Chapter 038

2018 -- S 2423 Enacted 06/18/2018

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS - REAL ESTATE BROKERS AND SALESPERSONS

Introduced By: Senators Metts, Quezada, Jabour, Goldin, and Goodwin

Date Introduced: February 15, 2018

It is enacted by the General Assembly as follows:

SECTION 1. Section 5-20.5-14 of the General Laws in Chapter 5-20.5 entitled "Real

Estate Brokers and Salespersons" is hereby amended to read as follows:

5-20.5-14. Revocation, suspension of license -- Probationary period -- Penalties.

(a) The director may, upon his or her own motion, and shall, upon the receipt of the

written verified complaint of any person initiating a cause under this section, ascertain the facts

and, if warranted, hold a hearing for the suspension or revocation of a license. The director has

power to refuse a license for cause or to suspend or revoke a license or place a licensee on

probation for a period not to exceed one year where it has been obtained by false representation,

or by fraudulent act or conduct, or where a licensee, in performing or attempting to perform any

of the acts mentioned in this chapter, is found to have committed any of the following acts or

practices:

(1) Making any substantial misrepresentation;

(2) Making any false promise of a character likely to influence, persuade, or induce any

person to enter into any contract or agreement when he or she could not or did not intend to keep

that promise;

(3) Pursuing a continued and flagrant course of misrepresentation or making of false

promises through salespersons, other persons, or any medium of advertising, or otherwise;

(4) Any misleading or untruthful advertising;

(5) Failing to deposit money or other customers' funds received by a broker or

salesperson into an escrow account maintained by the broker that complies with the requirements

set forth in § 5-20.5-26, upon execution of a purchase and sales agreement;

(6) Failing to preserve for three (3) years following its consummation records relating to

any real estate transaction as described in the regulations issued by the department;

(7) Acting for more than one party in a transaction without the knowledge and consent, in

writing, of all parties for whom he or she acts;

(8) Placing a "for sale" or "for rent" sign on any property without the written consent of

the owner, or his or her authorized agent;

(9) Failing to furnish a copy of any listing, sale, lease, or other contract relevant to a real

estate transaction to all signatories of the contract at the time of execution;

(10) Failing to specify a definite termination date that is not subject to prior notice, in any

listing contract;

(11) Inducing any party to a contract, sale, or lease to break that contract for the purpose

of substitution in lieu of that contract a new contract, where that substitution is motivated by the

personal gain of the licensee;

(12) Accepting a commission or any valuable consideration by a salesperson for the

performance of any acts specified in this chapter, from any person, except the licensed real estate

broker with whom he or she is affiliated;

(13) Failing to disclose to an owner his or her intention or true position if he or she,

directly or indirectly through a third party, purchases for him or herself or acquires or intends to

acquire any interest in or any option to purchase property that has been listed with his or her

office to sell or lease;

(14) Being convicted of any criminal felony in a court of competent jurisdiction of this or

any other state or federal court involving dishonesty, breach of trust, forgery, embezzlement,

obtaining money under false pretenses, bribery, larceny, extortion, conspiracy to defraud, fraud,

false dealing, or any similar offense(s) or by pleading guilty or nolo contendere to any such

criminal offense or offenses;

(15) Violating any rule or regulation promulgated by the department in the interest of the

public and consistent with the provisions of this chapter;

(16) In the case of a broker licensee, failing to exercise adequate supervision over the

activities of his or her licensed salesperson within the scope of this chapter;

(17) Failing or refusing to provide information requested by the commission or director

as the result of a formal or informal complaint to the director that would indicate a violation of

this chapter;

(18) Soliciting, selling, or offering for sale real property by offering free lots, or

conducting lotteries or contests or offering prizes for the purpose of influencing a purchaser or

prospective purchaser of real property;

(19) Paying or accepting, giving, or charging any undisclosed commission, rebate,

compensation, or profit or expenditures for a principal, or in violation of this chapter;

(20) Any conduct in a real estate transaction that demonstrates bad faith, dishonesty,

untrustworthiness, or incompetence;

(21) Failing to have all listing agreements in writing, properly identifying the property

and containing all of the terms and conditions of the sale, including the commission to be paid,

the signatures of all parties concerned, and a definite expiration date in that contract, which that

shall not require an owner to notify a broker of his or her intention to terminate. An exclusive

agency listing or exclusive right to sell listing shall be clearly indicated in the listing agreement;

(22) Accepting a listing based on "net price". In cases where the owner wishes to list in

this manner, the agreed-upon commission is added and listings made in the usual manner;

(23) Negotiating, or attempting to negotiate, the sale, exchange, or lease of any real

property directly with an owner or lessor knowing that the owner or lessor has an outstanding

exclusive listing contract with another licensee covering the same property, except when the real

estate broker or salesperson is contacted by the client of another broker regarding a real estate

service, and the broker or salesperson has not directly or indirectly initiated those discussions,

they may discuss the terms under which they might enter into future agency agreement; or they

may enter into an agency agreement that becomes effective upon termination of any existing

exclusive agreement; or they may enter into an agreement for other real estate service not covered

by an existing agency relationship;

(24) Accepting an exclusive right to sell or lease or an exclusive agency and subsequently

failing to make a diligent effort to sell or lease the listed property;

(25) Advising against the use of the services of an attorney in any real estate transaction;

(26) Representing to any lender or any other party in interest, either verbally or through

the preparation of a false sales contract, an amount other than the true and actual sales price;

(27) Submitting to an owner a written offer to purchase or lease unless that offer contains

the essential terms and conditions of the offer, including the manner in which the purchase price

is to be paid, and if that offer is contingent upon certain conditions, those conditions shall be

clearly stated in the offer, or unless the offer is conditioned upon the later execution of a complete

agreement for sale;

(28) Paying any sums of money being held in an escrow account to any person, or

converting such the sums of money for his or her own use, in the event of a failed real estate

transaction, without having complied with the department's rules and regulations relative to the

transfer of disputed deposit funds to the office of the general treasurer;

(29) Advertising to sell, buy, exchange, rent, or lease the property of another in a manner

indicating that the offer to sell, buy, exchange, rent, or lease that property is being made by a

private party not engaged in the real estate business, nor inserting advertisements in any

publication containing only a post office or other box number, telephone number, or street

address. No salesperson shall advertise the property of another under his or her own name;

(30) As a licensed salesperson, failing upon termination of his or her employment or

affiliation with a real estate broker and upon demand by the broker to immediately turn over to

the broker any and all information, records, or other materials obtained during his or her

employment, whether the information or records were originally given to him or her by the broker

or copied from the records of that broker or affiliation or acquired by the salesperson during his

or her employment;

(31) Offering, promising, giving, or paying, directly or indirectly, any part or share of his

or her commission or compensation arising or accruing from any real estate transaction to any

person who is not licensed as a real estate broker, but who by law should be licensed, or who is

not a real estate salesperson employed by that licensee;

(32) Soliciting the sale, lease, or the listing for sale or lease, of residential property on the

ground of loss of value due to the present or prospective entry in the neighborhood of a person or

persons of another race, religion, or ethnic origin, nor shall he or she distribute, or cause to be

distributed, material or make statements designed to induce a residential property owner to sell or

lease his or her property due to such factors;

(33) Failure of the employing broker to notify the director, in writing, within ten (10)

days of the termination of a salesperson's employment of contractual relationship, or failure of a

salesperson to notify the director, in writing, within ten (10) days of any change in his/her broker

affiliation;

(34) Failure to report all written offers to the owner prior to the signing of a purchase and

sale agreement by the owner;

(35) Failure of agents to provide buyers and sellers of real property with disclosure

regarding real estate agency relationships as specified in chapter 20.6 of this title;

(36) Failure of an associate broker to inform the public of associate broker status by not

listing associate broker on business cards and correspondence or by informing the public that his

or her status in the real estate firm is that of broker; or

(37) Failure to pay sums of money being held in an escrow account, pursuant to § 5-20.5-

26, within ten (10) days of receipt of a written release that has been signed by all parties to a

failed real estate transaction.

(b) The director is authorized to levy an administrative penalty not exceeding one

thousand dollars ($1,000) two thousand dollars ($2,000) for any violation under this section or the

rules and regulations of the department of business regulation.

SECTION 2. This act shall take effect upon passage.

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LC004610

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