AB783: Bill Text

Brokerage services

Under current law, a person may not engage in brokerage services unless the person is a licensed broker. Currently, brokerage services include promoting certain transactions in real estate or business opportunities. This bill specifies that brokerage services include promoting certain transactions in real estate, time shares, or businesses or their goodwill, inventory, or fixtures, whether or not the business includes real property.

Under current law, a broker may not provide brokerage services to a party to a transaction without an agency agreement that authorizes the broker to provide the services. The agency agreement must contain a statement of the terms and conditions of the brokerage services that the broker will provide. Also under current law, a broker may not provide brokerage services to a party or a client unless the broker has provided the party or client with a disclosure form that: 1) identifies the broker's clients in the transaction; 2) states the broker's duties to the broker's clients; 3) states the broker's duties to a party; and 4) contains a statement, the text of which is prescribed by current law, describing the broker's duties to disclose certain known defects affecting a property and to maintain the confidentiality of certain other information.

Under the bill, a broker may provide brokerage services to any person in a transaction, whether or not the broker has entered into an agency agreement with a party to the transaction or has been engaged to provide brokerage services in the transaction as a subagent (see "Subagency," below), except that a broker may not negotiate on behalf of a person who is not the broker's client unless another party to the transaction is the broker's client or is a client of another broker who has engaged the broker to provide brokerage services in the transaction as a subagent, and the broker has provided to the party a disclosure form stating the broker's duties to a person receiving brokerage services from the broker. The bill deletes the requirements that the disclosure form identify the broker's client in the transaction and state the broker's duties to the broker's client. Under the bill, the disclosure form summarizes the broker's duties to parties and the broker's disclosure and confidentiality duties.

The bill creates a separate disclosure form for a broker's client. Under the bill, a broker is required to provide the form to a client not later than the time the broker enters into an agency agreement with the client. The client disclosure form summarizes the broker's duties to clients, the broker's disclosure and confidentiality duties, and the broker's duties if the client is involved in a transaction in which another party is also the broker's client (see "Multiple representation relationships and designated agency," below). The client disclosure form also contains a space for the client to indicate whether the client consents to certain multiple representation relationships.

Under the bill, if a broker is providing services to a person in a transaction in which no party is the broker's client or a client of another broker who has engaged the broker to provide brokerage services as a subagent, the broker may not provide to any party advice or opinions relating to the transaction in which the person is receiving brokerage services if doing so is contrary to the interests of the person or another person receiving services from the broker.

The bill also modifies the current definition of "negotiate." The bill specifies that providing advice or opinions that are material to a person's transaction or showing real estate to a party does not, in and of itself, constitute negotiation.

Subagency

This bill defines a subagent as a broker who is engaged by a principal broker to provide brokerage services in a transaction but who is not the principal broker's employee. A broker may not engage another broker to provide brokerage services to the broker's client as a subagent unless the agency agreement between the broker and the client authorizes the broker to engage a subagent.

Under the bill, a broker who has been engaged to provide brokerage services in a transaction as a subagent owes all parties the duties owed by a broker who is not a subagent. Additionally, in a transaction in which a subagent has been engaged by a principal broker, a subagent may not place the subagent's interests ahead of the interests of the principal broker's client in the transaction, or provide advice or opinions to parties in the transaction if doing so is contrary to the interests of the principal broker's client. A broker who has been engaged by another broker as a subagent does not owe the principal broker's client the additional duties that a broker owes to the broker's own client.

Multiple representation relationships and designated agency

Currently, a broker may not provide brokerage services to more than one client in a transaction (multiple representation relationship) unless the broker has entered into an agency agreement with, and made certain written disclosures to, each client, and each client has given written consent. Under current law, a broker who represents more than one client in a transaction may not place the interests of any client ahead of the interests of another client in the transaction.

Under the bill, if a broker's client does not give written consent to multiple representation relationships or if the client withdraws such consent, neither the broker nor the broker's employees may place the interests of any client ahead of the interests of any other in negotiations. A client may withdraw consent to multiple representation relationships at any time by written notice to the broker.

