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