Real Estate Principles and Practices Chapter 20 License Law © 2014 OnCourse Learning

Real EstateReal Estate Principles and Practices Principles and Practices

Chapter 20Chapter 20

License LawLicense Law

© 2014 OnCourse Learning


Key TermsKey Terms

Agent

Associate broker

Broker

Censure

Earnest money

License law

Reciprocal license

Revocation

Rules and regulations

Salesperson

Subdivider

Suspension

Trust account


Who Needs a License?Who Needs a License?

Negotiate the listing, sale, purchase, exchange, rent, lease, or option

Receive a fee for providing a lead

Manage property

BPO or CMA



Sell lots or parcels for the owner

Charge an advanced fee to promote the sale

Buy sell or deal in options



Owner or lessor

Attorney-in-fact

Attorney-at-law

Receiver or trustee in bankruptcy

Administrator or executor

Court-appointed guardian



Officer or employee of federal or state agency

Resident manager of apartment complexes or person employed by the owner

Person who sells or purchases oil, gas, or mineral leases



Person who renders opinions of value for real estate taxation

Owners of railroads and public utilities

Employees or officers of the federal government when working in official capacity


Types of LicensesTypes of Licenses

Two types of licensesSalesperson

BrokerBroker

Broker AKA: AgentAgent – represents the principal

May conduct business in their own name or a trade name

Partnership or corporation



Associate Broker: Associate Broker: has a broker's license but works for another broker

Salesperson must work for a broker

Trust account: account for money belonging to others

Broker is legally responsible for salespersons

Branch offices: broker or associate broker



Colorado – all licensees are brokers

Broker associate: Broker associate: employed and supervised

Independent broker: Independent broker: self employed with no licensees

Employing broker: Employing broker: can employ and must supervise licensees

Single License ConceptSingle License Concept


Licensing ExamsLicensing Exams

Completion of required course

Written application & fee

Written or computerized exam

80 – 100 questions apply to all states

Minimum of 30 questions state specific


Licensing ExamsLicensing Exams

Obtaining a license in a new state

No exam

Only state portion

Different exams for broker or salesperson


Requirements of ApplicantsRequirements of Applicants

Minimum age: 18 – 21

1 – 3 years experience for broker license

College courses

Continuing education


CommissionsCommissions

• Independent contractor: self Independent contractor: self employedemployed

• % of commission earned by the firm% of commission earned by the firm

• 100% commission plus share of 100% commission plus share of expensesexpenses

• No set commission feeNo set commission fee


License FeeLicense Fee

Fee paid for initial license

RenewalContinuing education

Renewal fee

Infraction of the license law

RevocationRevocation

SuspensionSuspension


Nonresident LicensesNonresident Licenses

Right of reciprocityProof of licensure

Nonresident salesperson must be employed by non-resident broker

Real estate commission designated as licensee’s agent

Education requirements


Errors and Omissions Errors and Omissions InsuranceInsurance

Available to all licensees and cannot be cancelled

Competitive bidding procedures

Governing board determines coverage, permissible deductibles and exemptions

GuidelinesGuidelines

Cost cannot exceed board or commission limit


Governing BodiesGoverning Bodies

Real estate commission enforces the license laws

Rules and regulations: Rules and regulations: promulgated by the real estate commission

National Association of REALTORS®



Consists of active licensees and unlicensed individuals

Director:Keeps record

Conducts exams

Issue and renews licensees

Holds seminars

Issues, revokes, or suspends licenses



Analyze laws and regulations monitoring changes in the industry

Similar education requirements among states

Computer data base

License revocations, suspensions, fines, reprimands, censures, censures, or surrenders

Association of Real Estate Law License OfficialsAssociation of Real Estate Law License Officials


Trust AccountsTrust Accounts

Must place all money belonging to others in an trust account

Subject to inspection

Shielded from creditors

Commingle: mixing of personal and business funds


Earnest-Money DepositsEarnest-Money Deposits

Remains in trust account until transaction is consummated or terminated

Check issued to cooperating broker’s trust account

Transferred to escrow agent

oror


Guaranty FundsGuaranty Funds

Recovery FundRecovery Fund


Unfair Trade PracticesUnfair Trade Practices

Discrimination based on protected categories

Misleading or inaccurate advertising

Funds must be placed in a trust account / may not commingle

Undisclosed commission, rebate, or direct profit

Representing another broker or accepting commission from another broker without consent



Guaranteeing future profits

Placing a “For Sale” sign without written permission

Offering terms other than as authorized by owner or owner’s representative

Inducing a party to break a contract

Failure to present all offers

Paying an unlicensed person



Failure to provide an expiration date or copy of listing contract

Failure to provide a copy of sales contract to buyer and seller

Failure to provide a copy of the settlement statement

Failure to put offer in writing when requested by purchaser



Failure to present all written offers

Providing less favorable service to minorities


Disciplinary ActionDisciplinary Action

Commission investigates upon suspected or reported violation of license law

No violation – complaint dismissed

Hearing scheduled if complaint appears justified


Unlicensed PersonsUnlicensed Persons

Reported to the attorney general

Injunction order to cease

Documents

Real Estate Principles and Practices Chapter 20 License Law © 2014 OnCourse Learning