Common
Consumer Questions
Licensee
Practice Questions
Trust
Accounts
Requirements
for a Trust Account Bookkeeping System
Continuing
Education
Wisconsin
Real Estate Requirements for the Sale of Out-of-State Lots and Out-of-State
or In-State Condominiums, Time-Shares and Campgrounds
COMMON
CONSUMER QUESTIONS
Q. When should a broker
return earnest money?
A. A broker must indicate on
the offer to purchase the receipt of earnest money received from a buyer
at the time the offer is drafted. The earnest money must be held in
the broker's real estate trust account unless the parties to a transaction
designate an escrow agent other than the broker. The disbursement of
earnest money held in the broker's trust fund is governed by Wis. Adm.
Code section RL 18.09, which allows seven permissible circumstances
under which the broker is not liable for disbursement as follows: (a)
To the payor upon the rejection, expiration or withdrawal prior to binding
acceptance of an offer to purchase, lease, exchange agreement or option
on real estate or a business opportunity; (b) As directed in a written
earnest money disbursement agreement signed by all parties having an
interest in the trust funds. A closing statement is a written earnest
money disbursement agreement for the purposes of this subsection. An
offer to purchase, lease, exchange agreement or option is not a written
earnest money disbursement agreement for the purpose of this subsection.
(c) To a court having jurisdiction over a civil action involving all
parties having an interest in the trust funds; (d) As directed by order
of a court; (e) Upon a good faith decision based upon advice of an attorney
not representing any party to the contract; (f) Upon authorization granted
within the contract; or (g) As otherwise provided by law.
A consumer should review the
sales documents related to the transaction to determine if the broker
is withholding earnest money improperly. A consumer may have contractual
rights against the broker which can be pursued in civil or small claims
court. If a complaint is filed against the broker this department will
also investigate the facts of the case which could possibly result in
administrative discipline against the broker. Please be advised that
the department is not a court of law and cannot order the broker to
pay a consumer damages or return monies to which a consumer may have
a right.
Q. If a broker isn't
performing under a listing contract, when can a consumer cancel?
A. A listing agreement is a contract
between the broker and a client. If the broker is not performing what
he/she has contractually promised to perform the client may have the
right to cancel the agreement and seek possible damages. The client
will need to consult a private attorney to determine the client's rights
under the contract. If a client files a complaint against the broker
this department will also investigate the facts of the case which could
possibly result in administrative discipline against the broker.
Q. A real estate agent
says that I must continue to work with him to find a house, and that
I owe him a commission for the work that he has done so far. When is
a commission or other payment owed?
A. A consumer only owes a fee
to a broker if a signed written agreement exists between the broker
and the consumer. At that point, the consumer becomes a client of the
broker, and the terms of the agreement determine what fee or commission
is owed and under what conditions.
Q. Are rebates
legal in Wisconsin and can a broker rebate a portion of the selling
commission they receive?
A. There is nothing in the
statutes or rules of the board which prohibit a real estate broker from
providing a cash payment or other consideration to a buyer in order
to induce their puchase of real estate. Providing incentives to
prospective buyers or sellers by real estate licensees is not prohibited.
Wis. Stats. s. 452.19 prohibits real estate brokers from paying "referral
" or "finder's fees" to unlicensed individuals who are
not prospective puchasers or sellers. Under this statute an unlicensed
person may not receive compensation from a broker for referring others
to the broker. You can not be compensated by a broker for referring
your friend to a broker as a prospective buyer or seller.
Q. The broker failed
to disclose the following, for example: lead based paint, a defect of
some kind, a nearby land fill, a new microwave tower, etc.
A. Generally, if the broker knew or
became aware of information suggesting the possibility of the presence
of lead based paint, or a property or structural defect that constitutes
a material adverse fact, or any other material adverse fact related
to the transaction, the broker may be subject to administrative discipline
for the failure to disclose this information to all parties to the transaction.
The broker is under a duty to disclose all material adverse facts that
the broker knows and that a party does not know or cannot discover through
a reasonably vigilant observation, unless the disclosure of the material
adverse fact is prohibited by law. The broker also is under a duty to
disclose information suggesting material adverse facts. A consumer
should also contact a private attorney to determine any legal rights
against the broker or other persons involved in the transaction.
Q. What type of property
inspection is a broker required to perform?
A. Generally, any licensee
when engaging in real estate practice is under a duty to conduct a reasonably
competent and diligent inspection of any structural improvements to
real estate and immediately surrounding areas of the property to detect
observable, material adverse facts. A listing broker is additionally
required to ask the seller about the condition of the structure, mechanical
systems and other relevant aspects of the property as applicable, and
request that the seller provide a written response.
