RULES AND REGULATIONS
STATE REAL ESTATE COMMISSION
[ 49 PA. CODE CH. 35 ]
Consumer Notice
[38 Pa.B. 6282]
[Saturday, November 15, 2008]The State Real Estate Commission (Commission) amends §§ 35.201 and 35.336 (relating to definitions; and disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant) to read as set forth in Annex A.
Statutory Authority
The amendments are authorized under section 608 of the Real Estate Licensing and Registration Act (RELRA) (63 P. S. § 455.608).
Response to Public Comments and Regulatory Review and Description of Amendments to the Final-Form Rulemaking
Notice of proposed rulemaking was published at 37 Pa.B. 1499 (April 7, 2007). Publication was followed by a 30-day public comment period during which the Commission received comments from the Pennsylvania Association of Realtors (PAR). Following the close of the public comment period, the Commission received comments from the House Professional Licensure Committee (HPLC). The Independent Regulatory Review Commission (IRRC) and the Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) did not comment.
The following is a discussion of the comments received and the Commission's response:
§ 35.336--General Comments
PAR asked that the Commission explain whether the Commission intends to prescribe the ''shape and size'' of the Consumer Notice or merely the content in its requirement in subsection (c) that the Consumer Notice be in the ''format available from the Commission.'' While the Commission has no preference whether the Consumer Notice is printed in portrait or landscape, the Commission's intention is for the Consumer Notice to not only contain the content required by § 35.336, but also the exact language in the order found in § 35.336.
The HPLC recommended that the Commission include the cautionary language about not disclosing confidential information until after a business relationship agreement is signed at the beginning and end of the Consumer Notice for heightened impact. In proposed form, the Commission moved this cautionary language from the beginning of the Notice to immediately above the consumer's signature. In the Commission's experience, it has found that consumers pay more attention to bolded language located immediately above a signature than to language at the beginning of the document. As a result, it has not reinserted the cautionary language at the beginning of the Consumer Notice as recommended.
§ 35.336(c)--Seller Agent/Buyer Agent
The HPLC questioned why the Commission eliminated the duty that seller agents make a continuous and good faith effort to find a buyer for the property except while the property is subject to an existing agreement and that buyer agents make a continuous and good faith effort to find a property for the buyer/tenant. The Commission concurs with the HPLC and has reinserted this language under both seller agent and buyer agent.
PAR commented that the statement that licensees must reveal known material defects about the property is repeated in the specific sections for seller agent, buyer agent and again under the duties for all licensees. PAR suggested that to streamline the form, the requirement to disclose all material defects should be included under the duties of all licensees only. The Commission has not made this change because it wants to assure that consumers know about the disclosure requirement within each relationship.
§ 35.336(c)--Dual agent/Designated Agent
The HPLC questioned why the Commission eliminated the duty of the broker to take responsibility to direct and supervise the business activities of the licensees who represent the buyers and sellers without taking any action that is adverse or detrimental to either party's interest in the transaction. While the bullet that contained this information in the current Consumer Notice has been eliminated in the revised form, the Commission has not eliminated this requirement. Instead, it is found in part in the dual agent section and in part in the designated agent section. Under the designated agent section, the Consumer Notice advises, ''Because the broker supervises all of the licensees, the broker automatically serves as a dual agent.'' Under the dual agent section, the Consumer Notice advises, ''A dual agent may not take any action that is adverse or detrimental to either party.''
§ 35.336(c)--Transaction licensee
PAR recommended that the section on transaction licensee be formatted similar to seller agent, buyer agent, dual agent and designated agent. Unlike the other relationships mentioned, transaction licensees do not have an agency relationship with the consumer. As such, the Commission cannot include transaction licensees under the categories of agency relationships that licensees may enter into with consumers.
§ 35.336(c)--Duty owed to all consumers
The HPLC questioned why the Commission deleted the phrase ''which meets the practice standards required by the act'' from the requirement that licensees exercise reasonable skill and care in the first bullet. Upon further reflection, the Commission has reinserted this language.
PAR recommended that the Commission change the fourth bullet to ''Real Estate Seller Disclosure Law'' rather than ''Act.'' The Commission concurs and has made that change.
§ 35.336(c)--Negotiable terms
The HPLC recommended that the Commission substitute the phrase ''the sharing of fees'' in the fourth bullet for ''compensation to other brokers.'' The Commission concurs with this suggestion, and since the broker may cooperate and share fees with other brokers, has revised the bullet to read ''The broker's cooperation and sharing of fees with other brokers.''
§ 35.336(c)--Acknowledgement
Finally, the HPLC recommended that the Commission add to the signature line for the licensee a space for the licensee's printed name and the date signed, as well as the license number to clearly identify the licensee. The Commission concurs and has made the recommended change to the form in the final-form regulations.
Other Amendments to the Final-Form Regulations
In the proposed rulemaking, the Commission intended to retain the requirements previously espoused in section 608 of the RELRA (63 P. S. § 455.608) that licensees retain a copy of the signed or refused acknowledgement for 6 months and that licensees provide the consumer a copy of the entire disclosure summary. However, this language was inadvertently replaced with the language that appeared in subsection (b) of the proposed rulemaking as published, which is identical to the first paragraph of the Consumer Notice. In the final-form rulemaking, the Commission is deleting the redundant language and is inserting the intended language as subsection (b).
Fiscal Impact and Paperwork Requirements
The final-form regulations will have no fiscal impact on the Commonwealth, its political subdivisions or the public. The regulations will have a positive fiscal impact on the regulated community because the amendments reduce the legal, accounting, reporting or other paperwork requirements on the regulated community.
Sunset Date
The Commission continually monitors the effectiveness of its regulations through communication with the regulated population. Accordingly, no sunset date has been set.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on March 28, 2007, the Commission submitted a copy of the notice of proposed rulemaking, published at 37 Pa.B. 1499, to IRRC, the HPLC and the SCP/PLC for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC, the HPLC and the SCP/PLC were provided with copies of the comments received during the public comment period. In preparing the final-form regulations, the Commission has considered all comments from the HPLC and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on September 17, 2008, the final-form regulations were approved by the HPLC. On October 15, 2008, the final-form regulations were deemed approved by SCP/PLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on October 16, 2008, and approved the final-form regulations.
Contact Person
Further information may be obtained by contacting Patricia A. Ridley, Administrative Assistant, State Real Estate Commission, P. O. Box 2649, Harrisburg, PA 17105-2649, www.state.pa.us/bpoa/recomm/mainpage.
Findings
The Commission finds that:
(1) Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and all comments were considered.
(3) The amendments to the final-form rulemaking do not enlarge the purpose of proposed rulemaking published at 37 Pa.B. 1499.
(4) The final-form regulations are necessary and appropriate for administering and enforcing the authorizing act identified in this Preamble.
Order
The Commission, acting under its authorizing statutes, orders that:
(a) The regulations of the Commission, 49 Pa. Code Chapter 35, are amended by amending §§ 35.201 and 35.336 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(b) The Commission shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General as required by law.
(c) The Commission shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) The amendments will be effective December 15, 2008; however, licensees will have until June 15, 2009, to begin using the new Consumer Notice form.
ANNIE HANNA CESTRA,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 38 Pa.B. 6123 (November 1, 2008).)
Fiscal Note: Fiscal Note 16A-5614 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 35. STATE REAL ESTATE COMMISSION
Subchapter B. GENERAL PROVISIONS § 35.201. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Initial interview--The first substantive discussion between a licensee and a consumer about the consumer's real estate needs.
* * * * *
Subchapter E. STANDARDS OF CONDUCT AND PRACTICE
REAL ESTATE DOCUMENTS § 35.336. Disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant.
(a) Licensees shall provide the consumer with the Consumer Notice at their initial interview.
(b) Licensees shall retain a copy of the signed/refused acknowledgement for 6 months and provide the consumer a copy of the entire disclosure summary.
(c) The Disclosure Summary must be entitled ''Consumer Notice'' and must be in the following format available from the Commission office upon request by phone, fax or internet:
CONSUMER NOTICE
THIS IS NOT A CONTRACT In an effort to enable consumers of real estate services to make informed decisions about the business relationships they may have with real estate brokers and salespersons (licensees), the Real Estate Licensing and Registration Act (RELRA) requires that consumers be provided with this Notice at the initial interview.
* Licensees may enter into the following agency relationships with consumers:
Seller Agent
As a seller agent, the licensee and the licensee's company works exclusively for the seller/landlord and must act in the seller's/landlord's best interest, including making a continuous and good faith effort to find a buyer/tenant except while the property is subject to an existing agreement. All confidential information relayed by the seller/landlord must be kept confidential except that a licensee must reveal known material defects about the property. A subagent has the same duties and obligations as the seller agent.
Buyer Agent
As a buyer agent, the licensee and the licensee's company work exclusively for the buyer/tenant even if paid by the seller/landlord. The buyer agent must act in the buyer/tenant's best interest, including making a continuous and good faith effort to find a property for the buyer/tenant, except while the buyer is subject to an existing contract, and must keep all confidential information, other than known material defects about the property, confidential.
Dual Agent
As a dual agent, the licensee works for both the seller/landlord and the buyer/tenant. A dual agent may not take any action that is adverse or detrimental to either party but must disclose known material defects about the property. A licensee must have the written consent of both parties before acting as a dual agent.
Designated Agent
As a designated agent, the broker of the selected real estate company designates certain licensees within the company to act exclusively as the seller/landlord agent and other licensees within the company to act exclusively as the buyer/tenant agent in the transaction. Because the broker supervises all of the licensees, the broker automatically serves as a dual agent. Each of the designated licensees are required to act in the applicable capacity explained previously. Additionally, the broker has the duty to take reasonable steps to assure that confidential information is not disclosed within the company.
* In addition, a licensee may serve as a Transaction Licensee.
A transaction licensee provides real estate services without having any agency relationship with a consumer. Although a transaction licensee has no duty of loyalty or confidentiality, a transaction licensee is prohibited from disclosing that:
* The seller will accept a price less than the asking/listing price,
* The buyer will pay a price greater than the price submitted in the written offer, and
* The seller or buyer will agree to financing terms other than those offered.
Like licensees in agency relationships, transaction licensees must disclose known material defects about the property.
* Regardless of the business relationship selected, all licensees owe consumers the duty to:
* Exercise reasonable professional skill and care which meets the practice standards required by the RELRA.
* Deal honestly and in good faith.
* Present, as soon as practicable, all written offers, counteroffers, notices and communications to and from the parties. This duty may be waived by the seller where the seller's property is under contract and the waiver is in writing.
* Comply with the Real Estate Seller Disclosure Law.
* Account for escrow and deposit funds.
* Disclose, as soon as practicable, all conflicts of interest and financial interests.
* Provide assistance with document preparation and advise the consumer regarding compliance with laws pertaining to real estate transactions.
* Advise the consumer to seek expert advice on matters about the transaction that are beyond the licensee's expertise.
* Keep the consumer informed about the transaction and the tasks to be completed.
* Disclose financial interest in a service, such as financial, title transfer and preparation services, insurance, construction, repair or inspection, at the time service is recommended or the first time the licensee learns that the service will be used.
* The following contractual terms are negotiable between the licensee and the consumer and must be addressed in an agreement/disclosure statement:
* The duration of the licensee's employment, listing agreement or contract.
* The licensee's fees or commission.
* The scope of the licensee's activities or practices.
* The broker's cooperation with and sharing of fees with other brokers.
* All sales agreements must contain the property's zoning classification except where the property is zoned solely or primarily to permit single family dwellings.
* The Real Estate Recovery Fund exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting all legal and equitable remedies. For complete details about the Fund, call (717) 783-3658.
Before you disclose any financial information to a licensee, be advised that unless you select a business relationship by signing a written agreement, the licensee is NOT representing you. A business relationship is NOT presumed.
__________
ACKNOWLEDGMENT I acknowledge that I have received this disclosure.
Date: _________________ _________________ __________
(Consumer's printed name) (Consumer's signature)
__________
Date: _________________ _________________ __________
(Consumer's printed name) (Consumer's signature)
__________
I certify that I have provided this document to the above consumer during the initial interview.
Date: _________________
_________________ _________________ __________
(Licensee's printed name) (Licensee's signature) (License #)
Adopted by the State Real Estate Commission in 49 Pa. Code § 35.336.
[Pa.B. Doc. No. 08-2060. Filed for public inspection November 14, 2008, 9:00 a.m.]
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