Chapter REEB 24

Chapter REEB 24

CONDUCT AND ETHICAL PRACTICES FOR REAL ESTATE LICENSEES

REEB 24.01   Authority and intent.

REEB 24.02   Definitions.

REEB 24.03   Competent services.

REEB 24.04   Advertising.

REEB 24.05   Disclosure of compensation and interests.

REEB 24.06   Unauthorized practice of law.

REEB 24.07   Inspection and disclosure duties.

REEB 24.075   Tie-in arrangements.

REEB 24.08   Agreements to be in writing.

REEB 24.085   False portrayal of interest, prohibited.

REEB 24.09   Securing agency agreements.

REEB 24.10   Net listing prohibited.

REEB 24.12   Confidentiality of offers.

REEB 24.13   Drafting and submission of written proposals.

REEB 24.15   Adequate funds required.

REEB 24.17   Miscellaneous requirements.

Ch. REEB 24 Note Note: Chapter REB 15 as it existed on February 29, 1980 was repealed and a new chapter REB 15 was created effective March 1, 1980. Renumbered from chapter REB 15, effective March 1, 1983. Chapter RL 24 was renumbered chapter REEB 24 under s. 13.92 (4) (b) 1., Stats., Register November 2011 No. 671.

REEB 24.01 REEB 24.01 Authority and intent.

REEB 24.01(1) (1) The rules in this chapter are adopted pursuant to ss. 227.11, 452.01, 452.07, 452.133, 452.138, 452.139 and 452.14, Stats.

REEB 24.01(2) (2) The intent of the board in adopting the rules in this chapter is to establish minimum standards of conduct for real estate licensees and to define conduct that may result in board discipline pursuant to s. 452.14, Stats.

REEB 24.01(3) (3) If a licensee violates rules in this chapter, the licensee has demonstrated incompetency to act as a broker or 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.

REEB 24.01(4) (4) If a licensee violates the rules set forth in s. REEB 24.075, the licensee has engaged in improper, fraudulent or dishonest dealing as used in s. 452.14 (3) (k), Stats. However, the terms “improper, fraudulent or dishonest dealing” are not limited in their meaning to violations of s. REEB 24.075.

REEB 24.01 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; renum. (3) to be (5), (3) renum. from REB 15.02 (2) and cr. (4), Register, December, 1980, No. 300, eff. 1-1-81; renum. from REB 15.01 and am. (2) to (4), Register, February, 1983, No. 326, eff. 3-1-83; am. (1) and (3), r. (5) (intro.) and (d), renum. (5) (a) to (c) to be RL 24.025, RL 24.03 (2) (b) and (c), Register, January, 1987, No. 373, eff. 2-1-87; correction in (4) made under s. 13.93 (2m) (b) 4., Stats., Register, May, 1988, No. 389; am. Register, April, 1995, No. 472, eff. 5-1-95; correction in (2), (4) made under s. 13.92 (4) (b) 6., 7., Stats., Register November 2011 No. 671; EmR1620: emerg. am. (3), eff. 7-1-16; CR 16-042: am. (3) Register February 2017 No. 734, eff. 3-1-17; CR 21-043: am. (2) Register March 2022 No. 795, eff. 4-1-22.

REEB 24.02 REEB 24.02 Definitions.

REEB 24.02(1) (1) “Adverse fact” means any of the following:

REEB 24.02(1)(a) (a) A condition or occurrence that is generally recognized by a competent licensee as doing any of the following:

REEB 24.02(1)(a)1. 1. Significantly and adversely affecting the value of the property.

REEB 24.02(1)(a)2. 2. Significantly reducing the structural integrity of improvements to real estate.

REEB 24.02(1)(a)3. 3. Presenting a significant health risk to occupants of the property.

REEB 24.02(1)(b) (b) Information that indicates that a party to a transaction is not able to or does not intend to meet his or her obligations under a contract or agreement made concerning the transaction.

REEB 24.02(3) (3) “Brokerage service” means any service described under s. 452.01 (2), Stats., provided to a person by a firm and any licensees associated with the firm.

REEB 24.02(4) (4) “Builder” means any person engaged in the business of constructing homes without a buyer under contract or constructing homes under a contract with the buyer.

REEB 24.02(5) (5) “Buyer’s firm” means a firm who has an agency agreement with a buyer.

REEB 24.02(7) (7) “Commonly controlled corporation” means one of 2 or more corporations in which the same person or persons own stock in each of the corporations, possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares of all other classes of stock of the corporations.

REEB 24.02(10) (10) “Effectively controlled” means having the power or authority to cause the transfer of an interest in real estate for oneself or another but does not include the authority conferred by a real estate listing contract.

REEB 24.02(12) (12) “Material adverse fact” means an adverse fact that a party indicates is of such significance, or that is generally recognized by a competent licensee as being of such significance to a reasonable party, that it affects or would affect the party’s decision to enter into a contract or agreement concerning a transaction or affects or would affect the party’s decision about the terms of such a contract or agreement.

REEB 24.02(13) (13) “Party” means a person seeking to engage in a transaction.

REEB 24.02(13m) (13m) “Principal firm” means a firm that engages a subagent to provide brokerage services in a transaction.

REEB 24.02(14) (14) “Qualified third party” means a federal, state or local governmental agency, or any person whom the licensee or a party to the real estate transaction reasonably believes has the expertise necessary to meet the industry standards of practice for the type of inspection or investigation that has been conducted by the third party in order to prepare the written report described in s. 452.23 (2) (b), Stats.

REEB 24.02(15) (15) “Secured lender” means an individual or organization originating a loan in a real estate or business opportunity transaction secured by real estate or by the assets of a business or a business opportunity.

REEB 24.02(16) (16) “Real estate practice” means engaging in conduct that requires a license under ch. 452, Stats.

REEB 24.02(16m) (16m) “Right of first refusal” means the right of a person to have the first opportunity to purchase or lease real property.

REEB 24.02(18) (18) “Transaction” means the sale, exchange, purchase or rental of, or the granting or acceptance of an option, exchange, purchase or rent, an interest in real estate, a business, or a business opportunity.

REEB 24.02(19) (19) “Written proposal” means any written document provided by one party to another during the course of a transaction, including notices, offers, counteroffers, options, exchanges, rental agreements, and amendments.

REEB 24.02 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; renum. (1) to be (5), renum. (2) to be REB 15.01 (3), cr. (1) to (4) and (6), Register, December, 1980, No. 300, eff. 1-1-81; renum. from REB 15.02, Register, February, 1983, No. 326, eff. 3-1-83; renum. (4) to (6) to be (7) to (9) under s. 13.93 (2m) (b) 1., Stats., Register, September, 1990, No. 417; renum. (1) to (3) to be (2), (4) and (6), cr. (1), (3) and (5), Register, September, 1990, No. 417, eff. 10-1-90; am. (1), Register, January, 1992, No. 433, eff. 2-1-92; am. (1), Register, July, 1993, No. 451, eff. 8-1-93; r. and recr. (1), renum. (2) to (4) to be (4), (5), (7), (6) and (7) to be (8) and (10), (8) to be (11) and am., (a) to be (17), r. (5), cr. (2), (3), (6), (9), (12) to (16), (18), Register, April, 1995, No. 472, eff. 5-1-95; am. (7), r. (11), Register, July, 1998, No. 511, eff. 8-1-98; correction in (3) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; CR 10-136: am. (2) to (5), r. (8), am. (13), cr. (13m), r. (17), cr. (19) Register April 2012 No. 676, eff. 7-1-12; EmR1620: emerg. r. (2), am. (3), (5), (6), (9), (13m), eff. 7-1-16; CR 16-042: r. (2), am. (3), (5), renum. (6), (9) to REEB 11.02 (3m), (4m), am. (13m) February 2017 No. 734, eff. 3-1-17; CR 21-043: am. (13m), (14), (16), cr. (16m), am. (18), (19) Register March 2022 No. 795, eff. 4-1-22.

REEB 24.03 REEB 24.03 Competent services.

REEB 24.03(1) (1) Discrimination prohibited. Licensees may not discriminate against, nor deny equal services to, nor be a party to any plan or agreement to discriminate against any person in any manner unlawful under applicable federal, state or local fair housing law.