Also under the bill, if a client consents to multiple representation relationships the client may also consent to receiving negotiation services from the broker in a multiple representation relationship only from an employee of the broker who is not providing negotiation services to another client of the broker in the transaction ("designated agency"). In a designated agency relationship, the broker's employee may provide to the client on whose behalf the employee is negotiating information, opinions, and advice to assist the client in the negotiations, whether or not the information, opinions, and advice place the interests of one of the broker's clients ahead of the interests of another client of the broker.

If a client consents to multiple representation relationships but not to designated agency, the broker and the broker's employees may not place the interests of any client ahead of the interests of any other in negotiations.

Broker liability

Current law provides that duties imposed on brokers by statutes or by rules supersede fiduciary duties the broker has to a party based on common law principles of agency, to the extent that common law is inconsistent with the statutes or rules. Under the bill, a broker's duties under the statutes or rules supersede any inconsistent common law duties or obligations, not just fiduciary duties based on agency principles.

Under current law, a broker must supervise, and is responsible for, the acts of any broker, salesperson, or time-share salesperson employed by the broker. Under the bill, a broker is responsible for brokerage services provided on behalf of the broker by a broker, salesperson, or time-share salesperson employed by the broker.

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

AB783, s. 1 Section 1. 452.01 (1m) of the statutes is amended to read:

AB783,5,3 452.01 (1m) "Agency agreement" means a written agreement between a broker and a client under s. 452.135 (1) in which the client authorizes the broker to provide brokerage services to the client.

AB783, s. 2 Section 2. 452.01 (2) (a) of the statutes is amended to read:

AB783,5,9 452.01 (2) (a) For another person, and for commission, money, or other thing of value, negotiates or offers or attempts to negotiate a sale, exchange, purchase, or rental of, or the granting or acceptance of an option to sell, exchange, purchase, or rent, an interest or estate in real estate, a time share, or a business or its goodwill, inventory, or fixtures, whether or not the business includes real property.

AB783, s. 3 Section 3. 452.01 (2) (b) of the statutes is amended to read:

AB783,5,17 452.01 (2) (b) Is engaged wholly or in part in the business of selling or exchanging interests or estates in real estate or businesses, including businesses' goodwill, inventory, or fixtures, whether or not the business includes real property, to the extent that a pattern of real estate sales or exchanges is established, whether or not such the person owns the real estate is owned by such person or businesses. Five sales or exchanges in one year or 10 sales or exchanges in 5 years is presumptive evidence of a pattern of sales or exchanges.

AB783, s. 4 Section 4. 452.01 (2) (bm) of the statutes is created to read:

AB783,5,22 452.01 (2) (bm) For another person, and for commission, money, or other thing of value shows real estate or a business or its inventory or fixtures, whether or not the business includes real property, except that this paragraph does not include showing a property that is offered exclusively for rent.

AB783, s. 5 Section 5. 452.01 (2) (d) of the statutes is repealed.

AB783, s. 6 Section 6. 452.01 (2) (e) of the statutes is repealed.

AB783, s. 7 Section 7. 452.01 (2) (f) of the statutes is repealed.

AB783, s. 8 Section 8. 452.01 (2) (g) of the statutes is repealed.

AB783, s. 9 Section 9. 452.01 (2) (h) of the statutes is amended to read:

AB783,6,8 452.01 (2) (h) For another person, and for a commission, money, or other thing of value, promotes the sale, exchange, purchase, option, rental, or leasing of real estate, a time share, or a business opportunities or its goodwill, inventory, or fixtures, whether or not the business includes real property. This paragraph does not apply to a person who only publishes or disseminates verbatim information provided by another person.

AB783, s. 10 Section 10. 452.01 (3e) of the statutes is amended to read:

AB783,6,11 452.01 (3e) "Brokerage service" means any service described under sub. (2) (a) to (h) provided by a broker to another person.

AB783, s. 11 Section 11. 452.01 (3w) of the statutes is created to read:

AB783,6,17 452.01 (3w) "Designated agency" means a multiple representation relationship in which each client of the broker in the multiple representation relationship receives negotiation services from the broker only from employees of the broker who are not providing negotiation services to any other client of the broker in the transaction.

AB783, s. 12 Section 12. 452.01 (4d) of the statutes is amended to read:

AB783,6,24 452.01 (4d) "Employ",," when used in reference to a broker employing another broker, a salesperson, or a time-share salesperson, includes means engaging the services of another broker, a salesperson, or a time-share salesperson who provides to provide brokerage services to the broker broker's clients and customers on behalf of the broker and under the broker's supervision, including engaging a broker, salesperson, or time-share salesperson as an independent contractor.

AB783, s. 13 Section 13. 452.01 (4h) of the statutes is amended to read:

AB783,7,5 452.01 (4h) "Employee",," when used in reference to an employee of a broker, includes means another broker, a salesperson, or a time-share salesperson who provides brokerage services to the broker broker's clients and customers on behalf of the broker and under the broker's supervision, including a broker, salesperson, or time-share salesperson engaged by the broker as an independent contractor.

AB783, s. 14 Section 14. 452.01 (4p) of the statutes is amended to read:

AB783,7,13 452.01 (4p) "Employer",," when used in reference to a broker who is the employer of another broker, a salesperson, or a time-share salesperson, includes means a broker who engages the services of another broker, a salesperson, or a time-share salesperson who provides services to the broker to provide brokerage services to the broker's clients and customers on behalf of the broker and under the broker's supervision, including a broker who engages the services of another broker, salesperson, or time-share salesperson as an independent contractor.

AB783, s. 15 Section 15. 452.01 (4t) of the statutes is amended to read:

AB783,7,20 452.01 (4t) "Employment",," when used in reference to a broker's employment of another broker, a salesperson, or a time-share salesperson, includes means the state of providing being engaged by a broker to provide services to the broker by the other broker's clients and customers on behalf of the broker and under the broker's supervision, including being engaged by the employing broker, the salesperson or the time-share salesperson as an independent contractor.

AB783, s. 16 Section 16. 452.01 (5j) of the statutes is created to read:

AB783,7,24 452.01 (5j) "Multiple representation relationship" means a relationship between a broker and 2 or more of the broker's clients in which the clients are parties in the same transaction.

AB783, s. 17 Section 17. 452.01 (5m) (intro.) of the statutes is amended to read:

AB783,8,4 452.01 (5m) (intro.) "Negotiate" means to act as an intermediary between the parties to a transaction provide to a party assistance within the scope of the knowledge, skills, and training required under this chapter in developing a proposal or agreement relating to a transaction, including doing any of the following:

AB783, s. 18 Section 18. 452.01 (5m) (a) of the statutes is amended to read:

AB783,8,12 452.01 (5m) (a) Facilitating Acting as an intermediary by facilitating or participating in the parties' discussion of the terms of a contract or agreement concerning communications between parties related to the parties' interests in a transaction. In this paragraph, providing advice or opinions on matters that are material to a transaction in which a person is engaged or intends to engage or showing a party real estate does not, in and of itself, constitute acting as an intermediary by facilitating or participating in communications between parties.

AB783, s. 19 Section 19. 452.01 (5m) (c) of the statutes is amended to read:

AB783,8,17 452.01 (5m) (c) Presenting to a party the proposals of other parties to the transaction and informing the party receiving a proposal of the advantages and disadvantages giving the party a general explanation of the provisions of the proposal.

AB783, s. 20 Section 20. 452.01 (5m) (d) of the statutes is repealed.

AB783, s. 21 Section 21. 452.01 (5r) of the statutes is amended to read:

AB783,8,23 452.01 (5r) "Party" means a person seeking to sell, exchange, buy or rent an interest in real estate, a business or a business opportunity. "Party" includes a person who seeks to grant or accept an option to buy, sell or rent an interest in real estate, a business or a business opportunity engage in a transaction.

AB783, s. 22 Section 22. 452.01 (5w) of the statutes is created to read:

AB783,9,2 452.01 (5w) "Principal broker" means a broker who engages a subagent to provide brokerage services in a transaction.

AB783, s. 23 Section 23. 452.01 (7) of the statutes is amended to read:

AB783,9,6 452.01 (7) "Salesperson" means any person other than a broker or time-share salesperson who is employed by a broker to perform any act authorized by this chapter to be performed by a broker.

AB783, s. 24 Section 24. 452.01 (7r) of the statutes is created to read:

AB783,9,10 452.01 (7r) "Subagent" means a broker who is engaged by another broker to provide brokerage services in a transaction, but who is not the other broker's employee.

AB783, s. 25 Section 25. 452.12 (3) of the statutes is amended to read:

AB783,9,15 452.12 (3) Broker's liability for acts of employees. Each broker shall supervise, and is responsible for, the acts of, brokerage services provided on behalf of the broker by any broker, salesperson, or time-share salesperson employed by who is an employee of the broker.

AB783, s. 26 Section 26. 452.133 (1) (intro.) of the statutes is amended to read:

AB783,9,19 452.133 (1) Broker's duties to all parties to persons in a transaction. (intro.) In A broker who is providing brokerage services to a party to person in a transaction, a broker shall do all of the following owes all of the following duties to the person:

AB783, s. 27 Section 27. 452.133 (1) (a) of the statutes is amended to read:

AB783,9,22 452.133 (1) (a) Provide The duty to provide brokerage services to all parties to the transaction honestly, and fairly and in good faith.

AB783, s. 28 Section 28. 452.133 (1) (b) of the statutes is amended to read:

AB783,9,25 452.133 (1) (b) Diligently exercise The duty to provide brokerage services with reasonable skill and care in providing brokerage services to all parties.

AB783, s. 29 Section 29. 452.133 (1) (c) of the statutes is amended to read:

AB783,10,5 452.133 (1) (c) Disclose to each party The duty to timely disclose in writing all material adverse facts that the broker knows and that the party person does not know or cannot discover through reasonably vigilant observation, unless the disclosure of a material adverse fact is prohibited by law.

AB783, s. 30 Section 30. 452.133 (1) (d) of the statutes is amended to read:

AB783,10,15 452.133 (1) (d) Keep The duty to keep confidential any information given to the broker in confidence, or any information obtained by the broker that he or she knows a reasonable party person would want to be kept confidential, unless the information must be disclosed under par. (c) or s. 452.23 or is otherwise required by law to be disclosed or the party person whose interests may be adversely affected by the disclosure specifically authorizes the disclosure of particular confidential information. A broker shall continue to keep the information confidential after the transaction is complete and after the broker is no longer providing brokerage services to the party person.

AB783, s. 31 Section 31. 452.133 (1) (e) of the statutes is amended to read:

AB783,10,20 452.133 (1) (e) Provide The duty to provide accurate information about market conditions that affect a the person's transaction, to any party who requests the information, within a reasonable time of after the party's person's request, unless disclosure of the information is prohibited by law.

AB783, s. 32 Section 32. 452.133 (1) (f) of the statutes is amended to read:

AB783,10,25 452.133 (1) (f) Account for all The duty to safeguard trust funds and other property coming into the possession of a held by the broker that belongs to any party within a reasonable time of receiving the property as required by rules promulgated by the department under s. 452.13 (5).

AB783, s. 33 Section 33. 452.133 (1) (g) of the statutes is amended to read:

AB783,11,4 452.133 (1) (g) When the broker is negotiating on behalf of a party, the duty to present contract proposals in an objective and unbiased manner and disclose the advantages and disadvantages of the proposals.

AB783, s. 34 Section 34. 452.133 (2) (intro.) of the statutes is amended to read:

AB783,11,9 452.133 (2) Broker's duties to a client. (intro.) In addition to his or her duties under sub. (1), a A broker providing brokerage services to his or her client shall do owes the client the duties that the broker owes to a person under sub. (1) and all of the following additional duties:

AB783, s. 35 Section 35. 452.133 (2) (a) of the statutes is renumbered 452.133 (2) (a) (intro.) and amended to read:

AB783,11,13 452.133 (2) (a) (intro.) Loyally The duty to loyally represent the client's interests by placing doing all of the following:

AB783,11,16 1. Placing the client's interests ahead of the broker's interests of any other party, unless loyalty to a client violates the broker's duties under sub. (1) or s. 452.137 (2).

AB783, s. 36 Section 36. 452.133 (2) (a) 2. of the statutes is created to read:

AB783,11,22 452.133 (2) (a) 2. Placing the client's interests ahead of the interests of persons in the transaction who are not the broker's clients by not disclosing to persons in the transaction other than the broker's clients information or advice the disclosure of which is contrary to the interests of a client of the broker, unless the disclosure is required by law.

AB783, s. 37 Section 37. 452.133 (2) (am) of the statutes is created to read: