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17may00.....4235h

5/31/00.....4643cofc

5/31/00.....4779eba

2000 SESSION

99-0985

10/01

SENATE BILL 226-FN

COMMITTEE: Executive Departments and Administration

AMENDED ANALYSIS

This bill makes various changes to the real estate practice act and adds new requirements and new exemptions for persons regulated by the real estate commission. This bill also establishes standards for advertising.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

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17may00.....4235h

5/31/00.....4643cofc

5/31/00.....4779eba

99-0985

10/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand

Be it Enacted by the Senate and House of Representatives in General Court convened:

311:1 New Paragraph; Definition; Associate Broker. Amend RSA 331-A:2 by inserting after paragraph I-a the following new paragraph:

I-b. "Associate broker" means any person who is licensed as a real estate broker, but who is employed by and operates under the supervision of a principal broker to participate in any activity described in paragraph III of this section.

311:2 Exempted Classes. Amend RSA 331-A:4 to read as follows:

331-A:4 Exempted Classes. The provisions of this chapter shall not apply to:

I. An owner, builder or tenant of real estate or to [his] regular employees with respect to property owned or leased by [him] the owner, builder, or tenant, or to a prospective purchaser or tenant of real estate or to [his] regular employees with respect to property sought to be acquired or leased by [him,] the purchaser or tenant; [or]

II. [to] An attorney in fact [under a duly executed power of attorney authorizing the consummation of a real estate transaction,];

III. [to] An attorney at law in the performance of [his] duties as an attorney[,]; [or]

IV. [to] An auctioneer selling at public auction[,]; [or]

V. [to] A public official in the conduct of [his] official duties[,]; [or]

VI. [to] A person or [his] the person's regular employees while such person is acting as a receiver, trustee, administrator, executor, conservator, guardian, or fiduciary, or while acting under court order, or while acting under the authority of a will, trust instrument, or other recorded instrument containing a power of sale[,]; [or]

VII. [to] Any person owning or operating a park, including [his] the person's regular employees, in which manufactured housing to be sold or leased is located, who may, for a fee or commission or other valuable consideration, list, sell, purchase, exchange or lease such manufactured housing without a license of a broker or [salesman] salesperson; or

VIII. A corporate consultant who receives a fee from a client based on site searching services rendered in accordance with a written contract, rather than on the completion of any particular transaction and who does not hold himself or herself out as a real estate broker;

311:3 Commission Members; Alternates. Amend RSA 331-A:5, VIII to read as follows:

VIII. The commission shall hold at least 4 regular meetings each year. A simple majority of the commission members currently serving shall constitute a quorum of the commission. Whenever a quorum of commission members is unable to hear a particular case, the commission may appoint one or more former commission members as alternates to hear that case, starting with the most recent member to leave the commission and proceeding in reverse chronological order of former members. Alternates shall be appointed and sworn in on a case-by-case basis only, and shall receive compensation as provided for members under RSA 331-A:5, VI.

311:4 Qualifications for Licensure. Amend RSA 331-A:10 to read as follows:

331-A:10 Qualifications For Licensure. The executive director shall issue a license to any applicant who:

I. Has attained the age of [majority] 18, if a salesperson applicant.

II. Has successfully completed an examination administered or approved by the commission which demonstrates satisfactory knowledge and understanding of the principles of real estate practice. The executive director shall only accept for registration to take the examination for a broker's license, an applicant who shows proof of completion of 60 hours of approved study and who:

(a) Has been employed full time by an active broker for at least one year; or

(b) Has at least 2,000 part-time hours as a licensed salesperson in this state; or

(c) Proves to the commission that the applicant has experience equivalent to the experience required by subparagraph (a) or (b).

III. Demonstrates no record of unprofessional conduct.

IV. Furnishes any evidence required by the commission relative to good reputation for honesty, trustworthiness and integrity.

V. For [an individual] a broker [license including] acting as a principal broker or a managing broker, but excluding associate brokers or a corporation, partnership, limited liability company, or association, files a surety bond with the commission which shall be held in accordance with RSA [331-A:13] 331-A:14.

311:5 Escrow Accounts; Deposits. Amend RSA 331-A:13, I to read as follows:

I. The principal broker shall maintain an escrow account or accounts, separate and apart from the individual or office account, in which all [contract] deposits on fully executed contracts shall be promptly deposited. The escrow account or accounts shall be maintained in an insured financial institution within the state of New Hampshire.

311:6 Escrow Accounts; Draw on Deposits. Amend RSA 331-A:13, III to read as follows:

III. No checks shall be drawn against uncollected contract deposits in the escrow account.

311:7 New Paragraph; Escrow Accounts; Business or Personal Funds. Amend RSA 331-A:13 by inserting after paragraph VI the following new paragraph:

VII. A broker may deposit business or personal funds into an escrow account to cover service charges only, assessed to the account by the bank or depository where the account is located, or to maintain a minimum balance in the account as required by the regulations of the bank or depository.

311:8 Bonds; Principal or Managing Brokers. Amend RSA 331-A:14 to read as follows:

331-A:14 Bonds. No [active] principal or managing broker's license shall be issued or renewed until the applicant gives to the commission a surety bond in the form approved by the commission in a sum of not less than $25,000, executed by the applicant and by a surety company authorized to do business in this state. The bond shall be payable to the state of New Hampshire, for the benefit of any person aggrieved, and shall be conditioned upon the faithful accounting by the broker for all funds entrusted to the broker in the broker's capacity as [an active licensed] a principal or managing real estate broker. Any person so aggrieved may bring suit on the bond in the aggrieved person's own name; provided, however, that the aggregate liability of the surety to all persons shall, in no event, exceed the sum of such bond. The commission may revoke the license of any [active] principal or managing broker whenever the bond filed by the broker ceases to be in full force and effect.

311:9 New Paragraphs; Supervision of Real Estate Office. Amend RSA 331-A:16 by inserting after paragraph III the following new paragraphs:

IV.(a) All advertisements by an associate broker or salesperson shall include the regular business name of the firm. This requirement shall apply to all categories of advertising including all publications, radio or television broadcasts, all electronic media including electronic mail and the Internet, business stationery, business and legal forms and documents, and signs and billboards.

(b) With the exception of business cards, any advertising which contains a home telephone number, cell-phone number, beeper or pager number, home fax number, or electronic mail address of an individual salesperson or associate broker, or a team of such licensees, shall also include the name and telephone number of the employing broker or brokerage firm through which the advertising licensees operate. All such advertising shall contain language identifying each number included in the advertising.

311:10 Renewal; Reference to Bond Changed. Amend RSA 331-A:19, II to read as follows:

II. Upon receiving a completed renewal application, the required fees, an affidavit from the sponsor of an accredited program attesting to the successful completion of the continuing education requirements as set by the commission under RSA 331-A:20 and, in the case of [an individual] a principal or managing broker licensee, evidence that the required bond is in full force and effect, the executive director shall issue the appropriate license for an additional 2 years.

311:11 Continuing Education. Amend RSA 331-A:20, II to read as follows:

II. Continuing education 3-hour courses shall cover, but not be limited to, changes in state and federal laws dealing with real estate brokerage, housing, financing of real property and consumer protection as well as changes in state enabling laws dealing with zoning and subdivision practices. The courses shall be designated as core courses designed to improve the licensee's knowledge of the real estate business and to assist the licensee in keeping abreast of changing laws, rules and practices which will affect the interest of the licensee's clients.

311:12 Temporary Licenses. Amend RSA 331-A:21 to read as follows:

331-A:21 Temporary Licenses. In the event of the death or total incapacity of a licensed real estate broker who is the sole proprietor of a real estate business, the commission may, upon application by the broker's legal representative, issue without examination a temporary license to such legal representative or to an individual designated by the legal representative and approved by the commission, and by the payment of the prescribed fee, which shall authorize such temporary licensee to continue to transact real estate business for a period not to exceed one year from the date of death or incapacitation.

311:13 Rulemaking; Continuing Education. Amend RSA 331-A:25, IX to read as follows:

IX. A minimum of [3 hours] a 3-hour core course of continuing education for active and inactive license renewal, and an additional 6 elective hours of continuing education for active license renewals.

311:14 Prohibited Conduct; Certain Deposits; Writing Required. Amend RSA 331-A:26, XI to read as follows:

XI. Accepting other than cash or its equivalent as earnest money, unless that fact is communicated in writing to the owner prior to the owner's acceptance of the offer to purchase, and such fact is shown in the earnest money receipt and acknowledged in writing by the owner.

311:15 Prohibited Conduct; Rebates. Amend RSA 331-A:26, XXI to read as follows:

XXI. Directing any transaction involving the licensee's principal to any mortgage broker, or directly or indirectly to any lending institution for financing or to any escrow company, in expectation of receiving a kickback or rebate.

311:16 Prohibited Conduct; Disclosure of Licensee Interest. Amend RSA 331-A:26, XXII to read as follows:

XXII. Failing to disclose in writing to an owner, the licensee's intention or true position if the licensee directly, or indirectly through a third party, purchases for such licensee, or acquires or intends to acquire any interest in or any option to purchase the property. Such disclosure shall be made prior to an offer to purchase, and acknowledged in writing by all parties to the transaction.

311:17 Prohibited Conduct; Consideration Shared with Out-of-State Brokers. Amend RSA 331-A:26, XXIV to read as follows:

XXIV. Paying or offering to pay valuable consideration, as defined by the commission, to any person not licensed under this chapter [or not a member of an exempted class under RSA 331-A], except that valuable consideration may be shared with a licensed broker of another jurisdiction who is doing business regularly and legally within that broker's own jurisdiction. No licensee shall knowingly pay a commission or other valuable consideration to a licensed person knowing that the licensee will in turn pay a portion or all of that which is received to a person who does not hold a valid real estate license. A licensee who has allowed his or her license to expire or who has changed to inactive status or who has transferred to another responsible broker may receive compensation from the previous responsible broker for transactions in which the person participated during the time that the licensee was under the supervision of that responsible broker.

311:18 Prohibited Conduct; Supervision. Amend RSA 331-A:26, XXVII to read as follows:

XXVII. In the case of a principal broker or a licensee who is a branch manager, failing to exercise reasonable supervision over the activities of licensees and any unlicensed staff.

311:19 Prohibited Conduct; Guarantee of Profits. Amend RSA 331-A:26, XXX to read as follows:

XXX. Guaranteeing or authorizing any person to guarantee future profits or income which may result from the purchase or resale of the real property.

311:20 New Paragraph; Prohibited Conduct; Notification of Conviction. Amend RSA 331-A:26 by inserting after paragraph XXXVI the following new paragraph:

XXXVII. Failing to inform the commission in writing within 30 days of being convicted in a court of competent jurisdiction of this or any other state or federal court, of forgery, embezzlement, obtaining money under false pretenses, bribery, larceny, extortion, conspiracy to defraud, or any similar offense or offenses, or an offense or offenses involving sexual crimes, drug distribution, arson, or physical violence; provided that, for the purposes of this paragraph, being convicted shall include all instances in which a plea of guilty or nolo contendere is the basis for the conviction, and all proceedings in which the sentence has been deferred or suspended. This paragraph applies only when the conviction has not first been annulled by a court pursuant to RSA 651:5.

311:21 Discipline; Require Relevant Courses. Amend RSA 331-A:28, I (c) to read as follows:

(c) Require the person to complete a course or courses in [a] selected [area] areas of real estate practice relevant to the section of this chapter violated.

311:22 Contingent Renumbering of Provision of 2000, 37. If SB 415-FN-LOCAL of the 2000 session becomes law, then upon the effective date of this act the provisions of RSA 100-A:53-a, I-a as inserted by 2000, 37 (HB 1114) shall be renumbered as RSA 100-A:52-a, I-a in light of the repeal of RSA 100-A:53-a and reenactment of its provisions as RSA 100-A:52-a by SB 415-FN-LOCAL.

311:23 Effective Date. This act shall take effect January 1, 2001.

(Approved: June 21, 2000)

(Effective Date: January 1, 2001)

LBAO

99-0985

Revised 3/29/99

SB 226 FISCAL NOTE

FISCAL IMPACT:

METHODOLOGY: