HAR TREC Video Conference Feb. 2011
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HAR TREC Video Conference Feb. 2011

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HAR TREC Video Conference Feb. 2011 HAR TREC Video Conference Feb. 2011 Presentation Transcript

  • TREC Rules Adopted 11/15/2010 Effective January 1, 2011
  • Broker Responsibilities The amendments to §535.2 articulate a broker’s responsibilities to their sponsored salespersons, the public, and other brokers. Under the new rule:
    • A broker is required to advise a sponsored salesperson of the scope of the salesperson’s authorized activities under the act.
    • If a broker permits a sponsored salesperson to conduct activities beyond the scope explicitly authorized by the broker, those too will be deemed to be authorized acts for which the broker is responsible.
    • A broker is responsible for any property management activity which requires a real estate license that is conducted by the broker’s sponsored salespersons.
    • A broker may designate another licensee to assist in administrating compliance with the Act and Rules, but the broker may not relinquish overall responsibility for the supervision of licensees sponsored by the broker. Any such designation must be in writing.
    • Listings may only be solicited and accepted in the broker’s name.
    • A broker is responsible to ensure that a sponsored salesperson’s advertising complies with §535.154 of this chapter.
    • Except for records destroyed by an “Act of God” such as a natural disaster or fire not intentionally caused by the broker, the following records, at a minimum, shall be maintained for at least four (4) years from the date of closing or termination of the contract in a format that can readily be made available to the commission.>>>>>>>>>>
    • Disclosures;
    • Commission agreements;
    • Work files;
    • Contracts and related addenda;
    • Receipts/disbursements of compensation;
    • Property management contracts;
    • USPAP documents for appraisals;
    • Sponsorship agreements
    • A broker shall maintain on a current basis written policies and procedures to ensure that:
    (1) Each sponsored salesperson is advised of the scope of the salesperson's authorized activities subject to the Act and is competent to conduct such activities; (2) Each sponsored salesperson maintains their license in active status at all times while they are engaging in activities subject to the Act; (3) Any and all compensation paid to a sponsored salesperson for acts or services subject to the Act is paid by, through, or with the written consent of the sponsoring broker;
  • NIB (4) Each sponsored salesperson is provided on a timely basis, prior to the effective date of the change, notice of any change to the Act, Rules, or the promulgated contract forms; (5) In addition to completing statutory minimum continuing education requirements, each sponsored salesperson receives such additional educational instruction the broker may deem necessary to obtain and maintain on a current basis competency in the scope of the sponsored salesperson's practice subject to the Act;
  • The amendments to §535.3 require that an agreement between a broker and sponsored salesperson regarding the compensation a salesperson receives or pays to other licensees must be in writing. Compensation to or Paid by a Salesperson
  • License Required New section 535.4 adds a provision requiring a license for a corporation or limited liability company owned by a broker or salesperson which receives compensation on behalf of the licensee.
  • Corporations and Limited Liability Companies
    • The amendments to §535.53 require:
    • the designated broker of a corporation or LLC to be an officer of the corporation or a manager of a LLC;
    • an entity to provide proof to TREC of the designated individual’s current status as an officer or manager upon any change in the corporation or LLC’s designated individual; and
    • if a corporation or LLC is dissolved with the Secretary of State, the license becomes null and void.
  • General Provisions Regarding Education and Experience Requirements for a License New § 535.54(b) provides that a bachelor’s degree from an accredited college or university counts towards all the related education requirements for a salesperson or broker license.
  • Education and Experience Requirements for a Broker License TREC has statutory authority to waive some or all of the education and experience requirements for a broker’s license for someone who has been licensed within the six years preceding the date the application is filed. New §535.56 limits the period to four years.
  • Examinations The amendments to §535.61(a)(1) and (3) remove the requirements of intent or knowledge – engaging in the listed activities with respect to the TREC exam is considered grounds for disciplinary action regardless of the intent or knowledge of the applicant or licensee.
  • Mailing Address and Other Contact Information New §535.96 requires licensees to notify the commission of the licensee’s email address.
