STATE OF WISCONSIN
Real Estate Examining Board
IN THE MATTER OF RULEMAKING
PROCEEDINGS BEFORE THE
REAL ESTATE EXAMINING BOARD
ORDER OF THE
REAL ESTATE EXAMINING BOARD
ADOPTING EMERGENCY RULES
The statement of scope for this rule, SS
021-16
, was approved by the Governor on
March 11, 2016
, published in
Register
723A2
on
March 14, 2016
,
and approved by
the Real Estate Examining Board
on
March 28, 2016
. This emergency rule as approved by the Governor on
June 23, 2016.
ORDER
An order of the Real Estate Examining Board to repeal REEB 15.03, 17.02, 17.025, 17.03 (1), 17.04, 17.05, 17.06, 17.07, 17.08, 17.12, 18.02
(2)
and 24.02 (2); to renumber REEB 11.02 (1); to renumber and amend REEB 15.04; to amend REEB 12.011 (1), Chapter
15
(title), 15.02 (1) and (3), 16.02 (1m), (2e), (2m), (2s), (3), (3m), (4)
,
(4m)
and (5)
, 16.03 (1) (intro.), (d) and (e), 16.04 (2), 16.06 (1) (c)
,
(4) (a)
and (8)
, 17.03 (title), 17.03 (2), 17.03 (4), 18.02 (6) (intro.) and (g), 18.031 (1) (intro.) and (a), (2), (3) and (5)(b), 18.032, 18.033, 18.034, 18.035, 18.036,
18.037,
18.04, 18.05, 18.06, 18.07, 18.09 (1)(intro.), (2) and (3), 18.10, 18.11, 18.13 (intro), (1) (intro.), (2), (3), (4), (5) and (6) (intro) and (e), 18.14, 23.03, 23.04, 24.01 (3), 24.02 (3), (5), (6), (9) and (13m), 24.04 (2) (a) and (b), (3) and (4), 24.05 (1) (a), (2), (4) and (5) (a) 3., 24.07 (1) (b) (title), (c), (3), (8) (a) 1., 1g., 1r., and 2 (intro.), a. and c. and (8) (b), (d) and (e), 24.10, 24.13 (2) (a), (3) (b), (4) and (5), 24.16 and 24.17 (1); to repeal and recreate Chapter
REEB 17
(title) and 17.03 (3); and to create REEB 11.02 (1d), (1h), (1p), (5g) and (6m), 12.011 (1) (am), 15.02 (4) and 15.04 (2) relating to real estate practice.
Analysis prepared by the Department of Safety and Professional Services.
-----------------------------------------------------------------------------------------------------------
EXEMPTION FROM FINDING OF EMERGENCY
The Legislature by SECTION 179 in
2015 Act 258
provides an exemption from a finding of emergency for the adoption of the rules under chapter 452, Stats.
that
are necessary to implement the changes in
2015 Act 258
.
-----------------------------------------------------------------------------------------------------------
ANALYSIS
Statutes interpreted:
Chapter
452
, Stats.
Statutory authority:
15.08
(
5
)
(b)
, Stats.
Explanation of agency authority:
Each examining board shall promulgate rules for its own guidance and for the guidance of the profession to which it pertains, and define and enforce professional conduct and unethical practices not inconsistent with the law relating to the particular trade or profession.
[s.
15.08 (5) (b)
, Stats.]
Related statute or rule:
N/A
Plain language analysis:
This rule updates the real estate code chapters to reflect current real estate practice as provided in
2015 Act 258
including: terminology, provisions relating to independent contractor relationship, duties of licensees, supervision of licensees, use of unlicensed personal assistants, business representations, inactive license references, fees for predeterminations on criminal records, electronic records retention, use of forms and elimination of timeshare credential references.
Sections
1
and
2
create definitions for three new terms defined in statute: “associated with a firm”, “associated with a subagent” and firm” by referring to the same definition as the statute.
These sections also create
a definition for “agency agreement” referring to the statutory definition. Lastly, the
sections create
a definition for “member of the licensee’s immediate family” which clarifies a previous definition for “immediate family”.
Sections 3
and
4
removes the reference to timeshare salespersons due to Act 258 removing the requirement for credentialing of timeshare salespersons.
These sections also create
a $68.00 fee for the binding determination as to whether the individual’s criminal record would disqualify the individual from obtaining a license prior to the individual submitting an application for the license.
This provision allows an applicant who receives a favorable determination to credit the amount toward their application fee if the person applies within 1 year of the determination.
Act 258 permits the Board to charge a fee for the cost of making this determination.
Sections 5, 13, 15, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 35, 36, 38, 39, 41,
and
42
update
terminology
.
Section 6
clarifies documents prepared or received by the licensee in addition to utilized shall be promptly provided. The section also includes rental agreements and clarifies the lease or rental agreement shall be provided upon execution of the lease or rental agreement.
Sections 7
clarifies a broker or salesperson shall promptly distribute a copy of an agency agreement that has been accepted and signed by all parties to the client when the client signs an agency agreement.
Section 8
repeals the obsolete provision relating to closing statements.
Section 9
updates terminology and clarifies the record retention period in transactions without a date of closing or consummation
begins from the date the listing contract or agency agreement is terminated. In addition, this section clarifies electronic or digital record retention may be utilized.
