Wisconsin Real Estate Salesperson Exam — All Questions

Wisconsin law generally requires the seller of residential property of one to four units to provide the buyer a:

• a.Real Estate Condition Report (RECR)✓
• b.title insurance policy paid by the seller
• c.boundary survey
• d.appraisal report

Wisconsin's Real Estate Condition Report (RECR) requires most sellers of residential property of one to four dwelling units to disclose known conditions and defects to the buyer. The report helps buyers learn about the property's condition before closing.

Trust or escrow funds a Wisconsin broker holds for clients must be:

• a.Kept in the broker's business operating account
• b.Held in a separate trust account and not commingled✓
• c.Kept as cash in the office
• d.Held personally by the salesperson

Wisconsin brokers must hold client funds such as earnest money in a separate trust account, keeping them apart from the broker's own money. Commingling or misusing trust funds violates Chapter 452 and REEB rules and can result in discipline.

A Wisconsin salesperson accepts an earnest money check on Monday morning. By when must the firm deposit it in a real estate trust account?

• a.By the end of the next banking day
• b.Within 48 hours of receipt of the trust funds✓
• c.Within 5 business days of receipt
• d.By the closing date stated in the offer

Section REEB 18.031 (1) requires a firm to deposit all real estate trust funds within 48 hours of receipt, extended to the next 2 business days when the depository institution is closed. Funds the firm cannot deposit must be forwarded to the payee or returned to the payer no later than one business day after receipt. Cite: Wis. Admin. Code REEB 18.031 (1).

How much of a Wisconsin firm's own money may be kept in its real estate trust account?

• a.None; any personal funds are unlawful commingling
• b.Up to $100, identified as a reserve for bank charges
• c.Up to $300, identified and deposited to cover service charges✓
• d.Up to one month's expected commissions on pending files

Section REEB 18.10 (1) bars commingling but carves out one exception: a firm may deposit and maintain a sum not to exceed $300.00 of personal funds in any real estate trust account, specifically identified and deposited to cover service charges on that account. Sub. (2) requires the firm to top it up within 10 business days of notice of a charge. Cite: Wis. Admin. Code REEB 18.10 (1) (b).

Who owns the interest earned on the interest-bearing common trust account a Wisconsin firm holds for client funds?

• a.The department of administration, less service charges✓
• b.The firm, as compensation for administering the account
• c.The buyer whose earnest money generated the interest
• d.The board, which uses it to fund licensee education

Section 452.13 (2) (d) names the department of administration as beneficial owner of the interest accruing to the interest-bearing common trust account, minus service charges or fees, and s. REEB 18.031 (3) (a) adds that at no time may the firm remove or use that interest. Cite: Wis. Stat. 452.13 (2) (d); Wis. Admin. Code REEB 18.031 (3) (a).

A Wisconsin offer falls through and the buyer and seller each demand the earnest money. The firm decides to disburse on authorization in the contract, knowing the other side objects. What must happen first?

• a.The firm must deposit the funds with the circuit court
• b.The firm must obtain a written release signed by both parties
• c.The firm must wait 10 business days after telephoning both parties
• d.The firm must give written notice and wait 30 days✓

Section REEB 18.09 (2) requires the firm to attempt to notify all parties in writing of its intent to disburse, by certified mail to their last known addresses, stating to whom and when the disbursement will be made, and forbids the disbursement until 30 days after the date the notice is sent. Cite: Wis. Admin. Code REEB 18.09 (2).

A Wisconsin sale closes and the firm's commission is sitting in the trust account. When must the firm withdraw it?

• a.At the end of the month in which the sale closed
• b.Within 24 hours after the transaction is consummated or terminated✓
• c.Within 5 business days after the deed is recorded
• d.At any time, so long as the account reconciles each month

Section REEB 18.09 (3) (a) requires a firm to withdraw commissions or fees it has earned from its real estate trust accounts within 24 hours after transactions are consummated or terminated, or after the fees are earned under the contract. Property management fees are disbursed monthly under sub. (3) (b). Cite: Wis. Admin. Code REEB 18.09 (3) (a).

Wisconsin parties want a title company rather than the listing firm to hold the earnest money. What may the licensee do?

• a.Draft the escrow agreement and hold a copy in the file
• b.Hold the funds in the firm's trust account as a courtesy
• c.Leave the escrow agreement to the parties or an attorney✓
• d.Refuse the arrangement, since the firm must hold the funds

Section REEB 18.06 forbids the licensee from drafting the escrow agreement when an escrow agent other than the firm is designated; the parties or an attorney must draft it. The firm may not hold the funds in its trust account nor act in any way as custodian of them. Cite: Wis. Admin. Code REEB 18.06.

A Wisconsin seller offers to let the firm keep everything above $250,000 as its fee. What is the problem?

• a.Nothing, if the arrangement is disclosed in writing
• b.The commission exceeds the rate the board has set
• c.The seller must first obtain a written appraisal
• d.It is a net listing, which licensees may not obtain or negotiate✓

Section REEB 24.10 forbids a licensee to obtain, negotiate or attempt to obtain or negotiate any listing contract providing for a stipulated net price to the owner with the excess over that price to be received by the firm as commission. No disclosure or appraisal cures it. Cite: Wis. Admin. Code REEB 24.10.

Two offers arrive on a Wisconsin listing. What may the licensee tell the second buyer?

• a.That another offer exists, but not the terms of that offer✓
• b.The price and financing terms, to encourage a stronger offer
• c.Nothing whatever about the existence of any other offer
• d.The terms, if the first buyer's agent agrees to the disclosure

Section REEB 24.12 (1) bars a licensee from disclosing the terms of one prospective buyer's offer, exchange agreement or option to another prospective buyer, and requires licensees to encourage all buyers to submit their best offers. The licensee may, but need not, disclose that other offers exist, that an offer was accepted, and that it carries contingencies. Cite: Wis. Admin. Code REEB 24.12 (1).

