§ 5-20.5-5. Real estate recovery account.
(a)(1) The department of business regulation shall establish and maintain a real estate recovery account from which any person aggrieved by an act, representation, transaction, or conduct of a licensed real estate broker or real estate salesperson, upon the grounds of fraud, misrepresentation or deceit, may recover by order of the superior court of the county where the violation occurred, an amount of not more than fifty thousand dollars ($50,000) for damages sustained by the fraud, misrepresentation, or deceit, as a result of any real estate transaction in which the real estate broker or salesperson has acted in his or her capacity as a real estate broker or salesperson. This account shall not be used to reimburse any real estate broker or salesperson for any commission, fee, or other valuable consideration due or owing from any other real estate broker or salesperson. Provided, that pursuant to subsection (h) of this section the amount available for payments of claims is limited to fifty thousand dollars ($50,000) for any one licensee. Payment of claims is made in order according to the date a judgment is awarded with that judgment awarded earliest in time being paid first.
(2) When any person makes application for an original license to practice as a real estate broker or salesperson he or she shall pay, in addition to his or her original license fee, a fee determined by the department for deposit in the real estate recovery account. If the department does not issue the license, this fee is returned to the applicant.
(b) If, on December 31 of any year, the balance remaining in the real estate recovery account is less than two hundred thousand dollars ($200,000), every real estate broker, when renewing his or her license during the following calendar year, shall pay, in addition to his or her license renewal fee, a fee of twenty-five dollars ($25.00) for deposit in the real estate recovery account, and every real estate salesperson, when renewing his or her license during that year, shall pay, in addition to his or her license renewal fee, a fee of twenty-five dollars ($25.00) for deposit in the real estate recovery account.
(c)(1) No action for a judgment which subsequently results in an order for collection from the real estate recovery account shall be started later than two (2) years from the accrual of the cause of action. When any aggrieved person commences action for a judgment, which may result in collection from the real estate recovery account, the aggrieved person shall notify the department of business regulations, in writing, to this effect at the time of the commencement of that action.
(2) When any aggrieved person recovers a valid judgment in any court of competent jurisdiction against any real estate broker, or real estate salesperson, upon the grounds of fraud, misrepresentation, or deceit, which occurred on or after May 11, 1978, the aggrieved person may, upon the termination of all proceedings, including reviews and appeals in connection with the judgment, file a verified claim in the court in which the judgment was entered and, upon ten (10) days' written notice to the department, may apply to the court for an order directing payment out of the real estate recovery account, of the amount unpaid upon the judgment, subject to the limitations stated in this section.
(3) The court shall proceed upon the application in a summary manner, and, upon the hearing on the application, the aggrieved person shall be required to show:
(i) He or she is not a spouse of debtor, or the personal representative of the spouse;
(ii) He or she has complied with all the requirements of this section;
(iii) He or she has obtained a judgment as set out in subdivision (2) of this subsection, stating the amount of the judgment and the amount owing on it on the date of the application;
(iv) He or she has made all reasonable searches and inquiries to ascertain whether the judgment debtor is possessed of real or personal property or other assets, liable to be sold or applied in satisfaction of the judgment; and
(v) That by the search pursuant to paragraph (iv) of this subdivision he or she has discovered no personal or real property or other assets liable to be sold or applied, or that he or she has discovered certain of them, describing them, owned by the judgment debtor and liable to be so applied, and that he or she has taken all necessary action and proceedings for the realization, and that the amount realized was insufficient to satisfy the judgment, stating the amount realized and the balance remaining due on the judgment after application of the amount realized.
(4) The court shall make an order directed to the department of business regulation requiring payment from the real estate recovery account of whatever sum it finds to be payable upon the claim, pursuant to and in accordance with the limitations contained in this section, if the court is satisfied, upon the hearing of the truth of all matters required to be shown by the aggrieved person by subdivision (3) of this subsection and that the aggrieved person has fully pursued and exhausted all remedies available to him or her for recovering the amount awarded by the judgment of the court.
(5) Should the department of business regulation pay from the real estate recovery account any amount in settlement of a claim or toward satisfaction of a judgment against a licensed real estate broker or real estate salesperson, the license of the broker or salesperson shall be automatically revoked upon the issuance of a court order authorizing payment from the real estate recovery account. This broker or salesperson is not eligible to receive a new license until he or she has repaid in full, plus interest at the rate of twelve percent (12%) a year, the amount paid from the real estate recovery account on his or her account. A discharge in bankruptcy does not relieve a person from the penalties and disabilities provided in this subdivision.
(6) If, at any time, the money deposited in the real estate recovery account is insufficient to satisfy any authorized claim or portion of a claim, the department shall, when sufficient money has been deposited in the real estate recovery account, satisfy those unpaid claims or portions of claims, in the order that those claims or portions of claims were originally filed, plus accumulated interest at the rate of twelve percent (12%) a year.
(d) It is unlawful and constitutes a misdemeanor for any person or his or her agent to file with the department of business regulation any notice, statement, or other document required under this chapter which is false or untrue or contains any material misstatement of fact.
(e) When the department receives notice, as provided in subdivision (c)(1) of this section, the department may enter an appearance, file an answer, appear at the court hearing, defend the action, or take whatever other action it deems appropriate on behalf and in the name of the defendant, and take recourse through any appropriate method of review on behalf of, and in the name of, the defendant.
(f) When, upon the order of the court, the department of business regulation has paid from the real estate recovery account any sum to the judgment creditor, the department is subrogated to all of the rights of the judgment creditor and the judgment creditor assigns all his or her right, title, and interest in the judgment to the department and any amount and interest recovered by the department on the judgment shall be deposited to the account.
(g) The failure of an aggrieved person to comply with this chapter relating to the real estate recovery account constitutes a waiver of any rights under this chapter.
(h) Notwithstanding any other provision, the liability of that portion of the real estate recovery account allocated for the purposes of the real estate recovery account shall not exceed fifty thousand dollars ($50,000) for any one licensee.
(i) Nothing contained in this section limits the authority of the department of business regulation to take disciplinary action against any licensee for a violation of this chapter, or the rules and regulations of the department; nor does the repayment in full of all obligations to the real estate recovery account by any licensee nullify or modify the effect of any other disciplinary proceeding brought pursuant to this chapter.
(P.L. 1978, ch. 169, § 2; P.L. 1982, ch. 429, § 1; P.L. 1985, ch. 181, art. 59, § 1; P.L. 1990, ch. 412, § 2; P.L. 1990, ch. 480, § 1; P.L. 1992, ch. 61, § 1; P.L. 1993, ch. 138, art. 6, § 1.)