2015-16 real estate continuingeducation - on d emand is the practice quiz? the practice quiz is an...

2015-16 Real Estate Continuing Education - On DemandPLUS

Welcome to the Wisconsin REALTORS® Association’s new On DemandPLUS! With OnDemandPLUS you can complete the course by reading the electronic book, watching the instructor videos, or toggling between the two.

Mandatory CoursesCourse 1 Wisconsin State-approved Listing ContractsCourse 2 Wisconsin State-approved Offers to Purchase Course 3 Wisconsin New DevelopmentsCourse 4 Ethics and Fair Housing in Wisconsin

Elective TopicsElective A Disclosures in a Wisconsin TransactionElective B Risk Reduction for Wisconsin Salespeople and BrokersElective C Inspections and Testing in Wisconsin TransactionsElective D Wisconsin Condominiums

Course Instructions:1. Access your courses at www.wra.org/myOnDemand.2. Launch your course.3. Choose how to access your course information:

• Watch videos- Have the course taught to you by WRA instructors; OR• Read- Go at your own pace by reading the electronic books.

4. Review your mastery of the material by taking an OPTIONAL practice quiz before taking your exam.5. Pass your mandatory course exam to be issued your course certificate.

Exam Details:1. After completing the exam, you may review your answers and skipped questions, then click Score the Exam. Once

the exam is scored, you will be able to review each question before exiting the exam.2. After you pass, click Print Certificate, or a copy of the certificate may be obtained by logging into the WRA’s web-

site and going to: www.wra.org/EducationHistory. If you are unable to print your certificate, you may obtain a copy of the certificate from the WRA at any time for a $10 administrative fee. (The WRA retains course records for a period of 5 years.)

3. You will have three attempts to pass the exam, with a 4 hour waiting period between retakes. Should you fail after that, you will need to attend a live WRA course. Access the WRA website at www.wra.org/LiveCE for a listing of live courses.

How do I renew my license?You will renew your license with the Department of Safety and Professional Services at the end of the biennium (December 14, 2016). You must complete and pass six continuing education modules (18 hours) to renew your license. You can find more information at www.dsps.wi.gov regarding renewing your license.

TM

Wisconsin REALTORS® Association

TM


Wisconsin REALTORS® AssociationTM



TM


TM





#1) MAIN PREVIEW WINDOW

#2) ACTIVITY REEL

#3) INDEX & NOTES

# 4) COURSE BOOK #5) COURSE BOOK ICONS

#6) CONTACT INSTRUCTOR ICON

#7) HELP ICON

#1) Main Preview WindowWhat is the Main Preview Window?The Main Preview Window is window that you use for viewing your primary course content.

#2) Activity Reel

What is the Activity Reel? The Activity Reel is a new feature located below the Main Preview Window that will allow you to navigate through your course media content.

How do I switch to a new chapter? There are two ways to switch chapters. One way is to double-click the appropriate chapter in your activity reel. The other way is to select the appropriate chapter tab in the Index tab window (#3) and choose which section of the chapter you would like to view by clicking on the appropriate section title.

What is the practice quiz?The practice quiz is an optional part of the OnDemandPLUS

CE course. To take the quiz, simply click the quiz icon in the activity reel and the quiz will begin in a pop-up window.

What is the difference between a quiz and exam?The practice quiz is an optional means of reviewing knowledge of the course material prior to taking your mandatory course exam. The exam is your final test. You can take your final exam after you’ve completed watching the videos, or after you have completed reading the electronic course book. Once you’ve passed the exam you will be able to print your certificate.

How does the exam work?You have three chances per course to pass the exam. You have 30 minutes to complete the exam. An on-screen clock will provide you with elapsed time. Each course exam is comprised of 15 randomly selected multiple choice questions. To select an answer, simply mark the circle preceding the correct answer. If you are unsure of an answer, you may skip a question and return to it at the end of the exam. You have the option of reviewing all questions or only skipped questions before grading your exam.

#3) Index/NotesWhat is the “Index” tab for?The “Index” tab is an easy way to access a specific topic in a chapter. Simply click a link in the Index and you can instantly access the corresponding content in the video and course book when viewing the material within the On DemandPLUS player. It’s perfect for accessing a topic you would like to review.

What is the “Notes” tab for?The “Notes” tab allows you to take your notes inside the product. If this functionality were not available you would need to take your notes manually. Notes will automatically save for you.

Can I print my notes? You are able to print your notes by clicking on the “print” icon in the upper right hand corner of the notes tab. Your notes will be automatically listed by chapter.

#4) Course BookWhat is the “Course Book”?Your Course Book is the material that accompanies your video content.

How do I navigate my Course Book?To change between pages, you can click on the arrows that are displayed on either side of the Course Book.

Can I view my Course Book in the Main Preview Window? You can view the Course Book in the main preview window by double-clicking the Course Book in its default location. To redock the video to the main preview window, simply double-click on the video that had switched positions with the Course Book.

#5) Course Book Icons

Can I make my Course Book bigger?There are two methods of viewing a larger course book within the player. The first way is to double-click on the course book when it is in the main preview window. This will allow you to view a larger version of the course book while still being able to watch your course video in the lower right-hand corner. The other method is to click on the “Bigger” icon located beneath your course book. This will enlarge the Course Book to its maximum size within the player.

Can I veiw the Course Book one page at a time?If you would like to view your Course Book pages at full-width, you can click on the “Continous Pages” icon located beneath your Course Book. In additon to your normal navigation funtions, this will allow you to scroll through the pages in your Course Book.

Can I print my course book?If you would like to print your course book or view it in a window that is separate from the player, click on the “Download” icon located beneath the course book. You may then print the course book from your Internet browser.

#6) Contact Instructor Icon

What is “Contact Instructor” ?With our “Contact Instructor” feature, designated with the talk bubble icon in the upper right-hand corner of the player, you have the ability to directly ask the course trainer any questions you have about the material. WRA instructors will be available during regular business hours; questions submitted outside of business hours will typically be answered by the end of the next business day.

#7) Help Icon

Do you have further questions?You can click on the question mark icon located in the upper right-hand corner of the screen for help topics, or call 1-800-279-1972.

** Submit the exam for grading when you complete the exam. Your score appears automatically. If you receive a score of 70% or better, you may print your certificate. If your score is less than 70%, you will need to review the course materials and retake the exam. You will have three attempts to pass the exam, with a 4 hour waiting period between retakes. Should you score less than 70% again, you will need to call the WRA to schedule a live course at no additional fee. Access the WRA website at www.wra.org/LiveCE for a listing of live courses.

TroubleshootingI have no volume/sound.To troubleshoot sound, perform the following steps:

1. Can you hear sounds from other Windows applications?2. Make sure the volume on your computer is turned up.3. Double check your speaker connection in the back of the sound card, making sure it is plugged into the right port.4. If all tests fail and you still do not have sound either from the player or other Windows-based applications,

contact your local computer technician.

My video is stuttering, pausing and/or stopping. How can I fix this problem?1. It is likely you are short on bandwidth. Internet Service Providers (ISPs) can have times when traffic is at a

maximum; thus slowing your connection. To change bandwidth, use the dropdown box located under “Help” in the upper right-hand corner of the Media Player. The default bandwidth is 600 kbps.

2. Press the F5 key on your keyboard to refresh the player.3. Log out of the website, then log back in.

If after dropping bandwidth you do not see an improvement in performance, what can I try next?1. Re-test your bandwidth making sure your download speed is at least 512 Kbps by following this link:

www.wra.org/bandwidthcheck2. Try connecting to a landline. Often wireless connections do not run smoothly, which causes the video to

continuously stop and start.3. Try switching computers to see if you get the same result.

Other Problems?For other problems please call the Wisconsin REALTORS® Association at 1-800-279-1972.

Address: 4801 Forest Run Road, Suite 201 | Madison, WI 53704-7337 Phone: 608-241-2047 | Toll-free: 800-279-1972 | Fax: 608-241-5168

email: [email protected] | website: www.wra.org

TM


TM





J:\2015-2016 Continuing Education\Instructions\CE1516_VOD_Instructions 5/18/2015

i

2015-2016 Real Estate Continuing Education Program Elective C - Inspections and Testing in Wisconsin Transactions

Mandatory 2015-2016 CE Courses

All licensees must take courses 1-4.

Course 1: Wisconsin State-approved Listing ContractsCourse 2: Wisconsin State-approved Offers to PurchaseCourse 3: Wisconsin New Developments Course 4: Ethics and Fair Housing in Wisconsin** Includes the NAR ethics requirements.

Elective 2015-2016 CE Courses

Licensees must take two electives.

Elective A: Disclosures in a Wisconsin Transaction Elective B: Risk Reduction for Wisconsin Salespeople and BrokersElective C: Inspections and Testing in Wisconsin TransactionsElective D: Wisconsin Condominiums

Certificate of CompletionLicensees earn a Certificate of Completion upon successful completion of this continuing education course. Licensees can print Certificates of Completion and retain them for their records. Licensees can review education history and print duplicate Certificates of Completion at any time and at no charge by logging into myWRA at www.wra.org.

Special acknowledgment to the WRA Legal Department for the use of various Legal Updates, Hottips, and other WRA co-authored and sponsored publications.

The information and materials contained in this product are provided exclusively for educational purposes and are solely intended to be statements of general legal principles. The information and materials are not to be construed, interpreted,

relied upon or used as legal advice in any fashion, including but not limited to use in litigation, arbitration, ethics matters, or other administrative proceedings. Individuals seeking legal advice should obtain private legal counsel and should not rely upon the

information and materials contained herein.

Copyright © 2015 by


1

I. Inspectiona. Inspection and Testing in the WB-11 Offer to Purchase

■ SPECIAL ASSESSMENTS/OTHER EXPENSES: Special assessments, if any, levied or for work actually commenced prior 360

to the date of this Offer shall be paid by Seller no later than closing. All other special assessments shall be paid by 361

Buyer. 362

CAUTION: Consider a special agreement if area assessments, property owners association assessments, special 363

charges for current services under Wis. Stat. § 66.0627 or other expenses are contemplated. “Other expenses” are 364

one-time charges or ongoing use fees for public improvements (other than those resulting in special assessments) 365

relating to curb, gutter, street, sidewalk, municipal water, sanitary and storm water and storm sewer (including all 366

sewer mains and hook-up/connection and interceptor charges), parks, street lighting and street trees, and impact 367

fees for other public facilities, as defined in Wis. Stat. § 66.0617(1)(f). 368

EARNEST MONEY 369

■ HELD BY: Unless otherwise agreed, earnest money shall be paid to and held in the trust account of the listing broker 370

(Buyer's agent if Property is not listed or Seller's account if no broker is involved), until applied to the purchase price or 371

otherwise disbursed as provided in the Offer. 372

CAUTION: Should persons other than a broker hold earnest money, an escrow agreement should be drafted by the 373

Parties or an attorney. If someone other than Buyer makes payment of earnest money, consider a special 374

disbursement agreement. 375

■ DISBURSEMENT: If negotiations do not result in an accepted offer, the earnest money shall be promptly disbursed (after 376

clearance from payor's depository institution if earnest money is paid by check) to the person(s) who paid the earnest money. 377

At closing, earnest money shall be disbursed according to the closing statement. If this Offer does not close, the earnest 378

money shall be disbursed according to a written disbursement agreement signed by all Parties to this Offer. If said 379

disbursement agreement has not been delivered to broker within 60 days after the date set for closing, broker may disburse 380

the earnest money: (1) as directed by an attorney who has reviewed the transaction and does not represent Buyer or Seller; 381

(2) into a court hearing a lawsuit involving the earnest money and all Parties to this Offer; (3) as directed by court order; or (4) 382

any other disbursement required or allowed by law. Broker may retain legal services to direct disbursement per (1) or to file an 383

interpleader action per (2) and broker may deduct from the earnest money any costs and reasonable attorneys fees, not to 384

exceed $250, prior to disbursement. 385

■ LEGAL RIGHTS/ACTION: Broker's disbursement of earnest money does not determine the legal rights of the Parties in 386

relation to this Offer. Buyer's or Seller's legal right to earnest money cannot be determined by broker. At least 30 days prior to 387

disbursement per (1) or (4) above, broker shall send Buyer and Seller notice of the disbursement by certified mail. If Buyer or 388

Seller disagree with broker's proposed disbursement, a lawsuit may be filed to obtain a court order regarding disbursement. 389

Small Claims Court has jurisdiction over all earnest money disputes arising out of the sale of residential property with 1-4 390

dwelling units and certain other earnest money disputes. Buyer and Seller should consider consulting attorneys regarding their 391

legal rights under this Offer in case of a dispute. Both Parties agree to hold the broker harmless from any liability for good faith 392

disbursement of earnest money in accordance with this Offer or applicable Department of Regulation and Licensing 393

regulations concerning earnest money. See Wis. Admin. Code Ch. RL 18. 394

INSPECTIONS AND TESTING Buyer may only conduct inspections or tests if specific contingencies are included as a part of 395

this Offer. An “inspection” is defined as an observation of the Property which does not include an appraisal or testing of the 396

Property, other than testing for leaking carbon monoxide, or testing for leaking LP gas or natural gas used as a fuel source, 397

which are hereby authorized. A “test” is defined as the taking of samples of materials such as soils, water, air or building 398

materials from the Property and the laboratory or other analysis of these materials. Seller agrees to allow Buyer’s inspectors, 399

testers and appraisers reasonable access to the Property upon advance notice, if necessary to satisfy the contingencies in 400

this Offer. Buyer and licensees may be present at all inspections and testing. Except as otherwise provided, Seller’s 401

authorization for inspections does not authorize Buyer to conduct testing of the Property. 402

NOTE: Any contingency authorizing testing should specify the areas of the Property to be tested, the purpose of the 403

test, (e.g., to determine if environmental contamination is present), any limitations on Buyer's testing and any other 404

material terms of the contingency. 405

Buyer agrees to promptly restore the Property to its original condition after Buyer’s inspections and testing are completed 406

unless otherwise agreed to with Seller. Buyer agrees to promptly provide copies of all inspection and testing reports to Seller. 407

Seller acknowledges that certain inspections or tests may detect environmental pollution which may be required to be reported 408

to the Wisconsin Department of Natural Resources. 409

of 9, WB-11

i. This section is from the WB-11 Residential Offer to Purchase and it defines test and inspection.

ii. The definitions of inspection and test are substantially similar in the other approved offers to purchase with minor differences.