Section 10
creates a provision requiring brokers and salespersons to submit documents to the firm in a timely manner so that the firm can be in compliance with the record retention requirements.
Sections 11
and
14
updates
terminology and reflects forms are filled out based upon instruction and not intent of the party.
Section 12
updates terminology and adds quasi-governmental and tribal agencies to the form exception in order to provide clarification to the profession.
Sections 17, 18, 19, 20,
and
21
update
terminology
in provisions for persons associated with a firm
and changes the references from code references to statutory references.
Section 23
repeals the obsolete definition of “cooperating broker”.
Section
34 repeals the “agency agreement” definition.
Section
37
updates terminology and clarifies family member language in order to be clear the code means a member of the family and not family as a unit.
Section 40
updates terminology and clarifies a pending written proposal or offer is one being negotiated.
Summary of, and comparison with, existing or proposed federal regulation:
None
Comparison with rules in adjacent states:
Illinois
:
Illinois does not have a predetermination process regarding criminal convictions.
Illinois
also does not use terminology relating to firm.
Iowa
:
Iowa does not have a predetermination process regarding criminal convictions. Iowa also does not use terminology relating to firm.
Michigan
:
Michigan
does not have a predetermination process regarding criminal convictions.
Michigan
also does not use terminology relating to firm.
Minnesota:
Minnesota
does not have a predetermination process regarding criminal convictions.
Minnesota
also does not use terminology relating to firm.
Summary of factual data and analytical methodologies:
The Board reviewed
all of the REEB chapters to implement the
2015 Act 258
changes.
Fiscal Estimate:
This rule will not have a fiscal impact.
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
Jeffrey.Weigand@wisconsin.gov
, or by calling (608) 267-2435
Agency contact person
:
Sharon
Henes
, Administrative Rules Coordinator
, Department of
Safety and Professional Services
, Division of
Policy Development
, 1400 East Washington Avenue, Room 151, P.O. Box
8366
, Madison, Wisconsin 53708; telephone 608-
261-2377
; email at
Sharon.Henes
@wisconsin.gov
.
Place where comments are to be submitted and deadline for submission
:
Comments may be submitted to
Sharon
Henes
, Administrative Rules Coordinator
, Department of
Safety and Professional Services
, Division of
Policy Development
, 1400 East Washington Avenue, Room 151, P.O. Box
8366
, Madison, WI 53708-
8366
, or by email to
Sharon.Henes
@wisco
ns
in.gov
. Comments must be received on or before
August 18, 2016
to be included in the record of rule-making proceedings.
------------------------------------------------------------------------------------------------------------
TEXT OF RULE
Section
1. REEB 11.02 (1) is renumbered to 11.02 (1t)
Section
2. REEB 11.02 (
1d)
, (1h), (1p), (5g) and (6m) are created to read:
REEB 11.0
2
(1d)
“Agency agreement” has the meaning under s.
452.01 (1m)
, Stats.
(1h)
“Associated with a firm” has the meaning under s.
452.01 (1o)
, Stats.
(1p)
“Associated with a subagent” has the meaning under s.
452.01 (1p)
, Stats.
(5g)
“Firm” has the meaning under s.
452.01 (4w)
, Stats.
(
6m
)
“
Member of the licensee’s immediate family
” means any of the following:
(a)
A p
arent, stepparent, grandparent, foster parent, child, stepchild, grandchild, foster child, brother, sister
, aunt, uncle
of
the
licensee.
(b) The spouse or domestic partner of
the
licensee
or any person listed in par. (a)
.
Section
3. REEB 12.011 (1) is amended to read:
(1)
An individual who does not possess a broker’s or salesperson’s license
or a time-share salesperson’s certificate
may apply to the board, without submitting a full application
and payment of application fee,
for a determination of whether the individual would be disqualified from obtaining a license or certificate based upon a criminal conviction by submitting all of the following:
.
Section
4. REEB 12.011 (1) (am) is created to read:
REEB 12.011 (1)
(am)
A
fee in the amount of $68.00. The fee may be applied to the application fee under s.
REEB 12.01 (4)
if the individual applies for a real estate broker or salesperson license within 1 year of the determination decision.
Section
5. Chapter
REEB 15
(title) is amended to read:
BROKER’S
OBLIGATION TO FURNISH COPIES AND MAINTAIN RECORDS
Section
6. REEB 15.02 (1) and (3) are amended to read:
REEB 15.02 Copies of documents (1
)
A
broker or salesperson shall promptly provide an exact and complete copy of any document utilized
, prepared or received by the licensee
in real estate practice to any person who has signed the document.
(3)
A broker or salesperson shall promptly distribute an exact and complete copy of a lease
or rental agreement
which has been accepted and signed by all parties to the tenant
upon execution of the lease or rental agreement
when the tenant leases the property and to the landlord upon the landlord’s request.
Section
7. REEB 15.02 (4) is created to read:
REEB 15.02 (4)
A broker or salesperson shall promptly distribute a
n exact and complete copy of a listing contract or
agency agreement that has been accepted and signed by all parties to the client when the client signs an agency agreement.
Section
8. REEB 15.03 is repealed.
Section
9. REEB 15.04 is renumbered 15.04(1) and amended to read:
REEB
15.04
Retention
of records.
