2007 -- S 0370

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LC01339

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2007

____________

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS -- RESIDENTIAL REAL ESTATE

TRANSACTIONS

     Introduced By: Senator William A. Walaska

     Date Introduced: February 13, 2007

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 5-20.6-1, 5-20.6-2, 5-20.6-3, 5-20.6-4, 5-20.6-5, 5-20.6-6, 5-20.6-

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7 and 5-20.6-8 of the General Laws in Chapter 5-20.6 entitled "Agency Relationships in

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Residential Real Estate Transactions" are hereby amended to read as follows:

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     5-20.6-1. Definitions. –Legislative purpose. -- As used in this chapter, the following

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terms have the following meanings:

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      (1) "Agent" means a person who is licensed as a real estate broker or salesperson under

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chapter 20.5 of this title and is acting in a fiduciary capacity on behalf of another party in a real

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estate transaction.

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      (2) "Buyer" means a transferee in a real estate transaction, and includes a person who

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executes an offer to purchase real estate from a seller through an agent, or who seeks the services

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of an agent with the object of entering into a real estate transaction.

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      (3) "Buyer's agent" means an agent who contracts to locate property for a buyer or who

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finds a buyer for a property for which no listing exists and presents an offer to purchase to the

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seller and negotiates on behalf of the buyer.

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      (4) "Dual agent" means an agent acting as agent for both the seller and the buyer in a real

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estate transaction.

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      (5) "Listing agent" means a person who has obtained a listing of real property for sale.

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      (6) "Listing agreement" means a contract between owner(s) of real property and an

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agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer.

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      (7) "Residential real estate transaction" refers to the sale of real property of four (4)

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dwelling units or less.

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      (8) "Sales agreement" means a written contract executed by a buyer acting through a

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selling agent, which becomes the contract for the sale of the real property upon signing by the

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seller.

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      (9) "Sell," "sale," or "sold" refers to a transaction for the transfer of real property from

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the seller to the buyer, and includes exchanges of real property between the seller and buyer and

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transactions involving the creation of a real property sales contract.

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      (10) "Seller" means the transferor in a real estate transaction, and includes an owner who

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lists real property for sale with an agent, whether or not a transfer results, or who receives an offer

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to purchase real property of which he or she is the owner from an agent on behalf of another.

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      (11) "Selling agent" means a listing agent who acts alone, or an agent who acts in

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cooperation with a listing agent, and who sells or finds and obtains a buyer for the real property.

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      (12) "Subagent" means a person acting as a real estate broker or salesperson under

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chapter 20.5 of this title acting in a fiduciary capacity on behalf of another party in a real estate

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transaction and who is associated with a real estate broker as an employee or independent

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contractor, or who is a selling agent acting in cooperation with a listing agent.

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     (a) The way that consumers buy, sell, rent, exchange, and otherwise transfer real estate

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has changed over the years. The purpose of this legislation is to provide consumers with choice.

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     (b) This act is intended to abrogate the common law of agency relative to relationships in

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regulated real estate transactions to the extent that they are inconsistent with this article.

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     (c) Nothing in this act shall prohibit a brokerage firm entering into a written

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representation contract with a buyer, seller, tenant or landlord which creates an agency

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relationship in which the duties and obligations are greater than those provided in this act.

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However, unless greater duties are specified in a representation contract or mandatory disclosure

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form, the duties and obligations owed to a client in a regulated real estate transaction are not

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fiduciary in nature and are not subject to equitable remedies for breach of fiduciary duty.

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     5-20.6-2. Agency status. – Definitions. -- (a) In the practice of real estate brokerage,

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real estate agents are considered to be the agent of the seller of real estate unless there is an

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agreement, in writing, to the contrary between the buyer(s) and agent, and the agreement is

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disclosed to all parties.

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      (b) As agent, the real estate broker and salesperson are obligated to perform the duties of

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agency, as to whether the agent represents the seller or the buyer. The specific duties of the agent

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are as set forth in section 5-20.6-6.

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      (c) A broker or salesperson, operating as a subagent in cooperation with a listing agent,

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owes the same duties and fiduciary responsibility to the seller as the agent. A subagent has the

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following additional duties:

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      (1) To keep the agent informed as to the buyer's progress in meeting contingencies in the

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contract for sale or lease of real property; and

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      (2) To provide required services to buyers to consummate the sale.

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      (d) A broker who is associated with a real estate firm, not as principal broker in the firm,

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shall be considered a subagent, and shall utilize the term "associate broker". An associate broker

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may be affiliated with a real estate firm as either an employee or an independent contractor.

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      (e) A broker associate or salesperson may establish independent contractor status by an

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appropriate written contract which essentially conforms to the exemption requirements under the

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internal revenue code.

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     As used in this chapter, the following terms have the following meanings:

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     (a) "Affiliated licensee" means a person who is a licensed real estate salesperson or real

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estate broker as defined in section 5-20.5-1 and is associated with a particular brokerage.

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     (b) "Brokerage" means a real estate principal broker or entity and affiliated licensees as

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defined in section 5-20. 5-8.

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     (c) "Buyer" means a person who acquires or seeks to acquire an ownership interest in real

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estate.

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     (d) "Buyer representative" means a real estate licensee who is acting on behalf of a buyer

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in a real estate transaction.

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     (e) "Client" means a buyer, seller, tenant or landlord who has entered into a

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representation agreement in a real estate transaction.

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     (f) "Confidential information" means facts concerning a client's assets, liabilities, income,

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expenses, motivations to purchase, rent or sell real estate and previous offers received or made to

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purchase or lease real estate which are not authorized to be disclosed by the client, not a matter of

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general knowledge, nor part of a public record or file to which access is authorized or otherwise

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subject to disclosure by law.

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     (g) "Customer" means a person for whom a brokerage performs ministerial acts in a real

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estate transaction. Unless a licensee enters into a representation agreement with such person, it

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shall be presumed that such person is a customer of the licensee rather than a client.

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     (h) "Landlord" means a person who leases or attempts to lease his ownership interest in

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real estate to another person.

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     (i) "Landlord representative" means a real estate licensee who is action on behalf of a

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landlord in a real estate transaction.

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     (j) "Lease" means an express written or oral contract between a landlord and tenant for

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the use or occupancy by the tenant of real estate that is owned by another person.

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     (k) "Ministerial acts" means acts of an administrative nature which licensees perform

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including showing property, preparing offers or agreements to sell, purchase, exchange, rent, or

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lease, and conveying those offers or agreements to the parties and providing information and

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assistance.

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     (l) "Principal broker" means an individual who is licensed as a real estate broker in Rhode

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Island and who is designated by the brokerage company to be responsible for the supervision of

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the brokerage company and the activities of any associated licensees in accordance with this

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chapter.

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     (m) "Real estate" refers to vacant land or land with physical improvements consisting of a

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house and/or structure.

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     (n) "Representation contract" means an express, written contract between a buyer, seller,

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tenant or landlord and a brokerage that authorizes the brokerage to act as a real estate

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representative for a buyer, seller, landlord or tenant and meets the requirements of section 5-20.6-

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12.

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     (o) "Representation disclosure" means a mandatory form that describes the fiduciary or

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nonfiduciary relationship between a brokerage and a consumer and meets the requirements of

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section 5-20.6-13.

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     (p) "Sales agreement" means an express written contract that is signed by the buyer and

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seller for the purchase and sale of the real estate.

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     (q) "Sales associate" means a salesperson or an associate broker licensed under and

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associated with a principal broker.

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     (r) "Sell," "sale," or "sold" means a transaction for the transfer of real estate from a seller

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to a buyer, including, but not limited to, exchanges of real estate between the seller and buyer and

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transactions involving the creation of a real estate sales agreement.

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     (s) "Seller" means a person who sells or attempts to sell an ownership interest in real

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estate to another person.

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     (t) "Seller representative" means a real estate licensee who is acting on behalf of a seller

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in a real estate transaction.

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     (u) "Tenant" means a person who acquired or seeks to acquire an interest in real estate

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that entitles him or her to occupy or use a property that is owned by another person.

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     (v) "Tenant representative" means a real estate licensee who is acting on behalf of a

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tenant in a real estate transaction.

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     (w) "Transaction broker" means an affiliated licensee who is a transaction representative

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who is working with either or both the buyer, seller, tenant or landlord who is a customer in the

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same transaction.

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     (x) "Transaction coordinator" means a principal broker who oversees a real estate

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transaction in which one affiliated licensee is a buyer or tenant representative and another

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affiliated licensee is a seller or landlord representative in the same transaction.

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     (y) "Transaction representative" means a brokerage and its licensees who provide

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assistance to a buyer, seller, tenant or landlord or both in a real estate transaction but do not

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represent either or both in a fiduciary capacity.

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     5-20.6-3. Disclosure -- Provision to seller -- Exceptions. – Relationships – Creation

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and presumption. -- Listing agents shall provide the seller in a real estate transaction with a copy

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of the disclosure form set forth in section 5-20.6-6 and shall obtain a signed acknowledgement of

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receipt from that seller, except as provided in section 5-20.6-5 as follows: the listing agent shall

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provide the disclosure form to the seller as part of the listing agreement. The form may be

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referenced in the listing agreement and may appear on the reverse side. The reference to state

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seller disclosure form is required by law to be signed by all parties.

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     (a) It shall be presumed that all real estate licensees in a real estate transaction are acting

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as transaction representatives absent a signed, representation disclosure form pursuant to section

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5-20.6-13 that expressly states that the licensee will be acting as a buyer, seller, tenant or landlord

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representative. No type of agency representation may be assumed by a brokerage, buyer, seller,

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tenant or landlord or created by implication. The provisions of this act are expressly intended to

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abrogate the common law of agency.

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     (b) Types of relationships. The following types of relationships are recognized:

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     (1) Transaction representation of a customer; and

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     (2) Representation of a buyer, seller, tenant or landlord client;

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     5-20.6-4. Disclosure -- Provision to buyer. – Duties owed by transaction

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representative to a customer. -- Selling agents shall provide the buyer in a real estate transaction

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with a copy of the disclosure form set forth in section 5-20.6-6 and shall obtain a signed

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acknowledgement of receipt from that buyer except as provided in section 5-20.6-5. This shall be

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done as soon as practical, such as prior to qualifying a buyer or showing property by appointment,

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and in all cases prior to submission of a written offer to purchase. A copy of the signed disclosure

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form shall be provided to the listing agent at the time of the showing of the property.

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     (a) A transaction representative owes the following duties to a customer:

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     (1) To perform ministerial acts to assist the buyer, seller, tenant or landlord in the sale,

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purchase, lease or exchange of real estate;

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     (2) To perform these acts with honesty, good faith, reasonable skill and care; and

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     (3) To properly account for money or property placed in the care and responsibility of the

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brokerage;

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     (b) A transaction representative owes no duty to protect the confidential information of a

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customer.

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     5-20.6-5. Refusal to sign acknowledgement of receipt. – No duty to inspect. -- In any

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circumstances in which the seller or buyer refuses to sign an acknowledgement of receipt

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pursuant to sections 5-20.6-3 and 5-20.6-4, the agent shall set forth, sign, and date a written

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declaration of the facts of the refusal.

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     A real estate brokerage and its licensees have no duty to inspect the onsite or offsite

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conditions of the property and any improvements. A licensee offering services to a customer may

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not knowingly give a party in a real estate transaction false information; however, the licensee is

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not liable to a party for providing false information to the party if the real estate licensee did not

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have actual knowledge that the information was false and discloses to the party the source of the

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information.

