Real Estate Principals and Practice

Virginia Law

• Matthew Rathbun, Vice PresidentABR, ABRM, AHWD, BPOR, CDPE, CRB, ePRO, GREEN, GRI, SFR, SRS, SRES 

EarthCraft and Eco-Broker Certified

TERMS AND CONCEPTS• Active Status

• Actively Engaged

• Applicant

• Principal Broker

• Associate Broker

• Supervising / Manager Broker

• Board (Virginia Real Estate Board)

• Inactive Status

• Licensee

TERMS AND CONCEPTS• Sole Proprietor

• Non-Broker• Broker

• Concurrent Broker’s License

• License Required• § 54.1-2101. Real estate salesperson defined.

• For the purposes of this chapter, "real estate salesperson" means any person, or business entity of not more than two persons unless related by blood or marriage, who for compensation or valuable consideration is employed either directly or indirectly by, or affiliated as an independent contractor with, a real estate broker, to sell or offer to sell, or to buy or offer to buy, or to negotiate the purchase, sale or exchange of real estate, or to lease, rent or offer for rent any real estate, or to negotiate leases thereof, or of the improvements thereon.

THE REAL ESTATE BOARD

• Board Members

• 7 Licensees with at least 5 years of experience• 2 Citizen Members (non-licensed)• Total of 9 members

• Authority

• Consumer Protection• License oversight• Limit of enforcement

• REALTOR® Association (Voluntary)

http://www.dpor.virginia.gov

QUALIFICATIONS FOR LICENSE

• 60 Hour Pre-licensing Course

• For Broker’s License – Must be “Actively Engaged for 36 of the past 48 months”

• Brokers must take 180 hour course

• Must be 18 Years of Age

QUALIFICATIONS FOR LICENSURE

• Cannot have Fair Housing Violations

• Must be able to read and write English

• No Misdemeanor convictions within past 5 years (or moral turpitude)

• No Felony convictions

• High School Graduate or GED

RE-LICENSING• Post Licensing Education

• 30 Hours in first 12 months

• Continuing Education

• 16 Hours in following and each other 2 year period

• Broker Education

• 16 Hours renewal and 8 additional Management

GETTING LICENSED• Active vs Inactive Status

• License

• Property of the Virginia Real Estate Board

• Issued to your broker• Terminated at discretion of the Broker

• Inactive

• Application must be made within 12 months of course completion

INACTIVE STATUS

• Inactive or Expired Licensees may NOT perform any real estate activities

• A practitioner may be “Inactive” for no longer than 3 years and must complete educational requirements.

RECIPROCAL LICENSES

• Non-Residents must apply for a Irrevocable Consent to Suits and Services

• Agreement to submit to Virginia sanctions and lawsuits

• Reciprocal Licensee must take Virginia portion of the PSI exam within fist year.

BROKERAGE LICENSE

• All Offices must be managed by a Broker

• Broker may oversee multiple offices

• Brokers further than 50 miles away from the Firm must submit annual reports showing supervision efforts.

• Agent Licenses must be placed in a Conspicuous Location in the office

• Branch Offices may keep a list of branch agents.

REPORTING CHANGES• License Changes must be reported:

• 30 Days• Personal Address Change• Change in Name• Bankruptcy• Criminal Convictions

• 10 Days• Termination of Firm Association• Voluntary Inactivation

DEATH OF A BROKER

• Agents who are working for a Broker, that suffers death:

• May not create any new business• Must transfer license to a new

company within 180 days

DISCLOSURES• Residential Property Disclosures

• Agency Disclosure

• Disclosure of Brokerage Relationships

• Disclosure of Personal Interest

• Disclosure of Compensation

RECORDS KEEPING• Brokers must retain all records

• All Agency Disclosures and Transaction Records must be maintained for 3 years

• Brokers must be able to account for all monies at all times.

• Records must be delivered to DPOR within 10 days of request.

Unworthiness and Incompetence

• Obtain license by false representation

• Holding more than one license as a broker or salesperson

• Sitting in a licensing exam for another

• Failure to report a guilty plead or conviction within 30 days

Unworthiness and Incompetence

• Getting a license suspended in another jurisdiction

• Violating Fair Housing

• Failure to safeguard the interests of the public

• Engaging in improper, fraudulent or dishonest conduct

EscrowLaw

Review

Virginia l35-20-180Virginia Administrative Code

Maintenance of Escrow AccountsBroker Responsible | Account Marked Escrow | Federally Insured

Upon the ratification of a contract, earnest money deposits and down payments received by the principal broker or supervising broker or his associates must be placed in an escrow account by the end of the fifth

business banking day following ratification, unless otherwise agreed to in writing by the parties to the transaction, and shall remain in that account until the transaction has been consummated or terminated.

