Real Estate Continuing Education - On Demand PLUS

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2 Wisconsin REALTORS REALTORS Association Association TM Real Estate Continuing Education - On Demand PLUS Welcome to the Wisconsin REALTORS Association s new On Demand PLUS! With OnDemand PLUS you can complete the course by reading the electronic book, watching the instructor videos, or toggling between the two. Mandatory Courses Course 1 Wisconsin State-approved Listing Contracts Course 2 Wisconsin State-approved Offers to Purchase Course 3 Wisconsin New Developments Course 4 Ethics and Fair Housing in Wisconsin Elective Topics Elective A Disclosures in a Wisconsin Transaction Elective B Risk Reduction for Wisconsin Salespeople and Brokers Elective C Inspections and Testing in Wisconsin Transactions Elective D Wisconsin Condominiums Course Instructions: 1. Access your courses at 2. Launch your course. 3. Choose how to access your course information: Watch videos- Have the course taught to you by WRA instructors; OR Read- Go at your own pace by reading the electronic books. 4. Review your mastery of the material by taking an OPTIONAL practice quiz before taking your exam. 5. Pass your mandatory course exam to be issued your course certificate. Exam Details: 1. After completing the exam, you may review your answers and skipped questions, then click Score the Exam. Once the exam is scored, you will be able to review each question before exiting the exam. 2. After you pass, click Print Certificate, or a copy of the certificate may be obtained by logging into the WRA s website and going to: If you are unable to print your certificate, you may obtain a copy of the certificate from the WRA at any time for a $10 administrative fee. (The WRA retains course records for a period of 5 years.) 3. You will have three attempts to pass the exam, with a 4 hour waiting period between retakes. Should you fail after that, you will need to attend a live WRA course. Access the WRA website at for a listing of live courses. How do I renew my license? You will renew your license with the Department of Safety and Professional Services at the end of the biennium (December 14, 2016). You must complete and pass six continuing education modules (18 hours) to renew your license. You can find more information at regarding renewing your license.

3 #1) MAIN PREVIEW WINDOW #2) ACTIVITY REEL #3) INDEX & NOTES # 4) COURSE BOOK #5) COURSE BOOK ICONS #6) CONTACT INSTRUCTOR ICON #7) HELP ICON #1) Main Preview Window What is the Main Preview Window? The Main Preview Window is window that you use for viewing your primary course content. #2) Activity Reel What is the Activity Reel? The Activity Reel is a new feature located below the Main Preview Window that will allow you to navigate through your course media content. How do I switch to a new chapter? There are two ways to switch chapters. One way is to double-click the appropriate chapter in your activity reel. The other way is to select the appropriate chapter tab in the Index tab window (#3) and choose which section of the chapter you would like to view by clicking on the appropriate section title. What is the practice quiz? The practice quiz is an optional part of the OnDemand PLUS CE course. To take the quiz, simply click the quiz icon in the activity reel and the quiz will begin in a pop-up window. What is the difference between a quiz and exam? The practice quiz is an optional means of reviewing knowledge of the course material prior to taking your mandatory course exam. The exam is your final test. You can take your final exam after you ve completed watching the videos, or after you have completed reading the electronic course book. Once you ve passed the exam you will be able to print your certificate. How does the exam work? You have three chances per course to pass the exam. You have 30 minutes to complete the exam. An on-screen clock will provide you with elapsed time. Each course exam is comprised of 15 randomly selected multiple choice questions. To select an answer, simply mark the circle preceding the correct answer. If you are unsure of an answer, you may skip a question and return to it at the end of the exam. You have the option of reviewing all questions or only skipped questions before grading your exam. #3) Index/Notes What is the Index tab for? The Index tab is an easy way to access a specific topic in a chapter. Simply click a link in the Index and you can instantly access the corresponding content in the video and course book when viewing the material within the On Demand PLUS player. It s perfect for accessing a topic you would like to review.

4 What is the Notes tab for? The Notes tab allows you to take your notes inside the product. If this functionality were not available you would need to take your notes manually. Notes will automatically save for you. Can I print my notes? You are able to print your notes by clicking on the print icon notes will be automatically listed by chapter. in the upper right hand corner of the notes tab. Your #4) Course Book What is the Course Book? Your Course Book is the material that accompanies your video content. How do I navigate my Course Book? To change between pages, you can click on the arrows that are displayed on either side of the Course Book. Can I view my Course Book in the Main Preview Window? You can view the Course Book in the main preview window by double-clicking the Course Book in its default location. To redock the video to the main preview window, simply double-click on the video that had switched positions with the Course Book. #5) Course Book Icons Can I make my Course Book bigger? There are two methods of viewing a larger course book within the player. The first way is to double-click on the course book when it is in the main preview window. This will allow you to view a larger version of the course book while still being able to watch your course video in the lower right-hand corner. The other method is to click on the Bigger icon located beneath your course book. This will enlarge the Course Book to its maximum size within the player. Can I veiw the Course Book one page at a time? If you would like to view your Course Book pages at full-width, you can click on the Continous Pages icon located beneath your Course Book. In additon to your normal navigation funtions, this will allow you to scroll through the pages in your Course Book. Can I print my course book? If you would like to print your course book or view it in a window that is separate from the player, click on the Download icon located beneath the course book. You may then print the course book from your Internet browser.

