April 17, 2019 – Even when the real estate market is hot, focusing solely on speed can lead to missteps – unless you’re familiar with the obstacles that might arise during a sale or purchase of real property.
Be prepared to assist your client with any real estate transaction circumstance – including the forms, checklists, and sample language – with Real Estate Transactions System, recently supplemented from State Bar of Wisconsin PINNACLE®.
Protect Sellers from Unprepared Buyers
When houses in the sweet-spot price range are few, a would-be buyer might be tempted to present an offer immediately – and the seller might accept quickly. What happens if the buyer encounters problems selling her current residence or obtaining financing?
According to the authors of Chapter 1 of Real Estate Transactions System, the seller should include the following contingency in the counteroffer:
“In regard to Buyer’s (describe contingency (e.g., financing contingency, contingency regarding sale of buyer’s property)) only, if another acceptable offer to purchase this property is submitted to Seller, Buyer shall have 72 hours after receipt of notice of the other offer to waive this particular contingency. If Buyer refuses to waive this contingency within such time period, this Offer shall be null and void, and all earnest money shall be returned forthwith to Buyer.”
Protect Buyers from Uninformed Sellers
In tight markets, buyers might initially overlook potentially serious flaws in a property, such as susceptibility to flooding, invisible toxins, or planned sidewalk repairs.
But a deal is a deal, isn’t it? Not necessarily.
As explained in Real Estate Transactions System, sellers of one-to-four dwelling units must:
“provide buyers with a real estate condition report that attests to the seller’s awareness of various defects. These defects include, but are not limited to, seepage; unsafe concentrations of radon; structural, mechanical, and electrical problems; lot-line disputes; nonconforming uses; pending special assessments; and other conditions that affect the property.”
The Residential Real Estate Condition Report in the recent book supplement reflects amendments made by the Wisconsin Legislature when it repealed and recreated Wis. Stat. section 709.03 in 2018.
If the report discloses a defect, is incomplete, or contains an inaccurate assertion that an item does not apply, the buyer’s sole statutory remedy is rescission of the offer to purchase.
The authors thus advise that buyers should consider establishing a warranty such as the following:
“Seller warrants and represents that Seller (will) (has) fully and accurately complete(d) the real estate condition report required under Wis. Stat. ch. 709, and Buyer is entitled to rely on it.”
This warranty incorporates the Wis. Stat. chapter 709 report, and thereby creates duties independent of the seller’s duties under chapter 709, potentially giving the buyer additional remedies.
Leaving No Loose Ends
When no serious problems arise on inspection, the buyer has financing and doesn’t need to sell another home, and neither seller nor buyer has cold feet about the property or the price, is the lawyer’s job done?
Not yet. Sellers and buyers won’t rest easy until the transaction closes, so their lawyers shouldn’t, either.
As checklists in Real Estate Transactions System illustrate, the parties’ lawyers can ensure the closing is truly a happy ending by taking care of matters such as:
contacting the municipality about zoning;
reviewing title documents;
setting the time and place for closing; and
preparing the deed.
Even after the house keys change hands, the lawyers have a few more tasks. One that is particularly easy for lawyers who use Real Estate Transactions System is to gather and organize all the documents into a document clip or booklet with an index.
Anticipate and Account for Every Possible Detail
Real Estate Transactions System helps you and clients avert the potentially immense legal and financial risks of property ownership. The book presents the basic residential real estate transaction step-by-step, and introduces other types of real property transactions.
It also contains chapters on the effects of Wisconsin’s marital property regime, and the increasingly significant area of environmental considerations.
The master information list and checklists equip you to gather crucial information from a prospective property buyer or seller. These forms are among dozens in the book – and some are newly revised:
WB-3 (Vacant Land Listing Contract);
WB-4 (Residential Condominium Listing Contract);
WB-5 (Commercial Listing Contract – Exclusive Right to Sell);
WB-6 (Business Listing Contract – Exclusive Right to Sell);
analyses for forms WB-3, WB-4; and
WB-36 (Buyer Agency Agreement).
How to Order
Real Estate Transactions System is available both in print for $219 for members and $269 for nonmembers, and online via Books UnBound®, the State Bar’s interactive online library.
For more information or to place an order, visit the WisBar Marketplace or call the State Bar at (800) 728-7788 or (608) 257-3838.