act-1998-0-112•Pennsylvania Act 1998-112 — REAL ESTATE LICENSING AND REGISTRATION ACT - OMNIBUS AMENDMENTS
Pennsylvania Act 1998-112 — REAL ESTATE LICENSING AND REGISTRATION ACT - OMNIBUS AMENDMENTS
act-1998-0-1121998 Pa. Act 112Law
Act text
REAL ESTATE LICENSING AND REGISTRATION ACT - OMNIBUS AMENDMENT
Act of Nov. 25, 1998, P.L. 908, No. 112 Cl. 63
Session of 1998
No. 1998-112
HB 1172
AN ACT
Amending the act of February 19, 1980 (P.L.15, No.9), entitled
"An act establishing the State Real Estate Commission and
providing for the licensing of real estate brokers and
salesmen," further providing for definitions, for continuing
education and for broker's disclosure to seller; providing
for duties of licensees generally, for duties of seller's
agent, for duties of buyer's broker, for duties of dual
agent, for duties of designated agent and for duties of a
transactional licensee; further providing for broker's
disclosure to buyer and for information to be given at
initial interview; providing for written agreement with
broker and for mandatory provisions of sales contract; and
further providing for cemetery broker's disclosure.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "broker" and "salesperson" in
section 201 of the act of February 19, 1980 (P.L.15, No.9),
known as the Real Estate Licensing and Registration Act, amended
March 29, 1984 (P.L.162, No.32) and repealed in part July 2,
1996 (P.L.460, No.71), are amended and the section is amended by
adding definitions to read:
Section 201. Definitions.
The following words and phrases when used in this act shall
have, unless the context clearly indicates otherwise, the
meanings given to them in this section:
"Agency relationship." A relationship whereby the broker or
licensees in the employ of the broker act as fiduciaries for a
consumer of real estate services by the express authority of the
consumer of real estate services.
* * *
"Broker." Any person who, for another and for a fee,
commission or other valuable consideration:
(1) negotiates with or aids any person in locating or
obtaining for purchase, lease or an acquisition of interest
in any real estate;
(2) negotiates the listing, sale, purchase, exchange,
lease, time share and similarly designated interests,
financing or option for any real estate;
(3) manages [or appraises] any real estate;
(4) represents himself [as] to be a real estate
consultant, counsellor, [house] agent or finder;
(5) undertakes to promote the sale, exchange, purchase
or rental of real estate: Provided, however, That this
provision shall not include any person whose main business is
that of advertising, promotion or public relations; [or]
(5.1) undertakes to perform a comparative market
analysis; or
(6) attempts to perform any of the above acts.
* * *
"Buyer agent." Any licensee who has entered into an agency
relationship with a consumer buyer of real estate.
* * *
"Comparative market analysis." A written analysis, opinion
or conclusion by a contracted buyer's agent, transactional
licensee or an actual or potential seller's agent relating to
the probable sale price of a specified piece of real estate in
an identified real estate market at a specified time, offered
either for the purpose of determining the asking/offering price
for the property by a specific actual or potential consumer or
for the purpose of securing a listing agreement with a seller.
"Consumer." A person who is the recipient of any real estate
service.
* * *
"Designated agent." One or more licensees designated by the
employing broker with the consent of the principal to act
exclusively as an agent or as agents on behalf of the principal
to the exclusion of all other licensees within the broker's
employ.
"Disclosure." Provision of all relevant facts without
reservation, ambiguity or distortion so as to enable a consumer
to understand the options and weigh the risks and benefits in
order to make a decision in his or her own best interest.
"Dual agent." A licensee who acts as an agent for the buyer
and seller or lessee and landlord in the same transaction.
* * *
"Listing broker." A broker engaged as a seller's agent, dual
agent or transaction licensee to market the property of a
seller/landlord for sale or lease pursuant to a written
agreement with the seller/landlord.
* * *
"Principal." A consumer of real estate services who has
entered into an agency relationship with a broker.
* * *
"Real estate service." An act or acts requiring a real
estate license.