May a Wisconsin licensee bill a party a separate fee for filling out a board-approved form?

• a.Yes, if the fee is disclosed before the form is completed
• b.No; a separate charge for completing an approved form is prohibited✓
• c.Yes, but only where the licensee is a party to the transaction
• d.Yes, if an attorney reviews the completed form afterward

Section REEB 16.05 (4) states flatly that a licensee may not make a separate charge for completing an approved form in connection with a transaction. Completing the form is part of the brokerage service, and s. 452.40 (2) treats a general explanation of its provisions as something short of legal advice. Cite: Wis. Admin. Code REEB 16.05 (4).

A Wisconsin firm wants a standing addendum that rewrites printed provisions of a board-approved offer form. What does the rule require?

• a.Board approval of the addendum before its first use
• b.That the addendum be initialed by both parties on every page
• c.That an attorney draft it and be identified on the addendum✓
• d.That the firm file the addendum with the department annually

Section REEB 16.06 (5) permits a pre-prepared addendum that supplants or alters the printed provisions of an approved form only if an attorney drafted it and is identified on it, it contains no optional or multiple-choice provisions, it has no blanks except signatures, and it is incorporated by reference. A firm-drafted addendum under sub. (4) may only fill or alter optional provisions. Cite: Wis. Admin. Code REEB 16.06 (5).

A Wisconsin seller of a three-bedroom house accepts an offer on June 1. Under Wis. Stat. 709.02, when must the buyer receive the real estate condition report?

• a.Not later than 10 days after acceptance of the contract✓
• b.Not later than 5 business days after acceptance
• c.At or before the time the buyer submits the offer
• d.Not later than 3 days before the scheduled closing

Section 709.02 (1) requires the owner to furnish the completed report not later than 10 days after acceptance of a contract of sale or option contract. A buyer who does not receive it within those 10 days may rescind within 2 business days after the 10-day period ends and recover deposits or option fees paid. Cite: Wis. Stat. 709.02 (1).

A Wisconsin home sells for $300,000. What real estate transfer fee is due, and who owes it?

• a.$300, paid by the grantee at recording
• b.$1,500, split evenly between grantor and grantee
• c.$900, imposed on the grantor✓
• d.$2,100, imposed on the grantor

Section 77.22 (1) imposes the fee on the GRANTOR at 30 cents for each $100 of value or fraction of it, which is $3 per $1,000: on $300,000 that is $900. The register of deeds collects it when the conveyance is submitted for recording, and s. 77.24 leaves 20 percent with the county. Cite: Wis. Stat. 77.22 (1).

A married Wisconsin seller holds title to the couple's homestead in his name alone. Whose signature does the deed require?

• a.Only the record owner's, since he holds sole title
• b.Only the record owner's, if the spouse attends the closing
• c.Both spouses', but only if the deed is a warranty deed
• d.Both spouses', by the deed or by a separate conveyance✓

Section 706.02 (1) (f) requires a conveyance alienating any interest of a married person in a homestead to be signed, or joined in by separate conveyance, by or on behalf of each spouse. Conveyances between the spouses are excepted, and on a purchase money mortgage pledging that property as security only the purchaser need sign. Cite: Wis. Stat. 706.02 (1) (f).

A Wisconsin buyer asks whether a violent crime once occurred inside the listed house. What does Wis. Stat. 452.23 (2) say about disclosure?

• a.The licensee must disclose it as a material adverse fact
• b.The licensee need not, if the physical condition was unaffected✓
• c.The licensee must disclose it only if it occurred within 5 years
• d.The licensee must disclose it if any neighbor already knows

Section 452.23 (2) (a) says a licensee is not required to disclose that property was the site of a specific act or occurrence if the act had no effect on the physical condition of the property or any structures on it. The same subsection also excuses disclosing the location of an adult family home, community-based residential facility or nursing home. Cite: Wis. Stat. 452.23 (2).

Before taking a Wisconsin listing on an improved property, what must the licensee personally do?

• a.Order a home inspection from a qualified third party
• b.Obtain a written appraisal of the structure's condition
• c.Conduct a reasonably diligent inspection of accessible areas✓
• d.Review the county's building permit and code enforcement history

Section REEB 24.07 (1) (a) requires the licensee to conduct a reasonably competent and diligent inspection of accessible areas of the structure and immediately surrounding areas to detect observable material adverse facts, and sub. (1) (b) adds that a listing licensee must inspect before the listing contract is executed and ask the seller in writing about the property's condition. Sub. (1) (d) makes clear the licensee need not operate equipment, open panels, or hire inspectors. Cite: Wis. Admin. Code REEB 24.07 (1).

A Wisconsin licensee selling her own vacant lot tells a buyer the price is available only if he hires a particular builder. What rule is at issue?

• a.The advertising rules, which forbid a price other than the agreed price
• b.The net listing rule, which caps the licensee's profit
• c.The disclosure rules, which require a written statement of interest
• d.The tie-in rule, which limits conditioning a sale on employing a builder✓

Section REEB 24.075 (3) forbids conditioning the sale of vacant real estate the licensee owns or effectively controls on the buyer's agreement to employ specific builders, unless the builder owns a bona fide interest with full disclosure, the builder and owner are the same or commonly controlled corporations selling improved property, or the agreement is a bona fide effort to maintain development quality with no consideration passing from builder to licensee. Cite: Wis. Admin. Code REEB 24.075 (3).