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Real Estate Wisconsin

A Publication of the Wisconsin REALTORS速 Association

How Wisconsin housing fared.

Commission Crunch

Q&A about commission issues.


RECR Handout

A seller-friendly explanation to share.

Time to Talk Frac

Frac sand mining in Wisconsin.


m La by Co ri

2012 Statistics Recap


February 2013 Vol. 29 No. 5



contents February 2013 | Vol. 29, No. 5


14 16

13 8

4 Legal hotline 13 Disclosure tips 26 16 Consumer RECR info 18 26 Endorsement announcement REALTOR® sales tip 23 28 Gold rush Teetering into 2013 Mike Theo looks at economic uncertainty starting a new year.

Answers to tricky and sticky commission questions.

Quick tips from three court cases involving disclosure issues.

Marcus Wally shares his face-toface prospecting tips.

The WRA endorsed Justice Pat Roggensack for Wisconsin Supreme Court.

An overview of frac sand mining in Wisconsin.

The Legal Issue

Cover Story

Disclosure, commissions and financing — oh my! An overwhelming majority of respondents in November’s Wisconsin Real Estate Magazine survey indicated that they wanted to read more legal coverage in 2013 issues.

Can a buyer terminate a transaction if financing falls through? What is considered a loan commitment? And must it be in writing? In another “Urban Legend” installment, you’ll read about the myths and facts of the Financing Contingency in the WB-11 Residential Offer to Purchase. See page 8.

While every issue includes legal articles and a “Best of the Legal Hotline” column, the February 2013 magazine covers a broad array of the most common real estaterelated legal topics across several articles.


Are your clients unsure about the RECR? Give them this sheet.


A Message from the President by Mike Theo

Teetering into 2013




e begin this year teetering on an economic recovery. The macro economy remains weak, with unemployment high, real GDP growth low and job growth anemic. Yet our housing economy, especially in Wisconsin, has been steadily improving, with sales up for 17 straight months, prices stable, inventories shrinking, affordability improving and interest rates — both now and for the foreseeable future — at historic lows. So what’s missing? Why are we economically shaky as opposed to thriving? Many economists say uncertainty is a major factor in holding the economy back. From a business perspective, economic insecurity causes firms to hold off on hiring or making major capital investments. Individuals are more inclined to put off major purchases like a new home. Last year’s national elections added more uncertainty, which was exacerbated in Wisconsin with the numerous recall efforts of the past few years. Even now that the elections are over, other major national issues remain and continue to add to economic uncertainty — issues like implementation of the Affordable Care Act, known as “Obamacare,” as well as the major taxing, spending and debt limit debates that were kicked down the road with the recent agreement that temporarily avoided the “fiscal cliff.” What does all this mean for the housing sector and the real estate industry? That’s unknown. The “fiscal cliff” legislation, H.R. 8, had several key real estate-related issues worth noting. The legislation extended the mortgage cancellation relief for one more year so homeowners won’t have to pay taxes on mortgage amounts reduced in a short sale or foreclosure. Also extended for one more year were mortgage insurance premium deductions for filers earning less than $110,000, and the 15-year straight-line cost recovery for qualified commercial properties. The 10 percent tax credit, up to $500, for energy improvements to existing homes was


Amount of money that the average taxpayer saved as a result of the mortgage interest deduction. also extended through 2013. Limitations on total itemized deductions were repealed for taxpayers earning less than $250,000, or $300,000 for joint filers, but increased and indexed for inflation for those making more. Finally, the “fiscal cliff” deal retained a capital gains tax rate of 15 percent for those with incomes of $400,000 (and $450,000 joint) and less, but for those earning more than that, the rate increased to 20 percent. The $250,000/$500,000 exclusion for the sale of a principal residence remains in place. As you see, this action by Congress provided limited certainty, but only temporarily. From a real estate perspective, perhaps the greatest remaining uncertainty stems from the continued speculation that the next round of Congressional tax discussions will include efforts to reduce or restrict the mortgage interest deduction (MID). Most real estate professionals wince at the prospect of weakening this longstanding tax promotion of homeownership, but tax reformers in Congress see it as the potential mother lode of new revenues, worth an estimated $100 billion a year in new money — that’s billion with a “B”. Even if they don’t take it all, the likelihood of tapping into part of this stash of cash is high, despite the intensifying lobbying effort

against it by the National Association of REALTORS® and other industry partners. For Wisconsin homeowners, the stakes are high in this MID battle. According to the Wisconsin Department of Revenue (DOR), of the approximately 1.54 million owneroccupied houses in Wisconsin, 1.03 million, which is 67 percent, have a mortgage. A total of 803,300 taxpayers claimed the deduction for mortgage interest in 2010 for a total of $6.26 billion. This means the average taxpayer claiming the MID subtracted $7,800 from his or her taxable income. Assuming a marginal tax rate of 25 percent, the average taxpayer saved $1,950 as a result of the MID. That’s a total tax savings in Wisconsin alone of $1.56 billion in 2010! It is also important to note that the loss that would be experienced by eliminating the MID is not a one-time event. Homeowners would lose out on these potential tax savings each and every year. According to the DOR, the present value of these lost savings could total over $51.8 billion. With the total of all owner-occupied real estate in Wisconsin in 2011 valued at $301.2 billion, if the lost tax savings were fully capitalized into the price of housing, the average home value in Wisconsin would decline 17 percent. Assuming the 2011 median home price of $152,200, the decline in value could mean a loss of $26,200 for a typical Wisconsin homeowner. ... Feeling like we’re teetering a bit? As we begin 2013, we should embrace the improving trends on the horizon in our marketplace but also realize the threats. Each of us must actively engage and educate our political leaders and policymakers, in Washington and Madison, to make sure they choose the right policies. Stay tuned for the details to come. Oh, and by the way, Happy New Year!

real estate inside the wra

Real Estate Wisconsin


Editorial Staff: Publisher: Michael Theo Editor: Lauren Bizorik Advertising: Robert Uhrina WRA Executive Committee: Renny Diedrich, Chairman Steve Lane, Chairman-Elect Dan Kruse, Treasurer Paul Schieldt, Vice President Peter Sveum, Vice President K.C. Maurer, Vice President Erik Sjowall, Vice President Contact Information: 4801 Forest Run Rd., Suite 201 Madison, WI, 53704-7337 608-241-2047 • 800-279-1972 e-mail: website: POSTMASTER: please send address changes to the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Rd., Ste. 201, Madison WI 53704-7337.

College Scholarships Available The selection process is now under way for the 2013 Wisconsin Realtors® Foundation REALTOR® Children’s Scholarship program. This program awards college scholarships to children of WRA members. The Foundation is offering 10 scholarships in the amount of $750 each. The deadline for submitting an application is March 8, 2013. The application is available online at or by contacting Sandy at

Nominating Committee Seeks Candidates Are you interested in serving in a leadership role for your state association? The WRA Nominating Committee is seeking applications for the positions of 2013-2014 Executive Committee Vice President, NAR Director (one opening) and WRA Board of Director Regional Representative. The number of openings for regional representative is determined by the membership as of February 28, 2013. The application deadline for all positions is March 15, 2013.


Preliminary Number of Openings

One Two Three Four Five Six Seven

0 0 1 1 1 1 0

Wisconsin Real Estate Magazine™ is published by the WISCONSIN REALTORS® ASSOCIATION. Trademark issued pursuant to Wisconsin state statute; federal trademark is pending.

Design and production by Joe Leschisin, Kella Design

zipForm® 6 Renewals Have you opened your zipForm® 6 account since January 28? If so, you likely received a notification to renew your subscription. Annual renewal of your account is required as confirmation of your current membership status. There is no additional fee with this renewal; it just needs to be completed. The process is simple and will take only a few minutes. Upon opening your zipForm® 6 program, you will receive an automatic renewal notification stating that your zipForm® 6 account will expire or has expired on March 1, 2013. Click “Renew Now” and follow the prompts to complete the short renewal process. Visit for step-by-step instructions for both REALTOR® and section member renewals. For questions regarding zipForm® renewal, contact the zipLogix customer support at 800-3839805 or contact the WRA Products and Services Department at 800-279-1972. Not currently a zipForm® 6 user? ZipForm® 6 is available for download free of charge at www. Two software products are available for download: Professional (online) and Standard (desktop). Access to both is included with your member benefits.

WIREALESTATEMAG • february 2013

Wisconsin Real Estate Magazine, USPS 597-850, ISSN 1548-0526, is published monthly by the WISCONSIN REALTORS® ASSOCIATION, 4801 Forest Run Road, Ste. 201, Madison, WI 53704. Periodical postage paid in Madison, WI and additional mailing offices. An annual subscription rate of $5 is included in membership dues and a copy is mailed to every paid REALTOR® and affiliate member of the association. Nonmember subscription rate: $60. Permission to reprint or quote any material from this issue is hereby granted, provided the Wisconsin Real Estate Magazine is given proper credit in all articles or commentaries, and the WISCONSIN REALTORS® ASSOCIATION is provided with a copy of any reprint. Advertising of third party products and services herein does not imply endorsement by the WRA unless specifically stated. Furthermore, the WRA does not endorse, approve, or otherwise warrant the accuracy or legality of any information or content contained in advertisements. Any questions regarding advertising policies should be directed toward the editor.


