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  • Wisconsin Lawyer
    July 20, 2009

    Residential Real Property Disclosure Duties

    Like homeowners, brokers and home inspectors now owe duties under various circumstances to disclose defects or conditions that may affect residential real property transactions. Recission is not a buyer's sole remedy when these duties are breached.

    Wisconsin Lawyer
    Vol. 75, No. 5, May 2002

    Residential Real Property Disclosure Duties

    Like homeowners, brokers and home inspectors now owe duties under various circumstances to disclose defects or conditions that may affect residential real property transactions. Recission is not a buyer's sole remedy when these duties are breached.

    a dismantled electrical outletby Mark R. Hinkston

    In 1992 Wisconsin became one of the first states to require residential property owners to disclose property defects in conjunction with a sale.1 The Wisconsin Legislature subsequently enacted other laws mandating disclosure under certain circumstances by real estate brokers and home inspectors. Although these parties' obligations differ in some respects, the Legislature's goal in creating disclosure standards for them was the same: to ensure disclosure of property conditions that adversely impact a property's value or structural integrity or that pose a health or safety risk. Consequently, homeowners, brokers, and home inspectors face liability for failing to disclose defects or adverse conditions relating to property. This article discusses the disclosure duties of each of these parties in the residential real estate context and the liability they face when the duties are breached.

    Owner Duties

    Background. Traditionally, Wisconsin real estate sellers had no duty to disclose information to the buyer in an arm's length transaction.2 In 1961 the Wisconsin Supreme Court signaled the demise of this once-hallowed doctrine of caveat emptor ("let the buyer beware") when it called it an "obnoxious legal cliché."3 Over the ensuing years, the Legislature and courts whittled away at the doctrine and carved out exceptions. For example, the doctrine did not apply when the seller actively concealed a defect, hindered a buyer's investigation, or was untruthful when asked about a property condition.4

    The Wisconsin Legislature sounded the death knell for caveat emptor when it promulgated Wis. Stat. chapter 709, titled "Disclosures by Owners of Residential Real Estate," which went into effect on Sept. 1, 1992. The disclosure law requires owners of residential property (of four or fewer dwelling units) to disclose in conjunction with the property's transfer (whether by sale, exchange, or land contract), "defects" in the property. The disclosure is to be made via a written report provided within 10 days of a buyer's acceptance.5

    An August 1992 Wisconsin Lawyer article hailed chapter 709's enactment and explained its content.6 Since then, as sellers and their brokers and attorneys have put the disclosure law's mandates into practice, various issues have arisen from the statute's now routine application in real estate transactions. Significant among these are:

    1) What is the nature and extent of defects or conditions that must be disclosed?

    2) Is rescission the only remedy for a seller's nondisclosure or deception?

    3) May a buyer waive the right to rely on a seller's representation?

    4) Under what circumstances should a seller rely on a third party (such as a broker or attorney) to satisfy his or her disclosure obligations?

    Defects: Conditions Significantly Affecting Value, Impairing Safety, or Shortening the Normal Life of the Premises. Chapter 709 provides a mandated form containing queries relating to 27 different structural systems, property conditions, and legal status issues.7 The owner must disclose whether he or she is aware of defects in the following: roof; electrical, plumbing, and heating/air conditioning systems; well; septic system; basement or foundation (including cracks, seepage, or bulges); structure; mechanical equipment; and fireplace. The owner also must disclose whether the property: 1) is serviced by a joint well; 2) is located in a floodplain; 3) has fuel storage or "LP" tanks on it; 4) is contaminated by toxic or hazardous substances or asbestos; or 5) is infested by termites or carpenter ants.

    Some of the disclosures relate to legal issues, such as whether the property is in need of repairs to comply with applicable regulations; the subject of a property line dispute, tax increases, property reassessment, pending special assessment, zoning violations, or easements; the site of a proposed public project; or designated as a historic site. A "catch-all" inquiry requires identification of "other defects affecting the property." Owners must explain all "yes" answers.

    Under chapter 709, "defect" is defined as "a condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the prem-ises."8 The vast majority of defects requiring disclosure are structural and easily identifiable. For example, most cases deal with calamities such as water seepage, cracks in the foundation or walls, rot, or termites.

