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2018


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Greater Madison Area June 2018 Asking Lease Rates


Office­Rates­ East:­$12.64 Central:­$18.35 West:­$14.68


Trust Accounts — Earnest Money Disbursement


QUESTION: The sellers had an accepted offer on their house. The buyer did an inspection, and earnest money was received after the inspec- tion. The buyer decided to cancel the sale based on the inspection report. The buyer sent over a Cancellation Agreement and Mutual Release (CAMR), which the sellers did not sign. The sellers sent a new CAMR to keep half of the earnest money, but the buyer did not sign it. The buyer sent over another CAMR, which the sellers have not signed, and the sellers sent over yet another CAMR that the buyer has not signed. The buyer has since retained an attorney, and the attorney contacted the listing broker demanding that the full earnest money be returned to the buyer. Can the listing broker return earnest money without a fully signed CAMR?


ANSWER: The listing broker cannot unilaterally decide to disburse the earnest money to the sellers or to the buyer, nor can an attorney for one of the parties. The broker may violate Wis. Admin. Code § REEB 18.09 for disbursement without authority by making such a unilateral decision.


Asking­rates­Office­from­06/01/12­–­06/30/18 Retail­Rates­ East:­$12.38­ Central:­$21.31 West:­$16.17


While it is natural to want to help the side that “deserves” it, the disburse- ment of earnest money and other trust funds from a real estate trust account is controlled by rules that do not focus on who is right or wrong, but rather establish a procedure that gives everyone a fair chance to make a claim on the funds. Wis. Admin. Code § REEB 18.09(1) & (2) establish the rules allowing a broker to disburse the funds. Funds may be disbursed, for example, upon agreement of the parties in the form of a WB-45 Cancella- tion Agreement and Mutual Release or provisions in an accepted offer specifically authorizing disbursement of earnest money. Wis. Admin. Code § 18.09(2) establishes procedures for giving advance notice to the parties prior to a disbursement that may be in dispute. The rules are fairly mechanical and do not give the broker the right to decide who deserves to receive funds.


Pursuant to the Earnest Money Disbursement section of the WB-11 Residential Offer to Purchase, the listing broker is to do nothing with the earnest money for 60 days after the scheduled closing date unless the par- ties reach a written agreement for the disbursement of the earnest money. The listing broker may wish to write a memorandum or letter to the buyer and seller and their respective attorneys, if any, pointing out the Earnest Money Disbursement section and explaining that this is how the earnest money disbursement must be handled. It is then up to the parties to work out their differences by negotiation or by going to small claims court.


Asking­rates­Retail­from­06/01/12­–­06/30/18 Office/Whse East:­$6.13 Central:­$8.64­ West:­$6.58


After the 60 days have passed, the listing broker may choose to initiate a small claims action or seek an impartial attorney's written opinion as to who should receive the earnest money. The broker may deduct up to $250 from the earnest money for the legal fees involved in either of these alter- natives. The broker also may continue to do nothing and allow the parties to find a way to resolve the earnest money dispute themselves or through their attorneys. The buyer's attorney may wish to initiate a small claims proceeding if the buyer and seller cannot resolve their dispute.


_______________________________________________________ Asking­rates­Office/Warehouse/Flex­from­06/01/12­–­06/30/18 32


READ MORE ABOUT IT: For further discussion of earnest money issues, see Legal Update 00.10, “Trust Account Basics,” at www.wra.org/LU0010, the May 2014 Legal Update, “Revisions to Forms Use and Trust Account Rules,” at www.wra.org/LU1405, and the fall 2011 WRA Broker Supervi- sion Newsletter, “Trust Accounts: Are You Prepared for an Audit?” at www.wra.org/bsnfall11.


INFORMATION­HEREIN­COLLECTED­FROM­SOuRCES­BELIEVED­RELIABLE.­CIREX/PROPERTY­DRIVE­IS­NOT­RESPONSIBLE­FOR­ITS­ACCuRACY.­


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