Chairman's corner by Renny Diedrich

Welcome to 2013

It’s hard to believe we are in a new year already




s I reflect on 2012, I am extremely happy about the amazing year we had. Home sales increased by 20 percent from 2011, and the median sales price also went up more than 2.5 percent. The market is definitely showing signs of recovery. Experts are predicting that 2013 will bring continued slow growth. Hang in there — slow and steady wins the race! January is a busy month for the WRA as we start work on this year’s strategic plan and meet with REALTORS® from around the state. I will visit Door County to swear in the officers for the Door County Board of REALTORS®. At the end of the month, our board of directors will meet prior to heading to Washington, D.C. for training to be your Federal Political Coordinators. And let’s not forget about the real estate work we have to do! January is definitely starting off with a bang! Now that the 2013-14 legislature has been sworn into office, our team of Tom Larson, Joe Murray and Cori Lamont will begin working with them on our agenda. We need you to show your support by attending REALTOR® & Government Day on March 20 at the Monona Terrace in Madison. Our impact is huge when we have as many as 500 or more members sharing concerns with our legislators. We are pleased to announce that Gov. Walker will be addressing our group this year. We have seen positive results of this event in years past, and this year will be no different. Please mark your calendar for this important event so that we can make this year another success. Sign up at today. In other association news, you will notice that a few of our designation courses have a new instructional format this year. In response to member feedback, GRI2/CRS201 will be offered

“Home sales increased by 20 percent from 2011, and the median sales price also went up more than 2.5 percent. The market is definitely showing signs of recovery. Experts are predicting that 2013 will bring continued slow growth.“ in a new live classroom webcast setting. The four-day live class will be held February 12-13 and March 12-13 in Madison. If Appleton, Eau Claire or Milwaukee is more convenient for you, the class will be available via webcast at the local association office in each of these locations. The option of taking the class locally will save you time and money, but still allow you to interact with the instructor and ask questions. A two-day ABR® course will also be held on April 10-11 in Madison, and the very popular BPOR certification course will be offered in Appleton on April 18. Education is such a huge part of our business, and the beginning of a new year is a great time to regain your focus on it! With the previous biennium ending in 2012, we can now look ahead to the next, which will end in 2014. For those who want to get a jump-

start on their continuing education requirements and enjoy a little fun in the sun, there is still time to sign up to complete your CE courses in San Juan March 5-8. Sign up today!

Tech tip Finally, I’d like to offer a technology tip: Card Munch. This has to be one of the most useful apps on my phone. Since our business is all about networking, we are constantly exchanging business cards with each other. Card Munch takes a picture of the business card and creates a contact based on the card’s information. If you’re like me, you have a three-inch pile of business cards and can’t find the one you need. This free app allows you to search for a contact and save that contact right into the contact list in your phone. As an added bonus, when you are making referrals, you can easily forward the contact information to your clients right from the app. Card Munch is powered by LinkedIn so it helps you grow your business contacts right from your phone. Give it a try and let me know what you think! I hope your year is off to a great start, and I look forward to seeing you around the state!

Renny Diedrich, WRA Chairman

wisconsin monthly housing report by David Clark

Wisconsin Housing Market Rebounded in 2012 WISCONSIN HOUSING STATISTICS MONTHLY ACTIVITY — December 2012 Statewide DEC-2012 DEC-2011 % Change YTD-2012 YTD-2011 % Change New Listings 4,396 5,216 -15.7% 110,520 113,751 -2.8% Closed Sales 4,280 3,850 11.2% 62,561 51,850 20.7% Median Sales Prices $132,500 $120,000 10.4% $133,500 $132,000 1.1% Median Price Existing Home Sales Region DEC-2012 DEC-2011 % Change DEC-2012 DEC-2011 % Change Southeast $133,000 $129,000 3.1% 1,572 1,411 11.4% South Central $152,500 $147,000 3.7% 815 715 14.0% West $128,200 $120,000 6.8% 432 402 7.5% Northeast $123,425 $110,000 12.2% 742 715 3.8% Central $106,000 $99,700 6.3% 261 238 9.7% North $129,450 $99,725 29.8% 456 366 24.6%


isconsin’s housing View Online market rebounded in 2012, with sales View all of the housing statistics at of existing home sales up substantially and median prices up modestly, according to the latest figures released by the WRA. Sales of existing homes for 2012 were 20.7 percent above the levels of 2011, and the statewide median price increased 1.1 percent to $133,500 over that same period.

David Clark, Ph.D., is a professor of economics at Marquette University and serves as a consultant to the WRA in the analysis of existing home sales data. For more information, contact Clark at C3 Statistical Solutions, 414-803-6537.

Median Price Year-To-Date

2012 2011 2010

$133,500 $132,000 $141,000

Closed Sales Year-To-Date

2012 2011 2010

62,561 51,850 51,392

Median price 2012 vs. 2011 $150,000

2011 $130,000

$120,000 $110,000 jan feb mar apr may jun jul aug sep oct nov dec

WIREALESTATEMAG • february 2013





Uncovering the

Truth WIREALESTATEMAG • February 2013

Financing Contingency Urban Legends


by Cori Lamont

One of the longest contingencies in the Wisconsin-approved form at almost 46 lines, this contingency addresses many issues — from potential loan terms to default language that controls when the offer is not contingent on financing. Needless to say, it can be overwhelming at first glance. And while consumers and agents alike may initially feel they need a decoder ring to understand the contingency, it is far less confusing when stripped down to the basics. This article will break down the most common myths associated with the Financing Contingency. No decoder ring needed. Contrary to popular belief, the Financing Contingency benefits both parties in the transaction. The buyer is saying, “This is what I believe I can obtain, and if I can’t, I want to be able to walk away”; the seller is saying, “you must show that you tried to obtain the terms stated in the contingency if you are claiming you cannot get a loan.” However, line 236 provides the buyer with some flexibility to accept loan terms different than those in the offer. Line 236

clearly allows the buyer to move forward with a “loan acceptable to Buyer.” For example, the buyer may wish to purchase the property with a fixed rate of 5 percent while the offer was written to include a fixed rate of 4.25 percent. As long as the written loan commitment is properly delivered to the seller, the buyer may choose to proceed with terms different than those described in the offer. Of course, if the loan commitment provides the financing described in the Financing Contingency, the buyer cannot deem it unacceptable and give a notice of unacceptability. All lines referenced throughout this article apply to the (2011) WB11 Residential Offer to Purchase.

Urban legend #1 A loan commitment does not have to be in writing. The truth: The buyer is required to obtain a written loan commitment within the time frame indicated on line 219.

Urban legend #2 State law dictates the terms that make a document a loan commitment. The truth: Since the term “loan commitment” is not defined in the offer or state law, one could argue that any lender-issued document stating agreement to provide a loan to the buyer is a loan commitment. Loan commitments generally have conditions or contingencies, ranging from a condition that insurance binders be produced at closing to contingencies for appraisals or the sale of a buyer’s home. Many times, the commitment is required to be delivered before the loan

underwriting process and other lender procedures are complete, so there will naturally be unresolved conditions. Delivery of the loan commitment satisfies the terms of the Financing Contingency, but additional steps may be needed if the buyer is actually going to get the funds. Generally a longer time frame to satisfy the Financing Contingency means fewer unresolved conditions and requirements in the buyer’s loan commitment. There is no standard loan commitment form as each lending institution issues unique commitments subject to different exceptions.

Urban legend #3 A buyer’s written direction for delivery of a loan commitment is not required. The truth: The language at lines 235246 ensures that a loan commitment is not forwarded to the seller or the listing agent, if the seller’s recipient for delivery, unless and until the buyer reviewed and approved the commitment and gave written instructions for delivery. Before this modification was made, when a loan commitment was forwarded to the seller, regardless of whether the buyer had even seen the commitment terms, the buyer became bound to the contract, assuming no other unresolved contingencies. The buyer would potentially have to borrow money on terms and conditions that were unfavorable or beyond what the buyer could afford. Delivery of the loan commitment waives the Financing Contingency, effectively making the transaction a cash deal. Thus, the fact that the buyer must provide written directions for delivery of the loan commitment to the seller is a measure of protection for the buyer to make sure that

WIREALESTATEMAG • february 2013


he Financing Contingency in the WB-11 Residential Offer to Purchase is always a hot topic at the WRA. Whether brought up in the context of continuing education, company training or the Legal Hotline, it is an issue that always provides a great deal of discussion.



the buyer has an opportunity to review and approve the terms of the commitment. This provision does not create an obligation on the part of the lender; the lender’s role is to provide a written loan commitment for the buyer to see the loan’s terms and conditions, and the seller can receive written confirmation that the buyer is complying with the offer and has secured a loan. Lines 238-242 provide, “Buyer and Seller agree that delivery of a copy of any written loan commitment to Seller (even if subject to conditions) shall satisfy Buyer’s Financing Contingency if, after review of the loan commitment, Buyer has directed, in writing, delivery of the loan commitment. Buyer’s written direction shall accompany the loan commitment. Delivery shall not satisfy this contingency if accompanied by a notice of unacceptability.” Thus, the buyer must review the loan commitment and give written instructions for the delivery; that written directive must accompany the commitment when delivered to the seller. The buyer’s notice for direction of delivery could be 1) given as a WB-41 Notice Relating to Offer, 2) on the loan commitment itself if a lender included such language on the commitment, or 3) on a separate document or by e-mail.