5 #6) Contact Instructor Icon What is Contact Instructor? With our Contact Instructor feature, designated with the talk bubble icon in the upper right-hand corner of the player, you have the ability to directly ask the course trainer any questions you have about the material. WRA instructors will be available during regular business hours; questions submitted outside of business hours will typically be answered by the end of the next business day. #7) Help Icon Do you have further questions? You can click on the question mark icon call located in the upper right-hand corner of the screen for help topics, or ** Submit the exam for grading when you complete the exam. Your score appears automatically. If you receive a score of 70% or better, you may print your certificate. If your score is less than 70%, you will need to review the course materials and retake the exam. You will have three attempts to pass the exam, with a 4 hour waiting period between retakes. Should you score less than 70% again, you will need to call the WRA to schedule a live course at no additional fee. Access the WRA website at for a listing of live courses.

6 Troubleshooting I have no volume/sound. To troubleshoot sound, perform the following steps: 1. Can you hear sounds from other Windows applications? 2. Make sure the volume on your computer is turned up. 3. Double check your speaker connection in the back of the sound card, making sure it is plugged into the right port. 4. If all tests fail and you still do not have sound either from the player or other Windows-based applications, contact your local computer technician. My video is stuttering, pausing and/or stopping. How can I fix this problem? 1. It is likely you are short on bandwidth. Internet Service Providers (ISPs) can have times when traffic is at a maximum; thus slowing your connection. To change bandwidth, use the dropdown box located under Help in the upper right-hand corner of the Media Player. The default bandwidth is 600 kbps. 2. Press the F5 key on your keyboard to refresh the player. 3. Log out of the website, then log back in. If after dropping bandwidth you do not see an improvement in performance, what can I try next? 1. Re-test your bandwidth making sure your download speed is at least 512 Kbps by following this link: 2. Try connecting to a landline. Often wireless connections do not run smoothly, which causes the video to continuously stop and start. 3. Try switching computers to see if you get the same result. Other Problems? For other problems please call the Wisconsin REALTORS Association at Wisconsin REALTORS Association Address: 4801 Forest Run Road, Suite 201 Madison, WI Phone: Toll-free: Fax: wra@wra.org website: TM J:\ Continuing Education\Instructions\CE1516_VOD_Instructions 5/18/2015

7 Real Estate Continuing Education Program Elective C - Inspections and Testing in Wisconsin Transactions All licensees must take courses 1-4. Mandatory CE Courses Course 1: Wisconsin State-approved Listing Contracts Course 2: Wisconsin State-approved Offers to Purchase Course 3: Wisconsin New Developments Course 4: Ethics and Fair Housing in Wisconsin* * Includes the NAR ethics requirements. Licensees must take two electives. Elective CE Courses Elective A: Disclosures in a Wisconsin Transaction Elective B: Risk Reduction for Wisconsin Salespeople and Brokers Elective C: Inspections and Testing in Wisconsin Transactions Elective D: Wisconsin Condominiums Certificate of Completion Licensees earn a Certificate of Completion upon successful completion of this continuing education course. Licensees can print Certificates of Completion and retain them for their records. Licensees can review education history and print duplicate Certificates of Completion at any time and at no charge by logging into mywra at Special acknowledgment to the WRA Legal Department for the use of various Legal Updates, Hottips, and other WRA co-authored and sponsored publications. The information and materials contained in this product are provided exclusively for educational purposes and are solely intended to be statements of general legal principles. The information and materials are not to be construed, interpreted, relied upon or used as legal advice in any fashion, including but not limited to use in litigation, arbitration, ethics matters, or other administrative proceedings. Individuals seeking legal advice should obtain private legal counsel and should not rely upon the information and materials contained herein. Copyright 2015 by TM Wisconsin REALTORS Association i