(1)
A
broker
firm
shall retain for at least
3
2
years
, unless required by federal law
or there is an active or ongoing investigation by the Board
,
exact and complete copies of all
listing contracts
,
agency
agreements
,
offers to purchase, leases, closing statements, deposit receipts, cancelled checks, trust account records and other documents or correspondence received or prepared
by the
broker
in connection with any transaction. The retention period shall run from the date of closing of the transaction or, if the
transaction has not been consummated, from the date
of
the
listing
contract
or the agency agreement is terminated.
The broker shall make
these
These
records
shall be
available for inspection and copying by the board.
If the records are retained outside this state,
the
broker
The
firm
shall, upon request
of
the board, promptly send exact and complete copies to the department
without charge to the department or board.
The Board may not require copies to be submitted beyond the retention period.
Electronic or digital means may be used to retain records
.
Section
10. REEB 15.04 (2) is created to read:
REEB 15.04 (2
)
A
broker or salesperson shall submit in a timely manner documents and records
to the firm
related to transactions that are used or received by the
broker or salesperson
to assist in complying with sub. (1).
Section
11. REEB 16.02 (1m) (2e), (2m), (2s), (3), (3m), (4)
,
(4m)
and (5)
are amended to read:
REEB 16.02
(1m
)
“Buyer agency/tenant representation agreement” means a written agency agreement authorizing a
broker
firm
to provide brokerage services to the client for the procurement of an interest in property and providing the terms whereby the broker may earn a commission.
(2e
)
“Exclusive right to locate buyer agency/tenant representation agreement” means a written buyer agency/tenant representation agreement giving the
broker
firm
the exclusive right to locate an interest in property for the client.
(2m)
“Exclusive right to locate and negotiate buyer agency/tenant representation agreement” means a written buyer agency/tenant representation agreement giving the
broker
firm
the exclusive right to locate an interest in property and to negotiate the procurement of an interest in property for the client.
(2s
)
“Exclusive right to negotiate buyer agency/tenant representation agreement” means a written buyer agency/tenant representation agreement giving the
broker
firm
the exclusive right to negotiate the procurement of an interest in a property for the client.
(3
)
“Exclusive right to sell listing” means a written listing contract making a
broker
firm
the exclusive agent for the sale of property for a specific period of time, and which entitles the listing broker to a commission if the property is sold by the owner, by the
broker
firm
, or by anyone else.
(3m
)
“Listing contract” means a written agency agreement authorizing a
broker
firm
to provide brokerage services to the client for the sale or rental of property and providing the terms whereby the broker may earn a commission.
(4
)
“Open listing” means a written listing agreement, which may be given to any number of
broker
s
firms
, with the first
broker
firm
to secure a buyer under the terms of the listing agreement earning the commission.
(4m)
“One-party listing” means a written listing contract containing all of the elements of an exclusive right to sell listing, except that listing
broker
firm
is entitled to a commission only if the property is sold by the owner, by the
broker
firm
, or by anyone else to a specific party or parties identified in the written listing contract.
(5)
“Use a form” means to complete a contractual or conveyance form by filling in the
b
lanks or modifying printed provisions on a form for the purpose of accomplishing the
intent
instruction
of a party in a specific real estate transaction.
Section
12. REEB 16.03 (1) (intro.), (d) and (e) is amended to read:
REEB 16.03 (1)
In addition to forms prepared and approved by the board pursuant to s.
452.05 (1) (b)
,
Stats.,
the board approves the following forms for use by
brokers
licensees.
(d) Forms prepared by governmental
, quasi-governmental and tribal
agencies for use in programs administered by them under authority provided by law.
(e) Forms to be used for a property management agreement between a
broker
firm
and a landlord, prepared by the broker entering into the agreement, an attorney, or the landlord, that contain provisions relating to leasing, managing, marketing, and overall management of the landlord’s property.
Section
13. REEB 16.04 (2) is amended to read:
REEB 16.04
(2)
For those kinds of real estate or business opportunity transactions for which the board has not approved contractual forms a licensee, when acting as an agent or a party, may use contractual forms drafted by a party or an attorney, if the name of the drafter is imprinted on the form before use by a licensee. For the purpose of this subsection, a listing
broker
firm
is a party to the listing contract transaction.
Section
14. REEB 16.06 (1) (c)
,
(4) (a)
and (8)
are amended to read:
REEB 16.06 (1)
(c
) Shall
indicate that the form is reproduced by the
licensee’s
firm, stating its address and telephone number at an appropriate place on the form.
(4)
(
a
) The addendum has been prepared by the
broker
firm
or an attorney who is identified on the addendum.
(8)
A licensee shall use approved forms and prepare addenda in such a manner as to adequately accomplish the contractual
intent
instruction
of the person for whom the licensee uses the forms and prepares the addenda.
Section
15. Chapter REEB 17 (title) is repealed and recreated to read:
LICENSEES
ASSOCIATED WITH A FIRM
Section
16. REEB 17.02 and 17.025 are repealed.
Section
17. REEB 17.03 (title) is amended to read:
REEB
17.03
Limitations
on
employees of a broker
licensees
associated with a firm
.