* * *
"Salesperson." Any person employed by a licensed real estate
broker to perform comparative market analyses or to list for
sale, sell or offer for sale, to buy or offer to buy or to
negotiate the purchase or sale or exchange of real estate or to
negotiate a loan on real estate or to lease or rent or offer to
lease, rent or place for rent any real estate or collect or
offer or attempt to collect rent for the use of real estate for
or in behalf of such real estate broker. No person employed by a
broker to perform duties other than those activities as defined
herein under "broker" shall be required to be licensed as a
salesperson.
* * *
"Seller agent." Any licensee who has entered into an agency
relationship with a seller of real estate.
"Subagent." A broker, not in the employ of the listing
broker, who is engaged to act for or cooperate with the listing
broker in selling property as an agent of the seller. A subagent
is deemed to have an agency relationship with the seller.
* * *
"Transaction licensee." A licensed broker or salesperson who
provides communication or document preparation services or
performs acts described under the definition of "broker" or
"salesperson" for which a license is required, without being an
agent or advocate of the consumer.
Section 2. Section 404.1(c) of the act, added July 9, 1990
(P.L.338, No.77), is amended to read:
Section 404.1. Continuing education.
* * *
(c) All courses, materials, locations and instructors shall
be approved by the commission. No credit shall be given for any
course in office management except for courses offered to
brokers that are intended to promote knowledge of the
supervisory duties imposed upon brokers by this act and by the
rules and regulations promulgated by the commission having to do
with document preparation and retention, recordkeeping, deposit
and maintenance of escrow accounts, advertising and solicitation
limitations and requirements, conflicts of interest, disclosures
to prospective sellers and buyers and the general ethical
responsibilities of licensees.
* * *
Section 3. Section 604(a) of the act is amended by adding a
paragraph to read:
Section 604. Prohibited acts.
(a) The commission may upon its own motion, and shall
promptly upon the verified complaint in writing of any person
setting forth a complaint under this section, ascertain the
facts and, if warranted, hold a hearing for the suspension or
revocation of a license or registration certificate or for the
imposition of fines not exceeding $1,000, or both. The
commission shall have power to refuse a license or registration
certificate for cause or to suspend or revoke a license or
registration certificate or to levy fines up to $1,000, or both,
where the said license has been obtained by false
representation, or by fraudulent act or conduct, or where a
licensee or registrant, in performing or attempting to perform
any of the acts mentioned herein, is found guilty of:
* * *
(15.1) Failing to provide a disclosure required by this
act or any other Federal or State law imposing a disclosure
obligation on licensees in connection with real estate
transactions.
* * *
Section 4. Section 606 of the act, amended July 1, 1990
(P.L.304, No.69), is amended to read:
Section 606. [Broker's disclosure to seller.
In any listing agreement or contract of agency, the broker
shall make the following disclosures to any seller of real
property:
(1) A statement that the broker's commission and the
time period of the listing have been determined as a result
of negotiations between the broker and the seller.
(2) A statement describing the purpose of the Real
Estate Recovery Fund established under section 801 and the
telephone number of the commission at which the seller can
receive further information about the fund.] Relationships
between brokers and consumers of real estate services.
A broker may act in a real estate transaction, subject to the
provisions of this act, as a seller/landlord agent, buyer/tenant
agent, as a dual agent for seller/landlord and buyer/tenant or
as a transaction licensee. Licensees employed by a broker shall
bear the same relationship to the consumer as the broker, except
that a broker serving as a dual agent may designate a licensee
to act exclusively as agent of the seller/landlord and designate
another licensee to act exclusively as agent of the
buyer/tenant.
Section 5. The act is amended by adding sections to read:
Section 606.1. Duties of licensee generally.
(a) Regardless of whether a licensee is acting within the
scope of an agency relationship with a consumer, a licensee owes
to all consumers to whom the licensee renders real estate
services the following duties which may not be waived:
(1) to exercise reasonable professional skill and care
which meets the practice standards required by this act;
(2) to deal honestly and in good faith;
(3) to present all written offers, written notices and
other written communications to and from parties to a real
estate transaction in a timely manner, except that the duty
of a licensee under this paragraph to present written offers
may be waived by a seller of a property that is subject to an
existing contract for sale if:
(i) the waiver is in writing; and
(ii) the waiver is in the manner prescribed by the
commission by regulation;
(4) to comply with those obligations imposed upon a
licensee by the act of July 2, 1996 (P.L.500, No.84), known
as the "Real Estate Seller Disclosure Act";
(5) to account in a timely manner for all money and
property received from or on behalf of any consumer to a
transaction consistent with the provisions of section
604(a)(5);
(6) to provide the consumer with information at the
initial interview pursuant to section 608;
(7) to timely disclose to the consumer any conflicts of
interest;
(8) to advise the consumer to seek expert advice on
matters relating to the transaction that are beyond the
licensee's expertise;
(9) to ensure that all services that are to be provided
to the consumer are provided in a reasonable, professional
and competent manner in accordance with the practice
standards of this act;
(10) to advise the consumer regarding the status of the
transaction;
(11) to advise the consumer of tasks that must be
completed to satisfy an agreement or condition for
settlement, provide assistance with document preparation and
advise the consumer regarding compliance with laws pertaining
to real estate transactions;
(12) to present all offers and counteroffers in a timely
manner unless a party has directed the licensee otherwise in
writing; and
(13) to provide disclosure to the consumer regarding any
financial interest, including, but not limited to, a referral
fee or commission, which a licensee has in any services to be
provided to the consumer by any other person, including, but
not limited to, financial services, title transfer and
preparation services, insurance, construction, repair or
inspection services. The licensee shall also provide
disclosure regarding any financial interest which an
affiliated licensee may have in any services to be provided
to the consumer by any other person. The disclosures required
by this paragraph shall be made at the time the licensee
first recommends that the consumer purchase a service in
which the licensee or an affiliated licensee has a financial
interest or when the licensee first learns that the consumer
will be purchasing a service in which the licensee or an
affiliated licensee has a financial interest.
(b) (1) A licensee may not perform a service for a consumer
of real estate services for a fee, commission or other
valuable consideration paid by or on behalf of the consumer
unless the nature of the service and the fee to be charged
are set forth in a written agreement between the broker and
the consumer that is signed by the consumer.
(2) Notwithstanding clause (1), an open listing
agreement may be oral if the seller is provided with a
written memorandum stating the terms of the agreement.
(3) Nothing in this subsection shall require a
transaction licensee or subagent who is cooperating with the
listing broker to obtain a written agreement from the seller.
(4) A subagent or transaction licensee who is
cooperating with the listing broker for a fee paid by the
listing broker or seller shall provide the buyer, prior to
performing any services, with a written disclosure statement
signed by the buyer, describing the nature of the services to
be performed by the subagent or transaction licensee and
containing the information required by section 608.
(c) A broker may not extend or delegate the broker's agency
relationship with a principal to another broker without the
written consent of the principal.
(d) A broker may compensate another broker who assists in
the marketing and sale/lease of a consumer's property. Payment
of compensation alone does not create an agency relationship
between the consumer and the other broker.
(e) The fact that a licensee representing a seller/landlord
also presents alternative properties to prospective
buyer/tenants does not in itself constitute a breach of a duty
or obligation owed by the licensee to the seller/landlord.
(f) The fact that a licensee representing a buyer/tenant
also presents alternative properties in which that buyer/tenant
is interested to other prospective buyer/tenants does not in
itself constitute a breach of a duty or obligation owed by the
licensee to that buyer/tenant.
(g) A licensee may not knowingly, during or following the
termination of an agency relationship, reveal confidential
information of the principal or use confidential information of
the principal to the advantage of the licensee or a third party,
except when:
(1) disclosure is made with the consent of the
principal;
(2) the information is disclosed to another licensee or
third party acting solely on the principal's behalf and not
for any other party;
(3) the information is required to be disclosed under
subpoena or court order;
(4) it is the intention of the principal to commit a
crime and the disclosure of information is believed necessary
to prevent the crime; or
(5) the information is used to defend the licensee in a
legal proceeding against an accusation of wrongful conduct.
