Chapter 19 - Misc Wisconsin Laws

Question 1

What is the record retention policy for Wisconsin real estate transactions?

Answer 1

paper or digital records for a minimum of 2 years, unless Federal law mandates that documents be held for longer time or the REEB has an ongoing, active investigation regarding the transaction related to the documentation

Question 2

What documents are required to be retained under WI law?

Answer 2

1. Listing contract/agency agreement
2. Offers to purchase, counteroffers, amendments or relevant correspondence
3. Lease agreements & associated amendments
4. Closing statements
5. Deposit Receipts or related canceled checks
6. Trust account records
7. Any other documents or correspondence that is used or prepared in conjunction with a transaction in WI

Question 3

In WI, a real estate licensee has a legal obligation to promptly provide a ______ of any prepared document that relates to the practice of real estate to any individual who has signed the document.

Answer 3

In WI, a real estate licensee has a legal obligation to promptly provide a duplicate copy of any prepared document that relates to the practice of real estate to any individual who has signed the document.

Question 4

What documents are required to be provided in complete & exact form when practicing real estate in WI?

Answer 4

1. Accepted offers, counteroffers, and any amendments
2. Accepted & executed lease agreements, amendments, or clauses
3. Agency or listing agreements
   * **Duplicate documents must be given to all parties involved

Question 5

Trust Fund

Answer 5

type of bank account that is specifically designed to be used to manage and hold funds that a fiduciary is holding on behalf of a client of the real estate firm for any purpose
–demand deposit account

Question 6

Demand deposit account

Answer 6

type of account where the account’s funds are available to transfer or to be withdrawn, without delay and on demand

Question 7

Client Funds

Answer 7

monies that are held in a trust account, including cash, check, notes, or drafts, NOT promissory notes, given for real estate transactional purposes.

Question 8

In what situations will a trust account be used?

Answer 8

1. Earnest money deposits or down payments provided to meet the terms of a lease agreement or contract
2. Payments for real estate taxes or insurance
3. Payments received from a principle that were being held to repay a 3rd party vendor
4. Advanced payments that are considered refundable (excludes non-refundable fees)
5. Payments for mortgage payments or land contracts
6. Rental payments, application fees, or lease deposits if the licensee is acting as an agent for the rental property’s principle owner
7. Security deposits for which the real estate licensee has some form of ownership interest

Question 9

Where must trust accounts be maintained?

Answer 9

at an acceptable depository institution that is FDIC-insured or a credit union with the authority to do business in WI in which the account is in good standing

Question 10

How must the trust account be named?

Answer 10

the trust account’s name must include the real estate firm’s name and identify the account as a trust account

Question 11

Where must trust accounts be registered and can they be audited?

Answer 11

YES, a trust account must be registered with the WI Department of Administration. The firm must provide the department with the financial institution’s name and address, the account number, and a letter that provides authorization to the Department of Administration to audit and inspect the trust account at will.

Question 12

What must a depository institution be able to confirm about trust funds?

Answer 12

1. Attest to the fact the account exists
2. Acknowledge that the bank must permit an audit of the account when requested by a qualified Department of Administration

Question 13

If a trust account has been opened, modified or closed, what must a real estate firm do?

Answer 13

A real estate firm is mandated to notify the Department of Administration within 10 day is a trust fund has been opened, modified or closed

Question 14

IBRETA account

Answer 14

interest-bearing real estate trust account–client funds are required to be deposited into an IBRETA account. The interest earned on this account is legally the property of the Department of Administration–NOT the real estate firm

Question 15

How quickly are trust funds supposed to be deposited?

Answer 15

within 48 hours of receipt or within 2 business days (not a Saturday, Sunday or a federal holiday). If the firm cannot do so within this timeframe, the funds must be returned to the owner or forwarded to the payee within one business day.

Question 16

Commingling

Answer 16

when a fiduciary, entrusted with the safekeeping of other’s monies, mixes those funds with funds other than those deemed trust funds.

Question 17

How much of the real estate firm’s own monies is it permitted to keep in a trust fund for account maintenance purposes?

Answer 17

up to $300 of its own monies in a trust account to meet account maintenance requirements or to avoid having to pay monthly account expenses.

Question 18

How quickly is a firm required to pay out the monies in a trust fund after a transaction is completed?

Answer 18

the firm is required to withdraw these earned commission funds within 24 hours from the time the transaction was consummated.

Question 19

Non-depositable assets

Answer 19

items of value, such as stock certificate or another equity instrument, held by a different qualified escrow agency
–something of value that cannot be deposited into the firm’s trust account

Question 20

What requirements are in place for trust fund record keeping?

Answer 20

transactions must indicate directly on the contract when any monies have exchanged hands with regard to a real estate deal.

1. Deposits including the date, payee, amount, and check number as well as the date, party who owns the funds & the amount
2. Ledger
3. Monthly Bank Reconciliation
4. Monthly Trial Balance
   * *All these relevant financial documents must be reviewed by a person qualified to determine if the records are valid and in agreement.