Urban legend #4


A loan commitment that includes ANY condition does not remove the Financing Contingency. The truth: Again, once the buyer provides the loan commitment along with direction for delivery of the loan commitment, and the loan commitment is delivered to the seller, then the buyer has satisfied the contingency and effectively created a cash deal. This is true regardless of any conditions in the loan commitment and regardless of the number and type of any conditions. The offer is between the buyer and the seller, and the Financing Contingency of the WB-11 sets the terms of the agreement. If the buyer delivers the loan commitment to the seller, even if it is subject to conditions, the buyer has waived financing. For example, if the buyer provides the seller a loan commitment that is subject to an appraisal and the property does not

appraise out, the buyer is still obligated to buy the property. This is true even though the loan the buyer was counting on fell through. A seller in this situation could claim that the buyer breached the contract and sue for specific performance or damages. The offer does not include the lender because the terms of the loan commitment are not incorporated into the offer. The offer in this situation did not include an appraisal contingency, but the loan was contingent on the appraisal. If the buyer receives a commitment with an unreasonably long list of conditions, the buyer or buyer’s attorney may contact the lender to see if the list can be shortened. Perhaps some conditions would already be completed or could be addressed and removed before the commitment is delivered to the seller.

Urban legend #5 A seller has no right to terminate under the Financing Contingency. The truth: Lines 247-249 state, “If Buyer does not make timely delivery of said commitment; Seller may terminate this Offer if Seller delivers a written notice of termination to Buyer prior to Seller’s Actual Receipt of a copy of Buyer’s written loan commitment.” Therefore, once the buyer’s deadline for delivery has passed on line 219 and the seller has not yet received the buyer’s loan commitment, the seller has the ability to terminate the offer by delivering to the buyer a written notice of the seller’s termination.

Urban legend #6 A seller may never finance the deal if the offer to purchase includes a Financing Contingency. The truth: When the buyer has submitted to the seller a rejection letter or other evidence of unavailability, the seller does have options in attempting to keep the deal together — at least in regards to financing. Unless the buyer has stated a specific loan source, for example VA or FHA, the seller has 10 days to decide whether to offer seller financing to the buyer. If the seller does not wish to offer seller financing, the offer will be null and void after 10

days. If the parties agree that they do not want to wait the full 10 days, the WB-45 Cancellation Agreement & Mutual Release may bring the transaction to an immediate end. When a seller chooses to exercise this section of the offer, the seller actually becomes the buyer’s lender, allowing the seller to finance the buyer’s purchase on the same terms agreed on in the Financing Contingency. This section does not give the seller authority or opportunity to play matchmaker by finding the buyer a thirdparty lender to finance the transaction. A buyer writing an offer on any property should carefully consider lines 252-256. Although many sellers lack interest or resources to provide financing for the buyer, that may not be the case when the

property is bank-owned. Regardless of who the seller is, if the buyer does not wish for the seller to have the ability to finance the transaction on the terms stated within the Financing Contingency, then the buyer may wish to strike lines 252256. However, the buyer should keep in mind the potential advantage of having the bank as the seller — the buyer may have one additional opportunity to obtain financing when other attempts have failed.

Urban legend #7 Buyers must provide multiple rejection letters and letters of unacceptability. The truth: According to the terms and conditions of the Financing Contingency, the buyer agrees to promptly apply

The recent unpublished 2012 Court of Appeals case, Stubbe v. Hamland, highlights the importance of understanding the Financing Contingency in the WB-11 Residential Offer to Purchase. In 2010, Ty and Jana Hamland wrote an offer to purchase on the WB-11 that included a Financing Contingency on the home of Brad and Robyn Stubbe for $165,000. The Financing Contingency stated that the Hamlands would pursue a USDA fixed-rate mortgage with a 5 percent or less interest rate. After a couple of counteroffers, the parties agreed to a purchase price of $166,000 with no other significant changes made. Later, the Hamlands received a letter from Envoy Mortgage stating that the “mortgage loan request on the above-referenced property had been approved.” The letter also stated that the approval was subject to certain terms and conditions. And while the Hamlands did not provide written consent or direction to deliver the Envoy letter to the Stubbes, the letter was faxed to the listing agent named as the seller’s recipient in Delivery provisions. After some time, the Hamlands sent the Stubbes a WB-41 Notice Relating to Offer to Purchase, along with a denial statement from Envoy Mortgage, terminating the offer due to financing unavailability. The Envoy letter stated that the mortgage application was denied based on failure to meet USDA underwriting guidelines. Since the Hamlands refused to close, the Stubbes sued for breach of contract, breach of the duty of good faith and fair dealing, unjust enrichment and quantum meruit. In turn, the Hamlands filed a third-party complaint against their real estate company, Contemporary; seeking contribution or indemnification to cover their losses if the Stubbes were successful in their action. The Stubbes moved for a partial summary judgment asking the court to determine one single issue — whether delivery of the Envoy letter from the Hamlands satisfied the Financing Contingency. The Hamlands and Contemporary moved for summary judgment on all the Stubbes’ claims. The circuit court granted summary judgment in favor of the Hamlands and Contemporary. The court determined that the delivery of the Envoy letter did not satisfy the contingency for two reasons: 1) the letter was not a loan commitment, under the terms of the purchase contract, and 2) even if the letter was a loan commitment, the Hamlands never provided written consent for its

delivery to the Stubbes. The court determined that the Financing Contingency was not satisfied and therefore the Hamlands did not breach the contract. The court dismissed the Stubbes’ claims against the Hamlands as well as the Hamlands’ claims against Contemporary; the Stubbes appealed. On appeal, the Court of Appeals held that the Financing Contingency was never satisfied for two reasons: 1. The Envoy letter was not a loan commitment under the financing contingency terms. The court stated that the letter did not describe itself as a loan commitment and did not specify that Envoy would provide a USDA mortgage, listed the interest rate as “market,” and did not specify a fixed interest rate of 5 percent or less. 2. Even if the Envoy letter did qualify as a loan commitment, the delivery to the Stubbes did not satisfy the Financing Contingency. The court determined the language of the WB-11 clearly states that to satisfy the Financing Contingency, the buyer must direct delivery in writing. The court pointed to the language found on lines 239-240 of WB-11, “if, after review of the loan commitment, Buyer has directed, in writing, delivery of the loan commitment.” Furthermore, the court pointed to the offer language on lines 240-241, “Buyer’s written direction shall accompany the loan commitment.” Because the Hamlands never directed delivery in writing of the Envoy letter to the Stubbes, the court determined that the contingency was not satisfied. The Stubbes, however, continue to argue that the Envoy letter qualified as a loan commitment and even brought forth an expert witness that testified that such a letter would be treated as a loan commitment. However, as the court noted, case law directs them to construe contract language that is unambiguous, according to its plain and ordinary meaning without considering outside evidence. The Hamlands’ Financing Contingency clearly required a loan commitment for a USDA loan with a 5 percent or less fixed-rate interest. The Envoy letter plainly did not satisfy the contingency requirements. REALTOR® practice tip: A valid delivery of a loan commitment to the seller or the seller’s recipient for delivery requires that 1) the buyer has first reviewed the loan commitment, 2) the buyer directed in writing that the loan commitment be delivered to the seller, and 3) the written direction accompanies the loan commitment. If any of these elements are missing, delivery of the loan commitment will be invalid and the seller will have grounds to terminate the offer if the loan commitment deadline has passed.

WIREALESTATEMAG • february 2013

What do you call a WB-11 that includes a Financing Contingency, a USDA loan, and a letter from a lender?



for financing. If financing is unavailable and the buyer has not delivered a loan commitment, the buyer may provide the seller a rejection letter or other evidence of unavailability, as stated on lines 250-252. The seller then decides whether to self-finance the transaction. If the buyer does not apply to more than one lender, the seller may consider a claim that the buyer did not act in good faith and with due diligence to obtain financing, assuming that the buyer fails to produce evidence on the contrary. However, the buyer may attempt to argue that the contract does not obligate the buyer to provide more proof. This argument may have to be resolved through the parties’ legal counsel, which is why the seller may wish to attempt to modify the terms of the agreement during early negotiations.

Urban legend #8 When an offer does not include a Financing Contingency, the agreement is a cash deal with no guidelines. The truth: The offer includes the “If This Offer is Not Contingent On Financing” provision that automatically applies if the buyer does not include a Financing Contingency. This provision will help parties understand that all offers without financing contingencies are not necessarily “cash offers.” At the same time, the provision requires that the buyer, within seven days of acceptance, provide written evidence from a financial institution, or third party in control of funds, that the buyer will have the amount required for the purchase available at closing. If the buyer does not provide this evidence within the seven days, the seller

may terminate the offer. There is no deadline given for the seller’s termination. The “If This Offer is Not Contingent on Financing” provision also acknowledges that buyers may choose to obtain financing from a lender even though they did not include a Financing Contingency but won’t enjoy the benefits and protections of that contingency. If the buyer wishes to have a Financing Contingency, he would need to check the box at line 217 and complete the financing provisions. The language permits the buyer to have the property appraised, so the seller must give the appraiser access to the property — but that does not mean that an appraisal contingency exists. Buyers who want to have an appraisal contingency should check the box at line 264. Cori Lamont is Director of Regulatory Affairs for the WRA.

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best of legal hotline

Be Commission Careful

by Debbi Conrad

REALTORS® should ensure that groundwork is in place when a transaction closes and it’s time for the client to pay commission. Brokers can take certain measures to help ensure payment, particularly in the area of purchases by protected buyers, which are illustrated in Wisconsin case law.

