No. 43643 (Amendment): Rule R162-2f. Real Estate Licensing and Practices Rules

(Amendment)

DAR File No.: 43643
Filed: 04/11/2019 10:27:54 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of these proposed amendments are to: 1) clarify the on-time renewal process; 2) add a mandatory three hour continuing education (CE) course with content approved by the Division of Real Estate (Division) for certification as a core CE course; 3) provide a certification process for CE instructors of the mandatory course; and 4) increase the amount of the value of a referral gift or payment to unlicensed individuals by a licensee in a property management transaction. If these proposed rule amendments are approved, completion of the mandatory CE course would be required of each licensee prior to renewal of a real estate license subsequent to the first renewal beginning 01/01/2020. The three hours of CE from the mandatory CE course are not in addition to the currently required 18 hours of CE required for renewal including nine hours of core curriculum. Rather, the three hour mandatory CE course would satisfy three of the nine hours of core curriculum currently required for license renewal.

Summary of the rule or change:

Section R162-2f-204 clarifies that for a licensee to renew on time without incurring a late fee, a licensee must complete all required continuing education credits prior to the 15th day of the month of license expiration; and establishes a mandatory three-hour CE course for all renewing licensees. Section R162-2f-206e requires that an instructor of the mandatory three-hour CE course certify by attending once every two years the instructor development workshop sponsored by the Division. Section R162-2f-401b increases the amount of a referral gift a licensee may pay for an unsolicited referral from $150 to $250, and increases the amount a property management company may pay an unlicensed employee or tenant from $200 to $250.

Statutory or constitutional authorization for this rule:

• Section 61-2f-103
• Section 61-2f-204
• Section 61-2f-206

Anticipated cost or savings to:

the state budget:

The Division has the staff and budget in place to administer these proposed amendments. After conducting a thorough analysis, it was determined that these proposed rule amendments will not result in a fiscal impact that will affect those resources or result in any additional cost or savings to the state budget.

local governments:

Local governments are not required to comply with or enforce the Real Estate Licensing and Practices Rules. After conducting a thorough analysis, it was determined that these proposed rule amendments will not result in a fiscal impact to local governments.

small businesses:

All CE course providers have fewer than 50 employees and are therefore small businesses. CE course providers are not required to offer the proposed mandatory three hour CE course. Any CE provider who determines to offer the course will experience costs to develop and present the course curriculum. These development and presentation costs cannot be estimated and will be offset by additional revenue to the provider from students taking the course. The Division will provide a mandatory three CE course outline which will help to minimize the cost of developing the course curriculum. The proposed mandatory three hour CE course is expected to have a measurable fiscal impact on continuing education instructors who elect to certify as instructors of the mandatory three hour CE course. Under the proposed rule amendments, instructors of the mandatory three hour CE course would be required to certify to teach the course by attending the Instructor Development Workshop (IDW) once every two years. Instructors of other continuing education courses are not required to attend IDW. The cost of the IDW is $75 for each instructor. It is estimated that approximately 20 instructors will incur this cost each year (for a total yearly cost of $1,500). For 2019, the Division will provide an alternative training session for instructors of the mandatory three hour CE course at no cost to attendees as an alternative to attendance at IDW by course instructors.

persons other than small businesses, businesses, or local governmental entities:

These proposed amendments do not create new obligations for persons other than small businesses, businesses, or local government entities, nor does it increase the costs associated with any existing obligation. After conducting a thorough analysis, it was determined that these proposed rule amendments will not result in a fiscal impact to persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

