Wisconsin Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Under Wis. Stat. § 452.03 (2), an individual working on behalf of and under the direction of a firm needs no real estate license if that individual's services are limited to which of the following?

• a.Presenting written offers to sellers on behalf of the listing firm
• b.Showing listed property to prospective buyers when the firm is short of staff
• c.Negotiating lease terms for the firm's property management clients
• d.Tasks that are purely administrative, clerical, or personal in nature✓

Section 452.03 (2) says no license is required for an individual who, on behalf of and under the direction of a firm or its licensees, provides services "that are limited to those that are purely administrative, clerical, or personal in nature." Showing property, negotiating a lease and presenting offers are all brokerage activities described in the § 452.01 (2) definition of broker, so each requires a license. Wis. Stat. § 452.34 (3) (b) reinforces the point for open houses: an unlicensed personal assistant may not assist at one without the direct, on-premises supervision and presence of a licensee.

Under Wis. Stat. § 452.12 (2) (a), a broker's license may be issued to a business entity only if the business entity does what?

• a.Employs no more than one licensed salesperson at each office
• b.Names a supervising broker who owns a majority of the entity
• c.Has at least one business representative licensed as a broker✓
• d.Holds a separate license for every county where it operates

Section 452.12 (2) (a) provides that "[a] broker's license may be issued to a business entity if the business entity has at least one business representative licensed as a broker," and the entity's license then lets each broker business representative act as a broker on its behalf. Nothing in § 452.12 caps the number of salespersons per office, requires the supervising broker to hold an ownership stake, or licenses by county. Under § 452.12 (2) (c) a change in business representatives must be reported to the board on the same form within 30 days of the effective date of the change.

What does Wis. Stat. § 452.13 (4) provide about a firm holding client funds?

• a.It does not require a firm to hold client funds at all✓
• b.It requires every firm to hold client funds in escrow
• c.It requires client funds to be held by the listing firm
• d.It requires client funds to be held until closing occurs

Subsection (4) is captioned TRUST ACCOUNT OPTIONAL and reads: "This section does not require a firm to hold client funds or require a person to transfer client funds to a firm." The obligations attach only once a firm does hold them: § 452.13 (2) (a) then requires the firm to establish an interest-bearing common trust account at a depository institution, and § 452.13 (2) (c) requires it to deposit all client funds there. The WB-1 and WB-36 both say plainly that the Firm may refuse to hold earnest money, which is the same rule seen from the form side.

Under Wis. Stat. § 452.133 (1) (c), a firm owes every party the duty to disclose in writing the material adverse facts that the firm knows and that the party:

• a.has not asked about in writing before the offer is drafted by the firm
• b.does not know or cannot discover through reasonably vigilant observation✓
• c.would consider important only after the offer has been accepted by all
• d.learned about from a third-party inspection report given to the other party's firm

Paragraph (1) (c) states the duty as timely written disclosure of "all material adverse facts that the firm knows and that the party does not know or cannot discover through reasonably vigilant observation, unless the disclosure of a material adverse fact is prohibited by law." The trigger is the firm's knowledge and the party's inability to discover, not a written request from the party, not who hired an inspector, and not the timing of acceptance. Wis. Admin. Code § REEB 24.07 (2) states the same duty in the conduct rules and adds that it is not limited to the condition of the property.

Which duty does a Wisconsin firm owe to a client but not to a customer?

• a.Providing brokerage services to the party honestly and fairly at all times
• b.Loyally representing the client by placing the client's interests first✓
• c.Keeping information given in confidence confidential after the transaction
• d.Safeguarding trust funds and other property the firm holds for the party

Section 452.133 (2) (a) adds, for clients only, "[t]he duty to loyally represent the client's interests" by placing them ahead of the firm's interests and ahead of the interests of persons in the transaction who are not the firm's clients. The other three are § 452.133 (1) duties owed to every party, client or customer: honest and fair service under (1) (a), confidentiality that continues after the transaction is complete under (1) (d), and safeguarding trust funds under (1) (f). The plain-language "Disclosure to Customers" prescribed by § 452.135 (1) (a) lists exactly the sub. (1) duties and no loyalty duty.

Under Wis. Stat. § 452.133 (3) (b), a licensee who acts in a transaction on the licensee's own behalf must obtain what, and where?

