Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission 1 Lesson 2 Louisiana Law and Regulations – Part II

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Lesson 2 Objectives Upon completion of this lesson, each student will be able to: Explain the requirements for advertising residential property including disclosures that apply to print and Internet advertising. Explain the requirements for advertising residential property including disclosures that apply to print and Internet advertising. 2

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Lesson 2 Objectives Upon completion of this lesson, each student will be able to: List and explain the forms and mandated disclosures used in real estate transactions. List and explain the forms and mandated disclosures used in real estate transactions. 3

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Lesson 2 Objectives Upon completion of this lesson, each student will be able to: Identify at least 10 of the 35 specific reasons for which a licensee may have their license revoked by the Louisiana Real Estate Commission. Identify at least 10 of the 35 specific reasons for which a licensee may have their license revoked by the Louisiana Real Estate Commission. 4

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Advertising Disclosures Disclosures Representations Representations 5

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Advertising (cont’d) Salespeople Salespeople Associate brokers Associate brokers 6

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Accuracy In Advertising Cannot be inaccurate Cannot be inaccurate Cannot be misleading Cannot be misleading Cannot misrepresent Cannot misrepresent 7

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Advertisements of Residential Property Print advertisements Print advertisements Month and year Month and year Commercial publications Commercial publications Brochures Brochures 8

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Advertisements By Franchise Organizations Disclosure to public Disclosure to public 9

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Agent Owner – Licensed Agent Licensee owned property Licensee owned property “Licensed real estate agent” “Licensed real estate agent” Licensee purchases Licensee purchases Exception for listed property Exception for listed property 10

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Internet Advertising - Brokers Broker’s name Broker’s name Main office location Main office location 11

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Electronic Communication - Brokers Broker’s name Broker’s name Main office location Main office location 12

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Internet Advertising - Sponsored Licensees Licensee’s name Licensee’s name Brokerage name Brokerage name Main office location Main office location 13

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Electronic Communication - Sponsored Licensees Licensee’s name Licensee’s name Brokerage name Brokerage name Main office location Main office location 14

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Licensee as a Principal 15

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Property Disclosure 16

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Agency Disclosure Pamphlet Required in all transactions Required in all transactions 17

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Agency Disclosure The pamphlet The pamphlet When to present When to present 18

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Agency Disclosure (cont’d) Signatures Signatures 19

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Agency Disclosure (cont’d) Refusal to sign the pamphlet Refusal to sign the pamphlet Maintaining records Maintaining records 20

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Required Purchase Agreement Form 21

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Requirement to Use Purchase Agreement Form Required on all residential sales Required on all residential sales Modifications not permitted Modifications not permitted 22

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Offender Notification Residential rental or lease agreements Residential rental or lease agreements Residential sales agreements Residential sales agreements 23

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Mold Disclosure 24

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Mold Informational Pamphlet Distributed to buyers Distributed to buyers Timing for delivery Timing for delivery No additional information required No additional information required 25

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Errors in Mold Pamphlet Licensee not responsible Licensee not responsible Must disclose material defects Must disclose material defects 26

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Timely Presentation Offers Offers Counteroffers Counteroffers 27

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Negotiations Listing broker Listing broker Designated listing agent Designated listing agent Buyer’s broker Buyer’s broker Designated buyer’s agent Designated buyer’s agent 28

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Transactions Date and time Date and time Notify designated agent Notify designated agent Document delivery Document delivery 29

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Rejections Offers Offers Counteroffers Counteroffers 30

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Broker Rejection of Offers Sign in lieu of owner Sign in lieu of owner Copies Copies Maintain records Maintain records 31

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Expiration Dates Listing agreements Listing agreements Management agreements Management agreements 32

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Providing Copies Immediately upon signing Immediately upon signing Within 5 days for multiple signers Within 5 days for multiple signers 33

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Recordkeeping Requirements Records of transactions must be maintained Records of transactions must be maintained LREC may inspect records LREC may inspect records Records may be subpoenaed Records may be subpoenaed Only brokers keep records Only brokers keep records 34

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Maintaining Documents Bank statements Bank statements Cancelled checks Cancelled checks Deposit slips Deposit slips Documents of transactions Documents of transactions 5 year requirement 5 year requirement 35

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Duty of Licensees to Report Legal Action Final judgments Final judgments Prosecution, arrest, or conviction Prosecution, arrest, or conviction Bankruptcy Bankruptcy 36

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Reporting Legal Action Report within 10 days Report within 10 days 37

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Reporting Bankruptcy Report within 10 days Report within 10 days 38

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Knowledge of the Law Licensee’s responsibility Licensee’s responsibility Regular review is important Regular review is important 39

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Commission Investigations Own motion Own motion Complaints in writing Complaints in writing Financial disputes Financial disputes 40

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Suspension and Revocation Return licenses Return licenses 72 hours 72 hours 41

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License Committing any act in violation of the Louisiana Real Estate License Law not specified in this Section. Committing any act in violation of the Louisiana Real Estate License Law not specified in this Section. Violating any rule or regulation promulgated by the Commission in the interest of the public and consistent with the provisions of the License Law. Violating any rule or regulation promulgated by the Commission in the interest of the public and consistent with the provisions of the License Law. 42

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Committing any act in violation of the Louisiana Timesharing Act. Committing any act in violation of the Louisiana Timesharing Act. Failure to account for any money coming into his possession belonging to others. Failure to account for any money coming into his possession belonging to others. 43

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure to properly disburse money which belongs to others upon its coming into his possession. Failure to properly disburse money which belongs to others upon its coming into his possession. Commingling the money or other property of his principals with his own. Commingling the money or other property of his principals with his own. 44

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Accepting, giving, or charging any undisclosed commission, rebate, or direct profit on expenditures made for a principal. Accepting, giving, or charging any undisclosed commission, rebate, or direct profit on expenditures made for a principal. Representing, or attempting to represent, a real estate broker or real estate agency, other than the licensed broker or agency listed on the real estate license issued by the Commission. Representing, or attempting to represent, a real estate broker or real estate agency, other than the licensed broker or agency listed on the real estate license issued by the Commission. 45

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Acting in the dual capacity of agent and undisclosed principal in any transaction. However, such a relationship shall not constitute dual agency if the licensee is the seller or lessor of property that he owns, or if the property is owned by a real estate business of which the licensee is the sole proprietor and agent, and the same is disclosed to the buyer or tenant. Acting in the dual capacity of agent and undisclosed principal in any transaction. However, such a relationship shall not constitute dual agency if the licensee is the seller or lessor of property that he owns, or if the property is owned by a real estate business of which the licensee is the sole proprietor and agent, and the same is disclosed to the buyer or tenant. 46

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Guaranteeing, or authorizing any person to guarantee, future profits which may result from the resale of real property. Guaranteeing, or authorizing any person to guarantee, future profits which may result from the resale of real property. Offering real estate for sale or lease without the written consent of the owner or his authorized agents. Undivided real estate may be offered for sale or lease with the written consent of the owner of the property to be sold or leased as to his undivided portion of the property. Offering real estate for sale or lease without the written consent of the owner or his authorized agents. Undivided real estate may be offered for sale or lease with the written consent of the owner of the property to be sold or leased as to his undivided portion of the property. 47

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Offering real estate for sale or lease on terms other than those authorized by the owner or his authorized agent. Offering real estate for sale or lease on terms other than those authorized by the owner or his authorized agent. Offering any inducement to, or in any way encouraging a party to a written contract involving the sale, lease, or management of real estate to break such contract for the purpose of substituting, in lieu thereof, a new contract with another principal or licensee. Offering any inducement to, or in any way encouraging a party to a written contract involving the sale, lease, or management of real estate to break such contract for the purpose of substituting, in lieu thereof, a new contract with another principal or licensee. 48

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Negotiating the sale, exchange, lease, or management of real estate directly with an owner or lessor of the real estate, if he knows that such owner or lessor has a written outstanding contract in connection with such real estate granting an exclusive agency or an exclusive right to sell, exchange, lease, or manage the real estate to another broker. Negotiating the sale, exchange, lease, or management of real estate directly with an owner or lessor of the real estate, if he knows that such owner or lessor has a written outstanding contract in connection with such real estate granting an exclusive agency or an exclusive right to sell, exchange, lease, or manage the real estate to another broker. 49

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Knowingly making any false representations to any party in a real estate transaction. Knowingly making any false representations to any party in a real estate transaction. Acting for more than one party in a real estate transaction without the written acknowledgment of all parties to the transaction. Acting for more than one party in a real estate transaction without the written acknowledgment of all parties to the transaction. 50

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure by an associate broker or salesperson to place, as soon after receipt as practicable, in the custody of his licensed broker, any deposit money or other money or funds entrusted to him by any person dealing with him as the representative of his licensed broker, or in connection with any transaction involving the sale, lease, or management of real property. Failure by an associate broker or salesperson to place, as soon after receipt as practicable, in the custody of his licensed broker, any deposit money or other money or funds entrusted to him by any person dealing with him as the representative of his licensed broker, or in connection with any transaction involving the sale, lease, or management of real property. 51

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Representing to any lender, guaranteeing agency, or any other interested party, either verbally or through the preparation of false documents, an amount in excess of the true and actual sale price of the real estate or terms differing from those actually agreed upon. Representing to any lender, guaranteeing agency, or any other interested party, either verbally or through the preparation of false documents, an amount in excess of the true and actual sale price of the real estate or terms differing from those actually agreed upon. 52

