Legal Library
Division Of Real Estate Newsletter – First Quarter 2020
January 1, 2020
Author:
Section 3(Licensing): Legislative Update: Talks about H.B. 147 and some of the impacts it has on real estate agents through the Real Estate Licensing and Practices Act, as well as some others for appraisers and mortgage companies.
Changes Affecting Real Estate, Mortgage, and Appraisal
Removed reference to crimes of moral turpitude.
The term moral turpitude is subjective. H.B. 147S01 replaced this term with specific types of crimes the division and commission care about: Felonies and Class A and B Misdemeanors involving fraud, misrepresentation, theft, or dishonesty.
Real Estate Licensing and Practices Act
61-2f-205. Form of license – Display of license.
Removed the requirement for a broker to keep a license copy for all licensees affiliated with their brokerage.
With technology today, a broker can easily pull up evidence of licensure through RELMS or the division’s website.
61-2f-401. Grounds for disciplinary action.
Removed reference to unprofessional conduct as defined by state or rule.
Unprofessional conduct has never been defined in statute or rule.
61-2f-402. Investigations.
Clarified that the division can only commence a disciplinary action within four years for failing to register a branch office (61-2f-206), failure to voluntarily furnish a copy of a document (61-2f-401(8)), and failure to respond to a request from the division (61-2f-401(18)).
Section 4(Advertising – Targeted Solicitation Law): A new law that goes into effect on May 12, 2020 may affect lenders and those who represent that they are the financial institution of an account holder. H.B. 113, Consumer Sales Practices Amendments prohibits a supplier who is not the financial institution of an account holder from representing, directly or indirectly, that the supplier is the financial institution of the account holder. Over the years, the Division has heard about companies that send direct mailers that misrepresent the source of the mailer. These direct mailers appear as though they are coming from the company where the consumer has an account, when in reality it is coming from a different company. This new law prohibits this practice. If a targeted solicitation is used, the following provisions must be followed:
A targeted solicitation, if offered in writing, shall include a clear and conspicuous statement in bold type on the front page of the document containing:
the name, address, and telephone number of the supplier offering the targeted solicitation; and
a statement indicating that the supplier offering the targeted solicitation is not sponsored by or affiliated with the financial institution that holds the account holder’s account.
If the targeted solicitation is offered orally, the supplier offering the targeted solicitation shall verbally communicate the statement described above.
A supplier who violates this section commits a deceptive act or practice under 13-11-4(1). Each violation can come with a fine of up to $2,500. The Division of Consumer Protection will enforce this new law. If an individual uses your company’s name in targeted solicitations after May 12, 2020 without your authorization, please file a complaint with the Division of Consumer Protection.
Section 9 (Broker Brush Up Series – I. Duties to Clients in Real Estate and Property Management): Part I of IV: Duties to Clients
First of all – I want to give a shout-out to the many phenomenal brokers out there running their brokerages with expertise and wisdom. We value the leadership and commitment you show to your clients, sales agents, the industry, and the community.
As you can imagine, there is a substantial difference between a broker running a brokerage with one or two sales agents and a broker supervising hundreds of sales agents. At the Division, all are held to the same standards. You may not have read the broker responsibilities in the Utah Code and Administrative Rules recently, so this year we thought a series of articles aiming to brush up your skills as a broker would be expedient. If you aren’t a broker but are thinking about the possibility of upgrading your license, read on as well! Let’s start things out with broker duties to clients.
The handling of client funds is paramount, so let’s go over a few earnest money rules. The deposit of earnest money from a buyer in a real estate transaction should be deposited into the brokerage trust account within three business days of receipt unless otherwise specified in the contract. If the parties to the transaction agree in writing, the earnest money may also be retained by a title company or another authorized escrow entity.
In a property management transaction, any funds received from a client or a tenant must be deposited into the brokerage trust account within three business days, unless otherwise specified in the contract. A property management broker may also forward or deposit client or tenant money into an account maintained by the property owner within the same time frame.
Let’s switch topics to another client duty, keeping clients updated throughout a transaction. Many real estate transactions are completed within 30 days, but did you know that as a principal or branch broker, you are required to provide a detailed statement showing the status of a transaction to your clients every 30 days until closing or failure? It is also a requirement to provide a status update to your client upon request. It might be prudent to track transactions that exceed a 30 day closing window so you can send out a friendly status update to let your clients know you are appreciative and mindful of their business.
Now, moving on to taking care of your clients at settlement. You need to make sure that the client’s agent or broker licensee affiliated with your office reviews the closing documents for content and accuracy, before or at closing. If you settle at a title company, it is common that the escrow officer provides your clients with a copy of closing documents, but it is your responsibility to make sure they receive these copies.
If you want to read the Utah Administrative Rule pertaining to the content above, see R162-2f-401c Additional Provisions Applicable to Brokers.
Easy peasy so far, right?! Brief recap, take care of your clients’ earnest money, transaction updates and closings. That’s all for now, until next time — Part II Transaction Files & Trust Accounts – Q2.
Laurel North – Broker Licensee & Investigator – Division of Real Estate
Section 14 (Kagie’s Korner – Advertising violations): In the year 2013, the percentage of complaints received by the Division that dealt with an advertising violation was approximately 36%. At that time, the Division issued warnings to the offending licensee for their first offense. Upon direction from the Real Estate Commission, the Division started holding licensees in violation on their first offense and discontinued issuing warnings. If you recall, the fourth quarter newsletter in 2013 included an article, “Notice: New Sanctions for Advertising Violations.”
Today, the number of advertising complaints has fallen to approximately 17%. The Division appreciates the efforts of licensees to comply with the advertising laws, thus decreasing the number of advertising complaints received. With that being said, we believe that as an industry we can do better. The 2014 guidelines established and introduced by the Real Estate Commission and Division, are as follows:
First-time advertising violation: $150 civil penalty, usually in the form of a citation.
Second advertising violation: $500 civil penalty, through either a citation or stipulation.
Third advertising violation: a hearing in front of the Real Estate Commission in which they will determine the appropriate penalty.
As stated in the 2013 article “As with any complaint, the Division will seek to obtain supporting evidence before deciding whether a penalty would be appropriate.” Any alleged violation made by the Division may be challenged by the licensee who will then have the option to present their case at a hearing with the Real Estate Commission or with an Administrative Law Judge. If the licensee disagrees with the allegations outlined in a citation, they have 20 days to appeal that citation.
Please be aware, any sanction by the Division will appear in the Division’s quarterly newsletter.
The Division recommends that each licensee familiarize themselves with R162-2f-401h, Requirements and Restrictions in Advertising.