Connecticut Real Estate Legal Review and Update

Connecticut Real Estate Legal Review and Update
This course was developed by the UConn Center for Real Estate at the request of the Connecticut Department of Consumer Protection and the Connecticut Real Estate Commission. It was approved by the Real Estate Commission for use as the one mandatory course requirement for all brokers and salespersons to take during the real estate continuing education cycle. All state schools are free to use this course, however, those wishing to use the course still need to fill out a course application using the Connecticut Real Estate Course Application for Continuing Education. Application for live courses to be taught using the required course slides do not need to include a course outline or syllabus, text information, or copies of handouts. Application for online courses or courses proposing to deliver the material without the slides need to complete the full application, and specifically describe how the material will be covered and interaction will occur. Course material for instructors and schools can be found at including this PowerPoint presentation and instructor’s notes. Mandatory Continuing Education Course CE Cycle Connecticut Real Estate Legal Review and Update

This course was developed by the: UConn Center for Real Estate and Urban Economic Studies at the request of the Connecticut Department of Consumer Protection and the Connecticut Real Estate Commission Special thanks to the following individuals for their contributions: Marilyn L. Keating Chair, Connecticut Real Estate Commission Lana K. Ogrodnik Connecticut Real Estate Commission Richard Maloney Director of Trade Practices, Dept. of Consumer Protection Michele Erling Real Estate Examiner, Dept. of Consumer Protection Kelly Harvey Real Estate Examiner, Dept. of Consumer Protection Linda Kieft-Robitaille Real Estate Examiner, Dept. of Consumer Protection Vicky Bullock, Esq Staff Attorney, Department of Consumer Protection John L. Glascock, Ph.D. Director of the UConn Center for Real Estate Katherine Pancak, Esq. Professor in Residence, University of Connecticut Recognition is given to the individuals listed above for their valuable research, writing, and review. All Connecticut schools and instructors are free to use this course material, as long as appropriate credit is given. CT CE

We will review the following ten topics:
Community Association Managers …………………… 4 Residential Property Condition Disclosure ……….. 15 & Smoke/Carbon Monoxide Detectors .….… 26 Broker Price Opinions………………………….……………… 31 Dual Agency & Designated Agency …………….…… 35 Referral Fees ………………………………………….…………… 44 Continuing Education ………………………………..……… 46 Legal Entity Licensing …………………………….…………… 51 Loan Estimate and Closing Disclosure Form …… 58 Representation Agreements ……………………………… 63 Power of Attorney ………………………………….…………… 72 There are ten primary goals of this course. Coverage of each topic should take about 15 minutes. That leaves time for a 15-minute break, and a brief review at the end. 1. Review of rules regarding Community Association Managers 2. Rules for the Residential Property Condition Report and Smoke/Carbon Monoxide Detectors 3. Rules regarding Broker Price Opinions 4. Review of Dual Agency and Designated Agency 5. Rules regarding Referral Fees A 15-minute break should be offered after Section 5. 6. Continuing Education requirements 7. Legal Entity Licensing 8. Loan Estimate and Closing Disclosure Form required by Dodd-Frank 9. Review of rules regarding Representation Agreements 10. Review of Power of Attorney CT CE

Section 1: Community Association Managers (CAMs)
What are CAMs? CAMs provide services to condominium associations. The services CAMS provide: control funds; prepare budgets; conduct meetings; advise in obtaining insurance; and/or run the overall operations of the association. CGS § to Persons, and their staff, providing any of the following services to a condominium association are required to be registered with the Department of Consumer Protection as CAMs if they are: collecting, controlling, or disbursing funds of the association or having the authority to do so; preparing budgets or other financial documents for the association; assisting or conducting association meetings; advising or assisting the association in obtaining insurance; and advising, coordinating or supervising the overall operations of the association. General Statutes of Connecticut – Community Association Managers and their staff are required to be registered. Sec Definitions. For the purposes of sections to , inclusive: (1) “Association” means (A) an “association” as defined in section and an “association of unit owners” as defined in section 47-68a and in section of the general statutes, revised to January 1, 1975, and (B) the mandatory owners organization of any common interest community, as defined in section , which community was not created under chapter 825 or 828 or under chapter 825 of the general statutes, revised to January 1, “Association” shall not include an association of a common interest community which contains only units restricted to nonresidential use; (2) “Community association manager” means a person who provides association management services; (3) “Association management services” means services provided to an association for remuneration including one or more of the following: (A) Collecting, controlling or disbursing funds of the association or having the authority to do so; (B) preparing budgets or other financial documents for the association; assisting in the conduct of or conducting association meetings; (D) advising or assisting the association in obtaining insurance; (E) coordinating or supervising the overall operations of the association; (F) advising the association on the overall operations of the association. Any person licensed in this state under any provision of the general statutes or rules of court who provides the services for which he is licensed to an association for remuneration, shall not be deemed to be providing association management services. Any director, officer or other member of an association who provides services specified in this subsection to the association of which he is a member shall not be deemed to be providing association management services; (4) “Commission” means the Real Estate Commission; (5) “Department” means the Department of Consumer Protection; and (6) “Person” means an individual, partnership, corporation, limited liability company or other legal entity. Sec Registration of community association managers required. No person shall hold himself out to be a community association manager without first obtaining a certificate of registration as provided in sections to , inclusive. Sec Application for certificate of registration. Fees. (a) Any person seeking a certificate of registration shall apply to the department in writing, on a form provided by the department. Such application shall include the applicant’s name, residence address, business address, business telephone number and such other information as the department may require. (b) Each application for a certificate of registration as a community association manager shall be accompanied by an application fee of sixty dollars and a registration fee of one hundred dollars. The department shall refund the registration fee if it refuses to issue a certificate of registration. Sec Issuance, suspension and revocation of certificate. Upon receipt of a completed application and the appropriate fees, the department, upon authorization of the commission, shall: (1) Issue and deliver to the applicant a certificate of registration; or (2) refuse to issue the certificate. The commission may suspend, revoke or refuse to issue or renew any certificate issued under sections to , inclusive, or may place a registrant on probation or issue a letter of reprimand for any of the reasons stated in section 20- 456. No application for the reinstatement of a certificate which has been revoked shall be accepted by the department within one year after the date of such revocation. Sec Hearing on denial of certificate. Subsequent application. (a) Upon refusal to issue or renew a certificate the department shall notify the applicant of the denial and of his right to request a hearing within ten days from the date of receipt of the notice of denial. (b) In the event the applicant requests a hearing within such ten days, the commission shall give notice of the grounds for its refusal and shall conduct a hearing concerning such refusal in accordance with the provisions of chapter 54 concerning contested matters. (c) In the event the commission’s denial of a certificate is sustained after such hearing, an applicant may make new application not less than one year after the date on which such denial was sustained. Sec Enforcement powers of commission and department. Injunctions. (a) The commission may hold hearings on any matter under the provisions of sections to , inclusive. The commission or department may issue subpoenas, administer oaths, compel testimony and order the production of books, records and documents. If any person refuses to appear, to testify or to produce any book, record, paper or document when so ordered, upon application of the commission or department, a judge of the Superior Court may make such order as may be appropriate to aid in the enforcement of this section. (b) The Attorney General, at the request of the commission or department, is authorized to apply in the name of the state of Connecticut to the Superior Court for an order temporarily or permanently restraining and enjoining any person from violating any provision of sections to , inclusive. CT CE