If these proposed rule amendments become effective, all licensees will be required to complete the mandatory three hour CE course prior to renewing their license beginning 01/01/2020. Approximately 12,000 licensees renew their license each year. However, the mandatory three hour CE course hours qualify as three of the nine hours of core CE that all licensees must take in all events, so there will be no increased number of CE hours for any licensee. Therefore, the only cost increase for licensees would be if the cost of the mandatory three hour CE class is more than the cost of other core CE classes, a matter that at present has not been determined by providers of this training. The net cost/benefit to real estate licensees is expected to be approximately zero. Under the proposed rule, instructors of the mandatory three hour CE course would be required to certify to teach the course by attending the Instructor Development Workshop (IDW) once every two years. Instructors of other continuing education courses are not required to attend IDW. The cost of the IDW is $75 for each instructor. It is estimated that approximately 20 instructors will incur this cost each year (for a total yearly cost of $1,500). For 2019, the Division will provide an alternative training session for instructors of the mandatory three hour CE course at no cost to attendees as an alternative to attendance at IDW by course instructors. These costs to instructors who choose to certify to teach the mandatory three hour course are included above under other persons as these instructors are all categorized as small businesses.

Comments by the department head on the fiscal impact the rule may have on businesses:

If the proposed rule amendments become effective, all licensees will be required to complete the mandatory three hour CE course prior to renewing their licensee beginning 01/01/2020. Approximately 12,000 licensees renew their license each year. However, the mandatory three hour CE course hours qualify as three of the nine hours of core CE that all licensees must take in all events, so there will be no increased number of CE hours for any licensee. Therefore, the only cost increase for licensees would be if the cost of the mandatory three hour CE class is more than the cost of other core CE classes, a matter that at present has not been determined by providers of this training. The net cost/benefit to real estate licensees is expected to approximate zero. CE course providers are not required to offer the proposed mandatory three hour CE course. Any CE provider who determines to offer the course will experience costs to develop and present the course curriculum. These development and presentation costs cannot be estimated and will be offset by additional revenue to the provider from students taking the course. The Division will provide a mandatory three CE course outline which will help to minimize the cost of developing the course curriculum. The proposed mandatory three hour CE course is expected to have a measurable fiscal impact on continuing education instructors who elect to certify as instructors of the mandatory three hour CE course. Under the proposed rule, instructors of the mandatory three hour CE course would be required to certify to teach the course by attending the IDW once every two years. Instructors of other continuing education courses are not required to attend IDW. The cost of the IDW is $75 for each instructor. It is estimated that approximately 20 instructors will incur this cost each year (for a total yearly cost of $1,500). For 2019, the Division will provide an alternative training session for instructors of the mandatory three hour CE course at no cost to attendees as an alternative to attendance at IDW by course instructors. There are no non-small businesses in the state of Utah that are engaged in conducting CE training. Therefore, there is no expected cost to non-small businesses as a result of these rule changes.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Commerce
Real Estate
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Justin Barney at the above address, by phone at 801-530-6603, by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/31/2019

This rule may become effective on:

06/07/2019

Authorized by:

Jonathan Stewart, Director

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2019

FY 2020

FY 2021

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$1500

$1500

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$1500

$1500

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$0

$0

Net Fiscal Benefits:

$0

-$1500

-$1500

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non-Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non-Small Businesses

If the proposed rule amendments become effective, all licensees will be required to complete the mandatory three hour CE course prior to renewing their licensee beginning 01/01/2020. Approximately 12,000 licensees renew their license each year. However, the mandatory three hour CE course hours qualify as three of the nine hours of core CE that all licensees must take in all events, so there will be no increased number of CE hours for any licensee. Therefore, the only cost increase for licensees would be if the cost of the mandatory three hour CE class is more than the cost of other core CE classes, a matter that at present has not been determined by providers of this training. The net cost/benefit to real estate licensees is expected to approximate zero.

 

CE course providers are not required to offer the proposed mandatory three hour CE course. Any CE provider who determines to offer the course will experience costs to develop and present the course curriculum. These development and presentation costs cannot be estimated and will be offset by additional revenue to the provider from students taking the course. The Division will provide a mandatory three CE course outline which will help to minimize the cost of developing the course curriculum.

