2.2 Agency Duties in Wisconsin
Key Takeaways
- Wis. Stat. 452.133(1) lists the duties a firm owes to ALL parties: honest service, reasonable skill and care, written disclosure of material adverse facts, accurate market information on request, confidentiality, account for funds, and reasonable inspection.
- A 'material adverse fact' (452.01(5g)) is a fact that would significantly affect a reasonable party's decision or the value/safety of the property and is not readily observable.
- Client-only duties under 452.133(2) add loyalty, obedience to lawful instructions, and disclosure of all information material to the transaction.
- Confidentiality survives the end of the agency relationship and protects motivation, financial position, and any info a reasonable person would want kept private.
- A firm must disclose material adverse facts in writing in a timely manner UNLESS disclosure is prohibited by law (for example, federal fair-housing or HIV/AIDS-status limits).
Duties Owed to ALL Parties — Wis. Stat. 452.133(1)
Every firm owes the following to every party in a transaction, client or customer alike. Memorize these six — the exam tests which duties survive even when no agency agreement exists.
| # | Duty (452.133(1)) | Exam-critical detail |
|---|---|---|
| 1 | Provide brokerage services honestly and fairly | No misrepresentation, no fraud, applies equally to both sides |
| 2 | Exercise reasonable skill and care | Negligence standard; competent, diligent performance |
| 3 | Disclose material adverse facts in writing | Timely, to each party, unless disclosure is prohibited by law |
| 4 | Keep confidential information confidential | Survives the relationship; not waived just because someone is a customer |
| 5 | Provide accurate market information on request | Within a reasonable time when a party asks |
| 6 | Account for property/funds; safeguard trust funds | Earnest money, deposits held in trust |
The firm must also conduct a reasonably competent and diligent inspection of accessible areas to detect observable material adverse facts — Wisconsin does NOT impose a full structural inspection duty, only observation of what is reasonably detectable.
Material Adverse Fact — the Defined Term
Under Wis. Stat. 452.01(5g), a material adverse fact is an adverse fact that a party indicates is significant to their decision, OR that is generally recognized as significant to a reasonable party, AND that the firm has reason to know the other party does not have and cannot reasonably discover. "Adverse fact" includes a condition or defect that reduces value, significantly impairs health/safety, or shortens the property's normal life.
| Likely material adverse fact | Likely NOT required to disclose |
|---|---|
| Known structural defect, recurring basement flooding | Property was site of a homicide/suicide (452.23 — not adverse) |
| Failing private septic (POWTS) | Occupant had/has HIV or AIDS (452.23 prohibits) |
| Defective well or unsafe wiring the buyer can't see | Mere proximity to a sex offender (use registry) |
Trap: Wisconsin's 452.23 stigma statute says a death on the property, a prior occupant's HIV/AIDS status, or registered-offender proximity are NOT material adverse facts and need not be disclosed. Disclosing protected-class health info could itself violate law.
Confidentiality Lasts
The duty to keep confidences continues after the transaction or relationship ends. Confidential info includes a party's motivation, top price/bottom line, financial condition, and anything given in confidence. The firm may break confidentiality only when law requires disclosure (for example, a known material adverse fact must still be disclosed).
Timing and the Inspection Standard
The duty to disclose material adverse facts is ongoing: if the firm learns of a defect after listing but before closing, it must disclose it in a timely manner. The firm's inspection obligation is limited to a reasonably competent and diligent inspection of accessible areas — the firm need not move furniture, open walls, or hire an engineer, but must report what a careful licensee would observe (water stains, foundation cracks, mold, obvious roof damage).
Additional Duties Owed ONLY to Clients — Wis. Stat. 452.133(2)
A client (someone with a written agency agreement) is owed everything above PLUS the heightened fiduciary-style duties below. A customer receives the 452.133(1) baseline but none of these.
| Client-only duty | What it requires | Limit |
|---|---|---|
| Loyalty | Act in the client's best interest, place client above firm's own interest | Limited/suspended in multiple representation |
| Obedience | Follow the client's lawful instructions | Cannot follow unlawful or discriminatory instructions |
| Full disclosure | Disclose all information material to the transaction to the client | Subject to fair-housing limits |
| Negotiate as the client directs | Advance the client's negotiating position, advise on price/terms | Not owed to a customer |
Loyalty plus full disclosure are why a client gets price advice and strategy while a customer does not. On the exam, if a question gives a duty like "advise the buyer how much to offer," the firm may do this only for a client.
Client vs. Customer — Master Comparison
| Duty | Client | Customer |
|---|---|---|
| Honest and fair service | Yes | Yes |
| Reasonable skill and care | Yes | Yes |
| Written disclosure of material adverse facts | Yes | Yes |
| Confidentiality (baseline) | Yes | Yes |
| Accurate market info on request | Yes | Yes |
| Account for / safeguard trust funds | Yes | Yes |
| Loyalty | Yes | No |
| Obedience to lawful instructions | Yes | No |
| Full disclosure of all material info | Yes | No |
| Negotiation advice / advocacy | Yes | No |
Worked Scenario
A listing firm learns the home has a chronically failing POWTS (private septic system) the buyer cannot see. The seller (client) says "don't tell anyone." The firm must still disclose the failing septic in writing to the buyer — it is a material adverse fact, and obedience does NOT extend to unlawful instructions. By contrast, if the seller confides a willingness to accept far less than list price, that is confidential and the firm must NOT reveal it to the buyer. Disclose defects; protect negotiating position.
Trap: Candidates conflate the two. Material adverse FACTS about the property must be disclosed to everyone; confidential NEGOTIATING information must be protected. A single scenario often tests both at once.
When Duties Begin, and Agency-Disclosure Timing
Wisconsin is a firm-level agency state: the duties of 452.133 attach to the firm, not to an individual agent, the moment the firm provides brokerage services. Two timing rules are tested heavily on the state portion:
| Trigger | Required disclosure | Form |
|---|---|---|
| Firm begins providing services to a party | Written agency disclosure describing whether the firm represents that party as a client | Built into WB listing/buyer-agency forms and the WB-50 customer disclosure |
| Firm will write an offer for a buyer who is only a customer | Provide the broker disclosure to customers before the offer | WB-50 |
A customer receives the 452.133(1) baseline (honest/fair service, reasonable skill and care, written disclosure of material adverse facts, confidentiality of information given in confidence, accurate market data on request, and safekeeping of funds) but not loyalty, obedience, full disclosure, or negotiating advocacy.
Trap: the disclosure that a party is a customer rather than a client must be made before the firm provides brokerage services or writes an offer for that party — not at closing. Late disclosure is itself a violation, even if the firm behaved honestly throughout.
Which duty does a Wisconsin firm owe to ALL parties, including customers?
A seller-client tells the listing firm to conceal a chronically failing private septic system the buyer cannot detect. What must the firm do?
Under Wisconsin's stigma statute (Wis. Stat. 452.23), which of the following is NOT a material adverse fact a firm must disclose?