Chapter 027
2013 -- H 5718 SUBSTITUTE A
Enacted 05/24/13
A N A C T
RELATING TO
BUSINESSES AND PROFESSIONS - AGENCY RELATIONSHIPS IN
RESIDENTIAL REAL
ESTATE TRANSACTIONS
Introduced By: Representative Robert D. Phillips
Date Introduced: February 28, 2013
It is enacted by the
General Assembly as follows:
SECTION 1. The title of Chapter 20.6 of the General Laws
entitled "Agency
Relationships in
Residential Real Estate Transactions" is hereby amended to read as
follows:
CHAPTER
20.6
Agency
Relationships in Residential Real Estate Transactions
CHAPTER
20.6
RELATIONSHIPS
IN RESIDENTIAL REAL ESTATE TRANSACTIONS
SECTION 2. Sections 5-20.6-2, 5-20.6-3, 5-20.6-4, 5-20.6-5,
5-20.6-6 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:
5-20.6-2.
Definitions. -- As used in this chapter, the
following terms shall have the
following meanings:
(1) "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.
(2)
"Brokerage" means a principal broker as defined in section 5-20.5-8 and
his or her
affiliated licensees.
(3) "Buyer"
means a person who acquires or seeks to acquire an ownership interest in
real estate.
(4) "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.
(5) "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.
(6) "Confidential
information" means the following information:
(i)
A buyer or tenant's willingness to pay more than the offered price;
(ii) A seller or
landlord's willingness to accept less than the asking price;
(iii) A buyer or
tenant's previous offers made to purchase or lease real estate;
(iv)
A seller or landlord's previous offers received to purchase or lease
real estate;
(v) Any parties'
motivating factors;
(vi)
Any parties' willingness to agree to other financing terms;
(vii) 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
(viii) Any information
about a party's assets, liabilities, income, or expenses.
(7)
"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.
(8) "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.
(9) "Designee"
means an associate broker as defined in section 5-20.5-1 whom a
principal broker authorizes to act on his or her behalf.
(9)(10)
"Director" means the director of business regulation for the state.
(10)(11)
"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.
(11)(12)
"Landlord" means a person who leases or attempts to lease his
ownership
interest in real estate to another person.
(12)(13)
"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.
(13)(14)
"Licensee" means an individual licensed by the director as a real
estate broker
or real estate salesperson pursuant to chapter 5-20.5.
(14)(15)
"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.
(15)(16)
"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.
(16)(17)
"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.
(17)(18)
"Real estate" refers to vacant land on which a building is intended
to be
constructed for use as one or two (2) residential dwellings or
land with physical improvements
consisting of a house and/or structure comprised of four (4) or
fewer residential units.
(18)(19)
"Sales agreement" means an express written contract signed by the
buyer and
seller for the purchase and sale of the real estate.
(19)(20)
"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.
(20)(21)
"Seller" means a person who sells or attempts to sell an ownership
interest in
real estate to another person.
(21)(22)
"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.
(22)(23)
"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.
(23)(24)
"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.
Relationships -- Creation and presumption. -- (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 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.
Duties owed by a transaction facilitator to a customer. --
(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.
Duties owed by a designated client representative to client.
-- (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)(g) A
designated client representative is exclusively responsible for the performance
of any duties owed to the client.
(i)(h) 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.
Dual facilitator. -- (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. In the event
that the clients of a principal broker consent to his or
her acting as a disclosed dual facilitator, the
principal broker may also oversee the transaction as a
transaction coordinator.
5-20.6-8.
Mandatory relations disclosure. --
Mandatory relationship disclosure. -- (a)
The
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 prior
to the disclosure of any confidential information. 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 box for the
client or customer to acknowledge the type of representation or
assistance that a real estate licensee is offering to the other
party in the same transaction.
(6)(7) 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)(8) 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)(9) 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)(10)
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)(11)
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)(12)
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
estate license law and may subject the licensee to
disciplinary action;
(12)(13)
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)(14)
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 3. This
act shall take effect upon passage.
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LC01792/SUB A
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