Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB918 Compare Versions

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Version 2 (New)

Old	New		Differences
1		-	Date of enactment:
2		-	2023 Assembly Bill 918 Date of publication*:
3		-	2023 WISCONSIN ACT
4		-	AN ACT to renumber 452.14 (2); to amend 452.14 (4m) (a), 452.14 (4r), 452.17 (1), 452.17 (3), 452.19 (1), 452.23
5		-	(title) and 452.23 (4); and to create 452.14 (2) (b), 452.14 (3) (im), 452.23 (5) and 710.13 of the statutes; relating
6		-	to: various changes regarding the laws governing real estate practice, disclosures regarding real property whole-
7		-	salers, and providing a penalty.
8		-	The people of the state of Wisconsin, represented in
9		-	senate and assembly, do enact as follows:
10		-	SECTION 4. 452.14 (2) of the statutes is renumbered
11		-	452.14 (2) (a).
12		-	SECTION 5. 452.14 (2) (b) of the statutes is created to
13		-	read:
14		-	452.14 (2) (b) The board shall notify a firm in writing
15		-	as to all disciplinary orders issued against a licensee asso-
16		-	ciated with the firm. The notice shall be sent to the firm
17		-	at the email address of the individual broker acting as a
18		-	sole proprietor or the email address for the licensed busi-
19		-	ness entity.
20		-	SECTION 7. 452.14 (3) (im) of the statutes is created
21		-	to read:
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	2	+	MED&KRP:klm&emw
	3	+	2023 - 2024 LEGISLATURE
	4	+	2023 ASSEMBLY BILL 918
	5	+	January 5, 2024 - Introduced by Representatives KRUG, ALLEN, BROOKS, DALLMAN,
	6	+	MURPHY, O'CONNOR and ORTIZ-VELEZ, cosponsored by Senators JAGLER, AGARD
	7	+	and FEYEN. Referred to Committee on Housing and Real Estate.
	8	+	*AUTHORS SUBJECT TO CHANGE*
	9	+	AN ACT to renumber 452.14 (2); to renumber and amend 452.14 (4m) (a); to
	10	+	amend 452.01 (5g), 452.14 (4r), 452.17 (1), 452.17 (3), 452.19 (1), 452.23 (title)
	11	+	and 452.23 (4); to repeal and recreate 452.23 (3); and to create 452.07 (4),
	12	+	452.12 (5) (e), 452.14 (2) (b), 452.14 (2) (c), 452.14 (3) (im), 452.14 (4m) (a) 1.,
	13	+	452.23 (5) and 710.13 of the statutes; relating to: various changes regarding
	14	+	the laws governing real estate practice, disclosures regarding real property
	15	+	wholesalers, and providing a penalty.
	16	+	Analysis by the Legislative Reference Bureau
	17	+	This bill 1) revises the law governing the practice of real estate by real estate
	18	+	brokers and salespersons (real estate practice law) and 2) requires real property
	19	+	wholesalers to provide certain disclosures to other parties involved in residential
	20	+	real property transactions.
	21	+	CHANGES REGARDING REAL ESTATE PRACTICE LAW
	22	+	Current law regulates the practice of real estate, which can only be practiced
	23	+	by real estate brokers and real estate salespersons. Real estate brokers and
	24	+	salespersons (licensees) are licensed by the Real Estate Examining Board, which is
	25	+	attached to the Department of Safety and Professional Services. A real estate
	26	+	broker's license may be issued to either an individual or a business entity. The bill
	27	+	makes various changes to real estate practice law, described in further detail as
	28	+	follows:
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	37	+	ASSEMBLY BILL 918
	38	+	Disclosures
	39	+	Current law imposes on a real estate firm providing brokerage services to a
	40	+	party to a transaction the duty to timely disclose in writing all material adverse facts
	41	+	that the firm knows and that the party does not know or cannot discover through
	42	+	reasonably vigilant observation, unless the disclosure of a material adverse fact is
	43	+	prohibited by law. The law defines both “adverse fact” and “material adverse fact.”
	44	+	Furthermore, each licensee associated with a firm owes the same duties to a party
	45	+	that the firm owes to that party. Separately, current law contains a requirement that
	46	+	a licensee disclose to the parties to a real estate transaction any facts known by the
	47	+	licensee that contradict any information included in a written real estate condition
	48	+	report. Current law further contains a list of specific types of information that a
	49	+	licensee is not required to disclose.
	50	+	The bill 1) harmonizes the disclosure requirement and the duty described
	51	+	above; 2) clarifies that the “material adverse facts” that licensees have the duty to
	52	+	disclose do not include anything on the list of specified types of information that
	53	+	current law provides are exempt from needing to be disclosed; 3) prohibits the board
	54	+	from promulgating rules that conflict with these provisions or that mandate
	55	+	additional disclosures; and 4) provides that a licensee that in good faith provides
	56	+	information attributable to a state or local governmental or quasi-governmental
	57	+	entity may not be held civilly liable if that information is subsequently determined
	58	+	to be inaccurate.
	59	+	Discipline and licenses
	60	+	The bill makes various changes pertaining to the discipline of licensees,
	61	+	including the following:
	62	+	1. The bill requires the board to notify a real estate brokerage firm in writing
	63	+	as to all investigations and disciplinary proceedings and actions that are related to
	64	+	a licensee associated with that firm, including the contents of any administrative
	65	+	warning issued by the board. The bill also provides that if an application for renewal
	66	+	of a license issued to a licensee who is associated with a firm is not filed with the board
	67	+	on or before the renewal date or if the renewal is not granted, DSPS must notify the
	68	+	firm.
	69	+	2. The bill expressly provides that a real estate brokerage firm is not
	70	+	responsible for ensuring compliance with, or for the monitoring of, any license
	71	+	limitations set forth by the board of a broker or salesperson associated with that firm.
	72	+	3. Current law contains a list of prohibitions, violations of which subject a
	73	+	licensee to professional discipline. Current law further allows the board to assess a
	74	+	forfeiture of not more than $1,000 for such violations. The bill raises the maximum
	75	+	forfeiture that the board may assess for a number of these violations to $5,000.
	76	+	Criminal penalties
	77	+	Under current law, any person who engages in or follows the business or
	78	+	occupation of, or advertises or holds himself or herself out as or acts temporarily or
	79	+	otherwise as, a broker or salesperson in this state without a license or who otherwise
	80	+	violates the real estate practice law may be fined not more than $1,000 or imprisoned
	81	+	for not more than six months or both. The bill raises the maximum criminal fine for
	82	+	violations to $5,000. The bill does not affect the maximum term of imprisonment. - 3 -2023 - 2024 Legislature
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	85	+	ASSEMBLY BILL 918
	86	+	DISCLOSURES REGARDING REAL PROPERTY WHOLESALERS
	87	+	The bill requires a real property wholesaler to provide certain disclosures to
	88	+	other parties involved in a real property transaction. Under the bill, “real property
	89	+	wholesaler" is defined as a person that enters into a purchase agreement as a buyer
	90	+	and intends to sell the person's rights as buyer to a third party, and “purchase
	91	+	agreement” is defined as a contract for the sale, exchange, option, rental, or purchase
	92	+	of residential real property that includes one to four dwelling units.
	93	+	The bill requires a real property wholesaler, no later than entering into a
	94	+	purchase agreement as a buyer, to provide written notice to the seller that the buyer
	95	+	is a real property wholesaler. Under the bill, if the real property wholesaler fails to
	96	+	provide the notice, the seller may rescind the purchase agreement at any time before
	97	+	the closing and retain any deposits or option fees paid by the real property
	98	+	wholesaler.
	99	+	In addition, if the real property wholesaler contracts to sell its interest in the
	100	+	purchase agreement to a third party, the bill requires the real property wholesaler,
	101	+	no later than entering into the contract, to provide written notice to the third party
	102	+	that the real property wholesaler is a real property wholesaler that holds an
	103	+	equitable interest in the property as a buyer under the purchase agreement and that
	104	+	the real property wholesaler is conveying its interest in the purchase agreement, not
	105	+	title to the property. Under the bill, if the real property wholesaler fails to provide
	106	+	the notice, the third party may rescind the contract at any time before the closing and
	107	+	is entitled to the return of any deposits or option fees paid by the third party.
