wra addendum a and in this issue addendum b revisions p1

Wisconsin REALTORS® Association Legal Update, October 2014

Real estate practice in Wisconsin is constantly evolving, and it is challenging to keep the forms and other tools needed in day-to-day practice current and up to date with frequent changes. The WRA Addendum A and Addendum B are no exception, and the time has come to freshen the content and embrace recent changes to the applicable law.

The WRA Addendum A has not been revised since 2009, and the WRA Addendum B has not been revised since 2008, while the WB-11 Residential Offer to Purchase was updated in 2010 and then revised again in 2011.

The revisions to Addendum A are triggered primarily by the desire to add a radon testing contingency and to include provisions and a contingency regarding flood insurance. The revisions to Addendum B incorporate the new rules for well inspections and well water testing occurring when a property is being transferred, and better choices and explanations regarding septic system inspections. The suggestions and recommendations of the WRA Forms Committee were solicited and their feedback is reflected in the 2014 versions of the addenda.

Most of the fill-in-the-blanks and [STRIKE ONE] provisions in these addenda have a default provision to furnish a selection in the case of agent oversight. That way there is no confusion trying to figure out what the provision means with an uncompleted blank line. A selection has been made as a backup measure. It is always better, of course, if the parties make their own decisions and write in their choices.

This Legal Update reviews the contents of the revised WRA Addendum B to the Offer to Purchase and then the updated WRA Addendum A to the Offer to Purchase, going section by section through the forms. Recent developments impacting addenda provision changes also are discussed.

WRA Addendum B to the Offer to Purchase

The WRA Addendum B to the Offer to Purchase has been revised primarily in response to the Department of Natural Resources (DNR)'s abrupt announcement of the effective date of the new well inspection and well water testing rules. The updated Addendum B also modifies the POWTS inspection contingency and provides other useful information regarding wells and POWTS. This addendum most typically will be used in transactions involving rural properties and other properties not served

by municipal sanitary and water systems. This two-page specialized addendum contains both optional and standard provisions relating to wells, well water, private sanitary systems (referred to as Private Onsite Wastewater Treatment Systems or POWTS), sanitary districts and related information.

A sample copy of the revised Addendum B appears on pages 18-19 of this Update. This draft is substantially the same as the final version and is available for purchase from the WRA and on WRA zipForm®.

Many of the blank lines that need to be filled in and all of the [STRIKE ONE] provisions in Addendum B have a default provision to furnish a selection in the case of agent oversight. This is not intended to facilitate a lackadaisical approach to this form or to suggest that the defaults are always the best choice. A selection has been made as a backup measure to avoid the confusion and disputes created when there is an uncompleted blank line. The parties to transactions should make their own decisions and ask the licensees they are working with to complete forms and addenda to reflect their choices.

OCTOBER 2014, 14.10

WRA Addendum A and Addendum B Revisions Addendum B to the Offer to Purchase

Revisions

Wells

POWTS

Addendum A to the Offer to Purchase Revisions

Sample Copy of Addendum B to the Offer to Purchase

Sample Copy of Addendum A to the Offer to Purchase

IN THIS ISSUE

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The Well Water Testing Contingency, Well System Inspection Contingency, and the Private Sanitary System (POWTS) Inspection Contingency are specific purpose inspection contingencies. In each of these provisions, the parties may specify the number of days after acceptance or prior to closing when the buyer must receive the required inspection report, indicate (by striking) which party is to provide and pay for the respective report, and indicate (by striking) whether the seller has the right to cure. The provisions indicating when these contingencies are deemed satisfied, and the seller’s options when the seller has the right to cure, appear separately in the Contingency Satisfaction/Right to Cure provision at the top of the second page, along with other informational items.

Each of these contingency provisions requires that a specific type of professional or expert perform the inspection to determine whether the stated standard is met. These specific types of inspectors have been designated at the suggestion of the DNR and the Department of Safety and Professional Services (DSPS) to prevent situations where reports are rendered by unqualified parties. Similarly the standards and other features of these contingencies were developed based upon the DNR administrative rules and the guidance and suggestions of DSPS and DNR personnel.

WellsThe revised WRA Addendum B addresses the well location, well water

safety and quality, the condition of the well and pressure systems, shared well agreements and the requirements for closing abandoned wells in conformance with applicable law.

Well provision (lines 6-7)The Well provision on lines 6-7 of Addendum B provides check boxes

where the parties may indicate whether there is an active well serving the property, if the well is located entirely on the property and whether the well is a private shared well. These are purely informational items to assist in further evaluation of the wells involved with the property.

New property transfer well inspection rulesThe DNR requires any licensed well driller or licensed pump installer

conducting a property transfer well inspection to automatically collect and test the well water for coliform bacteria, nitrate and arsenic. This applies to well inspections conducted on or after October 1, 2014. A well inspection is not required under the new DNR rules in Wis. Admin. Code § NR 812.44. If a well inspection is conducted, the inspection must be done by a licensed well driller or licensed pump installer in accordance with the provisions of § NR 812.44. See the new Wis. Admin. Code § NR 812.44 at docs.legis.wisconsin.gov/code/archive/2014/705b/insert/nr812.

If a well inspection is performed, the water must be tested for coliform

bacteria, nitrates and arsenic, even if a well water testing contingency is not included in the offer. If the well water testing contingency does not include one or more of the required tests, the water must still be tested. If the offer does not address the steps to take if the results exceed safe levels, the parties and agents in the transaction will have no provisions to determine the parties’ rights and responsibilities with respect to the water tests and the test results. The water tests, particularly with respect to arsenic, will likely increase the water testing fees and may result in possible delays if it takes longer to test for the three required elements.

These new rules create the need to modify the provisions in the well system inspection contingency and the well water testing contingency found in prior versions of WRA Addendum B.

Well water testing contingency (lines 8-22)The Well Water Contingency in the revised WRA Addendum B is

selected by checking the box on line 8, or may be automatically selected by virtue of line 32. Line 32 provides: “If the well is inspected, the Well Water Testing Contingency is automatically selected and included in this Offer.” This feature is intended to protect the parties if they have included a Well System Inspection Contingency to have the well inspected as part of the transaction but neglected to also select the Well Water Testing Contingency. Because all necessary blank lines and [STRIKE ONE] selections in the Well Water Testing Contingency have defaults, this can be done automatically in the event of such an oversight. The result may not be the Well Water Testing Contingency that the parties would have wanted, but there will be a contingency to set the ground rules of how any unsafe water testing results will be processed and handled by the parties.

In the Well Water Testing Contingency, the offer is contingent upon the buyer receiving reports indicating safe water results. The parties may

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i MORE INFORMATION

For more information about the new well inspection rules, see:

• DNR website at dnr.wi.gov/topic/Wells/RETransfer.html and dnr.wi.gov/topic/wells/privatewelltest.html.

• "Property Transfer Well Inspections: What every REALTOR® needs to know about new DNR well water testing regulations,” in the November 2014 Wisconsin Real Estate Magazine at www.wra.org/WREM/Nov14/WellWater.

• “The Best of the Legal Hotline: Well, Well, Well! Practical tips for putting the new well inspection rule into practice” in the November 2014 Wisconsin Real Estate Magazine at www.wra.org/WREM/Nov14/Hotline.

REALTOR® Practice Tip

If the parties want to have the well inspected and include a Well System Inspection Contingency, the parties should also include the Well Water Testing Contingency because the water is going to be tested for coliform bacteria, nitrates and arsenic regardless of whether the parties ask for this in the offer.


REALTORS® always should carefully review addenda provisions and allow the parties to make the selections and choices that reflect their intent and best interests. The presence of default measures is not an invitation to not tailor the addendum to the particular transaction and specific circumstances.


indicate the deadline for the buyer to receive the water test reports on lines 8-9 by filling in the number of days and using the [STRIKE ONE] feature to specify if the time frame will be measured by counting the specified number of days from the date of acceptance or before the date of closing. The default provision is 21 days prior to closing because the default on line 9 is “prior to closing” and the default number of days is 21 per lines 101-102. Lines 101-102 state: “DEFAULT NUMBER OF DAYS: Default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days.”

The contingency indicates that the water samples must be tested at a certified or other independent qualified lab. Laboratories certified to test private well water may be found at dnr.wi.gov/regulations/labCert/#tabx7. Different labs are certified to test for different substances so the parties must be sure that they find the proper lab or labs for the desired testing. The information on the Wisconsin State Hygiene Lab (WSHL) website provides instructive examples of the different water tests, sampling containers, costs and testing time frames that may be involved. Visit www.slh.wisc.edu/environmental/water. Each additional substance tested increases the cost of testing and may impact the time frames.

To satisfy the well water contingency, the lab reports must indicate that the well water is within the levels established by federal or state laws or guidelines regulating public water systems for safe human consumption. Lines 11-12 of the Well Water Testing Contingency indicate that the well water will be tested for bacteria (total Coliform and E.coli), nitrate and arsenic because these are the substances that must be tested if there is a well inspection as part of a real estate transaction.

Arsenic

According to the Wisconsin Department of Health Services (DHS), Wisconsin drinking water standards for arsenic are set at 10 parts per billion (ppb). If the arsenic level is more than 10 ppb, the DHS suggests that the water not be used for drinking and food preparation although other uses are safe. See www.dhs.wisconsin.gov/eh/ChemFS/fs/arsenic.htm.

Per the DNR, the federal drinking water standard for arsenic also is 10 ppb. For private residential wells, there is no state or federal requirement that you stop using your water regardless of the arsenic level. See the DNR information relating to arsenic at dnr.wi.gov/topic/groundwater/arsenic. The EPA also has similar information available at water.epa.gov/lawsregs/rulesregs/sdwa/arsenic/index.cfm.

Nitrate

Nitrate levels greater than 10 parts per million (ppm) exceed state and federal standards for nitrate in public drinking water supplies. No infant or any female who is or may become pregnant should consume any water that exceeds this standard (either by drinking or by eating foods prepared with the water such as soups, juices and coffee). Additionally, the DHS recommends that all people avoid long-term consumption of water that has a nitrate level greater than 10 ppm. In infants under 6 months of age, ingestion of nitrate can result in “blue baby syndrome” where the blood's ability to carry oxygen is compromised. See the DNR pamphlet relating to nitrate at dnr.wi.gov/files/PDF/pubs/DG/DG0001.pdf and the EPA information at water.epa.gov/drink/contaminants/basicinformation/nitrate.cfm.

If there is no well inspection and only the water is being tested, then the parties may modify the provision and line out bacteria (total Coliform and E.coli), nitrate or arsenic if the desired testing will be targeted in a different manner.

In all cases the parties may indicate additional substances to test for in the blank on lines 12-13 of Addendum B. The note on lines 13-15 states, “If desired by Buyer or required by Buyer’s lender, insert other substances that may affect drinking water safety such as pesticides, lead, nitrite, copper, radium, radon, etc., or that may affect water aesthetics, such as iron, sulfur bacteria, etc. See the DNR Web site at http://dnr.wi.gov/topic/Wells/waterQuality.html for information.” In some cases FHA, VA and other government loans may require well water testing for lead, nitrites and other substances. In other cases, the buyer may be concerned about a specific element. In all events, the buyer may write in additional substances that will be tested for.

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The WSLH website explains how to interpret lab results for bacteria and nitrate and gives helpful tips regarding how to address any well contamination issues at www.slh.wisc.edu/environmental/educational-resources/interpreting-your-laboratory-results. Similar information for understanding arsenic test results is found at www.dhs.wisconsin.gov/publications/P4/P45012.pdf. REALTOR® Practice Tip

Check with the local licensed well drillers and pump installers to see what labs they normally use. Ask if that the labs are certified to test for coliform bacteria, nitrates and arsenic or if they will have to send water samples out to other labs. If samples are sent out, the time frames and fees may be higher than with labs where the testing is performed onsite. Determine the fees and time frames so that the contingencies for well system inspection and well water testing can be appropriately drafted to allow enough time to be completed before closing. This information will also be valuable for setting the parties' expectations as to timing and costs.

i MORE INFORMATION

The parties are directed on line 15 of the Addendum B to the DNR website at dnr.wi.gov/topic/Wells/waterQuality.html for information regarding other substances that they may wish to test for.

Additional resources discussing contaminants in well water include pages 4-10 of Legal Update 02.10, “Drinking Water and Wells”: www.wra.org/02.10.

The DNR brochure, “Tests for Drinking Water from Private Wells”: dnr.wi.gov/regulations/labcert/documents/testsforwell.pdf is also loaded with useful information for consumers and REALTORS®.


On line 16 of the Well Water Testing Contingency, the parties may choose who will be responsible for obtaining the reports and for paying for the testing using a [STRIKE ONE] feature, with the default indicating that the seller will obtain and pay for the needed reports. Lines 16-18 instruct that a licensed plumber or some other independent drinking water professional take all well water samples for testing after binding acceptance. If there is a well inspection, the licensed well driller or licensed pump installer performing the well inspection will take the water samples. If there are follow-up tests, for example, after chlorination, those samples may be taken by a licensed plumber or another independent professional. Separate samples may be required when testing for various contaminants.