 

The proposed mandatory three hour CE course is expected to have a measurable fiscal impact on continuing education instructors who elect to certify as instructors of the mandatory three hour CE course. Under the proposed rule, instructors of the mandatory three hour CE course would be required to certify to teach the course by attending the Instructor Development Workshop (IDW) once every two years. Instructors of other continuing education courses are not required to attend IDW. The cost of the IDW is $75 for each instructor. It is estimated that approximately 20 instructors will incur this cost each year (for a total yearly cost of $1,500). For 2019, the Division will provide an alternative training session for instructors of the mandatory three hour CE course at no cost to attendees as an alternative to attendance at IDW by course instructors.

 

Francine A. Giani, Executive Director of the Commerce Department has reviewed and approved this fiscal analysis.

 

 

R162. Commerce, Real Estate.

R162-2f. Real Estate Licensing and Practices Rules.

R162-2f-204. License Renewal.

(1) Renewal period and deadlines.

(a) A license issued under these rules is valid for a period of two years from the date of licensure.

[(b) By the 15th day of the month of expiration, an applicant for renewal shall submit to the division proof of having completed all continuing education required under this Subsection (2)(b).

(c) In order to renew on time without incurring a late fee:

(i) an individual who is required to submit a renewal application through the online RELMS system shall complete the online process, including the completion and banking of continuing education credits, by the license expiration date; and

(ii) an individual whose circumstances require a "yes" answer to a disclosure question on the renewal application shall submit a paper renewal:](b) To renew on time without incurring a late fee, an applicant for renewal shall, by the 15th day of the month of expiration, have completed all continuing education credits required under subsection (2)(b) to ensure continuing education providers have time to bank continuing education hours prior to license expiration.

(c) An individual who is required to submit a renewal application through the online RELMS system shall complete the online process, including the completion and banking of continuing education credits, in the licensee's individual password protected RELMS account, by the license expiration date.

(d) An individual whose circumstances require a "yes" answer to a disclosure question on the renewal application shall submit a paper renewal application:

(i)[(A)] by the license expiration date, if that date falls on a day when the division is open for business; or

(ii)[(B)] on the next business day following the license expiration date, if that date falls on a day when the division is closed for business.

(2) Qualification for renewal.

(a) Character and competency.

(i) An individual applying for a renewed license shall evidence that the individual maintains character and competency as required for initial licensure.

(ii) An individual applying for a renewed license may not have:

(A) a felony conviction since the last date of licensure; or

(B) a finding of fraud, misrepresentation, or deceit entered against the applicant, related to activities requiring a real estate license, by a court of competent jurisdiction or a government agency since the last date of licensure, unless the finding was explicitly considered by the division in a previous application.

(b) Continuing education.

(i) To renew at the end of the first renewal cycle, an individual shall complete:

(A) the 12-hour new sales agent course certified by the division; and

(B) an additional six non-duplicative hours of continuing education:

(I) certified by the division as either core or elective; or

(II) acceptable to the division pursuant to this Subsection (2)(b)(ii)(B).

(ii) To renew at the end of a renewal cycle subsequent to the first renewal, an individual shall:

(A) complete 18 non-duplicative hours of continuing education:

(I) certified by the division;

(II) including at least nine non-duplicative hours of core curriculum, three hours of which are for completion of the Mandatory 3-Hour CE Course, a required continuing education course approved by the division; and

(III) taken during the previous license period; or

(B) apply to the division by the 15th day of the month of expiration for a waiver of all or part of the required continuing education hours by virtue of having completed non-certified courses that:

(I) were not required under Subsection R162-2f-206c(1)(a) to be certified; and

(II) meet the continuing education objectives listed in Subsection R162-2f-206c(2)(f).

(iii)(A) Completed continuing education courses will be credited to an individual when the hours are uploaded by the course provider pursuant to Subsection R162-2f-401d(1)[(k)](j).

(B) If a provider fails to upload course completion information within the ten-day period specified in Subsection R162-2f-401d(1)[(k)](j), an individual who attended the course may obtain credit by:

(I) filing a complaint against the provider; and

(II) submitting the course completion certificate to the division.

