contributed by Cori Lamont, Director of Corporate and Regulatory Affairs
The WRA received feedback from REALTORS practicing commercial real estate throughout the State requesting assistance on developing language for a commercial LOI. Several CARW members participated in dialogue with Cori Lamont and Tom Larson to create a new WRA form (this is not a WB Form).
As background, a Letter of Intent (LOI) is an agreement to agree in the future and is not an enforceable contract. In commercial transactions, it is commonplace for real estate agents to assist parties during the preliminary negotiation process by way of an LOI.
While real estate licensees can handle negotiations, which could potentially include an LOI, they also cannot provide legal advice. Since an LOI is not an enforceable contract, real estate licensees have to be cautious when working with LOIs because they must walk a fine line of avoiding providing any information, advice or representation of a legal nature.
Currently, Wisconsin law does not prohibit real estate licensees from utilizing LOIs on behalf of their party. The law does allow licensees the ability to utilize forms drafted by attorneys when a state-approved (WB) form is unavailable. Arguably, a licensee is in a better position to use an LOI form created by an attorney rather than drafting one on their own.
A few notes about the forthcoming WRA commercial LOI:
- not a WB form but is a WRA form. WB form must be used by real estate licensees, WRA forms do not.
- optional. Therefore, agents can continue to use their preferred LOI form rather than WRA’s.
- drafted by WRA attorneys.
- entitled Commercial Letter of Intent. This is intended to limit the use by residential practitioners.