(2) Depository institution’s certification. No later than 10 days after opening a real estate trust account a broker firm shall obtain the certification of every depository institution in which the broker firm maintains a real estate trust account attesting to the existence of the account and consenting to the examination and audit of the account by a duly authorized representative of the department or, in the case of interest-bearing common trust accounts maintained for client funds, the department of administration. The certification shall be provided to the department on a form, as required in s. REEB 18.037. 18.037 Form for notification and authorization. A broker firm shall provide the information and authorization as specified in ss. REEB 18.035 and 18.036 on a form provided by the department. This form shall be designated “consent to exame and audit trust account.” Section 27. REEB 18.04, 18.05, 18.06 and 18.07 are amended to read:
REEB 18.04 Authorization to sign trust account checks. A broker firm may authorize other persons to sign real estate trust account checks, share drafts or drafts drawn on the broker’s firm’s real estate trust account if the person is at least 18 years of age.
REEB 18.05 Receipt for earnest money received by the broker licensee. A broker licensee shall indicate on the offer to purchase the receipt of earnest money received from a buyer at the time the offer is drafted.
REEB 18.06 Escrow agreement for earnest money not held by the broker firm. If the parties to a transaction do not desire that the broker firm hold the earnest money in the broker’s firm’s real estate trust account, and wish to designate an escrow agent other than the broker firm, the broker licensee may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney. The broker firm may not hold the funds in the firm’s real estate trust account, nor may the broker firm act in any way as custodian of the funds for the parties. The funds, pursuant to the escrow agreement, shall be held by a party other than the broker firm, such as: a bank, a savings and loan association, a credit union, or an attorney.
REEB 18.07 After closing escrow agreements. (1) By separate agreement. If the parties to a contract wish, or are required, to place funds in escrow which are to be held after closing by the broker firm in the broker’s firm’s trust account or by another person until some future occurrence, an agreement to that effect shall be prepared by the parties or an attorney. If the broker firm holds these funds, the broker firm shall place them in the broker’s firm’s real estate trust account. The broker licensee may draft the escrow agreement if a form for this purpose has been approved by the board for use by licensees pursuant to s. REEB 16.03. (2) On closing statement. A broker firm may hold in the broker’s firm’s trust account without a separate escrow agreement occupancy or possession escrows, escrows for final proration of taxes, and escrows for charges incurred by a seller but not yet billed, provided that the closing statement shows that the broker firm is holding the funds.
Section 28. REEB 18.09 (1) (intro), (2), and (3) are amended to read:
REEB 18.09 Disbursement of trust funds. (1) Proper disbursement. A broker firm who disburses trust funds from the broker’s firm’s real estate trust account under any of the following circumstances shall not be deemed to have violated s. 452.14 (3) (i), Stats.: (2) Notification of disbursement. Prior to making a disbursement of trust funds under sub. (1) (a) where the broker firm has knowledge that not all parties agree that the rejection or withdrawal occurred prior to binding acceptance, and prior to making a disbursement under sub. (1) (e), (f) and (g) where the broker firm has knowledge that either party disagrees with the disbursement, the broker firm shall attempt to notify all parties in writing of the intent to disburse. The notice shall be delivered by certified mail to the parties’ last known addresses and shall state to whom and when the disbursement will be made. The disbursement may not occur until 30 days after the date on which the notice is sent.
(3) Withdrawal of commissions. (a) A broker firm shall withdraw commissions or fees earned by the broker firm from real estate trust accounts maintained by the broker firm within 24 hours after transactions are consummated or terminated, or after the commissions or fees are earned in accordance with the contract involved.
(b) A broker firm providing property management services shall disburse the fee earned for providing property management services as a regular monthly basis unless otherwise agreed in a written property management agreement signed by the parties to that agreement.
Section 29. REEB 18.10 and 18.11 are amended to read:
REEB 18.10 Comingling funds prohibited. (1) Depositable funds. A broker firm shall deposit only real estate trust funds in the broker’s firm’s real estate trust account.
(a) Except for sub. (b), a broker firm shall not commingle the broker’s personal funds or other funds in the real estate trust account.
(b) A broker firm may deposit and maintain a sum not to exceed $300.00 from the broker’s personal funds in any real estate trust account. Such sum shall be specifically identified and deposited to cover service charges relating to the real estate trust account.
(2) Additional funds. A broker firm shall deposit additional personal funds in sums consistent with sub. (1) (b) in the broker’s firm’s real estate trust account within 10 business days following receipt of a statement or other notification from a depository institution that a service charge has been made against the account for which insufficient personal funds are available in the real estate account.