	108	+	Because this bill creates a new crime or revises a penalty for an existing crime,
	109	+	the Joint Review Committee on Criminal Penalties may be requested to prepare a
	110	+	report.
	111	+	Because this bill may increase or decrease, directly or indirectly, the cost of the
	112	+	development, construction, financing, purchasing, sale, ownership, or availability of
	113	+	housing in this state, the Department of Administration, as required by law, will
	114	+	prepare a report to be printed as an appendix to this bill.
	115	+	The people of the state of Wisconsin, represented in senate and assembly, do
	116	+	enact as follows:
	117	+	SECTION 1. 452.01 (5g) of the statutes is amended to read:
	118	+	452.01 (5g) “Material adverse fact" means an adverse fact that a party
	119	+	indicates is of such significance, or that is generally recognized by a competent
	120	+	licensee as being of such significance to a reasonable party, that it affects or would
	121	+	affect the party's decision to enter into a contract or agreement concerning a
	122	+	transaction or affects or would affect the party's decision about the terms of such a
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	130	+	SECTION 1 ASSEMBLY BILL 918
	131	+	contract or agreement. “Material adverse fact” does not include anything specified
	132	+	in s. 452.23 (2) (a), (c), or (d).
	133	+	SECTION 2. 452.07 (4) of the statutes is created to read:
	134	+	452.07 (4) The board may not promulgate rules regarding disclosures by
	135	+	brokers or salespersons that conflict with s. 452.23 or that require disclosures beyond
	136	+	what is required under s. 452.23.
	137	+	SECTION 3. 452.12 (5) (e) of the statutes is created to read:
	138	+	452.12 (5) (e) If an application for renewal of a license issued to a licensee who
	139	+	is associated with a firm is not filed with the board on or before the renewal date or
	140	+	if the renewal is not granted, the department shall notify the firm with which the
	141	+	licensee is associated.
	142	+	SECTION 4. 452.14 (2) of the statutes is renumbered 452.14 (2) (a).
	143	+	SECTION 5. 452.14 (2) (b) of the statutes is created to read:
	144	+	452.14 (2) (b) The board shall notify a firm in writing as to all investigations
	145	+	and disciplinary proceedings and actions that are related to a licensee associated
	146	+	with the firm. Notwithstanding s. 440.205, a notice shall include the contents of any
	147	+	administrative warning issued under s. 440.205. A notice shall be made to the
	148	+	mailing address of the firm and to the email address of the individual broker acting
	149	+	as a sole proprietor or the email address for the licensed business entity.
	150	+	SECTION 6. 452.14 (2) (c) of the statutes is created to read:
	151	+	452.14 (2) (c) A firm is not responsible for ensuring compliance with, or for the
	152	+	monitoring of, any license limitations set forth by the board of a licensee associated
	153	+	with the firm.
	154	+	SECTION 7. 452.14 (3) (im) of the statutes is created to read:
22	155		452.14 (3) (im) Violated s. 710.13 (2).
23		-	SECTION 8m. 452.14 (4m) (a) of the statutes is
24		-	amended to read:
25		-	452.14 (4m) (a) Assess against a licensee a forfeiture
26		-	of not more than $1,000 $5,000 for each violation enu-
27		-	merated under sub. (3).
28		-	SECTION 10. 452.14 (4r) of the statutes is amended
29		-	to read:
30		-	452.14 (4r) The board may assess against a licensee
31		-	who is an individual a forfeiture of $1,000 $5,000 for a
32		-	violation under s. 452.25 (2) (a).
33		-	SECTION 11. 452.17 (1) of the statutes is amended to
34		-	read:
35		-	452.17 (1) Any person who engages in or follows the
36		-	business or occupation of, or advertises or holds himself
37		-	or herself out as or acts temporarily or otherwise as, a bro-
38		-	ker or salesperson in this state without a license under this
39		-	chapter shall be prosecuted by the district attorney in the
40		-	county where the violation occurs or by the attorney gen-
41		-	eral and may be fined not more than $1,000 $5,000 or
42		-	imprisoned not more than 6 months or both.
43		-	SECTION 12. 452.17 (3) of the statutes is amended to
44		-	read:
45		-	452.17 (3) Any person who otherwise violates any
46		-	provision of this chapter may be fined not more than
47		-	$1,000 $5,000 or imprisoned for not more than 6 months
48		-	or both.