(c) Principal broker. In addition to meeting the requirements of this Subsection (2)(a) and (b), an individual applying to renew a principal broker license shall certify that:

(i) the business name under which the individual operates is current and in good standing with the Division of Corporations and Commercial Code; and

(ii) the trust account maintained by the principal broker is current and in compliance with Section R162-2f-403.

(3) Renewal and reinstatement procedures.

(a) To renew a license, an applicant shall, prior to the expiration of the license:

(i) complete the online renewal of the license in the applicant's password protected RELMS account; and[submit the forms required by the division, including proof of having completed continuing education pursuant to this Subsection (2)(b); and]

(ii) pay a nonrefundable renewal fee.

(b) To reinstate an expired license, an applicant shall, according to deadlines set forth in Subsections 61-2f-204(2)(b) - (d):

(i) submit all forms required by the division, including proof of having completed continuing education pursuant to Subsection 61-2f-204(2); and

(ii) pay a nonrefundable reinstatement fee.

(4) Transition to online renewal. An individual licensee shall submit an application for renewal through the online RELMS system unless the individual's circumstances require a "yes" answer in response to a disclosure question.

 

R162-2f-206e. Certification of Continuing Education Course Instructor.

(1) An instructor shall certify with the division before teaching a continuing education course.

(2) To certify as an instructor for any continuing education course other than the Mandatory 3-Hour CE course, an applicant shall, within the 30-day period prior to the date on which the applicant proposes to begin instruction, provide the following:

(a) name and contact information of the applicant;

(b) evidence that the applicant meets the character requirements of Subsection R162-2f-201(1) and the competency requirements of Subsection R162-2f-201(2);

(c) evidence of having graduated from high school or achieved an equivalent education;

(d) evidence that the applicant understands the subject matter to be taught through:

(i) a minimum of two years of full-time experience as a real estate licensee;

(ii) college-level education related to the course subject; or

(iii) demonstrated expertise on the subject proposed to be taught;

(e) evidence of ability to teach through:

(i) a minimum of 12 months of full-time teaching experience; or

(ii) part-time teaching experience equivalent to 12 months of full-time teaching experience;

(f) a signed statement agreeing to allow the instructor's courses to be randomly audited on an unannounced basis by the division or its representative;

(g) a signed statement agreeing not to market personal sales products;

(h) any other information the division requires; and

(i) a nonrefundable application fee.

(3) To certify as an instructor of the Mandatory 3-Hour CE course, an applicant shall;

(a) attend the instructor development workshop at least once every two years or, if the division approves an alternative training session, attend the alternative training session at the time and location designated by the division; and

(b) comply with the requirements described in Subsection (2).

(4)(a)[(3)(a)] A continuing education course instructor certification expires 24 months from the date of issuance and must be renewed before the expiration date in order to remain active.

(b) To renew a continuing education course instructor certification, a person shall:

(i) submit all forms required by the division;

(ii)(A) evidence having taught, within the previous renewal period, a minimum of 12 continuing education credit hours; or

(B) submit written explanation outlining:

(I) the reason for not having taught a minimum of 12 continuing education credit hours; and

(II) documentation to the division that the applicant maintains satisfactory expertise in the subject area proposed to be taught; and

(iii) pay a nonrefundable renewal fee.

(c) To reinstate an expired continuing education instructor certification within 30 days following the expiration date, a person shall:

(i) comply with all requirements for a timely renewal; and

(ii) pay a nonrefundable late fee.

(d) To reinstate an expired continuing education instructor certification after 30 days and within six months following the expiration date, a person shall:

(i) comply with all requirements for a timely renewal; and

(ii) pay a non-refundable reinstatement fee.

(e) A certification that is expired for more than six months may not be reinstated. To obtain a certification, a person must apply as a new applicant.

(f) If a deadline specified in this Subsection (4)[(3)] falls on a day when the division is closed for business, the deadline shall be extended to the next business day.

 

R162-2f-401b. Prohibited Conduct As Applicable to All Licensed Individuals.

