On September 1, 2020, Wisconsin’s WB-14 form become the standard form used by real estate brokers on behalf of their clients to purchase condominiums. As drafted, it is a trap for the Seller, and any Broker using it should, at a minimum, cross out lines 158-160. Although this new form offer may make the broker’s job easier, it puts Sellers (but not real estate brokers) at significant risk for no particular reason.
Specifically, WB-14 includes on lines 149-166 a “Contingency for Additional Condominium Information”. If checked, which it likely always will be, it requires the Seller to deliver to Buyer at Seller’s expense, within 10 days of acceptance, if they exist, the following:
- Line 152 – Association financial statements “for the 2 two years.”
- Line 153 – Minutes of “the last 3 Unit owners’ meetings.”
- Line 154 – Minutes of “Condominium board meetings during the 12 months prior to acceptance of this Offer.”
- Line 155 – “Information about contemplated or pending Condominium special assessments.”
- Line 156 — The Association’s “certificate of insurance.”
- Line 157 – “The balance of reserve accounts controlled by the Association.”
- Line 158 – “Any Common Element inspection reports … held by the Association.”
- Line 160 – “Information regarding any pending litigation involving the Association.”
At first blush this seems so reasonable: I can hear your broker saying: “the Buyer just wants to know about the Association and exactly what the Buyer is buying.” In truth, this will be fertile ground for attorneys looking to file suit on behalf of Buyers and against Sellers for misrepresentation or fraud. What Seller of a condominium will be able to accurately answer the inspection report or litigation questions (Lines 158-160 on the offer)? The answer is NONE. What exactly is an “inspection report?” Does it include every review by the property manager? The property manager’s notes each time she or he walks the property? What about bids where the contractor inspected the property? What if that contract has not yet been awarded — does disclosing the bid inspection also disclose the bid amount? If there is a lawsuit pending at the Association level, what “information” is the Association required to disclose? Attorney client information? What if the information is not 100% accurate, because you don’t know all of the facts relating to the suit? Who do you think will get sued? That’s right, the Seller. What will your broker, who you paid thousands of dollars to at closing say? I can just hear them: “We just relayed the information the Seller or the Association provided, and we had no duty or way of knowing if the information was accurate.” But of course they will skip the part that they created the form that created the duty for the Seller.
If you are on your Board, selling your unit or buying into a condominium you need to know exactly how difficult if not impossible this new standard will be to attain.
RECOMMENDATION – based on the statements above, here is what I recommend:
- If you are the Seller, Strike lines 158-160 on the form before you sign it;
- If you are the Broker, do your clients a favor and strike these lines ahead of time;
- If you are the Buyer, these lines benefit you, but I believe that they put the Seller at an unreasonable and unfair risk and I am not sure ending up in a lawsuit benefits you either; and
- If you are the Association, contact your attorney so that when you are asked for this information, which you will be based on the disclosures you must provide under Sections 703.20 and 703.33 Wis. Stat., you can provide a standard response to these two questions that limits the exposure of your Association to liability and does not disclose confidential information. If done properly, you likely only need to pay the attorney once for this standard response that protects the Association and will likely help protect the Seller who didn’t know or understand what he or she was agreeing to.