1. The WB-12 Farm Offer to Purchase and the WB-13 Vacant Land Offer to Purchase have the same definitions for inspections and testing as is found in the WB-11 Residential Offer to Purchase.

a. Inspections and testing pertain to the Property. b. The seller agrees to permit access to the buyer's

inspectors, testers, and appraisers. 2. The WB-14 Condominium Offer has nearly identical definitions

except the inspection may be of the Unit and the Limited Common Elements and the testing may be of the Unit, rather than the Property as is seen in the other offers.

3. The WB-15 Commercial Offer definitions describe inspections and testing as they relate to the Property but the seller agrees to grant access to the buyer's inspectors, testers, appraisers, and qualified third parties.

4. The WB-16 Business Offer with Real Estate and the WB-17 Business Offer without Real Estate definitions describe inspections and testing as they relate to the Assets and the seller agrees to grant access to the buyer's inspectors, testers, and appraisers.

iii. Home inspections in residential transactions or property inspections in a non-residential transaction are routine.

iv. A seller makes representations in the seller's condition report, if there is one, and agents have to disclose material adverse facts but rarely will that be sufficient for a buyer to gain a clear picture of the condition of the property.

2

v. A buyer needs to have an inspection because neither the seller nor the agent is required to have the kind of technical expertise required to detect defects such a leaking carbon monoxide, faulty switches, or wiring issues.

vi. A buyer relies on inspectors and testers with appropriate technical expertise to determine the condition of the property.

vii. Inspections may reveal defects that neither the seller nor the agent knew about.

viii. There is no automatic right to test, inspect, or appraise a seller's property.

1. All three must be separately negotiated into a transaction.a. A buyer who wants an inspection must make the offer

contingent on that. b. A buyer who wants tests must negotiate the tests in the

offer to purchase. c. Even an appraisal must be separately negotiated into

the offer. 2. If a buyer and a seller include an inspection, a test, or an

appraisal in an accepted offer, the seller agrees to allow access to the property if necessary to satisfy the contingencies in the offer.

3. The buyer and licensees can be present at all inspections. 4. Testing and inspection are not the same. 5. Agents need to help buyers and sellers understand what

these terms mean and what effects the results of either a test or an inspection can have on the offer.

6. An agent working with a buyer should help the buyer understand the limitations involved in an inspection so the buyer can include additional testing contingencies if necessary.

7. An agent working with a seller should help the seller understand the consequences of letting a buyer inspect or test the seller's property.

8. Lines 408-409 warn a seller that the results of certain tests and inspections may not only signal the end of the transaction but may require notification of the Department of Natural Resources, which may trigger expensive clean up.

9. The buyer agrees to promptly restore the property to its original condition unless the seller agrees otherwise.

10. Inspections, tests, and appraisals all cost money and the obligation to restore the property could potentially add to that cost.

11. Paying for investigations, tests, and appraisals up front, however, may be significantly less expensive than ending up with a property with mysteries and secrets to be revealed later.

3

ix. Authorization for inspections does not permit testing. x. Authorization for testing does not permit inspection.

Surprise, Surprise!A buyer buys a house that was priced to sell. The buyer moves in and discovers significant foundation issues. The buyer is going to be responsible for paying for those repairs. Even if the buyer thinks the seller concealed or failed to disclose the structural problems, the buyer may have to take the seller to court to prove it. The buyer could lose the lawsuit or the court could award damages to the buyer that are less than what it will actually cost to fix it. Successfully suing a seller for potential damages is never a sure thing. The buyer has to weigh the risk that the buyer will pay the cost of the litigation and still lose. If the buyer loses the lawsuit, the buyer could end up paying for the cost of litigation and the cost of the repairs.

No Way Out

Sometimes property owners end up with undisclosed, undiscovered disasters after closing. A buyer could end up with a property with environmental contamination requiring costly cleanup. Conditions like environmental contamination or an abandoned underground storage tank are usually governed by the "finders keepers" test of ownership. Whether the current property owner is responsible for the contamination or the underground storage tank is often irrelevant. The current owner will be responsible for addressing the situation. Perhaps, as in the case with the buyer who had foundation defects, the property owner could try pursuing the previous owner for damages, but as always, a lawsuit can be a gamble.

In situations like this, the lender may choose not to file a foreclosure action even if the current property owner stops paying the mortgage. Due to the "finders keepers" ownership, if the lender foreclosed, the lender could become the owner of the property and the owner of the cost of the cleanup or remediation. From the lender's perspective, it may be less costly to let the borrower remain in default on the loan rather than attempting to recover ownership through the foreclosure process.

b. What is an Inspection?i. An inspection is an observation of the property that does not include

an appraisal or testing of the property except testing for leaking carbon monoxide, testing for leaking LP gas, or natural gas used as a fuel source.

ii. It does not include an appraisal or testing of the property. iii. What is included in the inspection will depend on the language of the

offer.

4

INSPECTION CONTINGENCY: This contingency only authorizes inspections, not testing (see lines 395-409). This 410

Offer is contingent upon a Wisconsin registered home inspector performing a home inspection of the Property which discloses 411

no Defects. This Offer is further contingent upon a qualified independent inspector or independent qualified third party 412

performing an inspection of _____________________________________________________________________________ 413

_____________________________________________ (list any Property component(s) to be separately inspected, e.g., 414

swimming pool, roof, foundation, chimney, etc.) which discloses no Defects. Buyer shall order the inspection(s) and be 415

responsible for all costs of inspection(s). Buyer may have follow-up inspections recommended in a written report resulting 416

from an authorized inspection, provided they occur prior to the deadline specified at line 421. Inspection(s) shall be performed 417

by a qualified independent inspector or independent qualified third party. 418 CAUTION: Buyer should provide sufficient time for the home inspection and/or any specialized inspection(s), as well 419 as any follow-up inspection(s). 420 This contingency shall be deemed satisfied unless Buyer, within ________ days of acceptance, delivers to Seller a copy of the 421 written inspection report(s) and a written notice listing the Defect(s) identified in those report(s) to which Buyer objects (Notice 422 of Defects). 423 CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement. 424 For the purposes of this contingency, Defects (see lines 182-184) do not include structural, mechanical or other conditions the 425 nature and extent of which Buyer had actual knowledge or written notice before signing this Offer. 426 ■ RIGHT TO CURE: Seller (shall)(shall not) STRIKE ONE (“shall” if neither is stricken) have a right to cure the Defects. If 427 Seller has the right to cure, Seller may satisfy this contingency by: (1) delivering written notice to Buyer within 10 days of 428 Buyer's delivery of the Notice of Defects stating Seller’s election to cure Defects; (2) curing the Defects in a good and 429 workmanlike manner; and (3) delivering to Buyer a written report detailing the work done within 3 days prior to closing. This 430 Offer shall be null and void if Buyer makes timely delivery of the Notice of Defects and written inspection report(s) and: (1) 431 Seller does not have a right to cure or (2) Seller has a right to cure but: (a) Seller delivers written notice that Seller will not cure 432 or (b) Seller does not timely deliver the written notice of election to cure. 433

ADDENDA: The attached __________________________________________________ is/are made part of this Offer. 434

ADDITIONAL PROVISIONS/CONTINGENCIES ____________________________________________________________ 435

____________________________________________________________________________________________________ 436

____________________________________________________________________________________________________ 437

____________________________________________________________________________________________________ 438

____________________________________________________________________________________________________ 439

____________________________________________________________________________________________________ 440

____________________________________________________________________________________________________ 441

____________________________________________________________________________________________________ 442

This Offer was drafted by [Licensee and Firm] _______________________________________________________________ 443

_____________________________________________________________ on _______________________________ ___. 444

(x) _________________________________________________________________________________________________ 445

Buyer’s Signature▲ Print Name Here► Date▲ 446

(x) _________________________________________________________________________________________________ 447


EARNEST MONEY RECEIPT Broker acknowledges receipt of earnest money as per line 10 of the above Offer. 449

________________________________________________ Broker (By) _________________________________________ 450

SELLER ACCEPTS THIS OFFER. THE WARRANTIES, REPRESENTATIONS AND COVENANTS MADE IN THIS OFFER 451

SURVIVE CLOSING AND THE CONVEYANCE OF THE PROPERTY. SELLER AGREES TO CONVEY THE PROPERTY 452

ON THE TERMS AND CONDITIONS AS SET FORTH HEREIN AND ACKNOWLEDGES RECEIPT OF A COPY OF THIS 453

OFFER. 454

(x) _________________________________________________________________________________________________ 455

Seller’s Signature▲ Print Name Here► Date▲ 456

(x) _________________________________________________________________________________________________ 457


This Offer was presented to Seller by [Licensee and Firm] _____________________________________________________ 459

__________________________________________ on __________________________ at ________________ a.m./p.m. 460

This Offer is rejected _____________ _________ This Offer is countered [See attached counter] _____________ _________ 461

Seller Initials▲ Date▲ Seller Initials▲ Date▲ 462

Property Address: _________________________________________________________________________________________________________Page 9 of 9, WB-11

__

iv. If the pre-printed language in an inspection contingency is not sufficient for what a buyer wants, the agent drafting the offer can draft an alternate contingency, seeking assistance as necessary.

v. This is not the place for the buyer to include tests that the buyer would like to have on the property.

vi. If a buyer is using the pre-printed contingency in the residential offer to purchase, the buyer is asking for a home inspection of the property.

1. A home inspection is the process by which the systems and components of residential real estate that are readily observable are examined.

2. A home inspector must perform a reasonably competent and diligent home inspection to detect observable conditions with respect to the residential real property and improvements.

vii. The buyer can also include an inspection or inspections of additional property components listed on lines 413-414 or by an addendum or in additional provisions.

viii. The buyer can also have follow-up inspections recommended in a written report resulting from an authorized inspection.

ix. The follow-up inspections must occur before the deadline in the home inspection contingency.

x. The pre-printed inspection contingencies in the farm, vacant land, and commercial offers have broader language calling for an inspection of the property but without specifying the type of inspection.

5

xi. The commercial offer also contains an Environmental Evaluation Contingency that a buyer can use to include an Environmental Site Assessment (Phase 1 Site Assessment) that includes an inspection of the property but also:

1. A review of ownership and use of the property; 2. A review of historic and recent aerial photographs of the

property; 3. A review of environmental licenses, permits, or orders; 4. An evaluation of results of any environmental sampling and

analysis that has been conducted; and5. A review to determine if the property is listed on a number of

registries and maps indicating that it could pose a threat to human health or the environment.

340

341

342

343

344

345

347

348

349

350

346

351

352

353

354

355

357

358

359

360

361

368

369

370

371

372

356

362

363

364

365

366

367

375

374

373

376

377

378

379

386

387

388

389

390

380

381

382

383

384

385

393

392

391

394

395

Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zipLogix.com

Property Address: Page 7 of 9, WB-15

TITLE EVIDENCE

CONVEYANCE OF TITLE: Upon payment of the purchase price, Seller shall convey the Property by warranty deed (trustee's deed if

Seller is a trust, personal representative's deed if Seller is an estate or other conveyance as provided herein) free and clear of all liens and

encumbrances, except: municipal and zoning ordinances and agreements entered under them, recorded easements for the distribution of utility

and municipal services, recorded building and use restrictions and covenants, present uses of the Property in violation of the foregoing disclosed

in Seller's disclosure report, and Real Estate Condition Report, if applicable, and in this Offer, general taxes levied in the year of closing and

which constitutes merchantable title for purposes of this transaction. Seller shall complete and execute the documents

necessary to record the conveyance at Seller's cost and pay the Wisconsin Real Estate Transfer Fee.

WARNING: Municipal and zoning ordinances, recorded building and use restrictions, covenants and easements may prohibit certain

improvements or uses and therefore should be reviewed, particularly if Buyer contemplates making improvements to Property or a use

other than the current use.

TITLE EVIDENCE: Seller shall give evidence of title in the form of an owner's policy of title insurance in the amount of the purchase price on a

GAP ENDORSEMENT: Seller shall provide a "gap" endorsement or equivalent gap coverage at (Seller's) (Buyer's)

PROVISION OF MERCHANTABLE TITLE: For purposes of closing, title evidence shall be acceptable if the required title insurance

TITLE NOT ACCEPTABLE FOR CLOSING: If title is not acceptable for closing, Buyer shall notify Seller in writing of objections to title within

current ALTA form issued by an insurer licensed to write title insurance in Wisconsin. Seller shall pay all costs of providing title evidence to Buyer.

Buyer shall pay all costs of providing title evidence required by Buyer's lender.

neither stricken) cost to provide coverage for any liens or encumbrances first filed or recorded after the effective date of the title insurance

("Seller's" if

commitment and before the deed is recorded, subject to the title insurance policy exclusions and exceptions, provided the title company will issue

closing (see lines 365-371).

STRIKE ONE

commitment is delivered to Buyer's attorney or Buyer not more than days after acceptance ("15" if left blank), showing title to the

days ("15" if left blank) after delivery of the title commitment to Buyer or Buyer's attorney. In such event, Seller shall have a

days ("5" if left blank), from Buyer's delivery of the notice stating title objections, to deliver

the endorsement. If a gap endorsement or equivalent gap coverage is not available, Buyer may give written notice that title is not acceptable for

Property as of a date no more than 15 days before delivery of such title evidence to be merchantable per lines 341-348, subject only to liens which

will be paid out of the proceeds of closing and standard title insurance requirements and exceptions, as appropriate.

reasonable time, but not exceeding

notice to Buyer stating Seller's election to remove the objections by the time set for closing. In the event that Seller is unable to remove said

objections, Buyer may deliver to Seller written notice waiving the objections, and the time for closing shall be extended accordingly. If Buyer does

not waive the objections, Buyer shall deliver written notice of termination and this Offer shall be null and void. Providing title evidence acceptable

for closing does not extinguish Seller's obligations to give merchantable title to Buyer.

ENVIRONMENTAL EVALUATION CONTINGENCY: This Offer is contingent upon a qualified independent environmental consultant of

days of acceptance,

STRIKE ONEBuyer's choice conducting an Environmental Site Assessment of the Property (see lines 288-302), at (Buyer's) (Seller's) expense

include a material violation of environmental laws, a material contingent liability affecting the Property arising under any environmental laws, the

presence of an underground storage tank(s) or material levels of hazardous substances either on the Property or presenting a significant risk of

contaminating the Property due to future migration from other properties. Defects do not include conditions the nature and extent of which Buyer

had actual knowledge or written notice before signing the Offer.

("Buyer's" if neither is stricken), which discloses no Defects. For the purpose of this contingency, a Defect (see lines 223-225) is defined to also

SPECIAL ASSESSMENTS/OTHER EXPENSES: Special assessments, if any, levied or for work actually commenced prior to the date of this

CONTINGENCY SATISFACTION: This contingency shall be deemed satisfied unless Buyer, within

RIGHT TO CURE: Seller (shall) (shall not) STRIKE ONE

Offer shall be paid by Seller no later than closing. All other special assessments shall be paid by Buyer.

CAUTION: Consider a special agreement if area assessments, property owners association assessments, special charges for current

services under Wis. Stat. § 66.0627 or other expenses are contemplated. "Other expenses" are one-time charges or ongoing use fees

for public improvements (other than those resulting in special assessments) relating to curb, gutter, street, sidewalk, municipal water,

sanitary and storm water and storm sewer (including all sewer mains and hook-up/connection and interceptor charges), parks, street

lighting and street trees, and impact fees for other public facilities, as defined in Wis. Stat. § 66.0617(1)(f).

delivers to Seller a copy of the Environmental Site Assessment report and a written notice listing the Defect(s) identified in the Environmental Site

Assessment report to which Buyer objects (Notice of Defects).

CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement.

cure, Seller may satisfy this contingency by: (1) delivering written notice to Buyer within 10 days of Buyer's delivery of the Notice of Defects stating

Seller's election to cure Defects, (2) curing the Defects in a good and workmanlike manner and (3) delivering to Buyer a written report detailing the

work done within 3 days prior to closing. This Offer shall be null and void if Buyer makes timely delivery of the Notice of Defects and written

Environmental Site Assessment report and: (1) Seller does not have a right to cure or (2) Seller has a right to cure but: (a) Seller delivers written

notice that Seller will not cure or (b) Seller does not timely deliver the written notice of election to cure.

("shall" if neither is stricken) have a right to cure the Defects. If Seller has the right to

Untitledxii. The Environmental Evaluation Contingency does not allow testing. xiii. To test soil, water, or other aspects of the property, the buyer would

need to include those separately. 1. A Phase II Site Assessment provides for the collection and

analysis of samples and would include subsurface testing of the soil and groundwater.

2. A Phase III Site Assessment evaluates remediation alternatives.

xiv. The condominium offer to purchase allows for a home inspector to perform a home inspection of the Unit and the Limited Common Elements.

xv. Both of the business offers contain an inspection contingency that permits an inspection of the Assets, which may or may not include real property.

xvi. The WB-12 Farm Offer to Purchase and the WB-13 Vacant Land Offer to Purchase have the same definitions for inspections and testing as is found in the WB-11 Residential Offer to Purchase.

6

c. Who Can Inspect?i. The inspection contingency in the WB-11 Residential Offer to

Purchase allows a buyer to have a Wisconsin registered home inspector perform a home inspection of the property.

ii. The buyer can also have a qualified independent inspector or other qualified third party inspect other components of the property if the buyer includes them in the inspection contingency.

Wis. Stat. § 440.975 (2) Standards of PracticeA home inspector shall perform a reasonably competent and diligent inspection to detect observable conditions of an improvement to residential real property. Except for removing an access panel that is normally removed by an occupant of residential real property, this subsection does not require a home inspector to disassemble any component of an improvement to residential real property. A reasonably competent and diligent inspection under this subsection is not required to be technically exhaustive.

iii. A home inspector is an individual who, for compensation, conducts a home inspection.

iv. Wisconsin home inspectors must be registered with the State of Wisconsin.

v. Wisconsin home inspectors must pass an exam to become registered and must complete continuing education to renew the registration.

vi. A home inspector cannot perform or offer to perform any act prohibited by law.

vii. A home inspector cannot deliver a home inspection report to anyone other than the client unless the client consents to delivery to another person.

viii. A home inspector cannot perform a home inspection for a client if a member of the home inspector’s immediate family or an organization or business entity in which the home inspector has an interest is a party to the transaction and has an interest adverse to that of the client, unless the home inspector has the client’s written consent.

ix. A home inspector cannot accept compensation from more than one party in the transaction without the written consent of all the parties.

x. A home inspector cannot pay or receive a referral fee or a finder's fee from someone who is not a home inspector with regards to construction, repairs, or maintenance or improvements to real estate that was inspected by the home inspector.

xi. If a buyer wants someone else to inspect the property, the buyer will have to use a different contingency or modify the pre-printed one.

http://docs.legis.wisconsin.gov/statutes/statutes/440/XI/975

7

Question: On the offer it states that it should be an independent home inspection. The buyer wants to do his own home inspection and he is a licensed home inspector in Wisconsin. Can he do the home inspection on a home he is purchasing?

Answer: Wis. Stat. § 440.975(7) indicates that: "A home inspector may not do any of the following:

(a) Perform or offer to perform any act or service contrary to law.(b) Deliver a home inspection report to any person other than the client without the client's consent.(c) Perform a home inspection for a client with respect to a transaction if the home inspector, a member of the home inspector's immediate family or an organization or business entity in which the home inspector has an interest, is a party to the transaction and has an interest that is adverse to that of the client, unless the home inspector obtains the written consent of the client."

d. Deadlinesi. The single most important thing to consider when drafting an

inspection contingency is to give the parties enough time to accomplish all of the permitted inspections and still have time to negotiate potential solutions based on the results.

ii. The deadline is for issuing a notice of defects, not completing the inspections.

iii. The time frame for completing an inspection and the subsequent negotiations is short and typically runs in "days" rather than "business days."

iv. Parties need to consider that during this time frame: 1. The buyer needs to order the inspection; 2. The inspector needs to be able to access the property; 3. The inspector needs to complete the report; 4. The buyer has to review the report and decide whether to

negotiate with the seller or issue a notice of defects; 5. If the buyer is attempting negotiation, there needs to be

enough time for amendments to be offered back and forth; 6. The buyer needs to decide whether to issue a notice of defects

based on the negotiations; and 7. Issue the notice of defects if that is the buyer's choice in the

transaction.

8

v. Factors to Consider when Deciding on a Deadline1. Holidays on which the home inspector may not work.2. Snow storms that may prevent a home inspector from keeping

a scheduled appointment.3. Snow cover that may prevent a roof inspector from actually

inspecting the roof.4. Accessibility issues due to tenants in the property.5. General uncertainty related to schedules and weather.

vi. A buyer's agent will want to try to negotiate a long deadline so that the buyer has time to have the inspections by the inspectors of the buyer's choosing, review the reports, and decide what to do next.

vii. An agent working with the seller will want a shorter deadline so the seller will know if there are defects and if the buyer is objecting to any.

viii. A buyer will not be able to have any follow-up inspections unless they are recommended in the written report from the initial inspection.

ix. The buyer shall order and pay for all of the inspections, including any desired follow-up inspections.

e. Required, Optional, and Prohibited Acts in Home Inspection i. Home inspectors do not inspect for code violations. ii. A diligent home inspection is not technically exhaustive. iii. The home inspector does not need to use extensive measurements,

instruments, testing, calculations or other means to develop scientific or engineering findings, conclusions, or recommendations.

9

Some Mechanical and Structural Components Included in a Home Inspection• Roof - coverings, gutters, downspouts, leaders, splash blocks and other similar

components, flashing, skylights, roof penetrations, chimneys.• Exterior - wall claddings, flashing, trim, balconies, stoops, steps, porches, drainage,

driveways, patios, walk ways, grading, retaining walls, garage door openers.• Interior - walls, ceilings, floors, steps, stairways, balconies, railings, counters, sink

base cabinets, sample of doors and windows, separation walls, ceilings.• Plumbing system - interior water supply and distribution system including piping

materials, supports, fixtures, faucets, flow, drainage, leaks, interior drain, waste, vent piping, piping supports, hot water systems, water heating equipment.

• Electrical system - functionality of power sources for smoke detectors, light switches and receptacles, service equipment, grounding equipment, distribution panels, amperage and voltage ratings, circuit conductors, polarity and grounding.

• Heating system - operation of heating systems, condition of heating equipment and distribution systems, operating controls and energy source, safety controls, exterior surface of chimneys, flues and vents, heat exchanger.

• Central air conditioning - operation of air conditioning system, presence of installed cooling source in each room, type and energy source, condition of cooling and air handling equipment, operating controls.

• Insulation and ventilation - insulation in unfinished spaces, ventilation of attics and foundation areas, kitchen, bathroom, and laundry venting systems.

• Foundation - type and condition of foundation.• Flooring system - type and condition of flooring.• Columns - type and condition of columns.

iv. Optional1. Evaluate the life expectancy of any component or improvement.2. Determine the cause or reason why a major repair to a

component or improvement is necessary.3. Discuss the method, necessary materials, or cost of any

needed repair or correction.4. Analyze suitability of an improvement for a specialized use.5. Determine whether any component or improvement complies

with applicable regulatory requirements.6. Comment on the condition of any component that the home

inspector was not required to inspect.

10

Optional Elements of a Home Inspection*A home inspector is not required to perform the following tasks.• Offer a warranty or guarantee of any kind.• Calculate the strength, adequacy, or efficiency of any component or improvement.• Enter any area or perform any procedure that may damage a property component or improvement or may be dangerous to the home inspector or other persons.• Operate any property component that is inoperable.• Operate any property component that does not respond to normal operating controls.• Disturb insulation or move personal items, furniture, equipment, vegetation, soil, snow, ice, or debris that obstructs access to or visibility of an improvement or component.• Determine the effectiveness of a component or system that was installed to control or remove suspected hazardous substances.• Evaluate acoustic characteristics of a property component.• Project or estimate the operating costs of a property component.• Predict future conditions such as the failure of a property component.• Inspect for rodents, insects, wood damaging organisms and other pests.• Inspect cosmetic items, underground items, or items not permanently installed (personal property).• Inspect for hazardous substances.• Disassemble any property component, except for removing an access panel.

*A party who wants an inspector to include any of these services should discuss this with the home inspector and confirm the inclusion of the services in writing.

v. Prohibited 1. A home inspector may not report, verbally or in writing, on the

market value or marketability of a property. 2. A home inspector cannot offer an opinion or recommendation

as to whether the property should be purchased.

Wis. Stat. § 440.977 Liability of Home Inspectors(1) Notwithstanding s. 893.54, an action to recover damages for any act or omission of a home inspector relating to a home inspection that he or she conducts shall be commenced within 2 years after the date that a home inspection is completed or be barred. The period of limitation under this subsection may not be reduced by agreement.

(2) A home inspector is not liable to a person for damages that arise from an act or omission relating to a home inspection that he or she conducts if that person is not a party to the transaction for which the home inspection is conducted.

http://docs.legis.wisconsin.gov/statutes/statutes/440/XI/975

11

II. Test a. What is a Test in the WB-11 Offer to Purchase?

i. A test is defined as the taking of samples of materials such as soils, water, air, or building materials from the property and the laboratory or other analysis of these materials.

ii. The pre-printed terms of the WB-11 do not include a testing contingency.

iii. A buyer must separately include a test contingency in the additional provisions or by an addendum.

iv. A buyer should not use the blank lines in the inspection contingency to include a test.

v. A testing contingency should specify the area or materials to be tested, the purpose of a test, any limitations on testing and any obligations to restore the property afterwards.

vi. Common testing contingencies address radon, lead-based paint, and containments in water or soil.

b. Who Can Test in the WB-11 Offer to Purchase?i. Because there is no pre-printed testing contingency in the offer to

purchase, a buyer can designate anyone as the "tester" in a testing contingency.

ii. A seller always has the opportunity to counter the buyer's offer if the seller does not agree with the buyer's selected "tester."

iii. The offer to purchase gives the buyer the right to be present at any test agreed to in the offer.

c. Deadlinesi. Without a pre-printed testing contingency in the offer to purchase,

buyers and sellers are free to negotiate any deadlines they want for the testing included in a transaction.

ii. As with an inspection, the buyer will want to make sure the deadline is long enough for some negotiations between the parties based on the results of the tests.

d. Including Tests in an Offeri. With the pre-printed offer to purchase, the buyer can use the

additional provisions or an addendum to include a test or multiple tests in an offer.

ii. Many buyers use a version of the WRA's Addendum A. iii. There are many different versions of the Addendum A used throughout

the state. iv. The version that any particular agent uses may look different from an

Addendum A another agent uses. v. An agent working with a party should carefully review any Addendum

A being included with an offer because the terms and provisions may not be the same as the addendum the agent usually uses.

12

vi. For purposes of an example, these materials will focus on the WRA's Addendum A.

WISCONSIN REALTORS® ASSOCIATION4801 Forest Run Road Madison, WI 53704

ADDENDUM A TO THE OFFER TO PURCHASE

Page 1 of 2, WRA Addendum A

1 This Addendum is made part of the Offer to Purchase dated , made by

2

3 CAUTION: Buyer must include contingencies in this Offer for any additional tests or inspections Buyer wishes to conduct. Specific

4

5

6

7

8

9

("Buyer's" ifSTRIKE ONE

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

(X)

55

(Buyer(s)' Initials) (Date)

56

57

58

59

60

61

(Buyer), with respect to the Property at .

addenda are available for testing or evaluation of Wells, Well Water, Septic Systems, Lead-Based Paint, Wetlands and Lead/Arsenic

Pesticides. Parties should consult with legal counsel with questions regarding testing or this Addendum.

RADON TESTING CONTINGENCY: This Offer is contingent upon Buyer having a qualified third party perform a radon test at the

Property in a manner consistent with applicable EPA and Wisconsin Department of Health Services (DHS) protocols and standards and furnish

a current written report indicating the radon level is less than 4 picoCuries per liter (pCi/L), at (Buyer's) (Seller's)

neither is stricken) expense. This contingency shall be deemed satisfied unless Buyer, no later than days (after acceptance) (prior

to closing) STRIKE ONE ("prior to closing" if neither is stricken), delivers to Seller a written copy of the radon test results report indicating a

radon level of 4.0 pCi/L or higher. Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines 62-71

regarding the Right to Cure.

TESTING CONTINGENCY: This Offer is contingent upon (Buyer obtaining)(Seller providing) STRIKE ONE ("Buyer obtaining" if neither is

stricken) a current written report from a qualified independent expert documenting the results of the following test(s) conducted pursuant to

applicable government or industry protocols and standards [indicate substances or compounds to be tested, e.g., asbestos (see

http://www2.epa.gov/asbestos/protect-your-family), etc.]: , no later than days (after

acceptance)(prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), at (Buyer's) (Seller's) STRIKE ONE ("Buyer's" if neither is

stricken) expense. Specify any protocols, testing contractors, labs, standards/levels constituting a Defect, financial limits, acceptable repair

methodology, etc.: .

Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines 62-71 regarding the Right to Cure.

CLOSING: The Parties agree that the closing shall be held at (the place selected by Buyer's lender) (the place selected by Buyer)

( ) STRIKE AND COMPLETE AS APPLICABLE .

ASSOCIATION FEE: Buyer acknowledges the (monthly)(quarterly)(annual) STRIKE TWO association fee of $ .

HOME WARRANTY PLAN: Buyer has been informed of the availability of a limited home warranty plan. A limited home warranty plan for

a term of one year shall be included, effective on the date of closing, provided the Property qualifies for the plan. The cost of the home warranty

shall not exceed $ and will be paid by (Seller)(Buyer) STRIKE ONE ("Seller" if neither is stricken) at closing. The warranty plan

will be provided by the (listing)(cooperating) STRIKE ONE ("listing" if neither is stricken) broker. Buyer is advised that a home inspection may

detect pre-existing conditions which may not be covered under the warranty.

FLOOD INSURANCE PREMIUMS CONTINGENCY (also see lines 118-123): This Offer is contingent upon Buyer obtaining, an

insurance binder, certificate of insurance or other insurance company documentation or correspondence showing (that Buyer's annual premium

for flood insurance for Buyer's initial year of ownership after closing shall not exceed $ )(that Buyer's annual premium will not

exceed $ after years)(that the actuarial annual premium cost is computed to be no more than $ )

STRIKE AND COMPLETE AS APPLICABLE . This contingency shall be deemed satisfied unless Buyer, no later than days (after

acceptance)(prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), delivers to Seller written notice indicating that this contingency

has not been satisfied and documentation of the flood insurance premiums available to Buyer. If this contingency is not satisfied, Buyer may

terminate this Offer by delivering written notice of termination to Seller.

MAP OF THE PROPERTY: This Offer is contingent upon (Buyer obtaining) (Seller providing) STRIKE ONE ("Seller providing" if neither is

stricken) a (survey map)( ALTA/ACSM Land Title Survey) ( STRIKE AND COMPLETE AS APPLICABLE of the)

Property, dated after the date of acceptance of this Offer and prepared by a Wisconsin licensed land surveyor, within days of

acceptance, at (Buyer's) (Seller's) STRIKE ONE ("Seller's" if neither is stricken) expense. The map shall identify the legal description of the

Property, Property boundaries and boundary line dimensions, visible encroachments, location of any improvements, a minimum of

acres, a maximum of acres and: .

STRIKE AND COMPLETE AS APPLICABLE (Additional specifications/features may include, but are not limited to: staking Property corners,

streets, length of street or water frontage, legal access, total acreage or square footage, utility installations, easements or rights-of-way.

CAUTION: Consider cost and need for map features, and time required to obtain map.) This contingency shall be deemed satisfied unless

Buyer, within 5 days of the earlier of Buyer's Actual Receipt of the map or the deadline for delivery of said map, delivers to Seller a copy of the

map and a written notice which identifies: (1) a significant encroachment; (2) information materially inconsistent with prior representations or (3)

failure to meet requirements stated in this contingency. Upon delivery of Buyer's notice, this offer shall be null and void. This Offer shall be null

and void if Buyer delivers written notice to Seller, within 5 days of the deadline on lines 39-40, stating Seller failed to timely deliver the map (if

Seller was responsible to provide the map).

FEDERAL VA MORTGAGE: (Buyer)(Seller) STRIKE ONE ("Seller" if neither is stricken) agrees to pay the entire funding fee not to

exceed % (0% if not filled in) of the mortgage amount. Note: Funding fee may not be divided between the parties. Buyer agrees to

pay all other costs of securing financing.

SELLER'S CONTRIBUTION: Seller shall give Buyer a loan cost credit at closing in the amount of $ or % of the

purchase price to assist Buyer in paying loan closing costs such as points, prepayables and escrows. Buyer's loan costs shall include

and exclude STRIKE AND COMPLETE AS APPLICABLE .

NUMBER OF DAYS: The default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days.

READING/UNDERSTANDING: By initialing and dating this Addendum, each Party acknowledges they have received and carefully read all

pages of this Addendum. Initialing does not signify acceptance or agreement with the terms of this Addendum.

(X)

(Seller(s)' Initials) (Date)

Phone: Fax:


Wisconsin REALTORS Association

Wisconsin REALTORS Association, 4801 Forest Run Rd Ste 201 Madison, WI 53704 (608)241-2047Jennifer Lindsley

Untitled

Wisconsin REALTORS Association, 4801 Forest Run Rd Ste 201 Madison, WI 53704(608)241-2047 UntitledJennifer Lindsley

vii. The Addendum A gives parties a way to add a radon testing contingency.

1. This contingency requires that a qualified third party perform a radon test in accordance with the applicable Wisconsin Department of Health Services (DHS) and federal Environmental Protection Agency (EPA) rules for conducting radon testing.

2. A buyer can find a certified radon measurement and mitigation contractor on the DHS website.

3. If a credentialed professional or a contractor conducts the testing, that will help ensure that the applicable protocols and standards will be familiar to this person and properly employed during the testing procedure.

4. Many radon measurement contractors are also home inspectors.

5. The parties may choose who will pay for the testing using a [STRIKE ONE] feature with the default indicating that the buyer will pay for the test.

6. The offer is contingent upon the written testing results indicating a radon level less than 4.0 picoCuries per liter (pCi/L).

7. If the radon is too high, the buyer can deliver a copy of the written test results to the seller by the deadline stated on line 9.

8. This provision does not specifically call for a written notice to be delivered along with the copy of the written test results report because the fact that the results show a level of 4.0 pCi/L or higher will be self-evident, but a written notice may be used along with the test results, if desired.

9. The parties use the [STRIKE ONE] feature on line 11 to indicate whether the seller has the right to cure (the default is that the seller does have the right to cure) and the provision then points the parties to the Right to Cure provisions on lines 62-71.

13

viii. The Addendum A gives parties a way to add a generic testing contingency.

WISCONSIN REALTORS® ASSOCIATION4801 Forest Run Road Madison, WI 53704

ADDENDUM A TO THE OFFER TO PURCHASE


1 This Addendum is made part of the Offer to Purchase dated , made by

2

3 CAUTION: Buyer must include contingencies in this Offer for any additional tests or inspections Buyer wishes to conduct. Specific

4

5

6

7

8

9

("Buyer's" ifSTRIKE ONE

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

(X)

55

(Buyer(s)' Initials) (Date)

56

57

58

59

60

61

(Buyer), with respect to the Property at .

addenda are available for testing or evaluation of Wells, Well Water, Septic Systems, Lead-Based Paint, Wetlands and Lead/Arsenic

Pesticides. Parties should consult with legal counsel with questions regarding testing or this Addendum.

RADON TESTING CONTINGENCY: This Offer is contingent upon Buyer having a qualified third party perform a radon test at the

Property in a manner consistent with applicable EPA and Wisconsin Department of Health Services (DHS) protocols and standards and furnish

a current written report indicating the radon level is less than 4 picoCuries per liter (pCi/L), at (Buyer's) (Seller's)

neither is stricken) expense. This contingency shall be deemed satisfied unless Buyer, no later than days (after acceptance) (prior

to closing) STRIKE ONE ("prior to closing" if neither is stricken), delivers to Seller a written copy of the radon test results report indicating a

radon level of 4.0 pCi/L or higher. Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines 62-71

regarding the Right to Cure.

TESTING CONTINGENCY: This Offer is contingent upon (Buyer obtaining)(Seller providing) STRIKE ONE ("Buyer obtaining" if neither is

stricken) a current written report from a qualified independent expert documenting the results of the following test(s) conducted pursuant to

applicable government or industry protocols and standards [indicate substances or compounds to be tested, e.g., asbestos (see

http://www2.epa.gov/asbestos/protect-your-family), etc.]: , no later than days (after

acceptance)(prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), at (Buyer's) (Seller's) STRIKE ONE ("Buyer's" if neither is

stricken) expense. Specify any protocols, testing contractors, labs, standards/levels constituting a Defect, financial limits, acceptable repair

methodology, etc.: .

Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines 62-71 regarding the Right to Cure.

CLOSING: The Parties agree that the closing shall be held at (the place selected by Buyer's lender) (the place selected by Buyer)

( ) STRIKE AND COMPLETE AS APPLICABLE .

ASSOCIATION FEE: Buyer acknowledges the (monthly)(quarterly)(annual) STRIKE TWO association fee of $ .

HOME WARRANTY PLAN: Buyer has been informed of the availability of a limited home warranty plan. A limited home warranty plan for

a term of one year shall be included, effective on the date of closing, provided the Property qualifies for the plan. The cost of the home warranty

shall not exceed $ and will be paid by (Seller)(Buyer) STRIKE ONE ("Seller" if neither is stricken) at closing. The warranty plan

will be provided by the (listing)(cooperating) STRIKE ONE ("listing" if neither is stricken) broker. Buyer is advised that a home inspection may

detect pre-existing conditions which may not be covered under the warranty.

FLOOD INSURANCE PREMIUMS CONTINGENCY (also see lines 118-123): This Offer is contingent upon Buyer obtaining, an

insurance binder, certificate of insurance or other insurance company documentation or correspondence showing (that Buyer's annual premium

for flood insurance for Buyer's initial year of ownership after closing shall not exceed $ )(that Buyer's annual premium will not

exceed $ after years)(that the actuarial annual premium cost is computed to be no more than $ )

STRIKE AND COMPLETE AS APPLICABLE . This contingency shall be deemed satisfied unless Buyer, no later than days (after

acceptance)(prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), delivers to Seller written notice indicating that this contingency

has not been satisfied and documentation of the flood insurance premiums available to Buyer. If this contingency is not satisfied, Buyer may

terminate this Offer by delivering written notice of termination to Seller.

MAP OF THE PROPERTY: This Offer is contingent upon (Buyer obtaining) (Seller providing) STRIKE ONE ("Seller providing" if neither is

stricken) a (survey map)( ALTA/ACSM Land Title Survey) ( STRIKE AND COMPLETE AS APPLICABLE of the)

Property, dated after the date of acceptance of this Offer and prepared by a Wisconsin licensed land surveyor, within days of

acceptance, at (Buyer's) (Seller's) STRIKE ONE ("Seller's" if neither is stricken) expense. The map shall identify the legal description of the

Property, Property boundaries and boundary line dimensions, visible encroachments, location of any improvements, a minimum of

acres, a maximum of acres and: .

STRIKE AND COMPLETE AS APPLICABLE (Additional specifications/features may include, but are not limited to: staking Property corners,

streets, length of street or water frontage, legal access, total acreage or square footage, utility installations, easements or rights-of-way.

CAUTION: Consider cost and need for map features, and time required to obtain map.) This contingency shall be deemed satisfied unless

Buyer, within 5 days of the earlier of Buyer's Actual Receipt of the map or the deadline for delivery of said map, delivers to Seller a copy of the

map and a written notice which identifies: (1) a significant encroachment; (2) information materially inconsistent with prior representations or (3)

failure to meet requirements stated in this contingency. Upon delivery of Buyer's notice, this offer shall be null and void. This Offer shall be null

and void if Buyer delivers written notice to Seller, within 5 days of the deadline on lines 39-40, stating Seller failed to timely deliver the map (if

Seller was responsible to provide the map).

FEDERAL VA MORTGAGE: (Buyer)(Seller) STRIKE ONE ("Seller" if neither is stricken) agrees to pay the entire funding fee not to

exceed % (0% if not filled in) of the mortgage amount. Note: Funding fee may not be divided between the parties. Buyer agrees to

pay all other costs of securing financing.

SELLER'S CONTRIBUTION: Seller shall give Buyer a loan cost credit at closing in the amount of $ or % of the

purchase price to assist Buyer in paying loan closing costs such as points, prepayables and escrows. Buyer's loan costs shall include

and exclude STRIKE AND COMPLETE AS APPLICABLE .

NUMBER OF DAYS: The default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days.

READING/UNDERSTANDING: By initialing and dating this Addendum, each Party acknowledges they have received and carefully read all

pages of this Addendum. Initialing does not signify acceptance or agreement with the terms of this Addendum.

(X)

(Seller(s)' Initials) (Date)

Phone: Fax:


Wisconsin REALTORS Association

Wisconsin REALTORS Association, 4801 Forest Run Rd Ste 201 Madison, WI 53704 (608)241-2047Jennifer Lindsley

Untitled

Wisconsin REALTORS Association, 4801 Forest Run Rd Ste 201 Madison, WI 53704(608)241-2047 UntitledJennifer Lindsley

1. The provision on lines 13-20 of the Addendum A is a generic testing contingency that can be completed to apply to tests for various substances or compounds, such as asbestos or other chemicals that the buyer would like to have tested.

2. Note that this contingency requires that either the buyer obtain or the seller provide a written report from a qualified independent expert documenting the test results.

3. If a credentialed professional is used for the testing, that will help ensure that the required “applicable government or industry protocols and standards” will be familiar to this person and properly employed during the testing procedure.

4. There is a blank on line 19 where the parties may specify any protocols, testing contractors, labs, standards/levels constituting a defect, financial limits, acceptable repair methodologies, or other parameters they want to have applied to the testing.

5. The report must be obtained or provided by the deadline inserted on lines 16-17.

6. If this is not completed, the default is 21 days prior to closing. 7. The testing will be at the buyer’s expense unless the [STRIKE

ONE] feature is used to indicate that the seller will pay. 8. Often the buyer will strike “Seller’s” because the buyer wants

to select the contractor and pay for the testing — in other words, be able to control the process to make sure that the testing is conducted objectively.

9. The parties indicate on line 20 whether the seller has the right to cure using the [STRIKE ONE] feature, with the default being that the seller does have the right to cure.

14

ix. The Contingency Satisfaction/Right to Cure Provisions in the Addendum A relate to both the radon testing contingency and the generic testing contingency.


62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

116

Copyright © 2014 by Wisconsin REALTORS® Association Drafted by: Attorney Debra Peterson Conrad

117

118

119

120

121

122

123

124

125

126

127

128

CONTINGENCY SATISFACTION/RIGHT TO CURE (radon or testing contingency): The contingency shall 62 be deemed satisfied

unless Buyer, within 5 days of the earlier of: 1) Buyer's Actual Receipt of the applicable testing report(s) or 2) the deadline for delivery

of said report(s), delivers to Seller a copy of the written report(s) and written notice stating why the report(s) do(es) not satisfy the

contingency standard. If Seller has the right to cure, Seller may satisfy this contingency by (1) delivering a written notice of Seller's

election to cure within 10 days of receipt of Buyer's notice; and (2) by curing the defects in a good and workmanlike manner that

satisfies the standard set forth in the selected contingency and by giving Buyer a report of the work done prior to closing. This Offer

shall be null and void if Buyer timely delivers the above written notice(s) and report(s) to Seller and (1) Seller does not have the right

to cure; or (2) Seller has a right to cure but: a) Seller delivers written notice that Seller will not cure or b) Seller does not timely deliver

the notice of election to cure. This Offer shall be null and void if Buyer delivers notice to Seller, within 5 days of the delivery deadline,

stating Seller failed to deliver report(s) by the respective stated deadline [if Seller was responsible to provide the report(s)].