The parties specify in this contingency whether the seller has the right to cure using a [STRIKE ONE] feature on line 18. The default gives the seller the right to cure. The parties are then referred to the Contingency Satisfaction/Right to Cure provisions on lines 61-71 as well as the related cautionary notes on lines 72-83. This discussion accordingly will turn to the second page of Addendum B to examine those portions of those provisions germane to the Well Water Testing Contingency.

Contingency satisfaction/right to cure (lines 61-71)

The Contingency Satisfaction/Right to Cure provision on the reverse side of the revised WRA Addendum B automatically applies to the Well Water Testing Contingency, Well System Inspection Contingency and Private Sanitary System (POWTS) Inspection Contingency if those contingencies have been selected by the parties. Each of these contingencies is deemed satisfied unless the buyer delivers to the seller a copy of the pertinent report and a written notice stating why the report does not satisfy the applicable standards.

The copy of the report and the notice must be delivered to the seller within five days of the buyer’s actual receipt of the reports or the deadline for delivery of the report, whichever comes first. However, if the seller is providing the reports, the offer will be null and void if the buyer delivers notice to the seller, within five days of the deadline for delivery of the reports, stating that the seller failed to deliver the reports by the applicable deadline.

If the seller has the right to cure, the seller satisfies the contingency if the seller (1) delivers a written notice of the seller’s election to cure to the buyer within 10 days of the seller’s receipt of the buyer’s notice,

and (2) completes the repairs in a good and workmanlike manner that satisfies the standards set forth in the respective contingency, and provides the buyer, prior to closing, with a written report detailing the work done.

The offer becomes null and void if the buyer delivers the appropriate notice and copy of the report to the seller on time, and the seller does not have a right to cure. The offer also becomes null and void if the buyer delivers the notice and copy of the report — on time — to a seller with the right to cure, who either delivers written notice to the buyer stating that the seller will not cure, or fails to deliver a written notice of the seller’s election to cure within the allotted 10 days.

Required well water testing

In the related pointers on lines 72-91, lines 72-74 spell out the connection between having the well inspected and mandatory testing of well water for bacteria, nitrate and arsenic: “Per Wis. Admin. Code § NR 812.44, if a property transfer well inspection is conducted the licensed well driller or a licensed pump installer conducting the inspection is

required to collect well water samples for bacteria (total Coliform and E.coli), nitrate, and arsenic testing.”

If the well is inspected on or after October 1, 2014, an unfavorable situation may be created. The new rule creates the potential for the well water test results to come back showing an elevated or unsafe level of a substance and there being no contract provisions stating how these results are to be addressed by the buyer or seller. If that is the case, the parties may need to seek legal counsel for assistance in this situation where there are unfavorable test results and no standards or procedures in place to deal with them. See the WRA ALERT Regarding Well Water Testing Language and Well and Well Water Resources at www.wra.org/Resources/Transactional/Offer_to_Purchase_Resources. These unfavorable consequences are avoided per line 32.

Arsenic testing time periods

Because some labs will send water samples out for arsenic testing and other labs will test for this substance only on certain days, the parties are reminded on lines 75-76 to check with the labs that will be used for the testing to make sure that sufficient time is allowed in the Well Water Testing Contingency to accomplish all required testing and reporting.

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Line 32 states that if the well is inspected, then the Well Water Testing Contingency is automatically treated as being selected and the provision defaults come into play if no portion of that contingency was completed.

“The new rule creates the potential for

the well water test results to come back showing an elevated

or unsafe level of a substance and

there be no contract provisions stating how these results are to be addressed by the buyer or seller. If that

is the case, the parties may need to seek legal

counsel ...”


It would be prudent for the licensees in the transaction to learn what labs test water samples for any additional substance inserted in the contingency as well as the associated costs and turnaround times, and help the buyer find information regarding how to interpret the test results for the substance.


Well water chlorination

A process and time frames for disinfecting a well where the water test came back as “unsafe” or positive for coliform is set forth in lines 77-80. If the initial well water report indicates bacteriological contamination, the seller may “shock” or chlorinate the well and retest up to two times, with the deadlines for the buyer’s receipt of the report and for closing extended for up to 14 days. After a report of bacteriological contamination, the seller must produce two safe water reports to satisfy the well water contingency, unless otherwise agreed in writing. See the WSLH pointers at www.slh.wisc.edu/environmental/educational-resources/interpreting-your-laboratory-results. If the parties wish to establish different standards or parameters, they may do so in the Additional Provisions section at the bottom of the first page of Addendum B.

Well water mediation

If the water testing results show a high level of a contaminant in the well water, lines 81-83 suggest that the parties confer with the licensed well driller or pump installer who conducted the well inspection and took the water samples regarding possible remediation techniques and whether a new well could provide safer water for the long term. This professional will be familiar with the particulars of the situation. Questions may also be posed to other well drillers or pump installers as the DNR considers that they all have sufficient training and knowledge to be helpful to the parties in a real estate transaction.

Utility service

The last of the pointers on lines 72-91 are potentially related to well water. Lines 90-91 make the seller responsible for providing electricity, water service and/or any other utility service that is necessary for any inspection or testing, unless otherwise designated in the Additional Provisions on lines 49-57 or in another part of the offer.

Right to cure methods (lines 20-22)Back on the first page of Addendum B, lines 20-22 provide the parties

with the opportunity to make a selection with regard to the techniques the seller might employ to cure a situation with an elevated level of a contaminant in the well water. Using the [STRIKE ONE] feature, the parties may indicate whether the seller may install Point of Use (POU) water treatment devices approved by the DSPS if the seller has the right to cure. The default indicates the seller may use POU devices if the seller cures. Comprehensive information about these treatment devices is available at dsps.wi.gov/php/sb-ppalopp/contam_alpha_list.php.

The DHS also has information looking at the pros and cons of various techniques that might be selected to mitigate unsafe arsenic levels. Possible options include installing a Reverse Osmosis (R/O) or Distillation Point of Use (POU) treatment system to remove arsenic from the drinking water. These filters are used to treat water coming from one faucet (most commonly, a faucet in the kitchen). Another choice is to install a Point of Entry (POE) treatment system that will treat all water coming into the house. Another choice is to drill a deeper well and install casing past the arsenic-producing zone. See this remediation discussion and related resources at www.dhs.wisconsin.gov/publications/P4/P45012.pdf.

Well system inspection contingency (lines 23-32)

The Well System Inspection Contingency in the revised WRA Addendum B is selected by checking the box on line 23. This provision makes the offer contingent upon the buyer receiving a current written Property Transfer Well(s) and Pressure System(s) Inspection report from a licensed well driller or a licensed pump installer that indicates that the well(s) comply with code.

The parties may indicate the deadline for the buyer to receive the well inspection report on lines 23-24 by filling in the number of days and using the [STRIKE ONE] feature to specify if the time frame will be measured by counting the specified number of days from the date of acceptance or before the date of closing. The default provision is 21 days prior to closing because the default on line 24 is “prior to closing” and the default number of days is 21 per lines 101-102. Lines 101-102 state: “DEFAULT NUMBER OF DAYS: Default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days.”

The Well System Inspection Contingency has a blank at line 26 where the type of well and the number of wells on the property may be entered, if known, but that is not necessary. See dnr.wi.gov/topic/Wells/homeowners.html for information about different types of wells.

If a well and pressure system inspection is done as part of a property transfer, the inspection must be done by an individual who is a licensed well driller or a licensed pump installer. For a list of licensed well drillers and pump installers, visit dnr.wi.gov/topic/wells/contacts.html.

The Property Transfer Well(s) and Pressure System(s) Inspection report (Form 3300-221 at dnr.wi.gov/files/PDF/forms/3300/3300-221.pdf) must be used by the inspector to report the results to the person who requested the inspection. The form lists all potential noncomplying features that an inspector is responsible for checking. Use of the form does not imply DNR approval of the well and pressure system.

The inspection includes visible and known noncomplying features of the well and pressure system, but does not include the plumbing distribution system. The inspector will evaluate the well according to the code in effect at the time of construction or installation, except that wells installed before Feb. 1, 1991, must comply other standards and wells used as a potable (drinking) water supply must comply with the Wis. Admin. Code chapter NR 812 requirements for potable water supplies. That is why the Well System Inspection Contingency simply calls for a report saying the well complies with code (see line 27), leaving the licensed well driller or pump installer to determine the applicable code.

The inspection must include all wells on the property; a separate inspection form may be used for each well. The inspector will also search for any unused or noncomplying wells that must be filled and sealed.

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REALTORS® should carefully review the provisions regarding well water testing after providing the buyers with information about the various standards for safe drinking water. If the buyer has enough information, then he or she can make an informed decision about what potential contaminants are of concern, and whether to modify the contingency to add additional standards or procedures.


Information about well filling and sealing is found at dnr.wi.gov/files/PDF/pubs/DG/DG0016.pdf.

On line 27 of the Well System Inspection Contingency, the parties may choose who will be responsible for obtaining the reports and for paying for the inspection using a [STRIKE ONE] feature, with the default indicating that the seller will obtain and pay for the needed reports.

The parties specify in this contingency whether the seller has the right to cure using a [STRIKE ONE] feature on line 28. The parties are then referred to the Contingency Satisfaction/Right to Cure provisions on lines 61-71, overviewed on page 4 of this Update.

At line 30, the parties may check the box if the party ordering the well inspection would also like to have information about the well capacity or water yield. Though not required for the well inspection, an inspector may note any concerns regarding the capacity or performance of the well and pressure system in the inspection report, including well or pump yield.

Line 32 is, once again, a critical provision that ensures that there will be standards in the offer to evaluate water testing results even if the parties forgot to include and complete the Well Water Testing contingency. “If the well is inspected, the Well Water Testing Contingency is automatically selected and included in this Offer.”

Other provisions germane to the Well System Inspection Contingency appear on the second page of Addendum B.

Shared well agreement (lines 92-96)If the well serving the property is shared with other property owners,

the offer is made contingent upon the seller, at seller’s expense, providing the buyer with a shared well agreement at least 15 days before closing. If the shared well agreement has not yet been recorded, the agreement is to be in recordable form so that the seller can record it at closing. The agreement is to address operational costs, water testing, repairs, well maintenance, use of the well for residential purposes, and the prorate sharing of costs and other responsibilities among all parcels served by the well. Other issues that might be addressed include major improvements and the eventuality of well closure. If the parties wish to address other issues or prefer a different shared well contingency, they may write this information in the Additional Provisions section at the bottom of the first page of the WRA Addendum B or create an additional addendum. See Wisconsin Real Estate Clauses: Contingencies and Other Standard Provisions, available at www.wra.org/pub280/.

Abandoned wells (lines 97-100)The Abandoned Wells provision addresses both wells that need to be

abandoned by the seller per DNR criteria and wells that have been already abandoned. The seller is required to have documentation confirming that any current or past well closure was performed according to the code that was applicable at that time. If the well has been closed, the seller shall provide the buyer with documentation confirming that the well was closed in conformance with all applicable codes. If the well has not been closed, the seller must do so, at seller’s expense, prior to closing, and provide the proper documentation.

The DNR considers a well to be permanently abandoned when it has been completely filled and sealed by a licensed well driller or pump installer using the materials and methods prescribed in Wis. Admin. Code § NR 812.26. This generally means that the pump and any piping inside of the well casing have been removed and the well has been filled from bottom to top with proper filling materials, such as cement grout,

concrete grout, concrete, a clay/sand slurry mix or, in some cases, bentonite chip.

Out-of-service wells are often forgotten when a property is sold. An unused well provides a direct path for contaminants and pollutants to the underground aquifers that supply working wells. If a forgotten well is covered, it is very difficult, if not impossible, to find it and determine if it’s causing contamination. See the DNR information at dnr.wi.gov/topic/Wells/FillingSealing.html.

Once the well has been filled and sealed, the contractor doing the work is required to submit a report of the work done to the DNR. Reports that have been submitted to the DNR are available for viewing at dnr.wi.gov/wars/Home.aspx.

POWTSAt this time, Wisconsin state law and regulations do not require the

inspection of Private Onsite Wastewater Treatment Systems (POWTS) at the time of real estate transactions. However, there are local requirements in various counties and municipalities as well as lender requirements. If any of these apply, it is best to find out in advance what specific standards must be met.

Private sanitary system (POWTS) inspection contingency (lines 33-48)

If the POWTS Inspection Contingency in the revised WRA Addendum B is selected, the offer is contingent upon the buyer receiving a current written report addressing the standards selected on lines 39-42. The parties may indicate the deadline for the buyer to receive the report on lines 33-34 by filling in the number of days and using the [STRIKE ONE] feature to specify if the time frame will be measured by counting the specified number of days from the date of acceptance or before the date of closing. The default provision is 21 days prior to closing because the default on line 34 is “prior to closing” and the default number of days is 21 per lines 101-102. Lines 101-102 state: “DEFAULT NUMBER OF DAYS: Default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days.”

The current report must be from a county sanitarian, licensed master plumber, licensed master plumber-restricted sewer, licensed plumber designer, registered engineer, certified POWTS inspector, certified septage operator and/or certified soils tester. As is noted at line 45, different professionals may be needed to inspect different system components.

The parties establish the applicable standards for the POWTS inspection by checking one, two or all three of the check boxes on lines 39-42. Lines 37-38 note that checking all three brings the highest level of confidence that the system is properly functioning. The three offered standards are:

• Lines 39-40: That the POWTS conforms to the code in effect when the POWTS was installed, with a note that a records review may be necessary to confirm the installation date and the specifications observed by the installer. Wis. Admin. Code § SPS 383.03 provides that an existing POWTS installed prior to July 1, 2000, must conform to rules in effect when it was permitted and installed. New POWTS, on the other hand, must conform to current code.

• Line 41: That the POWTS is not disapproved for current use

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and is hydraulically functional and structurally sound. This is a statement of hydraulic functionality. Unless the inspector is the county sanitarian, the inspector would not have the authority to disapprove the system.

• Lines 41-42: That the POWTS maintains a minimum vertical separation from limiting conditions such as groundwater or bedrock. The standard for operating POWTS is a 3-foot separation. POWTS installed before December 1, 1969 may have only a 2-foot separation. If there are no reliable records, a certified soils tester can make soil borings to determine separation.

It is feasible that an existing system may function hydraulically yet it may not be installed with the drain field portion at a suitable vertical separation (code compliant) distance from groundwater or bedrock. In other words, there is a risk with the older POWTS that the water “goes away” when a person flushes the toilet or does a load of laundry but the wastewater is not being treated adequately. There is a greater risk that someone's water supply could be contaminated by this system, bringing a potential for major litigation.

Depending on when a tank was last pumped and/or inspected and the age of the POWTS it may very well be appropriate to have the tank pumped when a POWTS is inspected as part of a real estate transaction. The WRA Addendum B provides at line 46 that the POWTS tank is to be pumped at the time of the inspection, at the seller’s expense, if this it required by the inspector evaluating the POWTS.

The parties then select which party will be responsible for obtaining the report(s) and for paying all associated costs, other than the cost of pumping, which will be the seller’s responsibility if required by the inspector. This selection is made on lines 46-47 using a [STRIKE ONE] feature, with the default indicating that the seller will obtain and pay for the needed reports. The contingency also indicates on lines 47-48 whether the seller will have the right to cure, again using a [STRIKE ONE] feature, with the default indicating that the seller shall have the right to cure.

A vast array of POWTS are approved in Wisconsin, including, for example, drip irrigation, aerobic treatment, ozonation and ultraviolet systems, which may be costly or require extensive maintenance. For descriptions of the types of systems that may be approved for use by the state, see pages 7-11 of Legal Update 01.08, “Private Sanitary System Contingencies & Comm 83,” www.wra.org/LU0108, and the septic systems REALTOR® Resource Page, www.wra.org/Septic.


The Contingency Satisfaction/Right to Cure provision on the reverse side of the revised WRA Addendum B automatically applies to the POWTS Inspection Contingency if the contingency was selected by the parties. The contingency is deemed satisfied unless the buyer delivers to the seller a copy of the pertinent written report(s) and a written notice stating why the report(s) does not satisfy the applicable standards to the seller.

The copy of the report and the notice must be delivered to the seller within five days of the buyer’s actual receipt of the reports or the deadline for delivery of the report, whichever comes first. However, lines 70-71 indicate that if the seller is providing the reports, the offer will be null and void if the buyer delivers notice to the seller, within five days of

the deadline for delivery of the reports, stating that the seller failed to deliver the reports by the applicable deadline.

If the seller has the right to cure, the seller satisfies the contingency if the seller (1) delivers a written notice of the seller’s election to cure to the buyer within 10 days of the seller’s receipt of the buyer’s notice and (2) completes the repairs in a good and workmanlike manner that satisfies the standards selected in the POWTS contingency, and, before closing, gives the buyer a written report detailing the work done.

The offer becomes null and void, as stated on lines 67-70, if the buyer delivers the appropriate notice and copy of the report(s) to the seller on time, and the seller does not have a right to cure. The offer also becomes null and void if the buyer delivers the notice and copy of the report — on time — to a seller with the right to cure, who either delivers written notice to the buyer stating that the seller will not cure, or fails to deliver a written notice of the seller’s election to cure within the allotted 10 days.

POWTS

In the related pointers on lines 84-89, the parties are informed that a POWTS failing to meet the stated standards may be cured only by repairing the current POWTS or by replacing the current POWTS with the same type of system that meets the standards stated in the POWTS Inspection Contingency, unless otherwise agreed in writing. A modification to an existing POWTS, including the replacement, alteration or addition of material or components, must conform to current code as stated in Wis. Admin. Code chapter SPS 383. Modifications to one component may necessitate the updating of other components in order to remain compliant. See docs.legis.wisconsin.gov/code/admin_code/sps/safety_and_buildings_and_environment/380_387/383/I/03.

Utility service

Lines 90-91 make the seller responsible for providing electricity, water service and/or any other utility service that is necessary for any inspection or testing, unless otherwise designated in the Additional Provisions on lines 49-57 or in another part of the offer.

POWTS inspectorsBecause POWTS may have several different components, different

professionals may be needed for a comprehensive evaluation of some POWTS. The POWTS Inspection Contingency includes a somewhat lengthy list of different types of contractors who may perform a POWTS inspection. The following discussion overviews various professionals who may appropriately provide a competent POWTS inspection. Most of the following credentials are issued by the DSPS.

Certified POWTS inspector : Wis. Admin. Code § SPS 305.66 indicates that a POWTS inspector may inspect POWTS to enforce Wis. Admin. Code chapters SPS 381-387 (the Plumbing Code, including chapter SPS 383 regulating POWTS). A commercial plumbing inspector also may inspect POWTS to enforce the SPS 381-387 Plumbing Code. See dsps.wi.gov/Licenses-Permits/POWTSInspector for additional information.

Licensed master plumber — restricted service: Wis. Admin. Code § SPS 305.66 governs restricted-service master plumbers. Pursuant to Wis. Stat. § 145.14, the plumbing activities that may be undertaken by a person who holds a credential as a licensed Master Plumber-Restricted Service, licensed Journeyman Plumber-Restricted Service or a registered Plumbing Learner-Restricted Service shall be limited, but includes the authorization to install or modify POWTS and components

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P8under Wis. Admin. Code chapter SPS 383. See dsps.wi.gov/Licenses-Permits/MasterPlumberRestrictedService for more information.

Licensed master plumber: Wis. Admin. Code § SPS 305.91 governs restricted-service master plumbers. An unrestricted master plumber may install or supervise the installation of all plumbing including POWTS, building sewers, building water mains and water services, and may submit plumbing designs for review. See dsps.wi.gov/Licenses-Permits/MasterPlumber for details.

Certified soil tester: Pursuant to Wis. Stat. § 145.045, no person may conduct soil evaluations relative to the discharge or disposal of liquid domestic wastes into the soil unless the person holds a credential issued by the DSPS as a certified Soil Tester. For more information see dsps.wi.gov/Licenses-Permits/SoilTester.

Designer of engineering systems (licensed plumbing designer): A designer of engineering systems is an individual engaged in the preparation of plans and specifications, consultation, investigation and evaluation in connection with the preparation of plans and specifications in the fields or subfield of heating, ventilation and air conditioning; plumbing systems; private sewage systems; electrical systems; and fire protection systems. Designers generally may not perform design services in those fields or subfields for which they do not hold a permit. See dsps.wi.gov/Licenses-Permits/DesignerofEngineeringSystems/DESlicense.

Registered professional engineer: A professional engineer is a person who by reason of his or her knowledge of mathematics, the physical sciences and the principles of engineering, acquired by professional education and practical experience, is qualified to engage in the practice of professional engineering. See dsps.wi.gov/Licenses-Permits/Engineer for additional information.

Registered sanitarian: These professionals are educated and experienced in the field of environmental health. See dsps.wi.gov/Default.aspx?Page=fb3f6922-f6b8-4241-bdf9-56563a1bede8 for more information.

The status of a particular DSPS credential holder may be checked online at app.wi.gov/licensesearch.

Certified septage operators: A Certified Septage Operator is an individual who has been issued a certificate by the DNR to do septage servicing as described in Wis. Admin. Code chapter NR 114. See the information in the various tables at dnr.wi.gov/regulations/opcert/septage.html for a complete rundown of the various levels.

Credential information on all licenses, permits and registrations offered by the State of Wisconsin can be found at worknet.wisconsin.gov/worknet/Occlist.aspx?menuselection=js&listtype=license and http://ww2.wisconsin.gov/state/license/app?COMMAND=gov.wi.state.cpp.license.command.ShowLicenseList&actionFrom=showAll.

Wisconsin Onsite Wastewater Recycling Association (WOWRA)

The Wisconsin Onsite Wastewater Recycling Association (WOWRA) has developed a comprehensive Evaluator Certification Training Course designed to make available knowledgeable professionals who can provide uniform, quality evaluations of existing POWTS. WOWRA's goal is to raise the standard for these types of evaluations so that consumers get an accurate assessment of the status of their POWTS based upon uniform criteria. WOWRA conducts a two-day training session twice each year using standardized protocol and forms (see www.wowra.

com/powtsevalserach). Adherence to a code of ethics is required for the certification. WOWRA-certified POWTS evaluators include various related professions such as POWTS installers, soil testers and septic system designers. For more information, visit www.wowra.com. A list of WOWRA-certified POWTS evaluators is available at www.wowra.com/powtsevalserach.

POWTS (lines 103-105)Since POWTS is not a familiar term to consumers, the WRA Addendum

B includes a short definitional section explaining that Private Onsite Wastewater Treatment Systems or POWTS is the terminology used by the DSPS and sanitary system professionals, as well as in applicable code, Wis. Admin. Code Chapter SPS 383, when referring to a private sanitary or septic system.

Local code compliance (lines 106-107)Because POWTS inspections at the time of real estate transactions are

not mandated by the state, some counties, most notably in the Northeast part of the state, have local ordinances that make these inspections mandatory. Some may specify minimum criteria of what constitutes an acceptable inspection. Because some municipalities have their own rules and ordinances regulating POWTS and wells, it is best that the parties check county and municipal well and septic ordinances to see if there might be additional requirements that may apply to the property. For instance, in a few counties, POWTS inspections are required when a property is sold and the inspector is required to submit a copy of his or her report to the municipality. This is being done in an effort to build an inventory of POWTS records.

Sanitary district (lines 108-110)The Sanitary District provision informs the buyer that the property

may be located in a sanitary district that may impose taxes, special assessments or other charges for sewer planning and construction, user fees, or other costs upon the owner of the property. The buyer is encouraged to contact the sanitary district officials to inquire about such potential charges.

Addendum A to the Offer to Purchase

The revisions to the Addendum A are triggered primarily by the desire to add a radon testing contingency and to include provisions and a contingency regarding flood insurance. The suggestions and recommendations of the WRA Forms Committee were solicited and their feedback is reflected in the 2014 version of the addendum. The Addendum A is suitable for use with any offers. The following discussion, however, will use the WB-11 residential offer as a point of reference. Most offers have the same or similar provisions so the following discussions also apply to the use of the addendum with other types of offers.

A sample copy of the revised Addendum A appears on pages 20-21 of this Update. This draft is substantially the same as the final version that is available for purchase from the WRA and on WRA zipForm®.

Most of the fill-in-the-blanks and [STRIKE ONE] provisions in Addendum A have a default provision to furnish a selection in the case of agent oversight. That way there is no confusion trying to figure out what the provision means with an uncompleted blank line. A selection has been made as a backup measure. It is always better, of course, if


the parties make their own decisions and write in their choices.

CAUTION regarding testing and inspection contingencies (lines 3-5)

One of the primary purposes for using Addendum A is to create a testing contingency. Multiple provisions in the WB-11 Residential Offer to Purchase point to separate testing contingencies specifically drafted by the parties, including the information on lines 395-409 of the WB-11. There it is emphasized that a testing contingency should be separately stated and should specifically state who will conduct the test, when and where it will be conducted, what standards will trigger the buyer's ability to either terminate the offer, whether the seller will have the right to cure, as well as other relevant terms and conditions for the specific test.

The testing services offered by home inspectors and other contractors are the square pegs that do not fit into the round holes of an inspection contingency. The offering of these services raises questions regarding qualifications, sampling without seller permission, proper testing methodologies, expertise necessary to interpret and evaluate test results, and specificity regarding what the seller may do to rectify the situation that will be acceptable to the buyer. A testing contingency is needed.

The WB-11 Inspection Contingency on lines 410-433 explicitly authorizes only inspections, not testing. Seller authorization for inspections in no way gives any permission or authorization for any testing to occur on the seller’s property. The fact that the home inspection contingency allows a registered Wisconsin home inspector to conduct a home inspection does not signal that the seller has consented to a radon test, a test for LBP, soil borings or any other manner of testing. When an offer does not authorize testing, the home inspector should not, for example, leave a radon canister or conduct other testing at the property. Prudent brokers should remind buyers that the inspection contingency does not grant the buyer, or his home inspector or other contractors,

authority to test for radon or other substances or conditions. If any testing will be conducted, a separate provision needs to be drafted and added to the contract via the additional provision blank lines or in an addendum.

