VA State Real Estate
The Virginia Fair Housing Act extends protection beyond the list of federally protected classes. What group has the added protection under the VA Fair Housing Act?
Elders For the most part, Virginia mirrors the federal protections (race, color, religion, national origin, gender, familial status, and handicap). However, the Virginia Fair Housing Act also adds elderliness (those 55 or older) to the list of protected classes.
A license may be suspended without benefit of a hearing in what case?
For failure to pay an assessment to the TRF (virginia transaction recovery fund) Disciplinary action can be taken against a licensee (without a hearing) for failure to pay an assessment to the TRF within 30 days of the 2nd notice.
Escrow funds
Money or trust instruments received, accepted, or held on behalf of another pending consummation or termination of a real estate transaction.
VA Fair Housing Act - Exception "For rent by owner. Share townhouse, 3 bdrm. 2 ba. conv. to shops and trans. Call 123-4567 for details. No agents or _________________." All of the following descriptions can legally complete the advertisement, EXCEPT:
Out of Females, Handicapped Persons, Families with teenagers, only Asian Americans is illegal. Owners who occupy their homes, but sell or rent rooms or units, are exempt from the non-racial aspects of the Fair Housing Act provided their home contains four (4) or fewer units. The owner must actually maintain one of the units as his legal residence for this exception to apply.
License by Reciprocity
A license by reciprocity is intended for those already licensed in another state.
Jane has been out of town on personal business. When she returns on July 5, Jane realizes that her real estate license expired on May 31. What must she do?
Apply for reinstatement of her license and pay a fee. - After 30 days (and May 31 to July 5 is more than 30 days), a person may apply to have one's license reinstated and pay the applicable fee. However, you cannot RENEW your license unless you do so within the renewal period.
A salesperson who receives an earnest money deposit is NOT required to place the money in an escrow account: A. With the knowledge and consent of the parties B. With the permission of his or her broker C. With the written agreement of both parties D. Until 10 days prior to settlement
C. With the written agreement of both parties. - We have no way of knowing why the parties would agree to not use an escrow account. However, if all parties agree in writing, then it is OK.
What are the requirements to become a broker in VA?
- Must be 18 years of age - Must be in good standing in any jurisdiction where licensed - Must have been active as a salesperson for 3 years. - Must have 180 credit-hours of classroom, correspondence, or distance learning study.
The developer of a time-share must eventually transfer his fee simple interest to the owners' association. This must be performed after what percentage of the project is sold? (VA Time Share Act)
90% Time-share title passes from developer to the association when: (i) 90% of the project has been sold; (ii) for 20% of the units, the developer is no longer the beneficiary on the deed of trust; or (iii) the project is completed.
What is the maximum amount that can be paid from the Transaction Recovery Fund for claims against the same licensee during a two year period?
$100,000 - The maximum amount that any one person can claim from the Fund is always $20,000. However, if multiple claimants file against the licensee from a single transaction, the maximum paid to all claimants would be a total of $50,000 during any 2-year period. If the licensee is involved in multiple transactions, the maximum that the Fund will pay to all claimants is $100,000 during any 2-year period.
The minimum balance of the Virginia Real Estate Transaction Recovery Fund is:
$400,000
Which of the following actions is NOT an act of real estate brokerage? A. Renting 1/2 of a duplex for a friend B. Helping a friend sell his house for a fee C. Selling a business for a relative D. Taking a listing
C. Selling a business for a relative Note that businesses are classified as personal property. You do not need a real estate license to sell personal property.
Ben and Jerry are communicating via instant messages. Ben is a licensee and Jerry is interested in locating property in Ben's area. Ben suggests that he may be able to help. What does Ben need to disclose next?
Ben must disclose his firm name, city, and state Ben must disclose his firm name, city, and state since Board regulations now cover instant messages. These disclosures must be viewable on the main page or no more than one click away from the main page.
After the death or disability of the only broker in a real estate firm, how long does a Board-approved person have to conclude the business?
180 If a firm's principal broker dies or becomes incapacitated, the Board may approve an unlicensed person to conclude the firm's business (limited to 180 days)
How long do you have to respond to the board for non record requests?
21 days.
How long must a broker keep copies of escrow records?
3 years from the date of consummation or ratification of the contract Escrow records must be kept for 3 year from the date of CONSUMMATION (closing) or ratification (if the contract does not go to closing).
