75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 316
Senate Bill 140
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor Theodore R.
Kulongoski for Real Estate Agency)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Modifies provisions relating to registered business names and
branch offices of real estate licensees.
Allows Real Estate Commissioner to issue limited real estate
licenses to applicants.
Requires client trust funds placed in escrow to be placed in
licensed neutral escrow depository.
Removes requirement to publish addresses of real estate
licensees subject to discipline.
Allows imposition of civil penalty of up to $1,000 per day for
failure to make real estate property management records available
for inspection.
A BILL FOR AN ACT
Relating to real estate licensees; creating new provisions; and
amending ORS 696.010, 696.026, 696.200, 696.241, 696.445 and
696.990.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 696.026 is amended to read:
696.026. (1) { + (a) + } { - A real estate broker or - }
{ + A real estate licensee who is a sole practitioner, + }
principal real estate broker { + or real estate property
manager + }may conduct professional real estate activity
under { + :
(A) + } { - The broker's name, - } { + The name of the
licensee;
(B) + } A registered business name { + ; + } or
{ + (C) + } A name prescribed by { - agency - } rule { +
of the Real Estate Agency + }.
{ + (b) Only a real estate licensee who is a sole
practitioner, principal real estate broker or real estate
property manager may register a business name.
(2) + } The { + registered + } business name under which a
{ - broker - } { + real estate licensee + } conducts
professional real estate activity has no license standing
{ - independent of the broker - } .
{ - (2) - } { + (3) + } 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 { + or real estate property manager + }.
{ - (3) - } { + (4) + } { - A real estate broker or
principal real estate broker - } { + A real estate licensee + }
operating under a business name registered by the
{ - broker - } { + licensee + } 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 { + business + } name. However, all professional real
estate activity conducted by or on behalf of the { - broker - }
{ + real estate licensee + } must be conducted under the
business name registered by the { - broker - } { +
licensee + }.
{ - (4) - } { + (5)(a) + } { - A real estate broker or
principal real estate broker - } { + A real estate licensee who
registers a business name as provided by subsection (1) of this
section + } may register two or more business names if the
business names are for affiliated or subsidiary business
organizations.
{ + (b) + } { - If a real estate broker or principal real
estate broker registers the - } { + If a real estate licensee
registers two or more + } business names for { - two or
more - } affiliated or subsidiary business organizations, the
{ - broker - } { + licensee + } may conduct professional real
estate activity separately under each business name.
{ + (6) + } { - A real estate broker or principal real
estate broker - } { + A real estate licensee + } must supervise
and control the professional real estate activity conducted under
the { - broker's name or registered business - } name { +
designated as provided by subsection (1) of this section + }.
{ - (5) - } { + (7) + } 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 { + real estate + } broker conducts
professional real estate activity, but may not control or
supervise the professional real estate activity of the principal
{ + real estate + } broker and may not interfere with or be
responsible for the training and supervision of any other
{ + real estate + } broker.
{ - (6) - } { + (8) + } A nonlicensed individual 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 - } { + the + }
business.
{ - (7) - } { + (9) + } 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) - } { + (10) + } 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 { + sole practitioner,
principal real estate broker or real estate + }broker associated
with a principal { + real estate + } broker may create a
corporation, limited liability company, limited liability
partnership or any other lawfully constituted business
organization for the purpose of receiving compensation { - from
the principal broker - } . { + A real estate broker associated
with a principal real estate broker may only receive compensation
from a principal real estate 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 2. { + Section 3 of this 2009 Act is added to and made
a part of ORS 696.010 to 696.495. + }
SECTION 3. { + (1) The Real Estate Commissioner may issue a
limited license to an applicant for a license as a real estate
broker, sole practitioner, principal real estate broker or real
estate property manager if the commissioner determines that the
issuance is in the public interest. The commissioner may limit a
license issued under this section:
(a) By term;
(b) To acts subject to the supervision of a specific principal
real estate broker;
(c) By conditions to be observed in the exercise and the
privileges granted; or
(d) In other ways determined by the commissioner as necessary
or appropriate to protect the public.
(2) A limited license issued under this section does not confer
any property right in the privileges to be exercised under the
license, and the holder of a limited license does not have the
right to renewal of the limited license. A limited license may be
suspended or revoked, or the real estate licensee may be
reprimanded, by the commissioner on the grounds set out in ORS
696.301 or for failure to comply with the limitations of the
license. + }
SECTION 4. ORS 696.200 is amended to read:
696.200. { + (1) To establish a main office or a branch office
under this section, a real estate licensee must be:
(a) A sole practitioner;
(b) A principal real estate broker; or
(c) A real estate property manager. + }
{ - (1) - } { + (2) + } { - Except for real estate
brokers associated with a principal real estate broker, every
real estate broker and principal real estate broker shall - }
{ + Every real estate licensee identified in subsection (1) of
this section must:
(a) + }Maintain in this state a place of business to be
designated as the { - broker's - } { + licensee's + } main
office { + ; + } and { +
(b) + } Designate the place of business by a sign that contains
the name under which the { - broker is licensed - } { +
licensee conducts professional real estate activity + }.
{ - (2) - } { + (3) + } The place of business { + of a
real estate licensee + } must be specified in the application for
a real estate license, and designated in the license. Prior to
the change of a business location, the { - broker shall - }
{ + real estate licensee must + }notify the Real Estate
Commissioner in writing of the new location. The change of a
business location without notification to the commissioner is
grounds for revocation of { - licenses previously issued - }
{ + a license + }.
