Agency Law and Disclosures Flashcards
6 cards from real Wisconsin Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Agency Law and Disclosures flashcards as text
A Wisconsin real estate licensee is representing a seller. A potential buyer, who is a customer and not represented by any agent, asks the licensee for advice on how much to offer for the property. According to Wisconsin agency law, how should the licensee respond?
Answer: Inform the buyer that they cannot provide advice, as their duty is to the seller, and recommend the buyer seek their own representation.
Under Wisconsin law, a licensee owes fiduciary duties to their client (the seller). Providing advice to a customer (the buyer) on negotiation strategy would be a violation of the duty of loyalty to the seller. The licensee's duties to a customer include fair and honest treatment and the disclosure of material adverse facts, but not providing advice that is contrary to the interests of their client. Therefore, the correct action is to inform the buyer of their role and recommend the buyer obtain their own agent.
Which of the following statements is TRUE regarding multiple representation relationships without designated agency in Wisconsin?
Answer: The brokerage firm and its agents must remain neutral and cannot provide advice or opinions that favor one party over the other.
In a multiple representation relationship without designated agency, the brokerage firm represents both the buyer and the seller, but must act as a neutral facilitator. The firm and its agents are prohibited from providing information, opinions, or advice that might favor one client's interests over the other's. Written consent from all clients is required for any form of multiple representation.
A licensee lists a property. The seller informs the licensee that the basement leaks during heavy rains, but they do not want this disclosed to potential buyers. What is the licensee's duty according to Wis. Admin. Code § REEB 24.07?
Answer: Disclose the leak to all parties in writing, as it is a material adverse fact.
According to Wis. Admin. Code § REEB 24.07(2), a licensee has a duty to disclose all known material adverse facts to all parties in writing, in a timely fashion. A basement that leaks is a material adverse fact. This duty to disclose known material adverse facts overrides the client's instruction to conceal it. The duty of obedience does not extend to unlawful or unethical instructions.
A buyer signs a WB-36 Buyer Agency/Tenant Representation Agreement with a brokerage firm. According to this agreement, the firm owes additional duties to the buyer as a client. Which of the following is an additional duty owed to a client, but NOT to a customer?
Answer: To provide advice and opinions on matters material to the transaction.
Under Wisconsin law, licensees owe all parties (clients and customers) the duties of fair and honest treatment, disclosure of material adverse facts, and safeguarding of trust funds. However, the duty to provide information, opinions, and advice on matters affecting the transaction is an additional fiduciary duty owed specifically to a client with whom the firm has an agency agreement.
In Wisconsin, when must a licensee provide the 'Disclosure to Customers' form to a potential buyer who is not represented by an agent?
Answer: Before negotiating on behalf of the customer.
Wisconsin law, specifically Wis. Stat. § 452.135, requires that a licensee provide the 'Disclosure to Customers' form prior to negotiating on behalf of that customer. This disclosure clarifies that the licensee is not representing the customer as a client and outlines the duties owed to them. While it's good practice to provide it early, the legal trigger is before beginning negotiations.
A seller provides a completed Real Estate Condition Report (RECR) to their listing agent. The agent, during a visual inspection, notices a large water stain on the ceiling that was not disclosed on the RECR. What is the agent's responsibility?
Answer: Disclose the observation of the stain as a potential material adverse fact to all parties, regardless of what the RECR states.
Under Wis. Admin. Code § REEB 24.07, a licensee has a duty to conduct a reasonably competent and diligent inspection of accessible areas of a property and to disclose any observed, material adverse facts. This duty exists independently of the seller's disclosures on the RECR. If the licensee observes something that contradicts or is not on the RECR, they have a duty to disclose it to all parties.