Chapter 10 - Real Estate License Law / Rules and Regulations

Limits to the amount of compensation a victim is able to receive from the Real Estate Recovery Fund:

$20,000 per claim $100,000 per licensee If the $100,000 limit is insufficient to cover all claims against a licensee, the $100,000 will be distributed to all claimants proportionately.

RELRA Section 455.601

A Broker must have a fixed place of business in the Commonwealth of Pennsylvania. Your Broker's license, along with the license of all salespeople working for you, must be prominently displayed at your place of business. Your Broker's license must include your current address. If you change your fixed place of business: o You must apply to the Commission prior to the move, or within ten days after the move, for a new license that reflects the new address. o You will be required to pay a fee.o The Commission will issue a new license showing the new address as long as the new location meets the requirements of RELRA.o The new license is good for the remaining unexpired term of the original license. You must have a sign outside your office indicating the proper licensed brokerage name. If a Broker has more than one office, a separate license must be obtained for each office and displayed at each office. Each license must include the address where that office is located. Each office must be under the supervision of a manager who is either a Broker or Associate Broker. A Broker, or Associate Broker, may manage more than one office.

Relating to a Broker's place of business, Section 35.242 of the State Real Estate Commission regulations also requires the following:

A Broker's office shall be devoted to transacting real estate business and must be set up to do so in privacy. If a Broker's office is in a private residence, there must be a separate entrance. The business name must be displayed prominently and permanently outside the office. A branch office must also comply with this section.

Section §35.288 of SREC governs duties when selling or leasing your own real estate. According to that section:

A broker or salesperson who sells or leases his own real estate shall comply with the requirements of the act and this chapter. A broker or salesperson who is selling or leasing his own real estate shall disclose his licensed status to a prospective buyer or lessee before the buyer or lessee enters into an agreement of sale or lease. Example: Nick is a licensed real estate agent who owns his home. Nick decides it is time to sell his home and buy something bigger since he has recently become engaged. Nick lists his house for sale as a for sale "by owner." Frank is looking to purchase a home and falls in love with Nick's house. Frank puts in an offer and, after some negotiation, Nick accepts. - Nick has violated §35.288 of SREC because at no time was there an agreement reached regarding the sale of the property where Nick advised Franck that he is a licensed real estate agent.

Hearing Procedures as outlined in Section 455.701

A hearing may be held by: o The full Commission o Any members of the Commission o Any duly authorized representatives of the Commission o Any other person duly authorized by the commission for such purpose After the hearing, a report will be submitted to the Commission by a representative from the hearing. Following the submission of the report, the Commission may do any of the following: o Adopt the findings in the report o Request additional testimony o Return the matter to the representative for further consideration o Make additional, or other, findings of fact on the basis of all the legally probative evidence of the record o Enter its conclusion of law and order The proceedings are conducted in accordance with Title 1, Part 2 of the Pennsylvania Code

Section § 35.282 of SREC governs misleading advice, assurances and representations. According to that section:

A licensee may not give assurances or advice concerning an aspect of a real estate transaction that he knows, or reasonably should be expected to know, is incorrect, inaccurate or improbable. A licensee may not knowingly be a party to a material false or inaccurate representation in a writing regarding a real estate transaction in which he is acting in a representative capacity. Example: Susan is a licensed real estate agent representing John and Mary in the purchase of their dream home. Mary is concerned about their ability to cover the closing costs if they purchase the home. Susan has already spoken to Bob, the seller's agent, about the likelihood that the sellers will cover the closing costs. Bob told Susan that the sellers will not agree to cover the closing costs. Despite this, Susan suggests to Mary that maybe the sellers will cover the closing costs and encourages Mary and John to write an offer that includes a provision requiring the sellers to cover the closing costs. - Susan may have violated Section § 35.282 because she encouraged her buyers to write an offer that she knew would not be accepted.

Right to cancel purchase of time share and campground membership

A purchaser shall have the right to cancel the purchase of a time share or a campground membership until midnight of the fifth day following the date on which the purchaser executed the purchase contract. The right of cancellation shall be set forth conspicuously in boldface type of at least ten point in size immediately above the signature of the purchaser on the purchase contract in substantially the following form: You, the purchaser, may cancel this purchase at any time prior to midnight of the fifth day following the date of this transaction. If you desire to cancel, you are required to notify the seller, in writing, at (address). Such notice shall be given by certified return receipt mail or by any other bona fide means of delivery which provides you with a receipt. Such notice shall be effective upon being postmarked by the United States Postal Service or upon deposit of the notice with any bona fide means of delivery which provides you with a receipt."

Sales contract or agreement (Governed by Section 455.608(b) of RELRA and Section 35.333 of SREC must contain):

A statement identifying the capacity in which the broker is engaged in the transaction and whether the broker, or any licensee affiliated with the broker, has provided services relating to the subject transaction to any other party to the transaction. A statement of the zoning classification of the property, unless zoned solely or primarily to permit single-family dwellings. Failure to comply with this requirement shall render the sales agreement or sales contract voidable at the option of the buyer, and if voided, any deposits tendered by the buyer shall be returned to the buyer without a requirement for court action. A statement that access to a public road may require issuance of a highway occupancy permit from the Department of Transportation. The date of the agreement. The names of the buyer and seller. A description of the property and the interest to be conveyed. The sale price. The dates for payment and conveyance. A provision that payments of money received by the broker on account of the sale— regardless of the form of payment and the person designated as payee (if payment is made by an instrument)—shall be held by the broker in an escrow account pending consummation of the sale or a prior termination thereof. It also has to include the following statement: "A Real Estate Recovery Fund exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting all legal and equitable remedies. For complete details about the Fund, call (717) 783-3658."