INSPECTIONS, TESTS AND OPINIONS: It is recommended that Buyer have the Property and specific Property

components of concern inspected by a Wisconsin registered home inspector or qualified independent inspectors/experts.

Real estate agents in this transaction may furnish a list of qualified, independent inspectors and testers. Unless provided in writing,

no representation has been made as to the competency of these inspectors/testers. The Party responsible for obtaining an inspection

or test shall be solely responsible for determining the qualifications of the inspector and tester. If a broker orders any inspection or

test on behalf of a Party in this transaction, the Parties agree to hold the broker harmless for any damages or liability resulting from

the inspection or test, other than that caused by the broker's negligence or intentional wrongdoing.

BUYER'S RESPONSIBILITY TO ASCERTAIN CONDITION OF THE PROPERTY: Buyer acknowledges that it is Buyer's

responsibility to confirm that the Property is in a condition that Buyer finds acceptable and accordingly has conducted such tests,

inspections, evaluations and independent inquiries as Buyer deems necessary. Buyer has relied upon Buyer's independent Property

inspection and tests; the statements, disclosures and representations contained in this Offer; Seller's property condition report (if

any); and any other written statements provided to Buyer. Buyer acknowledges that neither Seller nor any real estate agents have

made any representations concerning the Property or the transaction other than those provided in writing. Buyer has not requested

verification of accuracy of any Seller or third party statements, disclosures or representations unless specifically stated in this Offer.

HAZARDOUS SUBSTANCES: The parties are aware that news media and other public information sources indicate that

asbestos, lead-based paint, lead in drinking water, unsafe levels of mold, radium, radon gas and other toxic substances and

chemicals within a structure or in soils or water supplies can cause serious health hazards. Past flooding, water intrusion, leaking or

excessive dampness may result in mold growth that may present health risks. Synthetic stucco and wood composite exterior house

siding have been associated with moisture and mold related problems. Seller represents that, to the best of Seller's knowledge, the

Property does not contain asbestos, lead-based paint, excessive moisture or water intrusions, abnormal or unsafe concentrations of

mold, radon gas, lead, radium or other toxic or harmful substances or chemicals, and that there has been no past flooding, water

intrusion, leaking or excessive moisture in the Property. See the caution at lines 3-5 and the testing contingencies in this Addendum.

UNDERGROUND STORAGE TANKS AND BASEMENT FUEL OIL TANKS: Seller has no knowledge of any petroleum product

contamination on the Property. If there is an abandoned underground storage tank (UST) or basement or aboveground storage tank

(AST) on the Property, Seller shall, at least 5 days prior to closing, deliver to Buyer written confirmation that the tank and related

components have been closed in full conformance with current federal, state and local regulations. Seller's written confirmation shall

include a copy of any applicable contractor's report and any required Department of Agriculture, Trade and Consumer Protection

(DATCP) registration. Seller shall provide Buyer at least 5 days prior to closing with documentation confirming that any in-use UST,

AST or basement tank meets all current state and federal operating standards. Buyer shall notify DATCP of the change of ownership

of an in-use UST within 15 business days of closing. Visit http://datcp.wi.gov/Consumer/Hazardous_Materials_Storage_Tanks/.

MUNICIPAL REPORT/CODE COMPLIANCE: Seller agrees to provide Buyer with written verification of paid real estate taxes,

current or planned special assessments and any unpaid municipal charges affecting the Property, if such a statement is available

from the municipality. A Certificate of Code Compliance, Occupancy Permit or similar government documentation also may be

required. These statements shall be provided by Seller at or before closing at Seller's expense, unless otherwise provided in writing.

ZONING AND BUILDING RESTRICTIONS, COMPREHENSIVE PLANS AND NON-CONFORMING STRUCTURES: Municipal

zoning and building restrictions may affect use of the Property, and comprehensive plans may affect future use or value of the

Property by influencing future development in the municipality. Buyer is informed that some buildings are considered legal non-

regarding zoning and building restrictions and comprehensive plans if these issues are material to Buyer's decision to purchase.

conforming structures because they no longer conform to current dimensional zoning standards due to zoning standards and

ordinances enacted after the building was constructed. Buyer's ability to remodel, repair, replace or enlarge an existing non-

conforming structure may be regulated by the municipality. Buyer is encouraged to contact the appropriate municipal authorities

INSURANCE ISSUES: Seller agrees to allow representatives of Buyer's insurance company reasonable access to the Property

upon advance notice for inspections relating to Buyer's homeowner's insurance application. The Parties are advised to contact their

insurance agents with questions regarding insurability and costs.

FLOOD PLAINS/WETLANDS/SHORELAND: Buyer acknowledges that it is recommended that Buyer seek professional

assistance in interpreting any flood plain, wetlands and shoreland maps.

FLOOD INSURANCE: Buyer's mortgage lender may require Buyer to purchase flood insurance in connection with the purchase of

the Property. The National Flood Insurance Program (NFIP) (https://www.floodsmart.gov/floodsmart/) provides for the availability of

flood insurance and establishes flood insurance premiums based on the risk of flooding. Recent changes to federal law may result in

flood insurance premiums that are likely higher, and in the future may be substantially higher, than premiums paid by Seller. Buyer

should consult with one or more flood insurance carriers regarding flood insurance coverage, current and future premiums, and

whether Buyer may assume Seller's policy. Buyer may wish to contact NFIP for information about flood insurance for this Property.

FEDERAL VA AND FHA MORTGAGE: If this Offer is contingent upon Buyer obtaining a FHA or Federal VA loan, it is also

contingent upon the Parties executing an FHA or Federal VA amendment to the contract which shall give Buyer the right to terminate

the Offer if the Property fails to appraise for the purchase price.

MUNICIPALITY DISCREPANCY: Buyer acknowledges that while the Property mailing address may be within one municipality, the

Property may be physically located in an adjoining municipality that will determine the applicable property taxes and school district.

No representation is made as to the legal validity of any provision or the adequacy of any provision in any specific transaction.

Produced with zipForm® by zipLogix 18070 Fifteen Mile Road, Fraser, Michigan 48026 www.zipLogix.com Untitled

1. The Testing Contingency is deemed satisfied unless the buyer delivers a copy of the written test result report and written notice to the seller, within five days of the buyer’s actual receipt of the test results or the deadline on line 16, stating why the report does not satisfy the standard stated in the contingency.

2. Like in the WB-11 Inspection Contingency, a seller who has the right to cure has 10 days from the buyer’s delivery of the written notice and report to choose whether to cure the listed objections, let the offer become null and void, or propose an alternate solution.

3. Giving the seller notice puts the power to decide the fate of the offer in the seller’s hands.

4. The seller could propose an amendment to the offer. 5. The seller could deliver a written notice to the buyer stating

the seller’s election to cure the defects identified in the buyer’s notice in a good and workmanlike manner.

6. The seller could also deliver a written notice to the buyer advising the buyer that the seller will not cure, or the seller could let the 10 days lapse.

7. These last two actions (notice to not cure and letting the time run out) would have the result of making the offer null and void.

8. In addition, lines 70-71 indicate that the offer is null and void if the buyer delivers notice to the seller, within five days of the delivery deadline from line 16, stating that the seller failed to deliver the testing report by the stated deadline (if it was the seller who was responsible to provide the report).

9. This once again emphasizes the need to choose time frames carefully and allow adequate time to conduct the testing, produce and deliver the written report, allow the right to cure mechanisms to function, and give the seller enough time to investigate and implement any appropriate corrective measures to cure the identified problem.

x. The Addendum B can be used to add tests for well water.

15

e. Including Tests with an Option

314

315

316

317

318

319

320

321

322

323

324

325

326

327

328

329

330

331

332

333

334

335

336

338

339

340

341

342

343

344

350

351

352

353

Page 7 of 7, WB-24Property Address:

ADDENDA: The attached is/are made part of this Option.

This Option was drafted by [Licensee and Firm]

(x)Buyer’s/Authorized Signature Print Name/Title Here Date

(x)Buyer’s/Authorized Signature Print Name/Title Here Date

SELLER GRANTS THIS OPTION. THE WARRANTIES, REPRESENTATIONS AND COVENANTS MADE IN THIS OPTION SURVIVE

CLOSING AND THE CONVEYANCE OF THE PROPERTY. SELLER AGREES TO CONVEY THE PROPERTY ON THE TERMS AND

CONDITIONS AS SET FORTH HEREIN AND ACKNOWLEDGES RECEIPT OF A COPY OF THIS OPTION.

This Option was presented to Seller by [Licensee and Firm]

on at a.m./p.m.

This Option is rejected This Option is counteredSeller Initials Date

on .


AUTHORIZATION FOR APPRAISAL, INSPECTIONS AND TESTS Buyer is authorized to have the Property appraised by a Wisconsin licensed or certified

appraiser and to conduct the following inspections and tests (see lines 304-313) prior to Buyer's exercise of this Option. Any inspection(s) and test(s) shallbe performed by a qualified independent inspector or expert, or an independent qualified third party. Inspections and testing shall be conducted pursuant togovernment or industry protocols and standards, as applicable.List inspections (e.g., home, roof, foundation, septic) here:

List tests (e.g., radon, lead-based paint, well water) here:

ADDITIONAL PROVISIONS

NOTE: Any testing authorizations should specify the areas of the Property to be tested, the purpose of the test, (e.g., to determine if

environmental contamination is present), any limitations on Buyer's testing and any other material terms.

Describe additional inspections and tests, if any, at lines 256-263 or 326-330 or attach as an addendum per line 325.

IF GRANTED, THIS OPTION CAN CREATE A LEGALLY ENFORCEABLE CONTRACT. BOTH PARTIES SHOULD READ THIS OPTION AND ALL

ATTACHMENTS CAREFULLY. BROKERS MAY PROVIDE A GENERAL EXPLANATION OF THE PROVISIONS OF THE OPTION BUT ARE

PROHIBITED BY LAW FROM GIVING ADVICE OR OPINIONS CONCERNING YOUR LEGAL RIGHTS UNDER THIS OPTION OR HOW TITLE

SHOULD BE TAKEN AT CLOSING IF THE OPTION IS EXERCISED. AN ATTORNEY SHOULD BE CONSULTED IF LEGAL ADVICE IS NEEDED.

337 Buyer Entity Name (if any):

345 Seller Entity Name (if any):

346 (x)Print Name/Title Here DateSeller’s/Authorized Signature347

(x)348

DateSeller’s/Authorized Signature Print Name/Title Here349

Seller Initials Date

354

355

NOTE: Parties wishing to counter this Option should draft a new Option (WB-24) or draft a Counter-Offer (WB-44) to reference this Option.

NOTICE OF EXERCISE OF OPTION356 Purchase.

By signing below and delivering this notice (see lines 35-54) to Seller, Buyer hereby exercises this Option to

357 Buyer Entity Name (if any):

358 (x)Print Name/Title Here DateBuyer’s/Authorized Signature359

(x)360

DateBuyer’s/Authorized Signature Print Name/Title Here361

Untitled

i. The section in the WB-24 Option to Purchase allows the buyer include any test or inspection the buyer wants to complete before deciding whether to exercise the option.

ii. The pre-printed terms of the option do not have testing or inspection contingencies because the transaction does not succeed or fail as a direct consequence of testing or inspection results.

iii. The buyer chooses whether or not to exercise the option based on the results of any authorized test and inspection.

iv. The buyer does not have to provide a notice of defects or other objection to the results of a test or an inspection to terminate the transaction.

v. The buyer can let the option expire as a way to terminate the transaction.

vi. A buyer conducting tests or inspections as part of the option process must still share those results with the seller regardless of whether the buyer intends to exercise the option.

269

Page 6 of 7, WB-24

270

271

272

273

274

275

276

277

278

279

280

281

282

283

284

285

286

287

288

289

290

291

292

293

294

295

296

297

298

299

300

301

302

303

304

305

306


CONDOMINIUM UNITS

CAUTION: If this Option involves a condominium unit, Buyer should obtain and review the condominium disclosure documents before

entering into this Option. See lines (198-208)If the Property is a residential condominium unit, Seller must comply with the following:

of: (1) Buyer's Actual Receipt of the disclosure materials or requested missing documents or (2) upon the deadline for Seller's delivery

of the documents.

307

308

309

310

311

312

313

INSPECTIONS AND TESTING Buyer may only conduct inspections or tests if specific authorizations are included in this Option. An "inspection"is defined as an observation of the Property which does not include an appraisal or testing of the Property, other than testing for leaking carbonmonoxide, or testing for leaking LP gas or natural gas used as a fuel source, which are hereby authorized. A "test" is defined as the taking ofsamples of materials such as soils, water, air or building materials from the Property and the laboratory or other analysis of these materials. Selleragrees to allow Buyer's inspectors, testers, appraisers and qualified third parties reasonable access to the Property upon advance notice, ifnecessary to perform the activities authorized in this Option. Buyer and licensees may be present at all inspections and testing. Except asotherwise provided, Seller's authorization for inspections does not authorize Buyer to conduct testing of the Property. Buyer agrees to promptlyrestore the Property to its original condition after Buyer's inspections and testing are completed unless otherwise agreed to with Seller. Buyeragrees to promptly provide copies of all inspection and testing reports to Seller. Seller acknowledges that certain inspections or tests may detectenvironmental pollution which may be required to be reported to the Wisconsin Department of Natural Resources.

