House1178

STATE OF OKLAHOMA

1st Session of the 47th Legislature (1999)

HOUSE BILL NO.1178

INDEX

section 1: Definitions

section 2: Brokerage Options Under New Law

section 3: Duties of Transaction Broker

section 4: Duties of Single-Party Broker

section 5: Relationship Options when assisting one party & both parties

section 6: Written Disclosures Required by New Law

section 7: What Must be held as Confidential under New Law

section 8: Duties that survive the brokerage relationship

section 9: Payment of fees alone does not establish relationship

section 10: Abrogation of common law principle

section 11: Use of word "Agent" allowed in trade name

section 12: Party does not have vicarious liability for actions of transaction broker

section 13: Principal may employ broker-associates, sales associates, and provisional sales associates

section 14: List of actions that can constitute grounds for revocation or suspension of license

section 15: Effective date of new law: November 1, 2000

AS INTRODUCED BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: (To be effective 1 NOV 2000)

SECTION 1

Unless the context clearly indicates otherwise, as used in Sections 1 through 12 of this act:

1. "Broker" means a real estate broker as defined in Section 858-102 of Title 59 of the Oklahoma Statutes, and means, further, except where the context refers only to a real estate broker, an associated broker associate, sales associate, or provisional sales associate authorized by a real estate broker to provide brokerage services;

2. "Party" means a person who is a seller, buyer, landlord, or tenant or a person who is involved in an option or exchange;

3. "Single-party broker" means a broker who has entered into a written brokerage agreement with a party in a transaction to provide services for the benefit of that party;

4. "Transaction" means those real estate activities enumerated in Section 858-102 of Title 59 of the Oklahoma Statutes which are performed by a broker; and

5. "Transaction broker" means a broker who provides services by assisting a party in a transaction without being an advocate for the benefit of that party.

SECTION 2.

A broker may enter into a written brokerage agreement to provide services as either a single-party broker or a transaction broker. If a broker does not enter into a written brokerage agreement with a party, the broker shall perform services only as a transaction broker.

SECTION 3.

A. A transaction broker shall have the following duties and responsibilities:

1. To perform the terms of the written brokerage agreement, if applicable;

2. To treat all parties with honesty;

3. To comply with all requirements of the Oklahoma Real Estate License Code and all applicable statutes and rules; and

4. To exercise reasonable skill and care including:

a. timely presentation of all written offers and counteroffers,

b. keeping the party for whom the transaction broker is providing services fully informed regarding the transaction,

c. timely accounting for all money and property received by the broker, and

d. keeping confidential information received from a party confidential as required by Section 7 of this act.

e. Disclosing information pertaining to the property as required by the Residential Property Condition Disclosure Law.

SECTION 4.

A. A broker shall enter into a written brokerage agreement prior to providing services as a single-party broker.

B. The single-party broker shall have the following duties and responsibilities:

1. To perform the terms of the brokerage agreement;

2. To treat all parties with honesty;

3. To comply with all requirements of the Oklahoma Real Estate License Code and all applicable statutes and rules; and

4. To exercise reasonable skill and care including:

a. timely presentation of all written offers and counteroffers,

b. keeping the party for whom the single-party broker is performing services fully informed regarding the transaction,

c. timely accounting for all money and property received by the broker,

d. keeping confidential information received from a party confidential as required by Section 7 of this act,

e. performing all brokerage activities for the benefit of the party for whom the single-party broker is performing services unless prohibited by law,

f. disclosing to the party for whom the single-party broker is performing services adverse material facts concerning the transaction actually known by the broker unless disclosure of such information is prohibited by law, and obeying the specific directions of the party for whom the single-party broker is performing services that are not contrary to applicable statutes and rules or contrary to the terms of a contract between the parties to the transaction.

C. In the event a broker who is a single-party broker for a buyer or a tenant receives a fee or compensation based on a selling price or lease cost, such receipt does not constitute a breach of duty or obligation to the buyer or tenant if fully disclosed to the buyer or tenant in the written brokerage agreement..

SECTION 5.

A. When assisting one party to a transaction, a broker shall enter into one of the following relationships:

1. As a transaction broker without a written brokerage agreement;

2. As a transaction broker through a written brokerage agreement; or

3. As a single-party broker through a written brokerage agreement.

B. When assisting both parties to a transaction, a broker may enter into the following relationships:

1. As a transaction broker for both parties;

2. As a single-party broker for one party and as a transaction broker for the other party. In this event, a broker shall disclose in writing to the party for whom the broker is providing services as a transaction broker, the difference between a transaction broker and a single-party broker, and that the broker is a single-party broker for the other party and performs services for the benefit of the other party in the transaction; or

3. As a transaction broker where the broker has previously entered into a written brokerage agreement to provide services as a single-party broker for both parties. In this event, the broker shall obtain the written consent of each party before the broker begins to perform services as a transaction broker. The written consent may be included in the written brokerage agreement or in a separate document and shall contain the following information:

a. a description of the transaction or type of transactions that might occur in which the single-party broker seeks to obtain consent to become a transaction broker,

b. a statement that in such transactions the single-party broker would perform services for more than one party whose interest could be different or even adverse and that such transactions require the broker to seek the consent of each party to such transactions to permit a change in the brokerage relationship,

c. a statement that by giving consent in such transactions:

