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H.B. 315 Enrolled





Chief Sponsor: Gordon E. Snow

Senate Sponsor: L. Alma Mansell

             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions related to the Division of Real Estate's regulation of real
             10      estate issues.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies exemptions for persons or transactions;
             14          .    permits a member of the Real Estate Commission to serve two consecutive terms;
             15          .    modifies limit on the amount of a civil penalty;
             16          .    modifies grounds for disciplinary action; and
             17          .    makes technical changes.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          61-2-3, as last amended by Chapter 102, Laws of Utah 1996
             25          61-2-5.5, as last amended by Chapters 199 and 257, Laws of Utah 2005
             26          61-2-11, as last amended by Chapter 199, Laws of Utah 2005
             28      Be it enacted by the Legislature of the state of Utah:
             29          Section 1. Section 61-2-3 is amended to read:

             30           61-2-3. Exempt persons and transactions.
             31          (1) (a) Except as provided in Subsection (1)(b), a license under this chapter is not
             32      required for:
             33          (i) any person who as owner or lessor performs the acts described in Subsection 61-2-2
             34      (12) with reference to property owned or leased by that person;
             35          (ii) a regular salaried employee of the owner or lessor of real estate who, with reference
             36      to nonresidential real estate owned or leased by the employer, performs the acts enumerated in
             37      Subsections 61-2-2 (12)(a) and (b);
             38          (iii) a regular salaried employee of the owner of real estate who performs property
             39      management services with reference to real estate owned by the employer, except that the
             40      employee may only manage property for one employer;
             41          (iv) a person who performs property management services for the apartments at which
             42      that person resides in exchange for free or reduced rent on that person's apartment;
             43          (v) a regular salaried employee of a condominium homeowners' association who
             44      manages real property subject to the declaration of condominium that established the
             45      homeowners' association, except that the employee may only manage property for one
             46      condominium homeowners' association; and
             47          (vi) a regular salaried employee of a licensed property management company who
             48      performs support services, as prescribed by rule, for the property management company.
             49          (b) Subsection (1)(a) does not exempt from licensing:
             50          (i) employees engaged in the sale of properties regulated under:
             51          (A) Title 57, Chapter 11, Utah Uniform Land Sales Practices Act; and
             52          (B) Title 57, Chapter 19, Timeshare and Camp Resort Act;
             53          (ii) employees engaged in the sale of cooperative interests regulated under Title 57,
             54      Chapter 23, Real Estate Cooperative Marketing Act; or
             55          (iii) any person whose interest as an owner or lessor was obtained by [him] that person
             56      or transferred to [him] that person for the purpose of evading the application of this chapter,
             57      and not for any other legitimate business reason.

             58          (2) A license under this chapter is not required for:
             59          (a) isolated transactions by persons holding a duly executed power of attorney from the
             60      owner;
             61          (b) services rendered by an attorney at law in performing [his] the attorney at law's
             62      duties as an attorney at law;
             63          (c) a receiver, trustee in bankruptcy, administrator, executor, or any person acting
             64      under order of any court;
             65          (d) a trustee or its employees under a deed of trust or a will; or
             66          (e) any public utility, its officers, or regular salaried employees, unless performance of
             67      any of the acts set out in Subsection 61-2-2 (12) is in connection with the sale, purchase, lease,
             68      or other disposition of real estate or investment in real estate unrelated to the principal business
             69      activity of that public utility.
             70          (3) [(a) Except as provided in Subsection (3)(b), a] A license under this chapter is not
             71      required for any person registered to act as a broker-dealer, agent, or investment advisor under
             72      the Utah and federal securities laws in the sale or the offer for sale of real estate if:
             73          (a) (i) the real estate is a necessary element of a "security" as that term is defined by the
             74      Securities Act of 1933 and the Securities Exchange Act of 1934; and
             75          (ii) the security is registered for sale:
             76          (A) pursuant to the Securities Act of 1933; or
             77          (B) by Title 61, Chapter 1, Utah Uniform Securities Act[.]; or
             78          (b) (i) it is a transaction in a security for which a Form D, described in 17 C.F.R. Sec.
             79      239.500, has been filed with the Securities and Exchange Commission pursuant to Regulation
             80      D, Rule 506, 17 C.F.R. Sec. 230.506; and
             81          (ii) the selling agent and the purchaser are not residents of this state.
             82          [(b) The exemption in Subsection (3)(a) does not apply to exempt or resale
             83      transactions.]
             84          Section 2. Section 61-2-5.5 is amended to read:
             85           61-2-5.5. Real Estate Commission created -- Functions -- Appointment --

             86      Qualification and terms of members -- Expenses -- Meetings.
             87          (1) There is created within the division a Real Estate Commission. The commission
             88      shall:
             89          (a) make rules for the administration of this chapter that are not inconsistent with this
             90      chapter, including:
             91          (i) licensing of:
             92          (A) principal brokers;
             93          (B) associate brokers;
             94          (C) sales agents;
             95          (D) real estate companies; and
             96          (E) branch offices;
             97          (ii) prelicensing and postlicensing education curricula;
             98          (iii) examination procedures;
             99          (iv) the certification and conduct of:
             100          (A) real estate schools;
             101          (B) course providers; and
             102          (C) instructors;
             103          (v) proper handling of funds received by real estate licensees;
             104          (vi) brokerage office procedures and recordkeeping requirements;
             105          (vii) property management;
             106          (viii) standards of conduct for real estate licensees; and
             107          (ix) rules made under Section 61-2-26 regarding an undivided fractionalized long-term
             108      estate;
             109          (b) establish, with the concurrence of the division, all fees as provided in this chapter
             110      and Title 61, Chapter 2a, Real Estate Recovery Fund Act;
             111          (c) conduct all administrative hearings not delegated by the commission to an
             112      administrative law judge or the division relating to the:
             113          (i) licensing of any applicant;

             114          (ii) conduct of any licensee; or
             115          (iii) the certification or conduct of any real estate school, course provider, or instructor
             116      regulated under this chapter;
             117          (d) with the concurrence of the director, impose sanctions against licensees and
             118      certificate holders as provided in Section 61-2-11 ;
             119          (e) advise the director on the administration and enforcement of any matters affecting
             120      the division and the real estate sales and property management industries;
             121          (f) advise the director on matters affecting the division budget;
             122          (g) advise and assist the director in conducting real estate seminars; and
             123          (h) perform other duties as provided by:
             124          (i) this chapter; and
             125          (ii) Title 61, Chapter 2a, Real Estate Recovery Fund Act.
             126          (2) (a) The commission shall be comprised of five members appointed by the governor
             127      and approved by the Senate.
             128          (b) Four of the commission members shall:
             129          (i) have at least five years' experience in the real estate business; and
             130          (ii) hold an active principal broker, associate broker, or sales agent license.
             131          (c) One commission member shall be a member of the general public.
             132          (d) No more than one commission member may be appointed from any given county in
             133      the state.
             134          (3) (a) Except as required by Subsection (3)(b), as terms of current commission
             135      members expire, the governor shall appoint each new member or reappointed member to a
             136      four-year term ending June 30.
             137          (b) Notwithstanding the requirements of Subsection (3)(a), the governor shall, at the
             138      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             139      commission members are staggered so that approximately half of the commission is appointed
             140      every two years.
             141          (c) Upon the expiration of the term of a member of the commission, the member of the

             142      commission shall continue to hold office until a successor is appointed and qualified.
             143          (d) A commission member may not serve more than [one] two consecutive [term]
             144      terms.
             145          (e) Members of the commission shall annually select one member to serve as chair.
             146          (4) When a vacancy occurs in the membership for any reason, the replacement shall be
             147      appointed for the unexpired term.
             148          (5) (a) A member shall receive no compensation or benefits for the member's services,
             149      but may receive per diem and expenses incurred in the performance of the member's official
             150      duties at the rates established by the Division of Finance under Sections 63A-3-106 and
             151      63A-3-107 .
             152          (b) A member may decline to receive per diem and expenses for the member's service.
             153          (6) (a) The commission shall meet at least monthly.
             154          (b) The director may call additional meetings:
             155          (i) at the director's discretion;
             156          (ii) upon the request of the chair; or
             157          (iii) upon the written request of three or more commission members.
             158          (7) Three members of the commission constitute a quorum for the transaction of
             159      business.
             160          Section 3. Section 61-2-11 is amended to read:
             161           61-2-11. Investigations -- Subpoena power of division -- Grounds for disciplinary
             162      action.
             163          The division may investigate or cause to be investigated the actions of any principal
             164      broker, associate broker, sales agent, real estate school, course provider, or school instructor
             165      licensed or certified by this state, or of any applicant for licensure or certification, or of any
             166      person who acts in any of those capacities within this state. The division is empowered to
             167      subpoena witnesses, take evidence, and require by subpoena duces tecum the production of
             168      books, papers, contracts, records, other documents, or information considered relevant to the
             169      investigation. The division may serve subpoenas by certified mail. Each failure to respond to a