    Although the Wisconsin Legislature attempted to cover virtually every conceivable defect scenario via its form, there is no reference in chapter 709 to conditions associated with property that was the site of traumatic events, such as a murder or other criminal activity, suicide, or even alleged haunting by ghosts. While some states mandate disclosure in conjunction with the sale of such "stigmatized" or "psychologically impacted" properties,9 it is unlikely that the Wisconsin Legislature intended to mandate owner disclosure of such conditions. Wisconsin brokers are not required to disclose that a property was the site of a specific act or occurrence if it had no effect on the property's physical condition or structures.10 While Wisconsin appellate courts have yet to consider whether sellers should disclose such conditions,11 it is likely that buyers will bring such scenarios before Wisconsin courts to hone the concept of "defect" unless the Legislature amends chapter 709 to address such conditions.

    Remedies: Not Just Rescission. Under chapter 709, a buyer has a right to rescind a transaction in four preclosing situations: 1) if the disclosure report is not received from the seller within 10 days; 2) if the report discloses a defect; 3) if the report is incomplete; or 4) if an amended report discloses a defect.12 Although other states' disclosure laws provide remedies other than rescission for violations,13 Wis. Stat. section 709.05(4) provides that "[t]he right to rescind under this section is the only remedy under this chapter."

    But "giving the house back" is not the only remedy deceived buyers have for nondisclosure claims based on common law causes of action (such as misrepresentation) or the violation of statutes other than chapter 709. The Wisconsin Court of Appeals has noted that "it would make no sense" to restrict defrauded home buyers to rescission and deprive them of the right to monetary damages.14 As such, buyers have asserted claims such as breach of contract/warranty and misrepresentation. Recently, buyers have increasingly resorted to two statutes with some teeth: Wis. Stat. sections 895.80 ("Property damage or loss") and 100.18 ("Fraudulent representations").

    Section 895.80 provides a cause of action against one who engages in intentional conduct that causes damage. A prevailing plaintiff is entitled to treble damages and reasonable investigation and litigation costs,15 which courts have ruled include attorney fees.16 The statute provides a civil remedy for a violation of section 943.20 ("Theft by fraud"), which provides in part that it is illegal for one to obtain title to property through intentional deception. In the context of real estate transfers, a seller may be held liable if it is found that he or she fraudulently obtained buyers' purchase money by inducing a purchase by misrepresenting a property's condition.17

    Section 100.18 prohibits "untrue, deceptive or misleading" communications to the public, including those made in conjunction with real estate sales. The statute "intends to protect the public from all untrue, deceptive or misleading representations made in sales promotions, including representations made in face-to-face sales where no media advertising is involved."18 The statute affords plaintiffs double damages and attorney fees.19

    Upon discovery of an undisclosed defect or condition, buyers sometimes assume that the nondisclosure is prima facie evidence of misrepresentation or a violation of sections 895.80 and 100.18. It is not that easy. A buyer must present evidence that the seller knew or should have known of the severity and duration of the alleged condition.20 Liability is precluded if an owner has no knowledge of an error or omission, or if the error or omission was caused by relying on one of the third parties specified in section 709.02.21 Also, a mere difference between the real estate condition report and the property's actual condition is insufficient to prove misrepresentation.22

    The double and treble damages hammers of sections 895.80 and 100.18 are ominous, especially since the damages to be multiplied are either: 1) the difference between the property's actual fair market value (with disclosure of the defect) and the fair market value of the property as represented; or 2) the cost of remedying the defect.23 Plaintiffs also may seek punitive damages. Thus, sellers who ruminate over whether to tell buyers about their "leaky basement" or other defects should remember that the penalty for deception is much stiffer than getting the house back. The specter of double or treble damages, attorney fees, and punitive damages should make sellers think twice about their disclosure duties.

    Waiver: The Lambert Lesson. Buyers may waive the right to rescind under chapter 709 in writing or by proceeding to closing.24 A buyer also may waive recovery on a misrepresentation claim for nondisclosure of defects when the buyer proceeds to closing after the defects were identified in the condition report. For example, in Lambert v. Hein,25 the buyers sued the seller on claims including misrepresentation and breach of warranty arising out of basement water problems. The condition report disclosed basement dampness. The sellers, sellers' broker, and buyers obtained inspections confirming the water problem. The buyers nonetheless proceeded with closing, despite knowledge of the problem, but reserved the right to require the sellers to place the real estate into the condition disclosed in the condition report.

