CSSSHB 29(JUD): "An Act relating to real estate licensees and real estate transactions; and providing for an effective date."
00 CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 29(JUD) 01 "An Act relating to real estate licensees and real estate transactions; and providing for 02 an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 05 to read: 06 LEGISLATIVE FINDINGS AND INTENT. (a) The legislature finds that 07 (1) the application of the common law of agency to the relationships between 08 real estate licensees and persons who are sellers, lessors, buyers, or lessees of real property 09 has resulted in misunderstandings and consequences that are contrary to the best interests of 10 the public; 11 (2) the real estate industry has a significant effect on the economy of the state; 12 and 13 (3) it is in the best interest of the public to codify in statute the relationships 14 between real estate licensees and persons who are sellers, lessors, buyers, or lessees of real
01 property. 02 (b) It is the intent of the legislature for this Act to govern the relationships between 03 real estate licensees and sellers, lessors, buyers, and lessees in real property transactions. 04 * Sec. 2. AS 08.88.071 is amended by adding a new subsection to read: 05 (d) The commission may investigate a violation of a provision of 06 AS 08.88.600 - 08.88.695 by a real estate licensee and take administrative action 07 under (a)(3) of this section if the commission has reason to believe that a violation has 08 occurred. 09 * Sec. 3. AS 08.88.391(a) is amended to read: 10 (a) A real estate licensee who has a conflict of interest relating to a real estate 11 transaction shall disclose that conflict of interest to [AT THE TIME OF INITIAL 12 SUBSTANTIVE CONTACT WITH] the persons adversely affected by the conflict 13 [PRINCIPALS] or their real estate licensees [AGENTS OF THE PRINCIPALS] and 14 confirm the conflict of interest in writing to the persons adversely affected by the 15 conflict [PRINCIPALS] or their real estate licensees [AGENTS OF THE 16 PRINCIPALS] involved in the transaction as soon as possible after the conflict is 17 identified [INITIAL SUBSTANTIVE CONTACT]. 18 * Sec. 4. AS 08.88.396 is amended by adding a new subsection to read: 19 (f) This section applies only to acts that occur before the effective date of this 20 subsection. 21 * Sec. 5. AS 08.88.401(g) is amended to read: 22 (g) A person who violates this section or [,] AS 08.88.161 [, OR 08.88.396] is 23 guilty of a class A misdemeanor. 24 * Sec. 6. AS 08.88 is amended by adding new sections to read: 25 Article 4A. Licensee Relationships and Duties. 26 Sec. 08.88.600. Licensee relationships. (a) A real estate licensee who 27 provides real estate services to one party in a real estate transaction represents only 28 that party unless the parties to the transaction agree otherwise in writing. 29 (b) A real estate licensee may not provide real estate services to more than one 30 party in the same real estate transaction, except that 31 (1) a licensee may represent one party to the transaction while
01 providing specific assistance to an unrepresented party to the transaction; 02 (2) a licensee may act as a neutral licensee under (c) of this section; 03 (3) a licensee may also, with the written consent of the parties, be a 04 party to the transaction; or 05 (4) the parties to the transaction may agree otherwise in writing, except 06 as provided by AS 08.88.625. 07 (c) A real estate licensee may provide specific assistance to both the seller and 08 buyer, or both the lessor and lessee, in the same real estate transaction as a neutral 09 licensee if the licensee complies with AS 08.88.610. 10 (d) A real estate licensee who works for a real estate broker may represent or 11 provide specific assistance to a person in a real estate transaction even if the broker or 12 another licensee who is working for the broker represents or provides specific 13 assistance to another person in the same transaction. The broker shall designate which 14 licensee, including the broker, is the designated licensee for the seller or lessor and 15 which licensee, including the broker, is the designated licensee for the buyer or lessee. 16 Sec. 08.88.605. Additional licensee relationship provisions. (a) A real 17 estate licensee may provide real estate services to a party in separate real estate 18 transactions under different licensee relationships if the licensee complies with 19 AS 08.88.600 - 08.88.695 when establishing the relationship for each transaction. 20 (b) The authorization under (a) of this section includes acting as a real estate 21 licensee for a party in one real estate transaction and at the same time not representing 22 that party in a different real estate transaction involving that party. 23 Sec. 08.88.610. Authorization of neutral licensee relationship. (a) Before 24 a real estate licensee begins acting as a neutral licensee, the real estate licensee may 25 obtain preauthorization from a person to act as a neutral licensee in the person's real 26 estate transaction by obtaining the written consent of the person. 27 (b) If preauthorization is not obtained under (a) of this section, when a buyer 28 or lessee expresses an interest to the licensee in acquiring or leasing real estate and the 29 licensee is representing the seller or lessor of the property, the licensee shall obtain 30 written consent to act as a neutral licensee before the licensee shows the real estate. 31 (c) A written consent under this section must be provided on a separate form,
01 may not be contained in another writing, and must be entitled "Waiver of Right To Be 02 Represented." 03 Sec. 08.88.615. Duties owed by licensee in all licensee relationships. (a) 04 Unless additional duties are agreed to in a written document signed by the person, and 05 regardless of the type of licensee relationship in which the real estate licensee is 06 acting, a real estate licensee owes the following duties to each person to whom the 07 licensee provides specific assistance: 08 (1) the exercise of reasonable skill and care; 09 (2) honest and good faith dealing; 10 (3) the presentation of all written offers, written notices, and other 11 written communications to and from the person in a timely manner regardless of 12 whether the real estate is subject to an existing contract for sale or lease or the person 13 is already a party to an existing contract to buy or lease real estate; 14 (4) except as provided in (b) and (c) of this section, the disclosure of 15 all material information known by the licensee and not apparent or readily 16 ascertainable to the person regarding the physical condition of real estate if the 17 information substantially adversely affects the real estate or a person's ability to 18 perform the person's obligations in the real estate transaction or if the information 19 would materially impair or defeat the purpose of the real estate transaction; 20 (5) accounting in a timely manner for all money and other property 21 received from or on behalf of the person; 22 (6) before the licensee provides specific assistance to the person, or 23 when entering into a contract with the person to provide specific assistance, providing 24 a copy of the pamphlet established under AS 08.88.685(b)(2) and produced under 25 AS 08.88.685(c) that outlines the duties of the types of licensee relationships 26 identified under AS 08.88.600; 27 (7) before the licensee provides specific assistance to the person, 28 obtaining from the person a document signed by the person that discloses the 29 licensee's relationship with the person; 30 (8) in addition to the document provided under (7) of this subsection, 31 providing to the person when the person signs an offer in a real estate transaction
01 handled by the licensee a written statement that states whether the licensee represents 02 the buyer, represents the seller, represents the lessee, represents the lessor, or provides 03 specific assistance to both the buyer and the seller or both the lessee and the lessor as a 04 neutral licensee; the statement must be contained in a separate paragraph entitled 05 "Licensee Relationships" in the contract between the buyer and seller or the lessee and 06 lessor, or in a separate document entitled "Licensee Relationships." 07 (b) The disclosure requirements of (a)(4) of this section do not require the real 08 estate licensee to disclose a fact or suspicion that the real estate or neighboring real 09 estate is or was the site of a murder, suicide, or other death, rape or other sexual crime, 10 assault or other violent crime, robbery, burglary, illegal drug activity, gang-related 11 activity, political activity, religious activity, anticipated development, alleged 12 supernatural activity, or another act, occurrence, or use that does not adversely affect 13 the physical condition of or title to the real estate. 14 (c) The disclosure requirements of (a)(4) of this section may not be construed 15 to imply a duty to investigate a matter that the licensee has not agreed to investigate. 16 Sec. 08.88.620. Duties owed by licensee representing a person. Unless 17 additional duties are agreed to in a written document signed by the person represented 18 by the licensee, a real estate licensee who represents the person owes the person the 19 following duties in addition to the other duties imposed by AS 08.88.615: 20 (1) not taking action that the licensee knows is adverse or detrimental 21 to the interest of the represented person in a real estate transaction; 22 (2) disclosure of a conflict of interest to the represented person in a 23 timely manner; 24 (3) advising the represented person to obtain expert advice on a matter 25 that relates to the real estate transaction that is beyond the licensee's expertise; 26 (4) not disclosing confidential information from or about the 27 represented person without written consent, except under a subpoena or another court 28 order, even after termination of the licensee's relationship with the represented person; 29 (5) if the represented person is a seller or a lessor, unless otherwise 30 agreed to in writing, making a good faith and continuous effort to find a buyer or 31 lessee for the real estate of the seller or lessor, except that a licensee is not required to
01 seek additional offers to buy or lease the real estate while the real estate is subject to 02 an existing contract for sale or lease; and 03 (6) if the represented party is a buyer or a lessee, unless otherwise 04 agreed to in writing, making a good faith and continuous effort to find real estate for 05 the buyer or lessee, except that a licensee is not obligated to 06 (A) seek additional real estate to buy or lease for the buyer or 07 lessee while the buyer or lessee is a party to an existing contract to buy or lease 08 real estate; or 09 (B) show to the buyer or lessee real estate for which there is not 10 a written agreement to pay compensation to the licensee. 11 Sec. 08.88.625. Waiver of duties. A real estate licensee or a person to whom 12 a licensee provides specific assistance may not waive the duties identified under 13 AS 08.88.615 and 08.88.620, except as otherwise allowed under AS 08.88.620(5) and 14 (6). 15 Sec. 08.88.630. Duties not owed by licensee. Unless agreed otherwise, a real 16 estate licensee does not owe a duty to a person with whom the licensee has established 17 a licensee relationship to 18 (1) conduct an independent inspection of the real estate that is the 19 subject of the licensee relationship; 20 (2) conduct an independent investigation of a person's financial 21 condition; or 22 (3) independently verify the accuracy or completeness of a statement 23 made by a party to a real estate transaction or by a person reasonably believed by the 24 licensee to be reliable. 25 Sec. 08.88.635. Acts not amounting to adverse or detrimental acts or 26 conflicts of interest. (a) If a licensee shows real estate not owned or leased by the 27 seller or lessor to prospective buyers or lessees or lists competing properties for sale or 28 lease, this activity does not by itself constitute action that is adverse or detrimental to 29 the seller or lessor or create a conflict of interest under AS 08.88.391. 30 (b) The representation of more than one seller or lessor by the same licensee 31 or by different licensees working for the same real estate broker in competing
01 transactions involving the same buyer or lessee does not by itself constitute action that 02 is adverse or detrimental to the sellers or lessors or create a conflict of interest under 03 AS 08.88.391. 04 (c) If a licensee shows real estate in which the buyer or lessee is interested to 05 other prospective buyers or lessees, this activity does not by itself constitute action 06 that is adverse or detrimental to the buyer or lessee or create a conflict of interest 07 under AS 08.88.391. 08 (d) The representation of more than one buyer or lessee by the same licensee 09 or by different licensees working for the same real estate broker in competing 10 transactions involving the same seller or lessor does not by itself constitute action that 11 is adverse or detrimental to the sellers or lessors or create a conflict of interest under 12 AS 08.88.391. 13 (e) Acting as a neutral licensee in compliance with AS 08.88.600 - 08.88.695 14 does not by itself constitute action that is adverse or detrimental to a seller, lessor, 15 buyer, or lessee or create a conflict of interest under AS 08.88.391. 16 (f) A real estate licensee who discloses confidential information to the 17 licensee's broker for the purpose of seeking advice or assistance for the benefit of the 18 person to whom the licensee is providing specific assistance does not breach the 19 licensee's duty of confidentiality to the person, if the licensee's broker maintains 20 confidentiality of the information. 21 Sec. 08.88.640. Designated licensee relationship. (a) Unless the broker is 22 the designated licensee, the relationship, including the duties, obligations, and 23 responsibilities of the relationship, established between a person and a designated real 24 estate licensee does not extend to the real estate broker for whom the designated 25 licensee is working, to another real estate licensee who works for the same real estate 26 broker, or to an owner of the business that employs the real estate broker. The extent 27 or limitations of the relationship between the broker with the designated licensee shall 28 be disclosed to the parties to a real estate transaction. 29 (b) A real estate broker may have a different designated licensee working for a 30 seller or lessor and for the buyer or lessee in the same real estate transaction. Having a 31 different designated licensee working for a seller or lessor and for the buyer or lessee
01 in the same real estate transaction does not create dual agency or a conflict of interest 02 for the real estate broker or for a licensee employed by the same real estate broker. 03 (c) A designated real estate licensee may represent or provide specific 04 assistance to a person who is a seller or lessor in one real estate transaction while 05 representing or providing specific assistance to the person as a buyer or lessee in 06 another real estate transaction. 07 (d) Unless the broker is the designated licensee, when a designated licensee 08 represents or provides specific assistance as a designated licensee to a person in a real 09 estate transaction, the knowledge received by the designated licensee while 10 representing or providing specific assistance to the person is not imputed to the real 11 estate broker for whom the designated licensee works, to another real estate licensee 12 employed by or under contract to the broker, or to an owner of the business that 13 employs the real estate broker. 14 (e) This section may not be construed to limit the responsibility of a real estate 15 broker, or of an owner of a business that employs the real estate broker, to supervise 16 designated licensees who work for the broker or who work for the business that 17 employs the broker, or to shield the broker or business from vicarious liability for the 18 acts of the designated licensees. 19 Sec. 08.88.645. Duties of neutral licensee. (a) Unless additional duties are 20 agreed to in a written document signed by the neutral licensee and the seller, buyer, 21 lessor, or lessee, the duties of a neutral licensee are limited to the duties established for 22 real estate licensees under AS 08.88.615 and the following duties: 23 (1) not to take action that the neutral licensee knows is adverse or 24 detrimental to the interest of the persons to whom the neutral licensee provides 25 services in the real estate transaction; 26 (2) to disclose a conflict of interest in a timely manner to all parties to 27 whom the licensee provides specific assistance; 28 (3) to advise all parties to whom the licensee provides specific 29 assistance for the transaction to obtain expert advice on a matter relating to the 30 transaction that is beyond the expertise of the neutral licensee; 31 (4) not to disclose without written consent confidential information
01 from or about any of the parties to whom the licensee is providing specific assistance 02 to another party to whom the licensee is providing specific assistance in the 03 transaction, except under a subpoena or another court order, even after the relationship 04 with the party terminates; 05 (5) not to disclose without the consent of the person to whom the 06 information relates 07 (A) that the buyer or lessee is willing to pay more than the 08 price offered for the real estate; 09 (B) that the seller or lessor is willing to accept less than the 10 asking price for the real estate; or 11 (C) that the seller, buyer, lessor, or lessee will agree to 12 financing terms other than those terms offered. 13 (b) A neutral licensee does not violate the duties of a neutral licensee if, with 14 written consent, the neutral licensee engages in the following conduct in a good faith 15 effort to assist in reaching final agreement in a real estate transaction: 16 (1) analyzing, providing information on, or reporting on the merits of 17 the transaction to each party; 18 (2) discussing the price, terms, or conditions that each party would or 19 should offer or accept; or 20 (3) suggesting compromises in the parties' respective bargaining 21 positions. 22 Sec. 08.88.650. No imputation of knowledge resulting from neutral 23 licensee relationship. In a neutral licensee relationship, the knowledge or information 24 of the licensee about one client is not imputed to other clients or to other licensees 25 who work for the same real estate broker. 26 Sec. 08.88.655. Compensation. (a) A real estate broker may be compensated 27 by any party to a real estate transaction, by a third party, or by one or more of the 28 parties to the transaction splitting or sharing the compensation. 29 (b) The payment of compensation to a real estate broker may not be construed 30 to establish a relationship between the broker and the party who pays the 31 compensation.
01 (c) If a real estate licensee provides specific assistance or enters into a 02 personal service contract to act as a real estate licensee for a person, or if a seller and 03 buyer, or a lessor and lessee, enter into a contract to sell, buy, or lease real estate, the 04 real estate licensee shall disclose which party the licensee anticipates will be paying 05 compensation to the real estate brokers in the real estate transaction. 06 (d) A real estate licensee shall include in a contract to sell, buy, or lease real 07 estate a statement indicating which party is paying compensation to the real estate 08 brokers in the real estate transaction. 09 Sec. 08.88.660. Duration of relationship. (a) A licensee relationship with a 10 buyer, lessee, seller, or lessor begins when the licensee represents or provides specific 11 assistance to the buyer, lessee, seller, or lessor and continues until the earliest of the 12 following events occurs: 13 (1) the licensee completes the representation or specific assistance; 14 (2) the relationship term agreed on by the buyer, lessee, seller, or 15 lessor terminates; 16 (3) the licensee and the parties to the relationship terminate the 17 relationship by mutual agreement; or 18 (4) a party to the relationship terminates the relationship by giving 19 notice to the other party. 20 (b) The termination of a relationship under (a)(3) or (4) of this section only 21 terminates the licensee relationship and does not affect other contractual rights of the 22 parties to the licensee relationship. 23 (c) Except as otherwise agreed to in writing, a licensee does not owe a further 24 duty to a buyer, lessee, seller, or lessor after termination of the licensee relationship, 25 except for the duties of accounting for all money and other property received during 26 the relationship and not disclosing confidential information. 27 Sec. 08.88.665. Vicarious liability. A seller, buyer, lessor, or lessee is not 28 liable for an act, error, or omission of a real estate licensee that arises out of the 29 licensee relationship, 30 (1) unless the seller, buyer, lessor, or lessee participated in or 31 authorized the act, error, or omission and then only to the extent of the participation or
01 authorization; or 02 (2) except to the extent that the seller, buyer, lessor, or lessee benefited 03 from the act, error, or omission, and a court determines that it is highly probable that 04 the person claiming damages for the act, error, or omission would be unable to enforce 05 a judgment against the licensee. 06 Sec. 08.88.670. Imputed knowledge and notice. (a) Unless otherwise 07 agreed to in writing, a seller, buyer, lessor, or lessee is not considered to have 08 knowledge or notice of a fact known by a real estate licensee of the seller, buyer, 09 lessor, or lessee unless the fact is actually known by the seller, buyer, lessor, or lessee. 10 (b) Unless otherwise agreed to in writing, a real estate licensee does not have 11 knowledge or notice of a fact that is not actually known by the licensee. 12 Sec. 08.88.675. Common law abrogated. The common law of agency 13 related to real estate licensee relationships in real estate transactions is expressly 14 abrogated to the extent inconsistent with AS 08.88.600 - 08.88.695. 15 Sec. 08.88.680. Causes of action. (a) A person may not bring an action 16 against a neutral licensee for making a disclosure that is required or permitted under 17 this chapter. 18 (b) In a civil action for the failure of a licensee to comply with the provisions 19 of AS 08.88.600 - 08.88.695, the plaintiff's remedy is limited to the recovery of actual 20 damages. This subsection does not limit a person's ability to take any other action or 21 pursue any other remedy to which the person may be entitled under other law. 22 Sec. 08.88.685. Policies, guidelines, and requirements. (a) A broker shall 23 adopt a written policy that identifies and describes the relationships in which the 24 broker and the real estate licensees who work for the broker may engage with a seller, 25 buyer, lessor, or lessee. The broker shall make the written policy available to the 26 commission and to members of the public on request. 27 (b) The commission shall adopt regulations that establish 28 (1) guidelines to assist a broker to adopt the written policy required by 29 (a) of this section; 30 (2) the contents and format of the pamphlet to be provided by a 31 licensee under AS 08.88.615(a)(6); and
01 (3) requirements for a broker's supervision of the real estate licensees 02 who work for the broker. 03 (c) Based on the content and format for the pamphlets established under (b)(2) 04 of this section, a real estate broker shall produce and pay the costs to produce the 05 actual pamphlets to be provided by licensees in the broker's business under 06 AS 08.88.615(a)(6). 07 Sec. 08.88.690. Exemptions. A real estate licensee is exempt from the 08 signature requirements of AS 08.88.600 - 08.88.695 when the licensee provides 09 specific assistance to 10 (1) a corporation that issues publicly traded securities; 11 (2) a business that has a net worth in the previous calendar year of 12 $2,000,000 or more, if the business requests the exemption from the licensee; or 13 (3) a governmental agency; in this paragraph, "governmental agency" 14 means a department, division, public agency, political subdivision, or other public 15 instrumentality of the state or federal government, including the University of Alaska, 16 the Alaska Railroad Corporation, the Alaska Housing Finance Corporation, the Alaska 17 Industrial Development and Export Authority, and other public corporations. 18 Sec. 08.88.695. Definitions. In AS 08.88.600 - 08.88.695, 19 (1) "compensation" includes a commission; 20 (2) "confidential information" means information from or concerning a 21 person that 22 (A) the licensee acquired during the course of the licensee's 23 relationship as a licensee with the person; 24 (B) the person reasonably expects to be kept confidential; 25 (C) the person has not disclosed or authorized to be disclosed 26 to a third party; 27 (D) would, if disclosed, operate to the detriment of the person; 28 and 29 (E) the person is not obligated to disclose to the other party in a 30 real estate transaction; 31 (3) "designated licensee" means
01 (A) a real estate licensee who works for a real estate broker and 02 represents or provides specific assistance to a person in a real estate transaction 03 when another licensee who is working for the same broker represents or 04 provides specific assistance to an unrepresented person in the same transaction; 05 or 06 (B) a real estate broker who represents or provides specific 07 assistance to a person in a real estate transaction when another licensee who is 08 working for the broker represents or provides specific assistance to another 09 person in the same transaction; 10 (4) "neutral licensee" means a real estate licensee who 11 (A) provides specific assistance to both the buyer and the 12 seller, or both the lessor and the lessee in a real estate transaction; and 13 (B) does not represent either party; 14 (5) "personal services contract" includes a listing, a fee agreement 15 between brokers and sellers, buyers, lessors, or lessees, a management contract with 16 property owners, or any other agreement by which a broker agrees to perform a duty 17 with respect to real estate for an agreed upon fee or commission; 18 (6) "real estate services" means services related to a real estate 19 transaction; 20 (7) "represent" means to provide real estate services to a person if the 21 services are not limited to specific assistance; 22 (8) "specific assistance" 23 (A) means 24 (i) asking questions regarding confidential information 25 for a real estate transaction; 26 (ii) showing pieces of real estate selected for a buyer's 27 or lessee's specific needs or desires; 28 (iii) preparing a written offer for a real estate 29 transaction; or 30 (iv) entering into a personal services contract; 31 (B) does not include
01 (i) hosting an open house; 02 (ii) casual conversation regarding real estate; 03 (iii) receiving calls or electronic inquiries from the 04 licensee's signs, advertisements, or Internet site; 05 (iv) providing information regarding a piece of real 06 estate; 07 (v) setting an initial appointment to show a piece of real 08 estate; 09 (vi) receiving unsolicited information from a buyer or 10 lessee before or after disclosure of a real estate relationship. 11 * Sec. 7. The uncodified law of the State of Alaska is amended by adding a new section to 12 read: 13 TRANSITIONAL PROVISIONS: PAMPHLET; REGULATIONS. The Real Estate 14 Commission shall proceed to adopt the regulations required by AS 08.88.685(b), enacted by 15 sec. 6 of this Act. The Real Estate Commission may proceed to adopt other regulations 16 necessary to implement this Act. A regulation adopted under this section takes effect under 17 AS 44.62 (Administrative Procedure Act) but not before the effective date of the law 18 implemented by the regulation. 19 * Sec. 8. Sections 1 - 6 of this Act take effect January 1, 2005. 20 * Sec. 9. Section 7 of this Act takes effect immediately under AS 01.10.070(c).