CONDOMINIUM DISCLOSURE MATERIALS: Seller agrees to provide Buyer, at Seller's cost, within 10 days of Buyer exercising this Option,but no later than 15 days prior to closing, current and accurate copies of the condominium disclosure materials required by Wis. Stat. § 703.33.

executive summary.BUYER RESCISSION RIGHTS: As provided in Wis Stat. § 703.33(4)(a), Buyer may, within 5 business days of receipt of all the required

disclosure documents, rescind this Option by written notice delivered to Seller. If the disclosure materials are delivered to Buyer and Buyer does

deadline for Seller's delivery of the documents [Wis. Stat. § 703.33(4)(b)]. The Parties agree that the 5 business days begin upon the earlier

not receive all of the disclosure documents, Buyer may, within 5 business days of Buyer's receipt of the disclosure materials, either rescind theOption or request any missing documents. Seller has 5 business days following receipt of Buyer's request for missing documents to deliver therequested documents. Buyer may rescind the sale within 5 business days of the earlier of Buyer's receipt of requested missing documents or the

The condominium disclosure materials include a copy of the following and any amendments to any of these [except as may be limited for smallcondominiums with no more than 12 units per Wis. Stat. § 703.365(1)(b) and (8)]: (a) proposed or existing declaration, bylaws and any rules orregulations, and an index of the contents; (b) proposed or existing articles of incorporation of the association, if it is or is to be incorporated; (c)

condominium; (d) projected annual operating budget for the condominium including reasonable details concerning the estimated monthlypayments by the purchaser for assessments and other monthly charges; (e) leases to which unit owners or the association will be a party; (f)general description of any contemplated expansion of condominium including each state of expansion and the maximum number of units that canbe added to the condominium; (g) unit floor plan showing location of common elements and other facilities available to unit owners; (h) the

proposed or existing management contract, employment contract or other contract affecting the use, maintenance or access of all or part of the

NOTE: BUYER SHOULD READ ALL DOCUMENTS CAREFULLY. BROKERS MAY PROVIDE A GENERAL EXPLANATION OF THE

PROVISIONS OF THE DOCUMENTS BUT ARE PROHIBITED BY LAW FROM GIVING LEGAL ADVICE OR OPINIONS.ADDITIONAL CONDOMINIUM ISSUES: In addition to the disclosure materials required by Wis. Stat. § 703.33, Buyer may wish to consider reviewing

other condominium materials as may be available, such as copies of: the condominium association's financial statements for the last two years, theminutes of the last 3 Unit owners' meetings, the minutes of condominium board meetings during the 12 months prior to acceptance, information aboutcontemplated or pending condominium special assessments, the association's certificate of insurance, a statement from the association indicating thebalance of reserve accounts controlled by the association, a statement from the association of the amount of any unpaid assessments on the unit (per Wis.Stat. § 703.165), any common element inspection reports (e.g. roof, swimming pool, elevator and parking garage inspections, etc.), any pending litigationinvolving the association and the declaration, bylaws, budget and/or most recent financial statement of any master association or additional association theunit may be part of. Not all of these materials may exist or be available from the condominium association.

fee are not deposits subject to return under Wis. Stat. § 703.33(4)(c).OPTION FEES NOT A DEPOSIT: The Parties agree that if this Option is for a residential condominium unit, the option fee and any option extension

Untitled

16

Inspection or Testing Process When helping a buyer find a registered home inspector or a person to conduct testing, the agent should avoid recommending or endorsing one particular inspector or service provider for a test. A recommendation that does not present the buyer with options can result in liability for the agent and the agent's broker. A list of three names for an inspector or three providers for a particular test should be given including any available references from past users. A disclaimer that agents cannot personally endorse any inspector or test provider is helpful.

Once the buyer has selected the home inspector or test provider(s), the cooperating agent arranges a time through the listing agent for the home inspection or test providers to access the property.

Whether or not to accompany the home inspector or the test provider is a decision the agent should make after discussing it with the agent's broker. A buyer may want the agent to attend the home inspection or be present for testing but the agent's attendance can give the impression that the agent is supervising the process. An agent should reinforce that the buyer hired the home inspector or test provider and let the buyer deal directly with the inspector.

"Inspections, Tests, Appraisals, and Opinions" - 2012 WISCONSIN REAL ESTATE CLAUSES Contingencies and Other Standard ProvisionsReal estate agent(s) may furnish a list of independent inspectors/testers to the Seller/Buyer. Unless provided in writing, no representation has been made as to the competency of the inspectors/testers. The Party designated as responsible for obtaining an inspection shall be solely responsible for determining the qualifications of the inspector/tester. In the event any inspection or test is ordered on behalf of the Seller or Buyer by the broker in the transaction, the Parties agree to hold the broker harmless for any damages or liability resulting from the inspection or test, other than that caused by the broker's negligence or intentional wrongdoing. Buyer may receive copies of certain inspection, test, appraisal or other reports prepared for other persons. Buyer should carefully review these reports to determine the age and purpose of the report and the standards of practice followed by the individual preparing the report. It is recommended that the Buyer have the Property inspected by a Wisconsin registered home inspector or other qualified independent inspector/tester (for inspections other than a "home inspection").

17

III. Results a. Inspection Results

i. The home inspector must submit a written report to the client. ii. The report is the home inspector's written opinion concerning the

condition of a residential structure and improvements as well as the mechanical and structural components.

iii. There is not a specific form that the home inspector must use. iv. The buyer agrees to furnish copies of the inspection report to the

seller. v. The buyer must give a copy of the report to the seller regardless of

whether the buyer is going to issue a notice of defects. vi. The seller can share that report with subsequent buyers if the initial

transaction falls apart. vii. A prudent buyer will want to order a home inspection in addition to

reviewing any existing and available reports.

A home inspection report must:

• List the components, systems, and other items the home inspector was required to inspect;

• List the components, systems, and other items that the home inspector has inspected;

• Describe the condition of the components, systems, and items the home inspector was required to inspect;

• Describe the condition of any component, system, or item that, if not repaired, will have a significant adverse effect on the life expectancy of that component, system, or item; and

• List any material adverse facts that a home inspector has knowledge of or has observed.

A “material adverse fact,” for purposes of a home inspection, is a condition or occurrence that is generally recognized by a competent home inspector as significantly reducing the functionality or structural integrity of property components or systems, or posing a significant health or safety risk to occupants of the structure and improvements. A home inspector is not required to retain inspectors or investigators to perform follow-up inspections or investigations of any material adverse facts that a home inspector has learned or observed.

viii. A home inspection result will not typically identify code violations but may include language indicating that the property is new and therefore should not have any code violations.

ix. The report will also indicate if there are components not present in the property or if some components were not inspected.

18

b. Test Results i. The buyer must share the test results with the seller even if the buyer

is not objecting to the results. ii. If testing is conducted without proper authorization in a separate

contingency, the results are arguably not the basis for a notice of defects under the inspection contingency.

iii. Listing test results on a notice of defects may trigger a response from the seller's attorney contesting the validity of the notice.

Sharing the Test and Inspection Results with the SellerThe offer to purchase says that the buyer agrees to promptly provide copies of inspection and testing reports to the seller. Promptly is not defined. A buyer who knows the test or inspection results but who has not yet shared them with the seller may have the "upper-hand" in subsequent negotiations. The buyer has a home inspection completed. The home inspection reveals no major defects. The buyer does not promptly send over the home inspector's report but rather sends over an amendment proposing a reduction in the purchase price and agreeing to waive the home inspection. The seller suspects that the price reduction is being suggested because of something the buyer found in the home inspection. The seller accepts the amendment because the seller is afraid the buyer will issue a notice of defects if the seller does not accept it.The seller could try to propose an alternate amendment or push the buyer to send over the inspection report but because the home inspection process is typically so quick, the seller may feel pressured to accept it. It would be unethical and a violation of an agent's duties to recommend this strategy to a buyer. An agent has a duty to provide brokerage services honestly and fairly and an agent owes this duty to all parties in a transaction.

IV. Defecta. Definition of a Defect

DEFINITIONS CONTINUED FROM PAGE 2 173

■ DEADLINES: “Deadlines” expressed as a number of “days” from an event, such as acceptance, are calculated by excluding 174

the day the event occurred and by counting subsequent calendar days. The deadline expires at midnight on the last day. 175

Deadlines expressed as a specific number of “business days” exclude Saturdays, Sundays, any legal public holiday under 176

Wisconsin or Federal law, and any other day designated by the President such that the postal service does not receive 177

registered mail or make regular deliveries on that day. Deadlines expressed as a specific number of “hours” from the 178

occurrence of an event, such as receipt of a notice, are calculated from the exact time of the event, and by counting 24 hours 179

per calendar day. Deadlines expressed as a specific day of the calendar year or as the day of a specific event, such as 180

closing, expire at midnight of that day. 181

■ DEFECT: “Defect” means a condition that would have a significant adverse effect on the value of the Property; that would 182

significantly impair the health or safety of future occupants of the Property; or that if not repaired, removed or replaced would 183

significantly shorten or adversely affect the expected normal life of the premises. 184

■ FIXTURE: A “Fixture” is an item of property which is physically attached to or so closely associated with land or 185

improvements so as to be treated as part of the real estate, including, without limitation, physically attached items not easily 186

removable without damage to the premises, items specifically adapted to the premises and items customarily treated as 187

fixtures, including, but not limited to, all: garden bulbs; plants; shrubs and trees; screen and storm doors and windows; electric 188

lighting fixtures; window shades; curtain and traverse rods; blinds and shutters; central heating and cooling units and attached 189

equipment; water heaters and treatment systems; sump pumps; attached or fitted floor coverings; awnings; attached 190

antennas; garage door openers and remote controls; installed security systems; central vacuum systems and accessories; in-191

ground sprinkler systems and component parts; built-in appliances; ceiling fans; fences; storage buildings on permanent 192

foundations and docks/piers on permanent foundations. 193

CAUTION: Exclude any Fixtures to be retained by Seller or which are rented (e.g., water softener or other water 194

conditioning systems, home entertainment and satellite dish components, L.P. tanks, etc.) on lines 17-18. 195

■ PROPERTY: Unless otherwise stated, “Property” means the real estate described at lines 4-7. 196

PROPERTY DIMENSIONS AND SURVEYS Buyer acknowledges that any land, building or room dimensions, or total 197

acreage or building square footage figures, provided to Buyer by Seller or by a broker, may be approximate because of 198

rounding, formulas used or other reasons, unless verified by survey or other means. 199

CAUTION: Buyer should verify total square footage formula, total square footage/acreage figures, and land, building 200

or room dimensions, if material. 201

BUYER’S PRE-CLOSING WALK-THROUGH Within 3 days prior to closing, at a reasonable time pre-approved by Seller or 202

Seller's agent, Buyer shall have the right to walk through the Property to determine that there has been no significant change 203

in the condition of the Property, except for ordinary wear and tear and changes approved by Buyer, and that any defects 204

Seller has agreed to cure have been repaired in the manner agreed to by the Parties. 205

PROPERTY DAMAGE BETWEEN ACCEPTANCE AND CLOSING Seller shall maintain the Property until the earlier of 206

closing or occupancy of Buyer in materially the same condition as of the date of acceptance of this Offer, except for ordinary 207

wear and tear. If, prior to closing, the Property is damaged in an amount of not more than five percent (5%) of the selling price, 208

Seller shall be obligated to repair the Property and restore it to the same condition that it was on the day of this Offer. No later 209

than closing, Seller shall provide Buyer with lien waivers for all lienable repairs and restoration. If the damage shall exceed 210

such sum, Seller shall promptly notify Buyer in writing of the damage and this Offer may be canceled at option of Buyer. 211

Should Buyer elect to carry out this Offer despite such damage, Buyer shall be entitled to the insurance proceeds, if any, 212

relating to the damage to the Property, plus a credit towards the purchase price equal to the amount of Seller's deductible on 213

such policy, if any. However, if this sale is financed by a land contract or a mortgage to Seller, any insurance proceeds shall 214

be held in trust for the sole purpose of restoring the Property. 215

Page 4 of 9, WB-11

b. What is Defect?i. Whether any item listed is actually a defect is determined on a case-

by-case basis. ii. If the parties cannot agree on whether an item is a defect, as defined

in the offer, then the parties should be directed to their respective attorneys for advice.

c. What is not a Defect?i. Defects do not include structural, mechanical or other conditions if

the buyer had actual knowledge or received written notice describing the nature and extent of these conditions before signing the offer.

19

ii. Defects which have been previously disclosed in sufficient detail so that the buyer is aware of the nature and extent thereof cannot be listed by the buyer as a defect when the buyer gives a notice of defects under the inspection contingency.

Actual Knowledge of a Defect

The seller discloses a leaky roof on the seller's condition report. This arguably does not reveal the full nature and extent of the defect. If the home inspection report gives a more complete description and explanation, the buyer may list the leaking roof on the notice of defects. On the other hand, if the seller gives a more complete description such as “the roof leaked near the fireplace during heavy rains due to deteriorated shingles which are 23 years old" it is much more likely that the home inspection will not significantly add any detail about the nature and extent of the defect. The buyer probably would not be able to properly list the leak in the roof on a notice of defects.

This encourages the seller to give full disclosure of defects because a “fully disclosed defect” cannot be used as an “out” for the buyer. Even if the seller discloses the full extent of a problem, e.g. a damaged roof that needs to be replaced, sometimes the buyer still wants to investigate the matter further, get estimates for the work and then decide if the buyer wants to purchase the property. The buyer could specify that the defect could still be the subject of a notice once the buyer gets additional information regarding the cost, health concerns, or impact on value.

Adding language that indicates that the parties agree that a fully disclosed defect may still be the subject of a notice of defects if the cost for replacement exceeds a given amount, or striking the sentence that excludes fully disclosed defects are possible ways to address the situation.

d. The Home Inspector's Reporti. The inspection report will not directly identify anything as a defect as

defined in the offer to purchase but rather will include comments from the home inspector regarding the inspected components.

ii. The report may describe some components as defective but that does not automatically mean that it constitutes a defect according to the offer to purchase.

iii. The report will typically classify items as being in satisfactory, fair, or poor condition.

Home Inspection Report Does Not Equal a List of Defects Explain to the buyer that everything listed on the home inspection report may not fit the definition of defect in the inspection contingency. Buyers who list every item identified in the home inspection report on a notice of defects will be engaged in overkill. Many items shown in a home inspection report will not be serious enough to be a defect.

20

e. Test Resultsi. Test results do not typically specify whether something is or is not a

defect but rather a test contingency succeeds or fails based on the analysis of the tested material.

ii. Test results could be a defect if the buyer structured the test contingency in that matter.

iii. Measuring test results and understanding their affect on the offer requires setting standards for success or failure of the test.

Defective vs. Defect

• Roof, furnace, water heater, etc. is old - probably not defective, probably not a defect.

• "Soft-close" drawers not operating correctly - defective, probably not a defect.• Garage door opener not reversing - defective, maybe a defect.

• Furnace is inoperable - defective, probably a defect.

Home Inspection Report Lists: Inspection Contingency Definitions:

The condition of any component, improvement or item that, if not repaired, will have significant adverse effect on the life expectancy of the item.

A structural, mechanical or other condition that would have a significant adverse effect on the value of the property.

Conditions that may significantly reduce the functionality or structural integrity property components or systems. .