(h) A consumer of real estate services shall not be liable
for the acts of a licensee unless the licensee is acting
pursuant to the express direction of the consumer or the
licensee is acting based upon a representation of the consumer
reasonably relied upon by the licensee. A licensee shall not be
liable for acts of a consumer of real estate services unless the
consumer is acting at the express direction of the licensee or
the consumer is acting as a result of a representation by a
licensee reasonably relied on by the consumer.
(i) Unless otherwise agreed, a licensee owes no duty to
conduct an independent inspection of the property and owes no
duty to independently verify the accuracy or completeness of any
representation made by a consumer to a transaction reasonably
believed by the licensee to be accurate and reliable.
(j) Nothing in this section shall be construed to relieve a
licensee of any duty imposed by another provision of this act.
Section 606.2. Duties of seller's agent.
In addition to the duties generally required of a licensee as
set forth in section 606.1, the duties of the broker acting as
an agent for the seller include the following:
(1) to be loyal to the seller by taking action that is
consistent with the seller's interest in a transaction; and
(2) to make a continuous and good faith effort to find a
buyer for the property, except that a seller's broker is not
obligated to seek additional offers to purchase the property
while the property is subject to an existing agreement for
sale.
Section 606.3. Duties of buyer's broker.
In addition to the duties generally required of a licensee as
set forth in section 606.1, the duties of the broker acting as
an agent of the buyer include the following:
(1) to be loyal to the buyer by taking action that is
consistent with the buyer's interest in a transaction;
(2) to make a continuous and good faith effort to find a
property for the buyer, except that a buyer's broker is not
obligated to seek additional properties for purchase while
the buyer is subject to an existing contract for sale; and
(3) to disclose to the listing broker, at first contact,
that the broker has been engaged as a buyer's agent. In the
absence of a listing broker, this disclosure shall be made to
the seller.
Section 606.4. Duties of dual agent.
(a) A licensee may act as a dual agent only with the written
consent of both parties to the transaction following the
disclosures given at the initial interview required by section
608. The consent must include a statement of the terms of
compensation.
(b) In addition to the duties generally required of a
licensee as set forth in section 606.1, the duties of a dual
agent include the following:
(1) to take no action that is adverse or detrimental to
either party's interest in a transaction;
(2) unless otherwise agreed to in writing, to make a
continuous and good faith effort to find a buyer for the
property, except that a dual agent is not obligated to seek
additional offers to purchase the property while it is
subject to an existing contract for sale; and
(3) unless otherwise agreed to in writing, to make a
continuous and good faith effort to find a property for the
buyer, except that a dual agent is not obligated to seek
additional properties to purchase while the buyer is a party
to an existing contract to purchase.
(c) A dual agent may show alternative properties not owned
by the seller to prospective buyers and may list competing
properties for sale without breaching any duty to the seller. A
dual agent may show properties in which the buyer is interested
to other prospective buyers without breaching any duty to the
buyer.
Section 606.5. Duties of designated agent.
(a) (1) In an agency relationship with a principal, the
broker may, with the written consent of the principal,
designate one or more licensees employed by the broker to
serve as the designated agent of the principal to the
exclusion of all other licensees employed by the same broker.
A broker who represents both the seller/landlord and the
buyer/tenant in the same transaction is a dual agent. Dual
agency is permitted only as provided in section 606.4.
(2) A broker designating licensees to act as designated
agents shall take reasonable care to protect any confidential
information disclosed by a principal to his or her designated
agent.
(3) A broker has the responsibility to direct and
supervise the business activities of designated agents and
thereby owes duties to both the seller/landlord and the
buyer/tenant as a dual agent.
(b) In addition to the duties generally required of a
licensee as set forth in section 606.1, where principals to a
transaction are represented by designated agents employed by the
same broker, the duties of a designated agent include the
following:
(1) to be loyal to the principal with whom the agent is
working by taking action that is consistent with that
principal's interest in the transaction;
(2) to make a continuous and good faith effort to find a
buyer for a principal who is a seller or to find a property
for a principal who is a buyer. A designated agent is not,
however, obligated to seek additional offers for a seller
principal while the property is subject to an existing
contract for sale or, with regard to a principal buyer, to
seek additional properties to purchase while the buyer is a
party to an existing contract for purchase; and
(3) to disclose to the principal prior to writing or
presenting an offer to purchase that the other party to the
transaction is also represented by a licensee employed with
the same broker. The disclosure shall confirm that the broker
is a dual agent in the transaction.
Section 606.6. Duties of transaction licensee.
In addition to the duties generally required of a licensee as
set forth in section 606.1, the duties of a transaction licensee
include the following:
(1) to advise the consumer to be assisted that the
licensee is not acting as an agent or advocate of the
consumer and should not be provided with confidential
information; and
(2) to provide limited confidentiality.
A licensee shall not disclose information that the seller will
accept a price less than the asking price or listed price, that
the buyer will pay a price greater than the price submitted in a
written offer or that a seller or buyer will agree to financing
terms other than those offered.
Section 6. Sections 607 and 608 of the act, amended July 1,
1990 (P.L.304, No.69), are amended to read:
[Section 607. Broker's disclosure to buyer.
In any sales agreement or sales contract, a broker shall make
the following disclosures to any prospective buyer of real
property:
(1) A statement that the broker is the agent of the
seller or that the broker is the agent of the buyer.
(2) A statement describing the purpose of the Real
Estate Recovery Fund established under section 801 and the
telephone number of the commission at which the purchaser can
receive further information about the fund.
(3) A statement of the zoning classification of the
property except in cases where the property (or each parcel
thereof, if subdividable) is zoned solely or primarily to
permit single-family dwellings. Failure to comply with this
requirement shall render the sales agreement or sales
contract voidable at the option of the buyer, and, if voided,
any deposits tendered by the buyer shall be returned to the
buyer without any requirement for any court action.
(4) A statement that access to a public road may require
issuance of a highway occupancy permit from the Department of
Transportation.]
Section 608. Information to be given at initial interview.
The commission shall establish rules or regulations which
shall set forth the manner and method of disclosure of
information to the prospective [buyer or seller] buyer/tenant or
seller/landlord during the initial interview. For the purposes
of this section, the initial interview is the first contact
between a licensee and a consumer of real estate-related
services where a substantive discussion about real estate needs
occurs. Such disclosure shall be provided on a form adopted by
the commission by regulation and shall include, but shall not be
limited to:
(1) [A statement that the broker is the agent of the
seller or that the broker is the agent of the buyer.] A
disclosure of the relationships in which the broker may
engage with the consumer. The disclosure shall describe the
duties that the broker owes in each relationship provided for
in this act.
(2) A statement informing sellers and buyers of their
option to have an agency relationship with a broker, that an
agency relationship is not to be presumed and that it will
exist only as set forth in a written agreement between the
broker and consumer of real estate service acknowledged by
the consumer.
(3) A statement that a real estate consumer has the
right to enter into a negotiated agreement with the broker
limiting the activities or practices that the broker will
provide for on behalf of the consumer and that the fee and
services to be provided are to be determined by negotiations
between the consumer and the broker.
(4) A statement identifying any possibility that the
broker may provide services to another consumer who may be
party to the transaction and, if so, an explanation of the
duties the broker may owe the other party and whether the
broker may accept a fee for those services.
(5) A statement identifying any possibility that the
broker may designate one or more licensees affiliated with
the broker to represent the separate interest of the parties
to the transaction.
(6) A statement of the broker's policies regarding
cooperation with other brokers, including the sharing of
fees.
(7) A statement that a buyer's broker may be paid a fee
that is a percentage of the purchase price and the buyer's
broker, even if compensated by the listing broker, will
represent the interests of the buyer.
(8) A statement that the duration of the broker's
employment and the broker's fees are negotiable.
[(2)] (9) The purpose of the Real Estate Recovery Fund
and the telephone number of the commission at which further
information about the fund may be obtained.
[(3)] (10) A statement that the duration of the listing
agreement or contract and the broker's commission are
negotiable.
[(4)] (11) A statement that any sales agreement must
contain the zoning classification of a property except in
cases where the property (or each parcel thereof, if
subdividable) is zoned solely or primarily to permit single-
family dwellings.
Section 7. The act is amended by adding sections to read:
Section 608.1. Written agreement with broker.
An agreement between a broker and a principal, or any
agreement between a broker and a consumer whereby the consumer
is or may be committed to pay a fee, commission or other
valuable consideration, that is required to be in writing by
section 606.1 shall be signed by the consumer and shall identify
the services to be provided and the fee to be paid, if any. The
agreement shall also contain the following information which
shall be disclosed in the manner and method the commission shall
establish by regulation:
(1) A statement that the broker's fee and the duration
of the contract have been determined as a result of
negotiations between the broker and the seller/landlord or
buyer/tenant.
(2) A statement describing the nature and extent of the
broker's services to be provided to the seller/landlord or
buyer/tenant and the fees that will be charged.
(3) A statement identifying any possibility that the
broker or any licensee employed by the broker may provide
services to more than one consumer in a single transaction
and, if so, an explanation of the duties that may be owed the
other party and whether the broker may accept a fee for those
services.
(4) In an agreement between a broker and seller, a
statement of the broker's policies regarding cooperation with
subagents and buyer agents, a disclosure that a buyer agent
even if compensated by the broker or seller will represent
the interests of the buyer and a disclosure of any potential
for the broker to act as a disclosed dual agent.
(5) In an agreement between a broker and a buyer, a
statement identifying any possibility that the broker's
compensation may be based upon a percentage of the purchase
price, a disclosure of the broker's policies regarding
cooperation with listing brokers willing to pay buyer's
brokers, a disclosure that the broker even if compensated by
the listing broker or seller will represent the interests of
the buyer and disclosure of any potential for the buyer
broker to act as a disclosed dual agent.
(6) A statement describing the purpose of the Real
Estate Recovery Fund established under section 801 and the
telephone number of the commission at which the seller can
receive further information about the fund.
(7) A statement regarding any possible conflicts of
interest and informing the consumer of the licensee's
continuing duty to timely disclose any conflicts of interest.
Section 608.2. Mandatory provisions of sales contract.
In a sales agreement or sales contract, a broker shall
disclose the following information which shall be disclosed in
the manner and method the commission shall establish by
regulation:
(1) A statement identifying the capacity in which the
broker is engaged in the transaction and whether the broker
or any licensee affiliated with the broker has provided
services relating to the subject transaction to any other
party to the transaction.
(2) A statement describing the purpose of the Real
Estate Recovery Fund established under section 801 and the
telephone number of the commission at which the parties to
the transaction can receive further information about the
fund.
(3) A statement of the zoning classification of the
property, except in cases where the property or each parcel
of the property, if subdividable, is zoned solely or
primarily to permit single-family dwellings. Failure to
comply with this requirement shall render the sales agreement
or sales contract voidable at the option of the buyer, and,
if voided, any deposits tendered by the buyer shall be
returned to the buyer without a requirement for court action.
(4) A statement that access to a public road may require
issuance of a highway occupancy permit from the Department of
Transportation.
Section 608.3. Comparative market analysis disclosure.
A comparative market analysis must contain the following
statement printed conspicuously and without change on the first
page:
This analysis has not been performed in accordance with
the Uniform Standards of Professional Appraisal Practice
which require valuers to act as unbiased, disinterested
third parties with impartiality, objectivity and
independence and without accommodation of personal
interest. It is not to be construed as an appraisal and
may not be used as such for any purpose.
A comparative market analysis prepared in accordance with this
act shall not be deemed to be an appraisal within the scope of
the act of July 10, 1990 (P.L.404, No.98), known as the "Real
Estate Appraisers Certification Act."
Section 8. Section 608.1 of the act, added June 29, 1990
(P.L.246, No.58), is amended to read:
Section [608.1] 608.4. Cemetery broker's disclosure.
In any sales agreement or sales contract, a cemetery broker
shall be subject to the requirements of section [607(2)]
608.2(2) as it relates to the Real Estate Recovery Fund and the
disclosure of information.
Section 9. This act shall take effect in one year.
APPROVED--The 24th day of November, A. D. 1998.
THOMAS J. RIDGE
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