    The court of appeals affirmed the trial court's rejection of the buyers' claims on the ground that the buyers had waived their right to pursue the claims by proceeding when they had knowledge of the defects, despite the reservation of rights. As to the warranty claims, the court emphasized that the buyers failed to exercise their contractual option to disapprove the sellers' condition report and the fact that the buyers obtained their own inspection. As to the misrepresentation claim, the court noted that "when a buyer learns that a misrepresentation has been made prior to closing, the buyer is no longer deceived and, as a matter of law, can no longer rely upon the prior misrepresentation."26

    The court of appeals subsequently has found that buyers waive their right to assert a misrepresentation claim by closing despite an "as is" clause.27 Buyers also may waive their rights by proceeding to close without complaining of "open and obvious" defects.28 The lesson from Lambert and other waiver cases is that buyers who fail to exercise disapproval clauses and the statutory right to rescind after receipt of the condition report, who fail to heed inspectors' advice, who ignore "as is" clauses, or who turn a blind eye to "open and obvious" defects waive their right to later pursue claims for a seller's failure to disclose defects.

    Blaming Other Parties: Brokers and Attorneys as Targets. The Legislature recognized that sellers may need to defer to experts to identify the existence, nature, and extent of defects. Thus, under chapter 709, a seller may substitute for any required entry in the disclosure report information supplied by a licensed engineer, land surveyor, structural pest control operator, qualified third party as defined by Wis. Stat. section 452.23(2), or a contractor about matters within the scope of a contractor's occupation. An owner will not be liable if an error or omission in a condition disclosure report is based on information provided by any of these parties.29 But what happens when sellers turn to their broker or attorney for advice with respect to disclosure of defects? Brokers and attorneys may find themselves in precarious situations when they give practical advice on filling out the disclosure form.

    "My Broker Made Me Do It." Chapter 709 gives brokers relief by decreasing their exposure in their role as a conduit between seller and buyer. Buyers get representations straight from the seller, lessening the chances of nondisclosure due to seller-to-broker miscommunication. But this does not stop some sellers from blaming their broker when buyers allege misrepresentation.

    Sometimes sellers think that a defective condition need not be disclosed because their broker "told us we didn't have to disclose that." But sellers cannot use their broker as a shield. For example, assume this hypothetical: In 1992 homeowners discover basement water seepage. It comes and goes over the ensuing years. In 2002 they decide to sell and tell their broker of the seepage. Even though it constitutes a defect or material adverse condition, they ask the broker not to disclose it. What should the broker do?

    There are three reasons the broker should disclose the seepage, regardless of client loyalty. First, if the seepage is a "material adverse fact" that cannot be discovered by a buyer's "reasonably vigilant observation," the broker is under a duty to disclose it.30 Second, Wis. Stat. section 452.133 mandates broker disclosure because the sellers' request that the broker not disclose the seepage is a "material adverse fact" in that it reflects that the seller "does not intend to meet his or her obligations under a contract or agreement made concerning the transaction."31 Finally, brokers have a duty to disclose information that is inconsistent with condition report information.32

    The only time a seller client is "off the hook" and can legitimately blame the broker is if the broker made a misrepresentation without the seller's knowledge. However, the seller may be liable if the seller knows or should know of the misrepresentation and does nothing about it or the broker repeats a misrepresentation made to him or her by the seller.33

    "My Attorney Made Me Do It." Homeowners often consult with an attorney in conjunction with a sale. While attorneys performing legal services are not subject to the rules governing brokers,34 attorneys still must be cautious about the extent of their involvement in disclosure decisions. Many sellers have questions about the purpose of the condition report, the statute mandating it, and the report form's language. Many sellers also ask attorneys whether a condition is a defect that should be disclosed on the report form. This may put an attorney in an uncomfortable situation.