CAMS Must Register with DCP
CAMs are required to : submit an application for registration to DCP along with a state and national criminal record check and obtain a bond. Visit to obtain a registration application. CGS §20-457 Sec Required and prohibited acts re certificate of registration. Penalties for violations. Expiration and renewal of certificate. (a) Each person engaged in providing association management services shall (1) exhibit his certificate of registration upon request by any interested party, (2) state in any advertisement the fact that he is registered, and (3) include his registration number in any advertisement.(b) No person shall: (1) Present or attempt to present, as his own, the certificate of another, (2) knowingly give false evidence of a material nature to the commission or department for the purpose of procuring a certificate, (3) represent himself falsely as, or impersonate, a registered community association manager, (4) use or attempt to use a certificate which has expired or which has been suspended or revoked, (5) offer to provide association management services without having a current certificate of registration under sections to , inclusive, (6) represent in any manner that his registration constitutes an endorsement of the quality of his services or of his competency by the commission or department. In addition to any other remedy provided for in sections to 20-462, inclusive, any person who violates any provision of this subsection shall be fined not more than five hundred dollars or imprisoned for not more than one year or be both fined and imprisoned. A violation of any of the provisions of sections to 20- 462, inclusive, shall be deemed an unfair or deceptive trade practice under subsection (a) of section b. (c) Certificates issued to community association managers shall not be transferable or assignable. (d) All certificates issued under the provisions of sections to , inclusive, shall expire annually on the thirty-first day of January. he fee for renewal of a certificate shall be one hundred dollars. (e) A community association manager whose certificate has expired more than one month before his application for renewal is made shall have his registration restored upon payment of a fee of twenty-five dollars in addition to his renewal fee. Restoration of a registration shall be effective upon approval of the application for renewal by the commission. (f) A certificate shall not be restored unless it is renewed not later than one year after its expiration. (g) Failure to receive a notice of expiration or a renewal application shall not exempt a community association manager from the obligation to renew. CT CE

New CAMS Applications New applicants are required to:
take a review course, and pass the CAMs National Board of Certification exam within one year from the date of initial registration. CGS §20-457 REMEMBER: CAM registrations must be renewed before January 31 every year. New applicants for CAM registration are required to submit to a criminal background check. A State of Connecticut record check can be obtained from: State Police Bureau of Identification, 1111 Country Club Road, Middletown, CT The national criminal history may be obtained from: CT CE

Legal Entities Must Register
CAMs doing business as a Corporation or LLC must register the legal entity with DCP. CAM legal entity registrations expire on January 31 every year. Failing to renew a registration is subject to a fine up to $500, or imprisonment for less than a year, or both. CT CE

CAMs Education and Testing
CAMs are required to: complete a nationally recognized course, such as the Community Association Institute’s M-100 course. AND pass a CAMs National Board Certification exam, unless the individual is exempt. NOTE: Currently, there are no continuing education requirements for CAMS. For more information, visit: The Community Association Managers Act establishes education and testing requirements for CAMs. Failure to comply with the education requirement is grounds for suspending or revoking a registration. CT CE

What happens if I do not comply with the CAM Act?
If CAMS fail to comply, the Real Estate Commission may: revoke or suspend the certificate of registration. refuse to issue or renew the certificate of registration. place a registrant on probation. issue a letter of reprimand. CGS §20-456 CGS § Grounds for revocation, suspension or refusal to issue or renew certificate of registration. (a) The commission may revoke, suspend or refuse to issue or renew any certificate of registration as a community association manager or place a registrant on probation or issue a letter of reprimand for: (1) Making any material misrepresentation; (2) making any false promise of a character likely to influence, persuade or induce; (3) failing, within a reasonable time, to account for or remit any moneys coming into his possession which belong to others; (4) conviction in a court of competent jurisdiction of this or any other state of forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or other like offense or offenses provided suspension or revocation under this subdivision shall be subject to the provisions of section 46a-80; (5) commingling funds of others in an escrow or trustee account; (6) commingling funds of different associations; (7) any act or conduct which constitutes dishonest, fraudulent or improper dealings; or (8) a violation of any provision of sections to , inclusive, or any regulation issued under section (b) The commission shall not revoke or suspend any certificate of registration except upon notice and hearing in accordance with chapter 54. CT CE

Grounds for Suspension or Revocation of CAMs
What could jeopardize my CAM registration? making misrepresentations or false promises likely to influence, persuade or induce; failing to account for any money; conviction of forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud; commingling funds in an escrow or trustee account; and/or any dishonest, fraudulent or improper dealings. CGS § Sec Grounds for revocation, suspension or refusal to issue or renew certificate of registration. (a) The commission may revoke, suspend or refuse to issue or renew any certificate of registration as a community association manager or place a registrant on probation or issue a letter of reprimand for: (1) Making any material misrepresentation; (2) making any false promise of a character likely to influence, persuade or induce; (3) failing, within a reasonable time, to account for or remit any moneys coming into his possession which belong to others; (4) conviction in a court of competent jurisdiction of this or any other state of forgery, embezzlement, obtaining money under false pretenses, larceny, extortion, conspiracy to defraud, or other like offense or offenses, provided suspension or revocation under this subdivision shall be subject to the provisions of section 46a-80; (5) commingling funds of others in an escrow or trustee account; (6) commingling funds of different associations; (7) any act or conduct which constitutes dishonest, fraudulent or improper dealings; or (8) a violation of any provision of sections to , inclusive, including, but not limited to, failure to comply with the educational requirements prescribed in section , or any regulation adopted under section CT CE

HERE IS THE QUESTION. What is the Answer?
QUESTION: I get paid for providing services to a condominium association. Do I have to register as a Community Association Manager? ANSWER: YES. Anyone providing services for a fee to a condominium association must be registered as a CAM. CT CE

HERE IS THE QUESTION. What is the Answer?
QUESTION: Are there any Continuing Education requirements for CAMs? ANSWER: NO. Currently, there are no required Continuing Education requirements for CAMs. CT CE

QUICK QUIZ Persons failing to register as a CAM with the DCP are subject to a maximum fine up to: A. B. C. D. $ 200 $ 300 $ 500 $ 600 CT CE

CAM registrations must be renewed every:
QUICK QUIZ CAM registrations must be renewed every: A. B. C. D. year 2 years 3 years 5 years CT CE

Section 2: Property Condition Disclosure
The Residential Property Disclosure: reports the seller’s actual knowledge of the condition of the property. must be completed by the seller, not the licensee. does NOT constitute a warranty to the buyer. is NOT a substitute for a home inspection. CGS §20-327b The property condition disclosure report does not constitute a warranty to the buyer and is not a substitute for a home inspection. Giametti v. Inspections, Inc., 824 A.2d 1, 76 Conn. App. 352 (2003). NOTE: The building inspector may be sued and held liable for damages. CT CE

When are sellers required to provide the report?
Sellers are required to provide prospective buyers with a Residential Property Condition Disclosure Report before the buyers sign any binder, contract to purchase, option, or lease containing a purchase option, of a 1-4 family dwelling. CGS §20-327b If the seller fails to provide the Report, the buyer will receive a credit of $500 at closing. Once a seller of real property undertakes to speak on a subject, the seller must then make a full and fair disclosure as to that subject. Dockter v. Slowik, 881 A.2d 479, 91 Conn. App. 448 (2005). CT CE

What are sellers required to disclose?
heating, air conditioning, electrical, and plumbing problems asbestos, lead paint, radon, termites municipal assessments, water and sewer charges leased items, including water heaters and appliances structural or land use problems if the property is in a historic district The function of a residential property condition disclosure report documenting the seller’s actual knowledge of the condition of the property is to diminish the risk of litigation by facilitating meaningful communications between a seller and a prospective purchaser. Giametti v. Inspections, Inc., 824 A.2d 1, 76 Conn. App. 352 (2003). CT CE

What’s the law on residential property condition disclosures?
Disclosures must be accurate and complete, or the seller may be liable to the buyer for damages. If the seller and buyer cannot agree on the cost of repairs, the closing may be called off in accordance with the purchase and sale agreement. CGS §20-327b(d)(2)(D) Effective July 1, 2012, Public Act increases from $300 to $500 the credit that the seller must give to the purchaser at closing if he or she does not furnish the written Residential Property Condition Disclosure report. "On or after January 1, 1996, every agreement to purchase residential real estate, for which a written residential condition report is required pursuant to section b, as amended by this act, shall include a requirement that the seller credit the purchaser with the sum of [three] five hundred dollars at closing should the seller fail to furnish the written residential condition report as required by sections b to 20-327e, inclusive, as amended by this act." The current Residential Property Condition Disclosure Form posted on the Department’s website is a regulation; it does not reflect the July 1, 2012 change in credit from $300 to $500, and will not reflect the change until such time as the regulation is enacted. CT CE

What recourse do buyers have against sellers?
Buyers may file a lawsuit against sellers for: 1. negligent misrepresentations 2. intentional misrepresentations 3. nondisclosure of material facts It may be difficult for the buyer to prove reliance on the seller’s misrepresentations. Buyers may recover under the legal theory known as negligent misrepresentation of the condition of the house under common law. The buyer must prove that: (1) the owner made a misrepresentation, and (2) the buyer reasonably relied on the misrepresentation. Giametti v. Inspections, Inc., 76 Conn. App. 352 (2003). The judgment in this case was against the inspector for failing to find and seller’s nondisclosure of a problem with carpenter ants. Dockter v. Slowik, 91 Conn. App. 448, cert. denied, 276 Conn. 919 (2005). Seller failed to disclose problems relating to water quantity. CT CE

Does the seller have to amend the report?
If the seller completes the report and then finds out about problems with the property that were not disclosed, the original report must be amended to include those problems. The seller may decide to make the repairs, or give the buyer a credit at closing. CT CE

Disclosure Report is not required if the property transfer is:
to co-owners to immediate family members for no paid consideration pursuant to a court order new construction made by executors, administrators, trustees or conservators by the federal government by deed in lieu of foreclosure by the state of Connecticut the subject of a contract or option entered into prior to January 1, 1996 acquired by a judgment of strict foreclosure or by foreclosure by sale or by a deed in lieu of foreclosure CGS §20-327b Substitute House Bill No Public Act No Section 1. Subsection (d) of section b of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2012): (d) (1) Not later than [April 1, 2010] January 1, 2013, the Commissioner of Consumer Protection shall, by regulations adopted in accordance with the provisions of chapter 54, prescribe the form of the written residential disclosure report required by this section and sections c to e, inclusive. The regulations shall provide that the form include information concerning: (A) Municipal assessments, including, but not limited to, sewer or water charges applicable to the property. Such information shall include: (i) Whether such assessment is in effect and the amount of the assessment; (ii) whether there is an assessment on the property that has not been paid, and if so, the amount of the unpaid assessment; and (iii) to the extent of the seller's knowledge, whether there is reason to believe that the municipality may impose an assessment in the future; Substitute House Bill No. 5087 Public Act No of 5 (B) Leased items on the premises, including, but not limited to, propane fuel tanks, water heaters, major appliances and alarm systems; [and] (C) (i) Whether the real property is located in a municipally designated village district or municipally designated historic district or has been designated on the National Register of Historic Places, and (ii) a statement that information concerning village districts and historic districts may be obtained from the municipality's village or historic district commission, if applicable. (2) Such form of the written residential disclosure report shall contain the following: (A) A certification by the seller in the following form: "To the extent of the seller's knowledge as a property owner, the seller acknowledges that the information contained above is true and accurate for those areas of the property listed. In the event a real estate broker or salesperson is utilized, the seller authorizes the brokers or salespersons to provide the above information to prospective buyers, selling agents or buyers' agents. .... (Date) .... (Seller) .... (Date) .... (Seller)" (B) A certification by the buyer in the following form: "The buyer is urged to carefully inspect the property and, if desired, to have the property inspected by an expert. The buyer understands that there are areas of the property for which the seller has no knowledge and that this disclosure statement does not encompass those areas. The buyer also acknowledges that the buyer has read and received a signed copy of this statement from the seller or seller's agent.” CT CE

HERE’S THE QUESTION. What’s the Answer?
QUESTION: Sellers were not aware there were termites in the home, and the buyers’ inspector did not find any evidence of termites. But after the closing, the buyers discovered termite damage and had to make repairs at a cost of $5,000. Will the buyers be able to collect damages from the sellers? ANSWER: It is unlikely that buyers will be able to collect damages because the sellers did not know about the termites. The buyers may be able to collect from the home inspector for not finding the termite damage. In either case, it is a civil matter to be determined by the court. Buyers sued for negligent misrepresentation under CGS §20-327e. For a buyer to recover against seller for misrepresentations contained in the Report, the buyer must prove: (1) the seller had actual knowledge of the condition; and (2) that the buyer reasonably relied on the seller’s misrepresentation. A seller is not required to obtain an inspection, and seller’s representations are limited to information about which the seller has actual knowledge. Giametti v. Inspections, Inc., 824 A.2d 1, 76 Conn. App. 352 (2003). CT CE

QUESTION: Seller said that the swimming pool was in good working order, but the pool cover could not be removed for inspection. After closing, the buyer found that the pool walls had collapsed. The pool company testified that the seller knew about the problems. Will the seller have to pay damages to the buyer? ANSWER: If the seller had actual knowledge of problems with the pool, the seller may be liable to the buyer for damages. Shearn v. McGinnis, CV , Superior Court of Connecticut, Judicial District of Fairfield, at Bridgeport (2005). In buyers’ suit, alleging that sellers misrepresented condition of pool on property bought by buyers, order for prejudgment remedy under CGS sec et seq. was granted where evidence showed that damage to pool was such that it could not have begun after closing and where it was unlikely that sellers were unaware of pool’s condition. CT CE

GROUP DISCUSSION: What are your thoughts?
QUESTION: Sellers knew the septic system had to be replaced, but they marked the status of the septic system as UNKNOWN on the Residential Property Condition Disclosure Report. Will sellers have to pay damages to buyer for misrepresenting the condition of the septic system? ANSWER: YES. Sellers had “actual knowledge” that the septic system was not working properly. Marking the report UNKNOWN was deceptive. NOTE: An agent representing the sellers may be sued for non-disclosure if the agent knew about the problems with the septic system. Building inspectors may be sued if they fail to find problems with the septic system. Ciarlo v. Harlamon, CV S, Superior Court of Connecticut, Judicial District of Waterbury (2005). Homebuyer met his burden of proof as to his claims of fraudulent and negligent misrepresentation, and as to a CUTPA violation, alleged against the seller as the seller failed to disclose that the home’s poor septic system needed to be replaced and what it would take to replace the system, given that he had a written estimate for the same. The Court found that the seller’s representations were deceptive and entered judgment for the buyer in the amount of $29, CT CE

QUICK QUIZ Sellers knew the water heater had to be replaced, but marked “UNKNOWN” on the Residential Property Condition Report. An inspection performed for the buyers revealed that the water heater had to be replaced. After closing, buyers sued the sellers for misrepresentation. Will sellers have to pay for a new water heater? Sellers are liable because they had actual knowledge. Sellers are liable because of their intentional misrepresentation. Even though buyers had knowledge, sellers still have to pay. Buyers did not rely to their detriment on sellers’ misrepresentations, so sellers most likely will not have to pay. Grossman v. Listro, (2005). Buyers did not rely to their detriment on seller’s misrepresentations. To prove detrimental reliance, the buyers must show that they relied on the intentional false statement made by the sellers. The buyers hired their own inspector and knew that the water heater had to be replaced. So the buyers did not rely on the sellers’ false statement. Detrimental Reliance forces parties to a contract to perform their legal obligations, under the theory of Promissory Estoppel. If people reasonably rely on a promise to their detriment, they are entitled to damages. “Detrimental” means that they suffered some type of harm. CT CE

