Chapter
403
2007 -- S 0370 SUBSTITUTE A
Enacted 07/06/07
A N A C T
RELATING
TO BUSINESSES AND PROFESSIONS -- RESIDENTIAL REAL ESTATE TRANSACTIONS
Introduced
By: Senator William A. Walaska
Date
Introduced: February 13, 2007
It is enacted by the General Assembly as
follows:
SECTION 1.
Sections 5-20.6-1, 5-20.6-2, 5-20.6-3, 5-20.6-4, 5-20.6-5, 5-20.6-6, 5-20.6-
7 and 5-20.6-8 of the General Laws in Chapter
5-20.6 entitled "Agency Relationships in
Residential Real Estate Transactions" are
hereby amended to read as follows:
5-20.6-1. Definitions.
Legislative purpose. -- As used in this chapter, the following
terms have the following meanings:
(1)
"Agent" means a person who is licensed as a real estate broker or
salesperson under
chapter 20.5 of this title and is acting in a
fiduciary capacity on behalf of another party in a real
estate transaction.
(2)
"Buyer" means a transferee in a real estate transaction, and includes
a person who
executes an offer to purchase real estate from a
seller through an agent, or who seeks the services
of an agent with the object of entering into a
real estate transaction.
(3)
"Buyer's agent" means an agent who contracts to locate property for a
buyer or who
finds a buyer for a property for which no
listing exists and presents an offer to purchase to the
seller and negotiates on behalf of the buyer.
(4) "Dual
agent" means an agent acting as agent for both the seller and the buyer in
a real
estate transaction.
(5)
"Listing agent" means a person who has obtained a listing of real
property for sale.
(6)
"Listing agreement" means a contract between owner(s) of real
property and an
agent, by which the agent has been authorized to
sell the real property or to find or obtain a buyer.
(7)
"Residential real estate transaction" refers to the sale of real
property of four (4)
dwelling units or less.
(8)
"Sales agreement" means a written contract executed by a buyer acting
through a
selling agent, which becomes the contract for
the sale of the real property upon signing by the
seller.
(9)
"Sell," "sale," or "sold" refers to a transaction
for the transfer of real property from
the seller to the buyer, and includes exchanges
of real property between the seller and buyer and
transactions involving the creation of a real
property sales contract.
(10)
"Seller" means the transferor in a real estate transaction, and
includes an owner who
lists real property for sale with an agent,
whether or not a transfer results, or who receives an offer
to purchase real property of which he or she is
the owner from an agent on behalf of another.
(11)
"Selling agent" means a listing agent who acts alone, or an agent who
acts in
cooperation with a listing agent, and who sells
or finds and obtains a buyer for the real property.
(12)
"Subagent" means a person acting as a real estate broker or
salesperson under
chapter 20.5 of this title acting in a fiduciary
capacity on behalf of another party in a real estate
transaction and who is associated with a real
estate broker as an employee or independent
contractor, or who is a selling agent acting in
cooperation with a listing agent.
(a) The way
that consumers buy, sell, rent, exchange, and otherwise transfer real estate
has changed over the years. The purpose of this
legislation is to provide consumers with choice.
(b) This act is
intended to abrogate the common law of agency relative to relationships in
regulated real estate transactions to the extent
that they are inconsistent with this chapter.
(c) Unless
otherwise specified by written agreement, a licensee owes only those duties
and obligations set forth under this chapter,
chapter 5-20.5, and the regulations promulgated
thereunder. A licensee does not owe a fiduciary
duty under the common law of agency to his or
her clients and is not subject to equitable
remedies for breach of fiduciary duty.
(d) Nothing in this
chapter shall prohibit a principal broker and his or her affiliated
licensees from entering into a written
representation contract with a buyer, seller, tenant, or
landlord that creates a relationship in which
the duties and obligations are greater than those
provided in this chapter.