The contract language gives permission for the home inspector and follow-up inspectors to be on the property. Anyone who exceeds that authorization is technically a trespasser because they are on the seller’s property without the seller’s permission. The listing broker and/or the seller may contact the DSPS and file a complaint regarding the unauthorized activity of home inspectors or other credential holders who exceed their authority. It can be argued that unauthorized testing constitutes trespass as does a cooperating agent's entry into the home to remove a radon test canister without permission.

The REALTOR® Code of Ethics also specifically addresses access to property by REALTORS® or inspectors in both Articles 1 and 3 and the corresponding Standards of Practice. Standard of Practice 1-16 provides that, “REALTORS® shall not access or use, or permit or enable others to access or use, listed or managed property on terms or conditions other than those authorized by the owner or seller. (Adopted 1/12).” Similarly Standard of Practice 3-9 indicates that, “REALTORS® shall not provide access to listed property on terms other than those established by the owner or the listing broker. (Adopted 1/10).” Thus agents who allow inspectors, testers or other third parties to have access to the property without seller permission violate the Code of Ethics as well and may be the subject of an ethics complaint at the local association.

While there is a generic testing contingency on lines 13-20 of

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It is best if the buyer consults with the home inspector before drafting the offer to see if specific provisions including any testing contingencies need to be included in the offer. The buyer need not utilize every testing contingency included in the offer but should testing be needed, it is far safer to have the particulars stated, thus lessening the chance of confusion, delays and debate, or possible litigation. Review “Inspections and Infrared and Allergens, Oh My!” in the June 2014 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun14/InspectionTips for additional pointers.


Authorization for testing requires a separate testing contingency because the Inspection Contingency does not provide the buyer the right to conduct testing of the seller’s property, for example, for asbestos or radon. A testing contingency is not created by listing such chemicals on the blank lines in the Inspection Contingency — this only serves to create confusion, not a successful testing provision.


REALTORS® always should carefully review addenda provisions with the parties so they can make selections and choices that reflect their intent of the parties. The presence of default measures does not mean that licensees need not discuss the various options presented in the addenda provisions with the parties and complete the form as the parties direct.

i MORE INFORMATION

More information about inspections, testing and access to property is available in the June 2013 and June 2014 Wisconsin Real Estate Magazines online at www.wra.org/WREM/Jun13/Inspection and www.wra.org/WREM/June2014.

WRA LegalTalks video series on home inspections: www.wra.org/Legal_Talks/InspectionContingency.


If the buyer wants any testing — the taking of samples for lab analysis — a separate testing contingency must be included in the offer. Test results and home inspection reports are not the same thing.


Addendum A, and a new radon testing contingency on lines 6-12, the caution on lines 3-5 reminds REALTORS® and parties that there are specific testing contingencies available in other forms for certain substances and situations. These contingencies are tailor-made for the particular testing authorized and will inevitably produce a better result than using the generic testing contingency on lines 13-20 to create an appropriate contingency. The listed contingency addenda have been written, in some cases by state or federal agencies, to include the specialized procedures, methodologies and standards created for that particular variety of investigation. It almost always will be much better to use the specialized contingency addendum instead of creating a provision using the generic testing contingency.

Private wells, well water and septic systems

The WRA Addendum B to the Offer to Purchase contains a well water testing contingency, a well system inspection contingency and a private sanitary system (POWTS) inspection contingency, which include the current standards and recommendations from the DNR and the DSPS relative to health and safety concerns and the latest industry standards. Using these provisions will be much more effective than trying to create similar provisions. It makes no sense to re-invent the wheel. See pages 1-8 of this Update for a review of WRA Addendum B.

Lead-based paint

Similarly there are available addenda for lead-based paint (LBP) designed to be used in residential transactions, like the WRA Addendum S. Federal lead-based paint (LBP) law dictates, as of December 6, 1996, that no offers on residential housing built prior to 1978 can be accepted without mandatory LBP disclosures. The WRA Addendum S was drafted to meet these regulatory mandates. It is far better to use a form that the licensee knows has the required content than to try to create a substitute LBP disclosure and LBP inspection and testing contingency. For more information about LBP disclosure obligations and Addendum S, see the May 2010 Legal Update, “Lead-Based Paint in Target Housing,” at www.wra.org/LU1005.

Wetlands

A specific addendum has been created for situations where wetlands are suspected. Addendum W — Wetlands was drafted by the WRA in conjunction with the DNR and the Wisconsin Wetlands Association. The addendum provides a summary of the development obstacles involved with wetlands, asks the seller to answer three questions about what the seller has observed on the property as far as wetlands and directs the parties to the DNR Wetlands resources on the DNR website. These include the wetlands locator maps, video information (“Waking Up to Wetlands”), information for contacting appropriate professional assistance and what the DNR refers to as the “Real Estate Addendum,” that is, Addendum W — Wetlands. See pages 21-23 of the November 2008 Legal Update, “WB-3 Vacant Land Listing and Seller Disclosure Report — 2008 Revisions” at www.wra.org/LU0811, and the DNR website at dnr.wi.gov/topic/wetlands for further discussion and information.

Lead and arsenic from pesticides

There also is a Lead/Arsenic Pesticide Addendum for use by property owners selling properties that were once part of pre-1960 orchard properties. In the past, certain pesticides used in fruit orchards contained lead and arsenic. Although soils naturally contain traces of these compounds, the application of pesticides for agricultural purposes has resulted in some soils containing contamination that could result in health risks. Soil sampling is needed to detect whether hazardous amounts of these compounds remain. For more information about orchards and contamination issues, see the Department of Agriculture, Trade and Consumer Protection resources at datcp.wi.gov/Environment/Water_Quality/Lead_Arsenate/Factsheets_and_Info/index.aspx and datcp.wi.gov/Environment/Water_Quality/Lead_Arsenate/Tech_Information/index.aspx .

All of these addenda are available from the WRA and/or on zipForm®.

Radon testing contingency (lines 6-12)This Radon Testing Contingency is new to the WRA Addendum A. This contingency requires that a qualified third party perform a radon test in accordance with the applicable Wisconsin Department of Health Services (DHS) and federal Environmental Protection Agency (EPA) rules for conducting radon testing. In terms of who should be responsible for conducting the radon testing as well as performing any mitigation, the DHS has lists of certified radon measurement and mitigation contractors found at www.dhs.wisconsin.gov/radiation/radon/index.htm. If a credentialed professional or a contractor conducts the testing, that will help ensure that the applicable protocols and standards will be familiar to this person and properly employed during the testing procedure. Note that many of the listed radon measurement contractors are home inspectors.

The parties may choose who will pay for the testing using a [STRIKE ONE] feature with the default indicating that the buyer will pay for the test. The offer is contingent upon the written testing results indicating a radon level less than 4 picoCuries per liter (pCi/L). If that is not the

case, the buyer can deliver a copy of the written test results to the seller by the deadline stated on line 9. This provision does not specifically call for a written notice to be delivered along with the copy of the written test results report because the fact that the results show a level of 4 pCi/L or higher will be self-evident, but a written notice may be used along with the test results, if desired. The parties use the [STRIKE ONE] feature on line 11 to indicate whether the seller has the right to cure (the default is that the seller does have the right to cure) and the provision then points the parties to the Right to Cure provisions on lines 62-71. These provisions explain the contingency satisfaction/right to cure process on the top of the second page.

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“In the past, certain pesticides used in fruit

orchards contained lead and arsenic.

Although soils naturally contain traces of these

compounds ... soil sampling is needed to detect whether

hazardous amounts of these compounds

remain.”



Under this section, the right to cure process described in lines 65-71 closely resembles the one used in the inspection contingencies in the various offers to purchase approved by the Real Estate Examining Board (REEB). Lines 62-65 relate only to the testing contingency and not the radon testing contingency because in the radon testing contingency the buyer obtains the reports and there is no deadline for the receipt of the radon test results report, only the deadline for providing the test results to the seller if they are 4 pCi/L or higher.

If the seller has the right to cure, the seller has 10 days after receiving the buyer’s notice (the radon test results) to give the buyer notice of the seller’s election to cure the defects in a good and workmanlike manner that satisfies the standards in the contingency and provide the buyer with a report of the work done prior to closing. In other words, if the seller elects to cure the seller is saying the radon level will be mitigated to a level below 4 pCi/L before closing.

Like in the WB-11 Inspection Contingency, the seller can make other choices within those 10 days. The seller may allow the offer to become null and void or propose some other solution by proposing an amendment back to the buyer. The 10 days gives the seller time to investigate the radon level and potential mediation methods, obtain estimates for having the work done and ultimately decide whether the seller wants to undertake the requested work. The fate of the offer in the seller’s hands.

The parties may want to consider the possible timelines involved and give enough time so the seller can undertake whatever measures are needed to lower the radon level. Under the default timeline in the Radon Testing Contingency, the copy of the test results would be delivered no later than 21 days prior to closing. Line 57 establishes the default number of days at 21 and line 10 creates the “prior to closing” parameter.

The seller then has 10 days after delivery of the radon testing results to decide whether to give the buyer notice electing to mitigate the radon, which leaves only 11 days to complete the needed measures. The parties have the power to fill in another number of days and use the [STRIKE ONE] feature to choose either “after acceptance” or “prior to closing.” It may be wise to allow more time than the 21 days in the Radon Testing Contingency.

Testing contingency (lines 13-20)The provision on lines 9-23 of the Addendum A is a generic testing

contingency that can be completed to apply to tests for various substances or compounds, such as asbestos or other chemicals that the buyer would like to have tested. At the beginning of line 16, there is a link to the EPA resources regarding asbestos. Asbestos generally cannot be definitively identified without a test, but potential asbestos need not be tested in all circumstances if it is not going to be disturbed. See www2.epa.gov/asbestos/protect-your-family.

The blank on line 16 of the Addendum A testing contingency was designed for specific tests to be named. Another test typically named here is mold. Consider, however, that the WDH indicates, “While testing can be useful in some cases such as for conducting health-related research or investigating fungal species-specific health effects, deciding what to do about mold should be based primarily on visual assessment, knowledge of the building structure, and the history of water damage in the building.” See Mold: Information for Wisconsin Residents at www.dhs.wisconsin.gov/eh/mold for valuable information and resources. Also see the June 2002 Legal Update, “Managing Mold Issues in a Real Estate Transaction” at www.wra.org/LU0206 if a party is considering testing for mold. A buyer with certain allergies may also be interested in testing. Similarly see the WDH information concerning allergens at www.dhs.wisconsin.gov/eh/Air/fs/Allergens.htm.

Note that this contingency requires that either the buyer obtain or the seller provide a written report from a qualified independent expert documenting the test results. If a credentialed professional is used for the testing, that will help ensure that the required “applicable government or industry protocols and standards” will be familiar to this person and properly employed during the testing procedure. There is a blank on line 19 where the parties may specify any protocols, testing contractors, labs, standards/levels constituting a defect, financial limits, acceptable repair methodologies, or other parameters they want to have applied to the testing.

The report must be obtained or provided by the deadline inserted on lines 16-17. If this is not completed, the default is 21 days prior to closing. The testing will be at the buyer’s expense unless the [STRIKE ONE] feature is used to indicate that the seller will pay. Often the buyer will strike “Seller’s” because the buyer wants to select the contractor and pay for the testing — in other words, be able to control the process to make sure that the testing is conducted objectively.

The parties indicate on line 20 whether the seller has the right to cure using the [STRIKE ONE] feature, with the default being that the seller does have the right to cure. The parties are then directed to the Contingency Satisfaction/Right to Cure provisions on the second page.

Contingency satisfaction/right to cure provision (lines 62-71)

The Testing Contingency is deemed satisfied unless the buyer delivers a copy of the written test result report and written notice to the seller, within five days of the buyer’s actual receipt of the test results or the deadline on line 16, stating why the report does not satisfy the standard stated in the contingency.

Like in the WB-11 Inspection Contingency, a seller who has the right to cure has 10 days from the buyer’s delivery of the written notice and report to choose whether to cure the listed objections, let the offer

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i MORE INFORMATION

Radon Information for Wisconsin: www.dhs.wisconsin.gov/radiation/radon/index.htm.

Testing for Radon in Real Estate Transactions: www.dhs.wisconsin.gov/radiation/radon/realestate.htm.

The EPA’s “Home Buyer’s and Seller’s Guide to Radon” (September 2013): www.epa.gov/radon/pubs/hmbyguid.html#3.b.

Also see “Let Them Inspect, Not Test: When radon seeps into the inspection contingency” in the June 2013 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun13/Inspection.


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become null and void, or propose an alternate solution. Giving the seller notice puts the power to decide the fate of the offer in the seller’s hands. The seller could propose an amendment to the offer. The seller could deliver a written notice to the buyer stating the seller’s election to cure the defects identified in the buyer’s notice in a good and workmanlike manner. The seller could also deliver a written notice to the buyer advising the buyer that the seller will not cure, or the seller could let the remaining 10 days lapse. These last two actions (notice to not cure and letting the time run out) would have the result of making the offer null and void.