A structural, mechanical or other condition that would significantly shorten or have a significant adverse effect on the expected normal life of the property.

Conditions that may pose a significant health or safety risk to occupants of the structure and improvements.

A structural, mechanical or other condition that would pose a significant health or safety risk to occupants of the structure and improvements.

V. Amendmenta. Using the WB-40 Amendment to Offer to Purchase

i. Either party could use the WB-40 Amendment to Offer to Purchase to take advantage of the option of negotiating a resolution to the buyer's concerns.

ii. Negotiation takes the parties out of the all-or-nothing notice of defect process.

iii. Use of proposed amendments may give the parties a way to reach an acceptable resolution tailored by the parties.

iv. A proposed amendment is not a notice of defects.

21

v. Such an amendment may state: “This is not a notice of defects. Seller agrees to (perform the following repairs) and/or (give the following credit at closing) and/or (establish the following repair escrow).”

vi. The proposals should include details, time frames, costs, materials, contractors, consultants, etc.

vii. The seller would have an option to accept or reject the proposed amendment, or propose a different amendment back to the buyer.

viii. The deadline for acceptance of the amendment should ideally be earlier than the deadline for the buyer giving a notice of defects.

ix. If the seller does not sign a proposed amendment, the offer remains unchanged and the buyer must decide whether to try another amendment, issue a notice of defects, or purchase the property, defects and all.

x. Proposing an amendment to a seller does not trigger a seller's right to cure.

xi. The amendment could be used to suggest repairs, price reductions, or concessions to address the results of a test or an inspection.

xii. An amendment could also be used if the buyer submitted a notice of defects but either the buyer or the seller would now like to propose an alternative solution.

1. The amendment, if agreed too, would serve to rescind the notice of defects and state the alternate solution the parties have agreed to.

2. The buyer or the seller could use the following language: “The right to cure provisions at lines 427- 433 of the offer are deleted and the buyer’s notice of defects is withdrawn.”

b. Timingi. Ideally, a buyer should have enough time to offer more than one

amendment to a seller if the buyer wants to negotiate about the results of inspections or tests.

ii. A buyer and a seller could also use an amendment to extend the deadline in any testing or inspection contingency.

1. Sometimes a buyer and a seller need more time to try to address the results of the buyer's inspection or test.

2. Rather than forcing the buyer to issue a notice of defects and potentially end the transaction, the parties can agree by an amendment to move the deadline so the parties can continue to negotiate.

iii. When an agent is drafting an amendment for a buyer, an agent will want to make the deadline for accepting the amendment expire before the buyer has to issue a notice of defects.

iv. If a buyer proposes an amendment that the seller does not accept, and the deadline in the inspection or test contingency passes, the buyer has agreed to purchase the property regardless of the results of the inspection or test.

22

Question: After the inspection mold was observed in the attic. This turned the buyer off to the property. The seller had the right to cure in the contract. The buyers gave an amendment stating they did not want the property due to the inspection report and accompanied it with a mutual release. The seller refused the amendment and signed it as rejected, and left the mutual release blank. The seller also gave the buyers a notice of curing defects that were listed on summary page of inspection report. The buyers went to an attorney, who instructed them to have the agent draft a 5 page notice of defects indicating how they wanted the defects addressed.Does buyer have to reject the seller's notice electing to cure? All of the above was completed in the time lines set in the offer for an inspection. What if the buyer gives notice of items that are not defects?

Answer: Per line 424 and the terms of the Inspection Contingency in the WB-11 Residential Offer to Purchase, the seller's election to cure is not triggered by an amendment. Line 424 states, "CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement."It is the buyer's prerogative to use an amendment to negotiate with the seller. An amendment may be used for defects, as defined in the offer at lines 182-184, or other conditions listed in the inspection report. Given the only way to trigger the seller's election to cure is by giving a notice of defects, it is in essence premature and out of order for the seller to elect to cure prior to receiving a notice of defects. If the buyer subsequently delivers a notice of defects the seller may choose to issue a second notice of election to cure after receipt of the buyer's notice. When a buyer delivers a notice of defects, the buyer only need list the defects to which he objects to trigger the seller's election to cure. The buyer and seller have by the terms of the offer already agreed that the seller will cure in a good and workmanlike manner if the seller elects to cure. A notice of defects cannot be used to require the seller to cure defects per the buyer's standards. Although the buyer will follow the advice of his attorney and issue a notice of defects, it is unclear why the attorney is recommending the buyer include repair standards. An amendment would need to be agreed upon by the parties if the seller's repairs will be done in accordance with standards other than good and workmanlike.The inspection contingency states the seller will cure "defects," as that term is defined in the offer. The seller would not be required to cure items that are not defects. If there is a dispute as to which items in the inspection report are "defects" the seller could give a notice to cure saying they elect to cure only the items that are defects as defined. The parties may need to consult with legal counsel regarding items that are in dispute.

23

VI. Notice a. The notice of defects generally should be viewed as the buyer's last resort. b. If the seller does not have a right to cure, issuing a notice effectively

terminates the offer. c. Deadlines in Testing or Inspection Contingencies

i. The deadline is not the deadline for when the inspection or test must be completed.

ii. The deadline is for the entire process to be completed: test or inspection, follow up tests or inspections if recommended and authorized by the offer, potential negotiations with amendments, and finally the notice of defects.

iii. If a buyer misses the deadline for issuing a notice of defects, the buyer cannot get out of the offer to purchase based on the results of the inspection or test.

d. Using the WB-41 Notice Relating to Offer to Purchasei. The notice should specify that it is a notice of defects. ii. The notice should indicate to which defects the buyer is objecting. iii. The notice should be accompanied by the inspection report or the

results of the test to which the buyer is objecting.iv. Only the buyer signs the notice of defects. v. A buyer must deliver it according to the delivery methods in the offer

to purchase. vi. The notice is not the place for suggesting seller repairs or asking for

price concessions. vii. Issuing a notice of defects to a seller means that the seller is entirely

in control of the transaction. viii. A buyer cannot unilaterally withdraw a notice of defects. ix. The notice can only be withdrawn with seller consent. x. The parties would use an amendment to withdraw the notice. xi. The amendment withdrawing a notice should not only specify that the

parties are withdrawing the notice but also the agreed upon solution that the parties will use to remedy the defects.

xii. Prior to giving a notice of defects or offering an amendment, agents should discuss with buyers the ramifications of offering either document.

xiii. Each transaction must be reviewed independently as the parties may have different objectives depending on the situation.

xiv. A buyer may choose to withhold a notice of defects unless the defects are "deal breakers."

24

Question: The buyer wants to send a notice of defects and include items that are not included in the inspector's report. The broker believes the buyer should be cautioned that the buyer and seller agreed in the offer to purchase that the notice would include items the buyer objects to which are identified in the report. What are options of the seller who receives this notice? What would the seller's attorney say if the notice called for in the offer was not delivered? The listing agent believes the buyer should seek legal advice.The company has a policy that agents should draft the notice in the manner the buyer directs. The broker supposes that is OK, provided it is coupled with having the buyer sign a statement that the buyer has been cautioned regarding possible consequences and was advised to speak with a lawyer.

Answer: This scenario contains a balance of following the instruction of the party, following the terms of the offer, party education, and limitation of broker liability. Per the Inspection Contingency the offer states the buyer may give notice of defects identified in the inspection report. If the buyer is claiming the inspector said additional items were defects, but are not included in the written report, the buyer may request the inspector amend the report to reflect the verbal comments.

If the buyer wants additional items listed in the notice, the broker may draft according to the buyer's instructions. It would, however, be prudent to point out that the contract the buyer signed says the notice will list only items from the written inspection report and suggest that the buyer seek legal counsel for advice. To minimize broker liability, office policy may require written documentation reflecting that the agent is drafting according to the buyer's instructions. The document may also reiterate that the broker referred the buyer to legal counsel and that the buyer and the agent did engage in a general discussion of the offer and the potential risks of including the additional items, and confirm that the conversation was not legal advice from the agent. If the buyer chooses to add additional items, the drafting agent, when presenting the notice to the listing agent, may notify the listing agent that the notice was drafted upon the buyer's direction and that the drafter did discuss the content with the buyer.

A seller in response to any notice of defects may terminate the offer, elect to cure just the defects (as defined in the offer), propose to amend the offer for a different agreement (perhaps agreeing to address some of the additional items not listed in the inspection report), or cure the defects and fix replace or repair the additional items. Per the offer to purchase the seller is not required to cure those items that are not defects as defined in the offer and not contained in the written inspection report. It is, however, possible the seller will do anything the buyer asks even if it is outside the scope of the offer. If the seller responds with a written statement that they elect to only cure the defects as defined in the offer the parties may need to consult with legal counsel about which items fall into this category.

25

e. Ending the Transaction i. A buyer includes an inspection contingency to create a way to

terminate the offer depending on the result of the inspection. ii. If the contingency did not give the seller a right to cure, issuing the

notice of defects makes the offer null and void.

Is it a Deal Breaker? The buyer received the home inspection report. Based on the report, the buyer learns that the property does not have any smoke detectors, the bathroom faucet has a steady drip, the gutters need to be cleaned, and there are water stains in the attic possibly indicating a leaking roof. The roof, however, appears to be new and intact so the water stains are possibly from the old roof. What is the buyer going to do? The buyer first has to decide if those conditions are defects according to the definition in the offer. • Will any of the conditions have a significant adverse effect on the value of the

property?Probably not the missing smoke detectors, leaky faucet, or clogged gutters. The stains in the attic, if indicative of a current rather than an old and corrected condition, could be an issue. Hopefully the buyer has enough time before the contingency deadline to have a roof inspector come out and take a look.

• Will the condition significantly impair health or safety of future occupants of the property?

Missing smoke detectors will definitely impair the safety of future occupants of the property. A leaky faucet or clogged gutters probably will not qualify as a defect under this portion of the definition. A leaky roof could also affect health or safety of future occupants. Moisture can lead to mold issues, which have serious consequences for many people.

• If the condition is not repaired, removed, or replaced, will it significantly shorten or adversely affect the expected normal life of the premises?

Some of the condition issues with the property could significantly shorten or adversely affect the expected normal life of the premises. Missing smoke detectors could prevent early response to a fire. Clogged gutters can lead to water issues in the basement and determining whether the water stains in the attic are new or old will be vital to the buyer's decision on whether these property conditions are defects.

Whether these conditions count as defects is a decision that the buyer will have to make. Even if the buyer does decide these are defects, they may not actually be deal breakers. Missing smoke detectors, though very dangerous, is an easy and inexpensive condition to fix. A leaky faucet and clogged gutters are also relatively simple problems to address. If this buyer had a good agent, the buyer should have enough time to get a roof inspector out to the property to clarify the source and age of the water stains in the attic. With that information, the buyer will be able to decide whether to go forward despite the potential defects or issue a notice of defects and potentially lose the house. An agent should not advise a buyer about whether a property condition is a defect.

26

VII. Right to Curea. The buyer and the seller negotiate whether the seller will have a right to

cure before the buyer has any inspection or test completed. b. WB-11 Offer to Purchase Right to Cure

INSPECTION CONTINGENCY: This contingency only authorizes inspections, not testing (see lines 395-409). This 410

Offer is contingent upon a Wisconsin registered home inspector performing a home inspection of the Property which discloses 411

no Defects. This Offer is further contingent upon a qualified independent inspector or independent qualified third party 412

performing an inspection of _____________________________________________________________________________ 413

_____________________________________________ (list any Property component(s) to be separately inspected, e.g., 414

swimming pool, roof, foundation, chimney, etc.) which discloses no Defects. Buyer shall order the inspection(s) and be 415

responsible for all costs of inspection(s). Buyer may have follow-up inspections recommended in a written report resulting 416

from an authorized inspection, provided they occur prior to the deadline specified at line 421. Inspection(s) shall be performed 417

by a qualified independent inspector or independent qualified third party. 418 CAUTION: Buyer should provide sufficient time for the home inspection and/or any specialized inspection(s), as well 419 as any follow-up inspection(s). 420 This contingency shall be deemed satisfied unless Buyer, within ________ days of acceptance, delivers to Seller a copy of the 421 written inspection report(s) and a written notice listing the Defect(s) identified in those report(s) to which Buyer objects (Notice 422 of Defects). 423 CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement. 424 For the purposes of this contingency, Defects (see lines 182-184) do not include structural, mechanical or other conditions the 425 nature and extent of which Buyer had actual knowledge or written notice before signing this Offer. 426 ■ RIGHT TO CURE: Seller (shall)(shall not) STRIKE ONE (“shall” if neither is stricken) have a right to cure the Defects. If 427 Seller has the right to cure, Seller may satisfy this contingency by: (1) delivering written notice to Buyer within 10 days of 428 Buyer's delivery of the Notice of Defects stating Seller’s election to cure Defects; (2) curing the Defects in a good and 429 workmanlike manner; and (3) delivering to Buyer a written report detailing the work done within 3 days prior to closing. This 430 Offer shall be null and void if Buyer makes timely delivery of the Notice of Defects and written inspection report(s) and: (1) 431 Seller does not have a right to cure or (2) Seller has a right to cure but: (a) Seller delivers written notice that Seller will not cure 432 or (b) Seller does not timely deliver the written notice of election to cure. 433

ADDENDA: The attached __________________________________________________ is/are made part of this Offer. 434

ADDITIONAL PROVISIONS/CONTINGENCIES ____________________________________________________________ 435

____________________________________________________________________________________________________ 436

____________________________________________________________________________________________________ 437

____________________________________________________________________________________________________ 438

____________________________________________________________________________________________________ 439

____________________________________________________________________________________________________ 440

____________________________________________________________________________________________________ 441

____________________________________________________________________________________________________ 442

This Offer was drafted by [Licensee and Firm] _______________________________________________________________ 443

_____________________________________________________________ on _______________________________ ___. 444

(x) _________________________________________________________________________________________________ 445


(x) _________________________________________________________________________________________________ 447


EARNEST MONEY RECEIPT Broker acknowledges receipt of earnest money as per line 10 of the above Offer. 449

________________________________________________ Broker (By) _________________________________________ 450

SELLER ACCEPTS THIS OFFER. THE WARRANTIES, REPRESENTATIONS AND COVENANTS MADE IN THIS OFFER 451

SURVIVE CLOSING AND THE CONVEYANCE OF THE PROPERTY. SELLER AGREES TO CONVEY THE PROPERTY 452

ON THE TERMS AND CONDITIONS AS SET FORTH HEREIN AND ACKNOWLEDGES RECEIPT OF A COPY OF THIS 453

OFFER. 454

(x) _________________________________________________________________________________________________ 455


(x) _________________________________________________________________________________________________ 457


This Offer was presented to Seller by [Licensee and Firm] _____________________________________________________ 459

__________________________________________ on __________________________ at ________________ a.m./p.m. 460

This Offer is rejected _____________ _________ This Offer is countered [See attached counter] _____________ _________ 461

Seller Initials▲ Date▲ Seller Initials▲ Date▲ 462

Property Address: _________________________________________________________________________________________________________Page 9 of 9, WB-11

__

i. A buyer can make a choice as to whether to give the seller a right to cure by striking "shall" or "shall not."

ii. If the buyer does not make a choice, the seller has a right to cure. iii. If a seller has the right to cure, the seller has the option to cure, not

the obligation to cure.

