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H.B. 346 Enrolled

             1     

DIVISION OF REAL ESTATE RELATED

             2     
AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Gage Froerer

             6     
Senate Sponsor: Sheldon L. Killpack

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions related to areas regulated by the Division of Real Estate.
             11      Highlighted Provisions:
             12          This bill:
             13          .    addresses rulemaking by the Real Estate Commission;
             14          .    addresses fines that may be imposed;
             15          .    addresses firms;
             16          .    addresses disciplinary actions that may be imposed under provisions related to real
             17      estate brokers and agents, the Real Estate Appraiser Licensing and Certification Act,
             18      and the Utah Residential Mortgage Practices Act;
             19          .    provides for registration of trainees under the Real Estate Appraiser Licensing and
             20      Certification Act;
             21          .    addresses terminology for experts under the Real Estate Appraiser Licensing and
             22      Certification Act;
             23          .    modifies criminal penalties under the Real Estate Appraiser Licensing and
             24      Certification Act and the Utah Residential Mortgage Practices Act;
             25          .    addresses the hours required of prelicensing education for mortgage licensing
             26      including providing for rulemaking;
             27          .    removes grandfathering language related to principal lending manager;
             28          .    provides for deposit of certain fees into the Residential Mortgage Loan Education,
             29      Research, and Recovery Fund; and


             30          .    makes technical and conforming amendments.
             31      Monies Appropriated in this Bill:
             32          None
             33      Other Special Clauses:
             34          None
             35      Utah Code Sections Affected:
             36      AMENDS:
             37          61-2-5.5, as last amended by Laws of Utah 2007, Chapter 325
             38          61-2-13, as last amended by Laws of Utah 1991, Chapter 165
             39          61-2-20, as last amended by Laws of Utah 2007, Chapter 325
             40          61-2-21, as last amended by Laws of Utah 2007, Chapter 325
             41          61-2b-2, as last amended by Laws of Utah 2005, Chapter 199
             42          61-2b-6, as last amended by Laws of Utah 2005, Chapter 199
             43          61-2b-8, as last amended by Laws of Utah 2005, Chapter 199
             44          61-2b-18, as last amended by Laws of Utah 2005, Chapter 199
             45          61-2b-21, as last amended by Laws of Utah 2005, Chapter 199
             46          61-2b-22, as last amended by Laws of Utah 2005, Chapter 199
             47          61-2b-24, as last amended by Laws of Utah 2005, Chapter 199
             48          61-2b-25, as last amended by Laws of Utah 2007, Chapter 306
             49          61-2b-26, as last amended by Laws of Utah 2005, Chapter 199
             50          61-2b-27, as last amended by Laws of Utah 2005, Chapter 199
             51          61-2b-28, as last amended by Laws of Utah 2007, Chapter 325
             52          61-2b-29, as last amended by Laws of Utah 2007, Chapter 325
             53          61-2b-30.5, as last amended by Laws of Utah 2005, Chapter 199
             54          61-2b-31, as last amended by Laws of Utah 2007, Chapter 325
             55          61-2b-33, as last amended by Laws of Utah 2005, Chapter 199
             56          61-2c-202, as last amended by Laws of Utah 2007, Chapter 325
             57          61-2c-206, as last amended by Laws of Utah 2007, Chapter 325


             58          61-2c-403, as last amended by Laws of Utah 2007, Chapter 325
             59          61-2c-502, as last amended by Laws of Utah 2007, Chapter 325
             60      ENACTS:
             61          61-2c-405, Utah Code Annotated 1953
             62     
             63      Be it enacted by the Legislature of the state of Utah:
             64          Section 1. Section 61-2-5.5 is amended to read:
             65           61-2-5.5. Real Estate Commission.
             66          (1) There is created within the division a Real Estate Commission. The commission
             67      shall:
             68          (a) make rules for the administration of this chapter that are not inconsistent with this
             69      chapter, including:
             70          (i) licensing of:
             71          (A) principal brokers;
             72          (B) associate brokers;
             73          (C) sales agents;
             74          (D) real estate companies; and
             75          (E) branch offices;
             76          (ii) prelicensing and postlicensing education curricula;
             77          (iii) examination procedures;
             78          (iv) the certification and conduct of:
             79          (A) real estate schools;
             80          (B) course providers; and
             81          (C) instructors;
             82          (v) proper handling of funds received by real estate licensees;
             83          (vi) brokerage office procedures and recordkeeping requirements;
             84          (vii) property management;
             85          (viii) standards of conduct for real estate licensees; [and]


             86          (ix) rules made under Section 61-2-26 regarding an undivided fractionalized long-term
             87      estate; and
             88          (x) if the commission determines necessary, rules as provided in Subsection 61-2-20 (3)
             89      regarding legal forms;
             90          (b) establish, with the concurrence of the division, all fees as provided in this chapter
             91      and Title 61, Chapter 2a, Real Estate Recovery Fund Act;
             92          (c) conduct all administrative hearings not delegated by the commission to an
             93      administrative law judge or the division relating to the:
             94          (i) licensing of any applicant;
             95          (ii) conduct of any licensee;
             96          (iii) the certification or conduct of any real estate school, course provider, or instructor
             97      regulated under this chapter; or
             98          (iv) violation of this chapter by any person;
             99          (d) with the concurrence of the director, impose sanctions as provided in Section
             100      61-2-12 ;
             101          (e) advise the director on the administration and enforcement of any matters affecting
             102      the division and the real estate sales and property management industries;
             103          (f) advise the director on matters affecting the division budget;
             104          (g) advise and assist the director in conducting real estate seminars; and
             105          (h) perform other duties as provided by:
             106          (i) this chapter; and
             107          (ii) Title 61, Chapter 2a, Real Estate Recovery Fund Act.
             108          (2) (a) The commission shall be comprised of five members appointed by the governor
             109      and approved by the Senate.
             110          (b) Four of the commission members shall:
             111          (i) have at least five years' experience in the real estate business; and
             112          (ii) hold an active principal broker, associate broker, or sales agent license.
             113          (c) One commission member shall be a member of the general public.


             114          (d) No more than one commission member described in Subsection (2)(b) shall at the
             115      time of appointment reside in any given county in the state.
             116          (e) At least one commission member described in Subsection (2)(b) shall at the time of
             117      an appointment reside in a county that is not a county of the first or second class.
             118          (3) (a) Except as required by Subsection (3)(b), as terms of current commission
             119      members expire, the governor shall appoint each new member or reappointed member to a
             120      four-year term ending June 30.
             121          (b) Notwithstanding the requirements of Subsection (3)(a), the governor shall, at the
             122      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             123      commission members are staggered so that approximately half of the commission is appointed
             124      every two years.
             125          (c) Upon the expiration of the term of a member of the commission, the member of the
             126      commission shall continue to hold office until a successor is appointed and qualified.
             127          (d) A commission member may not serve more than two consecutive terms.
             128          (e) Members of the commission shall annually select one member to serve as chair.
             129          (4) When a vacancy occurs in the membership for any reason, the replacement shall be
             130      appointed for the unexpired term.
             131          (5) (a) A member may not receive compensation or benefits for the member's services,
             132      but may receive per diem and expenses incurred in the performance of the member's official
             133      duties at the rates established by the Division of Finance under Sections 63A-3-106 and
             134      63A-3-107 .
             135          (b) A member may decline to receive per diem and expenses for the member's service.
             136          (6) (a) The commission shall meet at least monthly.
             137          (b) The director may call additional meetings:
             138          (i) at the director's discretion;
             139          (ii) upon the request of the chair; or
             140          (iii) upon the written request of three or more commission members.
             141          (7) Three members of the commission constitute a quorum for the transaction of


             142      business.
             143          Section 2. Section 61-2-13 is amended to read:
             144           61-2-13. Grounds for revocation of principal broker's license -- Automatic
             145      inactivation of affiliated associate brokers and sales agents licenses.
             146          (1) (a) [Any] An unlawful act or [any] violation of this chapter committed by [any real
             147      estate sales agent or associate broker employed or engaged as an independent contractor by or
             148      on behalf of a licensed principal broker or committed by any employee, officer, or member of a
             149      licensed principal broker] a person listed in Subsection (1)(b) is cause for:
             150          (i) the revocation, suspension, or probation of [the] a principal broker's license[,]; or
             151      [for]
             152          (ii) the imposition of a fine against the principal broker in an amount not to exceed
             153      [$500] $2,500 per violation.
             154          (b) Subsection (1)(a) applies to an act or violation by any of the following:
             155          (i) a real estate sales agent or associate broker employed by a licensed principal broker;
             156          (ii) a real estate sales agent or associate broker engaged as an independent contractor
             157      by or on behalf of a licensed principal broker; or
             158          (iii) an employee, officer, or member of a licensed principal broker.
             159          (2) (a) The revocation or suspension of a principal broker license automatically
             160      inactivates [every] an associate broker or sales agent license granted to [those persons] a person
             161      by reason of [their] that person's affiliation with the principal broker whose license [was] is
             162      revoked or suspended, pending a change of broker affiliation.
             163          (b) A principal broker shall, [prior to] before the effective date of [the] a suspension or
             164      revocation of [his] the principal broker's license, notify in writing every licensee affiliated with
             165      [him] the principal broker of the revocation or suspension of [his] the principal broker license.
             166          Section 3. Section 61-2-20 is amended to read:
             167           61-2-20. Rights and privileges of real estate licensees to fill out forms or
             168      documents.
             169          [A] (1) Except as provided in Subsection (2), a real estate licensee may fill out only


             170      those legal forms approved by the commission and the attorney general, and those forms
             171      provided by statute[, with the following exceptions:].
             172          [(1)] (2) (a) (i) A principal broker may fill out any documents associated with the
             173      closing of a real estate transaction.
             174          [(b)] (ii) A branch broker or associate broker may fill out any documents associated
             175      with the closing of a real estate transaction if designated to fill out the documents by the
             176      principal broker with whom the branch broker or associate broker is affiliated.
             177          [(2)] (b) A real estate licensee may fill out real estate forms prepared by legal counsel of
             178      the buyer, seller, lessor, or lessee.
             179          [(3)] (c) If the commission and the attorney general have not approved a specific form
             180      for the transaction, a principal broker, associate broker, or sales agent may fill out real estate
             181      forms prepared by any legal counsel, including legal counsel retained by the brokerage to
             182      develop these forms.
             183          (3) The commission may by rule, made in accordance with Title 63, Chapter 46a, Utah
             184      Administrative Rulemaking Act, provide a process for the approval of a legal form under this
             185      section by the commission and the attorney general.
             186          Section 4. Section 61-2-21 is amended to read:
             187           61-2-21. Remedies and action for violations.
             188          (1) (a) The director shall issue and serve upon a person an order directing that person
             189      to cease and desist from an act if:
             190          (i) the director has reason to believe that the person has been engaging, is about to
             191      engage, or is engaging in the act constituting a violation of this chapter; and
             192          (ii) it appears to the director that it would be in the public interest to stop the act.
             193          (b) Within ten days after receiving the order, the person upon whom the order is served
             194      may request [an adjudicative proceeding] a hearing.
             195          (c) Pending [the] a hearing requested under Subsection (1)(b), [any] a cease and desist
             196      order shall remain in effect.
             197          (d) If a request for a hearing is made, the division shall follow the procedures and


             198      requirements of Title 63, Chapter 46b, Administrative Procedures Act.
             199          (2) (a) After [the] a hearing requested under Subsection (1), if the commission and the
             200      director agree that [the] an act of the person violates this chapter, the director:
             201          (i) shall issue an order making the order issued under Subsection (1) permanent; and
             202          (ii) may impose [a civil penalty not to exceed the greater of:] another disciplinary action
             203      under Section 61-2-12 .
             204          [(A) $2,500 for each violation; or]
             205          [(B) the amount of any gain or economic benefit derived from each violation.]
             206          (b) The director shall file suit in the name of the Department of Commerce and the
             207      Division of Real Estate, in the district court in the county in which an act described in
             208      Subsection (1) [occurred] occurs or where the person resides or carries on business, to enjoin
             209      and restrain the person from violating this chapter if:
             210          (i) (A) [no] a hearing is not requested under Subsection (1); and
             211          (B) the person fails to cease the act described in Subsection (1); or
             212          (ii) after discontinuing the act described in Subsection (1), the person again commences
             213      the act.
             214          (c) [The] A district [courts] court of this state [shall have] has jurisdiction of an action
             215      brought under this section.
             216          (d) Upon a proper showing in an action brought under this section [related to an
             217      undivided fractionalized long-term estate], the court may:
             218          (i) issue a permanent or temporary, prohibitory or mandatory injunction;
             219          (ii) issue a restraining order or writ of mandamus;
             220          (iii) enter a declaratory judgment;
             221          (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
             222          (v) order disgorgement;
             223          (vi) order rescission;
             224          (vii) impose a civil penalty not to exceed the greater of:
             225          (A) $2,500 for each violation; or


             226          (B) the amount of any gain or economic benefit derived from [each] a violation; and
             227          (viii) enter any other relief the court considers just.
             228          (e) The court may not require the division to post a bond in an action brought under
             229      this Subsection (2).
             230          (3) [The remedies and action] A remedy or action provided in this section [may] does
             231      not limit, interfere with, or prevent the prosecution of[, any other remedies or actions] another
             232      remedy or action, including a criminal [proceedings] proceeding.
             233          Section 5. Section 61-2b-2 is amended to read:
             234           61-2b-2. Definitions.
             235          (1) As used in this chapter:
             236          (a) (i) "Appraisal" means an unbiased analysis, opinion, or conclusion relating to the
             237      nature, quality, value, or utility of a specified [interests] interest in, or [aspects] aspect of,
             238      identified real estate or identified real property.
             239          (ii) An appraisal [shall be] is classified by the nature of the assignment as a valuation
             240      appraisal, an analysis assignment, or a review assignment in accordance with the following
             241      definitions:
             242          (A) "Valuation appraisal" means an unbiased analysis, opinion, or conclusion that
             243      estimates the value of an identified parcel of real estate or identified real property at a particular
             244      point in time.
             245          (B) "Analysis assignment" means an unbiased analysis, opinion, or conclusion that
             246      relates to the nature, quality, or utility of identified real estate or identified real property.
             247          (C) "Review assignment" means an unbiased analysis, opinion, or conclusion that forms
             248      an opinion as to the adequacy and appropriateness of a valuation appraisal or an analysis
             249      assignment.
             250          (b) "Appraisal Foundation" means the Appraisal Foundation that was incorporated as
             251      an Illinois not-for-profit corporation on November 30, 1987.
             252          (c) (i) "Appraisal report" means [any] a communication, written or oral, of an appraisal.
             253          (ii) An appraisal report [shall be] is classified by the nature of the assignment as a


             254      valuation report, analysis report, or review report in accordance with the definitions provided in
             255      Subsection (1)(a)(ii).
             256          (iii) The testimony of a person relating to the person's analyses, conclusions, or
             257      opinions concerning identified real estate or identified real property is considered to be an oral
             258      appraisal report.
             259          (d) "Board" means the Real Estate Appraiser Licensing and Certification Board that is
             260      established in Section 61-2b-7 .
             261          (e) "Certified appraisal report" means a written or oral appraisal report that is certified
             262      by a state-certified general appraiser or state-certified residential appraiser.
             263          (f) (i) (A) "Consultation service" means an engagement to provide a real estate
             264      valuation service analysis, opinion, conclusion, or other service that does not fall within the
             265      definition of appraisal.
             266          (B) "Consultation service" does not mean a valuation appraisal, analysis assignment, or
             267      review assignment.
             268          (ii) Regardless of the intention of the client or employer, if a person prepares an
             269      unbiased analysis, opinion, or conclusion, the analysis, opinion, or conclusion is considered to
             270      be an appraisal and not a consultation service.
             271          (g) "Contingent fee" means a fee or other form of compensation, payment of which is
             272      dependent on or conditioned by:
             273          (i) the reporting of a predetermined analysis, opinion, or conclusion by the person
             274      performing the analysis, opinion, or conclusion; or
             275          (ii) achieving a result specified by the person requesting the analysis, opinion, or
             276      conclusion.
             277          (h) "Division" means the Division of Real Estate of the Department of Commerce.
             278          (i) "Federally related transaction" means [any] a real estate related transaction that is
             279      required by federal law or by federal regulation to be supported by an appraisal prepared by:
             280          (i) a state-licensed appraiser; or
             281          (ii) a state-certified appraiser.


             282          (j) "Real estate" means an identified parcel or tract of land including improvements if
             283      any.
             284          (k) "Real estate appraisal activity" means the act or process of making an appraisal of
             285      real estate or real property and preparing an appraisal report.
             286          (l) "Real estate related transaction" means:
             287          (i) the sale, lease, purchase, investment in, or exchange of real property or an interest in
             288      real property, or the financing of such a transaction;
             289          (ii) the refinancing of real property or an interest in real property; or
             290          (iii) the use of real property or an interest in real property as security for a loan or
             291      investment, including mortgage-backed securities.
             292          (m) "Real property" means one or more defined interests, benefits, or rights inherent in
             293      the ownership of real estate.
             294          (n) "State-certified general appraiser" means a person who holds a current, valid
             295      certification as a state-certified general appraiser issued under this chapter.
             296          (o) "State-certified residential appraiser" means a person who holds a current, valid
             297      certification as a state-certified residential real estate appraiser issued under this chapter.
             298          (p) "State-licensed appraiser" means a person who holds a current, valid license as a
             299      state-licensed appraiser issued under this chapter.
             300          [(q) "State-registered appraiser" means a person who before May 3, 1999, was
             301      registered as an appraiser under this chapter.]
             302          [(r)] (q) "Trainee" means an individual who:
             303          (i) does not hold an appraiser license or appraiser certification issued under this chapter;
             304      [and]
             305          (ii) works under the direct supervision of a [state-licensed appraiser or] state-certified
             306      appraiser to earn experience for licensure[.]; and
             307          (iii) is registered as a trainee under this chapter.
             308          [(s)] (r) "Unbiased analysis, opinion, or conclusion" means an analysis, opinion, or
             309      conclusion relating to the nature, quality, value, or utility of identified real estate or identified


             310      real property that is prepared by a person who is employed or retained to act, or would be
             311      perceived by third parties or the public as acting, as a disinterested third party in rendering the
             312      analysis, opinion, or conclusion.
             313          (2) (a) If a term not defined in this section is defined by rule, the term shall have the
             314      meaning established by the division by rule made in accordance with Title 63, Chapter 46a, Utah
             315      Administrative Rulemaking Act.
             316          (b) If a term not defined in this section is not defined by rule, the term shall have the
             317      meaning commonly accepted in the business community.
             318          Section 6. Section 61-2b-6 is amended to read:
             319           61-2b-6. Duties and powers of division.
             320          (1) The division [shall have] has the powers and duties listed in this Subsection (1).
             321          (a) The division shall:
             322          (i) receive [applications] an application for licensing [and], certification, or registration;
             323          (ii) establish appropriate administrative procedures for the processing of [applications]
             324      an application for licensure [or], certification, or registration;
             325          (iii) issue [licenses and certifications to qualified applicants] a license or certification to
             326      a qualified applicant pursuant to this chapter; and
             327          [(iv) maintain a registry of the names and addresses of individuals who are currently
             328      licensed or certified as appraisers under this chapter.]
             329          (iv) register an individual who applies for registration as a trainee under this chapter.
             330          (b) (i) The division shall require [a trainee to notify the division that the trainee is
             331      acting] an individual to register as a trainee with the division before the individual acts in the
             332      capacity of a trainee earning experience for licensure.
             333          (ii) The board shall adopt rules in accordance with Title 63, Chapter 46a, Utah
             334      Administrative Rulemaking Act, for the trainee [notification] registration required by this
             335      Subsection (1)(b).
             336          (c) The division shall hold public hearings under the direction of the board.
             337          (d) The division may:


             338          (i) solicit bids and enter into contracts with one or more educational testing services or
             339      organizations for the preparation of a bank of questions and answers approved by the board for
             340      licensing and certification examinations; and
             341          (ii) administer or contract for the administration of licensing and certification
             342      examinations as may be required to carry out the division's responsibilities under this chapter.
             343          (e) The division shall provide administrative assistance to the board by providing to the
             344      board the facilities, equipment, supplies, and personnel that are required to enable the board to
             345      carry out the board's responsibilities under this chapter.
             346          (f) The division shall assist the board in upgrading and improving the quality of the
             347      education and examinations required under this chapter.
             348          (g) The division shall assist the board in improving the quality of the continuing
             349      education available to [persons] a person licensed and certified under this chapter.
             350          (h) The division shall assist the board with respect to the proper interpretation or
             351      explanation of the Uniform Standards of Professional Appraisal Practice as required by Section
             352      61-2b-27 when an interpretation or explanation becomes necessary in the enforcement of this
             353      chapter.
             354          (i) The division shall establish fees in accordance with Section 63-38-3.2 :
             355          (i) for processing:
             356          (A) a trainee [notifications] registration;
             357          (B) [applications] an application for licensing and certification; and
             358          (C) [registration of expert witnesses] approval of an expert witness; and
             359          (ii) for all other functions required or permitted by this chapter.
             360          (j) The division may:
             361          (i) investigate [complaints] a complaint against:
             362          (A) [trainees] a trainee; [or]
             363          (B) [persons] a person licensed or certified under this chapter; or
             364          (C) a person required to be licensed, certified, or registered under this chapter;
             365          (ii) subpoena [witnesses and the production of books, documents, records, and other


             366      papers;] a witness;
             367          (iii) subpoena the production of a book, document, record, or other paper;
             368          [(iii)] (iv) administer [oaths] an oath; and
             369          [(iv)] (v) take testimony and receive evidence concerning [all matters] a matter within
             370      the division's jurisdiction.
             371          (k) The division may:
             372          (i) promote research and conduct studies relating to the profession of real estate
             373      appraising; and
             374          (ii) sponsor real estate appraisal educational activities.
             375          (l) The division shall adopt, with the concurrence of the board, rules for the
             376      administration of this chapter pursuant to Title 63, Chapter 46a, Utah Administrative
             377      Rulemaking Act, that are not inconsistent with this chapter or the constitution and laws of this
             378      state or of the United States.
             379          (m) The division shall employ an appropriate staff to investigate allegations that
             380      [persons] a person required to be licensed [or], certified, or registered under this chapter [failed]
             381      fails to comply with this chapter.
             382          (n) The division may employ [such] other professional, clerical, and technical staff as
             383