49		-	SECTION 13. 452.19 (1) of the statutes is amended to
50		-	read:
51		-	452.19 (1) No licensee may pay a fee or a commis-
52		-	sion or any part thereof for performing any act specified
53		-	in this chapter or as compensation for a referral or as a
54		-	finder’s fee to any person who is not licensed under this
55		-	chapter or who is not regularly and lawfully engaged in
56		-	the real estate brokerage business in another state, a terri-
57		-	tory or possession of the United States, or a foreign coun-
58		-	* Section 991.11, WISCONSIN STATUTES: Effective date of acts. “Every act and every portion of an act enacted by the legislature over the governor’s
59		-	partial veto which does not expressly prescribe the time when it takes effect shall take effect on the day after its date of publication.” − 2 −2023 Wisconsin Act 2023 Assembly Bill 918
60		-	try, unless the person was licensed under this chapter
61		-	when the commission was earned or when the referral fee
62		-	arrangement was made.
63		-	SECTION 14. 452.23 (title) of the statutes is amended
64		-	to read:
65		-	452.23 (title) Disclosures, investigations and
66		-	inspections by brokers and salespersons.
67		-	SECTION 16. 452.23 (4) of the statutes is amended to
68		-	read:
69		-	452.23 (4) In performing an investigation or inspec-
70		-	tion and in making a disclosure in connection with a real
71		-	estate transaction, a licensee shall exercise the degree of
72		-	care expected to be exercised by a reasonably prudent
73		-	person who has the knowledge, skills, and training
74		-	required for licensure under this chapter.
75		-	SECTION 17. 452.23 (5) of the statutes is created to
76		-	read:
77		-	452.23 (5) A licensee that in good faith provides
78		-	information attributable to a state or local governmental
79		-	or quasi−governmental entity, including an agency,
80		-	department, board, commission, bureau, or division, or a
81		-	military or public safety organization, may not be held
82		-	civilly liable if that information is subsequently deter-
83		-	mined to be inaccurate, unless the licensee knew the
84		-	information was inaccurate at the time the licensee pro-
85		-	vided the information. For the purpose of any proceed-
86		-	ing, the good faith shall be presumed.
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	183	+	SECTION 8
	184	+	ASSEMBLY BILL 918
	185	+	SECTION 8. 452.14 (4m) (a) of the statutes is renumbered 452.14 (4m) (a) (intro.)
	186	+	and amended to read:
	187	+	452.14 (4m) (a) (intro.) Assess a forfeiture against a licensee a as follows:
	188	+	2. A forfeiture of not more than $1,000 for each violation enumerated under
	189	+	sub. (3) that is not enumerated under subd. 1.
	190	+	SECTION 9. 452.14 (4m) (a) 1. of the statutes is created to read:
	191	+	452.14 (4m) (a) 1. A forfeiture of not more than $5,000 for each violation
	192	+	enumerated under sub. (3) (a), (b), (c), (d), (f), (h), (i), (im), (j), (jm), (k), or (n).
	193	+	SECTION 10. 452.14 (4r) of the statutes is amended to read:
	194	+	452.14 (4r) The board may assess against a licensee who is an individual a
	195	+	forfeiture of $1,000 $5,000 for a violation under s. 452.25 (2) (a).
	196	+	SECTION 11. 452.17 (1) of the statutes is amended to read:
	197	+	452.17 (1) Any person who engages in or follows the business or occupation of,
	198	+	or advertises or holds himself or herself out as or acts temporarily or otherwise as,
	199	+	a broker or salesperson in this state without a license under this chapter shall be
	200	+	prosecuted by the district attorney in the county where the violation occurs or by the
	201	+	attorney general and may be fined not more than $1,000 $5,000 or imprisoned not
	202	+	more than 6 months or both.
	203	+	SECTION 12. 452.17 (3) of the statutes is amended to read:
	204	+	452.17 (3) Any person who otherwise violates any provision of this chapter may
	205	+	be fined not more than $1,000 $5,000 or imprisoned for not more than 6 months or
	206	+	both.
	207	+	SECTION 13. 452.19 (1) of the statutes is amended to read:
	208	+	452.19 (1) No licensee may pay a fee or a commission or any part thereof for
	209	+	performing any act specified in this chapter or as compensation for a referral or as
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	236	+	SECTION 13 ASSEMBLY BILL 918
	237	+	a finder's fee to any person who is not licensed under this chapter or who is not
	238	+	regularly and lawfully engaged in the real estate brokerage business in another
	239	+	state, a territory or possession of the United States, or a foreign country, unless the
	240	+	person was licensed under this chapter when the commission was earned or when
	241	+	the referral fee arrangement was made.
	242	+	SECTION 14. 452.23 (title) of the statutes is amended to read:
	243	+	452.23 (title) Disclosures, investigations and inspections by brokers
	244	+	and salespersons.
	245	+	SECTION 15. 452.23 (3) of the statutes is repealed and recreated to read:
	246	+	452.23 (3) (a) A licensee shall, except as provided in par. (b), disclose in writing
	247	+	to a party to a real estate transaction all material adverse facts known by the licensee
	248	+	that the party does not know or cannot discover through reasonably vigilant
	249	+	observation.
	250	+	(b) Paragraph (a) does not require the disclosure of a material adverse fact to
	251	+	a party if any of the following applies:
	252	+	1. The material adverse fact is addressed in a written report described under
	253	+	sub. (2) (b).
	254	+	2. The material adverse fact has otherwise been disclosed to the party in
	255	+	writing.
	256	+	3. Disclosure of the material adverse fact is prohibited by law.
	257	+	SECTION 16. 452.23 (4) of the statutes is amended to read:
	258	+	452.23 (4) In performing an investigation or inspection and in making a
	259	+	disclosure in connection with a real estate transaction, a licensee shall exercise the
	260	+	degree of care expected to be exercised by a reasonably prudent person who has the
	261	+	knowledge, skills, and training required for licensure under this chapter.
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	289	+	SECTION 17
	290	+	ASSEMBLY BILL 918
	291	+	SECTION 17. 452.23 (5) of the statutes is created to read:
	292	+	452.23 (5) A licensee that in good faith provides information attributable to a
	293	+	state or local governmental or quasi-governmental entity, including an agency,
	294	+	department, board, commission, bureau, or division, or a military or public safety
	295	+	organization, may not be held civilly liable if that information is subsequently
	296	+	determined to be inaccurate. For the purpose of any proceeding, the good faith shall
	297	+	be presumed.
87	298		SECTION 18. 710.13 of the statutes is created to read:
88		-	710.13 Disclosures regarding real property
89		-	wholesalers. (1) DEFINITIONS. (a) “Purchase agree-
90		-	ment” means a contract for the sale, exchange, option,
91		-	rental, or purchase of residential real property.
92		-	(b) “Real property wholesaler” means a person that
93		-	enters into a purchase agreement as a buyer and intends
94		-	to assign the person’s rights as buyer under the purchase
95		-	agreement to a 3rd party for consideration.
96		-	(c) “Residential real property” means real property
97		-	in this state that includes one to 4 dwelling units, as
98		-	defined in s. 101.61 (1).
99		-	(2) REQUIRED DISCLOSURES. A real property whole-
100		-	saler shall provide all of the following disclosures:
101		-	(a) No later than entering into a purchase agreement
102		-	as a buyer, written notice to the seller of the residential
103		-	real property that the buyer is a real property wholesaler.
104		-	(b) No later than entering into a contract with a 3rd
105		-	party to assign the real property wholesaler’s rights as
106		-	buyer under a purchase agreement to the 3rd party, writ-
107		-	ten notice to the 3rd party that the assignor is a real prop-
108		-	erty wholesaler that holds an equitable interest in the resi-
109		-	dential real property as a buyer under the purchase
110		-	agreement and that the assignor is conveying the assig-
111		-	nor’s interest in the purchase agreement, not title to the
112		-	residential real property.
113		-	(3) RIGHTS TO RESCIND. (a) If a real property whole-
114		-	saler fails to timely provide the disclosure to a seller as
115		-	required under sub. (2) (a), the seller may rescind the pur-
116		-	chase agreement at any time before the closing, without
117		-	any liability on the seller’s part, by providing written
118		-	notice of rescission to the real property wholesaler, and
119		-	the seller is entitled to retain any deposits or option fees
120		-	paid by the real property wholesaler in connection with
121		-	the transaction.