    For example, what if a client asks an attorney whether basement seepage encountered in 1992 should be disclosed? The attorney says it should. The clients ignore the advice and submit the form without disclosing the seepage. Does the attorney have an ethical obligation to inform the buyer of the nondisclosure? Supreme Court Rule 20:4.1, which requires an attorney to disclose "a material fact to a third person" to avoid assisting a client's fraud, mandates informing the buyer. The attorney is not bound to confidentiality if the client's nondisclosure constitutes a fraudulent act that may result in "substantial injury" to a buyer's financial interest.35

    Broker

    Brokers' Duties of Disclosure and Inspection. Although enactment of chapter 709 took pressure off brokers by placing the disclosure onus on sellers, brokers have long had a common law duty to not mislead or deceive purchasers.36 In 1994 brokers became subject to specific statutory disclosure requirements. Pursuant to Wis. Stat. section 452.133, a broker must disclose to each party all material adverse facts that the broker knows and that the other party does not know or cannot discover through reasonably vigilant observation, unless the disclosure of a material adverse fact is prohibited by law.37

    Brokers are required to conduct "a reasonably competent and diligent inspection" of the property to detect observable, material adverse facts. A broker who becomes aware of information suggesting the possibility of material adverse facts is to disclose the information to the parties in writing, recommend that the parties obtain experts to investigate and, if asked by the parties, draft appropriate inspection contingencies. A broker's disclosure obligation includes the property's condition and other material adverse facts in the transaction.38

    "Adverse fact" is a condition or occurrence that significantly and adversely affects the property's value, significantly reduces the structural integrity of improvements, or presents a significant health risk to the property's occupants. "Material adverse fact" is an adverse fact that is of such significance that it affects a party's decision to enter into a real estate contract or affects a party's decision as to the terms of such contract.39

    Reliance on Qualified Third Party. Although a broker is not required to retain an inspector,40 a broker isrelieved from the duties to inspect or disclose property condition information when an inspector is retained.41 If a broker retains an inspector, the broker may rely on the inspection results if he or she delivers the inspection report to all parties.42 But the report does not absolve the broker. The broker still must disclose all facts known by the broker that contradict any information in the seller's disclosure report or the inspector's report.43

    Broker Liability. As with sellers who fail to disclose a defect or engage in misrepresentation, brokers also face liability to buyers. For example, a broker may be liable for misrepresentation when he or she makes a positive representation about an aspect of the property even if the property is sold "as is."44 Claims also have been asserted against brokers under Wis. Stat. section 100.18.45 But that statute only applies to brokers when they have directly made a representation or statement of fact with the knowledge that it is "untrue, deceptive or misleading."46 Although double damages are available against a broker, the statute excludes recovery of attorney fees from a broker.47

    Brokers are not absolute guarantors of seller disclosure. While they certainly are in a better position than buyers to ascertain defects, their involvement does not make them an automatic target. The buyer still must prove that the broker, in a case where he or she did not defer to a third-party inspector, failed to disclose a material adverse fact that could not be observed by a buyer's "reasonably vigilant observation."

    Home Inspector Duties

    Home Inspector Act and Regulations. Home inspectors have experienced a boon. Many homebuyers now insist on a home inspection contingency.48 More sellers and brokers defer to inspectors to fulfill their disclosure duties,49 and mortgage lenders more frequently are requiring inspections.

    Some commentators have clamored for mandatory home inspection legislation.50 That day has not come in Wisconsin and the vast majority of other states. Yet the Wisconsin Legislature recognized that the profusion of residential real estate inspections created a need for regulation. Thus, the legislature enacted statutes in 1997 governing home inspectors.51 The Home Inspector Act requires inspector registration and outlines the parameters for inspections, reports, and liability. The Department of Regulation and Licensing has also promulgated practice standards for home inspectors.52

    Scope of Inspection and Report. A home inspector's focus is on "observable systems and components of improvements to residential real property that are readily accessible."53 Although the inspector is to conduct a "reasonably competent and diligent inspection" to detect "observable conditions," the inspection is not required to be "technically exhaustive."

    A home inspector is required to inspect virtually every component in a residence, including foundations, roofs, plumbing, heating and electrical systems, insulation, and ventilation. The regulations outline standards for inspection of these items.54 The inspector is not required to enter dangerous areas on the property; move objects that obstruct visibility; inspect for rodents, underground items, or hazardous substances; or disassemble any component, except to remove access panels normally removed by an occupant.

    Home Inspector Disclosure: "Material Adverse Facts." After conducting the inspection, the inspector is required to submit a report to the client that describes the condition of inspected items and discloses those conditions "that, if not repaired, will have a significant adverse effect on the life expectancy of the identified item." The inspector also must disclose "any material adverse facts" that the inspector has knowledge of or has observed.55 The inspector's duty differs from a broker's duty in that the inspector must disclose facts regardless of whether they can be observed by a buyer's "reasonably vigilant observation."

