If you are in the process of trying to sell your home, Wisconsin law may call for you to divulge certain property flaws to prospective buyers. Erring on the side of over disclosing can scare away potential buyers, while failing to report certain issues may derail a sale or cause the buyer to bring a legal action against you. It is therefore crucial for you to determine whether and what disclosures are required prior to closing.
Most, but not all, sellers in Wisconsin are required to submit a real estate condition report to any potential buyer. The law makes an exception, however, for sellers who may not have a reasonable idea of the condition of the property because the seller does not actually own the property. These types of sellers include a personal representative of an estate, a trustee, a conservator, or any person serving as a fiduciary by virtue of court order.
If you find yourself serving in one of these positions and attempting to sell a property, you will not have to provide a condition report. Keep in mind, though, that you may ultimately be held responsible if it can be shown that you knowingly concealed a defect in order to expedite the sale of the home.
If you are not in one of the exempt categories of seller, you will have to provide the real estate condition report described in this article.
The real estate condition report required under state law prompts the seller to answer a series of questions regarding the condition of certain aspects of the property. Your real estate agent is likely to provide you with a blank copy of the "Real Estate Condition Report" form, or you can read the required language in Chapter 709 of the Wisconsin Statutes.
Multiple questions require feedback about structural defects in the property, such as in the roof, foundation, HVAC, wiring, and plumbing systems. Other questions address possible environmental problems, such as well water problems, asbestos, lead paint, radon, or on-site fuel tanks.
The remaining questions focus on legal issues to do with the property, such as boundary line disputes, shared well agreements, or encumbrances.
You must indicate next to each question whether or not you are aware of a defect falling into the category described by that question. If you answer “yes” to any of the questions, you must provide a written explanation to detail the flaw.
If the property you are selling is a condominium, you must provide the prospective buyer with the name of the condominium, the date that the condominium was created, the name and address of the condominium association along with a contact person, and a statement as to the amount of condominium fees or assessments currently due and owing.
Near the end of the form, you must also disclose how long you have lived at the home.
It is important to remember that the real estate condition report is not a guarantee as to the house, nor does it put the buyer in the position of purchasing a trouble-free, “like-new” home. Wisconsin law requires you to disclose any condition or defect that would result in a significant negative effect on the property value, that would significantly impair the health or safety of future occupants, or that would significantly shorten or negatively affect the normal life of the property. This means that you must have knowledge of a defect to the property and must reasonably believe that this defect will have a significant negative effect on the property. If both of those conditions are not met, you may not be required to disclose the defect.
Wisconsin law requires you to provide the completed real estate condition report to the buyer no less than ten days after you have accepted the buyer’s offer to purchase, but it can be provided earlier. Some sellers will provide the condition report to a prospective buyer before even receiving an offer to purchase.
There are advantages and disadvantages to providing the report this early. On one hand, this type of early disclosure may scare off potential buyers (if there is a significant defect identified in the report). On the other hand, if the buyer receives the condition report before submitting an offer, that buyer enters the deal feeling knowledgeable about the property’s condition – and cannot later rescind the offer on the basis of information contained in the report itself.
Regardless of when you provide the real estate condition report, realize that in the event that you accept an offer and the buyer has an inspection done on the property, any defects identified by the inspector will be relayed back to you. If the sale subsequently falls through, you are now aware of these newly discovered defects and must amend your real estate condition report to add them.