Sunday, April 17, 2016

Wis. Stat. s. 452.142's Impact On Breach of Contract And Negligence Claims Against Real Estate Agents

My last two posts have discussed two glaring weaknesses in Wis. Stat. s. 452.142 - it does not apply to sellers' contribution claims against their real estate agents and it likely does not apply to buyers' misrepresentation claims against sellers' real estate agents.  What remains are breach of contract and negligence claims against real estate agents.  Since sellers will rarely sue their real estate agents, we're mostly talking about buyers' non-misrepresentation claims against real estate agents.

Unfortunately, most buyers do not get their own real estate agent for what is usually the biggest and most significant financial transaction of their life.  They believe that the real estate agent smiling at them from the advertising flyer or the agent who answered the phone at the local real estate office is their agent.  No!  That real estate agent who drove you to five homes on a Sunday is not your real estate agent unless you entered into a WB-36 Buyers Agency / Tenant Representation Agreement.  If you did not enter into such an agreement with a real estate agent, you are not that real estate agent's client.  You are merely that agent's customer.  Wis. Stat. s. 452.135 requires the real estate agent to provide you with a written disclosure statement telling you that you are that agent's customer prior to negotiating on your behalf.

If you are the real estate agent's customer, the real estate agent owes you the following duties:

The duty to provide brokerage services to you fairly and honestly.
The duty to exercise reasonable skill and care in providing brokerage services to you.
The duty to provide you with accurate information about market conditions within a reasonable time if you request it, unless disclosure of the information is prohibited by law.
The duty to disclose to you in writing certain material adverse facts about a property, unless disclosure of the information is prohibited by law.
The duty to protect your confidentiality. Unless the law requires it, the firm and its agents will not disclose your confidential information or the confidential information of other parties.
The duty to safeguard trust funds and other property held by the firm or its agents.
The duty, when negotiating, to present contract proposals in an objective and unbiased manner and disclose the advantages and disadvantages of the proposals.

Breach of the duty to disclose material adverse facts may form the basis for a misrepresentation claim, which I would argue is still governed by Wis. Stat. s. 893.93(1)(b)'s 6-year statute of limitation.  Breach of the other listed duties may form the basis for a negligence cause of action.  This cause of action used to be governed by s. 893.52's 6-year statute of limitation.  Effective March 4, 2016, however, negligence claims against real estate agents are governed by Wis. Stat. s. 452.142's 2-year statute of limitation.

What about our wise and responsible buyers who hire a buyers' agent?  Real estate agents owe clients the duties listed above AND these additional duties:

The firm or one of its agents will provide, at your request, information and advice on real estate matters that affect your transaction, unless you release the firm from this duty. The firm or one of its agents must provide you with all material facts affecting the transaction, not just adverse facts.
The firm and its agents will fulfill the firm's obligations under the agency agreement and fulfill your lawful requests that are within the scope of the agency agreement.
The firm and its agents will negotiate for you, unless you release them from this duty.
The firm and its agents will not place their interests ahead of your interests. The firm and its agents will not, unless required by law, give information or advice to other parties who are not the firm's clients, if giving the information or advice is contrary to your interests.

Real estate agents owe their clients a broader duty of disclosure, and breach of this duty of disclosure may likewise form the basis for a misrepresentation claim that is arguably exempted from the new 2-year statute of limitation.  Breach of the other listed duties may form the basis for a negligence cause of action or a breach of contract cause of action.  Regardless of whether we allege negligence or breach of contract, such claims meet the same fate under new Wis. Stat. s. 452.142.  Breach of contract causes of action against real estate agents used to be governed by s. 893.43's 6-year statute of limitation.  Effective March 4, 2016, breach of contract claims against real estate agents are governed by Wis. Stat. s. 452.142 and are therefore subject to a 2-year statute of limitation.

Wis. Stat. s. 452.142 appears to have greatly reduced the amount of time that buyers have to allege breach of contract and negligence claims against real estate agents.  If you believe that you have suffered harm as a result of the poor performance of the real estate agent who assisted you with the purchase of your home, you need to contact an attorney right away.  Please contact me at rudolphkuss@stevensandkuss.com