(1) the party will allow the broker to change the broker's relationship from performing services as a single-party broker to performing services as a transaction broker,

(2) the broker will no longer provide services for the benefit of the party, but may only assist in such transactions,

(3) the broker will not be obligated to obey the specific directions of the party but will assist all parties to such transactions

(4) the party will not be vicariously liable for the acts of the broker and associated associates, and

(5) the broker's obligation to keep confidential information received from the party confidential is not affected,

d. a statement that the party is not required to consent to the change in the brokerage relationships in such transactions and may seek independent advice,

e. a statement that the consent of the party to change the brokerage relationship in such transactions has been given voluntarily and that the written consent has been read and understood by the party, and

g. a statement that the party authorizes the broker to change the brokerage relationship in such transactions and to assist all parties to such transactions as a transaction broker.

C. 1. If neither party gives consent as described in paragraph 3 of subsection B of this section, the broker shall withdraw from providing services to all but one party to a transaction. If the broker refers the party for whom the broker is no longer providing services to another broker, the broker shall not receive a fee for referring the party unless written disclosure is made to all parties.

2. If only one party gives consent as described in paragraph 3 of subsection B of this section, the broker may act as a transaction broker for the consenting party and continue to act as a single-party broker for the nonconsenting party. In this event, the broker shall disclose in writing to the consenting party that the broker remains a single-party broker for the nonconsenting party and performs services for the benefit of the nonconsenting party.

D. A broker may cooperate with other brokers in a transaction. Under Sections 1 through 13 of this act, a broker shall not be an agent, subagent, or dual agent and an offer of subagency shall not be made to other brokers.

SECTION 6.

A. Prior to the signing by a party of a contract to purchase, lease, option or exchange real estate, a broker who is performing services as a transaction broker without a written brokerage agreement shall describe and disclose in writing the broker's role to the party.

B. Prior to entering into a written brokerage agreement as either a transaction broker or single-party broker, the broker shall describe and disclose in writing the broker's relationship to the party.

C. A transaction broker shall disclose to the party for whom the transaction broker is providing services that the party is not vicariously liable for the acts or omissions of the transaction broker.

D. A single-party broker shall disclose to the party for whom the single-party broker is providing services that the party may be vicariously liable for the acts or omissions of a single-party broker.

E. The disclosures required by this section and the consent required by Section 5 of this act must be confirmed by each party in writing in a separate provision, incorporated in or attached to the contract to purchase, lease, option, or exchange real estate. In those cases where a broker is involved in a transaction but does not prepare the contract to purchase, lease, option, or exchange real estate, compliance with the disclosure requirements must be documented by the broker.

SECTION 7.

A. The following information shall be considered confidential and shall not be disclosed by a broker without the consent of the party disclosing the information unless consent to disclosure is granted by the party disclosing the information, the disclosure is required by law, or the information is made public or becomes public as the result of actions from a source other than the broker:

1. That a party is willing to pay more or accept less than what is being offered;

2. That a party is willing to agree to financing terms that are different from those offered; and

3. The motivating factors of the party purchasing, selling, leasing, optioning, or exchanging the property.

SECTION 8.

Except as may be provided in a written brokerage agreement between the broker and a party to a transaction, the broker owes no further duties or responsibilities to the party after termination, expiration, or completion of performance of the transaction, except:

1. To account for all monies and property relating to the transaction; and

2. To keep confidential all confidential information received by the broker during the broker's relationship with a party.

SECTION 9.

The payment or promise of payment or compensation by a party to a broker does not determine what relationship, if any, has been established between the broker and a party to a transaction.

SECTION 10.

The duties and responsibilities of a broker specified in Sections 1 through 13 of this act shall replace and abrogate the fiduciary or other duties of a broker to a party based on common law principles of agency. The remedies at law and equity supplement the provisions of Sections 1 through 13 of this act.

SECTION 11.

A real estate broker is permitted under the provisions of Sections 1 through 11 of this act to use the word "agent" in a trade name.

SECTION 12.

A party to a real estate transaction shall not be vicariously liable for the acts or omissions of a real estate licensee who is providing services as a transaction broker under Sections 1 through 13 of this act.

SECTION 13.

Each broker associate, sales associate, and provisional sales associate shall be associated with a real estate broker. A real estate broker may authorize associates to enter into written agreements to provide brokerage services in the name of the real estate broker.

SECTION 14.

