Chapter 113

2011 -- H 5578 SUBSTITUTE A

Enacted 06/27/11

 

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS -- REAL ESTATE BROKERS AND SALESPERSONS

          

     Introduced By: Representatives Medina, Nunes, Johnston, Williams, and Tanzi

     Date Introduced: March 03, 2011

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. Sections 5-20.5-3, 5-20.5-4, 5-20.5-6, 5-20.5-7, 5-20.5-10, 5-20.5-11, 5-

20.5-12, 5-20.5-14, 5-20.5-15, 5-20.5-20, 5-20.5-26 and 5-20.5-27 of the General Laws in

Chapter 5-20.5 entitled "Real Estate Brokers and Salespersons" are hereby amended to read as

follows:

 

     5-20.5-3. Contents of application -- Application fee -- Recommendations required. --

(a) Applicants applying for the first time for a license to act as a real estate broker or real estate

salesperson shall file with the director an application for the license upon a printed or electronic

form as determined furnished by the director which, together with any additional information that

the director requires, contains a statement under oath by the applicant giving his or her age,

residence, place of business, present occupation and occupation for the past five (5) years and

whether or not he or she has been refused a real estate broker's or salesperson's license in this or

in any other state or had any real estate license suspended or revoked.

      (b) All applicants for a license to act as a real estate broker or real estate salesperson

shall accompany their applications with a fee of ten dollars ($10.00) to cover costs of processing

those applications.

      (c) The application for a broker's license shall be accompanied by the recommendation

names of at least three (3) citizens who are property owners for at least three (3) years, Rhode

Island residents who have known the applicant for three (3) years, and are not related to the

applicant, certifying and will attest that the applicant bears a good reputation for honesty and

trustworthiness, and who will recommend recommending that a license be granted to the

applicant,. and the The applicant must be a citizen or legal resident of the United States and at

least legal age of majority, if applicant for broker license, or at least eighteen (18) years of age for

salesperson license. In the case of an applicant for a real estate salesperson's license, he or she

must also file a statement under oath from the broker in whose employ the applicant desires to

enter that in his or her opinion the applicant is competent and trustworthy and is recommended as

a suitable person to be granted a salesperson's license.

 

     5-20.5-4. Examination of applicants -- Examination fee -- Licensing without

examination. -- (a) The director shall require any applicant for a real estate broker's or

salesperson's license to submit to and pass a written examination to show the applicant's

knowledge of the state statutes and the rules and regulations relating to real property, deeds,

mortgages, leases, contracts, and agency. An applicant shall not be required to take the uniform

portion of the Rhode Island real estate licensing examination if the applicant provides sufficient

evidence that the applicant possesses an existing valid real estate license from a state that has

similar statutes or regulations in effect which provide for reciprocal waiver of the uniform portion

of the real estate licensing examination for persons holding an existing valid Rhode Island real

estate broker's or salesperson's license and the applicant has been licensed for a period of not less

than two (2) consecutive years immediately prior to the date of his or her application; and further

provided, that the applicant must be tested for the remainder of the Rhode Island real estate

licensing examination as administered by the department of business regulation. An applicant for

a real estate broker's or salesperson's license, prior to the taking of the examination, must pay an

examination fee, the cost of which is limited to the charge as designated by the appropriate testing

service's contract with the department of business regulation.

      (b) An applicant for a real estate salesperson's license must submit satisfactory evidence

of completion of a minimum of forty-five (45) classroom hours in a real estate course given by a

school as defined in section 5-20.5-19. The applicant for a broker's license must also submit

satisfactory proof that he or she has been engaged full time as a real estate salesperson for at least

one year two (2) years immediately prior to the date of application, except that the period is

waived if the applicant has received a baccalaureate degree with a major in real estate, from an

accredited college or university; or has successfully completed at least ninety (90) hours of

approved classroom study in a school as defined in section 5-20.5-19, or equivalent in a

correspondence course offered by an extension department of an accredited college or university.

The director, in his or her sole discretion, may require any additional evidence or proof, as to the

honesty, trustworthiness, integrity, good reputation, and competency of any applicant.

      (c) The director shall notify applicants of the result of the examination within thirty (30)

days of the date of the examination. Any successful applicant who fails to remit the original

license fee as provided in section 5-20.5-11 within one year of the date of that examination may

be required by the director to re-submit to and pass a written examination as provided in

subsection (a) of this section.

      (d) When an attorney-at-law licensed by the supreme court of the state desires to have a

real estate broker's license or a real estate salesperson's license, the attorney, by application, and

upon payment of the applicable fee as provided in section 5-20.5-11, shall be granted a license

without examination.

      (e) A certificate of licensure shall be issued by the real estate division of the department

of business regulation within thirty (30) days after it is requested at a cost of not more than

twenty-five dollars ($25.00) for each certificate issued.

 

     5-20.5-6. Duration of licenses -- Rules and regulations -- Suspension or revocation of

licenses. -- (a) If the director is satisfied that the applicant is competent and trustworthy and is

reasonably familiar with the statutes and law relating to real estate, he or she shall issue to the

applicant a license to act as a real estate broker or a real estate salesperson. The director shall

promulgate rules and regulations mandating the term of license for each category of license

issued pursuant to this chapter. No license shall remain in force for a period in excess of three (3)

years. Any fee for the initial issuance of a license or for renewal of a license issued pursuant to

this chapter is determined by multiplying the current annual fee by the term of years of the license

or renewal. The fee for the total number of years of the initial license or of the renewal shall be

paid in full prior to the issuance of the respective license. The license shall be renewed upon

payment of the renewal fee, and proof of completion of any continuing education requirements as

set forth in the rules and regulations issued by the department of business regulation. Any license

issued or renewed may be suspended or revoked by the director, for cause, prior to the expiration

date. The director shall issue reasonable rules and regulations with the consent of the majority of

the Rhode Island real estate commission governing the conduct 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.

      (b) Any rules or regulations promulgated with regard to the requirement of continuing

education for the renewal of any real estate broker's and/or salesperson's license whose

application for an initial broker's and/or salesperson's license is approved within one hundred

eighty (180) days of the expiration date of his or her initial license is not subject to the continuing

education requirement at the time of his or her first renewal. The director, after a due and proper

hearing, may suspend, revoke, or refuse to renew any license upon proof that it was obtained by

fraud or misrepresentation or that the holder of the license has been guilty of fraud or

misrepresentation or criminal acts in the performance of his or her functions, or upon proof that

the holder of the license has violated this statute or any rule or regulation issued pursuant to this

statute.

      (c) The director shall, for licenses issued or renewed after July 1, 2004, require proof of,

reasonable familiarity with and knowledge of duties and responsibilities established by the Lead

Poisoning Prevention Act, chapter 24.6 of title 23 of the general laws, and the Lead Hazard

Mitigation Act, chapter 128.1 of title 42 of the general laws. Notwithstanding the provisions of

subsection (b) above, the requirements of this subsection shall apply to first renewals when

licenses were initially issued before July 1, 2004. This subsection shall be put into force and

effect by the director in the manner set forth in chapter 128.1 of title 42 and with the advice of the

Rhode Island Real Estate Commission.

 

     5-20.5-7. Fixed office required -- Display of license -- Notice of change of address

and employment. -- Each resident licensed real estate broker must maintain a fixed office within

this state which is located to conform to zoning laws. All business records relating to real estate

transactions and to the management of that office must be kept on the premises of the fixed office

location. The original license as real estate broker and the original license of each real estate

salesperson in the employ of or under contract with that real estate broker shall be prominently

displayed in the office. Any change of place of business of a real estate broker and any change of

employment of any real estate salesperson shall be immediately communicated to the director. A

real estate broker shall communicate any change of fixed office location to the director, and a real

estate salesperson shall communicate any change of employment or broker affiliation to the

director, immediately upon or prior to such change.

 

     5-20.5-10. Nonresident brokers -- Employment of unlicensed brokers restricted --

Nonresident salespersons -- Service of process. -- (a) A nonresident of this state may become a

real estate broker by conforming to all the provisions of this chapter, except that a nonresident

real estate broker regularly engaged in the real estate business as a vocation, and who maintains a

definite place of business and is licensed in some other state, which offers the same privileges to

the licensed brokers of this state, is not required to maintain a place of business within this state.

The director shall recognize the license issued to a real estate broker by another state as

satisfactorily qualifying him or her for a license as a broker in this state provided that the other

state permits licenses to be issued to licensed brokers in this state, without examination and

provided that the licensing requirements set forth in section 5-20.5-4 have been met.

      (b) It is unlawful for any licensed real estate broker to employ or compensate directly or

indirectly any person for performing any of the acts regulated by this chapter who is not a

licensed real estate broker or licensed real estate salesperson; provided, that a licensed real estate

broker may pay a commission to a licensed real estate broker of another state; provided, that the

nonresident real estate broker does not conduct in this state any of the negotiations for which a

fee, compensation, or commission is paid.

      (c) (1) A nonresident of this state may become a real estate salesperson by conforming to

all the provisions of this chapter, including those set forth in section 5-20.5-4 provided that the

nonresident real estate salesperson is regularly employed by a real estate broker licensed to do

business within this state.

      (2) The director shall recognize the license issued to a real estate salesperson by another

state as satisfactorily qualifying him or her for a license as a salesperson in this state and also that

the other state permits licenses to be issued to licensed salespersons in this state, without

examination.

      (d) No license shall be issued to a nonresident until he or she has filed with the director a

power of attorney constituting and appointing the director and his or her successor his or her true

and lawful attorney, upon whom all lawful processes in any action or legal proceeding against

him or her may be served, and in the power of attorney agrees that any lawful process against him

or her which may be served upon his or her attorney is of the same force and validity as if served

on the nonresident, and that the authority continues irrevocably in force as long as any liability of

the nonresident remains outstanding in the state. Service of that process shall be made by leaving

duplicate copies of it in the hands or office of the director, and the director shall immediately send

one of those copies by mail, postage prepaid, addressed to the defendant at his or her last address

as appearing on the records of the commission. One of the duplicates of that process, certified by

the director as having been served upon him or her is deemed sufficient evidence of that service,

and service upon that attorney is deemed service upon the principal.

 

     5-20.5-11. Fees and license renewals. -- (a) The following fees shall be charged by the

director:

      (1) For each application, a fee of ten dollars ($10.00);

      (2) For each examination a fee, the cost of which is limited to the charge as designated

by the appropriate testing service's contract with the department of business regulation;

      (3) For each original broker's license issued, a fee of eighty-five dollars ($85.00) per

annum for the term of the license and for each annual renewal of the license, a fee of eighty-five

dollars ($85.00) per annum for the term of renewal. The total fees for the term of initial licensure

and of renewal are must be paid at the time of application for the license;

      (4) For each original salesperson's license issued, a fee of sixty-five dollars ($65.00) per

annum for the term of the license and for each renewal of the license, a fee of sixty-five dollars

($65.00) per annum for the term of the license. The total fees for the term of initial licensure and

of renewal are must be paid at the time of application for the license.

      (5) For each change from one broker to another broker by a salesperson, or a broker, a

fee of twenty-five dollars ($25.00), to be paid by the salesperson or the broker;

      (6) For each duplicate license, where a license is lost or destroyed and affidavit is made

of that fact, a fee of twenty-five dollars ($25.00);

      (7) For each duplicate pocket card, where the original pocket card is lost or destroyed

and affidavit is made of that fact, a fee of twenty-five dollars ($25.00);

      (8) For each broker's license reinstated after its expiration date, a late fee of one hundred

dollars ($100), in addition to the required renewal fee;

      (9) For each salesperson's license reinstated after its expiration date, a late fee of one

hundred dollars ($100) in addition to the required renewal fee.

     (b) Every licensed real estate broker and salesperson who desires to renew a license for

the succeeding year term shall apply for the renewal of the license upon a form furnished by the

director and containing information that is required by the director. Any renewal of a license is

subject to the same provisions covering issuance, suspension, and revocation of any license

originally issued. At no time shall any license be renewed without examination if the license has

expired beyond a period of one year.

 

     5-20.5-12. Commission -- Creation -- Composition -- Appointment, terms, and

compensation of members -- Officers -- Deputy directors -- Seal. -- (a) (1) Within the

department of business regulation there is created the Rhode Island real estate commission,

subsequently referred to as "commission", to consist of nine (9) persons at least one from each

county to be appointed by the governor, each of whom has been a citizen of this state for at least

ten (10) years prior to the date of appointment, three (3) of whom have been engaged as a

licensed broker in this state for at least ten (10) years prior to the date of appointment, four (4) of

whom are members of the general public, at least one of whom has substantial academic

experience in real estate and at least one who has been active in citizen groups concerned with

real estate practices and activities. Two (2) members appointed for one year; two (2) members

shall be appointed for two (2) years; one member for three (3) years; one member for four (4)

years; and one member for five (5) years; beginning on December 31, 1973. Successors of all

members shall be appointed by the governor for terms of five (5) years each and until their

successors are appointed and qualify by subscribing to the constitutional oath of office, which

shall be filed with the secretary of state. Members to fill vacancies shall be appointed for the

unexpired term. No member shall be appointed to succeed himself or herself for more than one

full term. There are two (2) ex-officio members of the commission and they are the attorney

general or his or her designee and the director of the department or his or her designee. All ex-

officio members have full voting powers and serve without compensation. Upon qualification of

the members appointed, the commission shall organize by selecting from its members a

chairperson.

      (2) The commission shall adopt reasonable rules and regulations to carry out its

purposes. The division of professional department of business regulation with the assistance of

the commission shall implement a recertification program on or before January 1, 1982, and

establish any reasonable rules and regulations that are appropriate for that program to insure that

education and practice requirements of license holders meet the public interest.

      (b) The director shall employ a deputy director and any other employees that he or she

deems necessary and proper to discharge the duties imposed by this chapter, and shall determine

and prescribe their duties and fix their compensation, subject to the general laws of the state.

      (c) No member of the commission shall receive compensation for his or her official

duties but shall be reimbursed for his or her actual and necessary expenses incurred in the

performance of his or her official duties.

      (d) The commission shall adopt a seal of any design that it prescribes. Copies of all

records and papers in the office of the commission, duly certified and authenticated by its seal,

shall be received in evidence in all courts with like effect as the original. All records of the

commission are open to public inspection under any reasonable rules and regulations that it

prescribes.

      (e) The commission shall have a policy-making role in the preparation and composition

of the examinations to be administered by the division of professional regulation. Subsequent to

the administration of the examination, the commission shall review the examinations to evaluate

their effectiveness. The commission shall supervise the operations of the division in an advisory

capacity in promulgating any policy that is necessary to improve the operations of the division in

their areas of expertise. The promulgation of that policy is subject to the approval of the director

of the department of business regulation.

 

     5-20.5-14. Revocation, suspension of license -- Probationary period -- Penalties. -- (a)

The director may upon his or her own motion, and shall, upon the receipt of the written verified

complaint, in writing, of any person initiating a cause under this section, ascertain the facts and, if

warranted, hold a hearing for the suspension or revocation of a license. The director has power to

refuse a license for cause or to suspend or revoke a license or place a licensee on probation for a

period not to exceed one year where it has been obtained by false representation, or by fraudulent

act or conduct, or where a licensee, in performing or attempting to perform any of the acts

mentioned in this chapter, is found guilty of to have committed any of the following acts or

practices:

      (1) Making any substantial misrepresentation;

      (2) Making any false promise of a character likely to influence, persuade or induce any

person to enter into any contract or agreement when he or she could not or did not intend to keep

that promise;

      (3) Pursuing a continued and flagrant course of misrepresentation or making of false

promises through salespersons, other persons, or any medium of advertising, or otherwise;

      (4) Any misleading or untruthful advertising;

      (5) Failing to deposit money or other customers' funds received by a broker or

salesperson into an escrow account maintained by the broker which complies with the

requirements set forth in section 5-20.5-6, upon execution of a purchase and sales agreement;

      (6) Failing to preserve for three (3) years following its consummation records relating to

any real estate transaction as described in the regulations issued by the department;

      (7) Acting for more than one party in a transaction without the knowledge and consent,

in writing, of all parties for whom he or she acts;

      (8) Placing a "for sale" or "for rent" sign on any property without the written consent of

the owner, or his or her authorized agent;

      (9) Failing to furnish a copy of any listing, sale, lease or other contract relevant to a real

estate transaction to all signatories of the contract at the time of execution;

      (10) Failing to specify a definite termination date that is not subject to prior notice, in

any listing contract;

      (11) Inducing any party to a contract, sale, or lease to break that contract for the purpose

of substitution in lieu of that contract a new contract, where that substitution is motivated by the

personal gain of the licensee;

      (12) Accepting a commission or any valuable consideration by a salesperson for the

performance of any acts specified in this chapter, from any person, except the licensed real estate

broker with whom he or she is affiliated;

      (13) Failing to disclose to an owner his or her intention or true position if he or she

directly or indirectly through a third party, purchases for him or herself or acquires or intends to

acquire any interest in or any option to purchase property which has been listed with his or her

office to sell or lease;

      (14) Being convicted in a court of competent jurisdiction of this or any other state, or

federal court, of forgery, embezzlement, obtaining money under false pretenses, bribery, larceny,

extortion, conspiracy to defraud, or any similar offense or offenses, or pleading guilty or nolo

contendere to any such offense or offenses Being convicted of any criminal felony in a court of

competent jurisdiction of this or any other state or federal court, involving dishonesty, breach of

trust, forgery, embezzlement, obtaining money under false pretenses, bribery, larceny,

extortion, conspiracy to defraud, fraud, false dealing or any similar offense(s) or by pleading

guilty or nolo contendere to any such criminal offense or offenses;

      (15) Violating any rule or regulation promulgated by the commission or the department

in the interest of the public and consistent with the provisions of this chapter;

      (16) In the case of a broker licensee, failing to exercise adequate supervision over the

activities of his or her licensed salesperson within the scope of this chapter if the broker has

knowledge of any misdeeds of his or her sales staff;

      (17) Failing or refusing, within a reasonable time, to provide information requested by

the commission or director as the result of a formal or informal complaint to the commission or

director which would indicate a violation of this chapter;

      (18) Soliciting, selling, or offering for sale real property by offering free lots, or

conducting lotteries or contests or offering prizes for the purpose of influencing a purchaser or

prospective purchaser of real property;

      (19) Paying or accepting, giving or charging any undisclosed commission, rebate,

compensation, or profit or expenditures for a principal, or in violation of this chapter;

      (20) Any conduct in a real estate transaction, which demonstrates bad faith, dishonesty,

untrustworthiness, or incompetency incompetence;

      (21) Failing to have all listing agreements in writing, properly identifying the property

and containing all of the terms and conditions of the sale, including the commission to be paid,

the signatures of all parties concerned, and a definite expiration date in that contract, which shall

not require an owner to notify a broker of his or her intention to terminate. An exclusive agency

listing or exclusive right to sell listing shall be clearly indicated in the listing agreement;

      (22) Accepting a listing based on "net price". In cases where the owner wishes to list in

this manner, the agreed-upon commission is added and listings made in the usual manner;

