Contracts and Approved Forms Flashcards

A buyer submits a WB-11 Residential Offer to Purchase. The seller agrees to the price but wants to change the closing date. Which form is the proper and clearest method for the seller to use to propose this change before acceptance?

Answer: WB-44 Counter-Offer

A WB-44 Counter-Offer is used to reject a previous offer and propose new terms for a contract before there is a binding acceptance. An amendment (WB-40) is used to change terms on an already accepted contract. A notice (WB-41) is for unilateral communications that don't require the other party's agreement. While physically altering the contract is a form of counter-offer, using the WB-44 is the standard, approved, and clearest method.

A licensee is preparing a WB-1 Residential Listing Contract. The seller proposes a 'net listing,' where the seller gets a guaranteed $250,000 and the firm will receive any amount above that as its commission. According to Wisconsin Administrative Code, what is the licensee's proper course of action?

Answer: Refuse the listing because net listings are prohibited in Wisconsin.

Wisconsin Administrative Code REEB 24.10 explicitly prohibits net listing contracts. A licensee must not obtain or negotiate a listing that provides for a stipulated net price to the owner, with the excess going to the firm as commission. The commission must be clearly stated as a percentage or a specific amount.

Under which of the following circumstances is a Wisconsin real estate licensee permitted to use a contractual form that has NOT been approved by the Department of Safety and Professional Services (DSPS)?

Answer: When the form is prepared by a principal to the transaction or an attorney for a principal.

Wisconsin Administrative Code REEB 16.04 states that licensees must use approved forms, but provides an exception. A licensee may use a form drafted by a party (a principal like the buyer or seller) or an attorney for one of the parties. The licensee cannot draft the non-approved form themselves.

A buyer's offer (WB-11) includes an inspection contingency with the seller's right to cure. The buyer provides a timely Notice of Defects to the seller. According to the standard language of the form, which of the following may the seller do?

Answer: Deliver a written notice to the buyer stating they elect not to cure the defects, which renders the offer null and void.

The standard WB-11 inspection contingency gives the seller the option to cure or not to cure. If the seller elects not to cure (or fails to respond within the timeframe), the offer becomes null and void, and the buyer is entitled to a return of their earnest money. The seller is not obligated to cure, and the buyer is not obligated to accept a partial cure or a price reduction in lieu of the seller's right to cure.

A buyer and seller have a fully executed WB-11 Residential Offer to Purchase. The buyer's financing falls through, and the financing contingency cannot be satisfied. Both parties agree to terminate the transaction and have the earnest money returned to the buyer. Which approved form should be used to accomplish this?

Answer: WB-45 Cancellation Agreement and Mutual Release

The WB-45 Cancellation Agreement and Mutual Release (CAMR) is specifically designed for situations where both parties agree to terminate the contract. It formally cancels the Offer to Purchase, directs the disbursement of earnest money, and releases all parties from their obligations under the contract.

In a Wisconsin real estate transaction, 'delivery' of an accepted offer occurs when:

Answer: the accepted document is physically received by the other party or their designated agent.

In Wisconsin contracts, 'delivery' is a critical concept that creates a binding contract. It is not complete when a party signs or even when a document is sent. Binding acceptance occurs upon receipt of the accepted offer by the party who made the offer (or their agent), according to the delivery methods specified in the contract.