In addition, lines 70-71 indicate that the offer is null and void if the buyer delivers notice to the seller, within five days of the delivery deadline from line 16, stating that the seller failed to deliver the testing report by the stated deadline (if it was the seller who was responsible to provide the report). This once again emphasizes the need to choose time frames carefully and allow adequate time to conduct the testing, produce and deliver the written report, allow the right to cure mechanisms to function, and give the seller enough time to investigate and implement any appropriate corrective measures to cure the identified problem.

Closing (lines 21-22)The Closing provision on lines 116-117 of the WB-11 provides that

the closing place will be selected by the seller. During the last offer revision process it became apparent that there is no universal method for choosing the closing location. In the Milwaukee area, many closings occur at the place selected by the lender, while in the Madison market, many closings occur at the title company. Transactions in vacation areas for second homes or recreational properties close at the best place available, which may include an attorney’s office or the broker’s office.

Those who are unhappy with the provision putting the closing selection into the hands of the seller may provide otherwise on lines 21-22 of Addendum A. Addendum A allows the parties to use the [STRIKE AND COMPLETE AND APPLICABLE] features and choose to have the closing at (1) the place selected by the buyer’s lender, (2) the place selected by the buyer or (3) another place written into the blank on line 22 of Addendum A.

Association fee (line 23)In many transactions, the property may be located in an area where

there is a community, neighborhood, condominium or subdivision association. The property owner often will be subject to recorded restrictive covenants or bylaws for this association or organization, and must pay fees to the community association on a monthly, semi-annual or other basis. Line 23 of Addendum A allows the parties to address any association fee requirement associated with ownership of the property and specify the amount and frequency of any fees. This will help prevent the buyer from being surprised at closing or later on when the fee is due.

Home warranty plan (lines 24-28)As stated on the Wisconsin Commissioner of Insurance website (oci.

wi.gov/pub_list/pi-221.htm), a home warranty is “An insurance policy

that covers the mechanical breakdown of individual pieces of a home. Coverage extends over a specific time period and does not cover the home’s structure. Typically, the warranty will cover the electrical and plumbing systems, the furnace and range, roof, and other items, for one year from the date of closing. Home warranties have exclusions and limitations that can greatly restrict the product’s usefulness.”

The typical home warranty is a one-year service contract that protects a homeowner against the cost of unexpected repairs or replacement of major systems and appliances that break down due to normal usage. A home warranty entails a service agreement for the property’s vital mechanical systems and appliances, typically including the heating system, water heater, plumbing, electrical, garage door opener, washer, dryer, oven, refrigerator, garbage disposal, central air conditioning or evaporative cooler, and even the doorbell.

The WRA Addendum A contains a home warranty provision at lines 24-28. The parties fill in the maximum cost of the home warranty on line 26 and indicate whether the cost will be paid by the seller or the buyer with the seller being the default if no selection is made in the [STRIKE ONE] feature. The parties also indicate whether the listing broker or the cooperative broker will provide the warranty plan again using a [STRIKE ONE] feature that defaults to the listing broker should no choice be indicated. The buyer is advised that a home inspection may detect conditions not covered by the warranty plan.

The buyer would need to ask the seller to provide the home warranty in the offer to purchase because the offer determines the agreement between the buyer and seller. The listing contract or the MLS sheet only expresses what the seller is willing to include in the offer — the information there is not automatically included in the sale.

The Addendum A provision does not reference any possible fees that the listing or cooperating agent might be paid by home warranty companies. This is because the interpretative rules issued by the U.S. Department of Housing and Urban Development (HUD) regarding marketing and administrative service agreements entered into by real estate brokers with home warranty companies indicate that such fees may violate Section 8 of the Real Estate Settlement Procedures Act (RESPA). The rule indicates marketing performed by a real estate broker or agent to sell a home warranty to particular home buyers or sellers constitutes a referral to a settlement service provider, and a payment for such marketing services would be an illegal kickback.

See the interpretative rule issued by the HUD in June 2010 regarding “Real Estate Settlement Procedures Act (RESPA): Home Warranty Companies’ Payments to Real Estate Brokers and Agents,” at www.hud.gov/offices/hsg/ramh/res/homewar625.pdf and the discussion on pages 1-2 of the June 2011 Legal Update, “Broker Risk Trends,” at www.wra.org/LU1106.

Flood insurance premiums contingency (lines 29-36)

Flood insurance is required for federally backed mortgage loans for structures located within a floodplain (100-year or regional floodplain), also referred to as the Special Flood Hazard Area (SFHA). Flood insurance can be purchased by any property owner or renter in a community participating in the National Flood Insurance Program (NFIP), including over 500 communities in Wisconsin. In 2012, the Biggert-Waters Flood Insurance Reform Act made significant reforms to make the NFIP self-sustainable and extended the program for five years.


Use lines 21-22 of Addendum A to modify the place of closing provision if a location selected by the seller is not appropriate for local practice or the parties’ transaction.


P13

Biggert-Waters removed the flood insurance premium subsidies that had been paid by the Federal Emergency Management Agency (FEMA) for many years, and raised the rates for certain classes of properties to reflect the true actuarial flood risk. As a result, some property owners in SFHAs experienced staggering premium increases triggered when flood maps were revised, a policy lapsed or the property was sold.

The Homeowner Flood Insurance Affordability Act was enacted in 2014 to amend Biggert-Waters. The amendments restore the original intent to gradually phase out premium subsidies. There will be no more premium increases triggered by a property sale or a remapping; any increases will occur when the flood insurance policy is renewed. Buyers should be able to assume the seller's current premium rate, which transfers with the property. When the policy is renewed, any premium increase is limited to a maximum of 18 percent annually for primary residences and 25 percent for second homes and commercial properties. The 2014 Act restored grandfathering so property owners who build and maintain to code in one flood zone aren’t rated in higher-cost zones simply because the FEMA maps change.

Given the volatile nature of this legislation, changing and updated flood maps and the fact that large premium increases are still possible, a contingency has been included in the WRA Addendum A whereby the buyer can investigate and research the impact that flood insurance and flood insurance premiums may have on the buyer if he purchases a property deemed to be in the floodplain. It may be advisable for a buyer to conduct this investigation before making an offer, but this contingency provides an option when this is not feasible due to timing or other circumstances.

In the Flood Insurance Premiums Contingency on lines 29-36 of the WRA Addendum A, the buyer has the opportunity to secure insurance company documentation indicating what flood insurance premiums the buyer will face if the buyer purchases the property. The buyer can seek the annual flood insurance premium for the first year of ownership as well as the projected premiums going forward and select the benchmark the buyer is concerned with using the [STRIKE AND COMPLETE AS APPLICABLE] feature on lines 30-33, choosing from “(that Buyer's annual premium for flood insurance for Buyer's initial year of ownership after closing shall not exceed $____________)(that Buyer's annual premium will not exceed $__________ after __________ years)(that the actuarial annual premium cost is computed to be no more than $____________).” Actuarial premiums are based upon flood elevation maps without any subsidies taken into account. This is the maximum, arguably “real” premium cost that theoretically will be reached at some point in the future.

This contingency is satisfied unless the buyer delivers written notice indicating that the contingency has not been satisfied and documentation of the flood insurance premiums available to buyer to the seller by the deadline set at lines 33-34 (the default is 21 days prior to closing). At that point the buyer may wish to negotiate an amendment with the seller if there are measures that will alleviate the flood insurance premium situation, for example, a price reduction, a requirement that the seller secure an elevation certificate or contribute to the cost of elevating the structure. The buyer can also provide a written notice of termination to the seller that will terminate the offer.

Note that the beginning of the contingency at line 29 also refers to the Flood Insurance information on lines 118-123, which includes a link to the National Flood Insurance Program (NFIP) (www.floodsmart.gov/floodsmart/).

Map of the property (lines 37-50)This provision on lines 37-50 of Addendum A may sound familiar

because it is similar to the map contingency provision in the WB-13 Vacant Land Offer but also includes a few components from the WB-15 Commercial Offer to Purchase map contingency. If a significant encroachment, material inconsistency with prior representations, or failure to meet other stated map requirements is revealed, the buyer may deliver a copy of the map and notice outlining the map’s shortcomings to the seller, and the offer will be null and void. That is also the result if the seller fails to provide the map by the deadline on lines 39-40 and the buyer delivers notice stating that fact (if the seller was responsible to provide the map).

The Map of the Property Contingency allows the buyer to select desired map components. The contingency starts with an important

REALTOR® Practice Tips

REALTORS® may be reluctant to discuss flood insurance premiums for fear it will discourage buyers, but it is far better for the buyers to have a reasonable degree of certainty as to the premiums they may face at the outset rather than not discussing the issue and having them discover after closing that they cannot afford to live there and then seek redress against the broker. Send the buyer to the insurance agent and allow the insurance agent to assist the buyer.

It is wise for licensees working with properties in floodplains to become familiar with the seller’s flood insurance premiums, the local floodplain maps, whether the property is within a community that participates in the community NFIP rating system (and thus affords discounts), and contacts for insurance agents providing flood insurance. FEMA has updated the flood insurance manual that insurance companies use to write flood insurance policies. The comprehensive manual answers just about any question a REALTOR® may have regarding flood insurance. See www.fema.gov/media-library/assets/documents/97901. This is not to say that licensees should advise buyers regarding flood insurance premiums but rather that licensees should have basic background information to enable them to make competent suggestions and send buyers to the right resources and experts.

i MORE INFORMATION

NAR’s Homeowner Flood Insurance Affordability Act Frequently Asked Questions: www.realtor.org/topics/national-flood-insurance-program-nfip/homeowner-flood-insurance-affordability-act#implements.

“Flood Insurance Premiums: Proceed with Caution,” in the May 2014 Wisconsin Real Estate Magazine: www.wra.org/WREM/May14/Flood.

“Flood Insurance Rate Adjustments: Helping property owners keep premiums in check,” in the July 2013 Wisconsin Real Estate Magazine at www.wra.org/WREM/July13/FloodInsurance.


P14choice: whether the buyer will obtain or whether the seller will provide the map for the transaction. If the buyer obtains the map, the buyer will have more control over timing and will be able to keep tabs on the surveyor’s progress and ensure the desired detail is included. This may be particularly true if the buyer is paying for the survey map. If the parties do not utilize the [STRIKE ONE] features and choose who will secure the map and who will pay, the default provisions indicate it will be the seller. Some sellers may prefer that because it is the seller's property and the seller may wish to minimize outside intrusions or be available to point out corner monuments or other relevant factors.

The other crucial decision made is the selection on line 38 of whether the map will be a survey map, an ALTA/ACSM Land Title Survey, or another type of map named on the blank line within the [STRIKE AND COMPLETE AS APPLICABLE] feature. Standard title policies exclude coverage for easements not shown in the public records, encroachments and boundary disputes, but these exclusions may be removed if the buyer provides the title insurance company with a survey map conforming to certain specifications. Often the ALTA/ACSM standards may be required, particularly if it is a commercial or business transaction.

The contingency also specifies that the map must be prepared by a Wisconsin licensed land surveyor and will be dated after the seller’s acceptance of the offer. This generally will be necessary if the lender and/or title company plans to rely on the map, but may be lined out if the buyer is only interested in an informational copy of a prior map the seller already has. There also is a blank on line 39 for setting the deadline for provision of the survey map, stated in terms of a number of days after acceptance. Survey maps can take a bit of time to complete so it may be wise to be generous when establishing this time frame.

There are blanks in the map contingency for insertion of minimum or maximum acreage. These are important if the precise acreage is uncertain or a specific acreage is needed. If the survey map shows the acreage to be over the maximum or under the minimum, the buyer will have the opportunity to provide written notice and end the transaction. The contingency also states that the map must include the legal description of the property, the property boundaries and dimensions, visible encroachments, the location of improvements and any other features written in on the blank line. The buyer may ask for staking of all property corners, identification of streets and easements, and other features. The buyer is invited to customize the map contingency by striking unwanted items and writing in additional information that the buyer wants.

See “Vacant Land Mapping; Tailoring the survey to benefit the buyer” in the September 2013 Wisconsin Real Estate Magazine at www.wra.org/WREM/Sept13/LandMapping.

Federal VA mortgage provision (lines 51-53)Lines 51-53 contain an optional provision that allows the parties to

use the [STRIKE ONE] feature to indicate whether the seller or the buyer

will pay the funding fee in a federal Veterans Administration loan, up to a stated percentage cap.

Seller’s contribution (lines 54-56)This optional provision provides for the seller to give the buyer a loan

cost credit at closing, in the amount of a stated dollar amount or a percentage of the purchase price, to assist the buyer in paying loan closing costs such as points, prepayables and escrows. The parties are given the opportunity to further define what is meant by “closing costs” by specifying expenses and costs that will be included or will

not be covered by the seller’s contribution, using the [STRIKE AND COMPLETE AS APPLICABLE] feature.

Whenever a seller is crediting money toward the buyer's closing or loan costs, it is best to describe precisely what is or isn't included in the credit to avoid disputes at closing. An inclusive definition lists permissible closing costs; an exclusive definition includes all fees and costs paid at closing except for those listed. It is also wise to check with the lender in advance to make sure the provision will not violate the lender's underwriting standards.