             170      subpoena is considered as a separate violation of this chapter. The commission, with the
             171      concurrence of the director, may impose a civil penalty in an amount not to exceed [$500]
             172      $2,500 per violation, impose educational requirements, and suspend, revoke, place on
             173      probation, or deny renewal, reinstatement, or reissuance of any license or any certification if at
             174      any time the licensee or certificate holder, whether acting as an agent or on his own account,
             175      is found guilty of:
             176          (1) making any substantial misrepresentation;
             177          (2) making any false promises of a character likely to influence, persuade, or induce;
             178          (3) pursuing a continued and flagrant course of misrepresentation, or of making false
             179      promises through agents, sales agents, advertising, or otherwise;
             180          (4) acting for more than one party in a transaction without the informed consent of all
             181      parties;
             182          (5) (a) acting as an associate broker or sales agent while not licensed with a licensed
             183      principal broker;
             184          (b) representing or attempting to represent a broker other than the principal broker with
             185      whom the person is affiliated; or
             186          (c) representing as sales agent or having a contractual relationship similar to that of
             187      sales agent with other than a licensed principal broker;
             188          (6) (a) failing, within a reasonable time, to account for or to remit any monies coming
             189      into the person's possession that belong to others;
             190          (b) commingling the funds described in Subsection (6)(a) with the person's own; or
             191          (c) diverting the funds described in Subsection (6)(a) from the purpose for which they
             192      were received;
             193          (7) paying or offering to pay valuable consideration, as defined by the commission, to
             194      any person not licensed under this chapter, except that[: (a)] valuable consideration may be
             195      shared:
             196          (a) with a licensed principal broker of another jurisdiction; or
             197          (b) as provided under [the]:

             198          (i) Title 16, Chapter 10a, Utah Revised Business Corporation Act;
             199          (ii) Title 16, Chapter 11, Professional Corporation Act; or [the]
             200          (iii) Title 48, Chapter 2c, Utah Revised Limited Liability Company Act; [and]
             201          [(b) the valuable consideration to be paid to a licensee for the performance of any of
             202      the acts specified in this chapter may be paid by the licensee's principal broker to the licensee's
             203      Sub-Chapter S corporation;]
             204          (8) being unworthy or incompetent to act as a principal broker, associate broker, or
             205      sales agent in such manner as to safeguard the interests of the public;
             206          (9) failing to voluntarily furnish copies of all documents to all parties executing the
             207      documents;
             208          (10) failing to keep and make available for inspection by the division a record of each
             209      transaction, including:
             210          (a) the names of buyers and sellers or lessees and lessors;
             211          (b) the identification of the property;
             212          (c) the sale or rental price;
             213          (d) any monies received in trust;
             214          (e) any agreements or instructions from buyers and sellers or lessees and lessors; and
             215          (f) any other information required by rule;
             216          (11) failing to disclose, in writing, in the purchase, sale, or rental of property, whether
             217      the purchase, sale, or rental is made for himself or for an undisclosed principal;
             218          (12) regardless of whether the crime was related to real estate, being convicted of a
             219      criminal offense involving moral turpitude within five years of the most recent application,
             220      including a conviction based upon a plea of nolo contendere, or a plea held in abeyance to a
             221      criminal offense involving moral turpitude;
             222          (13) advertising the availability of real estate or the services of a licensee in a false,
             223      misleading, or deceptive manner;
             224          (14) in the case of a principal broker or a licensee who is a branch manager, failing to
             225      exercise reasonable supervision over the activities of the principal broker's or branch manager's

             226      licensees and any unlicensed staff;
             227          (15) violating or disregarding this chapter, an order of the commission, or the rules
             228      adopted by the commission and the division;
             229          (16) breaching a fiduciary duty owed by a licensee to the licensee's principal in a real
             230      estate transaction;
             231          (17) any other conduct which constitutes dishonest dealing;
             232          (18) unprofessional conduct as defined by statute or rule; or
             233          (19) suspension, revocation, surrender, or cancellation of a real estate license issued by
             234      another jurisdiction, or of another professional license issued by this or another jurisdiction,
             235      based on misconduct in a professional capacity that relates to character, honesty, integrity, or
             236      truthfulness.

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