3.1 Wisconsin Contract Requirements

Why Contracts Dominate the Exam

The Wisconsin salesperson exam is delivered by Pearson VUE as a single integrated test of 140 scored questions organized by topic, with a 75% weighted passing score. Contract Law & Approved Forms is about 22 questions, and contracts, offers, and trust-fund handling also surface inside other topic areas, so this chapter is high-yield. A salesperson is permitted to fill in the blanks on approved forms but may not draft custom legal provisions; doing so is the unauthorized practice of law.

Statute of Frauds (Wis. Stat. 706.02)

Wisconsin's Statute of Frauds requires that a transaction conveying an interest in land be evidenced by a writing that is signed by or on behalf of each party, identifies the parties and the land, and states the material terms. Oral listing or purchase agreements are generally unenforceable.

Key Point: A handshake deal to sell a house cannot be enforced in court. Electronic signatures and electronic records ARE valid under Wisconsin's adoption of the Uniform Electronic Transactions Act — "in writing" does not mean "on paper."

The Five Elements of a Valid Contract

Trap: Earnest money is NOT a required element of a binding contract. A zero-earnest-money offer can still be fully enforceable if the five elements are present.

Approved WB Forms (DSPS / REEB)

Wisconsin licensees use standardized WB forms approved by the Real Estate Examining Board (REEB) within the Department of Safety and Professional Services (DSPS). Know the numbers cold:

Form-number trap. The counter-offer is the WB-44, not the WB-41. The WB-41 is a "Notice Relating to Offer to Purchase" (used, for example, to deliver a notice such as satisfying or waiving a contingency), and the WB-40 is the Amendment both parties sign to change agreed terms. Mixing up WB-40, WB-41, and WB-44 is a classic state-portion distractor.

Offer, Counter, and Binding Acceptance

Acceptance is only effective when the signed acceptance (or counter-offer) is delivered back to the other party within the offer's stated time. Until delivery, either side may withdraw. A counter-offer rejects the original offer and substitutes new terms; the original is dead even if the offeror later tries to accept it.

Earnest Money and the Trust Account (REEB 18.031)

Earnest money is a good-faith deposit accompanying an offer. Under Wis. Admin. Code REEB 18.031, the firm (not the individual salesperson) must deposit all trust funds into a real estate trust account within 48 hours of receipt. If funds are received the day before a holiday or other day the bank is closed, the firm has the next 2 business days to deposit.

Worked Example: A buyer hands a salesperson a $5,000 earnest-money check at 5 p.m. Friday. The bank is closed Saturday and Sunday, and Monday is a legal holiday. The firm must deposit by the close of business Wednesday — the next two business days after the closure.

Common Contingencies

Contingencies let a party exit the contract if a stated condition is not satisfied by its deadline.

• Financing contingency: Buyer must apply for the loan within the stated days and may cancel (often with a lender denial) if financing on the described terms is unavailable.
• Inspection contingency: Buyer may inspect and then accept, request repairs/credit by amendment, or cancel within the inspection period.
• Appraisal contingency: If the property appraises below the purchase price, the buyer may cancel, pay the gap, or renegotiate.
• Sale-of-buyer's-property contingency: Buyer's purchase depends on selling their current home, often with a bump clause.

Computing Deadlines (“Time Is of the Essence”)

The WB-11 states that time is of the essence for stated dates. Deadlines run on calendar days unless “business days” is specified. The day of the event is not counted; counting begins the next day. A deadline landing on a Saturday, Sunday, or legal holiday extends to the next business day.

Exam Tip: Distinguish an executory contract (signed but not yet closed — contingencies pending) from an executed contract (fully performed at closing). “Executed” on the exam usually means “closed,” not merely “signed.”