Wisconsin Real Estate License Transactions & Contracts 2 — Questions and Answers
Question 1: In Wisconsin, which offer-to-purchase provision automatically makes an accepted offer contingent on the buyer securing a mortgage?
- The financing contingency in the WB-11 Residential Offer to Purchase (Correct answer)
- The default earnest money clause
- The seller's disclosure report
- The listing contract
Correct answer: The financing contingency in the WB-11 Residential Offer to Purchase
The WB-11 Residential Offer to Purchase includes a financing contingency that conditions the sale on the buyer obtaining loan approval.
Question 2: Under Wisconsin law, when does an offer to purchase become a binding contract?
- When the seller signs an unconditional acceptance and it is communicated to the buyer (Correct answer)
- When the buyer deposits earnest money
- When the listing agent verbally agrees
- When the appraisal is completed
Correct answer: When the seller signs an unconditional acceptance and it is communicated to the buyer
A binding contract forms upon the seller's written acceptance of the exact terms, communicated back to the buyer.
Question 3: A Wisconsin buyer wants to keep the right to back out if a home inspection reveals defects. Which provision protects this?
- An inspection contingency (Correct answer)
- A time-is-of-the-essence clause
- A liquidated damages clause
- A subordination clause
Correct answer: An inspection contingency
An inspection contingency lets the buyer cancel or renegotiate based on the results of a professional home inspection.
Question 4: What is the primary purpose of earnest money in a Wisconsin real estate transaction?
- To show the buyer's good-faith commitment to the purchase (Correct answer)
- To pay the listing broker's commission
- To cover the seller's closing costs
- To fund the buyer's down payment in full
Correct answer: To show the buyer's good-faith commitment to the purchase
Earnest money demonstrates the buyer's serious intent and is typically credited toward the purchase at closing.
Question 5: In Wisconsin, a counter-offer by the seller has what legal effect on the buyer's original offer?
- It rejects the original offer and creates a new offer (Correct answer)
- It automatically accepts the original offer
- It has no legal effect until closing
- It voids the earnest money
Correct answer: It rejects the original offer and creates a new offer
A counter-offer terminates the original offer and constitutes a new offer that the other party may accept or reject.
Question 6: Which Wisconsin document must a seller of residential property with 1-4 dwelling units generally provide to a buyer?
- The Real Estate Condition Report (Correct answer)
- A quitclaim deed
- A title insurance binder
- A power of attorney
Correct answer: The Real Estate Condition Report
Wisconsin law requires most sellers of 1-4 unit residential property to furnish a Real Estate Condition Report disclosing known defects.
Question 7: If a Wisconsin offer to purchase specifies 'time is of the essence,' what does that mean?
- Deadlines in the contract must be strictly met or a party may be in breach (Correct answer)
- The contract can be extended indefinitely
- Only the seller must meet deadlines
- Earnest money is optional
Correct answer: Deadlines in the contract must be strictly met or a party may be in breach
A 'time is of the essence' clause makes stated deadlines strictly enforceable, so missing one can constitute a breach.
Wisconsin Real Estate License Transactions & Contracts 2
In Wisconsin, which offer-to-purchase provision automatically makes an accepted offer contingent on the buyer securing a mortgage?