REEB 24.03 Note Note: The primary references for federal and state fair housing laws are the 1988 amendments to the Federal Housing Act (Title VII of the Civil Rights Act of 1968) and Chapter 106, Subchapter II, Stats.

REEB 24.03(2) (2) Competence required.

REEB 24.03(2)(a) (a) Licensees shall not provide services that the licensee is not competent to provide unless the licensee engages the assistance of another person who is competent. Any person engaged to provide such assistance shall be identified and that person’s contribution shall be described in the documents or records related to the transaction.

REEB 24.03(2)(b) (b) Licensees shall act to protect the public against fraud, misrepresentation and unethical practices.

REEB 24.03(2)(c) (c) A licensee shall be knowledgeable regarding laws, public policies and current market conditions on real estate matters and shall assist, guide, and advise the parties on these factors.

REEB 24.03(2)(d) (d) Licensees are not required to have the technical knowledge, skills or training possessed by competent third party inspectors and investigators of real estate and related areas.

REEB 24.03 Note Note: Paragraph (d) recognizes that licensees are not required to have the knowledge, skills or training possessed by, for example, persons such as home inspectors, plumbers, electricians or land surveyors.

REEB 24.03 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; am. (1), Register, March, 1981, No. 303, eff. 4-1-81; renum. from REB 15.03, Register, February, 1983, No. 326, eff. 3-1-83; am. (1), renum. (2) to be (2) (a), (2) (b) and (c) renum. from RL 24.01 (5) (b) and (c) and am., Register, January, 1987, No. 373, eff. 2-1-87; am. (1), cr. (2) (d), Register, July, 1993, No. 451, eff. 8-1-93; CR 21-043: am. (2) (a), (c) Register March 2022 No. 795, eff. 4-1-22.

REEB 24.04 REEB 24.04 Advertising. A licensee shall follow the requirements for advertising as specified under s. 452.136, Stats.

REEB 24.04 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; am. (4), Register, March, 1981, No. 303, eff. 4-1-81; renum. from REB 15.04 and am. (2), Register, February, 1983, No. 326, eff. 3-1-83; renum. (2) to be (2) (a) and am., cr. (2) (b) and (c), Register, January, 1987, No. 373, eff. 2-1-87; am. (2) (c), Register, April, 1995, No. 472, eff. 5-1-95; correction in (2) (a) made under s. 13.92 (4) (b) 7., Stats., Register November 2011 No. 671; EmR1620: emerg. am. (2) (a), (b), (3), (4), eff. 7-1-16; CR 16-042: am. (2) (a), (b), (3), (4) Register February 2017 No. 734, eff. 3-1-17; CR 21-043: r. and recr. Register March 2022 No. 795, eff. 4-1-22.

REEB 24.05 REEB 24.05 Disclosure of compensation and interests.

REEB 24.05(1) (1) Compensation. A licensee shall follow the requirements for compensation as specified under s. 452.133 (3) (a) and (c), Stats.

REEB 24.05(2) (2) Disclosure of interest. A licensee shall follow the requirements for disclosure of interest as specified under s. 452.133 (3) (b), Stats.

REEB 24.05(4) (4) Disclosure to seller. A listing 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.

REEB 24.05(5) (5) Disclosure of licensure.

REEB 24.05(5)(a) (a) A licensee acting as a principal in a real estate or business opportunity transaction shall disclose his, her, or its license status and intent to act in the transaction as a principal at the earliest of all of the following:

REEB 24.05(5)(a)1. 1. The first contact with the other party or an agent representing the other party where information regarding the other party or the transaction is being exchanged.

REEB 24.05(5)(a)2. 2. A showing of the property.

REEB 24.05(5)(a)3. 3. Any other negotiation with the seller, the listing firm, or other party or firm representing the other party.

REEB 24.05(5)(b) (b) The disclosure under this subsection shall be made in writing to the other party in a transaction or to an agent representing the other party.