Section
18. REEB 17.03 (1) is repealed.
Section
19. REEB 17.03 (2) is amended to read:
REEB 17.03
(
2)
A licensee
who is employed by a broker-employer
associated with a firm
may personally employ
or engage as an independent contractor
licensed persons only as unlicensed personal assistants within the meaning of
s.
REEB 17.02 (5)
452.34(1)
, Stats.
, subject to the provisions in s.
REEB 17.12
452.34
, Stats
.
Section
20. REEB
17.03 (3) is repealed and recreated to read:
REEB 17.03
(3
)
A broker shall be associated with only one firm unless the broker is engaging in independent practice under s.
452.30 (6) (a)
or acting as business representative for a licensed business entity under s.
452.12 (2) (a)
.
Section
21
. REEB
17.03 (4) is amended to read:
REEB 17.03
(4
)
A salesperson
or time-share salesperson
may engage in real estate practice only when
employed by a broker
associated with a firm
.
Section
22
. REEB
17.04, 17.05, 17.06, 17.07, 17.08, and 17.12 are repealed.
Section
23. REEB 18.02 (2) is repealed.
Section
24. REEB 18.02 (6) (intro) and (g) are amended to read:
REEB 18.02
(6)
(intro)
“Real estate trust funds” means any cash, checks, share drafts, drafts, or notes received by a
broker or a broker’s salesperson or time-share salespersons
firm or licensee
on behalf of a principal or any other person including any of the following:
(g) Initial and additional earnest money
downpayments
and other funds received in connection with offers to purchase, options, and exchanges, even if the broker
,
or
salesperson
, or time-share salesperson
receives the
downpayments
or funds when negotiating the sale of real estate or a business opportunity which the broker
,
or
salesperson
, or time-share salesperson
owns in whole or in part, or when negotiating the purchase of real estate or a business opportunity for ownership in whole or in part by the broker
,
or
salesperson
, or time-share salesperson
.
Section
25. REEB 18.031 (1) (intro) and (a), (2), (3) and (5) (b) are amended to read:
REEB 18.031 (1)
(intro)
Time of deposit.
A
broker
firm
shall deposit all real estate trust funds received by the
broker or broker’s salespersons or time-share salespersons
firm or licensees associated with the firm
in a real estate trust account within 48 hours of receipt of the trust funds. If funds are received on a day prior to a holiday or other day when the depository institution is closed, the
broker
firm
shall deposit the funds within
the next 2 business days. If a
broker
firm
receives funds which cannot be deposited by the
broker
firm
, the
broker
firm
shall, no later than one business day after receipt, either:
(a) Forward the funds to the payee, if someone other than the
broker
firm
.
(2
)
Duty of
salesperson
licensees
.
A
salesperson or time-share salesperson
licensee
who receives real estate trust funds shall promptly submit the funds to the
employer-broker
firm
of the
salesperson or time-share salesperson
licensee
.
(3
)
Interest-bearing accounts.
(a) Client funds shall be deposited in an interest-bearing common trust account and the department of administration shall be the beneficial owner of the interest accruing to the account, minus any service charges. At no time may the
broker
firm
remove or use the interest earned on such accounts.
(b) Real estate trust funds, other than client funds, may be deposited in an interest-bearing account if the
broker
firm
obtains from the persons for whom the funds are being held written authorization to deposit the funds in an interest-bearing account and if the authorization specifies how and to whom the interest will be disbursed. None of the interest earned on the funds deposited into an interest-bearing account may inure to the benefit of the
broker
firm
.
(5)
(b) A
broker
firm
may directly deposit into an owner’s account rental application deposits, rents and security deposits which may have been made payable to one or more owners. The
broker
firm
or licensee associated with the firm
may be designated as a signatory on the owner’s account and may make disbursements from that account to the extent authorized by the owner in writing.
Section
26. REEB 18.032, 18.033, 18.034, 18.035
,
18.036
and 18.037
are amended to read:
REEB 18.032
Number of real estate trust accounts.
A
broker
firm
may maintain more than one real estate trust account, including more than one interest-bearing common trust account for client funds, if the
broker
firm
notifies the department of these accounts, as required in s.
REEB 18.035
.
REEB 18.033
Opening and closing real estate trust accounts.
(1
)
Opening an account.
A
broker
firm
shall open a real estate trust account if the
broker
firm
receives real estate trust funds.
(2
)
Closing an account.
A
broker
firm
may close a real estate trust account if no real estate trust funds remain in the account or for reasons specified in s.
REEB 18.035
.
REEB 18.034
Account designation.
(1
)
Name on trust account.
A
broker
firm
shall name the
broker
firm’s
real estate trust account with the name appearing on the broker’s license or with a trade name submitted to the department under s.
REEB 23.03
and shall include the words “trust account” in the name of the account.
(2
)
Name on checks.
A
broker
firm
shall imprint the name of the real estate trust account on real estate trust account checks, share drafts or drafts.
REEB 18.035
Duty to notify the department.
(1
)
Opening an account.
No later than 10 days after opening any real estate trust account a
broker
firm
shall provide the
department with the name and number of the account, with the name of the depository institution in which the
broker
firm
holds the account and with information concerning whether the account is for client funds or for real estate trust funds other than client funds. The information shall be provided on a form, as required in s.
REEB 18.037
.
(2
)
Changing or closing an account.
A
broker
firm
shall notify the department no later than 10 days after a
broker
firm
changes a real estate trust account name or number, changes the real estate trust account from one depository institution to another, closes a real estate trust account or changes a real estate trust account to or from an interest-bearing common trust account established for client’s funds. The notification shall be provided on a form, as required in s.
REEB 18.037
. When closing a real estate trust account, a
broker
firm
may inform the board by letter.
REEB 18.036
Authorization to examine real estate trust accounts and records.
(1
)
Broker’s
Firm’s
authorization.
No later than 10 days after opening a real estate trust account a
broker
firm
shall furnish the department authorization for the department to examine and audit all of the
broker’s
firm’s
real estate trust account records and authorization for the department of administration to examine all of the
broker’s
firm’s
interest-bearing common trust accounts maintained for client funds. The authorization shall be provided on a form, as required in s.
REEB 18.037
.
(2
)
Depository institution’s certification.
No later than 10 days after opening a real estate trust account a
broker
firm
shall obtain the certification of every depository institution in which the
broker
firm
maintains a real estate trust account attesting to the existence of the account and consenting to the examination and audit of the account by a duly authorized representative of the department or, in the case of interest-bearing common trust accounts maintained for client funds, the department of administration. The certification shall be provided to the department on a form, as required in s.
REEB 18.037
.
18.037
Form for notification and authorization.
A
broker
firm
shall
provide the information and authorization as specified in ss.
REEB 18.035
and
18.036
on a form provided by the department. This form shall be designated “consent to
exame
and audit trust account.”
Section
27. REEB 18.04, 18.05, 18.06 and 18.07 are amended to read:
REEB 18.04
Authorization to sign trust account checks.
A
broker
firm
may authorize other persons to sign real estate trust account checks, share drafts or drafts drawn on the
broker’s
firm’s
real estate trust account if the person is at least 18 years of age.
REEB 18.05
Receipt for earnest money received by the
broker
licensee
.
A
broker
licensee
shall indicate on the offer to purchase the receipt of earnest money received from a buyer at the time the offer is drafted.
REEB 18.06
Escrow agreement for earnest money not held by the
broker
firm
.
If the parties to a transaction do not desire that the
broker
firm
hold the earnest money in
the
broker’s
firm’s
real estate trust account, and wish to designate an escrow agent other than the
broker
firm
, the
broker
licensee
may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney. The
broker
firm
may not hold the funds in the
firm’s
real estate trust account, nor may the
broker
firm
act in any way as custodian of the funds for the parties. The funds, pursuant to the escrow agreement, shall be held by a party other than the
broker
firm
, such as: a bank, a savings and loan association, a credit union, or an attorney.
REEB 18.07
After
closing escrow agreements.
(1
)
By separate agreement.
If the parties to a contract wish, or are required, to place funds in escrow which are to be held after closing by the
broker
firm
in the
broker’s
firm’s
trust account or by another person until some future occurrence, an agreement to that effect shall be prepared by the parties or an attorney. If the
broker
firm
holds these funds, the
broker
firm
shall place them in the
broker’s
firm’s
real estate trust account. The
broker
licensee
may draft the escrow agreement if a form for this purpose has been approved by the board for use by licensees pursuant to s.
REEB 16.03
.
(2
)
On closing statement.
A
broker
firm
may hold in the
broker’s
firm’s
trust account without a separate escrow agreement occupancy or possession escrows, escrows for final proration of taxes, and escrows for charges incurred by a seller but not yet billed, provided that the closing statement shows that the
broker
firm
is holding the funds.
Section
28. REEB 18.09 (1) (intro), (2), and (3) are amended to read:
REEB 18.09
Disbursement of trust funds.
(1
)
Proper disbursement.
A
broker
firm
who disburses trust funds from the
broker’s
firm’s
real estate trust account under any of the following circumstances shall not be deemed to have violated s.
452.14 (3) (
i
)
, Stats.:
(2
)
Notification of disbursement.
Prior to making a disbursement of trust funds under sub. (1) (a) where the
broker
firm
has knowledge that not all parties agree that the rejection or withdrawal occurred prior to binding acceptance, and prior to making a disbursement under sub. (1) (
e
), (f) and (g) where the
broker
firm
has knowledge that either party disagrees with the disbursement, the
broker
firm
shall attempt to notify all parties in writing of the intent to disburse. The notice shall be delivered by certified mail to the parties’ last known addresses and shall state to whom and when the disbursement will be made. The disbursement may not occur until 30 days after the date on which the notice is sent.
(3
)
Withdrawal of commissions.
(a) A
broker
firm
shall withdraw commissions or fees earned by the
broker
firm
from real estate trust accounts maintained by the
broker
firm
within 24 hours after transactions are consummated or terminated, or after the commissions or fees are earned in accordance with the contract involved.
(b) A
broker
firm
providing property management services shall disburse the fee earned for providing property management services as a regular monthly basis unless otherwise agreed in a written property management agreement signed by the parties to that agreement.
Section
29. REEB 18.10 and 18.11 are amended to read:
REEB 18.10
Comingling funds prohibited.
(1
)
Depositable
funds.