• a.Prior oral consent of the seller, confirmed later in the closing statement
• b.Prior written consent of the firm, recorded in the firm's transaction file
• c.Prior written approval of the board, filed before the offer is presented
• d.Prior written consent of all parties, obtained in the transaction contract✓

Paragraph (3) (b) bars a licensee from acting on the licensee's own behalf, on behalf of the licensee's firm, or on behalf of an entity in which the licensee has an interest, "without the prior written consent of all parties to the transaction," and then specifies where: "a licensee shall obtain the written consent in the offer to purchase, option, lease, or other transaction contract." Oral consent does not satisfy a written-consent requirement, and consent runs to the parties rather than to the firm or the board. Wis. Admin. Code § REEB 24.05 (2) simply directs licensees to follow § 452.133 (3) (b).

When must a Wisconsin firm give a party the written "Disclosure to Customers" statement set out in Wis. Stat. § 452.135 (1) (a)?

• a.Before showing any listed property to a prospective buyer or prospective tenant
• b.Before negotiating on behalf of a party who is not the firm's client✓
• c.Before the party signs an agency agreement with a different firm
• d.Before the firm accepts earnest money from a prospective purchaser

Paragraph (1) (a) provides that "[n]o firm, and no licensee associated with a firm, may negotiate on behalf of a party who is not the firm's client unless" the customer disclosure statement is provided. The trigger is negotiating for a non-client, not a showing, another firm's agency agreement, or the receipt of earnest money. Under § 452.135 (1) (b) a subagent owes the same disclosure to any person who is not the principal firm's client and who receives brokerage services within the scope of the subagency.

A client signs an agency agreement covering a two-unit residential property, and the written "Disclosure to Clients" statement is not incorporated into that agreement. What does Wis. Stat. § 452.135 (2) (b) require of the firm?

• a.Record the disclosure statement with the county register of deeds
• b.Deliver the disclosure statement to the client's attorney of record
• c.Request the client's signed acknowledgment that a copy was received✓
• d.Send the disclosure statement to the department within ten days

Paragraph (2) (b) applies where the agency agreement covers real estate "primarily intended for use as a residential property containing one to 4 dwelling units" and the disclosure statement is not incorporated into the agreement; the firm "shall request the client's signed acknowledgment that the client has received a copy of the written disclosure statement." Nothing in § 452.135 calls for recording, delivery to counsel, or filing with the department. The WB-1 and WB-36 avoid the problem by printing the Disclosure to Clients inside the form itself.

Under Wis. Stat. § 452.134 (2), a firm and its licensees may provide brokerage services in a multiple representation relationship only if:

• a.the transaction involves commercial rather than residential property
• b.a different supervising broker reviews each client's file at closing
• c.all of the firm's clients in that relationship consent in writing✓
• d.the firm reduces its commission for each client in the transaction

Subsection (2) reads: "A firm and any licensees associated with the firm may not provide brokerage services in a multiple representation relationship unless all of the firm's clients in the multiple representation relationship have consented to a multiple representation relationship in writing." The consent requirement does not turn on property type, on a second supervising broker, or on any commission adjustment. Designated agency is a separate written consent again under § 452.134 (3) (a), and a client may withdraw that consent by written notice at any time.

A firm is in a multiple representation relationship and one client withdraws consent to designated agency. Under Wis. Stat. § 452.134 (4), the firm and its licensees may not do what?

• a.Present the withdrawing client's offer to the other client's agent
• b.Continue to provide brokerage services to either client in the deal
• c.Accept a commission from more than one client in the transaction
• d.Place one client's interests ahead of another's in the negotiations✓

Subsection (4) provides that where a client does not consent to designated agency or withdraws that consent, "the firm and any licensees associated with the firm may not place the interests of any client ahead of the interests of any other in the negotiations." That is the neutral form of multiple representation; the firm may keep serving both clients, and nothing bars compensation from more than one client or the presentation of an offer. Only a refusal to consent to multiple representation at all, under § 452.134 (2), stops the firm from serving both.

Wis. Stat. § 452.139 (1) addresses how the duties in ch. 452 interact with the common law by providing that the chapter's duties:

• a.apply only where the common law is silent on the same subject
• b.are enforceable solely by the board and not by a private party
• c.may be waived by written agreement between a firm and a client
• d.supersede common law duties to the extent they are inconsistent✓

Subsection (1) provides that the duties of a firm specified in ch. 452 or its rules "shall supersede duties or obligations under common law to the extent that those common law duties or obligations are inconsistent with the duties specified in this chapter or in rules promulgated under this chapter." It is not a gap-filler that yields to the common law, and it says nothing about who may enforce the duties. Waiver is governed separately by § 452.133 (6), which makes most of the duties non-waivable and permits only a partial or full waiver of the duty to negotiate under sub. (2) (d), and then only with a prescribed written disclosure.

Under Wis. Stat. § 452.23 (2) (a), a licensee need not disclose that a property was the site of a specific act or occurrence, provided the act or occurrence:

• a.took place more than five years before the property was first listed for sale
• b.had no effect on the physical condition of the property or structures✓
• c.was not reported to any law enforcement agency in the county at all
• d.is not a matter the buyer specifically asked the licensee about

Paragraph (2) (a) excuses disclosure of "[t]hat 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." The test is physical effect, not the age of the event, whether police were involved, or whether the buyer asked. Section 452.23 (1) is a separate and absolute bar: no licensee may disclose information whose disclosure would be unlawful housing discrimination under § 106.50 or under 42 USC 3604, 3605, 3606 or 3617.

A qualified third party's written report states the roof has no defects, but the licensee knows the roof leaked last spring. Wis. Stat. § 452.23 (3) requires the licensee to:

• a.rely on the report because a qualified third party prepared it first
• b.ask the seller to have a second inspection performed before closing
• c.note the discrepancy in the firm's file and inform the listing firm
• d.disclose to the parties the facts that contradict the written report✓

Subsection (3) reads: "A licensee shall disclose to the parties to a real estate transaction any facts known by the licensee that contradict any information included in a written report described under sub. (2) (b)." The third-party report shield in sub. (2) (b) is expressly made subject to sub. (3), so it cannot be used to sit on contradictory knowledge, and an internal file note or a call to the other firm is not disclosure to the parties. Wis. Admin. Code § REEB 24.07 (6) states the same rule for inconsistencies revealed by the licensee's own inspection.

A buyer asks a Wisconsin licensee about the sex offender registry. Under Wis. Stat. § 452.24 (2), the licensee becomes immune from liability for acts or omissions related to that disclosure by timely providing:

• a.a printed copy of the registry entries for the surrounding subdivision
• b.written notice that the Department of Corrections has the information✓
• c.an oral summary of any registry information the licensee already knows
• d.a signed statement that the licensee has searched the state registry

Subsection (1) gives the licensee a duty to disclose registry information the licensee has actual knowledge of when asked; subsection (2) then grants immunity if the licensee "in a timely manner provides to the person requesting the information written notice that the person may obtain information about the sex offender registry and persons registered with the registry by contacting the department of corrections," including the department's telephone number and internet site. Nothing requires the licensee to compile registry entries, to give an oral summary, or to certify a search. The WB-1 and WB-11 both carry that notice preprinted, with the Department of Corrections website and phone number.

Under Wis. Stat. § 703.33 (1), how long before closing must the seller of a condominium unit furnish the required disclosure materials to a member of the public?

• a.Not later than 15 days prior to the closing of the sale of the unit✓
• b.Not later than 30 days prior to the closing of the sale of the unit
• c.Not later than 10 days prior to the closing of the sale of the unit
• d.Not later than 5 days prior to the closing of the sale of the unit

Section 703.33 (1) is captioned MATERIAL TO BE FURNISHED BY SELLER TO PURCHASER BEFORE CLOSING and begins: "Not later than 15 days prior to the closing of the sale of a unit to a member of the public, the seller shall furnish to the purchaser the following." The list runs from the declaration, bylaws and rules through the budget, floor plan and the executive summary required by § 703.33 (1) (h). The 10-day figure belongs to a different rule, the real estate condition report deadline in § 709.02 (1).

The cover sheet prescribed by Wis. Stat. § 703.33 (2) (a) tells a condominium purchaser that the contract of sale may be canceled in writing within what period after receipt of the documents?

• a.5 business days✓
• b.3 business days
• c.10 business days
• d.15 business days

The third boldface statement required on the cover sheet reads: "YOU MAY AT ANY TIME WITHIN 5 BUSINESS DAYS FOLLOWING RECEIPT OF THESE DOCUMENTS, OR FOLLOWING NOTICE OF ANY MATERIAL CHANGES IN THESE DOCUMENTS, CANCEL IN WRITING THE CONTRACT OF SALE AND RECEIVE A FULL REFUND OF ANY DEPOSITS MADE." The same 5-business-day period applies where the seller delivers less than all of the required documents. Section 709.02 (2) separately requires a condominium seller who must give a condition report to attach specified association information as an addendum.

Wis. Stat. § 452.132 (4) (b) limits the supervising broker's pre-closing review to confirming that the written disclosure statement was provided, confirming that any applicable approved form was used and completed consistently with the structure of the form, and:

• a.confirming the accuracy of the seller's condition report entries
• b.verifying that the buyer's financing has actually been approved
• c.communicating apparent errors in the forms to the licensee✓
• d.approving the commission the licensee will be paid at closing

Paragraph (4) (b) confines the review to three things, the third being "communicating to the licensee any errors in how the forms were completed that are apparent on the face of the document and known to the person reviewing the document." It is a facial review of paperwork, not an audit of financing, of the seller's disclosures, or of compensation. Section 452.40 (2) adds that reviews conducted under § 452.132 (4) are not the provision of legal advice or opinion, and § 452.132 (6) (a) puts the follow-up discussion with the party on the associated licensee.

A Wisconsin firm that is not a licensed broker business entity makes no specific delegation of the duty to supervise its licensees. Under Wis. Stat. § 452.132 (5) (b), who is the supervising broker?

• a.The board appoints a supervising broker for that firm
• b.The most senior salesperson associated with that firm
• c.No supervising broker is required for that kind of firm
• d.The firm itself is deemed to be the supervising broker✓

Paragraph (5) (b) allows such a firm to delegate supervision to a licensed individual broker, "but in the absence of a specific supervising broker delegation, the firm itself is deemed to be the supervising broker for that firm." There is no board appointment, no seniority rule, and no exemption. A firm that is a licensed broker business entity has no such default: § 452.132 (5) (a) requires it to delegate the duty to a supervising broker who is a licensed individual broker, and § 452.132 (5) (c) requires the delegation to be written and signed by both sides.

Wis. Admin. Code § REEB 23.02 requires a licensee who changes the name appearing on a current license, or who moves from the last address provided to the department, to notify the department in writing within:

• a.10 days of the change
• b.60 days of the change
• c.30 days of the change✓
• d.5 days of the change

Section REEB 23.02 provides that any person licensed under ch. 452 "who changes the name appearing on a current license or moves from the last address provided to the department shall notify the department in writing of the new name or address within 30 days of the change." Trade names are governed by § REEB 23.03 (2), which requires notice in writing before doing business under the trade name rather than within a set number of days. A different 10-day clock, in § 452.30 (4), applies when a licensee ceases to be associated with a firm.

Wis. Admin. Code § REEB 18.031 (1) requires a firm to deposit real estate trust funds received by the firm or by licensees associated with the firm into a real estate trust account within:

• a.24 hours of receipt of the trust funds
• b.5 business days of receipt of the funds
• c.10 days of receipt of the trust funds
• d.48 hours of receipt of the trust funds✓

Subsection (1), captioned TIME OF DEPOSIT, requires deposit "within 48 hours of receipt of the trust funds," with an extension to the next 2 business days where funds arrive the day before a holiday or other day the depository institution is closed. A licensee who receives trust funds must promptly submit them to the firm under § REEB 18.031 (2). If the firm cannot deposit the funds it has one business day to forward them to a payee other than the firm or return them to the payer.

Client funds deposited in an interest-bearing common trust account earn interest. Under Wis. Admin. Code § REEB 18.031 (3) (a), who is the beneficial owner of that interest?

• a.The firm holding the account, minus any service charges and fees
• b.The examining board's real estate education fund
• c.The buyer who paid the earnest money into the account
• d.The department of administration, minus any service charges✓

Paragraph (3) (a) provides that client funds go into an interest-bearing common trust account and "the department of administration shall be the beneficial owner of the interest accruing to the account, minus any service charges. At no time may the firm remove or use the interest earned on such accounts." Wis. Stat. § 452.13 (2) (d) says the same thing. Where trust funds other than client funds are placed in an interest-bearing account under § REEB 18.031 (3) (b), the firm needs written authorization specifying how and to whom the interest is disbursed, and none of it may inure to the firm's benefit.

Under Wis. Admin. Code § REEB 18.033 (1), when must a firm open a real estate trust account?

• a.Before the firm's broker license is first issued
• b.When the firm associates its first salesperson
• c.If the firm receives real estate trust funds✓
• d.Only if the firm manages residential rentals

Subsection (1) reads: "A firm shall open a real estate trust account if the firm receives real estate trust funds." Receipt of the funds is the trigger, not licensure, staffing, or line of business. Subsection (2) is the mirror image: a firm may close a real estate trust account if no real estate trust funds remain in it, or for the reasons specified in § REEB 18.035.

