,7 VACANT LAND DISCLOSURE REPORT

SB687,12,9 DISCLAIMER

SB687,12,16 This disclosure report concerns the real property located at .... in the .... (city) (village) (town) of ...., county of ...., state of Wisconsin. This report is a disclosure of the condition of that property in compliance with section 709.02 of the Wisconsin Statutes as of .... (month), .... (day), .... (year). It is not a warranty of any kind by the owner or any agents representing any party in this transaction and is not a substitute for any inspections or warranties that the parties may wish to obtain.

SB687,12,20 A buyer who does not receive a fully completed copy of this report within 10 days after the acceptance of the contract of sale or option contract for the above-described real property has the right to rescind that contract (Wis. Stat. s. 709.02), provided the owner is required to provide this report under Wisconsin Statutes chapter 709.

SB687,12,22 NOTICE TO PARTIES REGARDING ADVICE OR INSPECTIONS

SB687,13,3 Real estate licensees may not provide advice or opinions concerning whether or not an item is a defect for the purposes of this report or concerning the legal rights or obligations of parties to a transaction. The parties may wish to obtain professional advice or inspections of the property and to include appropriate provisions in a contract between them with respect to any advice, inspections, defects, or warranties.

SB687,13,5 A. OWNER'S INFORMATION

SB687,13,6 A1. In this form, “aware” means the “owner(s)” have notice or knowledge.

SB687,13,11 A2. In this form, “defect” means a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed, or replaced would significantly shorten or adversely affect the expected normal life of the premises.

SB687,13,13 A3. In this form, “owner" means the person or persons, entity, or organization that is the owner of the above-described real property.

SB687,13,15 An “owner" who transfers real estate that does not include any buildings is required to complete this report.

SB687,13,21 Exceptions: An “owner” who is a personal representative, trustee, conservator, or fiduciary appointed by or subject to supervision by a court, and who has never occupied the property transferred is not required to complete this report. An “owner” who transfers property that has not been inhabited or who transfers property in a manner that is exempt from the real estate transfer fee is not required to complete this report. (Wis. Stat. s. 709.01)

SB687,14,2 A4. The owner represents that to the best of the owner's knowledge, the responses to the following questions have been accurately checked as “yes,” “ no,” or “not applicable (N/A)” to the property being sold. If the owner responds to any question with “yes,” the owner shall provide, in the additional information area of this form, an explanation of the reason why the response to the question is “yes.”

SB687,14,6 A5. If the transfer is of a condominium unit, the property to which this form applies is the condominium unit, the common elements of the condominium, and any limited common elements that may be used only by the owner of the condominium unit being transferred.

SB687,14,12 A6. The owner discloses the following information with the knowledge that, even though this is not a warranty, prospective buyers may rely on this information in deciding whether and on what terms to purchase the property. The owner hereby authorizes the owner's agents and the agents of any prospective buyer to provide a copy of this report, and to disclose any information in the report, to any person in connection with any actual or anticipated sale of the property.

SB687,14,16 CAUTION: The lists of defects following each question below are examples only and are not the only defects that may properly be disclosed in response to each respective question.

SB687,15,35 B. ENVIRONMENTAL - See PDF for table

SB687,16,12 C. WELLS, SEPTIC SYSTEMS, STORAGE TANKS - See PDF for table

SB687,16,82 D. TAXES, SPECIAL ASSESSMENTS, PERMITS, ETC. - See PDF for table

SB687,18,74 E. LAND USE - See PDF for table

SB687,19,81 F. ADDITIONAL INFORMATION - See PDF for table