Section 2: Smoke and Carbon Monoxide Detectors
Sellers of one- or two-family homes (built before 10/1/2005) must give buyers an affidavit certifying that the home has working smoke and carbon monoxide detectors. Sellers failing to provide an affidavit must credit the buyer with $250 at closing. CGS §29-453(b) There are some exemptions to these requirements. CGS §29-453(e). CGS Section (e): The following shall be exempt from the requirements of subsections (a) and (b) of this section: (1) Any transfer from one or more co-owners solely to one or more of the other co-owners; (2) transfers made to the spouse, mother, father, brother, sister, child, grandparent or grandchild of the transferor where no consideration is paid; (3) transfers pursuant to an order of the court; (4) transfers by the federal government or any political subdivision thereof; (5) transfers by a judgment of strict foreclosure, by foreclosure by sale or by deed in lieu of foreclosure; (6) any transfer of title incident to the refinancing of an existing debt secured by a mortgage; (7) transfers by mortgage deed or other instrument to secure a debt where the transferor's title to the real property being transferred is subject to a preexisting debt secured by a mortgage; [and] (8) transfers made by executors, administrators, trustees or conservators; (9) transfers by short sale; and (10) transfers that occur not later than six months after the date on which the property was previously conveyed to the transferor if the transferor is (A) an employer that acquired the property from an employee pursuant to an employee relocation plan, or (B) an entity in the business of purchasing and selling residential property of employees who are being relocated pursuant to an employee relocation plan. For purposes of this section, "short sale" has the same meaning as provided in subdivision (5) of subsection (a) of section 36a-671. CT CE

Smoke Detector Affidavit
Even though the sellers must disclose any problems with the smoke detectors in the Property Condition Report, that report does not satisfy the requirement to provide a Smoke Detector Affidavit. CGS §29-453 Sec Smoke and carbon monoxide detectors required in certain residential buildings (a) Prior to transferring title to any real property containing a residential building designed to be occupied by one or two families, including cooperatives and condominiums, for which a building permit for new occupancy was issued prior to October 1, 2005, the transferor of such real property shall present to the transferee an affidavit certifying to the best knowledge and belief of the transferor (1) that such building permit for new occupancy was issued on or after October 1, 1985, or that such residential building is equipped with smoke detection and warning equipment complying with this section, and (2) that such residential building is equipped with carbon monoxide detection and warning equipment complying with this section or does not pose a risk of carbon monoxide poisoning because such residential building does not contain a fuel-burning appliance, fireplace or attached garage. Any representations made by such transferor in the affidavit shall not be construed to create any new implied or express warranties on behalf of the transferor. For purposes of this section, "cooperative" has the same meaning as provided in subdivision (12) of section and "condominium" has the same meaning as provided in subdivision (10) of section (b) Any transferor who fails to comply with the provisions of subsection (a) of this section shall credit the transferee with the sum of two hundred fifty dollars at closing. (c) Any smoke detection and warning equipment required pursuant to subsection (a) of this section shall (1) be capable of sensing visible or invisible smoke particles, (2) be installed in accordance with the manufacturer's instructions, and [in the immediate vicinity of each bedroom, (3) not exceed the standards under which such equipment was tested and approved, and (4)] (3) be capable of providing an alarm suitable to warn occupants when such equipment is activated. Such equipment may be operated using batteries. (d) Any carbon monoxide detection and warning equipment required pursuant to subsection (a) of this section shall (1) be capable of showing the amount of carbon monoxide present as a reading in parts per million, (2) be installed in accordance with the manufacturer's instructions, and (3) [not exceed the standards under which such equipment was tested and approved, and (4)] be capable of providing an alarm suitable to warn occupants when such equipment is activated. Such equipment may be operated using batteries. (e) The following shall be exempt from the requirements of subsections (a) and (b) of this section: (1) Any transfer from one or more co-owners solely to one or more of the other co-owners; (2) transfers made to the spouse, mother, father, brother, sister, child, grandparent or grandchild of the transferor where no consideration is paid; (3) transfers pursuant to an order of the court; (4) transfers by the federal government or any political subdivision thereof; (5) transfers by a judgment of strict foreclosure, by foreclosure by sale or by deed in lieu of foreclosure; (6) any transfer of title incident to the refinancing of an existing debt secured by a mortgage; (7) transfers by mortgage deed or other instrument to secure a debt where the transferor's title to the real property being transferred is subject to a preexisting debt secured by a mortgage; [and] (8) transfers made by executors, administrators, trustees or conservators; (9) transfers by short sale; and (10) transfers that occur not later than six months after the date on which the property was previously conveyed to the transferor if the transferor is (A) an employer that acquired the property from an employee pursuant to an employee relocation plan, or (B) an entity in the business of purchasing and selling residential property of employees who are being relocated pursuant to an employee relocation plan. For purposes of this section, "short sale" has the same meaning as provided in subdivision (5) of subsection (a) of section 36a-671. CT CE

QUESTION: As a salesperson representing the sellers, am I required to get a smoke and carbon monoxide detector affidavit from the sellers when they sign the listing agreement? ANSWER: NO, the sellers’ attorney will provide the affidavit to the buyer at closing. The affidavit is a sworn statement, and it must be signed before a Connecticut attorney or notary public. CT CE

As a broker representing a bank selling real property acquired by foreclosure, does a bank representative have to provide a smoke and carbon monoxide detector affidavit? ANSWER: YES. A bank representative must provide the affidavit at closing. Real Estate Owned (REO) properties are not exempt. Residential properties owned by banks are subject to the same rules as real estate owned by individuals. CT CE

QUICK QUIZ Sellers may be fined up to this dollar amount if the smoke and carbon monoxide detectors are not working. A. B. C. D. $250 $300 $350 $400 CT CE

Section 3: Broker Price Opinions (BPOs)
The law is that you must be a licensed appraiser to estimate the value of real estate for a fee. There are exceptions to this rule: Licensees can perform a market analysis for a seller in pursuit of a listing agreement, or to determine value for a prospective buyer. CGS §20-526 CGS Sec : Exceptions. The provisions of sections to , inclusive, concerning the certification, licensing, limited licensing or provisional licensing of real estate appraisers shall not apply to (1) any person under contract with a municipality who performs a revaluation of real estate for assessment purposes pursuant to section 12-62, and (2) any licensed real estate broker or real estate salesperson who estimates the value of real estate as part of a market analysis performed for the owner of the real estate or a designee of the owner, on such terms as may be agreed upon between such owner or the owner's designee and the real estate broker or real estate salesperson, for the purpose of (A) a prospective listing or sale of such real estate, (B) providing information to the seller or landlord under a listing agreement, or (C) providing information to a prospective buyer or tenant under a buyer or tenant agency agreement, provided such estimate of value shall not be referred to or be construed as an appraisal. If such owner executes a listing contract with the real estate broker or real estate salesperson who so estimated the value of the real estate for the sale of the real estate and such real estate contains any building or other structure, occupied or intended to be occupied by no more than four families, then such owner shall be credited against any compensation the owner pays on account of such listing contract for any fee paid by the owner for such estimate of value. CT CE

What is a Broker Price Opinion?
BPOs/CMA/Market Analysis are all interchangeable terms, and cannot be referred to as an appraisal. An “appraisal” is defined as an opinion of value. CGS §20-501 CGS Sec : Licensing and certification. Expiration of certain licenses. (a) No person shall act as a real estate appraiser or provisional appraiser or engage in the real estate appraisal business without the appropriate certification, license, limited license or provisional license issued by the commission, unless exempted by the provisions of sections to , inclusive. (b) No person licensed as a limited appraiser shall perform an appraisal in connection with a federally related transaction, as defined in FIRREA. Notwithstanding any provision of this chapter: (1) Limited appraiser licenses and renewals of such limited appraiser licenses issued pursuant to this chapter shall expire no later than September 30, 2006; and (2) no limited appraiser licenses shall be issued or renewed on or after October 1, 2006. (c) Notwithstanding any provision of this chapter: (1) Licenses and renewals for licensed appraisers issued pursuant to this chapter shall expire no later than September 30, 2003; and (2) no such license shall be issued or renewed on or after October 1, 2003. CT CE

May licensees charge for determining Fair Market Value?
Licensees may charge fees when determining Fair Market Value for a prospective seller in pursuit of a listing agreement. If the licensee lists and sells the property, the fee must be returned to the seller at closing. CGS Sec : Exceptions. The provisions of sections to , inclusive, concerning the certification, licensing, limited licensing or provisional licensing of real estate appraisers shall not apply to (1) any person under contract with a municipality who performs a revaluation of real estate for assessment purposes pursuant to section 12-62, and (2) any licensed real estate broker or real estate salesperson who estimates the value of real estate as part of a market analysis performed for the owner of the real estate or a designee of the owner, on such terms as may be agreed upon between such owner or the owner's designee and the real estate broker or real estate salesperson, for the purpose of (A) a prospective listing or sale of such real estate, (B) providing information to the seller or landlord under a listing agreement, or (C) providing information to a prospective buyer or tenant under a buyer or tenant agency agreement, provided such estimate of value shall not be referred to or be construed as an appraisal. If such owner executes a listing contract with the real estate broker or real estate salesperson who so estimated the value of the real estate for the sale of the real estate and such real estate contains any building or other structure, occupied or intended to be occupied by no more than four families, then such owner shall be credited against any compensation the owner pays on account of such listing contract for any fee paid by the owner for such estimate of value. CGS §20-526 CT CE

GROUP DISCUSSION: What do you think?
FACTS: A licensee was arrested for giving a low “broker price opinion” to a lender considering a short sale. The house was sold to the licensee’s accomplice, and they flipped the property for a profit. This short-sale mortgage fraud scheme is called “flopping.” According to a study by CoreLogic, a mortgage and real-estate data research company, short-sale fraud, or flopping, is an emerging financial crime. Lenders will lose more than $375 million this year alone when they sell undervalued houses to unscrupulous realty agents and their cohorts, the company says. In its study of the issue, CoreLogic labeled as suspicious two-thirds of short-sales that are resold within six months at a profit of 40% or more. Two real-estate agents in Connecticut were arrested in connection with a short-sale mortgage fraud scheme involving four properties. The pair face a maximum term of imprisonment of 30 years and a fine of up to $1 million on each count. The indictment against the two agents charged that they created straw-buyer transactions in order to negotiate with mortgage holders to allow sales of the properties to occur without paying the mortgages in full. During the negotiations with the mortgage holders, the agents knew that legitimate purchasers already had executed purchase and sale agreements with the property owners to purchase the property at higher prices. On each of the transactions, the agents arranged for two closings to take place, the first from the property owner to the straw buyer at the short-sale price, and the second from the straw buyer to the legitimate purchaser at a higher price. The lenders in each case did not know about the second closing and received no proceeds from the second closing. The two agents pleaded guilty to all the charges (July 2010). CT CE

Section 4: Dual Agent A broker or salesperson may act as a Dual Agent by representing both the buyer and the seller with their informed written consent. The licensee shall be neutral with regard to any conflicting interest of the buyer and seller. CGS §20-325 Notice of and informed consent to dual agency can be obtained by using EITHER the Dual Agency/Designated Agency Notice and Consent Form OR the Dual Agency Consent Agreement. CT CE

Example of Dual Agency:
Seller signs a listing agreement in a broker’s Simsbury office, and buyer signs a representation agreement in the same broker’s Bristol office. Agents from all of that broker’s offices represent both the seller and the buyer. The broker, seller and buyer would all have to consent to and sign a Dual Agency Consent Agreement. CGS §20-325i A dual agent owes the duty of confidentiality of material information and the duty to account for funds to both the seller and the buyer. This duty of confidentiality shall continue after termination of the brokerage relationship. CT CE

Dual Agency: If a real estate agent working on the sale of a particular home also represents a client who might be interested in buying that home, by law, the agent must provide both the seller and the potential buyer with a "Dual Agency Consent Agreement" form to sign. A sales agent is supposed to work only for the seller, but by signing the Dual Agency Consent Agreement, the seller waives that right and agrees that the agent is free to represent both buyer and seller in the deal. The form outlines the process to be followed to ensure that the sale is completely fair to both the seller and buyer. Neither seller nor buyers should agree to Dual Agency if they feel it's not in their best interest. IMPORTANT: Some agents urge clients to sign a Dual Agency form (as “just a formality”) when they sign the agent up to sell their home. This is not a fair practice. Consumers should not sign the Dual Agency consent form in advance. A seller should sign the form only if and when another client of their sales agent is ready to make an offer on the seller's home. CT CE

DUAL AGENCY CONSENT AGREEMENT
Landlord and Tenant Dual Agency Dual Agency also applies to agents representing both the landlord and tenant in the rental of an apartment. The landlord and tenant would have to sign a Dual Agency Consent Agreement. DUAL AGENCY CONSENT AGREEMENT Property Address: ___________________________________________________________ _____ Seller(s) or Landlord(s): ___________________________________________________________ _ Buyer(s) or Tenant(s):___________________________________________________ ___________ (1) This Dual Agency Consent Agreement is an addendum to and make part of (check all that apply): ( ) Listing Agreement dated __________ between brokerage firm and seller or landlord. ( ) Buyer or tenant agency agreement dated __________ between brokerage firm and buyer or tenant. (2) Seller and buyer (or landlord and tenant, as the case may be) hereby acknowledge and agree that ____________ (name of brokerage firm) is representing both buyer and seller (or landlord and tenant, as the case may be) in the purchase and sale (or lease) of the above referenced property and that brokerage firm has been and is now the agent of both seller and buyer (or landlord and tenant, as the case may be). Seller and buyer (or landlord and tenant, as the case may be) have both consented to and hereby confirm their consent to this dual representation. (3) Seller and buyer (or landlord and tenant, as the case may be) agree: (A) The brokerage firm shall not be required to and shall not disclose to either buyer or seller (or landlord or tenant, as the case may be) any personal, financial or other confidential information to such other party without the express written consent of the party whose information is disclosed, other than information related to material property defects which are known to the brokerage firm and other information the brokerage firm is required to disclose by law. (B) The brokerage firm may not disclose: (i) To the buyer that the seller (landlord) will accept less than the asking or listed price, unless otherwise instructed to do so in writing by the seller (landlord); (ii) to the seller (landlord) that the buyer (tenant) can or will pay a price greater than the price submitted in a written offer to the seller (landlord), unless otherwise instructed to do so in writing by the buyer (tenant); (iii) the motivation of the seller or buyer (or landlord or tenant, as the case may be) for selling, buying or leasing property, unless otherwise instructed in writing by the respective party; or (iv) that a seller or buyer will agree to financing terms other than those offered, unless instructed in writing by the respective party. (4) Property information available through the multiple listing service or otherwise, including listed and sold properties, which has been requested by either the seller or the buyer (or landlord or tenant, as the case may be) shall be disclosed to both seller and buyer (or landlord and tenant, as the case may be). (5) Both parties are advised to seek competent legal and tax advice with regard to this transaction, and with regard to all documents executed in connection with this transaction, including this Dual Agency Consent Agreement. I have read and understand the above agreement. Buyer Seller Brokerage Firm (Landlord) (Tenant) (Authorized Representative) CT CE