A reasonably competent and diligent
inspection of real estate improved with a structure does not require
the operation of mechanical equipment; the opening of panels, doors
or covers for access to mechanical systems; or the moving of furniture,
boxes or other property; nor does it require a licensee to observe areas
of the property for which entry presents an unreasonable risk of injury
or areas accessible only by ladder, by crawling or other equivalent
means of access.
Q. Is a broker required
to hire a home inspector?
A. A licensee is not required
to retain third party inspectors or investigators to complete a reasonably
competent and diligent inspection.
Q. Is a broker required
to inspect an entire parcel of vacant land?
A. No. A reasonably competent
and diligent inspection of vacant land does not require an observation
of the entire property, but shall include, if given access, an observation
of the property from at least one point on or adjacent to the property.
Q. What must a broker
disclose to a party about a property?
A. A licensee, when engaging
in real estate practice, shall disclose to each party, in writing and
in a timely fashion, all material adverse facts that the licensee knows
and that the party does not know or cannot discover through a reasonably
vigilant observation, unless the disclosure of the material adverse
fact is prohibited by law. This provision is not limited to the condition
of the property, but includes other material adverse facts in the transaction.
A licensee, when engaging in
real estate practice, who becomes aware of information suggesting the
possibility of material adverse facts to the transaction, shall be practicing
competently if the licensee discloses to the parties the information
suggesting the possibility of material adverse facts to the transaction
in writing and in a timely fashion, recommends the parties obtain expert
assistance to inspect or investigate for possible material adverse facts
to the transaction, and, if directed by the parties, drafts appropriate
inspection or investigation contingencies.
This disclosure is not limited
to the condition of the property, but includes other material adverse
facts to the transaction, including but not limited to defects and conditions
included within the report form under s. 709.03, Stats. A licensee is
not required to retain third party inspectors or investigators to perform
investigations of information suggesting the possibility of a material
adverse fact to the transaction.
If a licensee or a party in
a transaction engages the services of a qualified third party to conduct
a property inspection or investigation of material facts, the licensee
may rely on the results of the inspection or investigation providing
the licensee obtains a written report of the inspection or investigation
and delivers a copy of the report to all interested parties in a timely
manner.
If a licensee's reasonably
competent and diligent inspection reveals facts materially inconsistent
with or materially contradictory to the seller's statements, or the
inspection or investigation report of a third party, the inconsistency
shall be disclosed in writing and in a timely manner to the parties.
Q. What is a “material
adverse fact”?
A. A “material adverse fact”
is an adverse fact that a party indicates is of such significance, or
that is generally recognized by a competent licensee as being of such
significance to a reasonable party, that it affects or would affect
the party's decision to enter into a contract or agreement concerning
a transaction or affects or would affect the party's decision about
the terms of such a contract or agreement.
Q. Can a person sell
their own real estate without a license?
A. Yes, so long as the person
is not engaged wholly or in part in the business of selling real estate
and no pattern of real estate sales is established. This applies whether
or not the person owns the real estate being sold. Five sales in one
year or 10 sales in 5 years is presumptive evidence of a pattern of
sales.
Q. Does a person need
a license to run a business where they publish information about properties,
and bring a buyer and seller together and let them negotiate and finish
the deal?
A. A person does not need a
license if they only publish or disseminate verbatim information provided
by a seller. However, Wis. Stat. § 452.01 (h), does require a license
if for a commission, money or other thing of value, a person promotes
the sale, exchange, purchase, option, rental or leasing of real estate
or business opportunities. Therefore, the “bringing together” of a buyer
and seller, implies some act in addition to merely publishing information
on behalf of a seller. This additional act could constitute “promotion”
and would require a license.
Also, although the buyer and
seller would “negotiate and finish the deal”, the statutory definition
of “negotiate” may still apply to a person if the person acts as a “facilitator”.
Wis. Stat. § 452.01(5m), states as follows:
“Negotiate” means to act as an
intermediary between the parties to a transaction, including doing any
of the following:
(a) Facilitating or participating
in the parties' discussion of the terms of a contract or agreement concerning
a transaction.
(b) Completing, when requested
by a party, appropriate department-approved forms or other writing to
document the party's proposal consistent with the party's intent.
(c) Presenting to a party the proposals
of other parties to the transaction and informing the party receiving
a proposal of the advantages and disadvantages of the proposal.
Q.
May a licensee request a copy of a home inspection report prepared for
a buyer and provide it to a seller?
A.
Yes, if agreed to by the buyer as a term of the offer to purchase. Lines
97 through 102 of the offer to purchase form, WB-11, provide that the
buyer will promptly provide copies of all inspection reports to the
seller and to the listing broker if the property is listed. A buyer
desiring to modify these requirements should discuss any modifications
to the standard language with the licensee who is assisting in preparing
the offer.
Q:
Is it Wisconsin Disclosure Law that if a person has died in a home,
that information must be disclosed to the prospective buyer in a Real
Estate Transaction? Even if it was a death due to natural causes?
A:
A broker or salesperson is not required to disclose to any person in
connection with the sale, exchange, purchase or rental of real property,
that the property was the site of a specific act or occurrence, if the
act or occurrence had no effect on the physical condition of the property
or any structures located on the property.
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LICENSEE
PRACTICE QUESTIONS
Q. What contractual
form should a broker use in an “in between” situation?
A. Unless allowed by Wis. Adm.
Code section RL 16.04 (2), (3), a licensee is otherwise required to
use approved forms when acting as an agent or a party in a real estate
or business opportunity transaction. However, in certain instances an
approved form may be very close to providing the necessary terms and
conditions for the real estate transaction in question yet doesn't exactly
provide a legal blueprint to encompass the parties understanding. In
those instances a form should be selected that requires the least modification,
and the rules for modification contained in Wis. Adm. Code section RL
16.06 should be followed.
Q. A broker is selling
a real estate firm, what does the broker do with listings, trust account
funds, licenses?
A. Listings- (agency agreements),
as personal service contracts are not assignable to the purchaser of
your business unless the agreement so provides or the seller agrees
to the assignment. An alternative is for the seller to negotiate and
enter a new agency agreement with the purchaser.
Trust account funds- The trust
account funds for your real estate firm can be closed out when all funds
are paid out. Thereafter you must notify the department no later than
10 days after closing the account. The trust account may also be assigned
to the purchaser, and the purchaser must take responsibility for the
account. The department must also be notified no later than 10 days
after the assignment of the trust account.
Licenses- All licensed employees
who are terminated from employment must notify the department within
10 days after the termination of employment pursuant to Wis. Adm. Code
section RL 17.06. All licensed employees who will be hired by the successor/purchaser
real estate firm must follow the transfer of employment rule contained
in Wis. Adm. Code section RL 17.05, by submitting to the department
a transfer application accompanied by the specified fee. The license
of the selling real estate firm may be left to expire, or the department
may be notified that the firm has ceased business as of a certain date.
The license will then be placed on in active status until the next license
renewal period at which time it will be deemed expired.
Q. Where can a licensee
purchase approved real estate forms?
A. Copies of most approved
forms are available from various business supply stores and forms printers
throughout the state of Wisconsin . Forms prepared by governmental agencies
for use in programs administered by those agencies, and approved by
the department, are available from those agencies. Contractual forms
which have been prepared by the department and are currently approved
by the department are the following: WB-1 Residential Listing Contract
- Exclusive Right To Sell WB-2 Farm Listing Contract - Exclusive Right
To Sell WB-3 Vacant Land Listing Contract - Exclusive Right to Sell
WB-4 Residential Condominium Listing Contract - Exclusive Right To Sell
WB-5 Commercial Listing Contract - Exclusive Right To Sell WB-6 Business
Listing Contract - Exclusive Right To Sell WB-11 Residential Offer To
Purchase WB-12 Farm Offer To Purchase WB-13 Vacant Land Offer To Purchase
WB-14 Residential Condominium Offer To Purchase WB-15 Commercial Offer
To Purchase WB-16 Business Offer To Purchase WB-24 Option To Purchase
WB-25 Bill of Sale WB-26 Timeshare Contract (Sale by Developer) WB-27
Timeshare Contract (Resale by Non-Developer) WB-36 Buyer Agency Agreement
WB-37 Exclusive Listing Contract For Lease of Residential Property WB-42
Amendment To Listing Contract WB-43 Amendment To Contract of Sale/Notice
Relating to Contract of Sale WB-44 Counter-Offer WB-45 Cancellation
Agreement and Mutual Release WB-46 Multiple Counter-Offer WB-47 Amendment
to Buyer Agency Contract
Q. When does a person need
to be licensed as a broker in Wisconsin?
A. Generally, Wisconsin law requires
that people who physically negotiate the sale, rental or exchange of
real estate or a business in Wisconsin must be licensed in Wisconsin
. “Negotiate” includes showing Wisconsin property or placing your sign
on a Wisconsin property. However, a licensee of another state need not
be licensed in Wisconsin to advertise the sale or rental of property
in Wisconsin newspapers. Nor must a licensee of another state be licensed
in Wisconsin , in order to send letters to prospective buyers, sellers
or renters in Wisconsin or call them on the telephone.
Q. Can a broker pay
a referral fee, a finder's fee or a commission to a licensee in this
state or a licensee in another state?
A. Wisconsin licensees are permitted
to pay a referral fee, a finder's fee or a commission to a licensee
of this state, or of another state who is not licensed in Wisconsin
, provided that the non-resident licensee does not physically enter
into Wisconsin to engage in the practice of real estate.
Q. Can my business entity
be licensed as a broker in Wisconsin?
A. An individual or a “business
entity,” such as a corporation, a partnership or syndicate, a limited
liability company, a limited liability partnership, an association,
a business trust or a joint venture may be licensed as a broker in Wisconsin
.
If an individual engages in
the practice of real estate in Wisconsin in the name of or under the
authority of a business entity, the business entity must be licensed
as a Wisconsin real estate business entity.. Otherwise, the individual
would have to practice in his or her own name, assuming he or she is
licensed as a Wisconsin broker.
The Department may only license
a business entity if the entity has at least one "business representative"
(i.e., director, manager, member, officer, owner or partner) who is
licensed as a Wisconsin broker. In such case, that broker will be responsible
for compliance with the license law and for supervising any salespersons
licensed in Wisconsin and associated with that entity. Only Wisconsin-licensed
business representatives or associates may engage in the practice of
real estate in Wisconsin . Other unlicensed business representatives
of a company may not personally engage in the practice of real estate
in Wisconsin .
Q. When does a person
need a broker's real estate license to act as a property manager?
A. If a person manages commercial
property units the person will need a broker's license. A broker's license
is not needed for residential management for any custodian, janitor,
employee or agent of the owner or manager of a residential building
who exhibits a residential unit to prospective tenants, accepts applications
for leases and furnishes prospective tenants with information relative
to the rental of such unit, terms and conditions of leases required
by the owner or manager, and similar information.
Q. Can a licensee give
a gift or incentive to a buyer or seller?
A. Yes.
Q. Can a buyer include
in an offer that the seller shall pay the buyer's broker's commission?
A. Yes.
Q. Does a business entity
need to be licensed as a broker?
A. An individual or a "business
entity," such as a corporation, a partnership or syndicate, Limited
Liability Company, limited liability partnership, an association, a
business trust or a joint venture, or an individual may be licensed
as a broker in Wisconsin.
If an individual engages in the
practice of real estate in Wisconsin in the name of or under the authority
of a business entity, the business entity must be licensed as a Wisconsin
real estate broker. Otherwise, the individual would have to practice
in his or her own name, assuming he or she is licensed as a Wisconsin
broker.
The Department may only license
a business entity if the entity has at least one "business representative"
(i.e., director, manager, member, officer, owner or partner) who is
licensed as a Wisconsin broker. In such case, that broker will be responsible
for compliance with the license law and for supervising any salespersons
licensed in Wisconsin and associated with that entity. Only Wisconsin
licensed business representatives or associates may engage in the practice
of real estate in Wisconsin . Other unlicensed business representatives
of a company may not personally engage in the practice of real estate
in Wisconsin .
Application for licensure
of a business entity may be made on Form #815.
Q. Does a licensee need
to meet continuing education requirements to maintain a license?
A. Effective December 15,
2008 all licensees must complete 18 hours of continuing education in
each biennium through six approved 3-hour courses. Courses 1,
2, 3 and 4 and two elective courses are required to maintain active
licensure. The actual number of hours and the course contents for each
biennium are determined by the Department with the advice of the Real
Estate Board and the Council on Real Estate Curriculum and Examinations.
In lieu of attending classroom
education, licensees may pass a 60-question test-out exam
The test-out exam is administered from July 1 of each odd-numbered year
to June 30 of each even-numbered year by Pearson Vue. Information
about the test-out exam can be found at Pearson Vue's website at:
http://www.pearsonvue.com
A person who receives an original
license during a licensing biennium, and who was not licensed as either
a salesperson or a broker on the first day of the biennium is not required
to satisfy the continuing education requirement during the biennium
in which the person becomes a licensee. However, a person who held a
salesperson's license before the first day of the biennium and subsequently
receives a broker's license must satisfy the continuing education requirement
during the biennium in which the person receives a broker's license.
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TRUST
ACCOUNTS
NOTE: The answers to
the following questions paraphrase the Wisconsin Statutes and Rules.
Please consult Ch. 452, Stats., and RL 18, Wis. Admin. Code
for the exact wording.
Q. What are real estate
trust funds?
A. Cash, checks, share drafts,
drafts or notes, other than promissory notes, received by a broker or
a broker's salespersons or time-share salespersons on behalf of another.
Earnest money and other sums paid to or received by a broker or salesperson
when buying or selling real estate which the broker or seller owns or
wishes to own are also considered to be real estate trust funds and
must be deposited in a real estate trust account.
Q. What do trust funds
include?
A.. Earnest money, closing funds,
land contract payments, mortgage payments, tax and insurance payments
held in escrow, refundable advance fees and finder's fees, rental application
deposits and rents received when acting as an agent for the owner, rental
security deposits (except those placed in the account of the owner)
and any other payments received for subsequent payment to a third party.
Q. Where must a trust
account be located?