5-20.6-2. Agency
status. Definitions. -- (a) In the practice of real estate
brokerage,
real estate agents are considered to be the
agent of the seller of real estate unless there is an
agreement, in writing, to the contrary between
the buyer(s) and agent, and the agreement is
disclosed to all parties.
(b) As agent,
the real estate broker and salesperson are obligated to perform the duties of
agency, as to whether the agent represents the
seller or the buyer. The specific duties of the agent
are as set forth in section 5-20.6-6.
(c) A broker
or salesperson, operating as a subagent in cooperation with a listing agent,
owes the same duties and fiduciary
responsibility to the seller as the agent. A subagent has the
following additional duties:
(1) To keep
the agent informed as to the buyer's progress in meeting contingencies in the
contract for sale or lease of real property; and
(2) To provide
required services to buyers to consummate the sale.
(d) A broker
who is associated with a real estate firm, not as principal broker in the firm,
shall be considered a subagent, and shall
utilize the term "associate broker". An associate broker
may be affiliated with a real estate firm as
either an employee or an independent contractor.
(e) A broker
associate or salesperson may establish independent contractor status by an
appropriate written contract which essentially
conforms to the exemption requirements under the
internal revenue code.
As used in this
chapter, the following terms shall have the following meanings:
(a)
"Affiliated licensee" means a licensed real estate salesperson or
real estate broker as
defined in section 5-20.5-1 associated with a
particular principal broker.
(b)
"Brokerage" means a principal broker as defined in section 5-20.5-8
and his or her
affiliated licensees.
(c)
"Buyer" means a person who acquires or seeks to acquire an ownership interest
in real
estate.
(d)
"Client" means a buyer, seller, tenant or landlord who has agreed to
representation by
a licensee in a real estate transaction,
evidenced by an executed mandatory relationship
disclosure, to whom a licensee owes the duties
set forth in section 5-20.6-5.
(e)
"Client representation contract" means an express, written contract
between a
principal broker or his or her affiliated
licensees and a client that authorizes the principal broker
or his or her affiliated licensees to act as a
client representative for a buyer, seller, landlord, or
tenant and meets the requirements of section
5-20.6-10.
(f)
"Confidential information" means the following information:
(1) a buyer or
tenant's willingness to pay more than the offered price;
(2) a seller or
landlord's willingness to accept less than the asking price;
(3) a buyer or
tenant's previous offers made to purchase or lease real estate;
(4) a seller or
landlord's previous offers received to purchase or lease real estate;
(5) any
parties' motivating factors;
(6) any
parties' willingness to agree to other financing terms;
(7) any facts
or suspicions regarding circumstances, other than known material defects of
a property that a licensee must in all cases
disclose, that may psychologically impact or stigmatize
any real estate; or
(8) any
information about a party's assets, liabilities, income, or expenses.
(g)
"Customer" means a buyer, seller, tenant, or landlord who has agreed
to certain
assistance by a licensee in a real estate
transaction, evidenced by an executed mandatory
relationship disclosure, to whom a licensee owes
the duties set forth in section 5-20.6-4.
(h)
"Designated client representative" means an affiliated licensee
appointed by the
principal broker or his or her designee to
represent a buyer, seller, tenant, or landlord in a real
estate transaction.
The affiliated
licensee so designated shall obtain the informed, written consent of the
buyer, seller, tenant, or landlord with a signed
mandatory relationship disclosure pursuant to
section 5-20.6-8.
(i)
"Director" means the director of business regulation for the state.
(j) "Dual
facilitator" means a single licensee who, with the prior written consent
of both
parties assists a seller client and a buyer
client in the same transaction subject to the limitations
set forth in section 5-20.6-6.
(k)
"Landlord" means a person who leases or attempts to lease his
ownership interest in
real estate to another person.
(l)
"Lease" means an express written or oral contract between a landlord
and tenant for
the use or occupancy by the tenant of real
estate that is owned by another person.
(m)
"Licensee" means an individual licensed by the director as a real
estate broker or real
estate salesperson pursuant to chapter 5-20.5.
(n)
"Mandatory relationship disclosure" means a form that describes the
relationship
between a consumer and a principal broker and
his or her affiliated licensees that meets the
requirements of section 5-20.6-8.
(o)
"Ministerial acts" means acts of an administrative nature that
licensees perform for
client or customers, including, but not limited
to, showing property; preparing offers or
agreements to sell, purchase, exchange, rent, or
lease; conveying offers or agreements to the
parties; and providing information and
assistance.
(p)
"Principal broker" means a real estate broker licensed by the director
who is
designated by the brokerage to be responsible
for the supervision and activities of his or her
affiliated licensees in accordance with this
chapter and chapter 5-20.5.
(q) "Real
estate" refers to vacant land or land with physical improvements
consisting of a
house and/or structure.
(r) "Sales
agreement" means an express written contract signed by the buyer and
seller
for the purchase and sale of the real estate.
(s)
"Sell," "sale," or "sold" means a transaction for
the transfer of real estate from a seller
to a buyer, including, but not limited to,
exchanges of real estate between the seller and buyer and
transactions involving the creation of a sales
agreement.
(t)
"Seller" means a person who sells or attempts to sell an ownership
interest in real
estate to another person.
(u)
"Tenant" means a person who acquired or seeks to acquire an interest
in real estate
that entitles him or her to occupy or use a
property that is owned by another person.
(v)
"Transaction coordinator" means a principal broker or his or her
designee who
supervises a real estate transaction in a
neutral capacity in which one affiliated licensee represents
a buyer or tenant as a designated client
representative and another affiliated licensee represents a
seller or landlord as a designated client
representative in the same transaction. A transaction
coordinator does not own any fiduciary duties to
any party in a transaction except the duties to
protect the confidential information of the
parties and to properly account for money placed in his
or her care.
(w)
"Transaction facilitator" means a licensee who provides assistance to
a buyer, seller,
tenant, or landlord, or both, in a real estate
transaction as a neutral facilitator. A transaction
facilitator does not owe any fiduciary duties to
any party in a transaction but does owe the duties
set forth in section 5-20.6-4.
5-20.6-3. Disclosure
-- Provision to seller -- Exceptions. Relationships Creation
and presumption. -- Listing agents shall
provide the seller in a real estate transaction with a copy
of the disclosure form set forth in section
5-20.6-6 and shall obtain a signed acknowledgement of
receipt from that seller, except as provided in
section 5-20.6-5 as follows: the listing agent shall
provide the disclosure form to the seller as
part of the listing agreement. The form may be
referenced in the listing agreement and may
appear on the reverse side. The reference to state
seller disclosure form is required by law to be
signed by all parties.
(a) It shall be
presumed that all licensees in a real estate transaction are neutral
transaction facilitators unless, the licensee
obtains the informed, written consent of a buyer, seller,
tenant, or landlord with an executed mandatory
relationship disclosure to represent that person as
a designated client representative.
(b) The
provisions of this chapter are expressly intended to abrogate the common law of
agency; no type of agency representation shall
be assumed by a brokerage, principal broker,
licensee, buyer, seller, tenant, or landlord nor
shall agency representation be created by
implication.
(c) Types of relationships.
The following types of relationships are recognized:
(1) Neutral
assistance as a transaction facilitator to assist one or more customers; and
(2)
Representation of a buyer, seller, tenant or landlord as a designated client
representative.
5-20.6-4. Disclosure
-- Provision to buyer. Duties owed by transaction
representative to a customer Duties owed by a
transaction facilitator to a customer. --
Selling agents shall provide the buyer in a real
estate transaction with a copy of the disclosure
form set forth in section 5-20.6-6 and shall
obtain a signed acknowledgement of receipt from that
buyer except as provided in section 5-20.6-5.
This shall be done as soon as practical, such as prior
to qualifying a buyer or showing property by
appointment, and in all cases prior to submission of
a written offer to purchase. A copy of the
signed disclosure form shall be provided to the listing
agent at the time of the showing of the
property.
(a) A neutral
transaction facilitator owes the following duties to a customer:
(1) To perform
agreed upon ministerial acts timely and competently;
(2) To perform
these acts with honesty, good faith, reasonable skill and care;
(3) To properly
account for money or property placed in the care and responsibility of the
principal broker; and
(4) To protect
confidential information when assisting customers as a dual facilitator.
(b) A licensee
acting as a transaction facilitator does not owe any fiduciary duties to a
customer except those duties specified in
paragraph (a).
5-20.6-5.
Refusal to sign acknowledgement of receipt. Duties owed by a designated
client representative to client. -- In any circumstances
in which the seller or buyer refuses to
sign an acknowledgement of receipt pursuant to
sections 5-20.6-3 and 5-20.6-4, the agent shall
set forth, sign, and date a written declaration
of the facts of the refusal.
(a) If an
affiliated licensee is appointed by the principal broker or his or her designee
to
represent a buyer, seller, tenant, or landlord
in a real estate transaction and obtains the written
consent of a buyer, seller, tenant, or landlord
with an executed mandatory relationship disclosure
to represent that person as a designated client representative,
the licensee owes the following
legal duties and obligations to his or her
client:
(1) To perform
the terms of the client representation contract, if any, with reasonable skill
and care;
(2) To promote
the client's best interest in good faith and honesty;
(3) To protect
the client's confidential information during the relationship and after its
termination;
(4) To perform
agreed upon ministerial acts timely and competently;
(5) To perform
these acts with honesty, good faith, reasonable care and skill; and
(6) To properly
account for money or property placed in the care and responsibility of the
principal broker.
(b) A principal
broker or his or her designee may appoint one or more affiliated licensees
to act as the designated client
representative(s) of a seller or landlord and one or more affiliated
licensees to act as the designated client
representative(s) of a buyer or tenant in the same
transaction; provided; that, all parties to the
transaction receive written notice that an inherent
conflict of interest may exist when designated
client representatives are affiliated with the same
principal broker.
(c) A
designated client representative of a seller client or landlord client shall
have no
duty to protect the confidential information of
a buyer customer or tenant customer involved in a
transaction with his or her client. Conversely,
a designated client representative of a buyer client
or tenant client shall have no duty to protect
the confidential information of a seller customer or
landlord customer involved in a transaction with
his or her client.
(d) In the
event that one or more affiliated licensees represent a seller as a designated
client representative and one or more affiliated
licensees represent the buyer as a designated client
representative in the same transaction, the
principal broker or his or her designee shall act in a
neutral capacity as the transaction coordinator and
shall protect the confidential information of all
parties to the transaction and properly account
for funds.
(e) No
affiliated licensees of the principal broker other than those licensee(s)
specifically
designated to represent the client as a designated
client representative shall represent the client or
owe any other duties except that affiliated
licensees not appointed to represent a client in a
transaction shall have the duty to protect the
client's confidential information.
(f) All other
affiliated licensees of the principal broker not appointed as a designated
client representative for a party in a real
estate transaction may represent another party with
conflicting interests in the same transaction.
(g) The
mandatory relationship disclosure shall be presented, explained, and executed
at
the first personal contact with the prospective
buyer, seller, tenant, or landlord, or prior to an offer
to purchase, whichever is first to occur.
(h) A
designated client representative is exclusively responsible for the performance
of
any duties owed to the client.
(i) An
appointment of a designated client representative by a principal broker or his
or
her designee to represent a client shall not
limit the principal broker's liability or responsibility for
any breach of duty owed to a client by the
designated client representative.
5-20.6-6. Disclosure
form. Duties owed by a representative to a client Dual
facilitator. -- The disclosure form
required by sections 5-20.6-3 and 5-20.6-4 shall be in the
following form:
DISCLOSURE
REGARDING REAL ESTATE AGENCY RELATIONSHIP (a) When
you enter into a discussion with a real estate
salesperson or broker regarding a real estate
transaction, you should, from the outset, understand
what type of agency relationship or
representation you shall will have with the
salesperson or broker in the transaction. LISTING
AGENT (b) A listing agent is a real estate
salesperson or broker who becomes an agent of the
seller and works on behalf of and represents the
best interests of sellers, while treating buyers
honestly and fairly. According to the law of
agency, obligations of listing agents include, but are
not limited to, the following: TO THE SELLER:
(1) Owe the seller a fiduciary duty of utmost
care, integrity, honesty, loyalty, disclosure
and confidentiality; and (2) Represent the best
interests of the seller. TO THE BUYER: Treat the
buyer honestly and fairly. I
______________________________________ of __________________________________
(Listing Agent's Signature) (Listing Company)
represent the seller as listing agent. BUYER'S
AGENT (c) A buyer's agent is a real estate
salesperson or broker who becomes an agent of the
buyer and works on behalf of and represents the
best interests of buyers, while treating sellers
honestly and fairly. According to the law of
agency, obligations of buyer's agents include, but are
not limited to, the following; TO THE BUYER: (1)
Owe the buyer a fiduciary duty of utmost
care, integrity, honesty, loyalty, disclosure
and confidentiality; and (2) Represent the best
interests of the buyer. TO THE SELLER: Treat the
seller honestly and fairly. I
______________________________________ of __________________________________
(Buyer's Agent's Signature) (Real Estate
Company) represent the buyer as buyer's agent.
SELLER'S SUBAGENT (d) A seller's subagent is a
real estate salesperson or broker from either
the listing company or cooperating company who
becomes an agent of the seller and works on
behalf of and represents the best interests of
sellers, while treating buyers honestly and fairly.
According to the law of agency, obligations of
sellers' subagents include, but are not limited to,
the following; TO THE SELLER: (1) Owe the seller
a fiduciary duty of utmost care, integrity,
honesty, loyalty, disclosure and
confidentiality; and (2) Represent the best interests of the seller.
TO THE BUYER: Treat the buyer honestly and
fairly. I ______________________________ of
__________________________________________
(Signature of Listing or (Listing or
Cooperating Company) Cooperating Company Agent)
represent the seller as seller's subagent.
SELLER - BUYER RESPONSIBILITY (e) (1) The above
duties of the agent in a real estate
transaction do not relieve the seller or buyer
from the responsibility to protect their own interests.
You should carefully read all agreements to
assure that they adequately express your
understanding of the transaction. A real estate
agent is a person qualified to advise about real
estate. If legal or tax advice is desired,
consult a competent professional. (2) Throughout your real
property transaction you may receive more than
one disclosure form, depending upon the number
of agents assisting in the transaction. A
disclosure form is required by law to be signed by all
parties. You should read its contents each time
it is presented to you, considering the relationship
between you and the real estate agent in your
specific transaction. SELLER/BUYER
ACKNOWLEDGMENT I/We the undersigned hereby
acknowledge receipt of a copy of this
"Disclosure Regarding Real Estate Agency
Relationship" form, have read its contents and
understand the type of agency relationship I/We will
have with the salesperson or broker in the
real estate transaction.
__________________________________________________
Buyer/Seller Signature (Date)
__________________________________________________
Buyer/Seller Signature (Date) __________________________________________________
Buyer/Seller Signature (Date)
__________________________________________________
Buyer/Seller Signature (Date)
(a) A licensee
may assist both the buyer client and the seller client or tenant client and
landlord client in the same transaction only as
a neutral dual facilitator.