A
broker
firm
shall deposit only real estate trust funds in the
broker’s
firm’s
real estate trust account.
(a) Except for sub. (b), a
broker
firm
shall not commingle t
he broker’s
personal funds or other funds in the real estate trust account.
(b) A
broker
firm
may deposit and maintain a sum not to exceed $300.00
from
the
broker’s
personal funds in any real estate trust account. Such sum shall be specifically identified and deposited to cover service charges relating to the real estate trust account.
(2
)
Additional funds.
A
broker
firm
shall deposit additional personal funds in sums consistent with sub. (1) (b) in the
broker’s
firm’s
real estate trust account within 10 business days following receipt of a statement or other notification from a depository institution that a service charge has been made against the account for which insufficient personal funds are available in the real estate account.
REEB 18.11
Non-
depositable
items.
A
broker
firm
shall not hold any instrument, equity or thing of value which is not
depositable
in a real estate trust account. Non-
depositable
items shall be held by one of the parties to a transaction or some other party, subject to an escrow agreement prepared by the parties or an attorney.
Section
30. REEB 18.13 (intro), (1) (intro), (2), (3), (4), (5), and (6) (intro) and (e) are amended to read:
REEB 18.13
Bookkeeping system.
Each
broker
firm
shall maintain and be responsible for a bookkeeping system in the
broker’s
firm
’s
office consisting of at least the following:
(1
)
Cash journal.
A
broker
firm
shall maintain a record, called a journal showing the chronological sequence in which real estate trust funds are received and disbursed as follows:
(2
)
Ledger.
A
broker
firm
shall maintain a record including the receipts and the disbursements as they affect each particular transaction, including transactions between buyer and seller, landlord and tenant, etc. The ledger entry shall include the names of all parties to a transaction, the dates and the amounts received and the name of the party or parties providing the money if different from the buyer. Ledger entries shall include at least the date, payee, number of the check, share draft or draft and amount when funds are disbursed. The ledger shall include a running balance and segregate each transaction. The
broker
firm
shall maintain a separate ledger or separate section of the ledger for each of the various kinds of real estate transactions, including sales, rental collections, or mortgage and land contract collections.
(3
)
Account reconciliation.
The
broker
firm
or a person designated by the
broker
firm
shall reconcile the real estate trust account or accounts in writing each month except in the case where there has been no activity during the month. The written reconciliation shall include at least the ending account statement balance, the date and amounts of the deposits in transit, the number of the check, share draft, or draft, and amount of checks, share drafts, or drafts written but not paid by the depository institution as of the ending
date shown on the account statement to be reconciled, and the reconciled account statement ending balance.
(4
)
Trial balance.
The
broker
firm
shall prepare or have prepared, in conjunction with sub. (3), a written listing of all open items in the real estate trust account. The written listing shall be referred to as the “trial balance”. The listing shall include at least the names of all parties to the transaction and the amount held in trust for the parties at the time corresponding to the account reconciliation. The
broker
firm
may in lieu of the names of the parties to the transaction substitute the ledger page number or other means of identification from the ledger to label the funds in the trial balance.
(5
)
Validation.
The
broker
firm
or a person designated by the
broker
firm
shall review the reconciled account statement balance, the open ledger account listing, and the journal running balance to ensure that all of these records are valid and in agreement as of the date the account statement has been reconciled.
(6
)
Use of computers.
A computerized system may be used to maintain the
broker’s
firm’s
bookkeeping system if:
(e) All records
which are not maintained as written paper records are capable of being immediately converted to written paper records and immediately
shall be
made available
for inspection and copying by the department and exact and completed copies promptly sent to the department upon the request of the department
without charge to the department or board for the purposes of an audit or investigation.
Section
31. REEB 18.14 is amended to read:
REEB 18.14
Violation of rules.
A
broker
firm
who fails to comply with the rules in this chapter shall be considered to have demonstrated incompetency to act as a
licensed individual broker or a licensed broker business entity
in a manner as to safeguard the interests of the public, as specified in s.
452.14 (3)
, Stats.
Section
32.
REEB 23.03
and 23.04 are amended to read:
REEB 23.03
Trade name.
(1
)
Definition.
“Trade name” means the name other than the name appearing on the
broker’s
license, under which the
broker
licensed individual broker or a licensed broker business entity
advertises or does business.
(2
)
Notification.
A
licensed broker
licensee
, before doing business under any trade name, shall notify the department in writing of the trade name.
REEB 23.04
Change of form of business organization.
(1
)
Application.
A licensed broker
business entity
who intends to conduct business under a different
form of
business
entity
type
, shall apply for a new license. Upon payment of the fee specified in s.
440.05 (1)
,
Stats.,
the
department
board
shall issue to the applicant
, without examination,
a license under the new
form of entity
business type
.
(2
)
New license required.
A broker
business entity
shall not engage in real estate activities under a different
form of
business
entity
type
until a new license is issued.
Section
33. REEB 24.01 (3) is amended to read:
REEB 24.01 (3)
If a licensee violates rules in this chapter, the licensee has demonstrated incompetency to act as a broker
, salesperson
or
time-share
salesperson in such manner as to safeguard the interests of the public under s.
452.14 (3) (
i
)
, Stats. However, the term “incompetency” is not limited in its meaning to violations of this chapter
.