See “Best of the Legal Hotline: Smooth Closings — Overcoming Common Closing Issues” in the July 2010 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jul10/SmoothClosings; the American Land Title Association discussion at www.homeclosing101.org/costs.cfm; and “Best of the Legal Hotline: Closing Costs,” in the September 2004 Wisconsin Real Estate Magazine at www.wra.org/WREM/Sept04/Hotline.

Number of days (line 57)The WRA Addendum A contains default

provisions in most situations where the parties are to make a choice. Line 57 indicates that for any line where a number of days is needed, the default will be 21 days. This avoids the awkward conversations when there was no time frame stated, but if 21 days doesn’t work for a given provision, the licensees drafting the addendum would be well-served to make sure the appropriate deadline is inserted.

Reading/understanding (lines 58-59)Lines 58-59 of Addendum A provide that by initialing and dating the

addendum on line 60, each party is acknowledging they have received and carefully read both pages of Addendum A. This initialing does not mean that a party has accepted and agreed to every provision in Addendum A; it just means that they have received the document and read it. If a party does not agree with a provision in Addendum A, they may counter the provision to change or delete it.

Party initial lines (lines 60-61)Each party places his or her initials and the date on line 60.

Page 2 of Addendum A contains only preprinted language with no blank lines, [STRIKE ONE] features or boxes to check. Having already

“Standard title policies exclude coverage of

easements not shown in public records,

encroachments and boundary disputes,

but these exclusions may be removed if the buyer provides the title

insurance company with a survey map

conforming to certain specifications.”


P15reviewed the Contingency Satisfaction/Right to Cure provisions in the testing contingency discussion on pages 11-12 of this Update, the next section addresses Inspections, Tests and Opinions.

Inspections, tests and opinions (lines 72-78)The provision for Inspections, Test and Opinions on lines 72-78 of

Addendum A emphasizes the importance of buyers having all the tests and inspections done that are needed to satisfy them as to the condition of the property. Lines 72-73 warn: “It is recommended that Buyer have the Property and specific Property components of concern inspected by a Wisconsin registered home inspector and qualified independent inspectors/experts.”

The Inspections, Test and Opinions provision indicates that licensees may provide lists of competent contractors who can perform the inspections and tests that the buyer is interested in.

The provision indicates that the party selecting an inspector or tester is responsible to determine that person’s qualifications. It also disclaims broker liability if the broker is put in the position of ordering inspections or tests on behalf of a party. General legal principles dictate that one who contracts with an independent contractor is not liable to others for the negligence of the independent contractor. However, this principle

does not apply when the person hiring the independent contractor is negligent in selecting, instructing or supervising the contractor. The hiring party also may remain liable if that party retains supervision rights such that the independent contractor is not entirely free to do the work in his or her own way.

Buyer’s responsibility to ascertain condition of property (lines 79-85)

The disclaimer provision near the top of the second page of Addendum A on lines 79-85 puts the responsibility on the buyer to make sure that the property is acceptable to the buyer. The provision squarely puts the onus on the buyer to conduct all inspections, investigations, evaluations, tests and inquiries that the buyer finds necessary so that the buyer is satisfied. The provisions limit the buyer’s reliance on information provided by the seller or the agents in the transaction to the written information in the seller’s RECR, the offer and other information provided in writing. The buyer acknowledges that no representations about the property or the transaction have been made by the seller or the agents other than what has been expressed to the buyer in writing. The buyer also indicates that the buyer has not asked the seller and the agents have not volunteered to verify the accuracy of statements made by the seller or any third party unless stated in the offer.

Hazardous substances (lines 86-93)It seems that there is no end to the hazardous chemicals and

substances that potentially can create problems for property owners. The provisions on lines 86-93 of Addendum A list some of these possible concerns. The parties are warned that possible dangers and health hazards can be associated with asbestos, lead-based paint (LBP), lead in drinking water, unsafe levels of mold, radium, radon and other substances found in the soil, water or a structure. Water problems such as past flooding and water leaks may create a situation where excessive mold growth is present. Similar concerns may be present if synthetic stucco or wood composite siding has been used in the construction of the property structure.


If an agent finds that it is necessary that he or she hire contractors in a particular situation, the agent should have the parties give a specific written authorization to hire contractors and sign a release from liability for any damages caused by the contractor. Real estate agents should use a written engagement letter or work order memo if forced to retain a contractor for a party, specify that the party is responsible for the bill, and require the contractor to follow all safe work practices required by applicable law. See the model forms for this process on pages 12 and 13 of the May 2004 Legal Update, “Avoiding Liability When Signing and Making Referrals” at www.wra.org/LU0405.


When helping parties find professional inspectors and contractors (such as contractors for inspections and repairs), REALTORS® should carefully follow these steps:

• Prepare a list of professional inspectors and contractors. Do not recommend or endorse one particular contractor because a recommendation that does not present the party with options may result in liability. Instead, maintain a list with the names of at least three professionals in each field, and include any available references from past users. Any contractor included on a list should be certified in his or her field and hold all applicable credentials for the type of work being performed. Any company or agent affiliations with any listed contractors should be stated on the list or disclosed when the list is distributed. Put the list on a sheet of company letterhead, and include a disclaimer that the company’s agents cannot personally endorse these professionals.

• Avoid referral fees. It is wise to not ask for or accept a referral fee from any name on the referral list. Earning a fee just for referring business (except to other real estate brokers) violates RESPA if the contractor or company is a RESPA settlement service provider like a home inspector, appraiser or title company.

• Let inspectors and contractors do their jobs. Licensees may wish to avoid accompanying an inspector through the house, because this may imply that the licensee is supervising the inspector. Reinforce that the party hired the inspector and let the party deal directly with the inspector. Similarly, do not volunteer to inspect work performed on the house unless you wish to be considered the contractor’s supervisor.


Keeping everything in writing is the best way to avoid liability!


P16

Underground storage tanks and basement fuel oil tanks (lines 94-101)

This section has been updated to reflect that storage tanks are now subject to the Department of Agriculture, Trade and Consumer Protection (DATCP). The seller represents that the seller has no knowledge of any petroleum contamination on the property. With regard to an abandoned underground storage tank (UST) or basement or aboveground storage tank (AST), the seller agrees to deliver to the buyer written confirmation that the tank and related components have been closed in full conformance with current federal, state and local regulations. The seller agrees to provide the buyer with a copy of this paperwork at least five days before closing. The seller shall also provide documentation confirming that any in-use UST, AST or basement tank meets all current state and federal operating standards. This also must be provided to the buyer at least five days before closing. The buyer is reminded of the obligation to notify the DATCP of the change of ownership of an in-use UST within 15 business days of closing.

For more information, please see the Petroleum/Hazardous Materials Storage Tanks page at datcp.wi.gov/Consumer/Hazardous_Materials_Storage_Tanks.

Municipal report/code compliance (lines 102-105)

In the Municipal Report/Code Compliance provision, the seller agrees to obtain a written statement from the municipality where the property is located. This statement, if available, should verify that the real estate taxes have been paid and indicate any current and planned special assessments and any unpaid municipal charges applicable to the property. This statement shall be furnished to the buyer prior to closing. The seller must also provide a Certificate of Code Compliance, an Occupancy Permit or any other similar government documentation or permit required under local laws and ordinances at or before closing. All such documentation is furnished at the seller’s cost.

Zoning and building restrictions, comprehensive plans and non-conforming structures (lines 106-112)

The Zoning and Building Restrictions, Comprehensive Plans and Non-Conforming Property provision in the WRA Addendum A explains to the buyer that the municipality in which the property is located may have zoning and building restrictions that may affect the use of the property. The municipality may also have a comprehensive plan that may affect the future use or value of the property by influencing future development. The buyer is also advised that some properties may not conform to current zoning if municipal zoning regulations have changed since the structure was built. These non-conforming properties (grandfathered properties) may be subject to restrictions that limit the property owner’s ability to build, rebuild, remodel, replace or enlarge a structure on the property, or to change the nature of the owner’s use of the property. See the “REALTORS®’ Guide to Wisconsin’s New Nonconforming Structures Laws” in the June 2012 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun12/NonconformingLegislation for further discussion.

The buyer is encouraged to consult with local municipal zoning officials concerning applicable zoning, building and use restrictions and any comprehensive plan that may affect the property.

i MORE INFORMATION

To find out more about these problematic chemicals and substances, visit:

• Asbestos: the EPA Asbestos: Protect Your Family information at www2.epa.gov/asbestos/protect-your-family and the August 2009 Legal Update, “Environmental Concerns 2009” at www.wra.org/LU0908.

• LBP: the EPA resources regarding the Lead: Protect Your Family at www2.epa.gov/lead/protect-your-family and the May 2010 Legal Update, “Lead-Based Paint in Target Housing,” at www.wra.org/LU1005.

• Lead in Drinking Water: Legal Update 02.10, “Drinking Water and Wells,” at www.wra.org/LU0210, and the DNR “Lead in Drinking Water” pamphlet at dnr.wi.gov/files/pdf/pubs/dg/dg0015.pdf.

• Radium: Pages 11-12 of August 2009 Legal Update, “Environmental Concerns 2009” at www.wra.org/LU0908, and the DNR “Radium in Drinking Water” pamphlet at dnr.wi.gov/files/pdf/pubs/dg/dg0008.pdf.

• Radon: Radon Information for Wisconsin at www.dhs.wisconsin.gov/radiation/radon/index.htm and the EPA’s “Home Buyer’s and Seller’s Guide to Radon” (September 2013) at www.epa.gov/radon/pubs/hmbyguid.html#3.b.

• Mold: Information for Wisconsin residents at www.dhs.wisconsin.gov/eh/mold and Legal Update 02.06, “Managing Mold Issues in a Real Estate Transaction” at www.wra.org/LU0206.

• Synthetic Stucco: “Synthetic Stucco: Litigation alert” in the January 2004 REALTOR®Magazine at realtormag.realtor.org/law-and-ethics/law/article/2004/01/synthetic-stucco.

REALTOR® Practice Tips

The seller represents to the best of the seller’s knowledge that the hazardous substances and situations listed in the provision are not contained or present in the property. This is a fairly broad assertion for a seller to make. Many sellers may sign Addendum A or other addenda with similar provisions without ever knowing they are making such a sweeping representation — be sure the seller knows what they are signing or this could become a liability trap!

If any of these topics are a concern with the property, be sure that the seller is reminded to disclose the information — in a counter-offer to the offer, if need be. If the information has already been disclosed, the seller would be prudent to counter the offer and refer to the previously disclosed information as an exception to this broad seller representation. Buyers who do not wish to have their offers countered may consider lining out substances listed in this provision if the seller has already disclosed information regarding a listed subject.

EDITORIAL STAFFAuthorDebbi Conrad

ProductionLauren B. Hubbard

ASSOCIATION MANAgEMENT ChairmanDan Kruse

President & CEOMichael Theo, CAE

CONTACT INFORMATIONWisconsin REALTORS® Association4801 Forest Run Road, Suite 201Madison, WI 53704608-241-2047800-279-1972

LEgAL HOTLINEPh: 608-242-2296 Fax: 608-242-2279 Web: www.wra.org

The information contained herein is believed accurate as of December 15, 2014. The information is of a general nature and should not be considered by any member or subscriber as advice on a particular fact situation. Members should contact the WRA Legal Hotline with specific questions or for current developments.

Reproduction, use or inclusion of this material in other publications, products, services or websites is not permitted without prior written permission from the WRA or its Legal Department.

SUBSCRIBEThis Legal Update and other Updates beginning with 94.01 are available to members in the legal section of www.wra.org.

A Legal Update subscription is included with member dues. Members are alerted via email when a new issue is available online.

The non-member subscription rate for the Legal Update is $75. A subscription includes 12 monthly issues.

Contact the Wisconsin REALTORS® Association to subscribe:

4801 Forest Run Road, Madison, WI 53704-7337

608-241-2047800-279-1972www.wra.org

WRA Legal Update © 2014


P17

Insurance issues (lines 113-115)

In this shortened provision in the 2014 WRA Addendum A, the seller agrees to allow representatives of the buyer’s insurer to have access to the property for required insurance inspections, and both parties are advised to address questions regarding insurability and costs to their insurance agents.

Everyone must keep in mind that homeowner’s policies do not cover property or possessions in case of flooding, hence the separate flood insurance information section on lines 118-123 and the flood insurance premiums contingency on the first page of the addendum. Also see the Wisconsin Commissioner of Insurance flood insurance information at oci.wi.gov/employers/flood.htm. For homeowner’s insurance information, visit 165.189.60.209/consumer/autohome-pubshome.htm. For more information on insurance issues, also see Legal Update 03.04, “Addressing Transactional Property Insurance Issues in Wisconsin,” at www.wra.org/LU0304.

F loodp la ins/wet lands/shoreland (lines 116-117)

Lines 116-117 of the WRA Addendum A caution the buyer that floodplain maps and wetlands maps may be difficult to read and interpret. Accordingly, the buyer is encouraged to consult with appropriate government officials or other professionals for assistance in reading and interpreting these maps. See dnr.wi.gov/topic/wetlands/delineation.html with regard to wetland maps, dnr.wi.gov/topic/floodplains with regard to floodplain mapping and dnr.wi.gov/topic/ShorelandZoning pertaining to shorelands, as well as local zoning and planning officials for resources and assistance.