Wis. Admin. Code § REEB 18.034 (1) requires a firm to name its real estate trust account with the name on the broker's license or a trade name filed with the department, and to include which words in the account name?

• a.trust account✓
• b.escrow account
• c.client account
• d.broker account

Subsection (1), captioned NAME ON TRUST ACCOUNT, requires the firm to "include the words 'trust account' in the name of the account." Subsection (2) then requires the firm to imprint the name of the real estate trust account on the account's checks, share drafts or drafts. The trade name option cross-references § REEB 23.03, which requires the firm to notify the department in writing of a trade name before doing business under it.

After opening a real estate trust account, within how many days must a firm give the department the account name and number and the name of the depository institution, under Wis. Admin. Code § REEB 18.035 (1)?

• a.No later than 30 days
• b.No later than 5 days
• c.No later than 10 days✓
• d.No later than 60 days

Subsection (1) requires the firm, "[n]o later than 10 days after opening any real estate trust account," to give the department the account name and number, the depository institution, and whether the account holds client funds or other trust funds. The same 10-day clock in § REEB 18.035 (2) covers a change of account name or number, a move to another depository institution, a closing, or a switch to or from an interest-bearing common trust account. Section REEB 18.036 attaches two more 10-day duties on opening: the firm's examination authorization and the depository institution's certification.

Wis. Admin. Code § REEB 18.037 requires the notification and authorization called for by §§ REEB 18.035 and 18.036 to be given on a department form designated:

• a.notice of real estate trust account opening
• b.real estate trust account registration form
• c.consent to examine and audit trust account✓
• d.authorization to disburse trust account funds

Section REEB 18.037 provides that the firm shall supply the information and authorization "on a form provided by the department. This form shall be designated 'consent to examine and audit trust account.'" The authorization it carries runs to the department for all of the firm's trust account records and to the department of administration for the interest-bearing common trust accounts holding client funds. Wis. Stat. § 452.13 (2) (b) 3. imposes the parallel statutory duty to furnish an examination and audit authorization letter.

Under Wis. Admin. Code § REEB 18.04, a firm may authorize another person to sign checks drawn on the firm's real estate trust account if that person is:

• a.bonded by the department
• b.a licensed salesperson
• c.an officer of the firm
• d.at least 18 years of age✓

Section REEB 18.04 permits a firm to authorize other persons to sign real estate trust account checks, share drafts or drafts "if the person is at least 18 years of age." The rule imposes no licensure, corporate office, or bonding condition; age is the whole of it. The firm remains responsible for the account under § REEB 18.13, and a licensee who issues a check on a trust account containing insufficient funds violates § REEB 24.15.

Wis. Admin. Code § REEB 18.05 requires a licensee who receives earnest money from a buyer to indicate receipt of that earnest money:

• a.on a separate department receipt form given to the buyer
• b.in the firm's cash journal, before the end of the same day
• c.on the closing statement prepared for the settlement agent
• d.on the offer to purchase, at the time the offer is drafted✓

Section REEB 18.05 reads: "A licensee shall indicate on the offer to purchase the receipt of earnest money received from a buyer at the time the offer is drafted." The WB-11 implements it at line 57: "If the Offer was drafted by a licensee, receipt of the earnest money accompanying this Offer is acknowledged." The cash journal entry required by § REEB 18.13 (1) is a separate bookkeeping duty, not the receipt this rule calls for.

The parties want an escrow agent other than the firm to hold the earnest money. Under Wis. Admin. Code § REEB 18.06, the escrow agreement must be drafted by:

• a.the licensee, using a form approved by the board
• b.the parties or an attorney, not the licensee✓
• c.the escrow agent named in the agreement
• d.the firm's supervising broker of record

Section REEB 18.06 states that in that situation "the licensee may not draft the escrow agreement. The escrow agreement shall be drafted by the parties or an attorney," and the firm may neither hold the funds in its trust account nor act in any way as custodian of them. The rule names a bank, a savings and loan association, a credit union or an attorney as examples of the third party who holds instead. After-closing escrows are treated differently: under § REEB 18.07 (1) a licensee may draft the agreement if the board has approved a form for that purpose under § REEB 16.03.