An individual licensee may not:

(1) engage in any of the practices described in Section 61-2f-401 et seq., whether acting as agent or on the licensee's own account, in a manner that:

(a) fails to conform with accepted standards of the real estate sales, leasing, or management industries;

(b) could jeopardize the public health, safety, or welfare; or

(c) violates any provision of Title 61, Chapter 2f et seq. or the rules of this chapter;

(2) require parties to acknowledge receipt of a final copy of any document prepared by the licensee prior to all parties signing a contract evidencing agreement to the terms thereof;

(3) make a misrepresentation to the division:

(a) in an application for license renewal; or

(b) in an investigation.

(4)(a) propose, prepare, or cause to be prepared a document, agreement, settlement statement, or other device that the licensee knows or should know does not reflect the true terms of the transaction; or

(b) knowingly participate in a transaction in which such a false device is used;

(5) participate in a transaction in which a buyer enters into an agreement that:

(a) is not disclosed to the lender; and

(b) if disclosed, might have a material effect on the terms or the granting of the loan;

(6) use or propose the use of a double contract;

(7) place a sign on real property without the written consent of the property owner;

(8) take a net listing;

(9) sell listed properties other than through the listing broker;

(10) subject a principal to paying a double commission without the principal's informed consent;

(11) enter or attempt to enter into a concurrent agency representation when the licensee knows or should know that the principal has an existing agency representation agreement with another licensee;

(12) pay a finder's fee or give any valuable consideration to an unlicensed person or entity for referring a prospect, except that:

(a) a licensee may give a gift valued at $250[$150] or less to an individual in appreciation for an unsolicited referral of a prospect that results in a real estate transaction; and

(b) as to a property management transaction, a licensee may compensate an unlicensed employee or previous or current tenant up to $250[$200] per lease for assistance in retaining an existing tenant or securing a new tenant;

(13) accept a referral fee from:

(a) a lender; or

(b) a mortgage broker;

(14) act as a real estate agent or broker in the same transaction in which the licensee also acts as a:

(a) mortgage loan originator, associate lending manager, or principal lending manager;

(b) appraiser or appraiser trainee;

(c) escrow agent; or

(d) provider of title services;

(15) act or attempt to act as a limited agent in any transaction in which:

(a) the licensee is a principal in the transaction; or

(b) any entity in which the licensee is an officer, director, partner, member, manager, employee, or stockholder is a principal in the transaction;

(16) make a counteroffer by striking out, whiting out, substituting new language, or otherwise altering:

(a) the boilerplate provisions of the Real Estate Purchase Contract; or

(b) language that has been inserted to complete the blanks of the Real Estate Purchase Contract;

(17) advertise or offer to sell or lease property without the written consent of:

(a) the owner(s) of the property; and

(b) if the property is currently listed, the listing broker;

(18) advertise or offer to sell or lease property at a lower price than that listed without the written consent of the seller or lessor;

(19) represent on any form or contract that the individual is holding client funds without actually receiving funds and securing them pursuant to Subsection R162-2f-401a(24);

(20) when acting as a limited agent, disclose any information given to the agent by either principal that would likely weaken that party's bargaining position if it were known, unless the licensee has permission from the principal to disclose the information;

(21) disclose, or make any use of, a short sale demand letter outside of the purchase transaction for which it is issued;

(22) in a short sale, have the seller sign a document allowing the licensee to lien the property; or

(23) charge any fee that represents the difference between:

(a) the total concessions authorized by a seller and the actual amount of the buyer's closing costs; or

(b) in a short sale, the sale price approved by the lender and the total amount required to clear encumbrances on title and close the transaction.

 

KEY: real estate business, operational requirements, trust account records, notification requirements

Date of Enactment or Last Substantive Amendment: [January 23,] 2019

Notice of Continuation: August 12, 2015

Authorizing, and Implemented or Interpreted Law: 61-2f-103(1); 61-2f-105; 61-2f-203(1)(e); 61-2f-206(3); 61-2f-206(4)(a); 61-2f-306; 61-2f-307

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