A property listing expired with one company, and the home is listed with a new company. The first listing broker e-mailed exceptions to the seller. One of those exceptions called the second company for information and a showing appointment nine months later. The buyer and seller were informed that the buyer was on the exceptions list, and they have no idea why the buyer’s name was there. Neither recalled offers, showings, inquiries or discussion of terms during that listing period. Who must prove that the buyer is a legitimate exception? Does the seller have to acknowledge acceptance of the exception for it to be valid? Listing protection basics Buyers may be granted protection in one of four ways. If, during the term of the listing, the buyer 1) submitted a written offer to purchase or 2) negotiated directly with the seller, the listing protection is automatic and the first listing broker would not be required to perform additional steps to protect the buyer for the override period. If, during the term of the listing, the buyer 3) attended an individual showing or 4) “negotiated” with a broker, the buyer will be protected only if the listing broker delivered the buyer’s name to the seller no later than three days after the expiration of the first listing contract. “Negotiated,” for these purposes, means the buyer discussed potential terms in which the buyer might acquire an interest in the property. If the buyer were protected under the first listing, the first listing broker would have, in essence, a one-party listing for the protected buyer during the one-year override period. Any offer the buyer writes, accordingly, would be presented to the seller by the first listing broker. The first listing broker would earn the listing commission if this offer was accepted and closed. Proof A court may need to determine if the buyer was properly protected. The broker asserting listing protection would need to prove what triggered the protected buyer status, and if it was not automatic protection, that the buyer’s name was properly delivered to the seller. The seller may consult with legal counsel regarding

rights and obligations stemming from the original listing agreement. E-mail delivery According to the standard delivery language in the WB listing contracts, e-mail is not an authorized form of delivery. However, the first listing broker may have modified the listing to allow for e-mail delivery of the protected buyers list and other documents. Party acknowledgement of protected buyer not required In a recent case, the court specifically addressed whether parties must agree that a buyer is protected; the court held that the parties do not need agree that a particular buyer is exception: “The contract contains no requirement that the parties agree who will be named as protected buyers. Rather, a buyer is protected if it ‘negotiated to acquire an interest in the Property … during the term of [the] listing…’ According to the terms of the contract, then, the broker’s designation of protected buyers is a unilateral action that does not require the seller’s assent. A meeting of the minds is unnecessary.” See pages 8-10 of the February 2004 Legal Update, “Listing Procedures for the Prudent Broker,” at for further discussion of listing protection issues. Also see the discussion of the Burkett & Associates, Inc., Century 21 v. James M. Teymer case, 2009 WI App 67, on pages 1-2 of the May 2009 Legal Update, “Case Law Update,” at

Protected buyer list The subagent of a listing broker showed the property during the listing term. The listing expired on Monday. The subagent drafted an offer on Wednesday and submitted it to the listing agent. On Thursday, the listing agent called and said that the listing expired on Monday, and that the listing broker had delivered the protected buyer list to the seller within three days. The envelope was postmarked on the third day, but the seller didn’t receive it until day four. Is there listing protection, or can the subagent enter into a one-party listing to get the deal done? According to the terms and conditions of the listing agreement, the list of protected buyers must be delivered — not received — no later than three days after the expiration

WIREALESTATEMAG • february 2013

Did the buyer see the home before?


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of the listing contract. See the definition of “Protected Buyer” at lines 220-229 of the WB-11 Residential Listing Contract and the definition of “Delivery” at lines 192-198. The court in Burkett & Associates, Inc., Century 21 v. James M. Teymer, 2009 WI App 67, htm, includes a discussion about the effect of delivery — versus the seller’s receipt — of the protected buyer list: “The Teymers assert that even if the letter was included, it was not delivered within the three days specified by the contract since they received the mailing seven days after the contract terminated. This argument ignores the plain language of the contract: ‘delivery of documents or written notices related to this Listing may be accomplished by 2) depositing the document or written notice postage or fees prepaid or charged to an account in the U.S. Mail or a commercial delivery system, addressed to the Party, at the Party’s address.’ The date of delivery, then, is the date of mailing, not receipt. The record contains a certified receipt for mail from Burkett to the Teymers dated January 26, 2005. The court found this mailing contained a cover letter naming protected buyers. Therefore, Burkett complied with the requirement to deliver the names of protected buyers to the seller within three days of the contract’s termination.” When the deadline is in question, the best, absolute proof is a receipt from the post office showing the date and time of mailing.


Conversation to establish negotiation


The buyer called the office several times and spoke each time to the agent on floor duty. Each time, the buyer asked about a property feature or the closing schedule or when they would have to have their loan. The listing is about to expire, and the broker wonders whether this buyer should be listed as protected? In First Weber Group v. Guyant, 2011 WI App 84 at www., a prospective buyer stopped by the property after seeing it online and asked if the sellers would sell without a REALTOR®. Mrs. Guyant told the listing agent about the prospect’s visit and the conversation, but refused to give the prospect’s contact information so the agent could contact her before the expiration of the listing. After expiration, Mrs. Guyant called the prospect and arranged a showing. The home was listed with another brokerage, and the prospect bought the home. To determine whether the buyer was protected under the first listing, the court applied the listing contract definition of “negotiate” to the facts: did the Guyants and prospect discuss potential terms by which the prospect might purchase the property? The court found the requisite twoway communication within their discussion of: 1) whether the prospect would purchase the home if a broker was involved, and 2) when such a sale might occur (the sellers were to contact the prospect after the listing expired). The potential purchase terms discussed do not need to include price, the court noted, although the extent of broker involvement potentially affects price. Note that the elements of “negotiate” in the case are the barebones minimum and that REALTORS® are best served by engaging

in as much dialog as possible when discussing a prospect’s possible purchase. Sending the MLS data sheet, RECR, survey maps and other information to the prospect with a follow-up discussion in writing may be one good way to leave “tracks” and protect commissions. Brokers are well-served to use e-mail or other written communication and save records of communications with prospects just in case the day comes when proof of negotiation is needed.

Protected buyers list not received The listing agent accidentally sent the list of protected buyers to the wrong address for the sellers, and the mail was returned to him. Are those buyers protected? In Immobolia GB, Inc. v. Titletown REALTORS®, Inc. (No. 2009AP3135, Ct. App. 2011) capp/2011/2009ap003135.htm, when the new agent went to send the protected buyer’s name to the seller, she found that the prior agent had not filled in the sellers’ address on the listing contract. She sent the protected buyer list to the

fewer dwelling units, real property that is zoned for residential purposes and that does not contain any buildings or structures, and real property that is zoned for agricultural purposes.” To put a lien on commercial real estate: 1 Notice of broker lien rights language must be included in the agency agreement: sales listing contract, buyer agency agreement, lease listing contract, property management agreement or tenant representation agreement. 2 For sale and purchase transactions, a notice of interest must be recorded at least 30 days before closing and a commission lien must be recorded no later than 30 days after the recording of the closing documents. 3 For lease and property management transactions, a commission lien must be recorded no later than 90 days after the commission is earned or the broker receives notice that the commission is earned. 4 A copy of the commission lien must be mailed to the property owner or acquirer within 72 hours of recording. To read more about commission liens for commercial property and property management, see the June 2010 Legal Update, “Improved Broker Commission Lien Law,” at Debbi Conrad is Senior Attorney and Director of Legal Affairs for the WRA.

Commission lien What is the process for submitting a broker lien on a property, a timeline for the process, and the procedures in doing so? A broker cannot put a lien on a property for a residential transaction. The types of real estate that can be made subject to a broker commission lien are categorized in Wis. Stat. § 779.32(1)(b) as commercial real estate. Commercial real estate is defined as all real estate except “real property containing 8 or

WIREALESTATEMAG • february 2013

sellers’ old address, writing “please forward” on the envelope. When the broker sued for commission, the court found for the second listing broker because the notice was not delivered per the contract standards and instead was knowingly sent to an incorrect address. This emphasizes the importance of agents completing lines 265-279 with all relevant contact information available. In instances where no address is provided, it is wise to use another delivery method, such as personal delivery, to avoid disputes regarding the delivery of protected buyers lists.



Unsure about Disclosure? A back-to-basics explanation of the Real Estate Condition Report

by Debbi Conrad

This is a very common situation: the listing agent asks the seller to complete the Real Estate Condition Report (RECR), explaining that she wants to have it on hand for prospects who visit the planned open house or showings. When the seller asks the agent how to respond to some of the RECR statements, the agent offers a general explanation of the RECR and advises the seller to contact his attorney with specific questions. The explicit guidance the seller ultimately wants and needs amounts to legal advice and strategy.


his common and appropriate response by the agent may not be popular with sellers who are reluctant to call their lawyers. The back-to-basics explanation of the RECR, provided on page 18, offers practical guidance that agents may wish to pass along to clients.

basement foundation, replace block, and install a new drain tile system and sump crock. The Koseks sued the Hanauskas alleging they made a false representation on the RECR by not disclosing the full extent and seriousness of the water intrusion and damage. Lesson learned: Although the sellers provided what

Consequences in the courts What happens if the seller does not do a fair and honest job in completing the RECR? Some recent case law paints a revealing picture of what happens if the seller does not reveal enough or knowingly makes false representations.

RECR disclosures fail to reveal extent of water intrusions


Kosek v. Hanauska (No. 2009AP1633, Ct. App. 2010) (, summarized on Pages 4-5 of the August 2010 Legal Update, “Case Law Update 2010,” at


The Koseks purchased the Hanauskas’ home, which had a leaky basement. The Hanauskas completed a RECR, indicating “Yes” to the statement, “I am aware of defects in the basement or foundation (including cracks, seepage and bulges).” The RECR also included the explanation, “Previous owner had basement work done w/beams + baseboard dewatering system. Buyer may see dampness in NW corner.… Since house was put on market, the water heater has sprung a leak. We will replace before closing. Since house was put on market, we had an engineer inspect basement walls. It was determined that we reinforce east and west walls. This work was done by Zablocki on 3-2-05.” The following spring, water leaked into the basement at multiple areas. At one time, there was standing water in the entire basement. The leaks continued during every spring thaw and after heavy rainstorms until the Koseks spent $22,000 to excavate the

appeared to be a detailed explanation, the buyers sued because it was an insufficient description of the real problems.

Proof of seller’s notice or knowledge required to win RECR misrepresentation case Sikorski v. Wasserburger (Ct. App. 2012, No. 2011AP1316) (www., summarized on Pages 3-4 of the October 2012 Legal Update, “Case Law Update 2012: Residential Transactions and Issues,” at Sikorski purchased the Wasserburgers’ home and sued two years later for damages from a leaky basement. The Wasserburgers left the response for item C.10 on the RECR unanswered. Item C.10 stated, “I am aware of defects in the basement or foundation (including cracks, seepage and bulges). [Basement Defects include, without limitation, moisture or dampness; defective drain systems; bulging or walls not plumb.]” They claimed they didn’t know how to respond because they knew of a foundation repair before they bought the property, but during their ownership they were unaware of moisture, dampness, leaking, bulging, out-of-plumb walls or any other basement defects. When Sikorski hired a contractor for repairs after persistent leakage, the contractor confirmed that he saw physical evidence that water had regularly leaked into the basement for several years prior. Nonetheless, Sikorski had to prove to the court that the Wasserburgers had notice or actual knowledge that the basement leaked and there was no such proof in the record. Lesson learned: Buyers must prove the seller’s notice or knowledge of an undisclosed defect to win a lawsuit for misrepresentation, despite circumstantial evidence.

Personal liability for corporate owners knowingly making false representation on RECR

The Ferris’ purchased property from Location 3 Corporation. Sauer, Lechner and Mason are all members of Location 3. After closing, the Ferris’ learned that the adjacent landfill was a Superfund site: a site where toxic wastes were dumped and the Environmental Protection Agency has designated them to be cleaned up. The Ferris’ filed a complaint alleging that the sellers knew about the Superfund site but failed to disclose it in the RECR. The sellers responded “No” on the RECR to the question, “[a]re you aware of any other conditions or occurrences which would significantly increase the costs of development or reduce the value of the Property to a reasonable person with knowledge of the nature and scope of the condition or occurrence.” The Ferris’ claimed Lechner acted “in concert” with the other two when signing an RECR falsely stating that he knew of no such conditions that would adversely impact the value of property, even though all three knew the adjacent property’s landfill was a Superfund site. The court held that if a fact finder found that the three engaged in tortious conduct, then they could be held personally liable regardless of whether they acted on behalf of Location 3 when doing so. Lesson learned: Acting as a representative of an entity does not always protect against personal liability for false representations.

WIREALESTATEMAG • february 2013

Ferris v. Location 3 Corporation, 2011 WI App 134 (www., summarized on pages 16-17 of the November 2011 Legal Update, “Case Law Update 2011,” at


Residential Real Estate Condition Report This FAQ page is intended to help explain the § 709.03 residential RECR. This discussion is not a substitute for the assistance of an attorney with respect to specific property concerns or strategies.

What is the RECR? What is the purpose of the RECR? The RECR is a disclosure of information known to the seller about the condition of the property for sale. It is not a property condition warranty. Wisconsin public policy promotes seller disclosure of property conditions and defects because sellers are the most familiar with the property. Buyers who receive the RECR have more complete and accurate information that helps them negotiate an offer to purchase. From where does the RECR come? Wisconsin’s seller disclosure law, in § 709.03 of the Wisconsin Statutes, establishes the basic terminology and disclosure items for the RECR. Why must the seller complete the RECR? In the listing contract, the seller agrees to complete the RECR to the best of his or her knowledge. The offer to purchase also references the RECR and makes it part of the contract. In addition, seller disclosure law requires sellers of one- to fourfamily residential real estate to give buyers a completed RECR unless the transfer is exempt (Wis. Stat § 709.001).

How does the seller complete the RECR? Responses to property condition statements On the RECR, the seller responds to statements concerning various aspects of the property by indicating “Yes,” “No” or “N/A,” and is asked to explain any “Yes” responses. WRA RECR forms offer a fourth response option of “See Expert’s Report.” Sellers should complete each statement to the best of their ability and not guess. Sellers should answer “No” if lacking knowledge of any defects relevant to the statement or “N/A” if the question does not apply to the property. Definitions Many statements ask whether the seller is “aware” of any “defects” or conditions pertaining to a particular feature of the property. ÎÎ “Aware” means the seller has received notice or has knowledge of the condition. ÎÎ “Defect” refers to a condition that: a. would have a significant adverse effect on the value of the property, b. would significantly impair the health or safety of property occupants, or c. if not repaired, removed or replaced, would shorten or adversely affect the expected normal life of the property. Defects tend to be more serious problems like a leaking basement, a cracked heat exchanger on the furnace or wiring not in compliance with electrical code. Minor or cosmetic blemishes such as a loose light switch plate or a small gouge in a closet door would generally not be considered defects. Well and well water example The RECR includes the statement: “I am aware of defects in the well, including unsafe well water.” The seller is to check “Yes,” “No,” “N/A” or “See Expert’s Report” and explain if “Yes.” If the seller knows the well casing is in bad shape and consequently the water has twice been

contaminated, he marks “Yes” and explains the answer on the blank lines at the end of the Additional Information section or an attached page if needing additional room. If the seller knows of no problems with the well, he marks “No.” If no well exists on the property, he checks “N/A.” Expert’s report A seller must honestly complete the form based on the notices he has received as well as personal knowledge but also may use reports from qualified experts. Instead of responding to a Property Condition Statement, the seller may substitute an expert’s written information or report in place of the owner’s response. For instance, if the seller prefers to attach the report from the licensed pump installer regarding the water treatment unit installed to address prior contamination concerns and the lab reports showing the water is now safe, the seller can identify the well/well water statement (by checking the “See Expert’s Report” column if using the WRA form) and either attach the written information to the RECR or furnish the written information separately to the buyer by the applicable RECR deadline. Signing and certification The seller signs and dates the RECR in the Owner’s Certification section, certifying that the information is true and correct to the best of the seller’s knowledge as of the date of the seller’s signature. All owners of the property should sign and date the RECR or complete a separate RECR based on individual knowledge. If two or more owners are named on the deed, as joint tenants for example, each property owner must participate in the disclosure process. This captures the knowledge of each owner who may have different experiences or made different observations of the property.

When completed, what happens to the RECR? ÎÎ A completed RECR must be given to a buyer no later than 10 days after acceptance of the offer to purchase to avoid giving the buyer the opportunity to rescind or cancel the offer. ÎÎ If the form is provided after the buyer submits the offer, and it discloses a serious defect not already known to the buyer, the buyer has a two-business-day right of rescission. ÎÎ The buyer may also rescind the purchase contract if he or she receives a RECR that is incomplete or incorrectly asserts that an item is not applicable, provided the buyer is unaware of the defects that the seller failed to disclose. An example of an incorrect assertion would be a seller with a clearly observable LP gas tank with “N/A” marked next to the LP gas tank item. ÎÎ If the buyer has the RECR before submitting an offer to purchase, no right of rescission exists. The WRA recommends working with an experienced REALTOR® and a real estate attorney when buying or selling real estate. Wisconsin REALTORS® Association 4801 Forest Run Road Madison, WI 53704 I

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February 25-March 1; March 4-6, 2013 WRA Headquarters — Madison To obtain a real estate license in the state of Wisconsin, you must first complete 72 hours of approved education courses, such as the Sales Pre-license Course. Second, you must pass a state-administered exam. The WRA will offer an eight-day accelerated 72-hour sales program on February 25-March 1; March 4-6, 2013 in Madison. For more information, visit

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WIREALESTATEMAG • february 2013



product showcase

by Nichole Mickelson

All Things Legal


ur mission is and remains to offer beneficial products and services for Wisconsin real estate professionals to work most efficiently and to the highest industry standards. Below are just some of the products that can catapult you to the top of your game and ahead of competition!

Wisconsin Real Estate Clauses

Department of Safety and Professional Services. This edition adds new clauses and revises many clauses that appeared in the previous edition. Find more information at The zipForm® 6 Clause Library is the electronic version of Wisconsin Real Estate Clauses. The 2012 edition adds new clauses and revises many that appeared in the previous edition. You can purchase the Clause Library directly through your zipForm® 6 account. Downloadable PDF instructions can be found at

Note: brokers using this manual are solely responsible for determining the types of provisions that appropriately reflect their individual office policies. For more information, visit

Wisconsin Real Estate Law Manual


Office Policy Manual


A collaborative effort between the University of Wisconsin Law School and the WRA, this manual is the go-to resource for drafting ideas when standard forms need to be modified to reflect the intent of the parties. The clause manual addresses the myriad drafting considerations and includes sample provisions and contingencies, buyer and seller checklists, and a variety of broker disclosures. In many instances, alternate versions are available of a provision to better enable offer customization. The 2012 edition completely revises the previous. It incorporates the many and significant changes to drafting offers from the approval of the (2011) WB-11 Residential Offer to Purchase by the

This manual is designed to assist brokers who are drafting or revising a manual for their office. In its 13th edition, both the business and technology sections of the manual have been completely updated. The goal of the manual is to identify areas and topics regarding office policies and the type of language that may be used in developing these policies. As an added bonus, a CD offering an electronic version of the manual is included.