    "Material adverse fact" under the Home Inspector Act is a condition or occurrence that significantly reduces "the functionality or structural integrity of components or systems" or poses "a significant health or safety risk to occupants."56 This definition of "material adverse fact" differs from that applicable to brokers.57 Although both contain the structural integrity and health risk facets, the home inspector's definition does not subsume conditions "adversely affecting the value of the property." Indeed, an inspector may not report as to the market value or marketability of a property or whether a property should be purchased.58

    The inspector is not required to offer a warranty or guarantee of any kind or to predict future conditions, including the potential for failure of a component, and is not required to report on an item's life expectancy, the reason for the necessity of a major repair, or suggested repair methods. The inspector is not required to retain inspectors to investigate any "material adverse facts" the inspector has knowledge of.59

    Home Inspector Liability. The Wisconsin Court of Appeals has held that a real estate appraiser not in privity with a buyer may be liable for a negligent appraisal.60 Although a home inspector's liability is limited to the parties "to the transaction for which the home inspection is conducted,"61 Wisconsin appellate courts have not ruled on whether, and under what circumstances, a seller's home inspector may be held liable to a buyer. However, the precedent of appraiser third-party liability and the analogous relationship between appraisers and inspectors make it conceivable that a seller's negligent home inspector may face liability to a buyer if the seller consented to release of the inspection report. In any event, inspectors may not circumvent this potential liability by including a liability disclaimer in their contracts or reports.62

    Home inspectors have more procedural insulation from liability than sellers or brokers. An action against a home inspector must be initiated within two years after the inspection. This period may not be reduced by agreement.63 The two-year limitation period is a victory for home inspectors. Making the trigger point the date of inspection completion rather than discovery is also a victory because many undisclosed defects or conditions may not be discovered for years.

    Because of the Home Inspector Act's recent vintage, it has not yet been the subject of appellate court interpretation. But issues certainly will arise as the statute's mandates are put into practice. For example, what if a client, knowing of a crack in the foundation and consequent seepage, tells an inspector to exclude that information from a report? The home inspector has a predicament. A home inspector is normally required to report "water penetration."64 However, the regulations allow inspectors to exclude a component, such as the foundation, from inspection if requested to do so by the client.65 But honoring the client's nondisclosure request seems to contravene the inspector's duty to report "any material adverse facts that a home inspector has knowledge of."66

    Mark R. HinkstonMark R. Hinkston, Creighton 1988 cum laude, practices business litigation with Knuteson, Powers & Wheeler S.C., Racine. He is admitted to practice in Wisconsin, Missouri, Kansas, and Colorado. You can reach him at mhinkston@kpwlaw.com.

    A home inspector is prohibited from providing an inspection report to a third party without the client's consent.67 What if the client, not happy with the many defects disclosed in a report, decides to conceal the report from buyers? The home inspector statutes and regulations appear to impose no duty on an inspector to rectify the concealment by notifying the buyers. Conversely, if a client requests that a report be turned over to a buyer and the inspector refuses to do so, the inspector may face disciplinary action.68

    Obviously, the possibility that an inspector will misrepresent a property's condition is more remote than the possibility that a seller or broker will engage in such activity. The seller and broker, compensated by sale proceeds and commissions respectively, generally would have more financial motive than the inspector, paid a flat fee or by the hour. But in the improbable but possible circumstance in which a rogue inspector does conspire with a seller, broker, or lender, a plaintiff contemplating legal action must be aware of the stringent statute of limitation, the early trigger date, and the mandate that liability only extends to parties to the transaction.

    Conclusion

    Purchasing a home is a big event rife with emotion. At the first sign of post-closing dampness, flood, rot, or termites, that "nice couple who sold us the house, their great broker, and that diligent home inspector" can instantly become, in the eyes of disgruntled buyers, "those lying scoundrels who ripped us off." The buyers may be inclined to assume that all of these parties breached their disclosure duties. Understanding the respective duties and standards applicable to the players in residential sales affords buyers and their attorneys a more logical approach to analyze whether, and against whom, a claim may lie.