Section
34. REEB 24.02 (2) is repealed.
Section
35. REEB 24.02 (3), (5), (6), (9) and (13m) are amended to read:
REEB 24.02 (3
)
“Brokerage service” means any service described under s.
452.01 (2)
, Stats., provided
by a broker
to
another
a
person
by a firm and any licensees associated with the firm
.
(5
)
“Buyer’s
broker
firm
” means a
licensee
firm
who has an agency agreement with a buyer.
(6
)
“Client” means a party to a transaction who has an agency agreement with a
broker
firm
for brokerage services.
(9
)
“Customer” means a party to a transaction who is provided brokerage services by a
broker
firm
but who is not a client.
(13m
)
“Principal
broker
firm
” means a
broker
firm
who engages a subagent to provide brokerage services in a transaction.
Section
36. REEB 24.04 (2) (a) and (b), (3) and (4) are amended to read:
REEB 24.04
(2
)
Disclosure of name.
(a) Except for advertisements for the rental of real estate owned by the
broker
licensee
, a
broker
licensee
shall in all advertising disclose the
broker’s
firm
name
exactly as printed on the
broker’s
licensed individual broker or a licensed broker business entity
’s
license or disclose a trade name previously filed with the department, as required by s.
REEB 23.03
, and in either case clearly indicate that the
broker
firm
is a business concern and not a private party.
(b) Except for advertisements for the rental of real estate owned by the licensee, a licensee
employed by a broker
associated with a firm
shall advertise under the supervision of and in the name of the
employing broker
firm
.
(3
)
Advertising without authority prohibited.
Brokers
Licensees
shall not advertise property without the consent of the owner.
(4
)
Advertised price.
Brokers
Licensees
shall not advertise property at a price other than that agreed upon with the owner; however, the price may be stated as a range or in general terms if it reflects the agreed upon price.
Section
37. REEB 24.05 (1) (a), (2), (4) and (5) (a) 3.
is
amended to read:
REEB 24.05 (1
)
Compensation.
(a) A licensee acting as an agent in a real estate or business opportunity transaction may not accept any fee or compensation related to the transaction from any person, other than the licensee’s client, principal
broker
firm
, or
broker-employer
firm the licensee is associated with
without prior written consent from all parties to the transaction.
(2)
Disclosure of interest.
A licensee acting as an agent in a real estate or business opportunity transaction on the licensee’s own behalf, on behalf of the licensee’s
immediate family or
firm,
on behalf of any member of the licensee’s immediate family or any combination of members of the licensee’s immediate family,
or on behalf of any other organization or business entity in which the licensee has an interest without the prior written consent of all parties to the transaction. For the purpose of this subsection, a licensee shall obtain the written consent in the offer to purchase, option, lease or other transaction contract.
(4
)
Disclosure to seller.
A listing
broker
firm
may not pay any compensation or incentive to a licensee who is acting as a buyer in a transaction without prior written consent from the seller.
(5)
(a)3. Any other negotiation with the seller or the listing
broker
firm
.
Section
38. REEB 24.07 (1) (b) (title) and (c), (3), (8) (a)
1.,
1g., 1r., and 2 (intro), a. and c., and (8) (b), (d) and (e) are amended to read:
REEB 24.07
(1)
(b
)
Listing
broker
firm
.
When listing real estate and prior to execution of the listing contract, a licensee shall inspect the real estate as required by sub. (1), and shall make inquiries of the seller on the condition of the structure, mechanical systems and other relevant aspects of the property as applicable. The licensee shall request that the seller provide a written response to the licensee’s inquiry.
(c)
Other licensees.
Licensees, other than listing
brokers
firm
, shall inspect the real estate as required by sub. (1)
prior
to or during the showing of the property, unless the licensee is
not given access for a showing.
(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 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
s.
ss.
703.33
and
709.03
, 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.
(8
)
Disclosure of agency.
(a)
General requirements.
1. A
broker
firm
may not negotiate on behalf of a party who is not the
broker’s
firm’s
client unless the
broker
firm
provides to the party a copy of the
broker
disclosure to customers required under s.
452.135 (1)
, Stats. If the brokerage services are related to real estate primarily intended for use as a residential property containing one to 4 dwelling units, the
broker
firm
shall request the party’s signed acknowledgement that the party has received a copy of the written disclosure statement.
1g
. A
broker
firm
may not negotiate on behalf of a client unless the
broker
firm
gives the client a copy of the
broker
disclosure required under s.
452.135 (2)
, Stats.
1r
. If
a client enters into an agency agreement with a
broker
firm
to receive brokerage services related to real estate primarily intended for use as a residential property containing one to 4 dwelling units, and the
broker
disclosure to clients is not incorporated into the agency agreement, the
broker
firm
shall request the client’s signed acknowledgement that the client has received a copy of the written disclosure statement required in s.
452.135 (2)
, Stats.
2. Licensees acting as agents of potential buyers of real estate that is used or intended to be used principally for one to 4 family residential purposes, who are negotiating directly with the seller or who are aware that the owner of the real estate has granted a listing
broker
firm
the exclusive right to sell, shall notify the seller or the listing
broker
firm
, as applicable, of the licensee’s buyer agency relationship at the earlier of all of the following:
a. The
first contact with the seller or the listing
broker
firm
where information regarding the seller or transaction is being exchanged.
c. Any
other negotiation with the seller or the listing
broker
firm
.
(b)
Agency agreements.
1.
Brokers or their salespeople
Firms and the licensees associated with the firm
shall explain to their clients the responsibilities of
seller’s
listing
agents, buyer’s agents
,
and subagents before entering into an agency agreement.
2. No
broker or broker’s salesperson
firm or licensees associated with the firm
may permit other
brokers
firms
to act as subagents in a transaction unless the
broker’s
firm’s
client has authorized the use of a subagent in the agency agreement.
(d)
Subagency
arrangements.
1. A listing
broker
firm
shall provide a
broker
disclosure statement to a customer as required in s.
452.135 (1)
,
Stats.,
to the buyer if negotiations are being conducted directly with the buyer and not through a buyer’s
broker
firm
.
2. A buyer’s
broker
firm
shall provide a
broker
disclosure statement to a customer as required in s.
452.135 (1)
,
Stats.,
to a seller if negotiations are being conducted directly with the seller and not through a seller’s
broker
firm
.
3. A subagent shall provide a
broker
disclosure statement to a customer as required in s.
452.135 (1)
,
Stats.,
with whom he or she is working but not to the principal
broker’s
firm’s
client.
4. A principal
broker
firm
is not required to provide a
broker
disclosure statement to a customer as required in s.
452.135 (1)
,
Stats.,
to a customer of their subagents.
(e)
Agency agreements for lease and property management contracts.
1. A licensee who is entering into agency agreements for lease or property management contracts shall provide to his or her clients the
broker
disclosure statement as required in s.
452.135 (2)
, Stats.
2. A licensee shall provide to prospective tenants a
broker
disclosure statement as required in s.
452.135 (1)
,
Stats.,
when negotiating the terms of a lease on behalf of the client.
Section
39. REEB 24.10 is amended to read:
REEB 24.10
Net listing prohibited.
Licensees shall not obtain, negotiate or attempt to obtain or negotiate any listing contract providing for a stipulated net price to the owner with the excess over the stipulated net price to be received by the
broker
firm
as commission.
Section
40. REEB 24.13 (2) (a), (3) (b), (4) and (5) are amended to read:
REEB 24.13 (2)
(a) Listing
brokers
firms
shall permit access to listed property for showing purposes, to all buyers and persons assisting or advising buyers, without unreasonable delay, unless the buyer’s or other person’s access is contrary to specific written instructions of the seller.
(3)
(b
) A
listing
individual licensed
broker
acting as a sole
proprieter
or
the listing broker’s employee
licensee associated with a listing firm
may not submit his or her own
personal written proposal or
offer to purchase a property which the
broker
firm
has listed if the
broker or broker’s employee
licensee
has knowledge of the terms of any pending offer, except that a
broker
firm
may arrange for a guaranteed sale at the time of listing.
(4
)
Notification of action on written proposal.
Licensees shall promptly inform their clients and customers whether the other party has accepted, rejected, or countered their written proposal. A licensee shall immediately provide a written statement to the other party’s
broker
firm
that includes the date and time when the written proposal was presented when such a statement is requested by the other party or the other party’s
broker
firm
. A licensee shall immediately provide a written statement to the other party’s
broker
firm
that includes the date and time when the written proposal was rejected or had expired without acceptance when such a statement is requested by the other party or the other party’s
broker
firm
.
(5
)
Negotiation through
broker
firm
.
A licensee may not negotiate a sale or lease of real estate directly with a party if the licensee knows that the party has an unexpired written contract in connection with the real estate which grants to another licensee an exclusive right to sell, lease, or negotiate. All negotiations shall be conducted with the
broker
firm
holding the exclusive right to sell, lease, or negotiate, and not with the party, except with the consent of the
broker
firm
or where the absence of the
broker
firm
, or other similar circumstances, reasonably compels direct negotiation with the party. A listing
broker
firm
has no duty to investigate whether a buyer has granted a buyer’s agent an exclusive right to negotiate.
Section
41. REEB 24.16 is amended to read:
REEB 24.16
Availability of rules.
Brokers
Firms
shall have the rules of the department readily available in all offices for the use of all licensees.
Section
42. REEB 24.17 (1) is amended to read:
REEB 24.17
(1
)
Violations of law.
Licensees may not violate, or aid or abet the violation of, any law the circumstances of which substantially relate to the practices of a real estate
broker or salesperson
licensee
. A licensee who has been convicted of a crime shall send to the board within 48 hours after the judgment of conviction a copy of the complaint or other i
nformation which describes the nature of the crime and the judgment of conviction in order that the board may determine whether the circumstances of the crime of which the licensee was convicted are substantially related to the practice of a real estate
broker or salesperson
licensee
, pursuant to s.
111.335 (1) (c)
, Stats.
Section
43.
This emergency rule shall take effect
on July 1, 2016.
------------------------------------------------------------------------------------------------------------
(END OF TEXT OF RULE)
------------------------------------------------------------------------------------------------------------
Dated __
June 9, 2016
____
Agency _
____
/s/ Ste
ph
en Beers
_______________
Member of the Board
REAL ESTATE EXAMINING BOARD