The 2010 edition of Wisconsin Real Estate Law provides a complete update of the prior 2008 edition based on the significant and many changes resulting from approval of the new offer to purchase (WB-11). Each chapter of the respected treatise was reviewed and updated to reflect changes in real estate transactions created by the new offer. Also, the new edition includes significant new legislation and court decisions that affect Wisconsin real estate transactions. To order, visit Nichole Mickelson is the Business Services Assistant for the WRA.

realtor sales tips

by Marcus A. Wally

Farming in February Although the weather outside may be frightful, winter can be a great time to turn soil and plant new seeds for a bountiful spring harvest. In real estate, we often speak of developing “farm areas” and working those areas to cultivate new customers and clients, just as a farmer cultivates his crops to ensure a robust harvest. direct mail. Make sure you are dressed professionally, wearing a name badge and prepared to present yourself to everyone as the neighborhood real estate expert. You must believe in yourself for others to follow your lead. Success is contagious! As you may know, not everyone likes a solicitor. Try these tips to make your visit go smoothly: • Visit a neighborhood where you have a listing or just sold a home. • Start at nearby homes and build from there. • Create an address log containing a list of every house you intend to visit with space for notes. • Ring the doorbell or knock, then take a step or two back. Put your smile on and wait 30 to 45 seconds. If no one answers, ring or knock again and wait another 30 to 45 seconds before moving on. • Offer a gift: a calendar, magnet, pen or notepad with your contact information. People love free stuff! • Introduce yourself and share what you do for a living. • Give the homeowner two of your business cards — one for them to keep and one to share — and invite them to contact you. A spinoff on door-knocking is my “5, 5, 5 rule” — a method guaranteed to lead to some sort of new business. Each time I get a new listing, I immediately take copies of my MLS data sheet with color photos to the five neighbors to the left of my new listing, the five to the right and the five across the street. After introducing myself, I

point out my car so that they are aware of a new vehicle on their street they will begin to see. This courteous safety step is always appreciated. Being consistent and persistent are my final thoughts for you as we tackle 2013. If homeowners aren’t interested in selling until next summer, commit to following up with them as next summer will be here before you know it. Put these folks on a consistent mailing or calling list or stop by from time to time so they are accustomed to seeing your name and face. Be proactive — persistently pursue this warm lead. Trust yourself and make a solid commitment to your marketing efforts. Build your personal brand by building recognition in your target market. Become the go-to REALTOR®. Make one more phone call before you go home tonight; send a handwritten note to someone you saw recently in town; knock on one more door even though you are tired and ready to stop. Keep pushing and never give up because that’s how you will earn new business! Marcus A. Wally, MBA, is an active REALTOR® in St. Augustine, Florida. Marcus is the founder and broker of New World Realty, which also manages the coaching and facilitation of education classes around the world. Marcus earned his MBA from the University of North Florida in Jacksonville. He can be reached at 904-669-1081 or at marcus@ Learn more about him at

WIREALESTATEMAG • february 2013


he beginning of a new year is the perfect time to set goals and establish new routines, and one of the best ways to raise your game in 2013 is to develop and strengthen your farm areas. If you already have one or two, fertilize and water them consistently so this year’s production is record-breaking. If you are new to this, start a farm area now. Choosing an area to “farm” is the first and most critical step. Pick an area in which you have a personal interest — perhaps your own neighborhood. I have spent the past 12 years cultivating one of my strongest and most productive farms: the condominium community where I live. Connecting with my neighbors allows me to share my knowledge and expertise about local real estate and take a personal interest in my neighbors’ values. As a result of being a proactive member of the community, I handle most of the condo listings. One of the crucial elements of developing new business is being open to all the opportunities that surround you everywhere you go. Long before modern-day business development tools such as the Internet, e-mails and digital photography, real estate professionals would walk through a neighborhood to get to know folks personally. So it might not surprise you that more than 100 years later, direct, face-toface contact is still one of the most successful methods of earning business. I consistently get my best results from knocking on doors. Going door-todoor can even be more effective than


membership resources

Exclusive Member Benefits We wish you success in your career and hope you take advantage of the many benefits we offer.

Are You Settling for Mediocre E&O Coverage?


f you are, you may fall victim to costly mistakes. Three common hazards for real estate professionals are foreclosure sales, failure to provide homeowners association requirements and water intrusion. Avoid missteps with these tips! • When dealing with foreclosure sales, never operate outside your expertise. These transactions require a special expertise to complete. • For properties that have homeowners associations, always provide the buyer with a copy of restrictive covenants to ensure they are aware of acceptable living practices. If buyers do not receive these in writing, it could lead to a lengthy and costly negotiation process. • Inspecting for water intrusions is also an area for experts. This problem can be found in any home of any age, so do not assume a property is without flaws. Always encourage the buyer to have an inspection. It is also important to supplement risk management practices with adequate coverage. If you don’t, one mistake could be detrimental. Pearl Insurance has served REALTORS® for over 50 years and has been a WRA member benefit for the last 20 years. Pearl Insurance is an industry leader for Errors & Omissions (E&O) coverage and is A-rated by A.M. Best. Specially designed for the real estate industry, Pearl coverage now includes even more features:


Coverage for network and privacy claims. Not-for-profit directors and officers coverage. Open house property damage coverage to full policy limits. Agent-owned property transaction coverage with no waiting period. Instant quote at 50 percent deductible reduction for claims resolved within one year. In addition to affordable, comprehensive coverage, Pearl provides risk management tools with tips on how to run a successful, risk-controlled firm. Don’t spend another second with mediocre coverage! For more information about the benefits of Pearl’s E&O coverage, call 800-2898170 or visit

Office Supplies

Business Furniture

Shipping Discounts

Save on office supplies with Wisconsin-based Office Supplies 2U (OS2U). OS2U’s mission is to be the single-source premier supplier of business products. For more information, contact Bob Brooks at 608-441-8900, ext. 26, or by e-mail at Visit OS2U online at

Established in 1940, Emmons Business Interiors (EBI) markets and distributes quality office furnishings across Wisconsin. Through several statewide locations, EBI provides quality new, used and refurbished office furniture products. Also available are interior design services, installation, and project and moving management. For more information, contact Tod Dean at 800-324-1691 ext. 424 or by e-mail at Visit online at www.

WRA members currently enrolled in the UPS Savings Program must re-enroll to take advantage of this new exclusive offer. Just take a few minutes to fill out the short application form available at To enroll, use promo code NCR308. If you have any questions, call UPS at 800-325-7000.

Long-Distance Program


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Call long distance and save with AMI Communications! Enjoy low rates with no monthly fee, no time-of-day restrictions, and no term or volume commitments. AMI also offers teleconferencing and toll-free service. Call 800254-3202 or visit and mention that you are a WRA member.

Health, Dental & Life Insurance Save on health insurance premiums with REGIT Inc. without compromising coverage. REGIT’s program provides access to customizable insurance plans to meet your needs. Call 800537-9786 or visit

Website Development Interested in creating your own website? WRA members can design and maintain their own websites through Real Estate Home Pages. Software templates and easy-to-use tools for adding images and formatting text provide a professional look, usually only attained by a graphic artist or Web designer. Visit www. for more information. You’ll be amazed at how easy and inexpensive having a website can be!

Errors & Omissions Program Pearl Insurance, the WRA-endorsed carrier for errors and omissions (E&O) insurance, offers insurance designed specifically for the real estate industry and the risks you face. Pearl provides coverage for claims of regulatory complaints, personal injury, lockbox liability or allegations of discrimination. For more information and a free quote, call 800-2898170 or visit If you have questions about one of the WRA member benefits, contact Debbie Thacker at or by calling 800-279-1972.

What’s Your Dream Job? When was the last time your boss asked you that? At Coldwell Banker it’s always our first question. We believe our success comes from helping you realize your idea of success. It’s whatever you decide.

Every Dream Deserves a Chance •


Pat Roggensack for Supreme Court

The Wisconsin REALTORS® Association has endorsed incumbent Justice Patience Roggensack for a full 10-year term in the Wisconsin Supreme Court election to be held on April 2, 2013.


rior to her election to the Supreme Court in 2003, Roggensack was a Wisconsin Court of Appeals judge and litigator in a private firm. Justice Roggensack’s record clearly illustrates her support for issues important to the real estate industry and the WRA. She has demonstrated a solid understanding of private property rights in cases involving the environment, eminent domain, landlord/tenant issues, appraisals, assessments, easements, condemnations, real estate commissions, condominiums, zoning ordinances and contracts. The WRA’s Political Strategy Group, RPAC trustees and board of directors all voted unanimously to support Justice Roggensack.




Why Roggensack?


