RULES AND REGULATIONS
Title 49—PROFESSIONAL AND VOCATIONAL STANDARDS
STATE REAL ESTATE COMMISSION
[ 49 PA. CODE CH. 35 ]
Education
[42 Pa.B. 7647]
[Saturday, December 22, 2012]The State Real Estate Commission (Commission) amends §§ 35.201, 35.271—35.273, 35.275, 35.308, 35.341, 35.354, 35.359, 35.384 and 35.385 to read as set forth in Annex A.
Statutory Authority
The final-form rulemaking is authorized under section 404.1 of the Real Estate Licensing and Registration Act (63 P. S. § 455.404a).
Background and Purpose
In 2004, the Commission amended its regulations to consolidate duplicative prelicensure and continuing education provisions and revise outdated, burdensome and unnecessary real estate education provider requirements. Since that time, the Commission has reviewed the effectiveness of its regulations and determined that several provisions require additional amendment. This final-form rulemaking: (1) reinstitutes the requirement that real estate education providers provide transcripts, electronically or in print, to licensees; (2) requires new licensees to complete a required course as a condition of their first biennial renewal; (3) consolidates and clarifies real estate education provider provisions; (4) defines and uses the term ''accredited college'' consistently throughout the regulations; and (5) adds appropriate cross references to aid clarity for continuing education providers.
Response to Comments
Notice of proposed rulemaking was published at 40 Pa.B. 5195 (September 11, 2010). Publication was followed by a 30-day public comment period during which the Commission received a letter from the Pennsylvania Association of Realtors (PAR) indicating that PAR, along with its school, the Pennsylvania Realtors Institute, did not have comments or questions concerning the proposed rulemaking. The Commission did receive public comments from the School Directors within the PAR (School Directors), and the Greater Harrisburg Association of Realtors and its related organization the Greater Harrisburg Realtors Institute (GHAR/GHRI). Following the close of the public comment period, the Commission received comments from the Independent Regulatory Review Commission (IRRC) and the House Professional Licensure Committee (HPLC). The Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) did not comment.
References to ''industry organization''
Proposed §§ 35.271, 35.272, 35.273 and 35.275 included references to ''industry organizations'' among those entities that could provide prelicensure education to candidates for licensure. The School Directors, GHAR/GHRI and the HPLC questioned whether the Commission should define ''industry organization.'' Upon reviewing the multitude of organizations that hold themselves out as ''real estate industry organizations'' and noting that many do not have expertise in, nor are they designed to, provide real estate education, the Commission deleted references to ''industry organization'' in the final-form rulemaking.
GHAR/GHRI suggested that the final-form rulemaking should refer specifically to the National Association of Realtors (NAR) instead of the term ''industry organization'' to give credit for the NAR's designation programs. The Commission believes that an amendment does not need to be made because these courses would fall within §§ 35.271(b)(3)(i) and (ii), 35.272(b)(3)(i) and (ii), 35.273(b)(4)(i) and (ii) and 35.275(b)(3)(i) and (ii) if taught within this Commonwealth and §§ 35.271(b)(3)(iii), 35.272(b)(3)(iii), 35.273(b)(4)(iii), and 35.275(b)(3)(iii) if taught outside of this Commonwealth and they are approved by the licensing jurisdiction where the provider is located.
§ 35.359—Course documentation
Proposed § 35.359 (relating to course documentation) required continuing education providers to provide transcripts to students within 30 days after course completion. The School Directors asked the Commission to define ''provide'' to clarify whether paper transcripts or original signatures are required. GHAR/GHRI recommended that transcripts only be provided upon audit instead of at the completion of the course and commented that paper transcripts are costly.
The Commission learned from continuing education providers that licensees frequently ask the providers to supply additional copies of transcripts to respond to an audit. Owing to the concerns of the commentators, the Commission considered deleting the requirement that transcripts be provided following each course and replacing it with the requirement that providers ''make the transcripts available to course participants.'' Ultimately, the Commission decided not to make this change as it would shift the burden of demonstrating compliance from the individual licensee to the provider. Additionally, in the event of a provider closing or destruction of its records, the licensee would be unable to verify compliance with the continuing education requirements. Because the Commission believes that this is the licensee's obligation, amendments have not been made and the final-form rulemaking requires providers to provide transcripts to participants upon completion of the course. However, to ease the burden on providers, the Commission clarified that the transcripts can be produced in any format that cannot be altered, including electronically or in print, so long as the transcript is signed by the provider or director. Allowing for an electronic format should help alleviate some, if not most, of the providers' cost concerns.
IRRC questioned why the cross reference to § 35.360(a)(5)(i)—(viii) (relating to records) did not contain subparagraph (ix) and inquired whether it should be added. The Commission added subparagraph (ix) to the citation.
References to ''accredited college'' and ''college, university or institute of higher learning''
The proposed definition of ''accredited college'' recognized institutions accredited by Middle States Commission on Higher Education or an equivalent body. IRRC questioned the criteria used to evaluate the ''equivalent body.'' In response to this comment, the Commission reviewed the current recognition bodies and determined that the most inclusive, while assuring quality, were the Council for Higher Education Accreditation and the United States Secretary of Education. The Commission replaced ''accredited by the Middle States Commission on Higher Education or an equivalent body'' with ''recognized by the Council for Higher Education Accreditation or the United States Secretary of Education'' in this final-form rulemaking.
The HPLC questioned whether the Commission should also amend §§ 35.271(b)(l)(i) and (ii), 35.272(b)(l)(i) and (ii), 35.273(b)(l)(i) and (ii), 35.275(b)(l)(i) and (ii), 35.308, 35.341(6)(i)(a) and 35.354(a)(3) so that the Commission's use of ''accredited college'' is consistent throughout the regulations. The Commission found this suggestion worthwhile and amended these provisions to replace ''an accredited college, university or institute of higher learning'' with ''an accredited college as defined in § 35.201 (relating to definitions)'' throughout the final-form rulemaking.
§ 35.272—Examination for salesperson's license
IRRC commented that § 35.272(b)(2)(ii) (relating to examination for salesperson's license) permitted credits offered by a provider ''approved by the Commission'' but it did not explain the process for approval. IRRC further noted that § 35.341 (relating to approval of real estate education provider) included a process for approval of real estate education providers. Therefore, the Commission amended this section to include a cross reference to § 35.341 to help clarify the approval process for real estate education providers. The Commission also added this cross reference to §§ 35.271(b)(3)(ii), 35.273(b)(2)(ii) and 35.275(b)(2)(ii) (relating to examination for broker's license; examination for cemetery broker's license; and examination for rental listing referral agent's license).
§ 35.385—Continuing education providers
IRRC questioned why the Commission intends for continuing education providers to comply with certain subsections rather than entire sections that apply to real estate education providers. Subsection (b) identifies the sections of the regulations that apply to providers that only do continuing education. The sections that were not identified deal with providers that do prelicensure education as opposed to continuing education. The Commission has had many questions in the past from continuing education providers as to what was required of them. This section would help alleviate confusion as to what applies to the continuing education provider. The Commission is also deleting the reference to § 35.355 (relating to prospectus materials) as that was inadvertently added.
Fiscal Impact and Paperwork Requirements
The final-form rulemaking does not have fiscal impact on the Commonwealth, its political subdivisions or the public. The final-form rulemaking will impose a paperwork requirement which may have a fiscal impact on the regulated community because the regulations require real estate education providers to provide signed transcripts/certificates of completion to continuing education participants/instructors at the end of each course and because licensees are required to retain this documentation for 2 years following the end of the biennial renewal period for purposes of audit. The fiscal impact on the providers should be minimal since they may provide transcripts/certificates of completion electronically.
Sunset Date
The Board continually monitors the effectiveness of its regulations through communication with the regulated population. Therefore, a sunset date has not been set.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on August 27, 2010, the Commission submitted a copy of the notice of proposed rulemaking, published at 40 Pa.B. 5195, to IRRC and the Chairpersons of 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, as well as other documents when requested. In preparing the final-form rulemaking, the Board has considered all comments from IRRC, the HPLC, the SCP/PLC and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on November 14, 2012, the final-form rulemaking was deemed approved by the HPLC and the SCP/PLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on November 15, 2012, and approved the final-form rulemaking.
Contact Person
Further information may be obtained by contacting Patricia Ridley, Administrator, State Real Estate Commission, P. O. Box 2649, Harrisburg, PA 17105-2649, (717) 783-3658.
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) and regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and the comments were considered.
(3) The amendments to the final-form rulemaking do not enlarge the purpose of proposed rulemaking published at 40 Pa.B. 5195.
(4) This amendment is necessary and appropriate for administering and enforcing the authorizing acts 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, 35.271—35.273, 35.275, 35.308, 35.341, 35.354, 35.359, 35.384 and 35.385 to read as set forth in Annex A, with ellipses referring to the existing text of the regulations.