Section §35.307 of SREC governs advertisements of sales volume, market position, and number of offices. According to that section:

An advertisement by a broker about ''sales volume'' or ''production'' shall refer only to closed transactions. For purpose of this subsection, a ''closed transaction'' is either a listing sold or a sale made after a fully executed deed is delivered. An advertisement by a broker about his production or position in the ''market'' shall identify the municipality that the market comprises. An advertisement by a broker about the number of offices that he operates shall refer only to those offices that have been issued branch office licenses by the Commission. Example: Martha is a broker who wants to increase her business with the use of "creative" advertising. Martha runs ads in newspapers, online, and on television that claim her business does $20 million in sales volume each month, that she is the number one broker in her market, and that she has 10 oces that are all conveniently located. In reality, Martha's offices have $20 million worth of listings, on average, per month; however, her office does not do $20 million in listings sold each month. Martha has already violated Section §35.307. In addition, Martha claimed in her advertisements that she is the number one broker in her market; however, Martha did not define what market she is referring to, thereby violating Section §35.307 for a second time. Finally, Martha claims to have 10 offices that are conveniently located; however, only six of those offices have actually been issued a branch license by the Commission. Altogether, Martha has violated Section §35.307 in three different ways within her advertising materials; however, keep in mind that it only takes one violation for Martha to face sanctions from the Commission.

In addition, the following information applies to promotional land sales:

Application for registration is accomplished by filing a statement of record and meeting the requirements of §455.605 of RELRA. The specific information and documents required to accompany an application for registration can be found in §455.605. Registration must be renewed annually. The Commission will accept registration or similar disclosure documents from another state or the federal government in lieu of an application for registration in Pennsylvania. Any change in material fact requires the developer to file an Amendment to the initial registration.

Agreements between Broker and Principal OR between Broker and Consumer if the consumer is required to pay a fee and the agreement is required to be in writing. Governed by Section 455.608(a) of RELRA and must:

Be signed by the consumer. Identify services to be provided. State the fee to be paid. Include a statement that the Broker's fee and length of contract are the result of negotiations between broker and the seller/landlord or buyer/tenant. Include a statement identifying any possibility that the broker, or employee of the broker, may provide services to more than one consumer in a single transaction and if so, an explanation of the duties that may be owed the other party and whether the broker may accept a fee for those services. Include a statement of the broker's policies regarding cooperation with subagents and buyer agents, a disclosure that a buyer agent, even if compensated by the broker or seller will represent the interests of the buyer and a disclosure of any potential for the broker to act as a disclosed dual agent. Include a statement identifying any possibility that the broker's compensation maybe based upon a percentage of the purchase price, a disclosure of the broker's policies regarding cooperation with listing brokers willing to pay buyer's brokers, a disclosure that the broker, even if compensated by the listing broker or seller, will represent the interests of the buyer and disclosure of any potential for the buyer broker to act as a disclosed dual agent. A statement describing the purpose of the Real Estate Recovery Fund. A statement regarding any possible conflicts of interest and the duty to continue to disclose any. Payments of money to a Broker must be held in escrow until the sale is consummated.

Reciprocal (Out of State) Licenses - If you hold an active license from another state, the Commonwealth of Pennsylvania may issue you a Pennsylvania license if you submit the following to the Commission:

Certified copy of license or statement indicating the license is active sent directly from the licensing body in the state in which you hold a license. Statement sent to the Commission from the licensing body indicating whether you have even been disciplined and, if so, the outcome. A verified statement from you that: o You are not the subject of discipline or being investigated for misconduct or violation of a criminal law in Pennsylvania or another jurisdiction. o You have read RELRA and agree to be bound by the rules and regulations found therein. o You agree to permit disclosure of any disciplinary record from any other jurisdiction to the Commission. Payment of the appropriate fee. Agreement to service of process

The Commission consists of the following members, appointed by the Governor for five year terms:

Commissioner of Professional and Occupational Affairs Director of the Bureau of Consumer Protection, or his designee Three members who shall be persons representing the public at large Five other persons, each of whom shall at the time of his appointment be a licensed and qualified real estate broker under the existing law of this Commonwealth, and shall have been engaged in the real estate business in this Commonwealth for a period of not less than ten years immediately prior to his appointment One other person who shall have been licensed as a real estate broker, or cemetery broker, for a period of at least five years and shall have been engaged in selling cemetery lots for at least ten years immediately prior to his appointment.

In addition the State Real Estate Commission has the power to levy a fine and/or deny, suspend, or revoke your license for any of the following reasons:

Failing to disclose a commission, rebate, compensation, profit, or expenditures. Having a conduct which demonstrates bad faith, dishonesty, untrustworthiness, or incompetency. Performing any act that requires a license without one. Violating any provision of the "Pennsylvania Human Relations Act," including, but not limited to: o Accepting listings on the understanding that illegal discrimination in the sale or rental of housing is to be practiced. o Giving false information for purposes of discrimination in the rental or sale of housing. o Making distinctions in locations of housing or dates of availability of housing for purposes of discrimination in the rental or sale of such housing Violating section 455.602, 606, 607, or 609 of RELRA. In the case of a Broker, failing to exercise adequate supervision over the activities of a campground membership salesperson or a time-share salesperson within the scope of this act...and Being disciplined under a real estate licensing law of another jurisdiction.

Freehold

- Is an estate, or ownership interest, that has an indefinite duration but that lasts at least as long as the lifetime of the present title holder. For example, the home you own is likely held as a fee simple absolute estate, a type of freehold estate that is owned indefinitely and can be passed down to heirs.

Disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant:

Licensees shall provide the consumer with the Consumer Notice at their initial interview. Licensees shall retain a copy of the signed/refused acknowledgement for 6 months and provide the consumer a copy of the entire disclosure summary. The Disclosure Summary must be entitled ''Consumer Notice'' and must be in a specific format available from the Commission office upon request by phone, fax or internet.

Change of Employment

Notify the Commission no later than 10 days after the change of employment Pay the required fee Surrender your current license Keep a copy of your notice to the Commission which acts as your temporary license until you receive a new one from the Commission.

Prohibited Activity (RELRA Section 604) -If you work in the real estate business in the Commonwealth of Pennsylvania, the State Real Estate Commission has the power to levy a fine and/or deny, suspend, or revoke your license for any of the following reasons:

Obtaining your license by false representation or a fraudulent act or conduct. Making any substantial misrepresentation. Making any false promise of a character likely to influence, persuade or induce any person to enter into any contract or agreement when he/she could not, or did not, intend to keep such promise. Pursuing a continued and flagrant course of misrepresentation or making of false promises through a salesperson, associate broker, other persons, or any medium of advertising, or otherwise. Using misleading or untruthful advertising, or using any other trade name or insignia or membership in any real estate association or organization, of which the licensee is not a member. Failing to comply with any of the requirements of section 455.608.e of RELRA. Failing to preserve real estate transaction records for 3 years. Acting for more than one party in a transaction without consent in writing of all parties. Placing a "for sale" or "for rent" sign, or advertising any property, without written consent. Failing to provide a copy of any real estate contract to all signatories at the time of execution. Failing to specify a definite termination date that is not subject to prior notice, in any listing contract. Inducing any party to a contract, sale or lease to break the contract and enter into a new one for your own personal gain. Accepting a commission, or anything valuable, from anyone except your Broker for following the rules in RELRA. Paying a commission, or anything valuable, to anyone other than licensed employees or another real estate broker for following the rules in RELRA. Failing to disclose to an owner in writing your intention to purchase a property listed with your office. Being convicted of, or pleading nolo contendere to, any felony, or forgery, embezzlement, obtaining money under false pretenses, bribery, larceny, extortion, conspiracy to defraud, or any similar offense. Violating any rule or regulation promulgated by the Commission. Failing to provide a disclosure required by this act or any law. For a Broker, failing to properly supervise salespeople. Failing to provide information requested by the Commission relating to a complaint. Selling property by offering free lots, conducting lotteries or contests, or offering prizes for the purpose of influencing, by deceptive conduct, any purchaser or prospective purchaser of real property. In addition: o Any prize, gift, award or bonus offered in relation to the offering of sale of real property must include a statement of the fair market value, not suggested retail price, of all prizes offered, plus a statement of the odds of winning. o If a prize is to be awarded as a rebate, coupon or discount certificate, a statement of that fact shall be included, along with a statement of any fees and the maximum amount of each, which the prizewinner must pay in order to receive the prize. o An offering by mail shall be written in a clear and coherent manner, using common usages of words and terms. A concise description of the real property or interest being promoted shall appear in any offering and shall include a statement that the interest is a time share, where applicable. If the prospective prizewinner must personally visit and inspect the real property or interest being promoted and listen to a sales presentation in order to win a prize, the offering shall include a statement of that fact. An offering may include instructions for a recipient to contact a certain telephone number, within a specified time period, or by a specified date, if the offeror identifies the business entity and its relationship to the offeror, and complies with this paragraph. o Substitutions of prizes having equal or greater fair market value may be made if the offeror complies with this paragraph. o If a prospective purchaser must attend a time share sales presentation as a condition of the offering, the required disclosures for the offering shall: Be provided in writing or electronically, not orally Be stated in a clear, coherent and conspicuous manner...and The disclosure regarding the scheduled sales presentation must appear in boldface type. o The disclosures shall be provided at least once in a reasonable time period, before the scheduled sales presentation. o The required disclosures need not be in every advertisement or communication.o As used in this paragraph, the term "prize" includes, but is not limited to, money, personal property, vacations, travel certificates, motor vehicles and appliances.

If the Commission does decide that a complaint is serious enough to require disciplinary action, Section 455.604 of RELRA governs the penalties that may be imposed by the Commission, including the following:

Suspension of your license for a period of time determined by the Commission Revocation of your license Imposition of a fine not to exceed $1,000 *Note that you could be ordered to pay a fine and have your license suspended or revoked.

If a claim against a licensee is settled using funds from the Real Estate Recovery Fund:

The license of the licensee is automatically suspended on the date the claim is paid. The license cannot be reinstated until all funds are repaid, plus interest at the rate of 10 percent per year, to the fund. The Real Estate Recovery Fund has the right to petition the court to enter a judgment against the licensee for the amount paid by the fund on behalf of the licensee.

In addition to the penalties, the Commission may impose under the authority found in Section 455.604 of RELRA, an additional civil penalty of up to $1,000 may also be ordered pursuant to the authority found in Section 455.305. That section allows the additional penalty to be imposed by a vote of:

The majority of the maximum number of the authorized membership of the commission as provided by law The majority of the duly qualified and confirmed membership OR A minimum of five members, whichever is greater.

You, the purchaser, may cancel this purchase at any time prior to midnight of the fifth day following the date of this transaction. If you desire to cancel, you are required to notify the seller, in writing, at (address). Such notice shall be given by certified return receipt mail or by any other bona fide means of delivery which provides you with a receipt. Such notice shall be effective upon being postmarked by the United States Postal Service or upon deposit of the notice with any bona fide means of delivery which provides you with a receipt."

This clause is to be separately initialed by the purchaser. Copies of all documents which place an obligation upon a purchaser shall be given to the purchaser upon execution by the purchaser. Notice of cancellation shall be given by certified return receipt mail or by any other bona fide means of delivery, provided that the purchaser obtains a receipt. A noticeof cancellation given by a bona fide means of delivery shall be effective on the date postmarked or on the date of deposit of the notice with any bona fide means of delivery. Within ten business days after the receipt of a notice of cancellation, all payments made under the purchase contract shall be refunded to the purchaser and an acknowledgment that the contract is void shall be sent to the purchaser. In the event of a cancellation pursuant to this section, any promotional prizes, gifts and premiums issued to the purchaser by the seller shall remain the property of the purchaser. The right of cancellation shall not be waivable by any purchaser. A purchaser who exercises the right of cancellation shall not be liable for any damages as a result of the exercise of that right. In addition to constituting a violation of this act, a violation of this section by any individual, corporation, partnership, association or other entity shall also be deemed a violation of the act of December 17, 1968 (P.L. 1224, No. 387), known as the "Unfair Trade Practices and Consumer Protection Law." The Attorney General is authorized to enforce this section. Any actions brought by the Attorney General to enforce this section shall be in addition to any actions which the commission may bring under this act. The right of the purchaser to bring an action to enforce this section shall be independent of any rights of action which this section confers on the Attorney General and the commission.

Most violations of RELRA fall into one of two broad categories:

Unlicensed activity Violations of the rules and regulations of RELRA

If you are a licensed Salesperson or Associate Broker and you wish to change employment, you must comply with the following rules as set forth in Section 455.603 of RELRA:

You may not work for anyone other than the Broker designated on your license. If you wish to change your employment and work for a different licensed Broker, you must: o Notify the Commission in writing within ten dayso Pay the required feeo Return your current licenseo The Commission will issue you a new license after receiving an acknowledgment from the new Broker of the change of employment status. o While your request for a new license is pending, your copy of the notification sent to the Commission serves as your temporary license. o It is your duty to notify the Commission, within 30 days, if you have not received your new license, or if there is any communication regarding your application.

Salesperson's License

You must obtain a passing grade on the salesperson's examination. To be eligible to take the exam you must: o Be at least 18 years old. o Completed at least 60 hours of study approved by the commission in areas that include fair housing and ethics. You must apply in writing on an approved form. You must submit a sworn statement by the broker with whom you will be affiliated certifying that the broker will actively supervise and train you. You must apply within three years of passing the exam.

Comparative Market Analysis (CMA) - Must contain the following statement printed conspicuously and without change on the first page:

"This analysis has not been performed in accordance with the Uniform Standards of Professional Appraisal Practice which require valuers to act as unbiased, disinterested third parties with impartiality, objectivity and independence and without accommodation of personal interest. It is not to be construed as an appraisal and may not be used as such for any purpose."

Incorporeal

- Refers to rights to property having no physical existence, or in something intangible, such as a mortgage.

Non-Freehold

- Represents property interests with a limited or specific duration. A tenancy for years is an example of a non-freehold estate. The tenant has an interest in the property; however, the interest is not absolute and is for a limited duration.

In the case of an agreement of sale for the purchase of a time share or campground membership, it must include a statement regarding the purchaser's right of cancellation that is set forth conspicuously in bold face type of at least 10 point size immediately above the signature line for the purchaser and that is in substantially the following form:

"You, the purchaser, may cancel this purchase at any time prior to midnight of the fifth day following the date of this transaction. If you desire to cancel, you are required to notify the seller, in writing, at (insert address). Such notice shall be given by certified return receipt mail or by any other bona fide means of delivery which provides you with a receipt. Such notice shall be effective upon being postmarked by the United States Postal Service or upon deposit of the notice with any bona fide means of delivery which provides you with a receipt."

Section § 455.608.e of RELRA governs the handling of deposits and other escrows.

(a) All deposits or other escrows accepted by a broker must be retained by the broker pending: (1) consummation of the transaction involved;(2) termination prior to consummation of the transaction involved where there is either: no dispute; or a prior agreement in writing or electronic form as to disposition of the deposit or other escrows in the event of a dispute; (3) receipt by the broker of instructions in writing or electronic form, signed by all of the parties directing the broker to release some or all of the deposit or other escrows; or (4) an order of a court specifying disposition of the deposit or other escrows becoming final and not subject to appeal. (b) Deposits and other escrows must be accounted for in the full amount thereof at the time of consummation, termination or release as provided in subsection (a). If less than the full amount held pursuant to subsection (a) is released, notice must be given in writing or electronic form to all the parties to the transaction of the amounts released, the persons to whom distribution is made and the amounts that continue to be held pursuant to subsection (a). (c) Every associate broker or salesperson shall, promptly, following receipt of a deposit or other escrow, pay over the funds to the broker employing the associate broker or salesperson. (d) A broker shall not commingle deposits or other escrows or property of another person with the broker's own funds or property. (e) A broker must deposit moneys and property belonging to others, in a separate custodialor trust fund account by the end of the business day following their receipt by the broker. The moneys and property must be held by the broker until they are paid or released as provided in subsection (a), at which time the broker shall account for the full amount received. Under no circumstances shall funds belonging to others be deposited in the broker's business or personal account nor shall they be commingled with the broker's funds. (f) If a deposit in connection with an offer to buy or lease real estate is in the form of a check and the buyer and seller or lessee and lessor consent in writing or electronic form, the broker may hold the check and not deposit it as otherwise required by this section pending acceptance of the offer. If the offer is not accepted, the broker shall promptly return the check uncashed to the buyer or lessee. If the offer is accepted, the broker shall deposit the check into a custodial or trust fund account by the close of business on the business day following acceptance of the offer. (g) A broker must keep records of all funds deposited in a custodial or trust fund account,which records indicate clearly the date and from whom the broker received the funds, the date deposited, the dates of withdrawals and other pertinent information concerning the transaction, and must show clearly for whose account the money is deposited and to whom the money belongs. All such records and funds shall be subject to inspection by the commission immediately after proper demand. (h) A broker is not required to hold in escrow rents that the broker receives for property management for a lessor. (i) A broker must deposit rents received into a rental management account that is separate from the broker's escrow account and general business accounts. (j) A broker is permitted to deposit moneys into an escrow account to cover service charges to the account assessed by the banking institution. (k) This section does not preclude the parties to a transaction from agreeing in writing or electronic form to have deposits or other escrows held by a person other than the brokers who represent the parties. This subsection shall not be construed to allow an associate broker, salesperson or qualified association to hold deposits or other escrows.

§ 35.325. Escrow account

(a) An escrow account shall: (1) Be maintained in a Federally- or State-insured bank or recognized depository. (2) Designate the broker as trustee.(3) Provide for the withdrawal of funds without prior notice.(4) Be used exclusively for escrow purposes. (b) A broker who is a sole proprietor or broker of record may give an employee written authority to deposit money into an escrow account and may give a licensed employee written authorityto withdraw funds from the escrow account for payments that are properly chargeable to the account. (c) If money is expected to be held in escrow for more than 6 months, the broker is encouraged to deposit the money into an interest-bearing escrow account. Interest earned on an escrow account shall be held and disbursed, pro rata, in the same manner as the principal amount, unless the parties to the transaction direct otherwise by agreement. A broker may not claim the interest earned on an escrow account, unless the broker is a lessor as provided in section 511.2 of the Landlord and Tenant Act (68 P. S. § 250.511b). (d) Covered by RELRA.

§ 35.326. Prohibition against commingling or misappropriation.

(a) Covered by RELRA. (b) Covered by RELRA. (c) A broker may not misappropriate money that is required to be held in escrow—or interest earned on an escrow account—for business, personal or other purposes.

Section §35.321 Duty to deposit money belonging to another into escrow account.

(a) Covered by RELRA. (b) Covered by RELRA. (c) If a broker receives money belonging to another under an installment land purchase agreement, the transaction shall be considered consummated, for purposes of subsection(a), when the buyer has been aorded the opportunity, by means of the seller's written acknowledgement on or axed to the agreement, to record the agreement, unless the agreement specifies otherwise. (d) If a broker receives money belonging to another under an agreement of sale involving cemetery property, the transaction shall be considered consummated, for purposes of subsection (a), when the buyer receives a copy of the agreement of sale. (e) If a broker receives a security deposit belonging to another under a lease agreement, the broker's duty to pay over the deposit for purposes of subsection (a), shall arise when the tenancy ends. If a sale of the leased premises or a change in a property management contract occurs during the term of the tenancy, the broker may transfer the security deposit from the broker's escrow account to the escrow account of the lessor or the lessor's broker upon notification in writing to each tenant from whom the broker received a deposit of the name and address of the banking institution in which the deposits will be held, and the amount of the deposits.

§ 35.323. Responsibility for escrow in co-brokerage transactions.

(a) If a sales deposit is tendered by a buyer to the listing broker rather than to the selling broker, the listing broker shall assume the escrow duty. (b) If a sales deposit is tendered by a buyer to the selling broker with the buyer having prior notice that the selling broker intends to deliver the deposit to the listing broker, the listing broker shall assume the escrow duty. The selling broker shall require the buyer to acknowledge in writing, prior to his signing the agreement of sale, that the prior notice contained the following information: (1) The name of the listing broker. (2) That the selling broker's acceptance of the buyer's deposit is on behalf of the listing broker as subagent for the listing broker. (3) That the listing broker is a licensed real estate broker who is required to hold the deposit in escrow. (4) That the listing broker be designated as payee, if the buyer's deposit is in the form of a check. (c) If a sales deposit is tendered by a buyer to the selling broker without the buyer having the prior notice in subsection (b), the selling broker shall assume the escrow duty.

Continuing Education

- As a licensed Broker or Salesperson you will be required to satisfy continuing education requirements established by the Commission in order to renew your license. Only the Commission can excuse or waive the continuing education requirements for a documented illness, emergency, or hardship. - To renew your license, you must take 14 hours of Commission approved continuing education classes every two years. - You will receive a renewal notice two to three months aheadof time to remind you of the renewal requirements. If you fail to renew in a timely manner, your license will go into inactive status. - Your license can only stay in inactive status for five years after which you will have to retake the appropriate examination.

Section 202 of RELRA

- The Commission is responsible for administering and enforcing the rules found in RELRA as well as supervising the activities of all licensees in Pennsylvania. - Disciplinary action can also be taken by the Commission which has the authority to impose fines, suspend or revoke a license, or deny an initial application for a license. - In addition, the Commission is also responsible for granting new licenses and renewing existing licenses.

Real Estate Recovery Fund Fee

- When you apply for an initial real estate license, or renew an active license, you will notice thatin addition to the application or renewal fee you are required to pay, you must also pay a "Real Estate Recovery Fund" fee. -As the name implies, that fee is used to fund the Real Estate Recovery Fund which is used to compensate victims of fraud, misrepresentation, or deceit by a salesperson, broker, or anyone else holding a real estate related license.

Duty to Report - Regarding Criminal Offenses

- When you apply for your initial real estate license you will be asked about your criminal history, or lack thereof. Admitting that you have a conviction does not necessarily preclude you from qualifying for a license. - Assuming you are issued a license, your duty to report convictions continues for the duration of the time you hold your license. -Specifically, a licensee shall notify the Commission of being convicted of, or pleading guilty or nolo contendere to, a felony or misdemeanor, within 30 days of the verdict or plea. In addition, you must notify the Commission of disciplinary action taken against you by the real estate licensing authority of another jurisdiction within 30 days of receiving notice of the disciplinary action.

Certain people are specifically excluded from the license requirements found in RELRA such as:

1) An owner of real estate with respect to property owned or leased by such owner. 2) The employees of a public utility acting in the ordinary course of utility-related business, including negotiating the purchase, sale or lease of property. 3) The officers or employees of a partnership or corporation whose principal business is the discovery, extraction, distribution or transmission of energy or mineral resources, provided that the purchase, sale or lease of real estate is a common and necessary transaction in the conduct of such principal business. 4) The services rendered by an attorney-in-fact under an executed and recorded power of attorney from the owner or lessor. 5) A person acting as trustee in bankruptcy, administrator, executor, trustee or guardian while acting under a court order or under the authority of a will or of a trust instrument. 6) The elected officer or director of any banking institution, savings institution, savings bank, credit union or trust company operating under applicable Federal or State laws RealEstateU® - All Rights Reserved Chapter 10: Real Estate License Law / Rules and Regulations 330 where only the real estate of the banking institution, savings institution, savings bank, credit union or trust company is involved. 7) Any officer or employee of a cemetery company who, as incidental to his principal duties and without remuneration therefor, shows lots in such company's cemetery to persons for their use as a family burial lot and who accepts deposits on such lots for the representatives of the cemetery company legally authorized to sell the same. 8) Cemetery companies and cemeteries owned or controlled by a bona fide church or religious congregation or fraternal organization or by any association created by a bona fide church or religious organization or by a fraternal organization. 9) An auctioneer licensed under the act of September 29, 1961 (P.L. 1745, No. 708), known as "The Auctioneers' License Act," while performing authorized duties at any bona fide auction. 10) Any person employed by an owner of real estate for the purpose of managing or maintaining multifamily residential property: Provided, however, that such person is not authorized to enter into leases, negotiate terms or conditions of occupancy, or to hold money belonging to tenants other than on behalf of the owner. 11) The elected officer, director or employee of any banking institution, savings institution, savings bank, credit union or trust company operating under applicable Federal or State laws when acting on behalf of the institution in performing appraisals or other evaluations of real estate in connection with a loan transaction.

Associate broker

A Broker employed by another Broker.

Rental Listing Referral Agent

Any person who owns or manages a business which collects rental information for the purpose of referring prospective tenants to rental units or locations of such units. The term "rental listing referral agent" shall not include any employee or offcial of any public housing authority created pursuant to State or Federal law.

Document Disclosures.

As a licensee, you must disclose specific information when you use certain written documents. This is mandatory.

§ 35.322. Nonwaiver of escrow duty.

A broker's escrow duty may not be waived or altered by an agreement between the parties to the transaction, between the broker and the parties, or between the broker and other brokers who may be involved in the transaction.

Section §35.285 of SREC governs disclosure of real estate affiliations. According to that section:

A licensee shall provide to the Commission or its representatives upon proper demand information regarding a franchisor, network or other parent real estate company with which the licensee is, or may become, affliated.

Campground Membership Salesperson

A person who either as an employee or an independent contractor sells or offers to sell campground memberships. Such person shall sell campground memberships under the active supervision of a broker. A person licensed as a broker, as a salesperson or as a time-share salesperson shall not be required to be licensed as a campground membership salesperson as a condition for selling or offering to sell campground memberships.

Time-Share Salesperson

A person who either as an employee or independent contractor sells or offers to sell time shares. Such person shall sell time shares under the active supervision of a broker. A person licensed as a broker or as a salesperson shall not be required to be licensed as a time-share salesperson as a condition for selling or offering to sell time shares.

Real Estate Recovery Fund Qualifications

A victim must first obtain a final court order or judgment against someone licensed under RELRA and then file an application with the court to enter an order directing payment from the Real Estate Recovery Fund. The applicant must show all the following: That he/she is not a spouse of the debtor, or the personal representative of the spouse. That he/she has obtained a final judgment. That all reasonable steps have been taken to try and collect the money owed pursuant to the judgment. That no more than one year has passed since the termination of the court case that resulted in the judgment. The one year time limit begins after all court reviews and appeals have been exhausted.

Cemetery salesperson

Any person employed by a broker or cemetery broker to perform duties as defined herein under "cemetery broker."

Cemetery broker

Any person engaging in or carrying on the business or acting in the capacity of a broker within this Commonwealth exclusively within the limited field or branch of business which applies to cemetery lots, plots and mausoleum spaces or openings.

Builder-Owner salesperson

Any person who is a full-time employee of a builder- owner of single and multifamily dwellings located within the Commonwealth and as such employee shall be authorized and empowered to list for sale, sell or offer for sale, or to negotiate the sale or exchange of real estate, or to lease or rent, or offer to lease, rent or place for rent, any real estate owned by his builder-owner employer, or collect or offer, or attempt to collect, rent for the use of real estate owned by his builder-owner employer, for and on behalf of such builder-owner employer.

§ 35.328. Escrow records.

Covered by RELRA

Escrow involves the deposit of funds, a deed, or other legal instrument, with a third party to be held until the completion of a specified event or until specific conditions have been met. At that time, the funds or instruments are released to a designated party.

Example: Bob is the seller in a real estate transaction and Nancy is the buyer. Nancy submitted an Offer to Purchase and Bob accepted. The offer was contingent on a satisfactory inspection and Nancy's ability to obtain financing. A closing date has been set out four weeks in advance. When Nancy submitted the offer to purchase and Bob accepted, Nancy also gave Bob an "earnest money" check to show her "good faith" to complete the purchase. An escrow officer is agreed upon by the parties (usually an attorney, closing agent or title agent). The earnest money check, along with the purchase agreement, is forwarded to the escrow officer. From that point until the closing date, all important documents necessary for the closing are forwarded to the escrow officer for safekeeping. Ultimately, the escrow officer will release all purchase funds to the seller and the title to the buyer at the closing.

§ 35.327. Procedure when entitlement to money held in escrow is disputed.

If a dispute arises between the parties to a real estate transaction over entitlement to money that is being held in escrow by a broker, the broker shall retain the money in escrow until the dispute is resolved. If resolution of the dispute appears remote without legal action, the broker may, following 30 days' notice to the parties, petition the county court having jurisdiction in the matter to interplead the rival claimants.

Corporeal

Is right of ownership in material things, or in something tangible, such as a building.

Other Licenses

Licensing qualifications and procedures for the other types of real estate related licenses can be found in Chapter 5 of RELRA.

Section §455.605 of the Real Estate Licensing and Registration Act (RELRA) governs promotional land sales and requires any person who proposes to engage in real estate transactions of a promotional nature within the Commonwealth for a property located inside or outside of this Commonwealth to:

Register with the Commission for its approval Comply with such restrictions and conditions as the Commission may impose by rule or regulation. NOTE: Registration shall not be required for property located within or outside of this Commonwealth which is subject to a statutory exemption under the Federal Interstate Land Sales Full Disclosure Act.

Exclusive listing agreements are governed by

Section 35.322 of the State Real Estate Commission (SREC)

Section 455.701 of RELRA governs proceedings before the Commission

The Commission cannot, however, discipline a licensee without first providing the accused an opportunity to be heard at a hearing in front of the Commission

Enforcement Authority

The Real Estate Licensing and Regulation Act (RELRA) gives the State Real Estate Commission (the "Commission") the authority to enforce RELRA, including the rules and regulations contained therein that govern prohibited conduct of a licensee, and to take disciplinary action against a licensee who has violated the provisions of RELRA.

§ 35.324. Deadline for depositing money into escrow account.

a) Covered by RELRA (b) Covered by RELRA

Salesperson

any person employed by a licensed real estate broker to perform comparative market analyses or to list for sale, sell or offer for sale, to buy or offer to buy or to negotiate the purchase or sale or exchange of real estate or to negotiate a loan on real estate or to lease or rent or offer to lease, rent or place for rent any real estate or collect or offer or attempt to collect rent for the use of real estate for or in behalf of such real estate broker. No person employed by a broker to perform duties other than those activities as defined herein under "broker" shall be required to be licensed as a salesperson.

Section §35.306 of SREC governs advertisements of lotteries, contests, prizes, certificates, gifts and lots. According to that section: - An advertisement by a licensee for the solicitation, sale or offering for sale of real estate that employs lotteries or contests, or that offers prizes, certificates, gifts or free lots shall contain:

o A description of each prize, certificate, gift or lot offered. o The prerequisites for receiving each prize, certificate, gift or lot offered. o Limitation on the number of prizes, certificates, gifts or lots offered. o The fair market value of each prize, certificate, gift or lot offered. If the advertisement is in a print medium, the statement of fair market value shall bein the same size type as the description of the prize, certificate, gift or lot offered. For purposes of this paragraph, ''fair market value'' is the price or value that a prospective buyer would expect to pay, or be charged for, if he were to acquire a similar item of like quality and quantity in a retail outlet that offers the item for sale to the general public. o The odds of winning or receiving each prize, certificate, gift or lot offered. If the advertisement is in a print medium, the statement of odds shall be the same size type as the description of the prize, certificate, gift or lot, and shall appear immediately adjacent to the description.

An exclusive listing agreement may not contain:

o A listing period exceeding 1 year. o An automatic renewal clause. o A cancellation notice to terminate the agreement at the end of the listing period set forth in the agreement. o Authority of the broker to execute a signed agreement of sale or lease for the owner or lessor. o An option by the broker to purchase the listed property. o Authority of the broker to confess judgment against the owner or lessor for the Commission in the event of a sale or lease.

The following terms shall be printed in bold face if made part of an agreement of sale:

o A provision relieving the seller from responsibility for defects involving the sale property, or a provision requiring the buyer to execute a release to that effect at the time of settlement, or a provision of similar import. o A provision reserving to the builder-seller the right to change, or depart from, the building specifications for the sale property. o An agreement of sale for a cemetery lot or plot or a mausoleum space or opening shall contain the requirements in subsection (a)(1)—(5) and (9).

A licensee who represents buyers or a transaction licensee who has entered into an agreement with buyers shall:

o Advise buyers that sellers have a duty to provide a completed property disclosure statement. o Assure that the completed property disclosure statement or the property disclosure statement marked ''refused'' was delivered to the buyer prior to the execution of an agreement of sale. o Licensees are required to disclose, to the buyer in writing, all material defects that are not otherwise disclosed and of which the licensee has actual knowledge. o Licensees are not required to conduct an independent investigation to confirm seller's disclosures on the property disclosure statement.

A licensee who represents sellers or a transaction licensee who has entered into an agreement with sellers shall:

o Advise sellers of their duty to disclose any known material defects with the property by completing a property disclosure statement that satisfies the requirements in 68 Pa.C.S. § 7304. o Provide sellers with a property disclosure statement that meets or exceeds the disclosures set forth in § 35.335a. o Deliver the completed property disclosure statement or the property disclosure statement marked ''refused'' to the buyer, the licensee who represents the buyer or the transaction licensee who has entered into an agreement with the buyer prior to the execution of an agreement of sale.

Broker's License Requirements

o Be at least 21 years old o Be a high school graduate or equivalent o Have completed 240 hours of study approved by the Commission in areas of study that include fair housing and ethics. o Have worked as a licensed salesperson for at least three years or have the equivalent education and/or experience as determined by the Commission. You must apply for a Broker's license in writing on an approved form. The application must include the place of business where the license will be used. You must apply within three years of passing the exam. If the applicant is a corporation, partnership, or other type of business, only the person who plans to act as the Broker is required to obtain a Broker's license. All other only need a salesperson's license.

The Commission will regard the following as deceptive conduct within the meaning of section 604(a)(18) of the act (63 P. S. § 455.604(a)(18)):

o Failure to comply with either of the above subsections.o Failure to disclose the possibility that a particular prize, certificate, gift or lot may not be distributed or awarded. o Advertising the availability of a prize, certificate, gift or lot when it is not available for distribution or awarding. o Giving a misleading description of a prize, certificate, gift or lot. Example: Jacob and Paul own a large parcel of land that they plan to build on in the near future. As a way to generate interest in their future building project, Jacob and Paul decide to have a lottery. The pair plans to give away a lot within their larger parcel of land to the winner of the lottery. When Jacob and Paul create the advertisements for the lottery, however, it sounds as though the winner will win a home, not a lot on which they need to build a home. Moreover on the advertising materials is it neither explained what the chances of winning are, nor what the fair market value of the prize that the winner actually receives is. Paul and Jacob have violated Section §35.306 of SREC in several ways. First, they did not make it clear what the winner was actually winning. Second, they failed to disclose the odds of winning for those who played the lottery, Finally, they did not provide a fair market value for the lot they are giving away to the winner of the contest. It appears likely that Paul and Jacob may have violated a number of additional provisions of the section as well.

Broker-- any person who, for another and for a fee, commission or other valuable consideration:

o Negotiates with or aids any person in locating or obtaining for purchase, lease or an acquisition of interest in any real estate; o Negotiates the listing, sale, purchase, exchange, lease, time share and similarly designated interests, financing or option for any real estate; o Manages any real estate; o Represents himself to be a real estate consultant, counselor, agent or finder; o Undertakes to promote the sale, exchange, purchase or rental of real estate: Provided, however, that this provision shall not include any person whose main business is that of advertising, promotion or public relations; o Undertakes to perform a comparative market analysis; or o Attempts to perform any of the above acts.

A violation of §455.605 could lead to:

o Suspension or revocation of registration o Referral to the Consumer Protection Bureau of the Office of Attorney General o An injunction or temporary restraining order to prohibit the complained of activity.

Before an agreement of sale is executed, the brokers involved in the transaction shall provide each party with a written estimate of reasonably foreseeable expenses associated with the sale that the party may be expected to pay, including, but not limited to:

o The broker's commission. o The mortgage payments and financing costs. o Taxes and assessments. o Settlement expenses. The estimates of costs shall be as accurate as may be reasonably expected of a person having knowledge of, and experience in, real estate sales.

An exclusive listing agreement may be:

o The exclusive agency of the broker. o The exclusive right-to-sell or exclusive right-to-lease.

A licensee who solicits, sells or offers for sale real estate by using the mails or by offering prizes, certificates, gifts or lots shall maintain records that contain:

o The number and description of each prize, certificate, gift or lot distributed or awarded. o The name and address of each person who received a prize, certificate, gift or lot. o The name and address of each person who responded to the advertisement or solicitation but did not receive a prize, certificate, gift or lot.

An exclusive listing agreement shall contain the following:

o The sale or lease price. o The commission, fees or other compensation expected on the sale or lease price. o The duration of the agreement. o In the case of an exclusive right-to-sell agreement, a statement in bold face type that the broker earns a commission on the sale of the property during the listing period, made by whomever, including the owner. o In the case of an exclusive right-to-lease agreement, a statement in bold print that the broker earns a commission on the lease of the property during the listing period, made by whomever, including the lessor.

If the agreement of sale is conditioned upon the ability of the buyer to obtain a mortgage, it shall contain:

o The type of mortgage. o The mortgage principal. o The maximum interest rate of the mortgage. o The minimum term of the mortgage. o The deadline for the buyer to obtain the mortgage. o The nature and extent of assistance that the broker will render to the buyer in obtaining the mortgage.