Federal VA and FHA mortgage (lines 124-125)

The parties are reminded that if the offer is contingent upon the buyer obtaining a FHA or Federal VA loan, then the parties will need to execute an FHA or Federal VA amendment that gives the buyer the right to terminate the offer if the appraisal is not equal to or greater than the purchase price.

Municipality discrepancy (lines 127-128)

These lines point out that while the property mailing address may be within one municipality, the property may be physically located in an

adjoining municipality. This may have multiple consequences. It may affect the applicable property taxes, the school district, the fire district and the zone that the property is in on the lender’s or the insurance carrier’s rating maps.


Don’t rely on the street address and take the extra step to confirm where the property is physically located.

Watch the Legal Update Video Online:

http://www.wra.org

http://www.wra.org

http://www.wra.org

http://www.youtube.com/watch?v=HGCDQmCielk


P18Page 1 of 2, WRA Addendum B

WISCONSIN REALTORS® ASSOCIATION 4801 Forest Run Road, Madison, WI 53704

This Addendum is made a part of the Offer to Purchase dated ________________________________________________, made by 1 ___________________________________________________________________________ (Buyer) with respect to the Property at 2 _________________________________________________________________________________________________________. 3 PARAGRAPHS PRECEDED BY A BOX ARE A PART OF THIS ADDENDUM IF MARKED, SUCH AS WITH AN "X." THEY ARE 4 NOT PART OF THIS ADDENDUM IF MARKED "N/A" OR ARE LEFT BLANK (except as stated on line 32 below). 5

WELL: There is is not an active well serving the Property. The well and all related equipment is is not located entirely 6 on the Property. The well is is not a private shared well. 7

WELL WATER TESTING CONTINGENCY: This Offer is contingent upon Buyer receiving, no later than __________ days (after 8 acceptance)(prior to closing) STRIKE ONE ( prior to closing if neither is stricken), a current written report from a state-certified or 9 other independent qualified lab that indicates that the well(s) is/are supplying water that is within the levels established by federal or 10 state laws or guidelines regulating public water systems for safe human consumption, relative to the following substances: bacteria 11 (total Coliform and E.coli), nitrate, arsenic and: ____________________________________________________________________ 12 ____________________. (Note: If desired by Buyer , insert other substances that may affect drinking 13 water safety such as pesticides, lead, nitrite, copper, radium, radon, etc., or that may affect water aesthetics, such as iron, sulfur 14 bacteria, etc. See the DNR Web site at http://dnr.wi.gov/topic/Wells/waterQuality.html for information). 15 (Buyer)(Seller) STRIKE ONE ( Seller if neither is stricken) shall be responsible for obtaining the report(s), including all costs. All 16 water samples used for testing shall be taken after binding acceptance of this Offer by a licensed plumber or other independent, 17 qualified person. Seller (shall)(shall not) STRIKE ONE ( shall if neither is stricken) have the right to cure. See lines 61-72 regarding 18 the Right to Cure and the related cautionary notes on lines 72-83. 19 If a well water test report reveals unsafe levels of any substance listed on lines 12-13 and Seller has the right to cure, Seller 20 (may)(may not) STRIKE ONE may cure through installation of Point of Use (POU) water treatment devices 21 approved by the Department of Safety and Professional Services (see http://dsps.wi.gov/php/sb-ppalopp/contam_alpha_list.php). 22

WELL SYSTEM INSPECTION CONTINGENCY: This Offer is contingent upon Buyer receiving, no later than __________ days 23 (after acceptance)(prior to closing) STRIKE ONE ( prior to closing if neither is stricken), a current written Property Transfer Well(s) 24 and Pressure System(s) Inspection report from a licensed well driller or a licensed pump installer competent to inspect well systems, 25 which indicates that the ______________________________________ [state kind of well(s), e.g., point driven, number of wells, etc., 26 if known] well(s) and pressure system(s) complies with code. (Buyer)(Seller) STRIKE ONE ( Seller if neither is stricken) shall be 27 responsible for obtaining the report(s), including all costs. Seller (shall)(shall not) STRIKE ONE ( shall if neither is stricken) have the 28 right to cure. See lines 61-71 regarding the Right to Cure. 29 CHECK IF APPLICABLE The Party ordering the inspection shall request that well capacity/water yield information be provided, 30 in writing, along with the Property Transfer Well(s) and Pressure System(s) Inspection results form. 31 If the well is inspected, the Well Water Testing Contingency is automatically selected and included in this Offer. 32

PRIVATE SANITARY SYSTEM (POWTS) INSPECTION CONTINGENCY: This Offer is contingent upon Buyer receiving, no later 33 than ___________ days (after acceptance)(prior to closing) STRIKE ONE 34 report from a county sanitarian, licensed master plumber, licensed master plumber-restricted service, licensed plumbing designer, 35 registered engineer, certified POWTS inspector, certified septage operator, and/or a certified soil tester, which indicates that the 36 POWTS CHECK ONE OR MORE AS APPLICABLE (checking all three brings the highest level of confidence that the system is 37 properly functioning): 38

Conforms to the code in effect when the POWTS was installed. Note: This may include a records review to confirm installation 39 date and specifications observed by the installer. 40

Is not disapproved for current use (is hydraulically functional and structurally sound). 41 Maintains vertical separation from limiting conditions such as groundwater and bedrock per current code (3 foot separation). 42

Note: POWTS installed before December 1, 1969 may have only a 2 foot separation; a certified soils tester will be needed to make 43 soil borings to determine separation. Operating POWTS must maintain a 3 foot vertical separation. 44 Note: Different professionals may be needed to inspect different system components. 45 If required by the inspector, the POWTS is to be pumped at time of inspection, at Seller's expense. (Buyer)(Seller) STRIKE ONE 46 ( Seller if neither is stricken) shall be responsible for obtaining the report(s) and for all other costs. Seller (shall)(shall not) STRIKE 47 ONE is stricken) have the right to cure. See lines 61-71 regarding the Right to Cure. 48 ADDITIONAL PROVISIONS: ________________________________________________________________________________ 49

__________________________________________________________________________________________________________ 50 __________________________________________________________________________________________________________ 51 __________________________________________________________________________________________________________ 52 __________________________________________________________________________________________________________ 53 __________________________________________________________________________________________________________ 54 __________________________________________________________________________________________________________ 55 __________________________________________________________________________________________________________ 56 __________________________________________________________________________________________________________ 57

READING: By initialing and dating below, each Party acknowledges they have received and read a copy of this Addendum. 58 (X) _________________________________________ ________ (X) _________________________________________ ________ 59 ) (Date) (Date) 60

ADDENDUM B TO THE OFFER TO PURCHASE

WRA-ADB DISTRIBUTED BY WISCONSIN REALTORS® ASSOCIATION

Ply 1,2,3 face: black (8.5 x 11.625)187459 Addendum B To Offer WRA-ADB_Layout 1 10/14/14 2:20 PM Page 1

WRA S

AMPLE


P19Page 2 of 2, WRA Addendum B

CONTINGENCY SATISFACTION / RIGHT TO CURE: Each contingency selected above [well water, well system or private 61

sanitary system (POWTS)] shall be deemed satisfied unless Buyer, within 5 days of the earlier of: 1) Buyer's Actual Receipt of the 62 applicable water, well or sanitary system report(s) or 2) the deadline for delivery of said report(s), delivers to Seller a copy of the 63 written report(s) and a written notice stating why the report(s) do(es) not satisfy the standard set forth in the contingency(ies) 64 selected. If Seller has the right to cure, Seller may satisfy this contingency by: (1) delivering a written notice of Seller's election to 65 cure within 10 days of receipt of Buyer's notice; and (2) by curing the defects in a good and workmanlike manner that satisfies the 66 standard set forth in the selected contingency and by giving Buyer a report of the work done prior to closing. This Offer shall be null 67 and void if Buyer timely delivers the above written notice(s) and report(s) to Seller and (1) Seller does not have the right to cure; or 68 (2) Seller has a right to cure but: a) Seller delivers written notice that Seller will not cure or b) Seller does not timely deliver the notice 69 of election to cure. This Offer shall be null and void if Buyer delivers notice to Seller, within 5 days of the deadline for delivery of the 70 report(s), stating Seller failed to deliver report(s) by the respective stated deadline [if Seller was responsible to provide the report(s)]. 71

Required Well Water Testing. Per Wis. Admin. Code § NR 812.44, if a property transfer well inspection is conducted the 72 licensed well driller or a licensed pump installer conducting the inspection is required to collect well water samples for 73 bacteria (total Coliform and E.coli), nitrate, and arsenic testing. 74

Arsenic Testing Time Periods. The Parties should determine the time periods necessary to complete well water testing, 75 particularly for arsenic testing, which make take significantly longer to complete in some market areas. 76

Well Water Chlorination. If the initial well water report indicates bacteriological contamination and Seller has the right to cure, 77 Seller may chlorinate the well and retest up to 78 extended for up to 14 days. After a report of bacteriological contamination, Seller must produce two safe water reports to satisfy 79 the well water contingency, unless otherwise agreed in writing. 80

Well Water Mediation. If a well water test report reveals elevated levels of a contaminant, the Parties may request suggestions 81 regarding mediation from the well driller or pump installer who inspected the well or seek information from any licensed well 82 driller or licensed pump installer. 83

POWTS. A POWTS failing to meet the stated standards may be cured only by repairing the current POWTS (including 84 component replacements if indicated) or by replacing the current POWTS with the same type of system which meets the 85 standards stated in the POWTS Inspection Contingency, unless otherwise agreed in writing. A modification to an existing 86 POWTS, including the replacement, alteration or addition of material or components, shall conform to current code as stated in 87 Wis. Admin. Code chapter SPS 383. Modification of one part of a POWTS may affect the performance or the operation of other 88 parts of the POWTS thereby necessitating further modifications for the other parts to remain compliant. 89

Utility Service. Seller shall be responsible for providing electric, water service and/or other utility service as necessary for any 90 inspection or testing unless otherwise designated in Additional Provisions on lines 49-57. 91

SHARED WELL AGREEMENT: 92

expense, provide Buyer, no later than 15 days before closing, with a copy of a shared well agreement that provides, unless otherwise 93 agreed in writing, standards for the operation, maintenance, water testing, repair and use of the well for residential purposes, and the 94 prorata sharing of costs and responsibilities among all parcels served by the well. If not yet recorded, the agreement shall be in 95

96

ABANDONED WELLS: If there is an abandoned well on the Property that has not been closed, Seller shall, prior to closing and at 97 iance with all applicable codes. If 98

there is any abandoned well on the Property that was previously closed, Seller shall provide Buyer with documentation evidencing 99 that the well closure was in compliance with all applicable codes in effect at that time. 100

DEFAULT NUMBER OF DAYS: Default number of days is 21 if nothing is entered on blank lines requiring entry of a number of 101 days. 102

POWTS: Private Onsite Wastewater Treatment Systems or POWTS is the terminology used by the Wisconsin Department of 103 Safety and Professional Services and sanitary system professionals, as well as in applicable code, Wis. Admin. Code Chapter SPS 104 383, when referring to a private sanitary system. 105

LOCAL CODE COMPLIANCE: The Parties should check county and municipal well, water and septic ordinances and codes for 106 additional requirements that may apply to the Property. 107

SANITARY DISTRICT: Buyer is informed that the Property may be located within an established sanitary district. Buyer may be 108 subject to taxes, special assessments or other charges for sewer planning or construction, user fees and related costs. Buyer is 109 encouraged to contact officials of the sanitary district to inquire about such costs. 110 APPLICABILITY: BUYER AND SELLER ARE ADVISED THAT THIS ADDENDUM CONTAINS PROVISIONS WHICH MAY NOT BE 111 APPROPRIATE IN ALL TRANSACTIONS. NO REPRESENTATION IS MADE THAT THE PROVISIONS OF THIS ADDENDUM ARE 112 APPROPRIATE, ADEQUATE OR LEGALLY SUFFICIENT FOR ANY SPECIFIC TRANSACTION. BUYER AND SELLER ARE 113 ENCOURAGED TO CONSULT WITH LEGAL COUNSEL REGARDING THE PROVISIONS OF THE OFFER AND THIS 114 ADDENDUM. 115 Copyright© 2014 by Wisconsin REALTORS® Association; Drafted by: Attorney Debra Peterson Conrad

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WISCONSIN REALTORS® ASSOCIATION 4801 Forest Run Road Madison, WI 53704