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Knowingly permitting a sponsored licensee to operate as an individual real estate broker. Knowingly permitting a sponsored licensee to operate as an individual real estate broker. Knowingly permitting a sponsored licensee or an employee to conduct real estate activities in violation of the License Law. Knowingly permitting a sponsored licensee or an employee to conduct real estate activities in violation of the License Law. 53

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure of a licensee to provide the parties to a real estate transaction with an agency disclosure informational pamphlet and, where applicable, a dual agency disclosure form. Failure of a licensee to provide the parties to a real estate transaction with an agency disclosure informational pamphlet and, where applicable, a dual agency disclosure form. Failure to advise all parties to a real estate transaction, in writing, of compensation being received from any source in connection with that real estate transaction. Failure to advise all parties to a real estate transaction, in writing, of compensation being received from any source in connection with that real estate transaction. 54

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure, without just cause, to surrender unto the rightful owner, upon demand, any document or instrument received by a licensee or registrant in the course of a real estate transaction. Failure, without just cause, to surrender unto the rightful owner, upon demand, any document or instrument received by a licensee or registrant in the course of a real estate transaction. 55

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Accepting other than cash as earnest money or good faith deposit, unless that fact is communicated to the owner prior to the acceptance of the offer to purchase, and such fact is shown on the face of the purchase and sale agreement. Accepting other than cash as earnest money or good faith deposit, unless that fact is communicated to the owner prior to the acceptance of the offer to purchase, and such fact is shown on the face of the purchase and sale agreement. 56

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure of a licensee to inform the buyer and seller, at the time an offer is presented, that either party may be expected to pay certain costs, such as discount points, etc. and the approximate amount of said costs. Failure of a licensee to inform the buyer and seller, at the time an offer is presented, that either party may be expected to pay certain costs, such as discount points, etc. and the approximate amount of said costs. 57

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure to reduce a bona fide offer to writing when a proposed purchaser requests that a written offer be submitted. Failure to reduce a bona fide offer to writing when a proposed purchaser requests that a written offer be submitted. Failure to disclose to a buyer a known material defect regarding the condition of real estate of which a broker, salesperson, or timeshare interest salesperson has knowledge. Failure to disclose to a buyer a known material defect regarding the condition of real estate of which a broker, salesperson, or timeshare interest salesperson has knowledge. 58

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Having been finally adjudicated and found guilty for refusing, because of race, color, national origin, sex, or ethnic group, to show, sell, or rent any real estate for sale or rent to qualified purchasers or renters, or for any violation of the Fair Housing Act of 1968 or the Louisiana Equal Housing Opportunity Act, and/or any amendments thereto, or any successor legislation subsequently following. Having been finally adjudicated and found guilty for refusing, because of race, color, national origin, sex, or ethnic group, to show, sell, or rent any real estate for sale or rent to qualified purchasers or renters, or for any violation of the Fair Housing Act of 1968 or the Louisiana Equal Housing Opportunity Act, and/or any amendments thereto, or any successor legislation subsequently following. 59

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Having been convicted of a felony, or entered a plea of guilty or nolo contendere, to a felony charge. Having been convicted of a felony, or entered a plea of guilty or nolo contendere, to a felony charge. Refusing to appear or testify under oath at any hearing held by the Commission. Refusing to appear or testify under oath at any hearing held by the Commission. Procuring a license, registration, or certificate for himself, or anyone else by fraud, misrepresentation, or deceit. Procuring a license, registration, or certificate for himself, or anyone else by fraud, misrepresentation, or deceit. 60

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Failure to comply with an order or consent order issued or approved by the Commission pursuant to adjudicatory proceedings. Failure to comply with an order or consent order issued or approved by the Commission pursuant to adjudicatory proceedings. Failure by a licensee to provide a buyer or seller with a written property disclosure form for sales and certain leases involving residential real property pursuant to R.S. 9:3195 et seq. Failure by a licensee to provide a buyer or seller with a written property disclosure form for sales and certain leases involving residential real property pursuant to R.S. 9:3195 et seq. 61

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Thirty-Five Ways to Lose a License (cont’d) Engaging in real estate activity, or attempting or offering to engage in real estate activity within the state during any period of suspension of a real estate license by the Commission, or revocation of any real estate license by the Commission. Engaging in real estate activity, or attempting or offering to engage in real estate activity within the state during any period of suspension of a real estate license by the Commission, or revocation of any real estate license by the Commission. Using advertising that is misleading or inaccurate. Using advertising that is misleading or inaccurate. 62

Broker and Agent Responsibilities © 2011 Louisiana Real Estate Commission Returned Checks to LREC Not the bank’s fault Not the bank’s fault 10 days to pay with additional fee 10 days to pay with additional fee 63