Real Estate Principles and Practices Chapter 20 License Law © 2010 by South-Western, Cengage Learning

Key Terms Agent Associate broker Broker Censure Earnest money License law Reciprocal license Revocation Rules and regulations Salesperson Subdivider Suspension Trust account

© 2010 by South-Western, Cengage Learning Who Needs a License? Negotiate the listing, sale, purchase, exchange, rent, lease, or option Receive a fee for providing a lead Manage property BPO or CMA

© 2010 by South-Western, Cengage Learning Who Needs a License? Sell lots or parcels for the owner Charge an advanced fee to promote the sale Buy sell or deal in options

© 2010 by South-Western, Cengage Learning Who Needs a License? Owner or lessor Attorney-in-fact Attorney-at-law Receiver or trustee in bankruptcy Administrator or executor Court-appointed guardian

© 2010 by South-Western, Cengage Learning Who Needs a License? Officer or employee of federal or state agency Resident manager of apartment complexes or person employed by the owner Person who sells or purchases oil, gas, or mineral leases

© 2010 by South-Western, Cengage Learning Who Needs a License? Person who renders opinions of value for real estate taxation Owners of railroads and public utilities Employees or officers of the federal government when working in official capacity

© 2010 by South-Western, Cengage Learning Types of Licenses Two types of licenses SalespersonBroker Agent Broker AKA: Agent – represents the principal May conduct business in their own name or a trade name Partnership or corporation

© 2010 by South-Western, Cengage Learning Types of Licenses Associate Broker: Associate Broker: has a broker's license but works for another broker Salesperson must work for a broker Trust account: account for money belonging to others Broker is legally responsible for salespersons Branch offices: broker or associate broker

© 2010 by South-Western, Cengage Learning Types of Licenses Colorado – all licensees are brokers Broker associate: Broker associate: employed and supervised Independent broker: Independent broker: self employed with no licensees Employing broker: Employing broker: can employ and must supervise licensees Single License Concept

© 2010 by South-Western, Cengage Learning Licensing Exams Completion of required course Written application & fee Written or computerized exam 80 – 100 questions apply to all states Minimum of 30 questions state specific

© 2010 by South-Western, Cengage Learning Licensing Exams Obtaining a license in a new state No exam Only state portion Different exams for broker or salesperson

© 2010 by South-Western, Cengage Learning Requirements of Applicants Minimum age: 18 – 21 1 – 3 years experience for broker license College courses Continuing education

© 2010 by South-Western, Cengage Learning Commissions Independent contractor: self employed Independent contractor: self employed % of commission earned by the firm % of commission earned by the firm 100% commission plus share of expenses 100% commission plus share of expenses No set commission fee No set commission fee

© 2010 by South-Western, Cengage Learning License Fee Fee paid for initial license Renewal Continuing education Renewal fee Infraction of the license lawRevocationSuspension

© 2010 by South-Western, Cengage Learning Nonresident Licenses Right of reciprocity Proof of licensure Nonresident salesperson must be employed by non-resident broker Real estate commission designated as licensee’s agent Education requirements License

© 2010 by South-Western, Cengage Learning Errors and Omissions Insurance Available to all licensees and cannot be cancelled Competitive bidding procedures Governing board determines coverage, permissible deductibles and exemptions Guidelines Cost cannot exceed board or commission limit

© 2010 by South-Western, Cengage Learning Governing Bodies Real estate commission enforces the license laws Rules and regulations: Rules and regulations: promulgated by the real estate commission National Association of REALTORS®

© 2010 by South-Western, Cengage Learning Governing Bodies Consists of active licensees and unlicensed individuals Director: Keeps record Conducts exams Issue and renews licensees Holds seminars Issues, revokes, or suspends licenses

© 2010 by South-Western, Cengage Learning Governing Bodies Analyze laws and regulations monitoring changes in the industry Similar education requirements among states Computer data base censures, License revocations, suspensions, fines, reprimands, censures, or surrenders Association of Real Estate Law License Officials

© 2010 by South-Western, Cengage Learning Trust Accounts Must place all money belonging to others in an trust account Subject to inspection Shielded from creditors Commingle: mixing of personal and business funds

© 2010 by South-Western, Cengage Learning Earnest-Money Deposits Remains in trust account until transaction is consummated or terminated Check issued to cooperating broker’s trust account Transferred to escrow agent or

© 2010 by South-Western, Cengage Learning Guaranty Funds Recovery Fund

© 2010 by South-Western, Cengage Learning Unfair Trade Practices Discrimination based on protected categories Misleading or inaccurate advertising Funds must be placed in a trust account / may not commingle Undisclosed commission, rebate, or direct profit Representing another broker or accepting commission from another broker without consent

© 2010 by South-Western, Cengage Learning Unfair Trade Practices Guaranteeing future profits Placing a “For Sale” sign without written permission Offering terms other than as authorized by owner or owner’s representative Inducing a party to break a contract Failure to present all offers Paying an unlicensed person

© 2010 by South-Western, Cengage Learning Unfair Trade Practices Failure to provide an expiration date or copy of listing contract Failure to provide a copy of sales contract to buyer and seller Failure to provide a copy of the settlement statement Failure to put offer in writing when requested by purchaser

© 2010 by South-Western, Cengage Learning Unfair Trade Practices Failure to present all written offers Providing less favorable service to minorities

© 2010 by South-Western, Cengage Learning Disciplinary Action Commission investigates upon suspected or reported violation of license law No violation – complaint dismissed Hearing scheduled if complaint appears justified

© 2010 by South-Western, Cengage Learning Unlicensed Persons Reported to the attorney general Injunction order to cease