122		-	(b) If a real property wholesaler fails to timely pro-
123		-	vide the disclosure to a 3rd party assignee as required
124		-	under sub. (2) (b), the assignee may rescind the assign-
125		-	ment of the purchase agreement at any time before the
126		-	closing, without any liability on the assignee’s part, by
127		-	providing written notice of rescission to the real property
128		-	wholesaler, and the assignee is entitled to the return of
129		-	any deposits or option fees paid by the assignee in con-
130		-	nection with the transaction.
131		-	(4) WAIVER PROHIBITED. A person may not waive the
132		-	person’s rights under this section. If the person proceeds
133		-	to closing, the person’s right to rescind under sub. (3) is
134		-	terminated.
	299	+	710.13 Disclosures regarding real property wholesalers. (1)
	300	+	DEFINITIONS. (a) “Purchase agreement” means a contract for the sale, exchange,
	301	+	option, rental, or purchase of residential real property.
	302	+	(b) “Real property wholesaler” means a person that enters into a purchase
	303	+	agreement as a buyer and intends to assign the person's rights as buyer under the
	304	+	purchase agreement to a 3rd party for consideration.
	305	+	(c) “Residential real property" means real property in this state that includes
	306	+	one to 4 dwelling units, as defined in s. 101.61 (1).
	307	+	(2) REQUIRED DISCLOSURES. A real property wholesaler shall provide all of the
	308	+	following disclosures:
	309	+	(a) No later than entering into a purchase agreement as a buyer, written notice
	310	+	to the seller of the residential real property that the buyer is a real property
	311	+	wholesaler.
	312	+	(b) No later than entering into a contract with a 3rd party to assign the real
	313	+	property wholesaler's rights as buyer under a purchase agreement to the 3rd party,
	314	+	written notice to the 3rd party that the assignor is a real property wholesaler that
	315	+	holds an equitable interest in the residential real property as a buyer under the
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	340	+	25 - 8 -2023 - 2024 Legislature LRB-5444/1
	341	+	MED&KRP:klm&emw
	342	+	SECTION 18 ASSEMBLY BILL 918
	343	+	purchase agreement and that the assignor is conveying the assignor's interest in the
	344	+	purchase agreement, not title to the residential real property.
	345	+	(3) RIGHTS TO RESCIND. (a) If a real property wholesaler fails to timely provide
	346	+	the disclosure to a seller as required under sub. (2) (a), the seller may rescind the
	347	+	purchase agreement at any time before the closing, without any liability on the
	348	+	seller's part, by providing written notice of rescission to the real property wholesaler,
	349	+	and the seller is entitled to retain any deposits or option fees paid by the real property
	350	+	wholesaler in connection with the transaction.
	351	+	(b) If a real property wholesaler fails to timely provide the disclosure to a 3rd
	352	+	party assignee as required under sub. (2) (b), the assignee may rescind the
	353	+	assignment of the purchase agreement at any time before the closing, without any
	354	+	liability on the assignee's part, by providing written notice of rescission to the real
	355	+	property wholesaler, and the assignee is entitled to the return of any deposits or
	356	+	option fees paid by the assignee in connection with the transaction.
	357	+	(4) WAIVER PROHIBITED. A person may not waive the person's rights under this
	358	+	section. If the person proceeds to closing, the person's right to rescind under sub. (3)
	359	+	is terminated.
135	360		SECTION 19.0Initial applicability.
136		-	(1) DISCLOSURES REGARDING REAL PROPERTY WHOLE-
137		-	SALERS. The treatment of s. 710.13 first applies to a pur-
138		-	chase agreement or an assignment of a purchase agree-
139		-	ment entered into on the effective date of this subsection.
	361	+	(1) DISCLOSURES REGARDING REAL PROPERTY WHOLESALERS. The treatment of s.
	362	+	710.13 first applies to a purchase agreement or an assignment of a purchase
	363	+	agreement entered into on the effective date of this subsection.
	364	+	(END)
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