The unanimous endorsement of Roggensack is based on five significant reasons: 1. Record on cases impacting the real estate industry: Since 2003, Justice Roggensack decided 46 cases involving issues important to the WRA, and she ruled in a manner beneficial to the real estate industry or property owners in 32 of those cases. Roggensack’s overall record for support of property owners: 69.5 percent. 2. Solid on WRA cases: The WRA filed party or amicus briefs in 22 cases decided by Justice Roggensack during her 10 years on the Supreme Court. Roggensack ruled with the WRA, in whole or in part, in 17 of those 22 cases.


Roggensack’s record on WRA amicus briefs: 77 percent. Support for WRA position on unauthorized practice of law: Under the terms of a State Bar of Wisconsin proposal (“petition”), real estate licensees would have lost the ability to draft forms. This petition would have taken away a large portion of the role of a real estate licensee in a real estate transaction. Justice Roggensack ruled in the WRA’s favor. As noted by WRA attorneys Cori Lamont and at the time Kevin King, “If this event (petition) did occur, clearly your day, your career, your life would be very different.” Support of WRA motion for new rules on judicial recusal: In response to a judge recusing herself in a case involving the WRA because the WRA supported her campaign, the WRA filed a motion with the Supreme Court asking it to amend its internal rules to say that endorsement and political support alone does not require a judge to recuse him/ herself from a case. Justice Roggensack took a leadership role in a 4-3 vote to adopt the WRA’s motion on judicial recusal. As a result, the WRA and other organizations will continue to exercise constitutional rights to support and endorse judicial candidates without fear that the judges will be required to recuse themselves from hearing a case. Conservative stance on real estate-related cases: Generally, Justice Roggensack is a strict constructionist on statutes, upholds contracts where possible, and sides with

by Joe Murray

Congrats and thank you to the Wisconsin RPAC Hall of Fame members! These members have contributed $10,000 or more to RPAC and/or the Direct Giver program. Below are photos from the Large Donor Council dinner held at The Madison Club in 2012. See page 30 for RPAC and Direct Giver investors.

Photos by Lauren Bizorik

Vote February 19 and April 2 Two challengers have entered the race against Justice Roggensack in the February 19 primary election: Ed Fallone, a Marquette University law professor, and Vince Megna, a lemon law attorney. Surviving the February 19 primary is essential to Justice Roggensack’s advancement to the April 2 general election. The WRA will conduct a “Get Out the Vote” effort prior to both elections. Mark your calendars and vote on February 19 and April 2! Based on Justice Roggensack’s experience and track record on cases important to the real estate industry, property owners and the WRA, we urge you to support Roggensack in the upcoming Wisconsin Supreme Court race.

Midthun, Dennis: RE/MAX Preferred

Blenker, Rita: Century 21 Gold Key Realty Inc.

Miller, Matthew: Stark Company REALTORS®

Bytof, Joyce: Coldwell Banker The Real Estate Group

Mills, Stephen: Bear Realty of Kenosha Inc.

Bytof, Otto: Coldwell Banker The Real Estate Group

Mulleady, James: Coldwell Banker Mulleady

Chronquist, Richard: First Weber Group Northern WI LLC Murray, Joe: Wisconsin REALTORS® Association Decker, Sue: Century 21 Gold Key Realty Inc.

Neuville, David: Four Sail Realty LLC

Didier, Peter: RE/MAX United LLC

Nordeen, Dale

Docken, Gib: Docken Realty Services

O’Brien-Parker, Mardi: Mardi O’Brien Real Estate Inc.

Flynn, Norman: Norman D Flynn Associates Inc.

Olson, Charles: Coldwell Banker River Valley REALTORS®

Gleasman, Larry

Prassas, Fred: Property Management Concepts

Hasenbank, Patty: First Weber Group Northern WI

Rosenberg, Jeff: Midland Realty

Hellyer, Walter: Coldwell Banker The Real Estate Group

Schiferl, James: Kramer-Schiferl Realty

Helwig, Sharon: RE/MAX American Dream — The Real Estate Professionals LLC

See, Jacquelyn: First Weber Group Inc.

Hilgenberg, Neil: Hilgenberg & Associates Hilgenberg, Philip: Hilgenberg Realty Hilgenberg, Terry: Coldwell Banker Hilgenberg RE Horning, John: Shorewest REALTORS® Horning, Joseph: Shorewest REALTORS® Hovde, Donald: Hovde Realty Inc. Hovde, Glenn: Hovde & Hovde Inc. Imhoff, Jim: First Weber Group Inc. Kittleson, Darren: Keller Williams Realty

Joe Murray is Director of Political and Governmental Affairs for the WRA.

Lee, Daniel: First Weber Group Inc. Luetke, Art: Luetke Investment Real Estate Lyons, Jerry: RE/MAX Shambeau & Lyons Malkasian, William: National Association of REALTORS®

Seramur, Joan: Williams Realty of Minocqua Inc. Shuttleworth, Peter: Multiple Listing Service Inc. Spranger, Michael: First Weber Group Northern WI LLC Stanich, Douglas: Stanich Realty LLC Stark, David: Stark Company REALTORS® Stark, Phillip: Stark Company REALTORS® Stauter, Roger: Stark Company REALTORS® Sveum, Peter: Coldwell Banker Success Theo, Michael: Wisconsin REALTORS® Association Weber, Robert: First Weber Group Inc. Weirich, Liz: First Weber Group, Inc. Welsh, Scott: Colliers International

WIREALESTATEMAG • february 2013

property owners in cases dealing with private property rights.

Barry, James: Cassidy Turley Barry Inc.

Yunker Sr., Raymond: Yunker Real Estate Services


legislative by Tom Larson


Gold Rush


Frac sand mining in Wisconsin


Wisconsin has become the largest producer of frac sand in the country in recent years. This industry explosion has created new jobs, tax revenues and increased land values to our state — but has also raised concerns about possible impacts on human health, road safety and the environment. As a result, many communities are divided about whether frac sand mining is good for Wisconsin. This article provides an overview on frac sand mining to help REALTORS® understand the impact of this growing industry in our state.

Frac sand mining defined Frac sand is a special type of sand, also referred to as silica sand or quartz, used by the petroleum industry to extract natural gas and/ or crude oil from rock formations through a technique known as “fracking” or “hydrofracking.” Unlike conventional drilling methods, which can remove only pooled reservoirs of natural gas and oil, fracking breaks up the rock and allows the trapped natural gas and oil to escape. Like any gas drilling operation, the first step in the fracking process is to dig a vertical well. Once it enters the shale layer, the well is turned horizontal to expose more surface area, which allows more gas to seep into the well. Once the horizontal well is drilled, mini explosives

are set off in the well to create preliminary fractures in the rock. To open the fractures so that natural gas and/or oil can be extracted, a mixture of water, chemicals and frac sand are pumped into the well at a high pressure — up to 7 million gallons of water per fracture. The frac sand remains in the fractures after the water is pumped out to hold the fractures open and allow the gas and/or oil to escape. To meet industry standards, frac sand must be almost pure quartz, very well rounded, and meet certain size and strength standards. West Central Wisconsin and several other counties, such as Burnett, Green Lake and Waupaca, have large deposits of some of the best frac sand in the world.

Economic impacts

Environmental concerns While frac sand mining has given some areas an economic boost, residents are often concerned about impacts on human health, the environment and neighboring property values. Some of the most common concerns raised by residents include: • Health concerns: Lung diseases, such as silicosis and cancer, and autoimmune diseases can be caused by silica dust entering the air from mines and plants. • Groundwater contamination: Because groundwater is used for both

the mining and processing of frac sand, there are concerns of groundwater resources becoming contaminated. However, high-capacity wells are heavily regulated by the Department of Natural Resources (DNR) and chemicals are not generally used in frac sand mining. • Water usage: Frac sand must be washed after extracted from the ground, and washing the sand is a water-intensive process, using up to 2 million gallons per day, that could drain the aquifers and result in a shortage of groundwater. To mitigate this impact, mines and processing plants recycle as much water as possible. Moreover, the DNR monitors high-capacity wells that could have an impact on Wisconsin’s water resources. Some fear, though, that proper monitoring will not take place once the permit is issued. • Impacts on landscape: Destruction of landscape and natural scenic beauty is a concern. However, Wisconsin law requires all non-metallic mining operations to obtain a reclamation permit to ensure that sites are reclaimed to a post-mining land use after mining is complete. • Impacts on roads: The process by which frac sand is mined, processed and eventually delivered to the location where it will be used requires intensive use of roads, railways and other transportation infrastructure. • Impact on neighboring properties: One-third of Wisconsin’s frac sand

mining operations are in towns with no zoning regulations. While the state regulates the impact of mines on air, water and the landscape once the mining is complete, some feel that current state regulations are inadequate to create a sufficient buffer between the mining operations — which are noisy and often use explosives to extract sand — and neighboring property owners.

Possible new frac regulations With the rapid growth in frac sand mining in Wisconsin, some local communities are hoping the state adopts new regulations to address some of the concerns related to this industry. However, many state officials believe that frac sand mining can be adequately regulated through existing federal and state environmental regulations along with local zoning regulations if a community chooses to adopt them. While no new frac sand mining regulations have been introduced to date, the WRA will continue to monitor this issue during the upcoming legislative session. For more information about frac sand mining regulation, please visit the Wisconsin DNR’s website at mines/documents/silicasandminingfinal.pdf. If you have questions or need any additional information, please contact Tom Larson at or at 608-240-8254. Tom Larson is Vice President of Legal and Public Affairs for the WRA.