A. At a depository institution
(bank, savings bank, savings and loan association or credit union) authorized
by federal or state law to do business in Wisconsin and insured by the
FDIC or the national credit union share insurance fund.
Q. What are the types
of real estate trust accounts?
A. Interest-bearing real estate
common trust accounts established for “client funds”. These are frequently
referred to as IBRETA accounts. Non-client funds should not be placed
in an IBRETA account.
Q. What are “client
funds”?
A. All down payments, earnest
money deposits or other money related to a conveyance of real estate
(for example, the sale, exchange or option of real estate) received
by a broker or his or her employees. These funds must be deposited in
an interest-bearing common trust account.
Q. What are “non-client
funds”?
A. Any real estate trust funds
from rental and property management activities which include rental
application deposits, rents, security deposits and any other rental
deposits received while acting as an agent for the owner.
Q. Who handles the interest
earned on a client funds account?
A. The financial institution
must remit it to the Department of Commerce before February 1
of each year.
Q. May the broker receive
the interest earned on any real estate trust account?
A. No, a broker may never receive
any of the interest earned in any real estate trust account.
Q. Does a broker always
have to place “non-client funds” from property management and leasing
activities in a trust account?
A. No. A broker may directly
deposit into an owner's account rental application deposits, rents and
security deposits made payable to the owner. The broker may be designated
as a signatory on the owner's account and make disbursements from that
account when authorized by the owner in writing.
Q. When must trust funds
received by a broker be deposited in a trust account?
A. Trust funds received by the
broker or his or her salespersons must be deposited in a trust account
within 48 hours of receipt. If funds are received on a day prior
to a holiday or other day when the depository institution is closed,
the broker shall deposit the funds within the next 2 business days
in the depository institution.
Q. What are salespersons'
duties with regard to earnest money?
A. A salesperson must immediately
submit funds to their employing broker to be deposited within 48 hours
of receipt.
Q. What is required
of cooperating brokers when transferring funds to a listing broker?
A. Earnest money must be transferred
to the listing broker within 24 hours of acceptance or by other
terms stated in a contract. The cooperating broker may, however, withhold
transfer, pending clearance of a check, for up to 30 days after
receipt of the funds. If a selling broker receives a check made payable
to a listing broker, the selling broker must, within 1 business
day, forward the check directly to the listing broker or return the
check to the payor.
Q. When may an earnest
money check made out to a broker not be deposited in a trust account?
A. If an offer is rejected before
the 48-hour or 2-business-day deadline, the broker need not deposit
the earnest money check but may instead photocopy the check for the
office records and return it to the person who paid the earnest money.
A receipt should be obtained, acknowledging the return of the original
check.
Q. What if the parties
to a real estate contract for the conveyance of real estate want someone
other than a broker to hold earnest money or other trust funds?
A. The parties or an attorney
must prepare an escrow agreement which states the terms and conditions
under which another person or entity will hold and disburse the funds.
A broker may NOT draft this agreement. The funds must then beheld by
the other person or entity (the broker may NOT be custodian of the funds).
The funds, and the interest, if placed in an interest-bearing account,
will be paid to the party designated in the escrow agreement.
Q. If a licensee has
an ownership interest in a rental property, where should security deposits
related to that property be placed?
A. Either in a real estate trust
account or provide in a lease for the security deposits to be held in
an account maintained in the name of the owner(s).
Q. Must a broker notify
the department regarding opening, closing or changing a trust account?
A. Yes, a broker must provide
a completed Form #814 (CONSENT TO EXAMINE AND AUDIT TRUST ACCOUNT)
no later than 10 days after opening any real estate trust account.
Brokers shall also notify the department in writing within 10 days
of any changes to (by means of Form #814) or closing of an account
(by means of a letter). Note: Form #814
may be obtained from the Department of Regulation and Licensing.
Q. What name should
be on a trust account?
A. The name appearing on the
broker's license or a trade name submitted in writing to the department.
The account name must also include the words “trust account”.
Q. May a broker maintain
more than one trust account?
A. Yes, as many as the broker
needs or wants, but all accounts must be in compliance with all statutes
and administrative codes.
Q. May a broker authorize
other persons to sign real estate trust account checks, share drafts
or drafts drawn on the broker's trust account?
A. Yes. The person must be at
least 18 years of age.
Q. Is a broker required
to indicate on the offer to purchase the receipt of earnest money received
from a buyer?
A. Yes, if received at the time
the offer is drafted.
Q. What needs to occur
if funds are to be held in escrow after closing by the broker or another
escrow agent until some future time?
A. An escrow agreement must be
prepared by the parties or an attorney, with the exception of escrows
for occupancy or possession, final proration of taxes and charges incurred
by a seller but not yet billed. The closing statement must reflect the
escrow funds and state if the broker is holding the funds. If funds
are held by the broker, they must be placed in the broker's trust account?