(b) The dual
facilitator relationship between the licensee and buyer and seller, or between
the licensee and tenant client and landlord
client, exists solely for the specific transaction between
the parties. In the event the transaction is not
completed or fails to close, then the dual facilitator
remains the designated client representative for
the respective buyer and the seller or tenant and
landlord in all future, separate transactions
where there is no relationship with other party.
(c) A licensee
may be a neutral dual facilitator only after he or she has obtained the
informed, written consent of his or her
principal broker and all parties involved in the transaction
before presenting an offer to a seller client on
behalf of a buyer client or to a landlord client on
behalf of a tenant client. Such consent shall
specifically inform all parties to the transaction of
the following:
(1) The dual
facilitator is authorized to assist both parties in a transaction but shall be
neutral as to any conflicting interests between
the parties to the transaction;
(2) A dual
facilitator shall not have the ability to satisfy fully the duties of loyalty,
full
disclosure, reasonable care and obedience to
lawful instructions, but shall still owe a duty to
protect the confidential information of all
parties and a duty to account for funds;
(3)
Confidential information obtained by a dual facilitator from either party may
not be
disclosed except:
(i) if
disclosure is expressly authorized;
(ii) if such
disclosure is required by law;
(iii) if such
disclosure is intended to prevent illegal conduct; or
(iv) if such disclosure
is necessary to prosecute a claim against a person represented or to
defend a claim against the licensee. The duty to
protect confidential information shall continue
after the completion of the transaction; and
(4) If a
comparative market analysis was prepared for a seller client or a buyer client
and
a dual facilitation situation subsequently
arises, the dual facilitator may only provide the
comparative market analysis to the other party
with the prior consent of the party for whom it was
initially prepared. A dual facilitator shall not
be able to prepare a comparative market analysis
for either party after a dual facilitation
situation arises as it may adversely affect one party's
bargaining position relative to the other party.
In the event
that either the seller client or buyer client in the case of a sale of
property, or
the landlord client and the tenant client in the
case of a rental of property, does not consent to dual
facilitation, then the principal broker or his
or her designee, may, with the consent of the
party(ies) withholding consent designate another
licensee to represent one of the parties as a
designated client representative.
In the event
that an affiliated licensee is acting as a dual facilitator, the principal
broker or
his or her designee shall act as a neutral
transaction coordinator in the transaction, except as
required by section 5-20.8-2, and shall protect
the parties' confidential information.
5-20.6-7. Disclosure
and confirmation of agency relationship. Designated agency
Duty to protect confidential information. -- (a) The agent shall
disclose to the buyer and seller
whether the agent is acting in the real estate
transaction exclusively as the buyer's agent,
exclusively as the seller's agent, or as a dual
agent representing both the buyer and the seller in
the contract to purchase and sell real property.
(b) The listing agent shall disclose to the seller
whether the listing agent is acting in the real
estate transaction exclusively as the seller's agent, or
as a dual agent representing both the buyer and
seller in the contract to purchase and sell real
property. (c) Each contract to purchase and sell
real property shall have a confirmation required
by subsections (a) and (b) of this section and
shall be in the following form:
____________________________
of ____________________________ (Name of
Listing Agent) (Listing Company) ( ) The seller
exclusively; or ( ) Both the buyer and seller.
____________________________ of
____________________________ (Name of Agent if not
(Real Estate Company) the same as the Listing
Agent) ( ) The buyer exclusively; or ( ) The seller
exclusively; or ( ) Both the buyer and seller.
(d) The
disclosures and confirmation required by this section are in addition to the
disclosure required by sections 5-20.6-3 and
5-20.6-4.
(a) Unless
otherwise authorized in paragraph (b), a licensee may not disclose the
confidential information of: (i) a client, in
the case of a designated client representative; or (ii) a
customer, in the case of a dual facilitator or
transaction coordinator; or (iii) any represented
party, in the case of an affiliated licensee who
is not appointed a designated client representative,
without the client or customer's consent.