WIREALESTATEMAG • february 2013

With more than 30 states engaging in fracking due to large deposits of shale, the United States has become a world leader in oil and natural gas production. Experts estimate that by 2015, the U.S. will replace Russia as the world’s largest producer of natural gas. By 2017, experts also predict that we will produce more oil than Saudi Arabia, making the U.S. the top oil producer in the world. Within the last five years, fracking has increased U.S. oil production by 2.59 million barrels per day. The number of frac sand mining operations in Wisconsin has more than doubled in the past couple of years. In 2011, 41 frac sand mines were operating or proposed in Wisconsin and, in 2012, 87 frac sand mines were in operation and another 20 proposed. In addition to the frac sand mines, Wisconsin is currently home to more than 30 processing facilities, with more in planning stages. While it is difficult to determine an exact number, the Wisconsin Center for Investigative Journalism has estimated that the state’s frac sand mining industry will create more than 2,500 jobs over the next several years. However, this number does not include the thousands of possible service-related jobs in nearby hotels, restaurants and stores, or the new road construction or homebuilding jobs that will also likely be created. Land prices have also soared, increasing by 1,000 percent over the last few years in some areas. Some areas of land have reportedly sold for approximately $12,000 per acre.


realtors politcal action committee

Thank You to RPAC and Direct Giver Investors The Wisconsin REALTORS® Political Action Committee trustees extend a sincere “thank you” to all RPAC Major Investors who played an integral role in raising more than $366,000 in 2012 to support pro-business, pro-REALTOR® candidates for public office. Major Investors are an important core group of members who understand the necessity of RPAC funds to successfully advocate for a business environment favorable to homeowners, REALTORS® and their customers and clients as well as the protection of private property rights. NAR Golden R Members ($5,000+) • *Imhoff, Jim: First Weber Group Inc. • *Seramur, Joan: Williams Realty of Minocqua Inc.

NAR Crystal R Members ($2,500+) • Horning, John: Shorewest REALTORS® • Horning, Joseph: Shorewest REALTORS®

NAR Sterling R Members ($1,000+)


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Barry, James: Cassidy Turley Barry Inc. Bartels, Kathy: Coldwell Banker Success Beers, Stephen: Keefe Real Estate Blenker, Rita: Century 21 Gold Key Realty Inc. Blomberg, Krag: RE/MAX Affiliates Bunbury, Thomas: Bunbury & Associates REALTORS® Bytof, Joyce: Coldwell Banker The Real Estate Group Bytof, Otto: Coldwell Banker The Real Estate Group Canfield, Paul: RE/MAX Affiliates Cardinale, Ann: First Weber Group Inc. Central Wisconsin Board of REALTORS® Chavin, Barry: NAI MLG Commercial Chronquist, Richard: First Weber Group Northern WI LLC Clickner, Casey: Shorewest REALTORS® Cohen, Daniel: Mid-America Real Estate-Wisconsin LLC Czarnecki, John: Commercial United LLC Decker, Sue: Century 21 Gold Key Realty Inc. Dentice, Ted: Shorewest REALTORS® Didier, Peter: RE/MAX United LLC Diedrich, Renny: Coldwell Banker The Real Estate Group Donnell, Kevin: First Weber Group, REALTORS® Ebben, Sandra: First Weber Group Northern Wisconsin LLC Falk, Katherine: Coldwell Banker Residential Brokerage Fardy, Michael: Colliers International | Wisconsin Flood, Robert: RFP Commercial Inc. *Flor, John: Six Lakes Realty Flynn, Norman: Norman D Flynn Associates Inc. Gerke-Edwards, Lacinda: Cindy Gerke & Associates Gleasman, Larry Greater Milwaukee Association of REALTORS® Gull, Judy: RE/MAX First Choice Hellyer, Walter: Coldwell Banker The Real Estate Group Helwig, Sharon: RE/MAX American Dream — The Real

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Estate Professionals LLC Henderson-Kumm, Jacqueline: Edina Realty Inc. Hilgenberg, Philip: Hilgenberg Realty Hilgenberg, Terry: Coldwell Banker Hilgenberg RE Imhoff, James: Universal Home Protection LLC Jennings, Charles: Century 21 Gold Key Realty Inc. Kamps, Ralph: M & M Real Estate Keefe, Michael: Keefe Real Estate Abbey Springs Keefe, Robert: Government Relocation Group Inc. King, Kevin: REALTORS® Association of South Central WI *Kittleson, Darren: Keller Williams Realty Kruse, Daniel: Century 21 Affiliated Kuhl, Kathryne: First Weber Group Inc. La Crosse Area REALTORS® Association Lamont, Cori: Wisconsin REALTORS® Association Lane, Steven: First Weber Group Northern Wisconsin Larson, Thomas: Wisconsin REALTORS® Association Lawler, Daniel: Coldwell Banker Brenizer REALTORS® Lee, Daniel: First Weber Group Inc. Lee, J. Kenneth: Edina Realty Inc. Lillestrand, Steven: Coldwell Banker River Valley REALTORS® Lincoln, Richard: Mandel Group Inc. Logan, Laurie: Prudential Community Realty Lyons, Jerry: RE/MAX Shambeau & Lyons Maddente, Tamara: First Weber Group, REALTORS® Malkasian, William: National Association of REALTORS® Maurer, K.C.: RE/MAX 24/7 Real Estate LLC Merwin, Rebecca: The Rauland Agency Inc. Miller, Matthew: Stark Company REALTORS® Mills, Stephen: Bear Realty of Kenosha Inc. Milwaukee Metro MLS Monson, Elizabeth: Elizabeth Monson Mooney, J Michael: MLG Management Mulleady, James: Coldwell Banker Mulleady Murray, Joe: Wisconsin REALTORS® Association Nielsen, Thomas: Coldwell Banker Burnet Nordeen, Dale Northwestern Wisconsin MLS Northwood, Chris: Northwood Real Estate Ogden, Peter: Ogden & Company Inc. Olson, Charles: Coldwell Banker River Valley REALTORS® Pavlicek, Karen: Eagle Deer Land Company Petersen, Jeffrey: J Mark Investments Ltd. Prassas, Fred: Property Management Concepts Provancher, Stephen: NAI MLG Commercial Purtell, Ned: RFP Commercial Inc.

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REALTORS® Association of South Central Wisconsin REALTORS® Association of South Central Wisconsin MLS Revolinski, Scott: RFP Commercial Inc. Rivard, Roger Rufledt, Mary: Century 21 Metro Realty Inc. Rushman, Roger: First Weber Group, REALTORS® Ruzicka, Michael: Greater Milwaukee Association of REALTORS® • Schaefer, Patricia: Prudential Community Realty • Schultz, David: First Weber Group Inc. • Schwab, Dennis: First Weber Group • See, Jacquelyn: First Weber Group Inc. • Shuttleworth, Peter: MLS Inc. • Simons, Ryan: Keefe Real Estate • Sjowall, Erik: Bunbury & Associates REALTORS® • Spranger, Michael: First Weber Group Northern Wisconsin LLC • Stark, David: Stark Company REALTORS® • Stauter, Roger: Stark Company REALTORS® • Stortz, Scott: Star Properties • Swick, Scott: First Weber Group • Sykora, Thomas: Coldwell Banker Residential Brokerage • Theo, Michael: Wisconsin REALTORS® Association • Villa, Jim: Commercial Association of REALTORS® WI • Weber, Robert: First Weber Group Inc. • Webster, Bob: Keefe Real Estate • Welnetz, Ronald: Absolute REALTORS® SURE Realty Company • Welsh, Scott: Colliers International | Wisconsin • Western Wisconsin MLS • Wiese, Peter: American Edge Real Estate Services Inc. • Wille, Marilyn: The Title Company Inc. • Wisconsin REALTORS® Association • Zahrt, Ron: First Weber Group Northern Wisconsin LLC * Denotes NAR President’s Circle Program member

WRA $1,000+ • Berndt, William: Western Wisconsin REALTORS® Association • Drzewiecki, Jack: Century 21 Realty• Fedler, Ron • Gilbank, Mary: Shorewest REALTORS® • Hoeschler, Jay: Gerrard-Hoeschler • Hoffman, Jeffrey: Judson & Associates • Mandel, Barry: Mandel Group Inc. • Mirkin, Barry: Restaino & Associates • Schwab, John • Wangard, Stewart: Wangard Partners Inc.

Passing good laws and defeating bad ones starts with your voice in this building.


GOVERNMENT DAY March 20, 2013 | Monona Terrace, Madison |

What is our WHEDA Advantage ? ®

Peace of mind. Your home buyers have built-in peace of mind with a WHEDA Advantage loan. WHEDA Advantage loans include job loss mortgage payment protection, a benefit that pays your customer’s mortgage for up to six months in the event of involuntary unemployment within two years of loan closing.* Income and loan limits apply. Refinancing is not available. Interest rates are subject to change daily. To learn more, go to WISCONSIN HOUSING AND ECONOMIC DEVELOPMENT AUTHORITY 800.334.6873

*Some exclusions apply. See a WHEDA participating lender for details.

February 2013 - Wisconsin Real Estate Magazine  

The legal issue of 2013: February covers a broad array of the most common real estate-related legal topics across several articles.

February 2013 - Wisconsin Real Estate Magazine  

The legal issue of 2013: February covers a broad array of the most common real estate-related legal topics across several articles.