Q. How are earnest money
disbursements to be handled in cases where the transaction does not
close?
A. Follow the provisions in the
offer to purchase and in Wis. Admin. Code sec. RL 18.09, which
clarify how and when to disburse the money.
Q. When must a broker
withdraw commissions earned from a real estate trust account?
A. Within 24 hours after
sales transactions are terminated or after commissions are earned in
accordance with the contract. Fees earned for providing property management
services should be disbursed on a regular monthly basis or as otherwise
agreed in a property management agreement.
Q. May a broker deposit
personal funds in a trust account to cover miscellaneous bank fees?
A. Yes, up to $300. A deposit
must be made within 10 days of notice, to cover fees that exceed
a broker's personal funds.
Q. When may a broker
close a real estate trust account?
A. When no real estate trust
funds remain in the account. Notification of closure must be sent to
the department within 10 days.
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REQUIREMENTS
FOR A TRUST ACCOUNT BOOKKEEPING SYSTEM
NOTE: The answers to
many of the following questions paraphrase the Wisconsin Administrative
Code. Please consult RL l8 for the exact wording.
Q. Is a broker required
to maintain and be responsible for a bookkeeping system in the broker's
office?
A. Yes, even if a bookkeeper
is employed.
Q. What are the 5 steps
of maintaining a trust account bookkeeping system?
a. Record trust account receipts
and disbursements in a journal.
b. Post to a ledger.
c. Prepare a monthly bank reconciliation.
d. Prepare a monthly trial
balance.
e. Compare the trial balance
against the reconciliation and the journal balance for accuracy.
Q. What is a cash journal?
A daily record which shows
a chronological sequence of all real estate trust funds that are deposited
and disbursed. A running balance must be shown for each day trust funds
are received or disbursed. The cash journal is simply referred to as
a journal.
Q. What must a journal
include?
a. For funds received : date,
name of the party who is giving the money, amount, and identification
of the transaction.
b. For disbursements : date,
payee, check number, amount and identification of the transaction.
c. Identify each transaction
by the name of the principal, an identification number or other means
of identification. This identifying information must be a direct link
between the journal and ledger.
Q. What is a ledger?
A. A record of all receipts and
disbursements as they affect each individual transaction; such as, between
buyer and seller, landlord and tenant.
Q. Postings to the ledger
are made from the journal; what should they include?
a. For funds received : date,
amount received and name of the party giving the money if different
from the buyer.
b. For funds disbursed : date,
payee, check number and amount.
Q. What must each ledger
include in addition to items in #6 above?
a. Names of both parties to the
transaction.
b. Running balance.
c. Identification of the transaction
as used in the journal.
Q. How often must a broker
reconcile the real estate trust account in writing?
A. Each month, except where there
has been no activity during the month.
Q. What must the written
reconciliation include?
a. Ending bank statement balance.
b. Dates and amounts of the
deposits in transit which are deposits made but not yet received by
the depository institution.
c. Check numbers and amounts
of outstanding checks, which are checks written but not yet paid by
the depository institution.
d. Reconciled account statement
ending balance.
Q. What steps should
a broker follow in preparing an account reconciliation?
a. Enter the ending bank statement
balance, and list out the deposits in transit.
b. Add the deposits in transit
to the ending bank statement balance to obtain a subtotal.
c. List out the outstanding
checks.
d. Subtract the outstanding
checks from the subtotal to obtain the adjusted bank balance as of the
ending date shown on the account statement to be reconciled.
e. Compare the adjusted bank
balance to the journal balance. They should be equal, and if not, an
error has occurred and the account should be further reviewed to locate
the error and correct it.
Q. What is a trial balance?
A. A written listing of all open
ledgers in the real estate trust account as of the bank statement ending
date. This list includes the ledger identifier and amount of money the
broker is holding in the account for that ledger.
Q. What is an open ledger?
A. An individual ledger in which
there are funds which have not been disbursed to one of the parties
to the transaction.
Q. How would the broker
compare the trial balance against the reconciliation?
A. The trial balance may be prepared
at any time during the month and compared with the running balance of
the cash receipts and disbursement journal. The trial balance, however,
must be prepared, in writing, as of the bank statement ending date.
At this time the broker should compare:
a. The journal balance,
b. The trial balance total,
c. The reconciled bank statement
balance (the adjusted bank balance).
All three totals should show
the same number. If they do not, the broker needs to continue to search
for errors in either the journal, the ledger, or the bank reconciliation.
Q. Can a broker use
a computer for the broker's bookkeeping system?
A. Yes.
Q. What must the broker
do to maintain a computerized bookkeeping system?
A. All bookkeeping entries
must be made in the computerized system, even if other records are simultaneously
maintained.
Q. What are the broker's
obligations to maintain a backup copy of the bookkeeping records?
A. A backup copy of all journal
and ledger records must be made on each day on which entries are made
in the computerized bookkeeping system. The backup copy must be made
on a disk or other medium which is separate and distinct from that on
which the source documents reside. Monthly bank reconciliations and
trial balances must be copied to a separate medium or printed immediately
upon completion.
Q. What if the department
requests a copy of computerized trust account records?
A. The broker must be able to
immediately convert the computer records to written paper records and
make them available, without charge, to the department for audit or
investigation purposes.
Q. Can a broker maintain
separate trust accounts for various types of real estate transactions;
such as, sales, property management, and land contract collections?
A. Yes, a broker can maintain
as many trust accounts as needed to operate a business. It is also required
that moneys for sales transactions be held in a client funds (IBRETA)
trust account and that funds for property management be held in a separate
non-client trust account. Each trust account must be registered with
the department and be in compliance with all statutes and administrative
codes.
Q. Can spoiled or voided
checks, share drafts and other drafts be thrown away?
A. No, they must be filed with
the cancelled checks, cancelled share drafts and other cancelled drafts.
Q. If earnest money
is to be disbursed to a buyer but the buyer cannot be located, what
should the broker do?
A. The broker must make reasonable
attempts to locate the buyer and document these attempts. After 5 years
the funds are deemed abandoned, and the broker must provide the moneys
and notice to the State Treasurer who publishes a notice of unclaimed
property. Contact the Office of the State Treasurer, Unclaimed Property
Division (608-267-7977) for more information.
Q. How long must a broker
retain trust account records and all supporting documents?
A. Three years from the closing
of the transaction, or, if the transaction does not close, from the
date of the listing. ( NOTE: the IRS requires records to be maintained
for a longer time period.)
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CONTINUING
EDUCATION
Q. What
are the general requirements?
A. Licensed real estate brokers
and salespersons, except for certain new licensees, must satisfy continuing
education requirements during each licensing biennium which runs from
December 15 of an even-numbered year to December 14 of an even-numbered
year.
Renewal applications are sent to brokers
and salespersons early in November of each even-numbered year. Brokers
and salespersons must complete the continuing education requirement
by December 14 of that year or they should not submit their license
renewal application until they have completed the continuing education
requirement and paid the renewal fee, plus a $25 late renewal fee. If
they have not submitted a timely application and fee, they may not practice
as a real estate agent after December 14 until they receive a renewed
license.
A person who receives an original
salesperson's or broker's license during a licensing biennium is not
required to satisfy the continuing education requirement during the
biennium in which the person receives that license.
Q. What are the required
hours and courses?
A. Effective December 15, 2008 all
licensees must complete 18 hours of continuing education in each biennium
through six approved 3-hour courses. Courses 1, 2, 3 and 4 and
two elective courses are required. The Department, with the assistance
of the Council on Real Estate Curriculum and Examinations and the Real
Estate Board, designates the number of hours and the precise course
contents before the beginning of each licensing period. To successfully
complete a course, a licensee must pass an examination, prepared and
administered by the school, consisting of 5 multiple-choice questions
for each hour of instruction. Failure to pass the exam requires retaking
the course and the exam.
Q. Do I need to attend
an approved school? How do I find an approved school?
A. Only schools and instructors
that have been approved by the Department may offer continuing education
courses which will be accepted by the Department. Schools must file
an application with the Department and show that their courses contain
all of the contents required by the Department. The Department does
not approve other real estate courses which are available to licensees
in Wisconsin or elsewhere. The Department only approves the precise
courses that it has designated at the beginning of the licensing period.
The Department now approves courses offered by distance education, if
an approved school follows the requirements for distance education courses.
“Distance education” means the provision of educational programs or
courses without an instructor or representative of an approved school
physically present with the students. “Distance education” includes,
but is not limited to, the delivery of educational programs and courses
on CD-ROM, computer disk, or the Internet.
Q. May I choose to test-out
in lieu of attending classes?
A. Licensees may do some self-studying
and pass a 60-question test-out exam, prepared by the Department. Study
materials for the test-out exam may be purchased from the Department
or the Wisconsin Realtors Association, 4801 Forest Run Road, Madison
WI 53704 (608-241-2047).
The test-out exam may only
be taken from July 1 of each odd-numbered year to June 30 of each even-numbered
year by Pearson Vue. If a licensee fails to take the exam during this
one-year period, the only other choice available to the licensee is
to complete the education courses at an approved school. Licensees
may obtain a copy of the Real Estate Continuing Education Test-Out Information
Bulletin For the Computer-Administered Examination from the Department.
Information about the test-oout exam can be found at Pearson Vue's website
at: http://www.pearsonvue.com
Q. What do I do if
I don't complete my courses in time for renewal of my license?