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     5-20.6-6. Disclosure form. – Duties owed by a representative to a client. -- The

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disclosure form required by sections 5-20.6-3 and 5-20.6-4 shall be in the following form:

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     DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP

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      (a) When you enter into a discussion with a real estate salesperson or broker regarding a

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real estate transaction, you should, from the outset, understand what type of agency relationship

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or representation you shall will have with the salesperson or broker in the transaction.

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     LISTING AGENT

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     (b) A listing agent is a real estate salesperson or broker who becomes an agent of the

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seller and works on behalf of and represents the best interests of sellers, while treating buyers

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honestly and fairly. According to the law of agency, obligations of listing agents include, but are

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not limited to, the following:

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     TO THE SELLER:

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     (1) Owe the seller a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure

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and confidentiality; and

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     (2) Represent the best interests of the seller.

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     TO THE BUYER:

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     Treat the buyer honestly and fairly. I ______________________________________ of

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__________________________________ (Listing Agent's Signature) (Listing Company)

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represent the seller as listing agent.

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     BUYER'S AGENT

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     (c) A buyer's agent is a real estate salesperson or broker who becomes an agent of the

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buyer and works on behalf of and represents the best interests of buyers, while treating sellers

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honestly and fairly. According to the law of agency, obligations of buyer's agents include, but are

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not limited to, the following;

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     TO THE BUYER:

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     (1) Owe the buyer a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure

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and confidentiality; and

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     (2) Represent the best interests of the buyer.

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     TO THE SELLER:

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     Treat the seller honestly and fairly. I ______________________________________ of

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__________________________________ (Buyer's Agent's Signature) (Real Estate Company)

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represent the buyer as buyer's agent.

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     SELLER'S SUBAGENT

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     (d) A seller's subagent is a real estate salesperson or broker from either the listing

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company or cooperating company who becomes an agent of the seller and works on behalf of and

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represents the best interests of sellers, while treating buyers honestly and fairly. According to the

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law of agency, obligations of sellers' subagents include, but are not limited to, the following;

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     TO THE SELLER:

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     (1) Owe the seller a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure

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and confidentiality; and

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     (2) Represent the best interests of the seller.

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     TO THE BUYER:

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     Treat the buyer honestly and fairly. I ______________________________ of

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__________________________________________ (Signature of Listing or (Listing or

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Cooperating Company) Cooperating Company Agent) represent the seller as seller's subagent.

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      SELLER - BUYER RESPONSIBILITY

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     (e) (1) The above duties of the agent in a real estate transaction do not relieve the seller or

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buyer from the responsibility to protect their own interests. You should carefully read all

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agreements to assure that they adequately express your understanding of the transaction. A real

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estate agent is a person qualified to advise about real estate. If legal or tax advice is desired,

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consult a competent professional.

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     (2) Throughout your real property transaction you may receive more than one disclosure

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form, depending upon the number of agents assisting in the transaction. A disclosure form is

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required by law to be signed by all parties. You should read its contents each time it is presented

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to you, considering the relationship between you and the real estate agent in your specific

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transaction.

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     SELLER/BUYER ACKNOWLEDGMENT

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     I/We the undersigned hereby acknowledge receipt of a copy of this "Disclosure

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Regarding Real Estate Agency Relationship" form, have read its contents and understand the type

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of agency relationship I/We will have with the salesperson or broker in the real estate transaction.

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__________________________________________________ Buyer/Seller Signature (Date)

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__________________________________________________ Buyer/Seller Signature (Date)

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__________________________________________________ Buyer/Seller Signature (Date)

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__________________________________________________ Buyer/Seller Signature (Date)

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     (a) If a buyer, seller, tenant or landlord and brokerage sign a disclosure form pursuant to

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section 5-20.6-13 that expressly states that the licensee will be acting as a buyer, seller, tenant or

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landlord representative, that buyer, seller, tenant or landlord is a client and the brokerage and its

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licensees are representatives who owe the following legal duties and obligations to their clients in

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addition to those described in section 5-20.6-4:

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     (1) To perform the terms of the representation agreement, if any, with reasonable skill

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and care;

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     (2) To promote the client's best interest in good faith and honesty;

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     (3) To owe confidentiality to the client during the relationship and after termination; and

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     (4) To perform ministerial acts.

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     5-20.6-7. Disclosure and confirmation of agency relationship. – Designated agency. -

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- (a) The agent shall disclose to the buyer and seller whether the agent is acting in the real estate

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transaction exclusively as the buyer's agent, exclusively as the seller's agent, or as a dual agent

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representing both the buyer and the seller in the contract to purchase and sell real property.

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     (b) The listing agent shall disclose to the seller whether the listing agent is acting in the

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real estate transaction exclusively as the seller's agent, or as a dual agent representing both the

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buyer and seller in the contract to purchase and sell real property.

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     (c) Each contract to purchase and sell real property shall have a confirmation required by

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subsections (a) and (b) of this section and shall be in the following form:

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     ____________________________ of ____________________________

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     (Name of Listing Agent) (Listing Company)

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     ( ) The seller exclusively; or

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     ( ) Both the buyer and seller.

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      ____________________________ of ____________________________

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     (Name of Agent if not (Real Estate Company)

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      the same as the Listing Agent)

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     ( ) The buyer exclusively; or

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     ( ) The seller exclusively; or

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     ( ) Both the buyer and seller.

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      (d) The disclosures and confirmation required by this section are in addition to the

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disclosure required by sections 5-20.6-3 and 5-20.6-4.

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     (a) A brokerage may, designate one or more individual affiliated licensees to represent

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solely the seller or landlord and one or more other individual affiliated licensees to represent

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solely the buyer or tenant in the same transaction. The principal broker shall act as a transaction

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coordinator, and all other licensees who interact with the buyer, seller, tenant or landlord, in the

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brokerage shall act as transaction representatives.

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     (b) If the principal broker acts as a buyer representative, seller representative, tenant

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representative or landlord representative, and other licensee in that brokerage represents the other

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party in the transaction, then all licensees in that brokerage who interact with the buyer, seller,

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tenant or landlord including the principal broker shall act as transaction representatives.

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     5-20.6-8. Disclosed dual agency. – Assistance of more than one person in same

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transaction by individual affiliated licensee. -- (a) A real estate agent can legally be the agent

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of both the seller and the buyer in a transaction, when the agent has a signed buyer agency

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agreement with buyer and buyer is purchasing property listed by the real estate firm of the agent.

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     (b) Disclosed dual agency can only exist with the knowledge and consent of seller and

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buyer.

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     (c) Where the seller refuses the disclosed agency, then the agent is released from his or

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her obligations to the buyer, but must continue to treat the buyer fairly and honestly and must not

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reveal confidential information obtained from the buyer without approval of the buyer.

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     (d) When a buyer utilizing the services of a buyer's agent desires to make an offer on

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property listed by the buyer's agent real estate firm, the following form must be signed by the

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buyer, seller and agent:

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     State of Rhode Island Date

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     DISCLOSED DUAL AGENCY

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      As the undersigned buyer and seller, it is agreed that the property on which offer is to be

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made is presently listed with the firm of the undersigned agent, who had been earlier retained by

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the buyer as the buyer's agent. It is understood that agent cannot disclose confidential information

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obtained from either party, which would materially effect a purchase or sale decision by either

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party. Agent will exercise diligent and reasonable skill and care in treating both parties honestly

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and fairly and deal in good faith.

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     BUYER SELLER

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     AGENT ________________________COMPANY____________

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     An individual affiliated licensee may assist both the buyer and the seller or tenant and

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landlord in the same transaction only with the consent of the principal broker and after providing

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written notice to all clients involved in the transaction. The principal broker shall act as a

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transaction coordinator.

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     SECTION 2. Chapter 5-20.6 of the General Laws entitled "Agency Relationships in

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Residential Real Estate Transactions" is hereby amended by adding thereto the following

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sections:

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     5-20.6-9. Real estate representation brochure -- Provision to buyer, seller, tenant or

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landlord. – (a) A real estate licensee shall provide the buyer, seller, tenant or landlord in a real

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estate transaction with a copy of the real estate representation brochure as set forth in section 5-

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20.6-10 and shall obtain a signed acknowledgement of receipt from that buyer, seller, tenant or

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landlord as soon as practical and in all cases prior to submission of a written offer to purchase or

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the initial showing of a property, whichever comes first. In any circumstances in which the buyer,

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seller, tenant or landlord refuses to sign an acknowledgement of receipt pursuant to section 5-

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20.6-9, the agent shall set forth, sign, and date a written declaration of the facts of the refusal.

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     (b) The real estate representation brochure shall not create representation by the

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brokerage or its affiliated licensees.

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     (c) A statement that the failure of a licensee to timely give a buyer, seller, tenant or

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landlord the real estate representation brochure or the failure of a licensee to properly and timely

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obtain any written acknowledgement required by this chapter shall be a violation of Rhode Island

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real estate license law and may subject the licensee to disciplinary action according to the

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provisions of section 5-20.5-14 and the penalties stated in section 5-20.6-16.

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     5-20.6-10. Real estate representation brochure -- Minimum requirements. – The

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Rhode Island real estate commission shall approve a form of written real estate representation

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brochure as required under section 5-20.6-7 that conforms to the requirements of this section. The

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real estate representation brochure shall contain the following information:

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     (1) A list of the types of representation or assistance available to a buyer, seller, tenant or

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landlord in a real estate transaction, the legal duties and obligations owed to the buyer, seller,

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tenant or landlord in each type of representation and a conspicuous notice that no representation

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will exist absent a signed representation disclosure form pursuant to section 5-20.6-13 that

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expressly states that the licensee will be acting as a buyer, seller, tenant or landlord

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representative; and

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     (2) A statement that a brokerage must disclose its relationship as a buyer representative,

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seller representative, transaction representative or transaction coordinator to the buyer, seller,

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tenant or landlord in any transaction.

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     5-20.6-11. Written requirements for representation of a buyer, seller, tenant or

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landlord. – (a) A real estate licensee shall provide the buyer, seller, tenant or landlord in a real

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estate transaction with a copy of the real estate representation brochure as set forth in section 5-

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20.6-10 as soon as practical and in all cases prior to submission of a written offer to purchase or

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the initial showing of a property, whichever comes first.

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     (b) A real estate licensee shall not act as a buyer representative, seller representative,

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tenant representative or landlord representative until the brokerage has complied with the

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provisions of section 5-20.6-13.

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     (c) Each brokerage shall keep a receipt of the real estate representation disclosure form

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that has been signed by both the brokerage and the seller, buyer, landlord or tenant pursuant to

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subsections 5-20.5-13(6) and (7).

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     5-20.6-12. Representation contract -- Minimum requirements. – (a) If a seller, buyer,

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landlord, or tenant and brokerage elect to enter into a representation contract, the contract shall

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meet the following requirements;

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     (1) Be an express, written contract;

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     (2) Include terms of compensation;

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     (3) Describe all services and limitations on services to be performed by the brokerage;

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     (4) State that a brokerage may designate one or more individual affiliated licensees to

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represent solely the seller or landlord and one or more individual affiliated licensees to represent

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solely the buyer or tenant in the same transaction after providing written noticed to all parties; and

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     (5) Be signed by all parties.

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     (b) An exclusive representation contract, shall meet the following requirements in

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addition to those described above in (a):

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     (1) State a definite starting and expiration date;

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     (2) Establish the real estate licensee as the exclusive representative for the buyer, seller,

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landlord or tenant; and

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     (3) State the brokerage will:

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     (i) Accept delivery of and present to a client or customer offers and counteroffers to buy,

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sell, lease, option or exchange the client's real estate prior to the signing of a purchase and sales

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argument or offer to purchase by all necessary parties;

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     (ii) Assist a client or customer with communicating, and presenting offers, counteroffers

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and notices that relate to these offers and counteroffers.

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     5-20.6-13. Mandatory disclosure form. – (a) The Rhode Island real estate commission

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shall approve a mandatory disclosure form that includes the following information:

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     (1) A list of the types of representation or assistance available to a client, the legal duties

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and obligations owed to the buyer, seller, tenant or landlord in each type of representation and a

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conspicuous notice that no representation will exist unless the consumer and real estate licensee

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have signed a mandatory disclosure form that expressly states that the licensee will be acting as a

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buyer, seller, tenant, landlord or transaction representative;

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     (2) A box for the client to select the type of representation or assistance that he or she

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desires;

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     (3) A statement that a brokerage may designate one or more individual affiliated

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licensees to represent solely the seller or landlord and one or more individual affiliated licensees

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to represent solely the buyer or tenant in the same transaction after providing written notice to all

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parries;

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     (4) A statement that the failure of a licensee to timely give a buyer, seller, tenant or

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landlord the real estate representation brochure or the failure of a licensee to properly and timely

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obtain any written acknowledgement required by this chapter shall be a violation of Rhode Island

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real estate license law and may subject the licensee to disciplinary action according to the

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provisions of section 5-20.5-14 and the penalties stated in section 5-20.6-16;

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     (5) A brokerage's relationship with a client as a seller representative, buyer

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representative, landlord representative or tenant representative must be established and all

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necessary agreements executed no later than the preparation of a purchase and sales agreement or

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offer to purchase;

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     (6) Written confirmation from each party signing this document that he or she has

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received, read, and understood this mandatory disclosure form and has consented to the

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relationship confirmed above; and

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     (7) Written confirmation from a seller, buyer, landlord, or tenant that he or she has

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received the mandatory real estate representation brochure pursuant to section 5-20.6-9.

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     5-20.6-14. Relationship and compensation. – The payment or promise of payment or

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compensation to a real estate broker does not create an agency relationship between any broker

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and buyer, seller, tenant or landlord.

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     5-20.6-15. Imputed knowledge and liability. – (a) Any knowledge known or acquired

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by an affiliated licensee shall not be imputed to the principal broker or to other affiliated licensees

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unless the principal broker had actual knowledge. A principal broker shall not be liable for a

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wrongful act, error, omission, or misrepresentation of his or her affiliated licensees unless the

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principal broker had actual knowledge of the wrongful act, error, omission or misrepresentation.

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     (b) A client, whether buyer, seller, tenant or landlord, shall not be liable for a wrongful

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act, error, omission or misrepresentation of his or her broker or the affiliated licensees of his or

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her broker unless the client had actual knowledge of the wrongful act, error, omission or

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misrepresentation.

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     (c) A licensee or brokerage engaged in representation of a client shall be entitled to rely

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upon representations made by a client and shall not be liable for a wrongful act, error, omission or

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misrepresentation made by the client unless the licensee or brokerage had actual knowledge of the

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wrongful act, error, omission or misrepresentation.

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     5-20.6-16. Penalty for violation. – (a) Each violation of this statute by a real estate

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licensee shall constitute a violation of Rhode Island real estate license law and may subject the

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licensee to disciplinary action according to the provisions of section 5-20.5-14. The real estate

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licensee is subject to a civil penalty in the amount of two hundred fifty dollars ($250) for the first

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violation and five hundred dollars ($500) per occurrence for each subsequent violation payable to

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the Rhode Island department of business regulation.

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     (b) Failure to provide a real estate representation brochure pursuant to section 5-20.6-9, a

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mandatory disclosure form pursuant to section 5-20.6-13, or both to a consumer does not void the

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purchased and sales agreement nor create any defect in title.

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     SECTION 3. This act shall take effect on July 1, 2008.

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LC01339

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO BUSINESSES AND PROFESSIONS -- RESIDENTIAL REAL ESTATE

TRANSACTIONS

***

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     This act would amend the law regarding agency relationships in residential real estate

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transactions.

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     This act would take effect on July 1, 2008.

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LC01339

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