Real Estate Condition ReportGenerally when selling a home, Wisconsin homeowners are required to provide buyers with a Real Estate Condition Report (“Report”).  Wis. Stat. § 709.02.

The Purpose of a Real Estate Condition Report

The purpose of this Report is to disclose any known defects in the property and to avoid any misunderstandings between buyers and sellers with respect to the home’s condition.  The purpose of this article is to offer both buyers and sellers insight into Wisconsin law with respect to their rights and responsibilities regarding the Real Estate Condition Report.  This is not meant as an exhaustive exploration of the law, but rather to afford general guidance, and readers are encouraged to seek the advice of counsel for their particular needs.

For Sellers:

The purpose of the Report is to disclose any known defects in the home to prospective buyers.  The Report must substantially conform and include the information stated in Wis. Stat. § 709.03.  Among other things, the Report requires sellers to disclose whether they are aware of certain defects in the property.  To be “aware” of defects means to have notice or knowledge of them.  A “defect” is defined as a condition

  1. “that would have a significant adverse effect on the value of the property;”
  2. “that would significantly impair the health or safety of future occupants of the property;”
  3. or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.”

Wis. Stat. § 709.03.  With few exceptions, sellers must provide prospective buyers with a Real Estate Condition Report within 10 days of accepting a contract of sale or offer to purchase.  Although prospective buyers are routinely recommended to secure their own inspection of the home, sellers may not provide an incomplete report believing an inspection will disclose any and all defects in the home.  Buyers are entitled to rescind offers to purchase, within certain time periods, if a Real Estate Condition Report discloses a defect.  Buyers and sellers often renegotiate the terms of the sale if defects are disclosed.

Litigation often arises when a buyer later discovers issues with the home that were not disclosed in the Real Estate Condition Report.  Under Wisconsin law, buyers have several causes of action they may assert against sellers, including misrepresentation claims.  While misrepresentation claims can be difficult to prove, for certain claims, the law affords plaintiffs the right to recover their attorney fees and punitive damages should they prevail.  Sellers have a variety of defenses, however, to claims asserted by buyers.  Sellers should seek legal advice immediately if they are sued for providing an allegedly false Real Estate Condition Report to ensure their rights are protected.

For Buyers:

Under Wisconsin law, sellers must provide a completed Real Estate Condition Report within 10 days of an accepting a contract for sale or offer to purchase.  Within two (2) days of receiving the Report, buyers may rescind an offer to purchase and receive their earnest money back if the Report discloses a defect.  Buyers may also rescind an offer to purchase within two (2) business days if a Report is not provided by the sellers within the 10-day period or if the Report is incomplete.  Buyers may not, however, rescind an offer to purchase if they are aware or had written notice of the nature and extent of a defect not disclosed in the report at the time the offer to purchase was submitted to the sellers.  If defects are disclosed, buyers oftentimes renegotiate the terms of the contract of sale and require sellers to fix the defects at the seller’s expense, although sellers are not required to renegotiate a rescinded offer.  Prudent buyers still obtain their own independent inspection reports.

Issues most often arise when buyers discover issues with the home that were not disclosed in the Report.  This may give rise to several causes of action against the seller.  Buyers often assert misrepresentation claims against sellers for concealing known defects and failing to report them in the Real Estate Condition Report.  Misrepresentation and fraud claims, however, often require higher evidentiary burdens in order to prevail at trial.  In other words, misrepresentation claims require plaintiffs to prove their case with a higher degree of certainty than that required of other claims.  If buyers obtain inspection reports disclosing defects that were not disclosed in the Real Estate Condition Report, this knowledge may defeat a misrepresentation claim asserted against a seller, as a buyer cannot rely upon a Report he or she knows is untrue.  Buyers who discover defects in their home should consult with an attorney to explore their legal options.

If you have any questions regarding Wisconsin Real Estate Condition Report contact our Green Bay Real Estate Attorneys at (920) 499-5700.

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