A. The Department may grant an
extension of time for completing continuing education and may grant
a renewal license if it receives a written request from the licensee
and a physician's statement that verifies that a licensee's health prevented
him or her from satisfying the requirement. An extension may also be
granted to a licensee on active duty in the military service with assignment
to a duty station outside Wisconsin, or an extension be granted for
other compelling reasons beyond the control of the licensee.
Q. What type of proof
of attendance for a course do I need to have?
A. Approved schools are required
to give each student a certificate of attendance after successful completion
of continuing education courses. Licensees should retain this certificate
with their records and send a copy to the Department only if requested
by the Department. Licensees must certify on their license renewal application
that they have completed the continuing education requirement. Making
a false statement in connection with any application for licensure is
grounds for revocation and denial of that license.
Q. If I am a non-resident
licensee, do I need to satisfy continuing education requirements?
A. Non-resident licensees must
satisfy Wisconsin 's continuing education requirement. Other states'
continuing education courses do not satisfy Wisconsin 's continuing
education requirements.
Q. Can I take continuing
education courses to satisfy the requirements so that I may renew my
license after the renewal deadline?
A. A licensee who wishes to renew
a license after the renewal deadline may obtain continuing education
that was due during a previous licensing period by attending the precise
courses which were required during that period, (if such courses are
still available) or by attending a specific segment from the pre-license
salesperson's education program. Many approved schools continue to offer
courses from a previous licensing period for several months after the
renewal deadline. However, taking the segment from the pre-license salesperson's
program is an alternative that is always available at many locations
throughout the state. That segment consists of any 12 hours taken from
section (h) "real estate contracts" and section (m) "ethical
real estate practice." Another alternative is to take a special
13-hour course that was originally designed for persons licensed in
another state, applying for a Wisconsin license.
A licensee who completes the
continuing education late, as described in the above paragraph, must
also complete the continuing education requirement for the current licensing
period in order to renew his or her license at the end of that period.
Q. I want to get back
into real estate practice but it has been more than five years since
I renewed my license. How do I do this?
A. A licensee may renew a license
within 5 years after the license expiration date by following the procedures
in answer nine. However, if renewing more than 5 years after the date
of expiration, the person is practically starting over like an original
applicant. The person is no longer required to take any continuing education,
but, if applying for a salesperson's license, he or she must retake
the pre-license 72-hour salesperson's course and pass the salesperson's
exam. If the person is applying for a broker's license, he or she must
take just the broker's 36-hour pre-license course and pass both the
salesperson's and the broker's exam. The usual waiver for attorneys
and persons who had received semester-hour credits in real estate or
real estate-related law at an institution of higher learning apply in
this situation, too.
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WISCONSIN
REAL ESTATE REQUIREMENTS FOR THE SALE OF OUT-OF-STATE LOTS AND OUT-OF-STATE
OR IN-STATE CONDOMINIUMS, TIME-SHARES AND CAMPGROUNDS
OUT-OF-STATE
UNIMPROVED
PROPERTIES OR SUBDIVISION LOTS
No filing of any kind need be
made with the Real Estate Board or the Department of Regulation and
Licensing before marketing out-of-state subdivision lots in Wisconsin
. However, only real estate licensees may negotiate the sale of lots
or conduct promotional meetings when such negotiations or meetings occur
in Wisconsin .
OUT-OF-STATE
OR IN-STATE
CONDOMINIUMS
There is no requirement for any
kind of filing with the Real Estate Board or the Department of Regulation
and Licensing. However, when in-state or out-of-state condominium units
are physically marketed in Wisconsin to Wisconsin residents, a disclosure
document as defined in sec. 703.33, Stats., must be provided to
the purchasers. That disclosure document must provide for at least a
5 business day rescission period and contain other disclosure information.
Chapter 703 is enforced by civil actions, the Attorney General or a district attorney.
The Department of Regulation and Licensing is not responsible for administering
Chapter 703.
OUT-OF-STATE
OR IN-STATE
TIME-SHARES AND CAMPGROUNDS
There is no requirement for any
kind of filing with the Real Estate Board or the Department of Regulation
and Licensing. A time-share and campground law was enacted on May 17,
1988 . The law requires that negotiations for the sale of time-share
intervals or campground units be conducted only by licensed real estate
brokers, salespersons or time-share salespersons. Time-share salespersons
are not required to pass a real estate exam, but may only work for a
licensed real estate broker and they have very limited rights as stated
in sec. 452.025, Stats.
The Time-Share Ownership Act
(which includes campgrounds) is found in Chapter 707, Stats., and
contains provisions concerning the creation of time-shares and campgrounds,
definitions, zoning, plats, sales contracts, managing entities, insurance
assessments, liens, blanket encumbrances, protection of purchasers,
exchange programs, advertising, and other related issues.
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