Summary of factual data and analytical methodologies:
The Board hears and reviews disciplinary cases related to conduct and ethical practices of real estate licensees under s. 452.14, Stats. This proposed order clarifies and updates professional conduct and ethical practices rule provisions to meet current practice and statutory changes. Analysis and supporting documents used to determine effect on small business or in preparation of economic impact analysis:
The proposed rules were posted for a period of 14 days to solicit public comment on economic impact, including how the proposed rules may affect businesses, local government units, and individuals. No comments were received.
Fiscal Estimate and Economic Impact Analysis:
A fiscal estimate and economic impact analysis are attached.
Effect on small business:
These proposed rules do not have an economic impact on small businesses, as defined in s. 227.114 (1), Stats. The Department’s Regulatory Review Coordinator may be contacted by email at Daniel.Hereth@wisconsin.gov, or by calling (608) 267-2435. Agency contact person:
Nilajah Hardin, Administrative Rules Coordinator, Department of Safety and Professional Services, Division of Policy Development, P.O. Box 8366, Madison, Wisconsin 53708; telephone 608-267-7139; email at DSPSAdminRules@wisconsin.gov. ---------------------------------------------------------------------------------------------------------------------
TEXT OF RULE
Section 1. REEB 24.01 (2) is amended to read:
REEB 24.01 (2) The intent of the board in adopting the rules in this chapter is to establish minimum standards of conduct for real estate licensees and to define that conduct which that may result in board discipline pursuant to s. 452.14, Stats. Section 2. REEB 24.02 (13m), (14), and (16) are amended to read:
REEB 24.02 (13m) “Principal firm” means a firm who that engages a subagent to provide brokerage services in a transaction.
REEB 24.02 (14) “Qualified third party” means a federal, state or local governmental agency, or any person whom the broker, salesperson licensee or a party to the real estate transaction reasonably believes has the expertise necessary to meet the industry standards of practice for the type of inspection or investigation that has been conducted by the third party in order to prepare the written report described in s. 452.23 (2) (b), Stats.
REEB 24.02 (16) “Real estate practice" means engaging in conduct which that requires a license under ch. 452, Stats.Section 3. REEB 24.02 (16m) is created to read:
REEB 24.02 (16m) “Right of first refusal” means the right of a person to have the first opportunity to purchase or lease real property.
Section 4. REEB 24.02 (18) and (19) are amended to read:
REEB 24.02 (18) “Transaction" means the sale, exchange, purchase or rental of, or the granting or acceptance of an option to sell, exchange, purchase or rent, an interest in real estate, a business, or a business opportunity.
REEB 24.02 (19) “Written proposal” means any written document provided by one party to another during the course of a transaction, including but not limited to notices, offers, counteroffers, options, exchanges, rental agreements, and amendments.
Section 5. REEB 24.03 (2) (a) and (c) are amended to read:
REEB 24.03 (2) (a) Licensees shall not provide services which that the licensee is not competent to provide unless the licensee engages the assistance of one another person who is competent. Any person engaged to provide such assistance shall be identified and that person’s contribution shall be described in the documents or records related to the transaction.
REEB 24.03 (2) (c) Licensees A licensee shall be knowledgeable regarding laws, public policies and current market conditions on real estate matters and shall assist, guide, and advise the buying or selling public based upon parties on these factors.
Section 6. REEB 24.04 is repealed and recreated to read:
REEB 24.04 Advertising. A licensee shall follow the requirements for advertising as specified under s. 452.136, Stats. Section 7. REEB 24.05 (1) and (2) are repealed and recreated to read:
REEB 24.05 (1) Compensation. A licensee shall follow the requirements for compensation as specified under s. 452.133 (3) (a) and (c), Stats. REEB 24.05 (2) DISCLOSURE OF INTEREST. A licensee shall follow the requirements for disclosure of interest as specified under s. 452.133(3) (b), Stats. Section 8. REEB 24.05 (5) (a) 3. is amended to read:
REEB 24.05 (5) (a) 3. Any other negotiation with the seller, or the listing firm, or other party or firm representing the other party.
Section 9. REEB 24.07 (1) (a) and (c), (3), and (5) are amended to read:
REEB 24.07 (1) (a) General requirement. A licensee, when engaging in real estate practice which that involves real estate improved with a structure, shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts. A licensee, when engaging in real estate practice which that involves vacant land, shall, if the vacant land is accessible, conduct a reasonably competent and diligent inspection of the vacant land to detect observable material adverse facts.
REEB 24.07 (1) (c) Other licensees. Licensees, other than listing firms, shall inspect the real estate as required by sub. (1) prior to or during the a showing of the property, unless the licensee is not given access for a showing.
REEB 24.07 (3) Disclosure of information suggesting material adverse facts. A licensee, when engaging in real estate practice, who becomes aware of information suggesting the possibility of material adverse facts to the transaction, shall be is practicing competently if the licensee discloses to the parties the information suggesting the possibility of material adverse facts to the transaction in writing and in a timely fashion, recommends the parties obtain expert assistance to inspect or investigate for possible material adverse facts to the transaction, and, if directed by the parties, drafts appropriate inspection or investigation contingencies. This provision is not limited to the condition of the property, but includes other material adverse facts to the transaction, including but not limited to defects and conditions included within the report form under ss. 703.33 and 709.03 and 709.33, Stats. A licensee is not required to retain third party inspectors or investigators to perform investigations of information suggesting the possibility of a material adverse fact to the transaction. REEB 24.07 (5) Reliance upon third party inspections and investigations. If a licensee or a party in a transaction engages the services of a qualified third party to conduct a property inspection or investigation of material facts, the licensee may rely on the results of the inspection or investigation providing the licensee obtains a written report of the inspection or investigation and delivers a copy of the report to all interested parties in a timely manner.
Section 10. REEB 24.07 (8) (a) 1. is repealed and recreated to read:
REEB 24.07 (8) (a) General requirements. 1. A firm or licensee shall provide a written disclosure statement as prescribed under s. 452.135, Stats. Section 11. REEB 24.07 (8) (a) 1g. is repealed
Section 12. REEB 24.07 (8) (a) 1r. is amended to read:
REEB 24.07 (8) (a) 1r. If a client enters into an agency agreement with a firm is negotiating on behalf of a party who is not the client of another firm and the negotiations are to receive brokerage services related to real estate primarily intended for use as a residential property containing one to 4 dwelling units, and the disclosure to clients is not incorporated into the agency agreement, the firm shall request the party's signed acknowledgement that the client party has received a copy of the written disclosure statement required in s. 452.135 (2), Stats.