18VAC135-20-160 B-1

Disbursement: Mutual Consent

Disbursement: Broker Discretion

• Letter of Notice

• Hand Delivered

• Certified Mail

• 30 Day Notice

• If within 90 days, notice can be by electronic notice, as outlined in the contract

Disbursement: Court System

Disbursement: Interpleader• Interpleader - Third party surrendering a

dispute to the court on behalf of two other parties.

• Change in escrow cap for hearing in General District Court versus Circuit Court

Interest versus Non-Interest

Improper Handling• Accepting any instrument not immediately negotiable

• Commingling the funds

• Failure to deposit money in account designated as such

• Failure to have sufficient funds in escrow • Failing, as principal broker, to report to the board within three business days instances where the principal broker reasonably believes the improper conduct of a licensee has caused noncompliance with this section.

Releaseof

Escrow

VS.Release

ofContract

Abandoned Funds

If funds are not claimed after five years, they maybe surrendered to the Treasury Department

Disbursement: Foreclosure Release

•Automatic Release?

VREB COMPLAINTS• DPOR’s Investigator

• How to File a Complaint

• Investigation Cycle

• Informal Fact Finding Conference

• Appeal

ADVERTISING

Virginia Required Internet Rules (18VAC135-20-190)

• Agents name and licensed status must be disclosed on all solicitations or business related pages and e-mails.

• Brokerage Name, address and phone number must appear on all webpages in the first viewable section.

• Both must disclose all the locations in which they hold a license.

INTERNET RULES I• All internet advertisement is under the direct

supervision of the Broker.

• Instant messages are exempt so long as previous disclosures have been made.

• Chat Rooms – Disclosure must be made in ever instant that business services, recommendations or solicitations is to be made.

INTERNET RULES II

• Banner Ads – Disclosure link must be disclosed on the banner itself, can be a hyper-link.

• Cannot show listings “For Sale” if they are under contract or sold.

• NAR Rule – “REALTOR®” cannot be used with any adjectives

ADVERTISING• Conventional Marketing

• Must Disclose your License Name, Firm’s name and Address.

• Actual Status of the Property must be disclosed

• For Sale – Actively Available for buyers• Pending / Under Contract – Ratified Contract• Sold – Deed has transferred owners

• Fair Housing

Conflict of Interest

• Receiving compensation from a broker that isn’t your own, without prior written permission

• Acting as a for more than one principle (Dual Agency) without the prior written consent of the parties

• Acting as a Standard Agent for any client outside of the licensee’s brokerage.

Improper Brokerage Commission

• Offering to pay commission or other thing of value to anyone other than a licensee through their Broker

• Accepting commission in any form other than through your broker

• Not disclosing any and all compensation given to your client

• Net Listings

• Accepting fees for services on behalf of your client

Delivery of Instruments

• All documents must be delivered to clients in a timely manner

• Must deliver any and all changes in a timely manner

• Accounting of all monies must be delivered to the clients at the end of the transaction

• Clients have the right to any and all related documents they request

Amnesty for Brokers

A  real  estate  broker  who  discovers,  by  self  audit  or  audit  commissioned  by  the  broker,  that  a  member  of  the  firm  has  violated  a  law  or  regula:on  will  no  longer  be  penalized  if  he  

sa:sfies  certain  requirements,  including  no:fying  VREB  within  30  days,  submiDng  a  wriEen  plan  for  fixing  the  issue,  and  possibly  entering  into  a  voluntary  compliance  program  (which  must  be  completed  within  90  days  of  submiDng  the  plan)

18 VAC 135-20-160 Broker Oversight

Every place of business must have a Supervising Broker.

Responsibility may ONLY be given to another licensed broker.

Must oversee and approve all contracts and agency agreements

Must provide training AND policies on:Escrow HandlingFair HousingAdvertising

18 VAC 135-20-160 Broker Oversight

Negotiating and drafting of contracts, leases and brokerage agreements; Use of unlicensed individuals;

Agency relationships;

Distribution of information on new or changed statutory or regulatory requirements;

Disclosure of matters relating to the condition of the property.

Such other matters as necessary to assure the competence of licensees to comply with this chapter

18 VAC 135-20-160 Broker Oversight

Supervising broker must undertake reasonable steps to ensure compliance by all licensees assigned to the branch office;

Supervising broker located more than 50 miles from the branch office must certify in writing on a quarterly basis their supervision efforts. Records to be kept for 3 years.

Real Estate Principals and Practice

Transaction Recovery Fund

TRF

¡ Offset Compensation for consumers ( business or family exception) suffering financial hardship as a result of misdeeds by an agent.

¡ Fund must maintain a minimum of $400,000 and all licenses can be assessed $20 per year to maintain the fund’s minimum.

TRF II

¡ The maximum amount of the fund is $2 million.

¡ Interest earned on the account is to go toward administrative costs and research / education.

¡ License found in violation of a law that causes funds to be used will be revoked; and only reinstated once repaid and penalties paid.

Now! Go Home and Study!