REEB 18.11 Non-depositable items. A broker firm shall not hold any instrument, equity or thing of value which is not depositable in a real estate trust account. Non-depositable items shall be held by one of the parties to a transaction or some other party, subject to an escrow agreement prepared by the parties or an attorney.
Section 30. REEB 18.13 (intro), (1) (intro), (2), (3), (4), (5), and (6) (intro) and (e) are amended to read:
REEB 18.13 Bookkeeping system. Each broker firm shall maintain and be responsible for a bookkeeping system in the broker’s firm’s office consisting of at least the following:
(1) Cash journal. A broker firm shall maintain a record, called a journal showing the chronological sequence in which real estate trust funds are received and disbursed as follows:
(2) Ledger. A broker firm shall maintain a record including the receipts and the disbursements as they affect each particular transaction, including transactions between buyer and seller, landlord and tenant, etc. The ledger entry shall include the names of all parties to a transaction, the dates and the amounts received and the name of the party or parties providing the money if different from the buyer. Ledger entries shall include at least the date, payee, number of the check, share draft or draft and amount when funds are disbursed. The ledger shall include a running balance and segregate each transaction. The broker firm shall maintain a separate ledger or separate section of the ledger for each of the various kinds of real estate transactions, including sales, rental collections, or mortgage and land contract collections.
(3) Account reconciliation. The broker firm or a person designated by the broker firm shall reconcile the real estate trust account or accounts in writing each month except in the case where there has been no activity during the month. The written reconciliation shall include at least the ending account statement balance, the date and amounts of the deposits in transit, the number of the check, share draft, or draft, and amount of checks, share drafts, or drafts written but not paid by the depository institution as of the ending date shown on the account statement to be reconciled, and the reconciled account statement ending balance.
(4) Trial balance. The broker firm shall prepare or have prepared, in conjunction with sub. (3), a written listing of all open items in the real estate trust account. The written listing shall be referred to as the “trial balance”. The listing shall include at least the names of all parties to the transaction and the amount held in trust for the parties at the time corresponding to the account reconciliation. The broker firm may in lieu of the names of the parties to the transaction substitute the ledger page number or other means of identification from the ledger to label the funds in the trial balance.
(5) Validation. The broker firm or a person designated by the broker firm shall review the reconciled account statement balance, the open ledger account listing, and the journal running balance to ensure that all of these records are valid and in agreement as of the date the account statement has been reconciled.
(6) Use of computers. A computerized system may be used to maintain the broker’s firm’s bookkeeping system if:
(e) All records which are not maintained as written paper records are capable of being immediately converted to written paper records and immediately shall be made available for inspection and copying by the department and exact and completed copies promptly sent to the department upon the request of the department without charge to the department or board for the purposes of an audit or investigation.
Section 31. REEB 18.14 is amended to read:
REEB 18.14 Violation of rules. A broker firm who fails to comply with the rules in this chapter shall be considered to have demonstrated incompetency to act as a licensed individual broker or a licensed broker business entity in a manner as to safeguard the interests of the public, as specified in s. 452.14 (3), Stats. Section 32. REEB 23.03 and 23.04 are amended to read:
REEB 23.03 Trade name. (1) Definition. “Trade name” means the name other than the name appearing on the broker’s license, under which the broker licensed individual broker or a licensed broker business entity advertises or does business.
(2) Notification. A licensed broker licensee, before doing business under any trade name, shall notify the department in writing of the trade name.
REEB 23.04 Change of form of business organization. (1) Application. A licensed broker business entity who intends to conduct business under a different form of business entity type, shall apply for a new license. Upon payment of the fee specified in s. 440.05 (1), Stats., the department board shall issue to the applicant, without examination, a license under the new form of entity business type. (2) New license required. A broker business entity shall not engage in real estate activities under a different form of business entity type until a new license is issued.
Section 33. REEB 24.01 (3) is amended to read:
REEB 24.01 (3) If a licensee violates rules in this chapter, the licensee has demonstrated incompetency to act as a broker, salesperson or time-share salesperson in such manner as to safeguard the interests of the public under s. 452.14 (3) (i), Stats. However, the term “incompetency” is not limited in its meaning to violations of this chapter. Section 34. REEB 24.02 (2) is repealed.
Section 35. REEB 24.02 (3), (5), (6), (9) and (13m) are amended to read:
REEB 24.02 (3) “Brokerage service” means any service described under s. 452.01 (2), Stats., provided by a broker to another a person by a firm and any licensees associated with the firm. (5) “Buyer’s broker firm” means a licensee firm who has an agency agreement with a buyer.