Question 21

If a firm uses an electric bookkeeping system, the system should be ____

Answer 21

Backed up - A complete and reliable backup of all bookkeeping data must be done each day that a journal entry or financial record has been added, deleted, or modified. The backup system chosen must be separate from the data source’s and all documents should be backed up similarly and immediately by the licensed broker.

Question 22

What rules must be followed when disbursing trust funds?

Answer 22

1. Trust funds should be returned to the original payer upon the termination, withdrawal, rejection or expiration of a real estate transaction
2. Trust funds should be returned as indicated by a disbursement agreement (i.e., closing statement) that has been signed by all parties
3. Trust funds should be returned as indicated by a court order
4. Trust funds should be returned upon good-faith decision that has been made based upon the advice of a qualified attorney with no interest in any party to the transaction
5. Trust funds should be returned as delineated in the relevant legal agreement or contract
6. Trust funds should be returned if otherwise provided by law

Question 23

Intent to Disburse Notice

Answer 23

includes to whom the disbursements will be made and the date on which the disbursements will be made. It is required to be sent by certified mail to each parties’ last known address.

Question 24

The disbursement of trust funds cannot take place until ____ have elapsed from the date the intent to disburse notice was sent.

Answer 24

The disbursement of trust funds cannot take place until 30 days have elapsed from the date the intent to disburse notice was sent.

Question 25

Buyers/sellers in WI are ______ to use the real estate broker’s real estate trust or escrow account.

Answer 25

Buyers/sellers in WI are NOT required to use the real estate broker’s real estate trust or escrow account and have the option to designate another escrow agent. In this case, the licensee CANNOT draft the escrow agreement; the escrow agreement must be prepared by the escrow agent or attorney who has agreed to take on the fiduciary responsibility of managing these escrow or trust funds.

Question 26

Marital Property Agreement

Answer 26

signed by both spouses, it describes what each spouse is allowed to control and manage.

• -sets forth who can manage or control properties
• -defines the management rights and ownership structure of properties outside of WI’s default law
• -can be recorded as part of the chain of title, but not required for the agreement to be enforceable
• -not required if the marital property is not being divided by item

Question 27

Can one spouse purchase property on their own?

Answer 27

Yes–

1. if one spouse owned the real property prior to the marriage date
2. if one spouse inherits the property
3. if the property was given to only one spouse
4. if the value of the individual property appreciates
5. if the individual spouse is named as the individual property owner

Question 28

What is the general presumption related to married couples when it comes to WI real estate?

Answer 28

Wisconsin is a community property state - essentially, anything and everything acquired during the time of the couple’s marriage is considered marital property and provides each spouse with 1/2 undividable interest in that property.

Question 29

Determination Date

Answer 29

Latest dates of these events:

1. date of couple’s marriage
2. date when both individuals became WI residents
3. January 1, 1986, the effective date of the Wisconsin Marital Property Act

Question 30

Marital Property

Answer 30

includes all possessions obtained and income earned after the couple’s determination date and splits it in half. Determined by ownership by survivorship or through a will

Question 31

Property acquired after the determination date is still considered _______ even if the deed or record names only one spouse as an owner.

Answer 31

Property acquired after the determination date is still considered marital property even if the deed or record names only one spouse as an owner.

Question 32

Survivorship Marital Property

Answer 32

property that’s passed to a spouse upon the death of one spouse outside of the assets noted in the decedent’s will. Automatically and immediately passes to the surviving spouse by law.

Question 33

Unclassified Property

Answer 33

property acquired prior to the passage of the Marital Property Act or acquired while one of the spouses was living in a state other than WI – treated as individual property when and if the property owner marries

Question 34

Deferred marital property election

Answer 34

applies only to non-probate WI marital property to ensure that a surviving spouse receives 50% of the deferred marital property estate’s value.

Question 35

Mortgage Banker

Answer 35

professional with the license and expertise to assist borrowers in securing mortgage financing - has the authority to originate (act of making a credit decision in conjunction with the loan closing) residential mortgages

Question 36

Under what circumstances does a mortgage banker not need to maintain a WI license?

Answer 36

1. if they closed or expect to close 5 or fewer residential mortgage loans over the past calendar year
2. if they do not hold themselves out as a mortgage banking professional or do not actively advertise mortgage banking service

Question 37

Table Funded loans

Answer 37

mortgage closes in one name with funding from another 3rd party source. The original mortgagee assigns the mortgage loan to the funding source within a 24 hour period

Question 38

Mortgage loan originator

Answer 38

mortgage professional who works for a lending institution who, for a fee, helps borrowers complete the application and helps borrowers negotiate the mortgage loan terms. Negotiation refers to explaining or discussing a mortgage loan’s terms and conditions (i.e., rates, fees, and costs required to close a mortgage loan)

Question 39

Where are mortgage professionals required to be licensed through?

Answer 39

the Nationwide Mortgage Licensing System (NMLS)