Section 858-312, is amended to read as follows:

Section 858-312. The Oklahoma Real Estate Commission may, upon its own motion, and shall, upon written complaint filed by any person, investigate the business transactions of any real estate licensee, and may, upon showing good cause, impose sanctions as provided for in Section 858-208 of this title. Cause shall be established upon the showing that any licensee has performed, is performing, has attempted to perform, or is attempting to perform any of the following acts:

1. Making a materially false or fraudulent statement in an application for a license

2. Making substantial misrepresentations or false promises in the conduct of business, or through real estate licensees, or advertising, which are intended to influence, persuade, or induce others;

3. Failing to comply with the requirements of Sections 1 through 13 of this act;

4. Accepting a commission or other valuable consideration as a real estate associate for the performance of any acts as an associate, except from the real estate broker with whom the associate is associated;

5. Representing or attempting to represent a real estate broker other than the broker with whom the associate is associated without the express knowledge and consent of the broker with whom the associate is associated;

6. Failing, within a reasonable time, to account for or to remit any monies, documents, or other property coming into possession of the licensee which belong to others;

7. Paying a commission or valuable consideration to any person for acts or services performed in violation of the Oklahoma Real Estate License Code;

8. Any other conduct which constitutes untrustworthy, improper, fraudulent, or dishonest dealings;

9. Disregarding or violating any provision of The Oklahoma Real Estate License Code or rules promulgated by the Commission;

10. Guaranteeing or having authorized or permitted any real estate licensee to guarantee future profits which may result from the resale of real estate;

11. Advertising or offering for sale, rent or lease any real estate, or placing a sign on any real estate offering it for sale, rent or lease without the consent of the owner or the owner's authorized representative;

12. Soliciting, selling, or offering for sale real estate by offering "free lots", conducting lotteries or contests, or offering prizes for the purpose of influencing a purchaser or prospective purchaser of real estate;

13. Accepting employment or compensation for appraising real estate contingent upon the reporting of a predetermined value or issuing any appraisal report on real estate in which the licensee has an interest unless the licensee's interest is disclosed in the report. All appraisals shall be in compliance with the Oklahoma real estate appraisal law, and the person performing the appraisal or report shall disclose to the employer whether the person performing the appraisal or report is licensed or certified by the Oklahoma Real Estate Appraisal Board;

14. Paying a commission or any other valuable consideration to any person for performing the services of a real estate licensee as defined in The Oklahoma Real Estate License Code who has not first secured a real estate license pursuant to The Oklahoma Real Estate License Code;

15. Unworthiness to act as a real estate licensee, whether of the same or of a different character as specified in this section, or because the real estate licensee has been convicted of a crime involving moral turpitude;

16. Commingling with the licensee's own money or property the money or property of others which is received and held by the licensee, unless the money or property of others is received by the licensee and held in an escrow account that contains only money or property of others;

17. Conviction in a court of competent jurisdiction of having violated any provision of the federal fair housing laws, 42 U.S.C. Section 3601 et seq.;

18. Failure by a real estate broker after the receipt of a commission to render an accounting to and pay to a real estate licensee the licensee's earned share of the commission received;

19. Conviction in a court of competent jurisdiction in this or any other state of the crime of forgery, embezzlement, obtaining money under false pretenses, extortion, conspiracy to defraud, fraud, or any similar offense or offenses, or pleading guilty or nolo contendere to any such offense or offenses;

20. Advertising to buy, sell, rent, or exchange any real estate without disclosing that the licensee is a real estate licensee;

21. Paying any part of a fee, commission, or other valuable consideration received by a real estate licensee to any person not licensed;

22. Offering, loaning, paying, or making to appear to have been paid, a down payment or earnest money deposit for a purchaser or seller in connection with a real estate transaction; and

23. Violation of the Residential Property Condition Disclosure Act.

SECTION 15. This Act shall become effective November 1, 2000.

Word Help for the

Transaction Brokerage

The definitions given here are not intended to be legal definitions or even formal dictionary definitions. Instead the words are defined in an "easy way" to understand their meaning in relationship to their use in the Transaction Brokerage Act. For exact meanings consult a legal dictionary.

agent: Someone who acts on behalf of another under the common law of agency.

dual agent: Someone who acts as an agent for two parties in a transaction; usually buyer and seller. Usually the parties have adverse interests. For example, the buyer wants the lowest price and best terms and the seller wants the highest price and best terms. A broker representing a husband and wife buying as house is not a dual agent. The two parties should be on different sides of the deal.

imputed: Imputed means attributed to. Imputed knowledge is knowledge attributed to someone even if they do not know it. This can happen when an agent is told something by a third party. When the agent as been told something, it is said that the principal also has knowledge of that information -- even if the agent never tells the principal. It is sometimes said that "disclosing the agent is disclosing the principal."

moral turpitude: Moral baseness; moral badness. Being morally bad or immoral. This is sometimes mentioned in the "morals clause" of a contract.

subagent: This is an agent who works for another agent, usually to help that agent do work for the principal. For example, the broker at ABC, Realty used an agent from XYZ, Realty to bring a buyer for one of his listings. This use of subagents needs the approval of the principal.

vicariously liable: Liable through the actions of another. When the seller's agent lied about the condition of the house, the seller became liable for his agent's action -- even though the seller was honest and did not know the agent was lying. This was because the seller was vicariously liable. It is sometimes said that some people read biographies to live other people's lives vicariously.

Brokerage Relationships Act Tapes

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