Section 4: Designated Agents
The broker of record may appoint designated agents to represent each party, but is not required to do so. Both buyer and seller are required to sign a Designated Agency Agreement. CGS §20-325i CGS Sec. 20-325(i): Designated buyer agents and seller agents. Any real estate broker, or a person licensed under this chapter authorized by such broker, may appoint, at the option of such broker or authorized person, one or more designated seller agents as additional agents for a seller or landlord or a designated buyer agent as an additional agent for a buyer or tenant. Such designation may be made with regard to a particular transaction only. Upon such designation, the responsibility to satisfy the respective duties as a seller's or landlord's agent or as a buyer's or tenant's agent shall be the primary responsibility of the individual so designated, who shall not be deemed a dual agent, except in the case of an individual designated to represent both a seller and buyer in the same transaction. Nothing in this section shall be construed to prohibit other forms of agency relationships allowed by law. CT CE

Example of Designated Agency:
If the broker of record designates one agent to represent the seller and another to represent the buyer, they would have to sign a Dual Agency / Designated Agency Notice and Consent Agreement. Designated agency may be made with regard to a particular transaction only. Upon such designation, the responsibility to satisfy the respective duties as a seller’s agent or as a buyer’s agent shall be the primary responsibility of the individual so designated, who shall not be deemed a dual agent, except in the case of an individual designated to represent both a seller and buyer in the same transaction. CGS §20-325i. CT CE

The seller and buyer are represented by licensees in different offices of the same real estate brokerage business. Are the licensees required to have the parties consent to and sign a Designated Agency Notice and Consent Agreement ? ANSWER: Under the circumstances, it could be considered a dual or designated agency. This decision would be based on the broker’s office policy. Designated Agents are responsible for performing duties to their respective sellers and buyers. Agency laws are applied at the firm level, not at the office level of the same company. Agency runs to broker, not individual salespersons. CT CE

QUICK QUIZ Which of the following is an example of Dual Agency?
representing landlord and tenant in an apartment rental representing ex-spouses in the sale of their real property representing the seller of an apartment building representing husband and wife in the sale of their home CT CE

QUICK QUIZ Designated Agents may be appointed:
by the broker as an additional agent for a buyer. by the broker as an additional agent for a seller. to represent both the buyer and seller of the same property. to represent either the buyer or seller of the same property. CT CE

Section 5: Referral Fees
Brokers and salespersons are prohibited from receiving compensation for referring clients to a bank or attorney. Referral fees are prohibited when any portion of a real estate commission is paid to someone engaging in the real estate business without a license. CGS §20-320 CGS § prohibits a real estate licensee from receiving any type of compensation for the referral of a buyer to an attorney or lender. CGS Section a prohibits payment of any portion of a real estate commission to someone who is engaging in the real estate business without a license. This restriction does not apply to buyers or sellers in their own transactions, so a licensee can offer a rebate to a party to a transaction who buys or sells through that licensee. CT CE

QUESTION: A real estate attorney and a broker have offices next door to each other. The attorney pays $100 for every new client referred from the broker. Is this okay? ANSWER: NO! It is against the law for attorneys to pay referral fees to brokers. Also, salespersons and brokers are prohibited from giving a “thing of value” to attorneys for referring clients. Federal RESPA law prohibits real estate agents from receiving a “thing of value” for referring business to a real estate settlement service provider. CT CE

Section 6: Continuing Education (CE)
Licensees are required to complete twelve (12) hours of CE before renewing their license every two years in the even year. The current requirement is to complete three (3) hours of this mandatory course “Connecticut Real Estate Legal Review and Update” plus nine (9) hours of real estate elective courses. OR pass the 40-question Connecticut Continuing Education Examination. Brokers licenses expire on March 31 and salespersons licenses expire on May 31 in even-numbered years. Directions for looking up schools and course titles can be found at Contact PSI Examination Services (the testing company) directly: or go to CT CE

Continuing Education Deadlines
CE must be completed prior to the license renewal date of: March 31 for Brokers and May 31 for Salespersons Real estate schools are required to report CE attendance rosters to PSI within 30 days of completion of the course, and provide a certificate of completion to the licensees. The Department of Consumer Protection does NOT maintain Continuing Education records for licensees. CGS §20-319(b) CGS Sec. Renewal. Continuing education requirements. Regulations. (b) There is hereby established an annual renewal license to be issued by the Department of Consumer Protection. Persons licensed in accordance with the provisions of this chapter shall fulfill a continuing education requirement. Applicants for an annual renewal license for real estate brokers or real estate salespersons shall, in addition to the other requirements imposed by the provisions of this chapter, in any even-numbered year, submit proof of compliance with the continuing education requirements of this subsection to the commission, accompanied by an eight-dollar processing fee. The continuing education requirement may be satisfied by successful completion of any of the following during the two-year period preceding such renewal: (1) A course or courses, approved by the commission, of continuing education in current real estate practices and licensing laws, including, but not limited to, practices and laws concerning common interest communities, consisting of not less than twelve hours of classroom study; or (2) a written examination prepared and administered by either the Department of Consumer Protection, or by a national testing service approved by the department, which demonstrates a knowledge of current real estate practices and licensing laws; or (3) equivalent continuing educational experience or study as determined by regulations adopted pursuant to subsection (d) of this section. An applicant for examination under subdivision (2) of this subsection shall pay the required examination fee to the national testing service, if administered by such testing service, or to the Department of Consumer Protection, if administered by the department. CT CE

Continuing Education Certificates
Real estate licensees are responsible for keeping copies of continuing education certificates to prove compliance with requirements. Proof of compliance should be submitted to the Real Estate Commission ONLY in response to an audit. CT CE

May CE courses be held in a broker’s office?
Continuing education courses cannot be taught in a real estate or appraisal office. There must be a separate entrance, leading to a separate room, where the course will be taught. CT CE

I have not completed my CE requirements for the current cycle. Is there a grace period to finish my courses? ANSWER: NO. There is no grace period for completing continuing education requirements. Real estate licensees must be able to prove compliance with continuing education requirements. Licensees are subject to a civil penalty, and a potential loss of license, for failing to complete CE course requirements. Schools must provide to each student a written verification of a successfully completed course. Verification must contain the name and credential number of the school, the date of the course, name of the course, number of hours completed, name of the student, and must be signed by a school official. Real estate schools are required to report CE attendance rosters to PSI. The Department of Consumer Protection does not maintain CE records for all licensees. CGS §20-319(b) CT CE

What are the differences between these legal entities?
Section 7: Legal Entity Licensing All legal entities engaging in the real estate business must be licensed by DCP Partnerships Limited Liability Companies Corporations What are the differences between these legal entities? An example of two types of entities in CT that licensees are often confused about are corporations and LLC’s. The differences are: Corporations are owned by Shareholders who elect Directors to make business policy decisions. The Directors then appoint Officers to manage the corporation. Limited Liability Companies are owned by Members. Connecticut has two types of LLCs, and they are member-managed or manager-managed. Connecticut General Statutes Section (a) requires all persons acting as a real estate broker or salesperson to have a license. Connecticut General Statutes Section (4) defines “person” as “any individual, partnership, association, limited liability company or corporation”. Connecticut General Statutes Section requires that all legal entities engaging in the real estate business be licensed. This means brokerage firms, team partnerships, and any other LLC, corporation, or partnership. NOTE that this requirement is in addition to individual licenses obtained by salespersons and brokers. In other words, an individual needs a license, and a legal entity needs a license. CT CE

Legal Entity Definitions
Partnership: an association of two or more co-owners who carry on a business for profit based on an agreement as to how profits and losses will be divided Limited Liability Company: an entity whose owners (members) actively manage the LLC and are protected against personal liability Corporation: an independent legal entity owned by shareholders that may be privately or publicly held CGS Sec (f): All licenses issued under the provisions of this chapter shall expire annually. At the time of application for a real estate broker's license, there shall be paid to the commission, for each individual applicant and for each proposed active member or officer of a firm, partnership, association or corporation, the sum of five hundred sixty-five dollars, and for the annual renewal thereof, the sum of three hundred seventy-five dollars and for a real estate salesperson's license two hundred eighty-five dollars and for the annual renewal thereof the sum of two hundred eighty-five dollars. Three dollars of each such annual renewal fee shall be payable to the Real Estate Guaranty Fund established pursuant to section a. If a license is not issued, the fee shall be returned. A real estate broker's license issued to any partnership, association or corporation shall entitle the individual designated in the application, as provided in section , upon compliance with the terms of this chapter, but without the payment of any further fee, to perform all of the acts of a real estate broker under this chapter on behalf of such partnership, association or corporation. Any license which expires and is not renewed pursuant to this subsection may be reinstated by the commission, if, not later than two years after the date of expiration, the former licensee pays to the commission for each real estate broker's license the sum of three hundred seventy-five dollars and for each real estate salesperson's license the sum of two hundred eighty-five dollars for each year or fraction thereof from the date of expiration of the previous license to the date of payment for reinstatement, except that any licensee whose license expired after such licensee entered military service shall be reinstated without payment of any fee if an application for reinstatement is filed with the commission within two years after the date of expiration. Any such reinstated license shall expire on the next succeeding March thirty-first for real estate brokers or the next succeeding May thirty-first for real estate salespersons. CT CE

Officers and Owners of Legal Entities
Officers must be: licensed brokers Owners may be: licensed brokers or salespersons brokers owning at least 51 percent salespersons owning up to 49 percent Each officer of a Corporation actively engaged in the control or management of a brokerage business must be licensed as a broker. Each individual owner of a firm actively engaged in the management or control of a brokerage business must be licensed as a broker or salesperson. A broker must own at least 51 percent of the legal entity. A salesperson is allowed to own up to 49 percent of the legal entity. Salespersons cannot be officers of a corporation actively engaged in the management or control of a brokerage business. Connecticut Real Estate Commission Declaratory Ruling dated July 19, 2002 interprets CGS Section as requiring that the officers of a brokerage firm must be individually licensed as brokers (i.e., salespersons cannot be officers), and that each owner of a brokerage firm actively engaged in the management or control of a brokerage business be individually licensed as a broker. The designated broker for the legal entity is not required to pay for both an individual license and the legal entity license. Connecticut General Statutes Section (f) provides that payment of a licensing fee for an entity covers the licensing fee for the entity’s designated broker. The Department of Consumer Protection audits broker licensees and their entities for licensing compliance, and has the authority to fine brokers up to $1,000 for noncompliance. CGS (d). CT CE

I am a broker planning to form a LLC for my real estate business. Does the LLC itself need to be licensed? ANSWER: YES. Partnerships, limited liability companies and corporations engaging in the real estate business in the name of that legal entity are required to be licensed. If brokers are engaging in the real estate business in the name of a legal entity, that legal entity has to be licensed. CT CE

QUICK QUIZ What type of legal entity is owned by members?
general partnership limited liability company corporation limited partnership CT CE

QUICK QUIZ What type of legal entity is owned by shareholders?
general partnership limited liability company corporation limited partnership CT CE

QUICK QUIZ Can a salesperson solely own a legal entity in Connecticut for real estate purposes? Yes, the law allows a salesperson to be the sole owner (shareholder) of a corporation. Yes, as long as a salesperson owns at least 51% and a broker owns no more than 49% of the legal entity. No, the law does not allow salespersons to solely own a legal entity engaging in the real estate business. No, only brokers can own a legal entity formed for their real estate business. Sec. Licensing. (a) No person shall act as a real estate broker or real estate salesperson without a license issued by the commission, unless exempt under this chapter. The Commissioner of Consumer Protection may enter into any contract for the purpose of administratively processing the renewal of licenses on behalf of the commission. (b) The practice of or the offer to practice real estate brokerage business in this state by individual licensed real estate brokers or real estate salespersons as a corporation, limited liability company or partnership, a material part of the business of which includes real estate brokerage, is permitted, provided (1) the personnel of such corporation, limited liability company or partnership who engage in the real estate brokerage business as real estate brokers or real estate salespersons, and the real estate brokers whose ownership, control, membership or partnership interest is credited toward the requirements of subdivision (3) of this subsection, are licensed or exempt from licensure under this chapter, (2) the corporation, limited liability company or partnership has been issued a real estate broker license by the commission as provided in this section and has paid the license or renewal fee required for a real estate broker's license as set forth in section , and (3) except for a publicly traded corporation (A) with respect to a corporation other than a nonstock corporation, one or more real estate brokers own or control fifty-one per cent or more of the total issued shares of the corporation, (B) with respect to a nonstock corporation, one or more real estate brokers constitute at least fifty-one per cent of the members of the nonstock corporation, (C) with respect to a limited liability company, one or more real estate brokers own or control at least fifty-one per cent of the interest in the limited liability company, as defined in section , or (D) with respect to a partnership, one or more real estate brokers' partnership interest, as defined in section , constitutes at least fifty-one per cent of the total partnership interest. No such corporation, limited liability company or partnership shall be relieved of responsibility for the conduct or acts of its agents, employees or officers by reason of its compliance with this section, nor shall any individual practicing real estate brokerage be relieved of responsibility for real estate services performed by reason of the individual's employment or relationship with such corporation, limited liability company or partnership. The Real Estate Commission may refuse to authorize the issuance or renewal of a license if any facts exist that would entitle the commission to suspend or revoke an existing license. (c) A corporation, limited liability company or partnership desiring a real estate broker license shall file with the commission an application on such forms and in such manner as prescribed by the Department of Consumer Protection. Each such corporation, limited liability company or partnership shall file with the commission a designation of at least one individual licensed as a real estate broker in this state who shall be in charge of the real estate brokerage business of such corporation, limited liability company or partnership in this state. Such corporation, limited liability company or partnership shall notify the commission of any change in such designation not later than thirty days after such change becomes effective. (d) The Real Estate Commission may impose a fine of not more than one thousand dollars on any corporation, limited liability company or partnership that engages in real estate business without a license required by this section. CT CE

Section 8: Loan Estimate and Closing Disclosure
The Dodd-Frank Wall Street Reform and Consumer Protection Act will require a Loan Estimate and Closing Disclosure form to be used for all residential closings (effective August 1, 2015). Pub. L. No , 124 Stat (2010). The Loan Estimate will replace the current disclosures required under the Truth-in-Lending Act. The Closing Disclosure will replace the HUD-1 Settlement Statement for 1-4 family residential closings. CT CE

Laws under the Real Estate Settlement Procedures Act (RESPA) and Truth-in-Lending Act (TILA)
Currently, RESPA requires the HUD-1 Uniform Settlement Statement to be completed for 1-4 family residential real estate closings. (As of August 1, 2015, the HUD-1 will be replaced by the Closing Disclosure form). TILA requires banks to provide borrowers with estimates of financing costs. The HUD-1 Uniform Settlement Statement is required under Section 4 of the Real Estate Settlement Procedures Act, 12 U.S.C et seq. and Regulation X of the Department of Housing and Urban Development (24 CFR part 3500). Truth-in-Lending Act, 15 U.S.C et seq. CT CE

Who is required to disclose closing costs?
Effective in August 2015, a settlement agent (usually the buyer’s attorney) will be required to disclose all closing costs on the new Closing Disclosure form at least three days prior to the closing date. Currently, the HUD-1 Uniform Settlement Statement is used to disclose closing costs, and a sample form can be found at: As of August 2015, the Dodd-Frank Act will require the new Loan Estimate and Closing Disclosure forms to be used for residential real estate closings. CT CE

QUICK QUIZ The HUD-1 Uniform Settlement Statement created by the Real Estate Settlement Procedures Act is only required for: commercial closings residential closings (1 to 4 family) all real estate closings industrial closings CT CE