(Editor's Note: Final-form §§ 35.308 and 35.354 were not included in the proposed rulemaking published at 40 Pa.B. 5195.)
(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) This order shall take effect on publication in the Pennsylvania Bulletin.
JEFFREY J. JOHNSON,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 42 Pa.B. 7364 (December 1, 2012).)
Fiscal Note: Fiscal Note 16A-5613 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:
Accredited college—A college, university or institute of higher learning recognized by the Council for Higher Education Accreditation or the United States Secretary of Education.
Act—The Real Estate Licensing and Registration Act (63 P. S. §§ 455.101—455.902).
* * * * *
Subchapter D. LICENSING EXAMINATIONS § 35.271. Examination for broker's license.
* * * * * (b) The Commission will apply the following standards in determining whether an examination candidate has met the education requirement of subsection (a)(4):
(1) A candidate who has obtained one of the following degrees will be deemed to have met the education requirement and will not be required to show completion of coursework in specific areas of study:
(i) A bachelor's degree with a major in real estate from an accredited college as defined in § 35.201 (relating to definitions).
(ii) A bachelor's degree from an accredited college as defined in § 35.201, having completed coursework equivalent to a major in real estate.
(iii) A juris doctor degree from an accredited law school.
(2) Candidates who have not obtained a degree specified in paragraph (1) shall acquire 16 credits in professional real estate education. Two of the required 16 credits shall be in a Commission-developed or approved real estate office management course and 2 of the required 16 credits shall be in a Commission-developed or approved law course. At least 6 of the remaining 12 credits shall be in 3 or more of the Commission-developed courses listed in this paragraph. The remaining 6 credits shall be in real estate courses but not necessarily those listed in this paragraph. A candidate may not apply credits used to qualify for the salesperson's examination toward fulfillment of the broker education requirement.
(i) Real Estate Law.
(ii) Real Estate Finance.
(iii) Real Estate Investment.
(iv) Residential Property Management.
(v) Nonresidential Property Management.
(vi) Real Estate Sales.
(vii) Residential Construction.
(viii) Valuation of Residential Property.
(ix) Valuation of Income-Producing Property.
(3) To be counted toward the education requirement, a real estate course shall have been offered by:
(i) An accredited college as defined in § 35.201.
(ii) A real estate education provider who has met the approval requirements in § 35.341 (relating to approval of real estate education provider).
(iii) A real estate education provider outside this Commonwealth that has been approved by the real estate licensing authority of the jurisdiction where the real estate education provider is located. The course transcript or certificate of completion must state that the course is approved by the licensing authority of the jurisdiction where the real estate education provider is located.
(4) A maximum of four credits will be allowed for each real estate course. A maximum of four credits will be allowed for each area of real estate study listed in paragraph (2).
(5) Courses shall have been completed within 10 years prior to the date of successful completion of the licensing examination.
(6) Two credits will be allowed for each year of active practice the candidate has had as a licensed broker in another state during the 10-year period immediately preceding the submission of the examination application.
(c) A reciprocal licensee who is converting that license to a standard broker's license is exempt from subsection (a) and is only required to pass the state portion of the examination.
§ 35.272. Examination for salesperson's license.
(a) An individual who wants to take the salesperson's examination for the purpose of obtaining a standard salesperson's license shall:
(1) Be 18 years of age or older.
(2) Have successfully completed four credits, or 60 hours of instruction, in basic real estate courses as determined by the Commission under subsection (b).
(3) Submit a completed examination application to the Commission or its designee with the examination fee.
(b) The Commission will apply the following standards in determining whether an examination candidate has met the education requirement of subsection (a)(2):
(1) A candidate who has obtained one of the following degrees will be deemed to have met the education requirement and will not be required to show completion of coursework in specific areas of study:
(i) A bachelor's degree with a major in real estate from an accredited college as defined in § 35.201 (relating to definitions).
(ii) A bachelor's degree from an accredited college as defined in § 35.201, having completed coursework equivalent to a major in real estate.
(iii) A juris doctor degree from an accredited law school.
(2) Credits will be allowed for Real Estate Fundamentals and Real Estate Practice and all acceptable basic real estate courses when offered by:
(i) An accredited college as defined in § 35.201.
(ii) A real estate education provider who has met the approval requirements in § 35.341 (relating to approval of real estate education provider).
(iii) A real estate education provider outside this Commonwealth that has been approved by the real estate licensing authority of the jurisdiction where the real estate education provider is located. The course transcript or certificate of completion must state that the course is approved by the licensing authority of the jurisdiction where the real estate education provider is located.
(3) Courses shall have been completed within 10 years prior to the date of successful completion of the licensing examination.
(c) A licensee who is converting a reciprocal license to a standard salesperson's license is exempt from the requirements in subsections (a) and (b) and is only required to pass the state portion of the examination.
§ 35.273. Examination for cemetery broker's license.
* * * * * (b) The Commission will apply the following standards in determining whether an examination candidate has met the education requirements of subsection (a)(3):
(1) A candidate who has obtained one of the following degrees will be deemed to have met the education requirement and will not be required to show completion of course work in specific areas of study:
(i) A bachelor's degree with a major in real estate from an accredited college as defined in § 35.201 (relating to definitions).
(ii) A bachelor's degree from an accredited college as defined in § 35.201, having completed course work equivalent to a major in real estate.
(iii) A juris doctor degree from an accredited law school.
(2) Credits will be allowed for Real Estate Fundamentals and Real Estate Practice, cemetery courses and all basic real estate courses when offered by:
(i) An accredited college as defined in § 35.201.
(ii) A real estate education provider who has met the approval requirements in § 35.341 (relating to approval of real estate education provider).
(iii) A real estate education provider outside this Commonwealth that has been approved by the real estate licensing authority of the jurisdiction where the real estate education provider is located. The course transcript or certificate of completion must state that the course is approved by the licensing authority of the jurisdiction where the real estate education provider is located.
(iv) A cemetery association outside this Commonwealth, if the course taught by the cemetery association is equivalent to a course taught by a real estate education provider in this Commonwealth approved by the Commission.
(3) Courses shall have been completed within 10 years prior to the date of successful completion of the licensing examination.
(c) A reciprocal licensee who is converting a reciprocal license to a standard cemetery broker's license is exempt from subsection (a) and is only required to pass the state portion of the examination.
§ 35.275. Examination for rental listing referral agent's license.
(a) An individual who wants to take the salesperson's examination for the purpose of obtaining a standard rental listing referral agent's license shall:
(1) Be 18 years of age or older.
(2) Have successfully completed four credits, or 60 hours of instruction, in basic real estate courses as determined by the Commission under subsection (b).
(3) Submit a completed examination application to the Commission or its designee with the examination fee.
(b) The Commission will apply the following standards in determining whether an examination candidate has met the education requirements of subsection (a)(2):
(1) A candidate who has obtained one of the following degrees will be deemed to have met the education requirement and will not be required to show completion of coursework in specific areas of study:
(i) A bachelor's degree with a major in real estate from an accredited college as defined in § 35.201 (relating to definitions).
(ii) A bachelor's degree from an accredited college as defined in § 35.201, having completed coursework equivalent to a major in real estate.
(iii) A juris doctor degree from an accredited law school.
(2) Credits will be allowed for Real Estate Fundamentals and Real Estate Practice and all acceptable basic real estate courses when offered by:
(i) An accredited college as defined in § 35.201.
(ii) A real estate education provider who has met the approval requirements in § 35.341 (relating to approval of real estate education provider).
(iii) A real estate education provider outside this Commonwealth that has been approved by the real estate licensing authority of the jurisdiction where the real estate education provider is located. The course transcript or certificate of completion must state that the course is approved by the licensing authority of the jurisdiction where the real estate education provider is located.
(3) Courses shall have been completed within 10 years prior to the date of successful completion of the licensing examination.
(c) A reciprocal licensee who is converting a reciprocal license to a standard rental listing referral agent's license is exempt from the requirements in subsections (a) and (b) and is only required to pass the state portion of the examination.
Subchapter E. STANDARDS AND CONDUCT AND PRACTICE
ADVERTISING AND SOLICITATION § 35.308. Relationship with educational institution.
A real estate company, franchise or network may promote, endorse or advertise its association, affiliation or connection with a real estate education provider or with an accredited college as defined in § 35.201 (relating to definitions) regarding its offering of real estate instruction. An association, affiliation or connection which includes an ownership interest shall be disclosed in all promotions, endorsements or advertisements. For purposes of this section, an ownership interest will be considered by the Commission to include proprietary or beneficial interests through which the real estate company, franchise or network earns or has the potential to earn income, or which produces a direct or indirect economic benefit.
Subchapter F. REAL ESTATE EDUCATION PROVIDERS
APPROVAL OF REAL ESTATE EDUCATION PROVIDERS § 35.341. Approval of real estate education provider.
A real estate education provider shall obtain the Commission's approval before commencing operations in this Commonwealth. To obtain approval from the Commission, the real estate education provider shall:
(1) Be owned by persons who possess good moral character or, if the owner is a corporation, have officers and directors who meet this requirement.
(2) Have a name that is acceptable to the Commission.
(3) Have a director of operations who meets the requirements of § 35.342 (relating to approval of real estate educational director).
(4) Designate a person or entity to serve as custodian of records if the real estate education provider were to terminate operations.
(5) Post a surety bond of $10,000 to the Commonwealth for the protection of the contractual rights of the real estate education provider's students.
(6) Submit a completed real estate education provider approval application to the Commission with:
(i) A completed real estate education provider owner application with:
(A) A resume of the applicant's experience in owning, administrating or teaching in an accredited college as defined in § 35.201 (relating to definitions) or as a real estate education provider.
(B) Two letters of reference from responsible persons relating to the applicant's integrity and to the applicant's previous experience, if any, in the administration of an educational program.
(C) Certified copies of court documents related to a conviction of, or plea of guilty or nolo contendere to, a felony or misdemeanor and the sentence imposed.
(ii) A completed real estate education provider director application with:
(A) Credentials evidencing the qualifications required of the applicant under § 35.342.
(B) Certified copies of court documents related to conviction of, or plea of guilty or nolo contendere to, a felony or misdemeanor and the sentence imposed.
(iii) A fictitious name registration, if the real estate education provider has a fictitious name.
(iv) A copy of the registration documentation approved by the Department's Corporation Bureau, if the real estate education provider is a corporation, limited liability partnership, limited partnership or limited liability company.
(v) A copy of the surety bond required under paragraph (5).
(vi) A copy of the student enrollment agreement.
(vii) A copy of the school transcript.
(viii) A statement of the prerequisites for admission.
(ix) A statement of policy regarding refund of tuition and other fees.
(x) The approval fee prescribed in § 35.203 (relating to fees).
(xi) For the main school location and each proposed satellite location, a sketch or photograph of the real estate education provider's sign.
ADMINISTRATION OF REAL ESTATE EDUCATION PROVIDERS § 35.354. Prohibited forms of advertising and solicitation.
(a) A real estate education provider may not:
* * * * * (3) Hold itself out to be an educational institution that conforms to the standards and requirements prescribed for accredited colleges as defined in § 35.201 (relating to definitions) unless the real estate education provider meets those standards and requirements.
* * * * * § 35.359. Course documentation.
(a) Prelicensure. Within 30 days after a course has been taught, a real estate education provider shall provide each student in the course with an official course transcript that contains the information in § 35.360(a)(5) (relating to records) and is signed by the director.
(b) Continuing education. Within 30 days after a continuing education course has ended, the continuing education provider shall provide each licensee who satisfactorily completed/taught the course transcripts/certificates of instruction that contain the information in § 35.360(a)(5)(i)—(ix) signed by the provider or the director. The transcript/certificate of instruction must be in a format that cannot be altered.
(1) Licensees shall retain the transcripts/certificates of instruction for 2 years following the biennial renewal period during which the courses were taken to renew the license.
(2) Licensees shall provide a copy of the transcripts/certificates of instruction to the Commission verifying completion of the continuing education requirement upon request.
Subchapter H. CONTINUING EDUCATION § 35.384. Qualifying courses.
(a) Except as provided in subsection (b), a licensee shall complete 14 hours of continuing education in acceptable courses in a minimum of 2-hour increments.
(b) The Commission may, for a given biennial license period and with adequate notice to standard license holders, require that all or part of the 14 hours be completed in required topics. In addition, during the first biennial period that continuing education is required, a new licensee shall complete the Commission-developed 14-hour required course for new licensees in satisfaction of the continuing education requirement.
* * * * * § 35.385. Continuing education providers.
(a) The following providers may offer instruction for continuing education:
(1) An accredited college as defined in § 35.201 (relating to definitions).
(2) A real estate education provider who has met the approval requirements in § 35.341 (relating to approval of real estate education provider).
(3) A real estate education provider outside this Commonwealth that has been approved by the real estate licensing authority of the jurisdiction where the real estate education provider is located.
(b) Continuing education providers shall comply with the standards for real estate education providers in §§ 35.352(b), 35.353(a), 35.358(a) and 35.359(b).
[Pa.B. Doc. No. 12-2467. Filed for public inspection December 21, 2012, 9:00 a.m.]
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