    Attorneys counseling sellers should encourage overdisclosure rather than underdisclosure, promote third party expert inspections, urge clients to fill out the condition reports based on the clients' personal knowledge, and never countenance misrepresentation. Sellers who are aware of their disclosure duties and who heed their attorney's advice via full disclosure can drive away from the closing with peace of mind. Buyers who take advantage of an inspection contingency, follow up on suspected defects, use inspection experts, and close only after being convinced that all known or discoverable defects have been disclosed, can sleep well at night in their new home. If there are undisclosed defects that manifest later, Wisconsin's laws governing the conduct of owners, brokers, and home inspectors provide some solace and remedy.

    Endnotes

    11991 Wis. Act 162. A majority of states have followed suit by mandating seller disclosure.

    2 Ollerman v. O'Rourke Co., 94 Wis. 2d 17, 29, 288 N.W.2d 95, 101 (1980).

    3 Pines v. Perssion, 14 Wis. 2d 590, 596, 111 N.W.2d 409, 412 (1961).

    4 Ollerman, 94 Wis. 2dat 30-31, 288 N.W.2d at 102.

    5 Wis. Stat. §§ 709.01(1), .02. Excluded from the disclosure requirements are transfers of properties that have never been inhabited, those exempt from the real estate transfer fee, and transfers made by certain fiduciaries. Wis. Stat. § 709.01(2).

    6 Debra Peterson Conrad, Truth or Consequences? Residential Seller Disclosure Law, Wis. Law., Aug. 1992, at 9.

    7 Wis. Stat. § 709.03. Note that the buyer may waive the right to receive the form. Wis. Stat. § 709.08. To access the form online, go to www.wisbar.org and click on WI Statutes under the Legal Resources heading on the left side of the page.

    8 Wis. Stat. § 709.03.

    9 See Robert W. Washburn, Residential Real Estate Disclosure Legislation, 44 DePaul L. Rev. 381, 447-48 (1995); Daivia S. Kasper, Ohio's Homeowner Disclosure Law, 45 Case W. Res. L. Rev. 1149, 1178 (1995).

    10 Wis. Stat. § 452.23. Brokers are also not required to disclose that a particular person is registered as a sex offender, unless a client requests such information. See Wis. Stat. §§ 452.23(2)(d), .24(1). The broker is immune from liability for disclosure of said information if he or she provides written notice that the person may obtain sex offender registry information from the department of corrections. Wis. Stat. § 452.24(2).

    11 But see Green Spring Farms v. Spring Green Farm Assoc. Ltd. Partnership, 172 Wis. 2d 28, 492 N.W.2d 392 (Ct. App. 1992) (affirming denial of seller's motion for summary judgment in case involving failure to disclose salmonella contamination on farm).

    12 Wis. Stat. §§ 709.02, .05.

    13 Kasper, supra n. 9, at 1165.

    14 Stathus v. Horst, No. 00-0933 (Wis. Ct. App. Apr. 10, 2001) (unpublished opinion).

    15 Wis. Stat. § 895.80(3).

    16 See, e.g., Stathus, No. 00-0933 (buyers alleged claim for misrepresentation under Wis. Stat. § 895.80 arising out of nondisclosure of basement water problems and underground spring).

    17 Id.

    18 Grube v. Daun, 173 Wis. 2d 30, 57, 496 N.W.2d 106, 116 (1992).

    19 Wis. Stat. § 100.18(11)(b).

    20 Schmelzle v. Ade, No. 98-1406 (Wis. Ct. App. Oct. 14, 1998) (unpublished opinion).

    21 Wis. Stat. § 709.07.

    22 See Schmelzle, No. 98-1406.

    23 Wis. JI - Civil 2405 ("Intentional Misrepresentation: Measure of Damages in Actions Involving Sale [Exchange] of Property (Benefit of the Bargain)").

    24 Wis. Stat. § 709.08.

    25 Lambert v. Hein, 218 Wis. 2d 712, 582 N.W.2d 84 (Ct. App. 1998) (review denied).

    26 Id. at 732, 582 N.W.2d at 92 (quoting Foss v. Madison Twentieth Century Theaters Inc., 203 Wis. 2d 210, 218-19, 551 N.W.2d 862, 865-66 (Ct. App. 1996)). See also Walker v. O'Brien, No. 00-3046 (Wis. Ct. App. Nov. 20, 2001) (unpublished opinion) (holding that buyers waived claims arising out of sellers' failure to disclose basement water seepage when they closed transaction with knowledge of the defects obtained from independent inspector).

    27 Lunde v. Chase, No. 98-0716 (Wis. Ct. App. Jan. 6, 1999) (unpublished opinion) (holding that buyers waived their claims by proceeding to close when sellers had disclosed 13 of 28 different defects on condition report and added the words "Sold: AS IS" on report).

    28 See, e.g., Moilanen v. Nippoldt, No. 96-1293 (Wis. Ct. App. Nov. 9, 1996) (unpublished opinion) (denying recovery to buyers when sagging floor and malfunctioning patio door, despite not being identified in condition report, were so "open and obvious" that there could be no reasonable or justifiable reliance on representations in condition report).

    29 Wis. Stat. §§ 709.02, .07.

    30 Wis. Stat. § 452.133.

    31 Wis. Admin. Code § RL 24.02(1)(b) (definition of "adverse fact").

    32 Wis. Admin. Code § RL 24.07(6).

    33 Wis. Stat. § 452.139(2)(a).

    34 See Wis. Stat. § 452.01(3)(h) ("Broker" does not include "[a]ttorneys licensed to practice in this state while acting within the scope of their attorney's license").

    35 SCR 20:1.6(b).

    36 Lien v. Pitts, 46 Wis. 2d 35, 46, 174 N.W.2d 462, 468 (1970).

    37 An example of information that may not be disclosed is a seller's minimum sale price. Wis. Admin. Code § RL 24.07(2).

    38 Wis. Admin. Code § RL 24.07.

    39 Wis. Admin. Code § RL 24.02(1), (12).

    40 Wis. Admin. Code § RL 24.07(1)(d).

    41 Wis. Stat. § 452.23(2)(c); Wis. Admin. Code § RL 24.07(5). See also Conell v. Coldwell Banker Premier Real Estate Inc., 181 Wis. 2d 894, 900, 512 N.W.2d 239, 242 (Ct. App. 1994).

    42 Wis. Admin. Code § RL 24.07(5)

    43 Wis. Admin. Code § RL 24.07(6).

    44 See Grube v. Daun, 173 Wis. 2d 30, 496 N.W.2d 106 (1992).

    45 Id. at 62-63, 496 N.W.2d at 118.

    46 Wis. Stat. § 100.18(12)(b).

    47 Wis. Stat. § 100.18(11)(b).

    48 Alan J. Heavens, Home Inspector Popularity Increasing, Milw. J. Sent., Nov. 8, 1999.

    49 Although not expressly referenced, it is presumed that home inspectors would be included within the category of individuals to whom sellers and brokers may defer in satisfying their disclosure obligations (pursuant to Wis. Stat. §§ 709.02 and 452.23(2)(c)). The exclusion is likely due to the fact that the Home Inspector Act was promulgated after the seller and broker disclosure statutes went into effect.

    50 Washburn, supra n. 9, at 453.

    51 1997 Wis. Act 81, Wis. Stat. § 440.97 et seq.

    52 Wis. Admin. Code § RL 134.01 et seq.

    53 Wis. Stat. §§ 440.97(4), .975(2); Wis. Admin. Code § RL 134.02(1)-(2).

    54 Wis. Admin. Code § RL 134.03.

    55 Wis. Stat. § 440.975(3); Wis. Admin. Code § RL 134.04(1)(e).

    56 Wis. Admin. Code § RL 131.02(17).

    57 See supra n. 39.

    58 Wis. Admin. Code § RL 134.04(3)(a)-(b)

    59 Wis. Admin. Code §§ RL 134.02(2)(a), (2)(j), .04(2)(a)-(c), (4).

    60 Costa v. Neimon, 123 Wis. 2d 410, 414, 366 N.W.2d 896, 899 (Ct. App. 1985).

    61 Wis. Stat. § 440.977.

    62 Wis. Stat. § 440.976.

    63 Wis. Stat. § 440.977.

    64 Wis. Admin. Code § RL 134.03(8)(a)6.

    65 Wis. Admin. Code § RL 134.02(3)(b).

    66 Wis. Admin. Code § RL 134.04(1)(e).

    67 Wis. Stat. § 440.975(7)(b).

    68 Wis. Stat. § 440.978(2)(j).



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