A tenant lives in a four-unit apartment building. He agrees to maintain the building if he can receive a reduced rental fee. In this situation, which of the following statements is correct? A. The owner and the tenant are exempt from the real estate License Law B. The tenant must establish an escrow account C. Both the tenant and owner are subject to Board regulations D. To be exempt, the tenant must pay his own utilities
A. The owner and the tenant are exempt from the real estate License Law. - The owner doesn't need a license because he is acting in relation to his own property. The tenant does not need a license because maintenance services are not acts of real estate brokerage
If a broker operates the firm from an office in his home, it must:
Be clearly separate from the living area. A firm cannot operate on residential property unless the business office is completely separated from the living quarters (i.e., separate entrances).
Disclosure Laws
Disclosure laws apply regardless of whether a real estate agent is involved in the transaction. Although using disclosure forms adds a layer of protection for all parties in the transaction, the forms themselves do not replace an agent's independent responsibility to disclose all known material property defects. Environmental hazards are material facts and must be disclosed to all parties in the transaction.
Transaction Recovery Fund
Fund to compensate those who suffer a monetary loss due to the misconduct of a licensee. Maximum TRF payment in a single transaction: Single Party - $20,000 Multiple Party - $50,000 Maximum TRF payment in multiple transactions (over two yr period): Single Party - $20,000 per guilty license Multiple Party - $100,000
If a licensee purchases real estate in his own name:
He must disclose the fact that he is licensed. Any licensee may purchase or sell property that he personally owns. However, the licensee MUST disclose to the other party that he is licensed as a real estate professional.
A contract cannot be consummated due to a disagreement between buyer and seller. The broker still has the earnest money deposit in his escrow account. The seller demands that the deposit be given to him, but the buyer demands that the deposit be returned to her. What can the broker legally do?
Hold the funds until ordered by the court to disburse. The License Law and Regulations advise that if the sale is not consummated, the deposit should be disbursed as agreed upon by the parties (in the sales contract or otherwise). However, there is no agreement in this situation and no indication of the contract terms. Therefore, the only solutions are to let the courts hold the funds until the dispute is settled (interpleader), or to hold the money until a court orders the disposition of the funds.
A broker receives a deposit for escrow, what could he do that would be in violation of Virginia License Regulations?
If he does not advise the principals of exactly how the earned interest on the deposit will be distributed, he will be in violation of VA License Regulations. - The law does NOT require that escrow money earn interest. However, if the account does earn interest, all parties to the transaction must be advised and agree on exactly how the interest will be distributed.
The Board takes disciplinary action against a licensed salesperson. When is the employing broker also at risk of disciplinary action?
If the broker knew or should have known of the agent's actions. - The Board could discipline the principle broker or supervising broker if it can establish that the broker knew or should have known about the agent's actions.
VA Advertising Disclosures (Signage)
In Virginia, advertising includes all forms of representation, promotion, and solicitation related to licensed real estate activity (for any purpose, in any medium). There are disclosure requirements for radio and television advertisements, on "For Sale" signs, and In newspaper ads consisting of more than 28 lines of copy.
Sarah the Salesperson sold a property for Owner Fred. Fred though Sarah did such a good job, he sent her a $500 bonus. If Sarah keeps the $500, she:
Is in violation of VA License Law. Salesperson and associate brokers can ONLY receive compensation from their employing broker. The only way it would not be in violation is if Owner Fred sent the bonus directly to the employing broker.
Who can supervise a branch office?
It must be supervised by an on-premises principal or associate broker Branch offices can only be managed by the principal OR an associate broker (who has been designated as the "supervising broker"). A manager can only manage one office.
In April, Mary took a continuing education course to satisfy her October renewal requirements. A renewal notice was mailed from the Board, but it was lost in the mail and never received by Mary. Mary didn't realize until January that her license had expired. What should she do now?
Mary should apply for reinstatement of her license Renewal responsibilities always rest in the hands of the individual licensee. Failure to receive notice is no excuse. Mary is allowed to apply for reinstatement since it's still within one year of her expiration date. However, she will be required to pay the applicable fees.
A builder wants to sell tracts of land that he owns. This person: (Licensing Requirements)
May allow unlicensed employees (on a regular salary) to sell the tracts. Owners are allowed to sell their own land without being licensed.