A firm intends to disburse trust funds on an authorization granted within the contract and knows one party disagrees. Under Wis. Admin. Code § REEB 18.09 (2), after sending the required certified-mail notice, the firm may not disburse until:

• a.30 days after the date on which the notice is sent✓
• b.60 days after the date on which the notice is sent
• c.the disagreeing party withdraws the objection
• d.10 days after the date on which the notice is sent

Subsection (2) requires notice by certified mail to the parties' last known addresses stating to whom and when the disbursement will be made, and provides that "[t]he disbursement may not occur until 30 days after the date on which the notice is sent." Waiting for the objecting party to relent is not the rule; the notice period runs and the firm may then disburse. Commissions are handled separately under § REEB 18.09 (3) (a), which requires the firm to withdraw earned commissions or fees within 24 hours after a transaction is consummated or terminated.

Wis. Admin. Code § REEB 18.10 (1) (b) permits a firm to deposit and maintain personal funds in a real estate trust account, specifically identified to cover service charges, in a sum not to exceed:

• a.$500.00
• b.$1,000.00
• c.$100.00
• d.$300.00✓

Paragraph (1) (b) allows a firm to "deposit and maintain a sum not to exceed $300.00 from personal funds in any real estate trust account," specifically identified and deposited to cover service charges relating to that account. Subsection (2) then requires the firm to top the cushion back up, within 10 business days after notice from the depository institution that a service charge was assessed and insufficient personal funds were available. Every other mixing of personal or other funds into the trust account is prohibited commingling under § REEB 18.10 (1) (a).

Under Wis. Admin. Code § REEB 18.13 (3), how often must a firm reconcile its real estate trust account in writing?

• a.Each month, except where there was no activity that month✓
• b.Each week, except where no checks were written that week
• c.Each quarter, except where the account balance is zero
• d.Each year, before the firm's license renewal is filed

Subsection (3), captioned ACCOUNT RECONCILIATION, requires the firm or its designee to "reconcile the real estate trust account or accounts in writing each month except in the case where there has been no activity during the month." The written reconciliation must show the ending account statement balance, deposits in transit, outstanding checks by number and amount, and the reconciled ending balance. Section REEB 18.13 (4) requires a written trial balance of open items in conjunction with it, and § REEB 18.13 (5) requires the firm to validate that the reconciliation, the open ledger listing and the journal running balance agree.

Wis. Admin. Code § REEB 24.02 (12) defines a "material adverse fact" as an adverse fact of such significance that it affects or would affect a party's decision to enter into a contract concerning a transaction, or the party's decision about:

• a.the terms of such a contract or agreement✓
• b.the choice of a firm to represent the party
• c.the lender the party will apply to for a loan
• d.the price the party's own appraiser will set

Subsection (12) defines the term as an adverse fact that a party indicates is of such significance, or that a competent licensee generally recognizes 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." The definition is about the contract, not about the party's choice of broker, lender or appraiser. An "adverse fact" is defined one level down in § REEB 24.02 (1) and in Wis. Stat. § 452.01 (1e).

A Wisconsin licensee is asked to handle a matter outside the licensee's competence. Under Wis. Admin. Code § REEB 24.03 (2) (a), the licensee may proceed by engaging a competent person, provided that person is:

• a.identified and the contribution described in the transaction records✓
• b.licensed under ch. 452 and associated with the licensee's own firm
• c.approved in advance by the department on a prescribed written form
• d.paid directly by the client rather than out of the firm's commission

Paragraph (2) (a) says licensees may not provide services they are not competent to provide "unless the licensee engages the assistance of another person who is competent. Any person engaged to provide such assistance shall be identified and that person's contribution shall be described in the documents or records related to the transaction." There is no requirement that the helper be a licensee, that the department approve the arrangement, or that the client pay directly. Paragraph (2) (d) makes clear licensees are not expected to hold the technical knowledge of home inspectors, plumbers, electricians or land surveyors.

Wis. Admin. Code § REEB 24.03 (2) (d) states that Wisconsin licensees are not required to have which of the following?

• a.Knowledge of laws and public policies on real estate matters
• b.The ability to guide the parties on current market conditions
• c.The technical knowledge of competent third-party inspectors✓
• d.An understanding of the approved forms used in a transaction

Paragraph (2) (d) provides that "[l]icensees are not required to have the technical knowledge, skills or training possessed by competent third party inspectors and investigators of real estate and related areas," with the code note giving home inspectors, plumbers, electricians and land surveyors as examples. Paragraph (2) (c) runs the other way and requires the licensee to be knowledgeable about laws, public policies and current market conditions and to assist, guide and advise the parties on those factors. Competence with the board's approved forms is the core of the drafting duty in ch. REEB 16.