  • Inactive License § 535.121 is amended to clarify that a salesperson’s license goes inactive if a broker notifies the commission in writing that the broker is terminating sponsorship of the salesperson.
  • Inactive Broker Status Under §535.123 an inactive broker is required to notify TREC if the broker wishes to go on inactive status and provide TREC with information including the broker’s telephone number and email address.
  • TREC Real Estate Licensee Counts
  • Initiation of Investigation §535.141(h) is added to include advertising in the laundry list activities that a licensee may not engage in while the person’s license is under suspension and automatic suspension of a license for violating a term or condition of an agreed probated revocation or suspension.
  • When Acquiring or Disposing of Own Property The amendments to §535.144 clarify that a licensee must disclose in writing when selling, buying, trading, or leasing real property in the name of the licensee, licensee’s spouse, or a person related to the licensee.
  • Failure to Properly Account for Money; Commingling The amendments to §535.146 clarify existing requirements that apply to maintenance of trust accounts, including that a broker is ultimately responsible for compliance with the trust account requirements in the Act and Rules; subsection (h) is amended to require a broker to notify all parties in writing when a broker makes a disbursement to which all parties have not expressly agreed to in writing; new subsection (k) clarifies that a broker may deposit and maintain additional amounts in a trust account to cover bank service fees.
  • Splitting Fees with Unlicensed Person §535.147(a) clarifies that a licensee may not share a commission with an unlicensed person except as provided by the Act or Rules; new subsection (b) authorizes an unlicensed person to share in the income earned by a licensee as long as the person does not engage in real estate brokerage activity; new subsection (c) clarifies that a broker or salesperson may not share a commission with an unlicensed corporation or limited liability company created by a licensee for the purpose of collecting a commission or fees on behalf of the licensee.
  • Receiving an Undisclosed Commission or Rebate New §535.148(c) is added to prohibit a licensee from entering into contracts with service providers which prohibit a licensee from entering into or offering similar service on behalf of a competing service provider; new (d) prohibits contingent fee arrangements where the licensee accepts a fee that is contingent upon a party purchasing a contract or services from a specific service provider; new (e) adopts RSC-1, Disclosure of Relationship with Residential Service Company which licensees will be required to use to disclose compensation for services provided to or on behalf of a residential service company.
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  • SPONSORING BROKER’S EXECUTIVE SUMMARY “ To Do” List
  • 1. Advise sales people of their scope of authorized activities in writing. YOU’RE STILL RESPONSIBLE FOR ACTIVITIES BEYOND THAT SCOPE.   2. Review all advertising for all sponsored licensees.   3. Establish in writing who in your office can be a team leader or supervisor YOU’RE STILL RESPONSIBLE FOR ALL ACTIVITIES.
    • 4. Keep the following records for 4 years :
      • All Disclosures (IABS, Seller’s, Disclosure of Agency).
      • All compensation agreements of any kind.
      • All work files.
      • All contracts, exhibits, and addenda.
      • All receipts & disbursements involving compensation.
      • All property management contracts.
      • All appraisal information.
      • All agreements which must be in writing and signed by both between sponsoring broker and sponsored salespeople.
    • 5. A written policy and procedures manual confirming:
    • The four-year record-keeping policy set out above.
    • A procedure to maintain all licenses as current (calendar).
    • All compensation paid through sponsoring broker;
    • No “secret commissions” paid to any party.
    • Fees cannot be shared with unlicensed corp or LLC.
    • A trust account not commingled with operating account.
    • Prohibition against “exclusive use” contracts w/service co.
    • Use of TREC form RSC-1
    • 6. Make sure all licensees disclose in all transactions, when applicable, that the licensee is engaging in a real estate transaction:
      • On his or her own behalf
      • On behalf of a business entity in which the licensee owns more than 10% of that entity
      • On behalf of the licensee’s spouse, parent, or child.
    • 7. Set up a procedure for immediately delivering all mail to sponsored salespersons.
  • The New 20-10 Promulgated 02-14-2011
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  • Thank You! Lloyd Hampton [email_address] Kaplan University School of Professional and Continuing Education