Harry is a broker. He works out a deal with Larry (a developer), Darrell (a contractor), and Tony (a mortgage banker). The deal states that Harry will sell all of the houses that Darrell built on Larry's land. After that, Tony would handle the mortgages of any buyers through his bank. Harry sells three houses, then runs off with all the funds. Larry, Darrell, and Tony all file claims for payment from the Transaction Recovery Fund. Who is most likely to collect?
NO ONE People who REGULARLY deal in real estate transactions are not eligible for payment from the Transaction Recovery Fund. This includes real estate agents, bankers, developers, and contractors.
Lisa is a licensed salesperson that is selling her own townhouse. She advertises her townhouse as a FSBO as follows: "Beautiful 3 bedroom townhouse. Excellent assumption. Single females only. Call 123-4567 for details. Is this legal?
No, Lisa must still follow the Fair Housing Law (private individual owners are only exempt from the non-racial aspects). Further, Lisa does not meet the private owner exemption since she used discriminatory advertising.
Two individuals want to form a real estate partnership in Virginia. One is unlicensed and the other has a broker's license. Will they be able to open the partnership?
No, both partners would need to have a broker's license. The law specifies that if partners are licensed, they must be licensed as brokers (so, a salesperson cannot be a partner). Note that a person doesn't need to be licensed to have ownership rights in a firm. However, if the owners are engaged in acts of brokerage, then they MUST be licensed.
Can a broker "borrow" money from a property's escrow account if another property from the same owner needs it?
No, if the broker decided to "borrow" the money from another escrow account it would be a violation of License Law for improperly handling escrow funds.
Susan currently owns a house in Virginia, but is looking to move to Texas this summer. Susan decides to sell her own house. Does she need to contact a real estate agent?
No. In Virginia, you must be licensed if, ON BEHALF OF ANOTHER PERSON and for a fee, you perform a regulated act of real estate. A person does not need a license to sell her own property.
Can you find Open Listings on the MLS?
Not Likely. The MLS is only an advertising tool of the real estate industry. As such, the License Law and regulations do not address their activities. Multiple Listing Services do take commercial listings, but note that most refuse to accept open listings since their terms provide little protection for the listing broker's interests.
What is wrong with this advertisement: "3 bdrm, 2 ba, $75,000. Ann Agent. Broker XYZ. Phone 123-4567"?
Nothing. - There is nothing wrong with the ad as it is presented (assuming is is placed in conventional media). However, if this was an electronic advertisement, it would also have to include the firm's city and state.
What must a person apply for a license by reciprocity do before they obtain the license?
Take and pass the Virginia portion of the licensing examination. -All applicants must pass the state portion of the licensing exam before applying for a Virginia reciprocal license. Any other requirements (ex. pre-licensing courses and the national portion of the test) can be waived at the Board's discretion.
A licensee is on vacation when his license expires. He still needed to take one more continuing education course before his license expiration date. What should he do?
Take the continuing education course and apply to reinstate his license. - Remember that licensees may renew a license within 30 days of expiration without penalty. We are not told how long ago the license expired, so an additional fee may or may not be required. The only choice that covers all situations is to take the course and apply for reinstatement.
A woman tells her brother (a broker) that she would like to buy a piece of property that he has listed. However, she does not want the seller to know of their relationship. The brother should:
Tell the seller that the prospective buyer is a relative. You must disclose any interest that you have in in a transaction
How long does one have to renew an expired license?
Persons may renew by paying a renewal fee within 30 days of expiration. After 30 days, the person must apply for reinstatement and pay a reinstatement fee (board has discretion to deny reinstatement).
Virginia Fair Housing Laws apply to:
Residential sales and rentals. - Note it is not all real estate transactions.
If the Board receives a written complaint about a licensee, what is the first thing they will do?
Review the complaint to determine if there is a possible violation of License Law or Board regulations. - After receiving a complaint, the very first thing the Board will do is to see if it alleges a violation of License Law. Even when true, a complaint could be about an issue that is not a violation, or something that is entirely outside of the Board's jurisdiction.
When a salesperson takes a listing, the commission amount is determined by the:
Seller and broker License Law and Board Regulations are silent on the amount of a commission. Since the broker (agent) is employed by the seller (principal), commission is determined by what the seller is willing to pay and what the broker is willing to accept as a basis for the broker's agency.
If a salesperson is accused of violating License Law, the Real Estate Board will:
Send a copy of the charges to the salesperson's broker at the broker's place of business. - Note that the Real Estate Board will send copies of the charges to the salesperson at his home address, NOT THE BUSINESS ADDRESS. The employing broker will also be notified at his place of business. The Board does not have the authority to revoke a license pending a hearing, or to attach commissions pending an investigation.
Jane has been out of country on personal business. When she returns on March 5th, 2018 she realizes her real estate license expired before she left, January 2017. What must she do to reinstate her license?
She must reapply for her initial license. - Licenses not timely reinstated (over 1 year from expiration) will lapse. Once lapsed, the licensee must meet all educational and examination requirements and apply as a new applicant.
The Virginia Fair Housing Act
Similar to Federal Fair Housing Act, the Virginia Act adds elderliness (those 55 or older) to the other protected classes (race, color, religion, national origin, gender, family status, and handicap).
A condominium owner re-sells his unit. After settlement, it is discovered that the CCRs were revised during the executory period of the contract. Who was responsible for advising the buyer of the changes?
The Seller. - The law requires that certain information be provided to the buyer by the SELLER during the resale of a condo. Agents need to make certain that the seller does everything that is required by law.
A developer advertises a time-share and offers a prize to any person visits and inspects the property. What disclosures NEED to be included in the advertisement.
The ad must include the date that the offer expires. - Descriptions of the property, gifts, or prizes can be very general and non-specific. However, if a prize or promotion is offered, the advertisement must disclose the nature, value, odds, conditions, and expiration date of the offer.
What happens if the Transaction Recovery Fund falls below $400,000?
The board may assess active AND inactive licenses in order to restore the fund.
If a judgment has been awarded to a claimant, what must the claimant do before the Board will authorize payment from the Transaction Recovery Fund?
The claimant must have gone after any assets and property belonging to the debtor. After the claimant has obtained a judgment, he must pursue all legal avenues for reimbursement. This would include a legal attempt to seize and sell all of the respondent's assets. Then, and only then, is the claimant eligible for payment from the Fund.
An unlicensed investor plans to open a real estate brokerage business. The business will be operated as a sole proprietorship. How does he open the business legally>
The investor must hire a broker to manage the business. Unlicensed investors may own brokerage firms, so long as they hire a broker to manage the business and do not directly engage in acts of brokerage.
Earnest Money in Interest-Bearing Accounts.
The law does not require that escrow accounts bear interest. However, if the account does bear interest, the broker must disclose exactly how that interest will be distributed.
Who is responsible for the management of a condominium complex after all units are sold?
The owners' association
What happens to a respondent, if a claim to the TRF is deemed valid?
The respondent's license will be revoked, and must repay the Fund (plus interest).
When acting as a buyer's agent, what responsibilities should the broker have towards the seller of the property?
To keep the seller informed.
Board regulations require that licensees disclose agency relationships to the principals in a real estate transaction. When is such disclosure required?
When the licensee has substantive discussions about a specific property. - It is too late if you are already showing the property. Instead, you should disclose this information as soon as you have substantive discussions with a prospective customer.
Bob, an associate broker, sold a property. Several weeks after closing, the seller sent him $250 and a thank you note for a job well done. Bob accepted the check since he worked hard and felt the bonus was deserved. Is that a violation?
Yes, Bob has violated the Board regulations. Associate brokers cannot accept payment directly from a client. Like salespersons, an associate broker must ONLY be paid by the principal broker.
If a landlord disclosed personal information to a broker because you mentioned buying a home soon, would they be in violation of the Virginia Landlord and Tenant Act?
Yes. A landlord cannot release confidential information about tenants without written consent. However, there are certain exceptions to the rule. A landlord may release such information if the information was already public, only a summary of rental payments, related to law enforcement or emergency, for military purpose, for tax purpose, for the U.S. Census, requested by subpoena, or if requested by the landlord's property manager, lender, attorney, collection agency, or subsequent buyer of the property.
Agnes prepares a will where she names Mary, a licensee, as the devisee. Later, Agnes asks Mary to sell the property. Does Mary need to disclose that she is licensed?
Yes. The fact that she is licensed must be disclosed to any prospective purchaser. Anytime that a licensee is selling or leasing property in which she has an interest (either by title or by descent), the fact that she is licensed MUST be disclosed to the other party in the transaction.