8 I. Inspection a. Inspection and Testing in the WB-11 Offer to Purchase regulations concerning earnest money. See Wis. Admin. Code Ch. RL 18. INSPECTIONS AND TESTING Buyer may only conduct inspections or tests if specific contingencies are included as a part of this Offer. An inspection is defined as an observation of the Property which does not include an appraisal or testing of the Property, other than testing for leaking carbon monoxide, or testing for leaking LP gas or natural gas used as a fuel source, which are hereby authorized. A test is defined as the taking of samples of materials such as soils, water, air or building materials from the Property and the laboratory or other analysis of these materials. Seller agrees to allow Buyer s inspectors, testers and appraisers reasonable access to the Property upon advance notice, if necessary to satisfy the contingencies in this Offer. Buyer and licensees may be present at all inspections and testing. Except as otherwise provided, Seller s authorization for inspections does not authorize Buyer to conduct testing of the Property. NOTE: Any contingency authorizing testing should specify the areas of the Property to be tested, the purpose of the test, (e.g., to determine if environmental contamination is present), any limitations on Buyer's testing and any other material terms of the contingency. Buyer agrees to promptly restore the Property to its original condition after Buyer s inspections and testing are completed unless otherwise agreed to with Seller. Buyer agrees to promptly provide copies of all inspection and testing reports to Seller. Seller acknowledges that certain inspections or tests may detect environmental pollution which may be required to be reported to the Wisconsin Department of Natural Resources. 1 i. This section is from the WB-11 Residential Offer to Purchase and it defines test and inspection. ii. The definitions of inspection and test are substantially similar in the other approved offers to purchase with minor differences. 1. The WB-12 Farm Offer to Purchase and the WB-13 Vacant Land Offer to Purchase have the same definitions for inspections and testing as is found in the WB-11 Residential Offer to Purchase. a. Inspections and testing pertain to the Property. b. The seller agrees to permit access to the buyer's inspectors, testers, and appraisers. 2. The WB-14 Condominium Offer has nearly identical definitions except the inspection may be of the Unit and the Limited Common Elements and the testing may be of the Unit, rather than the Property as is seen in the other offers. 3. The WB-15 Commercial Offer definitions describe inspections and testing as they relate to the Property but the seller agrees to grant access to the buyer's inspectors, testers, appraisers, and qualified third parties. 4. The WB-16 Business Offer with Real Estate and the WB- 17 Business Offer without Real Estate definitions describe inspections and testing as they relate to the Assets and the seller agrees to grant access to the buyer's inspectors, testers, and appraisers. iii. Home inspections in residential transactions or property inspections in a non-residential transaction are routine. iv. A seller makes representations in the seller's condition report, if there is one, and agents have to disclose material adverse facts but rarely will that be sufficient for a buyer to gain a clear picture of the condition of the property.

9 v. A buyer needs to have an inspection because neither the seller nor the agent is required to have the kind of technical expertise required to detect defects such a leaking carbon monoxide, faulty switches, or wiring issues. vi. A buyer relies on inspectors and testers with appropriate technical expertise to determine the condition of the property. vii. Inspections may reveal defects that neither the seller nor the agent knew about. viii. There is no automatic right to test, inspect, or appraise a seller's property. 1. All three must be separately negotiated into a transaction. a. A buyer who wants an inspection must make the offer contingent on that. b. A buyer who wants tests must negotiate the tests in the offer to purchase. c. Even an appraisal must be separately negotiated into the offer. 2. If a buyer and a seller include an inspection, a test, or an appraisal in an accepted offer, the seller agrees to allow access to the property if necessary to satisfy the contingencies in the offer. 3. The buyer and licensees can be present at all inspections. 4. Testing and inspection are not the same. 5. Agents need to help buyers and sellers understand what these terms mean and what effects the results of either a test or an inspection can have on the offer. 6. An agent working with a buyer should help the buyer understand the limitations involved in an inspection so the buyer can include additional testing contingencies if necessary. 7. An agent working with a seller should help the seller understand the consequences of letting a buyer inspect or test the seller's property. 8. Lines warn a seller that the results of certain tests and inspections may not only signal the end of the transaction but may require notification of the Department of Natural Resources, which may trigger expensive clean up. 9. The buyer agrees to promptly restore the property to its original condition unless the seller agrees otherwise. 10. Inspections, tests, and appraisals all cost money and the obligation to restore the property could potentially add to that cost. 11. Paying for investigations, tests, and appraisals up front, however, may be significantly less expensive than ending up with a property with mysteries and secrets to be revealed later. 2

10 ix. Authorization for inspections does not permit testing. x. Authorization for testing does not permit inspection. Surprise, Surprise! A buyer buys a house that was priced to sell. The buyer moves in and discovers significant foundation issues. The buyer is going to be responsible for paying for those repairs. Even if the buyer thinks the seller concealed or failed to disclose the structural problems, the buyer may have to take the seller to court to prove it. The buyer could lose the lawsuit or the court could award damages to the buyer that are less than what it will actually cost to fix it. Successfully suing a seller for potential damages is never a sure thing. The buyer has to weigh the risk that the buyer will pay the cost of the litigation and still lose. If the buyer loses the lawsuit, the buyer could end up paying for the cost of litigation and the cost of the repairs. No Way Out Sometimes property owners end up with undisclosed, undiscovered disasters after closing. A buyer could end up with a property with environmental contamination requiring costly cleanup. Conditions like environmental contamination or an abandoned underground storage tank are usually governed by the "finders keepers" test of ownership. Whether the current property owner is responsible for the contamination or the underground storage tank is often irrelevant. The current owner will be responsible for addressing the situation. Perhaps, as in the case with the buyer who had foundation defects, the property owner could try pursuing the previous owner for damages, but as always, a lawsuit can be a gamble. In situations like this, the lender may choose not to file a foreclosure action even if the current property owner stops paying the mortgage. Due to the "finders keepers" ownership, if the lender foreclosed, the lender could become the owner of the property and the owner of the cost of the cleanup or remediation. From the lender's perspective, it may be less costly to let the borrower remain in default on the loan rather than attempting to recover ownership through the foreclosure process. b. What is an Inspection? i. An inspection is an observation of the property that does not include an appraisal or testing of the property except testing for leaking carbon monoxide, testing for leaking LP gas, or natural gas used as a fuel source. ii. It does not include an appraisal or testing of the property. iii. What is included in the inspection will depend on the language of the offer. 3

11 INSPECTION CONTINGENCY: This contingency only authorizes inspections, not testing (see lines ). This Offer is contingent upon a Wisconsin registered home inspector performing a home inspection of the Property which discloses no Defects. This Offer is further contingent upon a qualified independent inspector or independent qualified third party performing an inspection of (list any Property component(s) to be separately inspected, e.g., swimming pool, roof, foundation, chimney, etc.) which discloses no Defects. Buyer shall order the inspection(s) and be responsible for all costs of inspection(s). Buyer may have follow-up inspections recommended in a written report resulting from an authorized inspection, provided they occur prior to the deadline specified at line 421. Inspection(s) shall be performed by a qualified independent inspector or independent qualified third party. CAUTION: Buyer should provide sufficient time for the home inspection and/or any specialized inspection(s), as well as any follow-up inspection(s). This contingency shall be deemed satisfied unless Buyer, within days of acceptance, delivers to Seller a copy of the written inspection report(s) and a written notice listing the Defect(s) identified in those report(s) to which Buyer objects (Notice of Defects). CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement. For the purposes of this contingency, Defects (see lines ) do not include structural, mechanical or other conditions the nature and extent of which Buyer had actual knowledge or written notice before signing this Offer. iv. If the pre-printed language in an inspection contingency is not sufficient for what a buyer wants, the agent drafting the offer can draft an alternate contingency, seeking assistance as necessary. v. This is not the place for the buyer to include tests that the buyer would like to have on the property. vi. If a buyer is using the pre-printed contingency in the residential offer to purchase, the buyer is asking for a home inspection of the property. 1. A home inspection is the process by which the systems and components of residential real estate that are readily observable are examined. 2. A home inspector must perform a reasonably competent and diligent home inspection to detect observable conditions with respect to the residential real property and improvements. vii. The buyer can also include an inspection or inspections of additional property components listed on lines or by an addendum or in additional provisions. viii. The buyer can also have follow-up inspections recommended in a written report resulting from an authorized inspection. ix. The follow-up inspections must occur before the deadline in the home inspection contingency. x. The pre-printed inspection contingencies in the farm, vacant land, and commercial offers have broader language calling for an inspection of the property but without specifying the type of inspection. 4

