LRB-2234/1
MED&KRP:klm&emw
2023 - 2024 LEGISLATURE
January 5, 2024 - Introduced by Senators Jagler, Agard and Feyen, cosponsored
by Representatives Krug, Allen, Brooks, Dallman, Murphy, O'Connor and
Ortiz-Velez. Referred to Committee on Housing, Rural Issues and Forestry.
SB870,1,7
1An Act to renumber 452.14 (2);
to renumber and amend 452.14 (4m) (a);
to
2amend 452.01 (5g), 452.14 (4r), 452.17 (1), 452.17 (3), 452.19 (1), 452.23 (title)
3and 452.23 (4);
to repeal and recreate 452.23 (3); and
to create 452.07 (4),
4452.12 (5) (e), 452.14 (2) (b), 452.14 (2) (c), 452.14 (3) (im), 452.14 (4m) (a) 1.,
5452.23 (5) and 710.13 of the statutes;
relating to: various changes regarding
6the laws governing real estate practice, disclosures regarding real property
7wholesalers, and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill 1) revises the law governing the practice of real estate by real estate
brokers and salespersons (real estate practice law) and 2) requires real property
wholesalers to provide certain disclosures to other parties involved in residential
real property transactions.
Changes regarding real estate practice law
Current law regulates the practice of real estate, which can only be practiced
by real estate brokers and real estate salespersons. Real estate brokers and
salespersons (licensees) are licensed by the Real Estate Examining Board, which is
attached to the Department of Safety and Professional Services. A real estate
broker's license may be issued to either an individual or a business entity. The bill
makes various changes to real estate practice law, described in further detail as
follows:
Disclosures
Current law imposes on a real estate firm providing brokerage services to a
party to a transaction the duty to timely disclose in writing all material adverse facts
that the firm knows and that the party does not know or cannot discover through
reasonably vigilant observation, unless the disclosure of a material adverse fact is
prohibited by law. The law defines both “adverse fact” and “material adverse fact.”
Furthermore, each licensee associated with a firm owes the same duties to a party
that the firm owes to that party. Separately, current law contains a requirement that
a licensee disclose to the parties to a real estate transaction any facts known by the
licensee that contradict any information included in a written real estate condition
report. Current law further contains a list of specific types of information that a
licensee is not required to disclose.
The bill 1) harmonizes the disclosure requirement and the duty described
above; 2) clarifies that the “material adverse facts” that licensees have the duty to
disclose do not include anything on the list of specified types of information that
current law provides are exempt from needing to be disclosed; 3) prohibits the board
from promulgating rules that conflict with these provisions or that mandate
additional disclosures; and 4) provides that a licensee that in good faith provides
information attributable to a state or local governmental or quasi-governmental
entity may not be held civilly liable if that information is subsequently determined
to be inaccurate.
Discipline and licenses
The bill makes various changes pertaining to the discipline of licensees,
including the following:
1. The bill requires the board to notify a real estate brokerage firm in writing
as to all investigations and disciplinary proceedings and actions that are related to
a licensee associated with that firm, including the contents of any administrative
warning issued by the board. The bill also provides that if an application for renewal
of a license issued to a licensee who is associated with a firm is not filed with the board
on or before the renewal date or if the renewal is not granted, DSPS must notify the
firm.
2. The bill expressly provides that a real estate brokerage firm is not
responsible for ensuring compliance with, or for the monitoring of, any license
limitations set forth by the board of a broker or salesperson associated with that firm.
3. Current law contains a list of prohibitions, violations of which subject a
licensee to professional discipline. Current law further allows the board to assess a
forfeiture of not more than $1,000 for such violations. The bill raises the maximum
forfeiture that the board may assess for a number of these violations to $5,000.
Criminal penalties
Under current law, any person who engages in or follows the business or
occupation of, or advertises or holds himself or herself out as or acts temporarily or
otherwise as, a broker or salesperson in this state without a license or who otherwise
violates the real estate practice law may be fined not more than $1,000 or imprisoned
for not more than six months or both. The bill raises the maximum criminal fine for
violations to $5,000. The bill does not affect the maximum term of imprisonment.
Disclosures regarding real property wholesalers
The bill requires a real property wholesaler to provide certain disclosures to
other parties involved in a real property transaction. Under the bill, “real property
wholesaler" is defined as a person that enters into a purchase agreement as a buyer
and intends to sell the person's rights as buyer to a third party, and “purchase
agreement” is defined as a contract for the sale, exchange, option, rental, or purchase
of residential real property that includes one to four dwelling units.
The bill requires a real property wholesaler, no later than entering into a
purchase agreement as a buyer, to provide written notice to the seller that the buyer
is a real property wholesaler. Under the bill, if the real property wholesaler fails to
provide the notice, the seller may rescind the purchase agreement at any time before
the closing and retain any deposits or option fees paid by the real property
wholesaler.
In addition, if the real property wholesaler contracts to sell its interest in the
purchase agreement to a third party, the bill requires the real property wholesaler,
no later than entering into the contract, to provide written notice to the third party
that the real property wholesaler is a real property wholesaler that holds an
equitable interest in the property as a buyer under the purchase agreement and that
the real property wholesaler is conveying its interest in the purchase agreement, not
title to the property. Under the bill, if the real property wholesaler fails to provide
the notice, the third party may rescind the contract at any time before the closing and
is entitled to the return of any deposits or option fees paid by the third party.
Because this bill creates a new crime or revises a penalty for an existing crime,
the Joint Review Committee on Criminal Penalties may be requested to prepare a
report.
Because this bill may increase or decrease, directly or indirectly, the cost of the
development, construction, financing, purchasing, sale, ownership, or availability of
housing in this state, the Department of Administration, as required by law, will
prepare a report to be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB870,1
1Section
1. 452.01 (5g) of the statutes is amended to read:
SB870,4,22
452.01
(5g) “Material adverse fact" means an adverse fact that a party
3indicates is of such significance, or that is generally recognized by a competent
4licensee as being of such significance to a reasonable party, that it affects or would
5affect the party's decision to enter into a contract or agreement concerning a
6transaction or affects or would affect the party's decision about the terms of such a
1contract or agreement.
“Material adverse fact” does not include anything specified
2in s. 452.23 (2) (a), (c), or (d).
SB870,2
3Section
2. 452.07 (4) of the statutes is created to read:
SB870,4,64
452.07
(4) The board may not promulgate rules regarding disclosures by
5brokers or salespersons that conflict with s. 452.23 or that require disclosures beyond
6what is required under s. 452.23.
SB870,3
7Section
3. 452.12 (5) (e) of the statutes is created to read:
SB870,4,118
452.12
(5) (e) If an application for renewal of a license issued to a licensee who
9is associated with a firm is not filed with the board on or before the renewal date or
10if the renewal is not granted, the department shall notify the firm with which the
11licensee is associated.
SB870,4
12Section
4. 452.14 (2) of the statutes is renumbered 452.14 (2) (a).
SB870,5
13Section
5. 452.14 (2) (b) of the statutes is created to read:
SB870,4,1914
452.14
(2) (b) The board shall notify a firm in writing as to all investigations
15and disciplinary proceedings and actions that are related to a licensee associated
16with the firm. Notwithstanding s. 440.205, a notice shall include the contents of any
17administrative warning issued under s. 440.205. A notice shall be made to the
18mailing address of the firm and to the email address of the individual broker acting
19as a sole proprietor or the email address for the licensed business entity.
SB870,6
20Section
6. 452.14 (2) (c) of the statutes is created to read:
SB870,4,2321
452.14
(2) (c) A firm is not responsible for ensuring compliance with, or for the
22monitoring of, any license limitations set forth by the board of a licensee associated
23with the firm.
SB870,7
24Section
7. 452.14 (3) (im) of the statutes is created to read:
SB870,4,2525
452.14
(3) (im) Violated s. 710.13 (2).
SB870,8
1Section
8. 452.14 (4m) (a) of the statutes is renumbered 452.14 (4m) (a) (intro.)
2and amended to read:
SB870,5,33
452.14
(4m) (a) (intro.) Assess
a forfeiture against a licensee
a as follows:
SB870,5,5
42. A forfeiture of not more than $1,000 for each violation enumerated under
5sub. (3)
that is not enumerated under subd. 1.
SB870,9
6Section
9. 452.14 (4m) (a) 1. of the statutes is created to read:
SB870,5,87
452.14
(4m) (a) 1. A forfeiture of not more than $5,000 for each violation
8enumerated under sub. (3) (a), (b), (c), (d), (f), (h), (i), (im), (j), (jm), (k), or (n).
SB870,10
9Section
10. 452.14 (4r) of the statutes is amended to read:
SB870,5,1110
452.14
(4r) The board may assess against a licensee who is an individual a
11forfeiture of
$1,000 $5,000 for a violation under s. 452.25 (2) (a).
SB870,11
12Section
11. 452.17 (1) of the statutes is amended to read:
SB870,5,1813
452.17
(1) Any person who engages in or follows the business or occupation of,
14or advertises or holds himself or herself out as or acts temporarily or otherwise as
, 15a broker or salesperson in this state without a license under this chapter shall be
16prosecuted by the district attorney in the county where the violation occurs or by the
17attorney general and may be fined not more than
$1,000 $5,000 or imprisoned not
18more than 6 months or both.
SB870,12
19Section
12. 452.17 (3) of the statutes is amended to read:
SB870,5,2220
452.17
(3) Any person who otherwise violates any provision of this chapter may
21be fined not more than
$1,000 $5,000 or imprisoned for not more than 6 months or
22both.
SB870,13
23Section
13. 452.19 (1) of the statutes is amended to read: