| Introduced By: Senators Tavares, O'Leary and Goodwin |
| Date Introduced: February 11, 1997 |
| Referred To: Senate Committee on Corporations |
It is enacted by the General Assembly as follows
SECTION 1. Sections 5-20.6-1 thru 5-20.6-8 of the General Laws in Chapter 5-20.6 entitled "Agency Realtorships in Residential Real Estate Transactions" are hereby repealed in its entirety.
{DEL5-20.6-1. Definitions. -- DEL} {DEL As used in this chapter, the
following terms have the following meanings:
(1) "Agent" means a person who is licensed as a real estate broker or salesperson under chapter 5-20.5 of the general laws and is acting in a fiduciary capacity on behalf of another party in a real estate transaction.
(2) "Buyer" means a transferee in a real estate transaction, and includes a person who executes an offer to purchase real estate from a seller through an agent, or who seeks the services of an agent with the object of entering into a real estate transaction.
(3) "Buyer's agent" means an agent who contracts to locate property for a buyer or who finds a buyer for a property for which no listing exists and presents an offer to purchase to the seller and negotiates on behalf of the buyer.
(4) "Dual agent" means an agent acting as agent for both the seller and the buyer in a real estate transaction.
(5) "Listing agreement" means a contract between owner(s) of real property and an agent, by which the agent has been authorized to sell the real property or to find or obtain a buyer.
(6) "Listing agent" means a person who has obtained a listing of real property for sale.
(7) "Residential real estate transaction" refers to the sale of real property of four (4) dwelling units or less.
(8) "Sales agreement" means a written contract executed by a buyer acting through a selling agent which becomes the contract for the sale of the real property upon signing by the seller.
(9) "Sell," "sale," or "sold" refers to a transaction for the transfer of real property from the seller to the buyer, and includes exchanges of real property between the seller and buyer and transactions involving the creation of a real property sales contract.
(10) "Seller" means the transferor in a real estate transaction, and includes an owner who lists real property for sale with an agent, whether or not a transfer results, or who receives an offer to purchase real property of which he or she is the owner from an agent on behalf of another.
(11) "Selling agent" means a listing agent who acts alone, or an agent who acts in cooperation with a listing agent, and who sells or finds and obtains a buyer for the real property.
(12) "Subagent" means a person acting as a real estate broker or salesperson under chapter 5-20.5 of the general laws acting in a fiduciary capacity on behalf of another party in a real estate transaction and who is associated with a real estate broker as an employee or independent contractor, or who is a selling agent acting in cooperation with a listing agent. DEL}
{DEL5-20.6-2. Agency status. -- DEL} {DEL (a) In the practice of real
estate brokerage, real estate agents shall be considered to be the
agent of the seller of real estate unless there is an agreement in
writing to the contrary between the buyer(s) and agent, and such
agreement is disclosed to all parties.
(b) As agent, the real estate broker and salesperson shall be obligated to perform the duties of agency, in respect to whether the agent represents the seller or the buyer. The specific duties of such agent shall be as set forth in section 5-20.6-6.
(c) A broker or salesperson, operating as a subagent in cooperation with a listing agent, owes the same duties and fiduciary responsibility to the seller as the agent. A subagent has the following additional duties: To keep the agent informed as to the buyer's progress in meeting contingencies in the contract for sale or lease of real property, and (2) To provide required services to buyers to consummate the sale.
(d) A broker who is associated with a real estate firm, not as principal broker in the firm,shall be considered a subagent, and shall utilize the term "associate broker". An associate broker may be affiliated with a real estate firm as either an employee or an independent contractor.
(e) A broker associate or salesperson may establish independent contractor status by an appropriate written contract which essentially conforms to the exemption requirements under the internal revenue code. DEL}
{DEL5-20.6-3. Disclosure -- Provision to seller -- Exceptions.
-- DEL} {DEL Listing agents shall provide the seller in a real estate
transaction with a copy of the disclosure form set forth in section
5-20.6-6 and shall obtain a signed acknowledgement of receipt from
that seller, except as provided in section 5-20.6-5 as follows: The
listing agent shall provide the disclosure form to the seller as part
of the listing agreement. The form may be referenced in the listing
agreement and may appear on reverse side. The reference is to state:
seller disclosure form is required by law to be signed by all
parties. DEL}
{DEL5-20.6-4. Disclosure -- Provision to buyer. -- DEL} {DEL Selling
agents shall provide the buyer in a real estate transaction with a
copy of the disclosure form set forth in section 5-20.6-6 and shall
obtain a signed acknowledgement of receipt from that buyer except as
provided in section 5-20.6-5. This shall be done as soon as
practical, such as prior to qualifying a buyer or showing property by
appointment, and in all cases prior to submission a written offer to
purchase. A copy of the signed disclosure form shall be provided to
the listing agent at the time of the showing of the property. DEL}
{DEL5-20.6-5. Refusal to sign acknowledgment of receipt. -- DEL} {DEL In
any circumstances in which the seller or buyer refuses to sign an
acknowledgement of receipt pursuant to sections 5-20.6-3 and 5-20.6-4,
the agent shall set forth, sign, and date a written declaration of the
facts of the refusal. DEL}
{DEL5-20.6-6. Disclosure form. -- DEL} {DEL The disclosure form required
by sections 5-20.6-3 and 5-20.6-4 shall be in the following form:
DISCLOSURE REGARDING REAL ESTATE AGENCY RELATIONSHIP
(a) When you enter into a discussion with a real estate salesperson or broker regarding a real estate transaction, you should, from the outset, understand what type of agency relationship or representation you will have with the salesperson or broker in the transaction.
LISTING AGENT
(b) A listing agent is a real estate salesperson or broker who becomes an agent of the seller and works on behalf of and represents the best interests of sellers, while treating buyers honestly and fairly. According to the law of agency, obligations of listing agents include but are not limited to the following:
TO THE SELLER:
(1) Owe the seller a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure and confidentiality; and
(2) Represent the best interests of the seller.
TO THE BUYER:
Treat the buyer honestly and fairly.
I ______________________________ of ________________________________
(Listing Agent's Signature) (Listing Company)
represent the seller as listing agent.
BUYER'S AGENT
(c) A buyer's agent is a real estate salesperson or broker who becomes an agent of the buyer and works on behalf of and represents the best interests of buyers, while treating sellers honestly and fairly. According to the law of agency, obligation of buyer's agents include but are not limited to the following;
TO THE BUYER:
(1) Owe the buyer a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure and confidentiality; and
(2) Represent the best interests of the buyer.
TO THE SELLER:
Treat the seller honestly and fairly.
I ______________________________ of _________________________________
(Buyer's Agent's Signature) (Real Estate Company)
represent the buyer as buyer's agent.
SELLER'S SUBAGENT
(d) A seller's subagent is a real estate salesperson or broker
from either the listing company or cooperating company who becomes an agent of the seller and works on behalf of and represents the best interests of sellers, while treating buyers honestly and fairly. According to the law of agency, obligations of sellers' subagents include but are not limited to the following;TO THE SELLER:
(1) Owe the seller a fiduciary duty of utmost care, integrity, honesty, loyalty, disclosure and confidentiality; and
(2) Represent the best interests of the seller.
TO THE BUYER:
Treat the buyer honestly and fairly.
I ______________________________ of ________________________________
(Signature of Listing or (Listing or Cooperating Company)
Cooperating Company Agent)
represent the seller as seller's subagent.
SELLER -- BUYER RESPONSIBILITY
(e)(1) The above duties of the agent in a real estate transaction do not relieve a seller or buyer from the responsibility to protect their own interests. You should carefully read all agreements to assure that they adequately express your understanding of the
transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.(2) Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. A disclosure form is required by law to be signed by all parties. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.
SELLER/BUYER ACKNOWLEDGEMENT
I/We the undersigned hereby acknowledge receipt of a copy of this "Disclosure Regarding Real Estate Agency Relationship" form, have read its contents and understand the type of agency relationship I/We will have with the salesperson or broker in the real estate transaction.
________________________________
Buyer/Seller Signature (Date)
________________________________
Buyer/Seller Signature (Date)
________________________________
Buyer/Seller Signature (Date)
_______________________________
Buyer/Seller Signature (Date) DEL}
{DEL5-20.6-7. Disclosure and confirmation of agency relationship.
-- DEL} {DEL (a) The agent shall disclose to the buyer and seller whether
the agent is acting in the real estate transaction exclusively as the
buyer's agent, exclusively as the seller's agent, or as a dual agent
representing both the buyer and the seller in the contract to purchase
and sell real property.
(b) The listing agent shall disclose to the seller whether the listing agent is acting in the real estate transaction exclusively as the seller's agent, or as a dual agent representing both the buyer and seller in the contract to purchase and sell real property.
(c) Each contract to purchase and sell real property shall have a confirmation required by subdivisions (a) and (b) and shall be in the following form:
________________________ of ______________________ is the agent of: (Name of Listing Agent) (Listing Company) ( ) the seller exclusively; or ( ) both the buyer and seller. _________________________ of ______________________ is the agent of: (Name of Agent if not (Real Estate Company) the same as the Listing Agent) ( ) the buyer exclusively; or ( ) the seller exclusively; or ( ) both the buyer and seller.(d) The disclosures and confirmation required by this section shall be in addition to the disclosure required by sections 5-20.6-3 and 5-20.6-4. DEL}
{DEL5-20.6-8. Disclosed dual agency. -- DEL} {DEL (a) "A real estate
agent can legally be the agent of both the seller and the buyer in a
transaction, when the agent has signed buyer agency agreement with
buyer and buyer is purchasing property listed by the real estate firm
of said agent."
(b) Disclosed dual agency can only exist with the knowledge and consent of seller and buyer.
(c) Where the seller refuses the disclosed agency, then the agent
is released from his or her obligations to the buyer, but must continue to treat the buyer fairly and honestly and must not reveal confidential information obtained from the buyer without approval of the buyer.(d) When a buyer utilizing the services of a buyer's agent desires to make an offer on property listed by the buyer's agent real estate firm, the following form must be signed by the buyer, seller and agent: State of Rhode Island Date
DISCLOSED DUAL AGENCY
As the undersigned buyer and seller, it is agreed that the property on which offer is to be made is presently listed with the firm of the undersigned agent, who had been earlier retained by the buyer as the buyer's agent.
It is understood that agent cannot disclose confidential information obtained from either party which would materially effect a purchase or sale decision by either party.
Agent will exercise diligent and reasonable skill and care in
treating both parties honestly and fairly and deal in good faith. DEL}
{DEL BUYER DEL}{DEL SELLER DEL}{DEL AGENT
COMPANY*=M DEL}
SECTION 2. Title 5 of the General Laws entitled "Businesses and Professions" is hereby amended by adding thereto the following chapter:
{ADD CHAPTER 20.9 ADD}
{ADD CONSUMER AWARENESS IN REAL ADD}
{ADD ESTATE BROKERAGE RELATIONSHIP ADD}
{ADD 5-20.9-1. Legislative findings. -- ADD} {ADD The general assembly finds, determines, and declares that application of the common law of agency to the relationships between real estate brokers and persons who are sellers, buyers, landlords and tenants of rights and interests in real property has resulted in misunderstandings and consequences that have been contrary to the best interests of the public; the general assembly further finds, determines, and declares that the real estate brokerage industry has a significant impact upon the economy of the State of Rhode Island and that it is in the best interests of the public to provide codification of the relationships between real estate brokers and consumers of brokerage services in order to prevent detrimental misunderstandings and misinterpretations of such relationships by both consumers and real estate brokers and thus promote and provide stability in the real estate market. Specifically, the public should be advised of the general duties, obligations, and responsibilities of a real estate broker in any real estate transaction. The provisions of this subchapter are enacted to govern the relationships between sellers, landlords, buyers, tenants, and real estate brokers to the extent not governed by individual written agreements.
The general assembly further finds, determines, and declares that the provisions of this subchapter are not intended to prescribe or affect the contractual relationships as between real estate brokers and the broker's affiliated licensees.
The general assembly further declares that the provisions of this subchapter may serve as a basis for private rights of actions and defenses by sellers, buyers, landlords, tenants and real estate brokers. ADD}
{ADD 5-20.9-2. Definitions. -- ADD} {ADD As used in this subchapter, unless the context indicates otherwise, the following terms have the following meanings:
(1) "Affiliated licensee" means a licensee who is either a salesperson, broker or associate broker and who is authorized to engage in brokerage activity by and on behalf of a broker of record.
(2) "Broker" means either a licensee or an affiliated licensee who holds a broker's license, as defined in R.I.G.L. 5-20.5-1(c).
(3) "Broker of record" means a broker of an office designated to act for a brokerage firm in the conduct of real estate brokerage and whose name is so filed with the department of business regulation.
(4) "Brokerage contract" means a written agreement which expresses the parties, subject matter, consideration, mutuality of agreement, and mutuality of obligation for a real estate service, such as listing contract, exclusive buyer's representation contract, etc.
(5) "Brokerage firm" means a legal entity providing real estate brokerage services through its broker of record, affiliated licensee(s) and employees.
(6) "Brokerage relationship disclosure" means a written acknowledgement that discloses and establishes the relationships between the parties as to brokerage services to be performed, such as customer broker, seller's broker, etc.
(7) "Buyer" means either a purchaser or tenant; a party who has the right to acquire an interest in real estate.
(8) "Buyers broker" means a broker of record and/or its affiliated licensee(s) who is engaged by and represents the buyer or tenant in a real estate transaction.
(9) "Client" means a party who has entered into a specific brokerage relationship promoting interest of the party with a real estate broker of record and its affiliated licensee(s).
(10) "Consensual dual broker" means a broker of record and/or its affiliated licensee(s) who with the knowledge and informed prior written consent of the parties represent two (2) or more parties in the same transaction whose interests are adverse.
(11) "Customer" means a party to a transaction who is provided brokerage services by a broker of record and its affiliated licensee(s), as enumerated in 5-20.9-6, but is not a client.
(12) "Customer broker" means a broker of record and/or its affiliated licensee(s) who assists in a real estate transaction and who undertakes no representational duties, other that as enumerated in section 5-20.9-7.
(13) "In-company transaction" means a transaction in which both the seller and buyer are provided brokerage services by the same broker of record and/or its affiliated licensee(s) of the same brokerage firm.
(14) "Material" means a type of fact that relates to the specific property and is so substantial and important as to influence the parties to whom it is imparted.
(15) "Ministerial acts" means those acts that a broker of record and/or its affiliated licensee(s) performs for a party that do not require the exercise of discretionary judgement by a licensee.
(16) "Nonconsensual dual broker" means a broker of record and/or its affiliated licensee(s) representing in the same transaction two (2) or more clients with adverse interests without the knowledge and informed prior written consent of the clients. Such representation is illegal.
(17) "Responsible broker/salesperson" means that affiliated licensee who is nominated by the broker of record of the affiliated licensee's real estate brokerage firm to act for a client of that brokerage firm to the exclusion of other affiliated licensees of that brokerage firm.
(18) "Residential" refers to real property of four (4) dwelling units or less and/or vacant land to be developed for same.
(19) "Salesperson" means an affiliated licensee who holds a salesperson's license, as defined in R.I.G.L. 5-20.5-1(d).
(20) "Seller" means either a seller or landlord; a party who has the right to transfer an interest in real estate.
(21) "Seller's broker" means a broker of record and/or its affiliated licensee(s) that is engaged by and represents the seller or landlord in a real estate transaction.
(22) "Subagent" means a broker of record and/or its affiliated licensee(s) acting for the seller's broker in performing brokerage tasks for a seller. The subagent owes the same obligations and responsibilities to the seller as does the seller's broker. ADD}
{ADD 5-20.9-3. Seller's brokers. -- ADD} {ADD (1) Duty to seller. A real
estate broker of record and/or its affiliated licensee(s) engaged by a seller:(A) Shall perform the terms of the written brokerage relationship disclosure and/or brokerage contract made with the seller;
(B) Shall promote the interests of the seller by performance of brokerage duties, including:
(1) seeking a sale at the price and terms stated in the brokerage contract or at a price and terms acceptable to the seller except that the licensee is not obligated to seek additional offers for sale of the property while the property is subject to a contract of sale unless the brokerage agreement so provides;
(2) presenting in a timely manner all written offers to and from the seller, except when there is mutual agreement to the contrary, and/or the property is subject to a contract of sale;
(3) disclosing to the seller material facts about the specific property of which the broker of record and/or its affiliated licensee(s) has actual knowledge, except as directed in R.I.G.L. 5-20.8 "Real Estate Sales Disclosure". A real estate broker of record and/or its affiliated licensee(s) is not obligated to discover latent defects in the property. Nothing in this subchapter limits any obligation of a seller to inspect the physical condition of the property;
(4) advising the seller to obtain expert advice on material matters when necessary; and
(5) accounting a timely manner for all money and/or other valuable consideration in which the seller has or may have interest.
(C) Shall exercise reasonable skill and care;
(D) Shall comply with all requirements of the laws governing real estate brokerage licenses promulgated by the department of business regulation;
(E) Shall comply with any applicable federal, state or local laws, rules, regulations or ordinances related to real estate brokerage including fair housing and civil rights laws or regulations;
(F) Has an obligation to preserve confidential information provided by the seller, as follows:
(1) that a seller is willing to accept less than the asking price for the property;
(2) what the motivating factors are for the party selling the property;
(3) that a seller will agree to financing terms other than those offered;
(4) any facts or suspicions regarding circumstances which may psychologically impact or stigmatize any real property pursuant to R.I.G.L. 5-20.8-6; and
(5) any material information about the seller unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing.
(G) Has no duty to preserve confidential information if:
(1) The seller to whom the information pertains consents in writing to disclosure of the information;
(2) disclosure of the information is required by law;
(3) the information is made public or becomes public by the words or conduct of the seller to whom the information pertains or from a source other than the broker of record and/or its affiliated licensee(s); or
(4) disclosure is necessary to defend the broker of record and/or its affiliated licensee(s) against an accusation of wrongful conduct in a judicial proceeding or before the department of business regulation of before a professional committee.
(H) Shall be able to promote alternative properties not owned by the seller to prospective buyers as well as accept and market listings on competing properties for sale without breaching any duty to the seller;
(I) May cooperate with other brokerage firms and/or affiliated licensee(s); and
(J) May act as a consensual dual broker if in compliance with the requirements of section 5-20.9-6.
(2) Duty to buyer. The duty of a seller's broker to a buyer or customer is set forth in section 5-20.9-7, "Customer's broker". ADD}
{ADD 5-20.9-4. Buyer's broker. -- ADD} {ADD (1) Duty to buyer. A real estate broker of record and/or its affiliated licensee(s) engaged by a buyer:
(A) Shall perform the terms of the written brokerage relationship disclosure or brokerage contract made with the buyer;
(B) Shall promote the interests of the buyer by exercising brokerage duties, including:
(1) seeking a property at a price and terms specified by the buyer, except that the licensee is not obligated to seek other properties for the buyer while the buyer is a party to a contract to purchase a property unless the brokerage contract so provides;
(2) presenting in a timely manner all written offers to and from the buyer, except when there is mutual agreement to the contrary;
(3) disclosing to the buyer material facts about the specific property of which the broker of record and/or its affiliated licensee(s) has actual knowledge, except as directed in R.I.G.L. 5-20.8 "Real Estate Sales Disclosure". A real estate broker of record and/or its affiliated licensee(s) is not obligated to discover latent defects in the property. Nothing in this subchapter limits any obligation of a buyer to inspect the physical condition of the property;
(4) advising the buyer to obtain expert advice on material matters, when necessary; and
(5) accounting in a timely manner for all money and/or other valuable consideration in which the buyer has or may have an interest.
(C) Shall exercise reasonable skill and care;
(D) Shall comply with all requirements of the laws governing real estate brokerage licenses promulgated by the department of business regulation;
(E) Shall comply with any applicable federal, state or local laws, rules, regulations or ordinances related to real estate brokerage including fair housing and civil rights laws or regulations;
(F) Has an obligation to preserve confidential information provided by the buyer, as follows:
(1) That a buyer is willing to pay more than the purchase price offered for the property;
(2) What the motivating factors are for the party buying the property;
(3) That a buyer will agree to financing terms other than those offered;
(4) Any facts or suspicious regarding circumstances which may psychologically impact or stigmatize any real property pursuant to R.I.G.L. 5-20.8-6; and
(5) Any material information about the buyer unless disclosure is required by law or failure to disclose such information would constitute fraud or dishonest dealing.
(G) Has no duty to preserve confidential information if:
(1) The buyer to whom the information pertains consents in writing to disclosure of the information;
(2) Disclosure of the information is required by law;
(3) The information is made public or becomes public by the words or conduct of the buyer to whom the information pertains or from a source other than the broker of record and/or its affiliated licensee(s); or
(4) Disclosure is necessary to defend the broker of record and/or its affiliated licensee(s) against an accusation of wrongful conduct in a judicial proceeding or before the department of business regulation or before a professional committee.
(H) Shall be able to promote properties in which the buyer is interested to other buyers who might also be clients or customers of the real estate broker of record and/or its affiliated licensee(s) without breaching any duty to the client;
(I) May cooperate with other brokerage firms and/or affiliated licensee(s); and
(J) May act as a consensual dual broker if in compliance with section 5-20.9-6.
(2) Duty to seller. The duty of a buyer's brokers to a seller or customer is set forth in section 5-20.9-7, "Customer broker". ADD}
{ADD 5-20.9-5. Responsible brokers/salespersons within a firm. -- ADD} {ADD (1) Responsible brokers/salespersons. A real estate brokerage firm entering into a written brokerage relationship disclosure or brokerage contract may, through the broker of record, notify the client in writing of any affiliated licensee(s) within the real estate brokerage firm who will be acting as responsible broker(s)/salespersons(s) to that client to the exclusion of all other affiliated licensees with the real estate brokerage firm.
(2) Not a dual broker. A real estate brokerage firm and/or a broker of a record is not considered to be acting as a dual broker solely because of a nomination under the provisions of this section, except that any affiliated licensee who personally works with both the seller and the buyer in a particular transaction is a dual broker and must comply with the provisions of section 5-20.9-5 governing consensual dual brokerage. ADD}
{ADD 5-20.9-6. Consensual dual brokerage. -- ADD} {ADD (1) Consent agreement; consensual dual broker. A real estate broker of record
and/or its affiliated licensee(s) may act as a consensual dual broker only with the informed prior written consent of all parties. Consent is presumed to be informed is the parties sign an agreement that contains the following:(A) A description of the transaction(s) in which the real estate broker of record and/or its affiliated licensee(s) will serve as a consensual dual broker;
(B) A statement that, in serving as a consensual dual broker, the real estate broker of record and/or its affiliated licensee(s) represents two (2) clients whose interests may be adverse and that the brokerage duties are limited;
(C) A statement that the consensual dual broker may disclose any information to one (1) party that the broker gains from the other party if that information is relevant to the transaction, except:
(1) The willingness or ability of the seller to accept less than the asking price;
(2) The willingness or ability of the buyer to pay more than has been offered;
(3) Confidential negotiating strategy not disclosed in the offer as terms of the sale; or
(4) The motivation of the seller for selling and the motivation of the buyer for buying.
(D) A statement that each client may choose to consent or not consent to the consensual dual brokerage; and
(E) A statement that the agreement has been read and understood and the consent of the client has been given voluntarily.
(2) A real estate brokerage firm and/or its affiliated licensee(s) is not liable to a buyer-client for providing false information to the buyer-client if the false information was provided to the real estate brokerage firm and/or its affiliated licensee(s) by the real estate brokerage firm's seller-client, and the real estate broker of record and/or its affiliated licensee(s) did not know that the information was false. A real estate brokerage firm and its affiliated licensee(s) is not liable to the seller-client for providing false information to the seller-client if the false information was provided to the real estate brokerage firm and/or its affiliated licensee(s) by the real estate firm's buyer-client, and the real estate broker of record and/or if affiliated licensee(s) did not know that the information was false.
(3) A real estate broker of record and/or its affiliated licensee(s) is not obligated to discover latent defects in the property.
(4) Nothing in this subchapter precludes the obligation of a buyer to inspect the physical condition of the property.
(5) Except as otherwise provided in section 5-20.9-6, a consensual dual broker shall comply with duties set forth in section 5-20.9-3, "Seller's broker" and section 5-20.9-4, "Buyer's broker". ADD}
{ADD 5-20.9-7. Customer broker. -- ADD} {ADD A real estate broker of record and/or its affiliated licensee(s) may work as a customer broker to a party in a particular transaction and be neither a seller's broker nor a buyer's broker to that party. Within the requirements of this subchapter, a customer broker may:
(A) Work with a buyer if he is engaged as a seller's broker and has listed a property which that buyer is interested in purchasing without becoming a dual broker;
(B) Work with a seller if he is engaged as a buyer's broker and has a buyer who is interested in purchasing without becoming a dual broker;
(C) Work with a party while having neither a buyer's broker nor a seller's broker relationship with any other party to that transaction.
In (A), (B) and (C) above, a broker of record does not become a dual broker because that broker and/or its affiliated licensee(s) is working with a customer.
(1) Duty to customer. A real estate broker of record and/or its affiliated licensee(s) in a customer relationship with a buyer or seller:
(A) Shall perform the terms of any previously written brokerage relationship disclosure or brokerage contract made with any client to the transaction;
(B) Shall exercise reasonable skill and care as a customer broker; such reasonable skill and care will include, but not be limited to:
(1) Presenting all written offers in a timely manner, except when there is mutual agreement to the contrary and/or the property is subject to a contract of sale;
(2) Advising the customer to obtain expert advice on material matters, when necessary;
(3) Disclosing to the customer material facts about the specific property of which the licensee has actual knowledge, except as directed in R.I.G.L. 5-20.8 "Real Estate Sales Disclosure". A customer broker and/or its affiliated licensee(s) is not obligated to discover latent defects in the property. Nothing in this subchapter limits the obligation of a customer to inspect the physical condition of the property.
(4) Providing assistance to the customer by performing ministerial acts such as preparing and conveying offers, and providing information and assistance concerning professional services not related to real estate brokerage services. Performing ministerial acts for the customer shall not be construed as violating the real estate brokerage firm's and/or its affiliated licensee(s)' agreement with a client.
(5) Accounting in a timely manner for all money and/or other valuable consideration in which the customer has or may have an interest;
(6) Assisting the customer in complying with the terms and conditions of any contract, which may include closing the transaction; and
(C) Shall not be liable to a customer for providing false information to the customer if the false information was provided to the real estate brokerage firm and/or its affiliated licensee(s) by the real estate brokerage firm's client, and the real estate broker of record and/or its affiliated licensee(s) did not know that the information was false;
(D) Shall not release a customer from his duty to inspect the physical condition of the property;
(E) Shall comply with all requirements of the laws governing real estate brokerage licenses promulgated by the department of business regulation;
(F) Shall comply with any applicable federal, state or local laws, rules, regulations, or ordinances related to real estate
brokerage including fair housing and civil rights laws or regulations.(G) Has no obligation to preserve confidential information provided by the customer during the course of the relationship, including:
(1) That a buyer-customer is willing to pay more than the purchase price offered for the property;
(2) That a seller-customer is willing to accept less than the asking price for the property;
(3) What the motivating factors are for any customer buying or selling the property; or
(4) That a seller-customer or buyer-customer will agree to financing terms other than those offered.
(H) A customer broker and/or its affiliated licensee(s) may do the following without breaching any obligation or responsibility;
(1) List competing properties for sale, and/or show to other prospective buyers properties in which the buyer is interested;
(2) Serve as a seller's broker, buyer's broker, consensual dual broker, and/or customer broker or other written brokerage relationship for the same or for different parties in other real estate transactions; and
(3) Cooperate with other brokerage firms and/or its affiliated licensee(s). ADD}
{ADD 5-20.9-8. Interpretation. -- ADD} {ADD The provisions of this subchapter supersede and specificially abrogate the duties and responsibilities of the parties under the common law of agency, including the fiduciary responsibilities of a brokerage firm and/or its affiliated licensee(s) to a client, principal, and/or customer, except as set forth in this subchapter. There is no imputation of knowledge or information by operation of law among or between the customer and/or the client and/or the broker of record and its affiliated licensees. Such person are considered to possess only actual knowledge and information.
Nothing contained in this subchapter shall prohibit the public from entering into written brokerage relationship disclosures and/or brokerage contracts with any broker which contain duties, obligations, or responsibilities which are in addition to and/or other than those specified in this subchapter. Such duties, obligations, or responsibilities may constitute common law agency and/or subagency, but are not restricted to it. However, such contracts may or may not abrogate the duties and responsibilities of the parties under the common law of agency. ADD}
{ADD 5-20.9-9. Written company policy. -- ADD} {ADD Every real estate brokerage firm shall adopt a written company policy that identifies and describes the types of real estate brokerage relationships in which the broker of record and affiliated licensees may engage. Said office policy must define methods of nomination of responsible brokers/salespersons and the role of the real estate brokerage firm and the broker of record. The policy must include a requirement that clients be informed as to the real estate brokerage firm's responsible broker/salesperson policy and give written consent to that policy at the time of entering into a real estate brokerage agreement. Said policy shall also establish procedures to ensure that confidential information is maintained, even among and between affiliated licensees of the brokerage firm. A real estate brokerage firm may adopt a written company policy which requires a written brokerage contract with its clients and/or customers. ADD}
{ADD 5-20.9-10. Real estate brokerage disclosure required. -- ADD} {ADD A real estate broker of record and/or its affiliated licensee(s) shall provide to buyers and sellers a meaningful, written real estate brokerage relationship disclosure at the first substantive contact. Until a written brokerage relationship disclosure has been signed by a member of the public, there will be a presumption of customer brokerage. ADD}
{ADD 5-20.9-11. Duration of the relationship. -- ADD} {ADD (1) Effective date. The relationships set fort in this subchapter commence on the effective date of the brokerage relationship disclosure;
(2) Obligation; termination. A real estate brokerage firm and/or its affiliated licensee(s) owes no further duty or obligation after termination, expiration, completion or performance of the brokerage relationship disclosure and/or brokerage contract, except the duties of:
(A) Accounting in a timely manner for all money and property related to, and received during, the relationship; and
(B) Treating as confidential information provided by the client during the course of the relationship as noted in 5-20-3(1)(F) and 5-20.9-4(1)(F) unless:
(1) The client to whom the information pertains consents in writing to disclosure of the information;
(2) Disclosure of the information is required by law;
(3) The information is made public or becomes public by the words or conduct of the client to whom the information pertains or from a source other than the real estate brokerage firm and/or its affiliated licensee(s); or
(4) Disclosure is necessary to defend the real estate brokerage firm and/or its affiliated licensee(s) against an accusation of wrongful conduct in a judicial proceeding or before the department of business regulations or before a professional committee.
(3) Other obligations. A real estate broker of record and/or its affiliated licensee(s) has the same obligation of confidentiality for information provided by prospective clients as for actual clients and owes the same duties and enumerated in section 5-20.9-11(2)(B). ADD}
{ADD 5-20.9-12. Cause of action. -- ADD} {ADD A cause of action may not be brought on behalf of any party against a brokerage firm, broker of record, and/or its affiliated licensee(s) for making disclosures permitted or required by this subchapter; a real estate broker of record and/or its affiliated licensee(s) do not terminate any real estate brokerage relationship by making disclosures permitted or required by this subchapter. ADD}
{ADD 5-20.9-13. Client's/customer's liability restricted. -- ADD} {ADD A client or customer is not liable for any misrepresentation made by a real estate licensee in connection with the brokerage relationship unless the client has actual knowledge of the false information, or the real estate licensee is repeating false information provided to the licensee by the client. ADD}
{ADD 5-20.9-14. Penalty for violation. -- ADD} {ADD Any licensee who violates this subchapter, except 5-20.9-15, shall be subject to a civil penalty up to one hundred dollars ($100) per occurrence. ADD}
{ADD 5-20.9-15. Continuing education requirement. -- ADD} {ADD (1) By April 30, 2000, every licensee who is not otherwise exempt from licensing requirements under Rhode Island general law 5-20.5-2 shall be responsible for completing a one (1) time requirement for six (6) credit hours of continuing education in brokerage relationships. For those licensees required to complete twelve (12) credit hours of continuing education for license renewal, these six (6) hours in brokerage relationship education shall be credited toward that requirement. However, every licensee whose real estate practice is other than residential real estate brokerage shall have the option of filing an affidavit which waives this requirement with the department of business regulation with the next licensing renewal. If a licensee who has filed such affidavit is found to have violated any provision of the act in the practice of residential brokerage, said licensee shall be liable for a fine of up to five thousand dollars ($5,000) and said licensee's license shall be suspended or revoked. ADD}
SECTION 3. This act shall take effect July 1, 1998.
* * *
This act would repeal the chapter on "Agency Relationship in Residential Real Estate Transactions" and create a new chapter on "Consumer Awareness in Real Estate Brokerage Relationship" which provides new responsibilities for the parties to a real estate transaction.
The act would take effect July 1, 1998.