12 xi. The commercial offer also contains an Environmental Evaluation Contingency that a buyer can use to include an Environmental Site Assessment (Phase 1 Site Assessment) that includes an inspection of the property but also: 1. A review of ownership and use of the property; 2. A review of historic and recent aerial photographs of the property; 3. A review of environmental licenses, permits, or orders; 4. An evaluation of results of any environmental sampling and analysis that has been conducted; and 5. A review to determine if the property is listed on a number of registries and maps indicating that it could pose a threat to human health or the environment. lighting and street trees, and impact fees for other public facilities, as defined in Wis. Stat (1)(f). ENVIRONMENTAL EVALUATION CONTINGENCY: This Offer is contingent upon a qualified independent environmental consultant of Buyer's choice conducting an Environmental Site Assessment of the Property (see lines ), at (Buyer's) (Seller's) expense STRIKE ONE ("Buyer's" if neither is stricken), which discloses no Defects. For the purpose of this contingency, a Defect (see lines ) is defined to also include a material violation of environmental laws, a material contingent liability affecting the Property arising under any environmental laws, the presence of an underground storage tank(s) or material levels of hazardous substances either on the Property or presenting a significant risk of contaminating the Property due to future migration from other properties. Defects do not include conditions the nature and extent of which Buyer had actual knowledge or written notice before signing the Offer. CONTINGENCY SATISFACTION: This contingency shall be deemed satisfied unless Buyer, within days of acceptance, delivers to Seller a copy of the Environmental Site Assessment report and a written notice listing the Defect(s) identified in the Environmental Site Assessment report to which Buyer objects (Notice of Defects). CAUTION: A proposed amendment is not a Notice of Defects and will not satisfy this notice requirement. RIGHT TO CURE: Seller (shall) (shall not) STRIKE ONE ("shall" if neither is stricken) have a right to cure the Defects. If Seller has the right to cure, Seller may satisfy this contingency by: (1) delivering written notice to Buyer within 10 days of Buyer's delivery of the Notice of Defects stating Seller's election to cure Defects, (2) curing the Defects in a good and workmanlike manner and (3) delivering to Buyer a written report detailing the work done within 3 days prior to closing. This Offer shall be null and void if Buyer makes timely delivery of the Notice of Defects and written Environmental Site Assessment report and: (1) Seller does not have a right 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 the written notice of election to cure. 5 xii. The Environmental Evaluation Contingency does not allow testing. xiii. To test soil, water, or other aspects of the property, the buyer would need to include those separately. 1. A Phase II Site Assessment provides for the collection and analysis of samples and would include subsurface testing of the soil and groundwater. 2. A Phase III Site Assessment evaluates remediation alternatives. xiv. The condominium offer to purchase allows for a home inspector to perform a home inspection of the Unit and the Limited Common Elements. xv. Both of the business offers contain an inspection contingency that permits an inspection of the Assets, which may or may not include real property. xvi. The WB-12 Farm Offer to Purchase and the WB-13 Vacant Land Offer to Purchase have the same definitions for inspections and testing as is found in the WB-11 Residential Offer to Purchase.

13 c. Who Can Inspect? i. The inspection contingency in the WB-11 Residential Offer to Purchase allows a buyer to have a Wisconsin registered home inspector perform a home inspection of the property. ii. The buyer can also have a qualified independent inspector or other qualified third party inspect other components of the property if the buyer includes them in the inspection contingency. Wis. Stat (2) Standards of Practice A home inspector shall perform a reasonably competent and diligent inspection to detect observable conditions of an improvement to residential real property. Except for removing an access panel that is normally removed by an occupant of residential real property, this subsection does not require a home inspector to disassemble any component of an improvement to residential real property. A reasonably competent and diligent inspection under this subsection is not required to be technically exhaustive. iii. A home inspector is an individual who, for compensation, conducts a home inspection. iv. Wisconsin home inspectors must be registered with the State of Wisconsin. v. Wisconsin home inspectors must pass an exam to become registered and must complete continuing education to renew the registration. vi. A home inspector cannot perform or offer to perform any act prohibited by law. vii. A home inspector cannot deliver a home inspection report to anyone other than the client unless the client consents to delivery to another person. viii. A home inspector cannot perform a home inspection for a client if a member of the home inspector s immediate family or an organization or business entity in which the home inspector has an interest is a party to the transaction and has an interest adverse to that of the client, unless the home inspector has the client s written consent. ix. A home inspector cannot accept compensation from more than one party in the transaction without the written consent of all the parties. x. A home inspector cannot pay or receive a referral fee or a finder's fee from someone who is not a home inspector with regards to construction, repairs, or maintenance or improvements to real estate that was inspected by the home inspector. xi. If a buyer wants someone else to inspect the property, the buyer will have to use a different contingency or modify the pre-printed one. 6

14 Question: On the offer it states that it should be an independent home inspection. The buyer wants to do his own home inspection and he is a licensed home inspector in Wisconsin. Can he do the home inspection on a home he is purchasing? Answer: Wis. Stat (7) indicates that: "A home inspector may not do any of the following: (a) Perform or offer to perform any act or service contrary to law. (b) Deliver a home inspection report to any person other than the client without the client's consent. (c) Perform a home inspection for a client with respect to a transaction if the home inspector, a member of the home inspector's immediate family or an organization or business entity in which the home inspector has an interest, is a party to the transaction and has an interest that is adverse to that of the client, unless the home inspector obtains the written consent of the client." d. Deadlines i. The single most important thing to consider when drafting an inspection contingency is to give the parties enough time to accomplish all of the permitted inspections and still have time to negotiate potential solutions based on the results. ii. The deadline is for issuing a notice of defects, not completing the inspections. iii. The time frame for completing an inspection and the subsequent negotiations is short and typically runs in "days" rather than "business days." iv. Parties need to consider that during this time frame: 1. The buyer needs to order the inspection; 2. The inspector needs to be able to access the property; 3. The inspector needs to complete the report; 4. The buyer has to review the report and decide whether to negotiate with the seller or issue a notice of defects; 5. If the buyer is attempting negotiation, there needs to be enough time for amendments to be offered back and forth; 6. The buyer needs to decide whether to issue a notice of defects based on the negotiations; and 7. Issue the notice of defects if that is the buyer's choice in the transaction. 7

15 v. Factors to Consider when Deciding on a Deadline 1. Holidays on which the home inspector may not work. 2. Snow storms that may prevent a home inspector from keeping a scheduled appointment. 3. Snow cover that may prevent a roof inspector from actually inspecting the roof. 4. Accessibility issues due to tenants in the property. 5. General uncertainty related to schedules and weather. vi. A buyer's agent will want to try to negotiate a long deadline so that the buyer has time to have the inspections by the inspectors of the buyer's choosing, review the reports, and decide what to do next. vii. An agent working with the seller will want a shorter deadline so the seller will know if there are defects and if the buyer is objecting to any. viii. A buyer will not be able to have any follow-up inspections unless they are recommended in the written report from the initial inspection. ix. The buyer shall order and pay for all of the inspections, including any desired follow-up inspections. e. Required, Optional, and Prohibited Acts in Home Inspection i. Home inspectors do not inspect for code violations. ii. A diligent home inspection is not technically exhaustive. iii. The home inspector does not need to use extensive measurements, instruments, testing, calculations or other means to develop scientific or engineering findings, conclusions, or recommendations. 8

16 Some Mechanical and Structural Components Included in a Home Inspection Roof - coverings, gutters, downspouts, leaders, splash blocks and other similar components, flashing, skylights, roof penetrations, chimneys. Exterior - wall claddings, flashing, trim, balconies, stoops, steps, porches, drainage, driveways, patios, walk ways, grading, retaining walls, garage door openers. Interior - walls, ceilings, floors, steps, stairways, balconies, railings, counters, sink base cabinets, sample of doors and windows, separation walls, ceilings. Plumbing system - interior water supply and distribution system including piping materials, supports, fixtures, faucets, flow, drainage, leaks, interior drain, waste, vent piping, piping supports, hot water systems, water heating equipment. Electrical system - functionality of power sources for smoke detectors, light switches and receptacles, service equipment, grounding equipment, distribution panels, amperage and voltage ratings, circuit conductors, polarity and grounding. Heating system - operation of heating systems, condition of heating equipment and distribution systems, operating controls and energy source, safety controls, exterior surface of chimneys, flues and vents, heat exchanger. Central air conditioning - operation of air conditioning system, presence of installed cooling source in each room, type and energy source, condition of cooling and air handling equipment, operating controls. Insulation and ventilation - insulation in unfinished spaces, ventilation of attics and foundation areas, kitchen, bathroom, and laundry venting systems. Foundation - type and condition of foundation. Flooring system - type and condition of flooring. Columns - type and condition of columns. iv. Optional 1. Evaluate the life expectancy of any component or improvement. 2. Determine the cause or reason why a major repair to a component or improvement is necessary. 3. Discuss the method, necessary materials, or cost of any needed repair or correction. 4. Analyze suitability of an improvement for a specialized use. 5. Determine whether any component or improvement complies with applicable regulatory requirements. 6. Comment on the condition of any component that the home inspector was not required to inspect. 9

17 Optional Elements of a Home Inspection* A home inspector is not required to perform the following tasks. Offer a warranty or guarantee of any kind. Calculate the strength, adequacy, or efficiency of any component or improvement. Enter any area or perform any procedure that may damage a property component or improvement or may be dangerous to the home inspector or other persons. Operate any property component that is inoperable. Operate any property component that does not respond to normal operating controls. Disturb insulation or move personal items, furniture, equipment, vegetation, soil, snow, ice, or debris that obstructs access to or visibility of an improvement or component. Determine the effectiveness of a component or system that was installed to control or remove suspected hazardous substances. Evaluate acoustic characteristics of a property component. Project or estimate the operating costs of a property component. Predict future conditions such as the failure of a property component. Inspect for rodents, insects, wood damaging organisms and other pests. Inspect cosmetic items, underground items, or items not permanently installed (personal property). Inspect for hazardous substances. Disassemble any property component, except for removing an access panel. *A party who wants an inspector to include any of these services should discuss this with the home inspector and confirm the inclusion of the services in writing. v. Prohibited 1. A home inspector may not report, verbally or in writing, on the market value or marketability of a property. 2. A home inspector cannot offer an opinion or recommendation as to whether the property should be purchased. Wis. Stat Liability of Home Inspectors (1) Notwithstanding s , an action to recover damages for any act or omission of a home inspector relating to a home inspection that he or she conducts shall be commenced within 2 years after the date that a home inspection is completed or be barred. The period of limitation under this subsection may not be reduced by agreement. (2) A home inspector is not liable to a person for damages that arise from an act or omission relating to a home inspection that he or she conducts if that person is not a party to the transaction for which the home inspection is conducted. 10

18 11 II. Test a. What is a Test in the WB-11 Offer to Purchase? i. A test is defined as the taking of samples of materials such as soils, water, air, or building materials from the property and the laboratory or other analysis of these materials. ii. The pre-printed terms of the WB-11 do not include a testing contingency. iii. A buyer must separately include a test contingency in the additional provisions or by an addendum. iv. A buyer should not use the blank lines in the inspection contingency to include a test. v. A testing contingency should specify the area or materials to be tested, the purpose of a test, any limitations on testing and any obligations to restore the property afterwards. vi. Common testing contingencies address radon, lead-based paint, and containments in water or soil. b. Who Can Test in the WB-11 Offer to Purchase? i. Because there is no pre-printed testing contingency in the offer to purchase, a buyer can designate anyone as the "tester" in a testing contingency. ii. A seller always has the opportunity to counter the buyer's offer if the seller does not agree with the buyer's selected "tester." iii. The offer to purchase gives the buyer the right to be present at any test agreed to in the offer. c. Deadlines i. Without a pre-printed testing contingency in the offer to purchase, buyers and sellers are free to negotiate any deadlines they want for the testing included in a transaction. ii. As with an inspection, the buyer will want to make sure the deadline is long enough for some negotiations between the parties based on the results of the tests. d. Including Tests in an Offer i. With the pre-printed offer to purchase, the buyer can use the additional provisions or an addendum to include a test or multiple tests in an offer. ii. Many buyers use a version of the WRA's Addendum A. iii. There are many different versions of the Addendum A used throughout the state. iv. The version that any particular agent uses may look different from an Addendum A another agent uses. v. An agent working with a party should carefully review any Addendum A being included with an offer because the terms and provisions may not be the same as the addendum the agent usually uses.

19 vi. For purposes of an example, these materials will focus on the WRA's Addendum A. Pesticides. Parties should consult with legal counsel with questions regarding testing or this Addendum. RADON TESTING CONTINGENCY: This Offer is contingent upon Buyer having a qualified third party perform a radon test at the Property in a manner consistent with applicable EPA and Wisconsin Department of Health Services (DHS) protocols and standards and furnish a current written report indicating the radon level is less than 4 picocuries per liter (pci/l), at (Buyer's) (Seller's) STRIKE ONE ("Buyer's" if neither is stricken) expense. This contingency shall be deemed satisfied unless Buyer, no later than days (after acceptance) (prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), delivers to Seller a written copy of the radon test results report indicating a radon level of 4.0 pci/l or higher. Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines regarding the Right to Cure. vii. The Addendum A gives parties a way to add a radon testing contingency. 1. 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. 2. A buyer can find a certified radon measurement and mitigation contractor on the DHS website. 3. 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. 4. Many radon measurement contractors are also home inspectors. 5. 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. 6. The offer is contingent upon the written testing results indicating a radon level less than 4.0 picocuries per liter (pci/l). 7. If the radon is too high, the buyer can deliver a copy of the written test results to the seller by the deadline stated on line 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 4.0 pci/l or higher will be self-evident, but a written notice may be used along with the test results, if desired. 9. 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