      (23) Negotiating or attempting to negotiate the sale, exchange, or lease of any real

property directly with an owner or lessor knowing that the owner or lessor has an outstanding

exclusive listing contract with another licensee covering the same property, except when the real

estate broker or salesperson is contacted by the client of another broker regarding a real estate

service, and the broker or salesperson has not directly or indirectly initiated those discussions,

they may discuss the terms which they might enter into future agency agreement or they may

enter into an agency agreement which becomes effective upon termination of any existing

exclusive agreement; or they may enter into an agreement for other real estate service not covered

by an existing agency relationship;

      (24) Accepting an exclusive right to sell or lease or an exclusive agency and

subsequently failing to make a diligent effort to sell or lease the listed property;

      (25) Advising against the use of the services of an attorney in any real estate transaction;

      (26) Representing to any lender or any other party in interest, either verbally or through

the preparation of a false sales contract, an amount in excess of other than the true and actual

sales price;

      (27) Submitting to an owner a written offer to purchase or lease unless that offer contains

the essential terms and conditions of the offer including the manner in which the purchase price is

to be paid, and if that offer is contingent upon certain conditions, those conditions shall be clearly

stated in the offer, or unless the offer is conditioned upon the later execution of a complete

agreement for sale;

      (28) Wrongfully failing to refund to the buyer any sums of money paid by the buyer and

held by the broker when the seller wrongfully fails or is unable to consummate a transaction and

the buyer is ready, willing, and able to do so; Paying any sums of money being held in an escrow

account to any person, or converting such sums of money for his or her own use, in the event of a

failed real estate transaction, without having complied with the departmentís rules and regulations

relative to the transfer of disputed deposit funds to the office of the general treasurer;

      (29) Advertising to sell, buy, exchange, rent, or lease the property of another in a manner

indicating that the offer to sell, buy, exchange, rent, or lease that property is being made by a

private party not engaged in the real estate business, nor insert advertisements in any publication

containing only a post office or other box number, telephone number, or street address. No

salesperson shall advertise the property of another under his or her own name;

      (30) As a licensed salesperson, failing Failing upon termination of his or her

employment or affiliation with a real estate broker and upon demand by the broker to

immediately turn over to the broker any and all information, and records or other materials

obtained during his or her employment whether the information or records were originally given

to him or her by his or her employer the broker or copies copied from the records of that

employing broker or affiliation or acquired by the salesperson during his or her employment;

      (31) Offering, promising, giving or paying directly or indirectly, any part or share of his

or her commission or compensation arising or accruing from any real estate transaction to any

person who is not licensed as a real estate broker, but who by law should be licensed, or who is

not a real estate salesperson employed by that licensee;

      (32) Soliciting the sale, lease, or the listing for sale or lease, of residential property on

the ground of loss of value due to the present or prospective entry in the neighborhood of a person

or persons of another race, religion, or ethnic origin, nor shall he or she distribute or cause to be

distributed material or make statements designed to induce a residential property owner to sell or

lease his or her property due to the change in neighborhood such factors;

      (33) Failure of the employing broker to notify the director, in writing, within ten (10)

days of the termination of a salesperson's employment of contractual relationship, or failure of a

salesperson to notify the director, in writing, within ten (10) days of any change in his/her broker

affiliation;

      (34) Failure to report all written offers to the owner prior to the signing of a purchase and

sale agreement by the owner; or

      (35) Failure of agents to provide buyers and sellers of real property with disclosure

regarding real estate agency relationships as specified in chapter 20.6 of this title; or

      (36) Failure of an associate broker to inform the public of associate broker status by not

listing associate broker on business cards and correspondence or by informing the public that his

or her status in the real estate firm is that of broker.

      (b) The director is authorized to levy an administrative penalty not exceeding one

thousand dollars ($1,000) for any violation under this section or the rules and regulations of the

department of business regulation.