QUICK QUIZ Effective August 2015 under Dodd-Frank, the HUD-1 Uniform Settlement Statement will be replaced by a: RESPA form Closing Disclosure form TILA form Residential Property Statement CT CE

Section 9: Representation Agreements
The two most common types are: Listing Agreement (2) Buyer Representation Agreement CGS §20-328 A written compensation agreement is required to enforce the payment of a commission relating to the sale or rental of real estate. CGS Section This is the case whether the compensation agreement is a listing agreement or a buyer representation agreement. Regulations require that all such agreements be in writing and include the expiration date of the agreement. CGS Section (6) prohibits an automatic continuation of the period of the listing agreement beyond the expiration date. CT CE

Representation Agreements must contain: full names of all parties;
broker’s name and address; beginning and ending dates; conditions of the agreement; and signatures of all parties. REAL ESTATE AGENCY DISCLOSURE NOTICE GIVEN TO UNREPRESENTED PERSONS This is not a contract. Connecticut law requires that you be given this notice disclosing whom the real estate licensee represents. The purpose of such disclosure is to enable you to make informed choices about your relationship with real estate licensees. GIVEN TO:_________________________________________________________________ (UNREPRESENTED PERSON/PERSONS) ON _________________________________________ (DATE) OUR FIRM ________________________________________________________ REPRESENTS o SELLER o LANDLORD o BUYER o TENANT UNREPRESENTED PERSON(S)’S RIGHTS AND RESPONSIBILITIES 1. The broker and salespersons (referred to as agents or licensees) in this transaction owes the other party to this transaction undivided fiduciary obligations, such as: loyalty, reasonable care, disclosure, and obedience to lawful instruction, confidentiality and accountability. The agent(s) must put the other party’s interest first and negotiate for the best terms and conditions for them, not for you. 2. All real estate agents, whether representing you or not, are obligated by law to treat all parties to a real estate transaction honestly and fairly. 3. You have the responsibility to protect your own interests. Carefully read all agreements to make sure they accurately reflect your understanding. If you need additional advice for legal, tax, insurance or other such matters, it is your responsibility to consult a professional in those areas. 4. Whether you are a buyer, seller, tenant, or landlord, you can choose to have the advice, assistance and representation of your own real estate brokerage firm and its agents. Do not assume that a real estate brokerage firm or its agents are representing you or are acting on your behalf unless you have contracted in writing with that real estate brokerage firm. ACKNOWLEDGMENT ACKNOWLEDGEMENT OF AGENT OF UNREPRESENTED PERSON(S)* Signature(s) Signature Print Name(s) Print Name Date Date *To be signed by the buyer/tenant when the agent represents the seller/landlord, or To be signed by the seller/landlord when the agent represents the buyer/tenant CT CE

Unrepresented Persons
If a licensee wants to show property to unrepresented persons, the property must be listed by the sponsoring broker. In this situation, the licensee represents the seller. CGS §20-325(d) CGS Sec (d): Disclosure of representation. On and after January 1, 1995, a real estate broker or real estate salesperson licensed under this chapter, who is acting as an agent of the seller or lessor, shall make a written disclosure of whom he represents in a real estate transaction to prospective purchasers and lessees at the beginning of the first personal meeting concerning the prospective purchaser's or lessee's specific needs, unless such prospective purchaser or lessee is represented by another real estate broker or real estate salesperson licensed under this chapter. Such disclosure shall be signed by the prospective purchaser or lessee and attached to any offer or agreement to purchase or lease signed by the prospective purchaser or lessee. Whenever any real estate broker or real estate salesperson intends to act as an agent for the prospective purchaser or lessee, he shall disclose such intended representation to the seller or lessor at the beginning of the first personal meeting with the seller or lessor concerning the seller's or lessor's real property, unless such seller or lessor is represented by another real estate broker or real estate salesperson licensed under this chapter. On or before January 1, 1995, the Commissioner of Consumer Protection, shall adopt such regulations in accordance with chapter 54 as the commissioner deems necessary to carry out the provisions of this section. CT CE

When do agreements have to be in effect?
(1) Listing Agreements must be signed at, or prior to, the offering of a property for sale. (2) Buyer Representation Agreements must be signed before physically showing a property. CGS §20-328 CT CE

Who can sign listing agreements?
The record owner of the property and the broker, or the authorized licensee, must sign the listing agreement. The broker, not the salesperson, must be named in the listing agreement. The person signing the listing agreement must hold legal title to the real property. The recording information for the warranty deed (volume and page) can be found in the Assessor’s Office. A copy of the deed can be found in the Land Records. The agent should also check the status of the property taxes to be sure they are paid to date. CT CE

Who can sign buyer representation agreements?
Buyer representation agreements must be signed by the broker, or authorized licensee, and all prospective buyers. CT CE

How long do we have to keep copies of Representation Agreements?
All parties to the contract must receive copies of the signed representation agreement. Brokers must retain copies of agreements for not less than seven (7) years. CGS Sec. 20-325(m) CGS Sec. 20-325(m). Real estate brokers to retain certain real estate transaction records. Any real estate broker licensed under the provisions of this chapter who engages in the real estate business, as defined in section , shall retain the following records for a period of not less than seven years after any real estate transaction closes, all funds held in escrow for such transaction are disbursed or the listing agreement or buyer or tenant representation agreement expires, whichever occurs later: (1) All purchase contracts, leases, options, written offers or counteroffers drafted by such broker or on behalf of such broker; (2) the listing agreement or buyer or tenant representation agreement, any extensions of or amendments to such agreements and any disclosures or agreements required pursuant to sections a to l, inclusive; and (3) all canceled checks, unused checks, checkbooks and bank statements for any escrow or trust account maintained pursuant to section k. Such records may be retained in any format, electronic or otherwise, capable of producing an accurate copy in paper format of the original document. CT CE

QUICK QUIZ Who has authority to sign a listing agreement?
an individual having power of attorney for a deceased owner persons renting the property immediate family members of the deceased owner record owners holding title to the real property CT CE

QUICK QUIZ What documents must be retained for not less than seven years? purchase and listing agreements leases and option agreements offers, counteroffers, and cancelled checks all of the above CT CE

Section 10: Power of Attorney (POA)
The POA legally designates an individual to transact business and execute documents on behalf of another person, the principal. What happens if the principal becomes incompetent? That depends. Is the POA durable or not durable? A durable power of attorney survives the incompetency of the principal, which means the POA is still effective. If the power of attorney is not durable, it terminates immediately upon the incompetency of the principal. If the Principal dies, the POA automatically terminates at the moment of death. CT CE

Who can sign a listing agreement with a POA?
QUESTION: A person with a POA from a deceased homeowner signed the listing agreement. Is this okay? ANSWER: NO. The person does not have authority to sign the listing agreement. The POA terminated when the homeowner died. CT CE

Seller has a POA for his wife. She moved to Florida before the closing on their home in Connecticut. Seller notified the attorney that his wife is now incompetent. Does the seller have authority to sign his wife’s name on the closing documents? ANSWER: MAYBE. If the POA is durable, the husband still has authority to sign for his wife. If the POA is not durable, the husband’s authority terminated when his wife became incompetent. CT CE

HERE’S THE LAST QUESTION. What’s the Final Answer?
A homeowner gave his daughter POA to sell his home. The next day he passed away. Does his daughter still have authority to sell the home? ANSWER: NO. The daughter does not have authority to sell his home. A POA terminates immediately upon death. CGS §45a-562 The land records should be researched before listing the property to be sure the person signing the listing agreement actually holds title. CT CE

If you have any questions or comments about this course, please or call CT CE

Connecticut Real Estate Legal Review and Update

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Connecticut Real Estate Legal Review and Update

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