(6) “Client” means a party to a transaction who has an agency agreement with a broker firm for brokerage services.
(9) “Customer” means a party to a transaction who is provided brokerage services by a broker firm but who is not a client.
(13m) “Principal broker firm” means a broker firm who engages a subagent to provide brokerage services in a transaction.
Section 36. REEB 24.04 (2) (a) and (b), (3) and (4) are amended to read:
REEB 24.04 (2) Disclosure of name. (a) Except for advertisements for the rental of real estate owned by the broker licensee, a broker licensee shall in all advertising disclose the broker’s firm name exactly as printed on the broker’s licensed individual broker or a licensed broker business entity’s license or disclose a trade name previously filed with the department, as required by s. REEB 23.03, and in either case clearly indicate that the broker firm is a business concern and not a private party. (b) Except for advertisements for the rental of real estate owned by the licensee, a licensee employed by a broker associated with a firm shall advertise under the supervision of and in the name of the employing broker firm.
(3) Advertising without authority prohibited. Brokers Licensees shall not advertise property without the consent of the owner.
(4) Advertised price. Brokers Licensees shall not advertise property at a price other than that agreed upon with the owner; however, the price may be stated as a range or in general terms if it reflects the agreed upon price.
Section 37. REEB 24.05 (1) (a), (2), (4) and (5) (a) 3. is amended to read:
REEB 24.05 (1) Compensation. (a) A licensee acting as an agent in a real estate or business opportunity transaction may not accept any fee or compensation related to the transaction from any person, other than the licensee’s client, principal broker firm, or broker-employer firm the licensee is associated with without prior written consent from all parties to the transaction.
(2) Disclosure of interest. A licensee acting as an agent in a real estate or business opportunity transaction on the licensee’s own behalf, on behalf of the licensee’s immediate family or firm, on behalf of any member of the licensee’s immediate family or any combination of members of the licensee’s immediate family, or on behalf of any other organization or business entity in which the licensee has an interest without the prior written consent of all parties to the transaction. For the purpose of this subsection, a licensee shall obtain the written consent in the offer to purchase, option, lease or other transaction contract.
(4) Disclosure to seller. A listing broker firm may not pay any compensation or incentive to a licensee who is acting as a buyer in a transaction without prior written consent from the seller.
(5)(a)3. Any other negotiation with the seller or the listing broker firm.
Section 38. REEB 24.07 (1) (b) (title) and (c), (3), (8) (a) 1., 1g., 1r., and 2 (intro), a. and c., and (8) (b), (d) and (e) are amended to read:
REEB 24.07 (1) (b) Listing broker firm. When listing real estate and prior to execution of the listing contract, a licensee shall inspect the real estate as required by sub. (1), and shall make inquiries of the seller on the condition of the structure, mechanical systems and other relevant aspects of the property as applicable. The licensee shall request that the seller provide a written response to the licensee’s inquiry.
(c) Other licensees. Licensees, other than listing brokers firm, shall inspect the real estate as required by sub. (1) prior to or during the showing of the property, unless the licensee is not given access for a showing.
(3) Disclosure of information suggesting material adverse facts. A licensee, when engaging in real estate practice, who becomes aware of information suggesting the possibility of material adverse facts to the transaction, shall be practicing competently if the licensee discloses to the parties the information suggesting the possibility of material adverse facts to the transaction in writing and in a timely fashion, recommends the parties obtain expert assistance to inspect or investigate for possible material adverse facts to the transaction, and, if directed by the parties, drafts appropriate inspection or investigation contingencies. This provision is not limited to the condition of the property, but includes other material adverse facts to the transaction, including but not limited to defects and conditions included within the report form under s. ss. 703.33 and 709.03, Stats. A licensee is not required to retain third party inspectors or investigators to perform investigations of information suggesting the possibility of a material adverse fact to the transaction. (8) Disclosure of agency. (a) General requirements. 1. A broker firm may not negotiate on behalf of a party who is not the broker’s firm’s client unless the broker firm provides to the party a copy of the broker disclosure to customers required under s. 452.135 (1), Stats. If the brokerage services are related to real estate primarily intended for use as a residential property containing one to 4 dwelling units, the broker firm shall request the party’s signed acknowledgement that the party has received a copy of the written disclosure statement. 1g. A broker firm may not negotiate on behalf of a client unless the broker firm gives the client a copy of the broker disclosure required under s. 452.135 (2), Stats.