ADDENDUM A TO THE OFFER TO PURCHASE

This Addendum is made part of the Offer to Purchase dated ______________, made by _______________________________________ 1 (Buyer), with respect to the Property at _________________________________________________________________________________. 2 CAUTION: Buyer must include contingencies in this Offer for any additional tests or inspections Buyer wishes to conduct. Specific 3 addenda are available for testing or evaluation of Wells, Well Water, Septic Systems, Lead-Based Paint, Wetlands and Lead/Arsenic 4 Pesticides. Parties should consult with legal counsel with questions regarding testing or this Addendum. 5 RADON TESTING CONTINGENCY: This Offer is contingent upon Buyer having a qualified third party perform a radon test at the 6 Property in a manner consistent with applicable EPA and Wisconsin Department of Health Services (DHS) protocols and standards and furnish 7 a current written report indicating the radon level is less than 4 picoCuries per liter (pCi/L), at (Buyer's) (Seller's) STRIKE ONE 8 neither is stricken) expense. This contingency shall be deemed satisfied unless Buyer, no later than __________ days (after acceptance)(prior 9 to closing) STRIKE ONE delivers to Seller a written copy of the radon test results report indicating a 10 radon level of 4.0 pCi/L or higher. Seller (shall)(shall not) STRIKE ONE have the right to cure. See lines 62-71 11 regarding the Right to Cure. 12 TESTING CONTINGENCY: This Offer is contingent upon (Buyer obtaining)(Seller providing) STRIKE ONE is 13 stricken) a current written report from a qualified independent expert documenting the results of the following test(s) conducted pursuant to 14 applicable government or industry protocols and standards [indicate substances or compounds to be tested, e.g., asbestos (see 15 http://www2.epa.gov/asbestos/protect-your-family), etc.]: ___________________________________, no later than __________ days (after 16 acceptance)(prior to closing) STRIKE ONE at (Buyer's) (Seller's) STRIKE ONE is 17 stricken) expense. Specify any protocols, testing contractors, labs, standards/levels constituting a Defect, financial limits, acceptable repair 18 methodology, etc.: _________________________________________________________________________________________________. 19 Seller (shall)(shall not) STRIKE ONE have the right to cure. See lines 62-71 regarding the Right to Cure. 20 CLOSING: nder) (the place selected by Buyer) 21 (__________________________________________________________________________) STRIKE AND COMPLETE AS APPLICABLE. 22 ASSOCIATION FEE: Buyer acknowledges the (monthly)(quarterly)(annual) STRIKE TWO association fee of $ ____________________. 23 HOME WARRANTY PLAN: Buyer has been informed of the availability of a limited home warranty plan. A limited home warranty plan for 24 a term of one year shall be included, effective on the date of closing, provided the Property qualifies for the plan. The cost of the home warranty 25 shall not exceed $ ____________ and will be paid by (Seller)(Buyer) STRIKE ONE icken) at closing. The warranty plan 26 will be provided by the (listing)(cooperating) STRIKE ONE is stricken) broker. Buyer is advised that a home inspection may 27 detect pre-existing conditions which may not be covered under the warranty. 28 FLOOD INSURANCE PREMIUMS CONTINGENCY (also see lines 118-123): This Offer is contingent upon Buyer obtaining, an 29 insurance binder, certificate of insurance or other insurance company documentation or correspondence showing (that Buyer's annual premium 30 for flood insurance for Buyer's initial year of ownership after closing shall not exceed $____________)(that Buyer's annual premium will not 31 exceed $__________ after __________ years)(that the actuarial annual premium cost is computed to be no more than $____________) 32 STRIKE AND COMPLETE AS APPLICABLE. This contingency shall be deemed satisfied unless Buyer, no later than __________ days (after 33 acceptance)(prior to closing) STRIKE ONE delivers to Seller written notice indicating that this contingency 34 has not been satisfied and documentation of the flood insurance premiums available to Buyer. If this contingency is not satisfied, Buyer may 35 terminate this Offer by delivering written notice of termination to Seller. 36 MAP OF THE PROPERTY: This Offer is contingent upon (Buyer obtaining) (Seller providing) STRIKE ONE 37 stricken) a (survey map)( ALTA/ACSM Land Title Survey) (________________________) STRIKE AND COMPLETE AS APPLICABLE of the 38 Property, dated after the date of acceptance of this Offer and prepared by a Wisconsin licensed land surveyor, within __________ days of 39 acceptance, at (Buyer's) (Seller's) STRIKE ONE legal description of the 40 Property, Property boundaries and boundary line dimensions, visible encroachments, location of any improvements, a minimum of _______ 41 acres, a maximum of ________ acres and: ______________________________________________________________________________. 42 STRIKE AND COMPLETE AS APPLICABLE (Additional specifications/features may include, but are not limited to: staking Property corners, 43 streets, length of street or water frontage, legal access, total acreage or square footage, utility installations, easements or rights-of-way. 44 CAUTION: Consider cost and need for map features, and time required to obtain map.) This contingency shall be deemed satisfied unless 45 Buyer, within 5 days of the earlier of Buyer's Actual Receipt of the map or the deadline for delivery of said map, delivers to Seller a copy of the 46 map and a written notice which identifies: (1) a significant encroachment; (2) information materially inconsistent with prior representations or (3) 47 failure to meet requirements stated i This Offer shall be null 48 and void if Buyer delivers written notice to Seller, within 5 days of the deadline on lines 39-40, stating Seller failed to timely deliver the map (if 49 Seller was responsible to provide the map). 50 FEDERAL VA MORTGAGE: (Buyer)(Seller) STRIKE ONE ( agrees to pay the entire funding fee not to 51 exceed ________% (0% if not filled in) of the mortgage amount. Note: Funding fee may not be divided between the parties. Buyer agrees to 52 pay all other costs of securing financing. 53 SELLER S CONTRIBUTION: Seller shall give Buyer a loan cost credit at closing in the amount of $____________ or ________ % of the 54 purchase price to assist Buyer in paying loan closing costs such as points, prepayables and escrows. shall include 55 ________________________________ and exclude _________________________________ STRIKE AND COMPLETE AS APPLICABLE. 56

NUMBER OF DAYS: The default number of days is 21 if nothing is entered on blank lines requiring entry of a number of days. 57 READING/UNDERSTANDING: By initialing and dating this Addendum, each Party acknowledges they have received and carefully read all 58

pages of this Addendum. Initialing does not signify acceptance or agreement with the terms of this Addendum. 59

(X) _________________________________________ ________ (X) _________________________________________ ________ 60 (Date) (Date) 61

WRA-ADA DISTRIBUTED BY WISCONSIN REALTORS® ASSOCIATION

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CONTINGENCY SATISFACTION/RIGHT TO CURE (radon or testing contingency): The contingency shall be deemed satisfied 62 unless Buyer, within 5 days of the earlier of: 1) Buyer's Actual Receipt of the applicable testing report(s) or 2) the deadline for delivery 63 of said report(s), delivers to Seller a copy of the written report(s) and written notice stating why the report(s) do(es) not satisfy the 64 contingency standard. If Seller has the right to cure, Seller may satisfy this contingency by (1) delivering a written notice of Seller's 65 election to cure within 10 days of receipt of Buyer's notice; and (2) by curing the defects in a good and workmanlike manner that 66 satisfies the standard set forth in the selected contingency and by giving Buyer a report of the work done prior to closing. This Offer 67 shall be null and void if Buyer timely delivers the above written notice(s) and report(s) to Seller and (1) Seller does not have the right 68 to cure; or (2) Seller has a right to cure but: a) Seller delivers written notice that Seller will not cure or b) Seller does not timely deliver 69 the notice of election to cure. This Offer shall be null and void if Buyer delivers notice to Seller, within 5 days of the delivery deadline, 70 stating Seller failed to deliver report(s) by the respective stated deadline [if Seller was responsible to provide the report(s)]. 71

INSPECTIONS, TESTS AND OPINIONS: It is recommended that Buyer have the Property and specific Property 72 components of concern inspected by a Wisconsin registered home inspector or qualified independent inspectors/experts. 73 Real estate agents in this transaction may furnish a list of qualified, independent inspectors and testers. Unless provided in writing, 74 no representation has been made as to the competency of these inspectors/testers. The Party responsible for obtaining an inspection 75 or test shall be solely responsible for determining the qualifications of the inspector and tester. If a broker orders any inspection or 76 test on behalf of a Party in this transaction, the Parties agree to hold the broker harmless for any damages or liability resulting from 77 the inspection or test, other than that caused by the broker's negligence or intentional wrongdoing. 78

BUYER'S RESPONSIBILITY TO ASCERTAIN CONDITION OF THE PROPERTY: Buyer acknowledges that it is Buyer's 79 responsibility to confirm that the Property is in a condition that Buyer finds acceptable and accordingly has conducted such tests, 80 inspections, evaluations and independent inquiries as Buyer deems necessary. Buyer has relied upon Buyer's independent Property 81 inspection and tests; the statements, disclosures and representations contained in this Offer; Seller's property condition report (if 82 any); and any other written statements provided to Buyer. Buyer acknowledges that neither Seller nor any real estate agents have 83 made any representations concerning the Property or the transaction other than those provided in writing. Buyer has not requested 84 verification of accuracy of any Seller or third party statements, disclosures or representations unless specifically stated in this Offer. 85

HAZARDOUS SUBSTANCES: The parties are aware that news media and other public information sources indicate that 86 asbestos, lead-based paint, lead in drinking water, unsafe levels of mold, radium, radon gas and other toxic substances and 87 chemicals within a structure or in soils or water supplies can cause serious health hazards. Past flooding, water intrusion, leaking or 88 excessive dampness may result in mold growth that may present health risks. Synthetic stucco and wood composite exterior house 89 siding have been associated with moisture and mold related problems. Seller represents that, to the best of Seller's knowledge, the 90 Property does not contain asbestos, lead-based paint, excessive moisture or water intrusions, abnormal or unsafe concentrations of 91 mold, radon gas, lead, radium or other toxic or harmful substances or chemicals, and that there has been no past flooding, water 92 intrusion, leaking or excessive moisture in the Property. See the caution at lines 3-5 and the testing contingencies in this Addendum. 93

UNDERGROUND STORAGE TANKS AND BASEMENT FUEL OIL TANKS: Seller has no knowledge of any petroleum product 94 contamination on the Property. If there is an abandoned underground storage tank (UST) or basement or aboveground storage tank 95 (AST) on the Property, Seller shall, at least 5 days prior to closing, deliver to Buyer written confirmation that the tank and related 96 components have been closed in full conformance with current federal, state and local regulations. 97 include a Department of Agriculture, Trade and Consumer Protection 98 (DATCP) registration. Seller shall provide Buyer at least 5 days prior to closing with documentation confirming that any in-use UST, 99 AST or basement tank meets all current state and federal operating standards. Buyer shall notify DATCP of the change of ownership 100 of an in-use UST within 15 business days of closing. Visit http://datcp.wi.gov/Consumer/Hazardous_Materials_Storage_Tanks/. 101

MUNICIPAL REPORT/CODE COMPLIANCE: Seller agrees to provide Buyer with written verification of paid real estate taxes, 102 current or planned special assessments and any unpaid municipal charges affecting the Property, if such a statement is available 103 from the municipality. A Certificate of Code Compliance, Occupancy Permit or similar government documentation also may be 104 required. These statements shall be provided by Seller at or before closing at Seller's expense, unless otherwise provided in writing. 105

ZONING AND BUILDING RESTRICTIONS, COMPREHENSIVE PLANS AND NON-CONFORMING STRUCTURES: Municipal 106 zoning and building restrictions may affect use of the Property, and comprehensive plans may affect future use or value of the 107 Property by influencing future development in the municipality. Buyer is informed that some buildings are considered legal non-108 conforming structures because they no longer conform to current dimensional zoning standards due to zoning standards and 109 ordinances enacted after the building was constructed. Buyer's ability to remodel, repair, replace or enlarge an existing non-110 conforming structure may be regulated by the municipality. Buyer is encouraged to contact the appropriate municipal authorities 111 regarding zoning and building restrictions and comprehensive plans if these issues are material to Buyer's decision to purchase. 112

INSURANCE ISSUES: 113 upon advance notice for inspections relating to Buyer The Parties are advised to contact their 114 insurance agents with questions regarding insurability and costs. 115

FLOOD PLAINS/WETLANDS/SHORELAND: Buyer acknowledges that it is recommended that Buyer seek professional 116 assistance in interpreting any flood plain, wetlands and shoreland maps. 117

FLOOD INSURANCE: require Buyer to purchase flood insurance in connection with the purchase of 118 the Property. The National Flood Insurance Program (NFIP) (https://www.floodsmart.gov/floodsmart/) provides for the availability of 119 flood insurance and establishes flood insurance premiums based on the risk of flooding. Recent changes to federal law may result in 120 flood insurance premiums that are likely higher, and in the future may be substantially higher, than premiums paid by Seller. Buyer 121 should consult with one or more flood insurance carriers regarding flood insurance coverage, current and future premiums, and 122 whether Buyer may assume policy. Buyer may wish to contact NFIP for information about flood insurance for this Property. 123

FEDERAL VA AND FHA MORTGAGE: If this Offer is contingent upon Buyer obtaining a FHA or Federal VA loan, it is also 124 contingent upon the Parties executing an FHA or Federal VA amendment to the contract which shall give Buyer the right to terminate 125 the Offer if the Property fails to appraise for the purchase price. 126

MUNICIPALITY DISCREPANCY: Buyer acknowledges that while the Property mailing address may be within one municipality, the 127 Property may be physically located in an adjoining municipality that will determine the applicable property taxes and school district. 128

Copyright © 2014 by Wisconsin REALTORS® Association Drafted by: Attorney Debra Peterson Conrad No representation is made as to the legal validity of any provision or the adequacy of any provision in any specific transaction.

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