 

     5-20.5-15. Hearings before revocation or suspension of license. -- (a) (1) Before

refusing to issue a license or suspending or revoking a license on its own motion, the division of

professional regulation shall notify the applicant or licensee of its intended action and the grounds

for the action. The applicant or licensee may, within twenty (20) days file with the division, in

triplicate, a request for a hearing stating his or her answer to the grounds specified in the

notification. The division shall consider the answer and set a date for a hearing, notifying the

applicant or licensee of the date at least twenty (20) days prior to the hearing date.

      (2) Before refusing to issue a license or suspending or revoking an existing license upon

the verified written complaint of any person stating a cause of action under section 5-20.5-17, the

department of business regulation shall, in writing, notify the accused applicant or licensee of its

receipt of the complaint, enclosing a copy of the complaint. The accused applicant or licensee

shall within twenty (20) days, file with the department, in quadruplicate, his or her answer to the

complainant or complainants.

      (3) The division shall transmit a copy of the answer to the complainant or complainants

and set a time and place for a hearing, which is at least twenty (20) days prior to the hearing date.

      (4) All notices and answers required or authorized to be made or filed under this section

may be served or filed personally, or by certified mail to the last known business address of the

addressee. If served personally, the time runs from the date of service; if by registered mail, from

the postmarked date of the letter enclosing the document.

      (5) At the discretion of the division, hearings Hearings are open to the public, and are

conducted in accordance with the provisions of title 42, chapter 35 relating to Administrative

Procedures, and the departmentís rules of procedure for administrative hearings, and the applicant

or licensee has an opportunity to be heard in person or by counsel. The division A hearing officer

appointed by the director shall render a decision on any application or complaint within sixty (60)

days after the final hearing in the matter and shall immediately notify the parties to the

proceedings, in writing, its ruling, order or decision. In the event the matter contained in the

complaint has been filed or made a part of a case pending in any court in this state, the division

may then withhold its decision until the court action has been concluded. Hearings shall be held

in accordance with rules promulgated by the division in conformity with law.

      (b) Any unlawful act or violation of any of the provisions of this chapter by any

salesperson is not cause for the suspension or revocation of the license of the broker with whom

he or she is affiliated unless it appears to the satisfaction of the division of professional regulation

that the broker had knowledge of the unlawful act or violation.

      (c) The division of professional regulation is authorized and empowered to issue

subpoenas for the attendance of witnesses and the production of records or documents. The

process issued by the division may extend to all parts of the state, and the process may be served

by any person designated by the division. The person serving that process shall receive any

compensation that is allowed by the division, not to exceed the fee prescribed by law for similar

services. All witnesses subpoenaed who appear in any proceedings before the division shall

receive the same fees and mileage allowances allowed by law, and all those fees and allowances

are taxed as part of the cost of the proceedings.

      (d) Where, in any proceeding before the division of professional regulation, any witness

fails or refuses to attend upon subpoena issued by the division, or refuses to testify, or refuses to

produce any records or documents the production of which is called for by the subpoena, the

attendance of the witness and the giving of his or her testimony and the production of the

documents and records shall be enforced by any court of competent jurisdiction of this state in the

same manner as are enforced the attendance, testimony of witnesses, and production of records in

civil cases in the courts of this state.

 

     5-20.5-20. Real estate school permit -- Fees -- Penalty for operation without permit

prohibited. -- (a) It is unlawful for any school to offer courses or to conduct classes of instruction

in real estate subjects without first procuring a permit; or having obtained a permit, to represent

that its students are assured of passing examinations given by the division of professional

regulation, or to represent that the issuance of a permit is a recommendation or endorsement of

the school to which it is issued, or of any course of instruction given by it.

     (b) The application of each school shall be accompanied by a first year license fee of two

hundred fifty dollars ($250) and a further fee of one hundred dollars ($100) multiplied by the

remaining term of licensure. If issued, the license is renewable on the payment of a renewal fee

assessed at the rate of one hundred fifty dollars ($150) per annum. The total fee for the entire

term of initial licensure and renewal shall be paid at the time of application.

