74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
Senate Bill 482
Sponsored by COMMITTEE ON JUDICIARY (at the request of Oregon
Association of Realtors)
CHAPTER ................
AN ACT
Relating to real estate broker compensation; amending ORS
696.026, 696.241, 696.290, 696.301, 696.505, 696.520, 696.582
and 696.840.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 696.582 is amended to read:
696.582. (1) An escrow agent shall hold, as provided in
subsection (3) of this section, the amount of money or other
property agreed to as { - a commission - }
{ + compensation + } in a written real estate broker's or
principal real estate broker's
{ - commission - } { + compensation + } agreement, if the
escrow agent has at the office at which the escrow is being
closed, before the date of closing:
(a) A written notice of { - demand - }
{ + compensation + }, signed by the real estate broker or
principal real estate broker who is authorized under rules
adopted by the Real Estate Commissioner to enter into the
{ - commission - } { + compensation + } agreement and sign the
written notice of { - demand - } { + compensation + }, in
substantially the form set out in subsection (2) of this section;
and
(b) The written closing instructions of the principals which do
not honor the amount and terms of payment in the notice of
{ - demand - } { + compensation + }.
(2) The notice of { - demand - } { + compensation + }
required by subsection (1) of this section may not be
incorporated into any document of agreement between the
principals or between the broker and a principal, and shall be in
substantially the following form:
_________________________________________________________________
Notice of { - Demand for - }
Real Estate { - Commission - } { + Compensation + }
To: ________
(Name of Escrow Company)
Re: ________
(Names of Principals to
Transaction)
Your Escrow Number: ____
Enrolled Senate Bill 482 (SB 482-A) Page 1
The undersigned real estate broker or principal real estate
broker states that such broker has a valid written
{ - commission - } { + compensation + } agreement with ____
(Name of Principal), one of the principals to the transaction
referred to above, and that such principal is obligated to pay
the broker the { - commission - } { + compensation + } on
account of that transaction. The { - commission - }
{ + compensation + } amount is $___ and is to be paid on the
following terms: ______. { - Demand - } { + Request + } is
hereby made that the
{ - commission - } { + compensation + } be paid in that
amount and on those terms, out of escrow and as a part of your
closing of that transaction.
____________
(Name and Signature of Real Estate Broker
or Principal Real Estate Broker)
_________________________________________________________________
(3) An escrow agent in a transaction described in subsection
(1) of this section may only disburse the moneys or other
property to:
(a) The broker and principal, based upon a written agreement
between those parties and directed to the escrow agent as
disbursement instructions;
(b) Any persons, as directed by order of a court of competent
jurisdiction; or
(c) The court, upon filing by the escrow agent of an
interpleader action for the moneys or property.
(4) { - At the time of filing a notice of demand - } { + If
the filing of a notice of compensation + } with an escrow agent
under subsection (1) of this section { + is made more than 10
days prior to the scheduled closing date + }, the real estate
broker or principal real estate broker filing the notice shall
deliver a copy of the notice to the principal identified in the
notice. { + If the notice is filed within 10 days of the
scheduled closing date, a copy of the notice shall be provided by
the escrow agent to the principal identified in the notice at the
time of closing. + }
SECTION 2. ORS 696.505 is amended to read:
696.505. As used in ORS 696.505 to 696.590, unless the context
requires otherwise:
(1) 'Collection escrow' means an escrow in which the escrow
agent:
(a) Receives:
(A) Installment payments;
(B) Instruments evidencing or securing an obligation; or
(C) Instruments discharging the security interest; and
(b) Disburses the payments or delivers the instruments upon
specified conditions pursuant to the written instructions of an
obligor and obligee.
(2) 'Commissioner' means the Real Estate Commissioner. { +
(3) 'Compensation' means any fee, commission, salary, money or
valuable consideration for services rendered or to be rendered as
well as the promise thereof and whether contingent or
otherwise. + }
{ - (3) - } { + (4) + } 'Escrow' means any transaction
wherein any written instrument, money, evidence of title to real
or personal property or other thing of value is delivered, for
the purpose of paying an obligation or effecting the sale,
transfer, encumbrance or lease of real or personal property, to a
Enrolled Senate Bill 482 (SB 482-A) Page 2
person not otherwise having any right, title or interest therein,
to be held by that person as a neutral third party until the
happening of a specified event or the performance of a prescribed
condition, when it is then to be delivered by the neutral third
party to a grantee, grantor, promisee, promisor, obligee,
obligor, bailee, bailor or any agent or employee of any of them
pursuant to the written instructions of the principals to the
transaction.
{ - (4) - } { + (5) + } 'Escrow agent' means any person who
engages in the business of receiving escrows for deposit or
delivery and who receives or is promised any fee, commission,
salary or other valuable consideration, whether contingent or
otherwise, for or in anticipation of performance.
{ - (5) - } { + (6) + } 'Principal' means:
(a) The buyer and seller, lessor and lessee and the exchanging
parties in an escrow transaction involving the sale, lease,
lease-option or exchange of real property or personal property;
and
(b) The borrower in an escrow transaction involving the
refinancing of real or personal property, including but not
limited to the refinancing of an obligation secured by a land
sale contract requiring a deed to be delivered as part of such
refinancing.
{ - (6) - } { + (7) + } 'Real estate closing escrow' means
an escrow where the escrow fee is paid in whole or in part by the
principals to a real estate transaction and wherein the unpaid
purchase price is delivered to an escrow agent for disbursal
pursuant to the written instructions of the principals to the
transaction simultaneously on the transfer of specified title to
the real property.
{ - (7) - } { + (8) + } 'Subservicer' means an escrow
agent, a financial institution or a trust company, as those terms
are defined in ORS 706.008, or a collection agency registered
under ORS 697.015 when providing, pursuant to written
instructions, a portion of the escrow services for an escrow to
an escrow agent, or a person in the business of receiving escrows
under the laws of another state, that would otherwise provide the
escrow services directly to the principals.
SECTION 3. ORS 696.026 is amended to read:
696.026. (1) A real estate broker or principal real estate
broker may conduct professional real estate activity under the
broker's name, a registered business name or a name prescribed by
agency rule. The business name under which a broker conducts
professional real estate activity has no license standing
independent of the broker.
(2) The agency by rule shall adopt a registration system for
business names. The system shall allow the registration of any
branch office of either a sole practitioner or a principal real
estate broker.
(3) A real estate broker or principal real estate broker
operating under a business name registered by the broker need not
be an owner or officer of any organization otherwise lawfully
entitled to use the registered business name or have an ownership
interest in the registered name. However, all professional real
estate activity conducted by or on behalf of the broker must be
conducted under the business name registered by the broker.
(4) A real estate broker or principal real estate broker may
register two or more business names if the business names are for
affiliated or subsidiary business organizations. If a real estate
broker or principal real estate broker registers the business
Enrolled Senate Bill 482 (SB 482-A) Page 3
names for two or more affiliated or subsidiary business
organizations, the broker may conduct professional real estate
activity separately under each business name. A real estate
broker or principal real estate broker must supervise and control
the professional real estate activity conducted under the
broker's name or registered business name.
(5) A real estate broker employed, engaged or supervised by a
principal real estate broker for required training and
supervision by the principal real estate broker may have an
ownership interest in any business through which the principal
broker conducts professional real estate activity, but may not
control or supervise the professional real estate activity of the
principal broker and may not interfere with or be responsible for
the training and supervision of any other broker.
(6) A nonlicensed person may have an ownership interest in any
business through which a real estate broker or principal real
estate broker engages in professional real estate activity, but
may not control or supervise the professional real estate
activity of any real estate broker or principal real estate
broker licensed to control or supervise the professional real
estate activity of such business.
(7) Two or more real estate brokers operating under the same
registered business name who do not exercise any administrative
or supervisory control over one another are solely responsible
for their own professional real estate activity.
(8) Notwithstanding any other provision of ORS 696.010 to
696.495, 696.600 to 696.785, 696.800 to 696.870, 696.990 and
696.995, a broker associated with a principal broker may create a
corporation, limited liability company, limited liability
partnership or any other lawfully constituted business
organization for the purpose of receiving { - commission
payments - } { + compensation + }from the principal broker. A
business organization created under this subsection may not be
licensed under ORS 696.022 or conduct in its own name
professional real estate activity requiring a real estate
license.
SECTION 4. ORS 696.241 is amended to read:
696.241. (1) Each sole practitioner and each principal real
estate broker shall maintain in this state one or more separate
bank accounts that shall be designated a Clients' Trust Account
in which all trust funds received or handled by the sole
practitioner or broker and the real estate licensees subject to
the supervision of the broker on behalf of any other person shall
be deposited unless, pursuant to written agreement of all parties
having an interest in the trust funds, the trust funds are
immediately placed in a neutral escrow depository in this state.
(2) Each sole practitioner or principal real estate broker
shall file with the Real Estate Agency, on forms approved by the
Real Estate Commissioner, a statement identifying the name of the
bank or banks, account number or account numbers, and name of
account or accounts for each Clients' Trust Account maintained.
(3) Each sole practitioner or principal real estate broker
shall authorize the agency, by a form approved by the
commissioner, to examine any Clients' Trust Account, by a duly
authorized representative of the agency. The examination shall be
made at such times as the commissioner may direct.
(4) If a sole practitioner or principal real estate broker
maintains a separate Clients' Trust Account in a branch office, a
separate bookkeeping system shall be maintained in the branch
office, provided a copy of the records required by the provisions
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of ORS 696.280 are maintained in the main office of the sole
practitioner or broker.
(5) Trust funds received by a sole practitioner or principal
real estate broker may be placed by the sole practitioner or
broker in a federally insured interest-bearing bank account,
designated a Clients' Trust Account, but only with the prior
written approval of all parties having an interest in the trust
funds. The earnings of such interest-bearing account shall not
inure to the benefit of the sole practitioner or principal real
estate broker unless expressly approved in writing before deposit
of the trust funds by all parties having an interest in the trust
funds.
(6) With prior written notice to all parties who have an
interest in the trust funds, a sole practitioner or principal
real estate broker may place trust funds received by the sole
practitioner or principal real estate broker in a federally
insured interest-bearing bank account that is designated a
Clients' Trust Account and the earnings of which inure to the
benefit of a public benefit corporation, as defined in ORS
65.001, for distribution to organizations and individuals for
first-time homebuying assistance and for development of
affordable housing. The sole practitioner or principal real
estate broker shall select a qualified public benefit corporation
to receive the interest earnings.
(7) A sole practitioner or principal real estate broker is not
entitled to any part of any interest earnings on trust funds
deposited under subsection (5) of this section or to any part of
the earnest money or other money paid to the sole practitioner or
broker in connection with any real estate transaction as part or
all of the sole practitioner's or broker's { - commission or
fee - } { + compensation + } until the transaction has been
completed or terminated. The question of the disposition of
forfeited earnest money shall be negotiated between the sole
practitioner or principal real estate broker and the seller at
the time of executing any listing agreement or earnest money
agreement. The result of such negotiation shall be filled in on
the agreement form at the time of signing by the seller and
either separately initialed by the seller or placed immediately
above the signature of the seller.
(8) Clients' Trust Account funds are not subject to execution
or attachment on any claim against a sole practitioner or
principal real estate broker.
(9) No person shall knowingly keep or cause to be kept any
funds or money in any bank under the heading of Clients' Trust
Account or any other name designating such funds or money as
belonging to the clients of any sole practitioner or principal
real estate broker, except actual trust funds deposited with the
sole practitioner or broker.
(10) The agency by rule shall establish a procedure for
disbursal of disputed funds from a Clients' Trust Account to the
person who delivered the funds to the sole practitioner or
principal real estate broker. The procedure shall allow disbursal
not more than 20 days after a request is made for the disbursal.
Any disbursal pursuant to the procedure does not affect the claim
of any other person to the funds.
(11) The agency may provide by rules for other records to be
maintained and for the manner in which trust funds are deposited,
held and disbursed.
SECTION 5. ORS 696.290 is amended to read:
Enrolled Senate Bill 482 (SB 482-A) Page 5
696.290. (1) A real estate licensee shall not offer, promise,
allow, give, pay or rebate, directly or indirectly, any part or
share of the licensee's { - commission or - } compensation
arising or accruing from any real estate transaction or pay a
finder's fee to any person who is not a real estate licensee
licensed under ORS 696.022. However, a real estate broker or
principal real estate broker may pay a finder's fee or a share of
the { - commission - } { + licensee's compensation + } on a
cooperative sale { - where such - } { + when the + } payment
is made to a licensed real estate broker in another state or
country { + , + } provided that the state or country in which
that broker is licensed has a law permitting real estate brokers
to cooperate with real estate brokers or principal real estate
brokers in this state and that such nonresident real estate
broker does not conduct in this state any acts constituting
professional real estate activity and for which compensation is
paid. If a country does not license real estate brokers, the
payee must be a citizen or resident of the country and represent
that the payee is in the business of real estate brokerage in the
other country. A real estate broker associated with a principal
real estate broker shall not accept compensation from any person
other than the principal real estate broker with whom the real
estate broker is associated at the time. A principal real estate
broker shall not make payment to the real estate broker of
another principal real estate broker except through the principal
real estate broker with whom the real estate broker is
associated. Nothing in this section prevents payment of { - a
commission or fee - } { + compensation + } earned by a real
estate broker or principal real estate broker while licensed,
because of change of affiliation or inactivation of the broker's
license.
(2) Nothing in subsection (1) of this section is intended to
prohibit a real estate licensee who has a written property
management agreement with the owner of a residential building or
facility from authorizing the payment of a referral fee, rent
credit or other compensation to an existing tenant of the owner
or licensee, or a former tenant if the former tenant resided in
the building or facility within the previous six months, as
compensation for referring new tenants to the licensee.
(3) Nothing in subsection (1) of this section is intended to
prevent an Oregon real estate broker or principal real estate
broker from sharing { - a commission - } { + compensation + }
on a cooperative nonresidential real estate transaction with a
person who holds an active real estate license in another state
or country, provided:
(a) Before the out-of-state real estate licensee performs any
act in this state that constitutes professional real estate
activity, the licensee and the cooperating Oregon real estate
broker or principal real estate broker agree in writing that the
acts constituting professional real estate activity conducted in
this state will be under the supervision and control of the
cooperating Oregon broker and will comply with all applicable
Oregon laws;
(b) The cooperating Oregon real estate broker or principal real
estate broker accompanies the out-of-state real estate licensee
and the client during any property showings or negotiations
conducted in this state; and
(c) All property showings and negotiations regarding
nonresidential real estate located in this state are conducted
Enrolled Senate Bill 482 (SB 482-A) Page 6
under the supervision and control of the cooperating Oregon real
estate broker or principal real estate broker.
(4) Nothing in subsection (1) of this section is intended to
prohibit a real estate licensee from directly compensating a
licensed personal assistant if permitted by the terms, conditions
and requirements of a licensed personal assistant agreement under
ORS 696.028.
(5) As used in subsection (3) of this section, ' nonresidential
real estate' means any real property that is improved or
available for improvement by commercial structures or five or
more residential dwelling units.
SECTION 6. ORS 696.301 is amended to read:
696.301. Subject to ORS 696.396, the Real Estate Commissioner
may suspend or revoke the real estate license of any real estate
licensee, reprimand any licensee or deny the issuance or renewal
of a license to an applicant who has done any of the following:
(1) Created a reasonable probability of damage or injury to a
person by making one or more material misrepresentations or false
promises in a matter related to professional real estate
activity.
(2) Represented, attempted to represent or accepted { - a
commission or other - } compensation from a principal real
estate broker other than the principal real estate broker with
whom the real estate broker is associated.
(3) Disregarded or violated any provision of ORS 659A.421,
696.010 to 696.495, 696.600 to 696.785 and 696.800 to 696.870 or
any rule of the Real Estate Agency.
(4) Knowingly or recklessly published materially misleading or
untruthful advertising.
(5) Acted as an agent and an undisclosed principal in any
transaction.
(6) Intentionally interfered with the contractual relations of
others concerning real estate or professional real estate
activity.
(7) Intentionally interfered with the exclusive representation
or exclusive brokerage relationship of another licensee.
(8) Accepted employment or compensation for the preparation of
a competitive market analysis or letter opinion that is
contingent upon reporting a predetermined value or for real
estate in which the licensee had an undisclosed interest.
(9) Represented a taxpayer as described in ORS 305.230 or
309.100, contingent upon reporting a predetermined value or for
real estate in which the licensee had an undisclosed interest.
(10) Failed to ensure, in any real estate transaction in which
the licensee performed the closing, that the buyer and seller
received a complete detailed closing statement showing the amount
and purpose of all receipts, adjustments and disbursements.
(11) Has been convicted of a felony or misdemeanor
substantially related to the licensee's trustworthiness or
competence to engage in professional real estate activity.
(12) Demonstrated incompetence or untrustworthiness in
performing any act for which the licensee is required to hold a
license.
(13) Violated a term, condition, restriction or limitation
contained in an order issued by the commissioner.
(14) Committed an act of fraud or engaged in dishonest conduct
substantially related to the fitness of the applicant or licensee
to conduct professional real estate activity, without regard to
whether the act or conduct occurred in the course of professional
real estate activity.
Enrolled Senate Bill 482 (SB 482-A) Page 7
(15) Engaged in any conduct that is below the standard of care
for the practice of professional real estate activity in Oregon
as established by the community of persons engaged in the
practice of professional real estate activity in Oregon.
SECTION 7. ORS 696.520 is amended to read:
696.520. The provisions of ORS 696.505 to 696.590 do not apply
to and the term 'escrow agent' does not include:
(1) Any person doing business under the laws of this state or
the United States relating to banks, mutual savings banks, trust
companies, savings and loan associations, consumer finance
companies, or insurance companies except to the extent that the
person provides real estate closing escrow services other than
those permitted under subsection (3) of this section.
(2) An attorney at law rendering services in the performance of
duties as attorney at law.
(3) Any firm or corporation lending money on real or personal
property and which firm or corporation is subject to licensing,
supervision or auditing by a federal or state agency but only to
the extent of closing a loan transaction between such firm or
corporation and a borrower, and seller, if a fee for escrow
services is not charged to the seller.
(4) Any person doing any of the acts specified in ORS 696.505
{ - (3) - } { + (4) + } under order of any court.
(5) Any real estate broker or principal real estate broker
licensed under ORS 696.022 who performs the closing for the
principals in a real estate transaction handled by the broker, if
the principals are not charged a separate fee for escrow
services.
(6) Any collection agency registered under ORS 697.015 that is
engaged in any collection or billing activity without holding
documents relating to the debt.
SECTION 8. ORS 696.840 is amended to read:
696.840. The payment of compensation or the obligation to pay
compensation to a real estate licensee by the seller or the buyer
is not necessarily determinative of a particular agency
relationship between a real estate licensee and the seller or the
buyer. After full disclosure of agency relationships, a listing
agent, a selling agent or a real estate licensee or any
combination of the three may agree to share any compensation
{ - or commission - } paid, or any right to any compensation
{ - or commission - } for which an obligation arises as the
result of a real property transaction, and the terms of the
agreement shall not necessarily be determinative of a particular
relationship. Nothing in this section shall prevent the parties
from selecting a relationship not specifically prohibited by ORS
696.301, 696.392, 696.600 to 696.785, 696.800 to 696.870 and
696.995.
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Enrolled Senate Bill 482 (SB 482-A) Page 8
Passed by Senate March 28, 2007
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 22, 2007
...........................................................
Speaker of House
Enrolled Senate Bill 482 (SB 482-A) Page 9
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled Senate Bill 482 (SB 482-A) Page 10