(b) A licensee
may disclose confidential information that is a matter of general
knowledge or a part of a public record or file
to which access is authorized, or when necessary to
defend the licensee against a claim brought by
the client, or is otherwise subject to disclosure by
law.
(c) A principal
broker shall implement reasonable procedures to protect the confidential
information of all clients of designated client
representatives and, as required by this chapter, to
protect the confidential information of
customers of transaction facilitators. A designated client
representative shall have no duty to protect
confidential information of a party not a client unless
the confidential information of the party was
previously acquired by the designated client
representative as a result of a prior client or
transaction facilitator relationship with the party.
5-20.6-8. Disclosed
dual agency. Assistance of more than one person in same
transaction by individual affiliated licensee Mandatory relations
disclosure. -- (a) A real
estate agent can legally be the agent of both
the seller and the buyer in a transaction, when the
agent has a signed buyer agency agreement with
buyer and buyer is purchasing property listed by
the real estate firm of the agent. (b) Disclosed
dual agency can only exist with the knowledge and
consent of seller and buyer. (c) Where the
seller refuses the disclosed agency, then the agent is
released from his or her obligations to the
buyer, but must continue to treat the buyer fairly and
honestly and must not reveal confidential
information obtained from the buyer without approval
of the buyer. (d) When a buyer utilizing the services
of a buyer's agent desires to make an offer
on property listed by the buyer's agent real
estate firm, the following form must be signed by the
buyer, seller and agent:
State of Rhode
Island Date DISCLOSED DUAL AGENCY As the undersigned buyer
and seller, it is agreed that the property on
which offer is to be made is presently listed with the
firm of the undersigned agent, who had been
earlier retained by the buyer as the buyer's agent. It
is understood that agent cannot disclose
confidential information obtained from either party,
which would materially effect a purchase or sale
decision by either party. Agent will exercise
diligent and reasonable skill and care in
treating both parties honestly and fairly and deal in good
faith. BUYER SELLER AGENT
________________________ ____________
COMPANY____________
(a) The Rhode
Island real estate commission shall approve a mandatory relationship
disclosure that conforms to the requirements of
this section.
(b) A licensee
shall provide a prospective buyer, seller, tenant, or landlord in a real estate
transaction with a copy of the mandatory
relationship disclosure and shall obtain a signed
acknowledgement of receipt from the buyer,
seller, tenant, or landlord at the first personal contact
with the prospective buyer, seller, tenant, or
landlord, or prior to an offer to purchase, whichever
is first to occur. If a buyer, seller, tenant,
or landlord, refuses to sign an acknowledgement of
receipt, the licensee shall set forth, sign and date
a written declaration of the facts of the refusal.
(c) The
mandatory relationship disclosure shall contain the following information:
(1) A list of
the types of representation or assistance available to a prospective buyer,
seller, tenant, or landlord consistent with
section 5-20.6-3;
(2) A statement
that a principal broker and his or her affiliated licensees must disclose
their relationship as a designated client
representative, transaction facilitator, or transaction
coordinator to the buyer, seller, tenant, or
landlord in any transaction;
(3) The legal
duties and obligations owed to the buyer, seller, tenant, or landlord in each
type of relationship as set forth in this
chapter and chapter 5-20.5;
(4) A conspicuous
notice that a licensee cannot act as a client representative for a
prospective buyer, seller, tenant, or landlord
unless the licensee obtains the informed written
consent of a prospective buyer, seller, tenant,
or landlord with a signed mandatory relationship
disclosure;
(5) A box for
the client or customer to select the type of representation or assistance that
he or she desires;
(6) A statement
that a principal broker may designate one or more affiliated licensees to
act as the designated client representative(s)
of a seller or landlord and one or more affiliated
licensees to act as the designated client
representative(s) of a buyer or tenant in the same
transaction; provided, that the licensee obtains
the consent from the client being represented;
(7) A statement
that, when the principal broker or his or her designee appoints designated
client representatives to represent clients on
different sides of a transaction, he or she shall: (i) act
in a neutral capacity as a transaction
coordinator; (ii) protect all parties' confidential information;
and (iii) properly account for funds;
(8) A statement
that all affiliated licensees not appointed as a designated client
representative for the client may represent
another party in a transaction with conflicting interests;
(9) An
explanation of the potential conflicts of interest that exist if a licensee
acts as a
designated client representative in a
transaction or a neutral transaction facilitator for more than
one party in the same transaction;
(10) A
statement that a principal broker and his or her affiliated licensees must
disclose
their relationship as a designated client
representative, transaction facilitator, or transaction
coordinator to the buyer, seller, tenant, or
landlord in any transaction;
(11) A
statement that the failure of a licensee to give a prospective buyer, seller,
tenant,
or landlord the mandatory relationship
disclosure timely or the failure of a licensee to obtain any
other written consent required by this chapter
shall be a violation of Rhode Island real estate
license law and may subject the licensee to
disciplinary action;
(12) A
statement that if a consumer desires to change the nature of a relationship
with a
licensee from a customer relationship to a
client relationship that a licensee's relationship with a
buyer, seller, tenant, or landlord as a
designated client representative must be established no later
than the preparation of a sales agreement, offer
to purchase, or lease; and
(13) Written
confirmation from each party signing the mandatory relationship disclosure
that he or she has received, read, and
understood this mandatory relationship disclosure and has
consented to the relationship confirmed above.
(d) In all
instances, a licensee's relationship with a buyer, seller, tenant, or landlord
as a
designated client representative must be
established, and the mandatory relationship disclosure
executed, no later than the preparation of a
sales agreement, offer to purchase, or lease.
SECTION 2. Chapter
5-20.6 of the General Laws entitled "Agency Relationships in
Residential Real Estate Transactions" is
hereby amended by adding thereto the following
sections:
5-20.6-9.
Written requirement for representation of a client. (a) A licensee
shall not
act as a designated client representative until
the licensee has complied with section 5-20.6-8.
(b) Each
principal broker shall keep a receipt of the executed mandatory relationship
disclosure in accordance with subsection
5-20.5-8(b).
5-20.6-10.
Client representation contract Minimum requirements. (a) If a
seller,
buyer, landlord, or tenant and principal broker
elect to enter into a client representation contract,
the contract shall meet the following
requirements:
(1) Be an
express, written contract;
(2) Include
terms of compensation;
(3) Describe
all services and limitations on services to be performed by the principal
broker and his or her affiliated licensees;
(4) State that
a principal broker may appoint one or more affiliated licensees to act as the
designated client representative(s) for a seller
or landlord and one or more affiliated licensees to
act as the designated client representative(s)
for a buyer or tenant in the same transaction after a
licensee has obtained consent from the client
being represented; and
(5) Be signed
by all parties.
5-20.6-11. Relationship
and compensation. The payment or promise of payment or
compensation to a licensee does not create an
agency relationship between any licensee and
buyer, seller, tenant, or landlord.
5-20.6-12.
Rules and regulations. The director shall issue reasonable rules
and
regulations with the consent of the majority of
the Rhode Island real estate commission governing
the relationships of licensed real estate
brokers and salespersons. These rules and regulations shall
be designed to implement the laws and policies
of this state and to protect the interests of the
public.
5-20.6-13.
Penalty for violation. (a) Each violation of this chapter by a
licensee shall
constitute a violation of law pursuant to
chapter 5-20.5 and the regulations promulgated
thereunder and may subject the licensee to
disciplinary action.
(b) Failure to
provide the mandatory relationship disclosure in accordance with section 5-
20.6-8 does not void the sales agreement nor
create any defect in title.
SECTION 3. This
act shall take effect on May 1, 2008.
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LC01339/SUB A
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