20 viii. The Addendum A gives parties a way to add a generic testing contingency. regarding the Right to Cure. TESTING CONTINGENCY: This Offer is contingent upon (Buyer obtaining)(seller providing) STRIKE ONE ("Buyer obtaining" if neither is stricken) a current written report from a qualified independent expert documenting the results of the following test(s) conducted pursuant to applicable government or industry protocols and standards [indicate substances or compounds to be tested, e.g., asbestos (see etc.]:, no later than days (after acceptance)(prior to closing) STRIKE ONE ("prior to closing" if neither is stricken), at (Buyer's) (Seller's) STRIKE ONE ("Buyer's" if neither is stricken) expense. Specify any protocols, testing contractors, labs, standards/levels constituting a Defect, financial limits, acceptable repair methodology, etc.:. Seller (shall)(shall not) STRIKE ONE ("shall" if neither is stricken) have the right to cure. See lines regarding the Right to Cure. 1. The provision on lines 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. 2. 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. 3. 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. 4. 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. 5. The report must be obtained or provided by the deadline inserted on lines If this is not completed, the default is 21 days prior to closing. 7. The testing will be at the buyer s expense unless the [STRIKE ONE] feature is used to indicate that the seller will pay. 8. 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. 9. 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. 13

21 ix. The Contingency Satisfaction/Right to Cure Provisions in the Addendum A relate to both the radon testing contingency and the generic testing contingency. Page 2 of 2, WRA Addendum A CONTINGENCY SATISFACTION/RIGHT TO CURE (radon or testing contingency): The contingency shall 62 be deemed satisfied 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 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 contingency standard. If Seller has the right to cure, Seller may satisfy this contingency by (1) delivering a written notice of Seller's 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 satisfies the 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 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 (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 of election to cure. This Offer shall be null and void if Buyer delivers notice to Seller, within 5 days of the delivery deadline, stating Seller failed to deliver report(s) by the respective stated deadline [if Seller was responsible to provide the report(s)]. INSPECTIONS, TESTS AND OPINIONS: It is recommended that Buyer have the Property and specific Property 1. 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. 2. 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 become null and void, or propose an alternate solution. 3. Giving the seller notice puts the power to decide the fate of the offer in the seller s hands. 4. The seller could propose an amendment to the offer. 5. 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. 6. 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 10 days lapse. 7. 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. 8. In addition, lines 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). 9. 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. x. The Addendum B can be used to add tests for well water. 14

22 Property Address: e. Including Tests with an Option Page 7 of 7, WB-24 AUTHORIZATION FOR APPRAISAL, INSPECTIONS AND TESTS Buyer is authorized to have the Property appraised by a Wisconsin licensed or certified appraiser and to conduct the following inspections and tests (see lines ) prior to Buyer's exercise of this Option. Any inspection(s) and test(s) shall be performed by a qualified independent inspector or expert, or an independent qualified third party. Inspections and testing shall be conducted pursuant to government or industry protocols and standards, as applicable. List inspections (e.g., home, roof, foundation, septic) here: List tests (e.g., radon, lead-based paint, well water) here: Describe additional inspections and tests, if any, at lines or or attach as an addendum per line 325. NOTE: Any testing authorizations should specify the areas of the Property to be tested, the purpose of the test, (e.g., to determine if environmental contamination is present), any limitations on Buyer's testing and any other material terms. i. The section in the WB-24 Option to Purchase allows the buyer include any test or inspection the buyer wants to complete before deciding whether to exercise the option. ii. The pre-printed terms of the option do not have testing or inspection contingencies because the transaction does not succeed or fail as a direct consequence of testing or inspection results. iii. The buyer chooses whether or not to exercise the option based on the results of any authorized test and inspection. iv. The buyer does not have to provide a notice of defects or other objection to the results of a test or an inspection to terminate the transaction. v. The buyer can let the option expire as a way to terminate the transaction. vi. A buyer conducting tests or inspections as part of the option process must still share those results with the seller regardless of whether the buyer intends to exercise the option. fee are not deposits subject to return under Wis. Stat (4)(c). INSPECTIONS AND TESTING Buyer may only conduct inspections or tests if specific authorizations are included in this Option. An "inspection" is defined as an observation of the Property which does not include an appraisal or testing of the Property, other than testing for leaking carbon monoxide, or testing for leaking LP gas or natural gas used as a fuel source, which are hereby authorized. A "test" is defined as the taking of samples of materials such as soils, water, air or building materials from the Property and the laboratory or other analysis of these materials. Seller agrees to allow Buyer's inspectors, testers, appraisers and qualified third parties reasonable access to the Property upon advance notice, if necessary to perform the activities authorized in this Option. Buyer and licensees may be present at all inspections and testing. Except as otherwise provided, Seller's authorization for inspections does not authorize Buyer to conduct testing of the Property. Buyer agrees to promptly restore the Property to its original condition after Buyer's inspections and testing are completed unless otherwise agreed to with Seller. Buyer agrees to promptly provide copies of all inspection and testing reports to Seller. Seller acknowledges that certain inspections or tests may detect environmental pollution which may be required to be reported to the Wisconsin Department of Natural Resources. 15