Limiting a Seller's Right to Cure

A buyer may want to include the flexibility in an offer that giving a seller a right to cure creates. With a right to cure, defects do not mean the end of the transaction but rather permit a seller to correct the defects and the buyer can purchase the newly fixed property. The unrestrained right to cure in the WB-11 Offer to Purchase may make some buyers nervous. If a seller chooses to cure, the seller agrees to cure in a good and workmanlike manner. That standard is could be open to interpretation. The seller may feel competent to cure anything in a good and workmanlike manner where a buyer would have preferred that a professional make the repairs.

A buyer may want to control which defects a seller can cure and which defects might be deal-breakers. A buyer may want to control who does the curing for certain defects. A buyer may want to allow the seller a right to cure up to a certain amount. A buyer may want to the right to review the written report detailing the work done sooner than "within 3 days prior to closing."A buyer can propose these alternatives by using the additional provisions in an offer to purchase and modifying the right to cure or proposing a different right to cure clause in an addendum. "The seller shall have the right to cure any defect that can be properly cured without the services of an electrician.""The seller shall have the right to cure defects only if the seller uses Buyer's Contractor/Electrician/Plumber etc. to do the work.""The seller shall have the right to cure any defects that can be properly cured for $1500 or less.""The seller shall have the right to cure. If the seller elects to cure, the seller agrees to cure in a good and workmanlike manner and provide a written report detailing the work done at least 10 days prior to closing."

27

iv. A seller can choose not to cure. 1. The seller sends a notice to the buyer indicating that the seller

is choosing not to cure and the offer is null and void.2. The seller lets the 10 days following delivery of the buyer's

notice of defects pass without action and passively indicates the seller's choice to not cure.

3. Maybe the buyer's notice of defects is three pages long and the seller is not interested in curing all the "defects."

4. Maybe the seller disagrees that there are any defects at all and choosing to cure could be construed as the seller agreeing that the listed conditions are defects.

5. Maybe the seller has an attractive secondary offer and no other way to "bump" the primary buyer other than refusing to cure defects and making the first offer null and void.

Electing to Cure a "Defect"A buyer gives a notice of defects that reflects the buyer's rather broad interpretation of the definition of defects. The seller has a right to cure and sends over a notice to the buyer that the seller is electing to cure. The right to cure gives the seller a right to cure defects. The seller goes about fixing the laundry list of "defects" the buyer has sent over. • The transaction fails to close because the buyer cannot deliver a loan commitment.

The seller has not "cured" all the listed defects but was in the process of fixing many of them. How should the seller amend the condition report? The seller treated the items on the buyer's notice of defects as "defects." Can the seller now decide that some conditions are not defects, do not require further repair, and do not have to be addressed on the seller's amended condition report?

• The seller "cures" some of the items on the buyer's notice of defects but independently decides some of the items are not defects. The seller delivers the required report of work done to the buyer right before closing and the buyer discovers that not all the buyer's defects have been addressed? Will the buyer be able to get out of the transaction because the seller failed to cure defects as listed in the buyer's notice of defects.

If a buyer delivers a notice of defects the seller disagrees with, the seller should contact the seller's attorney immediately to discuss how to respond to the notice of defects in a way that will not later harm the seller.

v. A seller can choose to cure. 1. The seller has 10 days from the delivery of the buyer's notice

of defects to notify the buyer that the seller will choose to cure the defects.

2. During those 10 days, the seller can hire professionals and obtain opinions and bids to help decide whether to repair the listed defects.

28

3. The seller cures in a good and workmanlike manner and delivers a written report of the work done within 3 days prior to closing.

4. The buyer can use the buyer's pre-closing walk-through to evaluate the repairs.

DEFINITIONS CONTINUED FROM PAGE 2 173

■ DEADLINES: “Deadlines” expressed as a number of “days” from an event, such as acceptance, are calculated by excluding 174

the day the event occurred and by counting subsequent calendar days. The deadline expires at midnight on the last day. 175

Deadlines expressed as a specific number of “business days” exclude Saturdays, Sundays, any legal public holiday under 176

Wisconsin or Federal law, and any other day designated by the President such that the postal service does not receive 177

registered mail or make regular deliveries on that day. Deadlines expressed as a specific number of “hours” from the 178

occurrence of an event, such as receipt of a notice, are calculated from the exact time of the event, and by counting 24 hours 179

per calendar day. Deadlines expressed as a specific day of the calendar year or as the day of a specific event, such as 180

closing, expire at midnight of that day. 181

■ DEFECT: “Defect” means a condition that would have a significant adverse effect on the value of the Property; that would 182

significantly impair the health or safety of future occupants of the Property; or that if not repaired, removed or replaced would 183

significantly shorten or adversely affect the expected normal life of the premises. 184

■ FIXTURE: A “Fixture” is an item of property which is physically attached to or so closely associated with land or 185

improvements so as to be treated as part of the real estate, including, without limitation, physically attached items not easily 186

removable without damage to the premises, items specifically adapted to the premises and items customarily treated as 187

fixtures, including, but not limited to, all: garden bulbs; plants; shrubs and trees; screen and storm doors and windows; electric 188

lighting fixtures; window shades; curtain and traverse rods; blinds and shutters; central heating and cooling units and attached 189

equipment; water heaters and treatment systems; sump pumps; attached or fitted floor coverings; awnings; attached 190

antennas; garage door openers and remote controls; installed security systems; central vacuum systems and accessories; in-191

ground sprinkler systems and component parts; built-in appliances; ceiling fans; fences; storage buildings on permanent 192

foundations and docks/piers on permanent foundations. 193

CAUTION: Exclude any Fixtures to be retained by Seller or which are rented (e.g., water softener or other water 194

conditioning systems, home entertainment and satellite dish components, L.P. tanks, etc.) on lines 17-18. 195

■ PROPERTY: Unless otherwise stated, “Property” means the real estate described at lines 4-7. 196

PROPERTY DIMENSIONS AND SURVEYS Buyer acknowledges that any land, building or room dimensions, or total 197

acreage or building square footage figures, provided to Buyer by Seller or by a broker, may be approximate because of 198

rounding, formulas used or other reasons, unless verified by survey or other means. 199

CAUTION: Buyer should verify total square footage formula, total square footage/acreage figures, and land, building 200

or room dimensions, if material. 201

BUYER’S PRE-CLOSING WALK-THROUGH Within 3 days prior to closing, at a reasonable time pre-approved by Seller or 202

Seller's agent, Buyer shall have the right to walk through the Property to determine that there has been no significant change 203

in the condition of the Property, except for ordinary wear and tear and changes approved by Buyer, and that any defects 204

Seller has agreed to cure have been repaired in the manner agreed to by the Parties. 205

PROPERTY DAMAGE BETWEEN ACCEPTANCE AND CLOSING Seller shall maintain the Property until the earlier of 206

closing or occupancy of Buyer in materially the same condition as of the date of acceptance of this Offer, except for ordinary 207

wear and tear. If, prior to closing, the Property is damaged in an amount of not more than five percent (5%) of the selling price, 208

Seller shall be obligated to repair the Property and restore it to the same condition that it was on the day of this Offer. No later 209

than closing, Seller shall provide Buyer with lien waivers for all lienable repairs and restoration. If the damage shall exceed 210

such sum, Seller shall promptly notify Buyer in writing of the damage and this Offer may be canceled at option of Buyer. 211

Should Buyer elect to carry out this Offer despite such damage, Buyer shall be entitled to the insurance proceeds, if any, 212

relating to the damage to the Property, plus a credit towards the purchase price equal to the amount of Seller's deductible on 213

such policy, if any. However, if this sale is financed by a land contract or a mortgage to Seller, any insurance proceeds shall 214

be held in trust for the sole purpose of restoring the Property. 215

Page 4 of 9, WB-11

c. Other Tests or Inspectionsi. A buyer and a seller can negotiate a right to cure in response to any

test or inspection. ii. The parties could use language from the "right to cure" section from

the offer, the Addendum A, or use original language to create a right to cure that fits the needs of the parties to this transaction.

"Buyer Inspection" - 2012 WISCONSIN REAL ESTATE CLAUSES Contingencies and Other Standard ProvisionsCOMMENT: Rather than relying upon the expertise of professionals, this provision allows the buyer to make the determination of when a condition is a Defect. This may be useful in certain limited situations. This Offer is contingent upon a good faith inspection by Buyer of the Property which discloses no Defects as defined below. This contingency shall be deemed satisfied unless Buyer, within _____ days of acceptance, delivers to the Seller a written notice listing the Defect(s) identified by Buyer during Buyer's inspection to which Buyer objects. RIGHT TO CURE: Seller (shall) (shall not) [STRIKE ONE] ("shall" if neither is stricken) have a right to cure the Defect. If the Seller has a right to cure, Seller may satisfy this contingency by: (1) delivering a written notice, within 10 days of Buyer's delivery of the written notice, of the Seller's election to cure Defects, (2) curing the Defects in a good and workmanlike manner and (3) delivering to Buyer a written report detailing the work done no later than 3 days prior to closing. This Offer shall be null and void if Buyer makes timely delivery of the above notice and report and: (1) Seller does not have a right to cure or (2) Seller has a right to cure but: (a) Seller delivers notice that Seller will not cure or (b) Seller does not timely deliver the notice of election to cure. "Defect" Defined: For the purposes of this contingency, a Defect is defined as a structural, mechanical or other 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 have a significant adverse effect on the expected normal life of the Property. Defects do not include structural, mechanical or other conditions the nature and extent of which Buyer had actual knowledge or written notice before signing the Offer.

29

VIII. Cancellation Agreement and Mutual Releasea. A transaction that includes an inspection or testing contingency may not

survive the results of the test or inspection. i. The seller did not have a right to cure.

1. The buyer and the seller unsuccessfully attempted to negotiate a solution.

2. The buyer ultimately issued a notice of defects or a notice that the test or inspection contingency failed.

ii. The seller did not have a right to cure. 1. The buyer did not care to negotiate. 2. The buyer issued a notice of defects or notice that the test or

inspection contingency failed. iii. The seller had a right to cure but chose not to cure.

b. The language of the offer may mean that the offer is null and void but null and void does not always mean that the parties should move on to other negotiations.

c. Without a cancellation agreement and mutual release signed by both parties, neither the seller nor the buyer should proceed to a new transaction without first consulting an attorney.

Null and Void does Not Mean the Transaction is OverA buyer issues a notice of defects because a home inspector discovered a loose hand railing to the basement. A buyer issues a "notice of defects" but puts it on an amendment. The seller ignores the amendment and expects to see the buyer at closing. A buyer issues a notice of defects in response to an unauthorized radon test. The seller refuses to sign the cancellation agreement and mutual release because the seller does not agree that a loose hand railing constitutes a defect, that the buyer ever issued a notice of defects, or that the unauthorized radon test means anything because it was not a provision in the offer. The seller could pursue litigation against the buyer claiming that the buyer is not acting in good faith. Both the buyer and the seller should consult with their attorneys anytime a failed transaction does not result in a signed cancellation agreement and mutual release.

30

Question: The buyer served a notice of defects on July 3. The seller has not served a notice of election to cure or to not cure. There have been amendments proposed back and forth, but no agreement. The closing per the offer is July 25. With no resolution, the seller said he is not closing on the 25th, and would close on July 31. The buyer wants to terminate the contract. How does she do this without losing her right to sue for actual damages?Answer: By the terms of the inspection contingency, the offer is null and void. If the seller has the right to cure in the inspection contingency and the buyer timely delivered a notice of defects, it is the seller's choice per lines 427-433 of the WB-11 Residential Offer to Purchase to elect to cure the defects, cause the offer to become null and void, or attempt to reach an agreement by amendment. Since the seller did not give any notice and no amendments were agreed to, the offer becomes null and void because it is well after July 13.The buyer should decide what she would like to do. She may wish to confer with her attorney regarding what strategy is most beneficial and productive for her. With her attorney's assistance: She could submit a fully completed CAMR and receive earnest money back, provided she does not wish to preserve any additional legal rights against the seller.She may modify a CAMR to line out language regarding release of rights and interests in the contract and the property and complete only the section regarding the earnest money disbursement. A CAMR is not necessary for the earnest money disbursement if the broker has written authorization to disburse that is signed by all parties so the attorney may draft such a disbursement agreement to authorizing the disbursement.She could go to small claims court for the earnest money and perhaps other damages.

31

IX. Starting Over a. Amending the Condition Report

i. If a transaction ended because of the results of a test or inspection, the seller may have an obligation to amend a condition or disclosure report.

ii. The obligation to amend only pertains to sellers that were required to fill the report out in the first place.

Wis. Stat. § 709.035 Amendments to ReportIf at any time after completing a report, whether the original or an amended report, but before acceptance of a contract of sale or option contract an owner obtains information or becomes aware of any condition that would change a response on the completed report, the owner shall submit to a prospective buyer, within the time required under s. 709.02, a complete amended report or an amendment to the previously completed report, along with a copy of the previously completed report if not already submitted to the prospective buyer, that states all of the following:(1) The address of the property.(2) The owner's name.(3) The date of the report being amended.(4) The number of any statement on the report that is affected by the new information.(5) How the owner's original response to the statement is changed and, if the response is changed to "yes", an explanation of the reason why the response to the statement is "yes".

b. Disclosure of Material Adverse Fact i. If a seller chooses not to amend or complete a new condition report,

the listing agent now must decide whether the agent has information that is a material adverse fact or that suggests a material adverse fact that must be disclosed.

ii. Even if the seller was not required to complete a condition report initially, the agent may still have disclosure obligations based on information learned as a result of the tests or inspections.

iii. An agent should consult with the agent's broker if there is doubt about whether something must be disclosed.

http://docs.legis.wisconsin.gov/statutes/statutes/709/035

2015-16 real estate continuingeducation - on d emand is the practice quiz? the practice quiz is an...

Documents