      (c) In the event that any person is found guilty of violating this section in the operation

of a school, or any rule or regulation adopted pursuant to this section, or attempts to continue to

operate as a school after the revocation or during a period of suspension of a permit, he or she is

guilty of a misdemeanor.

      (d) The department of business regulation shall promulgate rules and regulations

mandating the term of license and the term of renewal of each permit issued. No license shall

remain in force for a period in excess of three (3) years.

 

     5-20.5-26. Escrows. -- (a) Escrow.

      (1) Escrow accounts.

      (i) Each real estate firm shall maintain an escrow account under the supervision of the

broker qualified to do business in the name and on behalf of the corporate, partnership or

association licensee. All those funds paid to a salesperson or paid directly to a broker shall be

segregated on the broker's books and deposited in an account in a recognized federally insured

financial institution in Rhode Island separate from any account containing funds owned by the

broker. A broker or salesperson shall not commingle deposit money or other customers' funds and

his or her own funds, use a customer's funds as his or her own, or fail to keep an escrow or trustee

account of funds deposited with him or her relating to a real estate transaction, for a period of

three (3) years, showing to whom the money belongs, date deposited, date of withdrawal, to

whom paid, and any other pertinent information that the commission requires. Those records are

to be available to the commission and the department or their representatives, on demand, or upon

written notice given to the depository. Each broker/office supervisor shall maintain a monthly

report as to the status of that office's escrow account, and is responsible for its accuracy.

      (ii) A multi-office firm may either have an escrow account for each office or one central

escrow account for the firm.

      (iii) Funds held in escrow may be applied to the commission when earned by the listing

company.

      (iv) Remaining escrow funds shall be brought to the closing for disbursement by the

closing officer.

      (v)(iv) Whenever the ownership of any deposit monies received by a broker or

salesperson pursuant to this section is in dispute by the parties to a real estate transaction, the

broker or salesperson shall deposit the monies with the general treasurer within one hundred

eighty (180) days of the date of the original deposit, those monies to be held in trust by the

general treasurer until the dispute is mediated, arbitrated, litigated, or otherwise resolved by the

parties. The parties to a real estate transaction may agree in writing to extend the time period by

which the monies must be deposited with the general treasurer in accordance with regulations

promulgated by the department of business regulation.

      (vi)(v) The department of business regulation shall have the authority to promulgate

rules and regulations with respect to such escrow accounts and the deposit of monies with the

general treasurer.

      (2) Escrow agents. - Funds or deposits placed in escrow may be held by any person or

entity legally authorized to hold funds in that capacity, e.g., the real estate broker or attorney.

      (b) Dual activities. - In all real estate transactions in which a broker holds more than one

title, e.g., builder, contractor, or insurance agent, all deposit monies received must be placed in

the brokers real estate escrow account, unless there is a contractual agreement between the

principals to the contrary.

      (c) Unlawful appropriation. - Pursuant to section 11-41-11.1, any licensee to whom any

money or other property is entrusted as escrow funds, who intentionally appropriates to the

licensee's own use that money or property, or transfers the funds from an escrow account to a

company or personal account prior to a closing, is guilty of unlawful appropriation.

 

     5-20.5-27. License required for ownership. -- No person, firm or corporation shall have

an ownership interest in a real estate brokerage firm nor participate in the operation of the real

estate brokerage firm if unless the person, firm or corporation's corporation holds a valid real

estate broker's license, issued pursuant to the provisions of this chapter, has been revoked.

 

     SECTION 2. Section 5-20.5-24 of the General Laws in Chapter 5-20.5 entitled "Real

Estate Brokers and Salespersons" is hereby repealed.

 

     5-20.5-24. Name change. -- Wherever in this chapter there appear the words "salesman"

or "salesmen", they shall be substituted with the words "salesperson" or "salespersons".

 

     SECTION 3. This act shall take effect upon passage.

     

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LC01312/SUB A

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