REEB 24.05 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; renum. (3) and (4) to be (4) and (5), cr. (3), Register, December, 1980, No. 300, eff. 1-1-81; am. (5), Register, March, 1981, No. 303, eff. 4-1-81; renum. from REB 15.05, Register, February, 1983, No. 326, eff. 3-1-83; am. (1) and (5), Register, June, 1988, No. 390, eff. 7-1-88; r. and recr. Register, July, 1993, No. 451, eff. 8-1-93; am. (1), (2), (3), (5), Register, April, 1995, No. 472, eff. 5-1-95; renum. (5) to be (5) (a) (intro.), cr. (5) (a) 1. to 3., and (b), Register, January, 2001, No. 541, eff. 2-1-01; CR 10-136: am. (title), (1) (title), renum. (1) to be (1) (a) and am., am. (2), r. (3) (title), renum. (3) to be (1) (b) and am., r. and recr. (4), am. (5) (b) Register April 2012 No. 676, eff. 7-1-12; EmR1620: emerg. am. (1) (a), (2), (4), (5) (a) 3., eff. 7-1-16; CR 16-042: am. (1) (a), (2), (4), (5) (a) 3. Register February 2017 No. 734, eff. 3-1-17; CR 21-043: r. and recr. (1), (2), am. (5) (a) 3. Register March 2022 No. 795, eff. 4-1-22.

REEB 24.06 REEB 24.06 Unauthorized practice of law.

REEB 24.06(1) (1) Unauthorized practice of law prohibited. Licensees shall not engage in activities that constitute the unauthorized practice of law.

REEB 24.06(2) (2) Legal counsel not to be discouraged. Licensees shall not discourage any person from retaining an attorney.

REEB 24.06 History History: Cr. Register, February, 1980, No. 290, eff. 3-1-80; renum. from REB 15.06, Register, February, 1983, No. 326, eff. 3-1-83.

REEB 24.07 REEB 24.07 Inspection and disclosure duties.

REEB 24.07(1) (1) Inspection of real estate.

REEB 24.07(1)(a) (a) General requirement. A licensee, when engaging in real estate practice that involves real estate improved with a structure, shall conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas of the property to detect observable, material adverse facts. A licensee, when engaging in real estate practice that involves vacant land, shall, if the vacant land is accessible, conduct a reasonably competent and diligent inspection of the vacant land to detect observable material adverse facts.

REEB 24.07(1)(b) (b) Listing 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.

REEB 24.07(1)(c) (c) Other licensees. Licensees, other than listing firms, shall inspect the real estate as required by sub. (1) prior to or during a showing of the property, unless the licensee is not given access for a showing.

REEB 24.07(1)(d) (d) Specific conduct regarding inspections. A reasonably competent and diligent inspection of real estate improved with a structure does not require the operation of mechanical equipment; the opening of panels, doors or covers for access to mechanical systems; or the moving of furniture, boxes or other property; nor does it require a licensee to observe areas of the property for which entry presents an unreasonable risk of injury or areas accessible only by ladder, by crawling or other equivalent means of access. A licensee is not required to retain third party inspectors or investigators to complete a reasonably competent and diligent inspection. A reasonably competent and diligent inspection of vacant land does not require an observation of the entire property, but shall include, if given access, an observation of the property from at least one point on or adjacent to the property.

REEB 24.07(2) (2) Disclosure of material adverse facts. A licensee may not exaggerate or misrepresent facts in the practice of real estate. A licensee, when engaging in real estate practice, shall disclose to each party, in writing and in a timely fashion, all material adverse facts that the licensee knows and that the party does not know or cannot discover through a reasonably vigilant observation, unless the disclosure of the material adverse fact is prohibited by law. This provision is not limited to the condition of the property, but includes other material adverse facts in the transaction.

REEB 24.07 Note Note: Certain “material adverse facts”, as defined in s. REEB 24.02 (12), may not be disclosed by law. For example, unless specifically authorized by a seller, a licensee may not disclose to a potential buyer the actual minimum sales price the seller will accept. See s. 452.133 (1) (d), Stats.

REEB 24.07(3) (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, is 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 defects and conditions included within the report form under ss. 709.03 and 709.033, 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.

REEB 24.07(4) (4) Disclosure of side agreements. A licensee, when engaging in real estate practice, who becomes aware of the fact that a party to the transaction has not disclosed that party’s entire agreement regarding the transaction to that party’s secured lender, shall disclose this fact, in writing and in a timely manner, to the party’s secured lender.