{ - (3) - } { + (4) + } { - A real estate broker or
principal real estate broker - } { + A real estate licensee
identified in subsection (1) of this section + }may establish
one or more branch offices as separate business locations under
the management of the { - broker - } { + licensee + }. A
{ - broker - } { + real estate licensee + } may conduct and
supervise the business of more than one office, whether
{ + a + } main { + office + } or { + a + } branch { +
office + }. The { - broker shall - } { + real estate licensee
must + } register each branch office with the commissioner and
designate each branch office by a sign that contains the name
under which the { - broker is licensed - } { + licensee
conducts professional real estate activity + }.
{ - (4) - } { + (5) + } Upon vacating any business
location, the { - broker - } { + real estate licensee + }
shall ensure that the sign containing the
{ - broker's - } { + licensee's + } name or the name under
which the { - broker - } { + licensee + } has operated is
removed from the location { - that the broker has vacated - } .
{ + (6) + } A { - broker - } { + real estate licensee + }
may not display any name at the designated places of business
{ - named in the broker's license or licenses - } other than
the name under which the { - broker is licensed - }
{ + licensee conducts professional real estate activity + }.
SECTION 5. 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 { + licensed + } 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
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 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) A sole practitioner or principal real estate broker may not
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 an optional procedure
by which a sole practitioner or a principal real estate broker
may elect to disburse disputed funds held in relation to the
sale, exchange or purchase of real estate 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. A disbursal pursuant to the procedure does not
affect the claim of any other person to the funds.
(11) The agency may provide by rule for other records to be
maintained and for the manner in which trust funds are deposited,
held and disbursed.
SECTION 6. ORS 696.445 is amended to read:
696.445. (1) Pursuant to ORS 696.385 (2), the Real Estate
Agency shall provide for the advancement of education and
research in connection with the educational requirements for the
securing of licenses for real estate licensees under ORS 696.010
to 696.495, 696.600 to 696.785, 696.800 to 696.870 and 696.995.
(2) The Real Estate Commissioner may assign and reassign staff
in the agency to perform such duties as the commissioner
considers necessary to carry out subsection (1) of this section,
including but not limited to the preparation and distribution of
a periodic publication to be known as the Oregon Real Estate News
Journal and the preparation and publication of other printed
matter of an educational nature for the benefit of real estate
licensees.
(3) The commissioner shall publish in the Oregon Real Estate
News Journal the names { - and addresses of all applicants for
real estate or escrow licenses whose licenses have been
refused, - } { + and the city and state + } of real estate
licensees who have been reprimanded, of real estate and escrow
{ + agent + } licensees whose licenses have been suspended or
revoked and of real estate and escrow { + agent + } licensees
who have been assessed civil penalties. Each such publication
shall include a brief description of the situation involved and
the grounds for the commissioner's action.
SECTION 7. ORS 696.990 is amended to read:
696.990. (1) Violation of any provision of ORS 696.010 to
696.130, 696.200, 696.205, 696.241 to 696.375, 696.392, 696.395
to 696.430, 696.490, 696.600 to 696.785 and 696.995 is a Class A
misdemeanor.
(2) Any officer, director or shareholder or agent of a
corporation, or member or agent of a partnership or association,
who personally participates in or is an accessory to any
violation of ORS 696.010 to 696.130, 696.200, 696.205, 696.241 to
696.375, 696.392, 696.395 to 696.430, 696.490, 696.600 to 696.785
and 696.995 by the partnership, association or corporation, is
subject to the penalties prescribed in subsection (1) of this
section.
(3) A violation of any one of the provisions of ORS 696.505 to
696.590 is a Class A misdemeanor.
(4) Any person that violates ORS 696.020 (2) may be required by
the Real Estate Commissioner to forfeit and pay to the General
Fund of the State Treasury a civil penalty in an amount
determined by the commissioner of:
(a) Not less than $100 nor more than $500 for the first offense
of unlicensed professional real estate activity; and
(b) Not less than $500 nor more than $1,000 for the second and
subsequent offenses of unlicensed professional real estate
activity.
(5) In addition to the civil penalty set forth in subsection
(4) of this section, any person that violates ORS 696.020 may be
required by the commissioner to forfeit and pay to the General
Fund of the State Treasury a civil penalty in an amount
determined by the commissioner but not to exceed the amount by
which such person profited in any transaction that violates ORS
696.020.
{ + (6)(a) Except as provided in paragraph (b) of this
subsection, a real estate licensee who is a real estate property
manager or principal real estate broker and who is engaging in or
who has engaged in the management of rental real estate may be
required to forfeit and pay to the General Fund of the State
Treasury a civil penalty of up to $1,000 per day of violation, or
a lesser penalty in an amount determined by the commissioner, if
the licensee fails to comply with rules that require the licensee
to produce for inspection records related to the management of
rental real estate that are maintained by the licensee as
provided by ORS 696.280.
(b) A civil penalty imposed under this subsection may not
exceed $10,000. + }
{ - (6) - } { + (7) + } Civil penalties under this section
shall be imposed as provided in ORS 183.745.
{ - (7) - } { + (8) + } The civil penalty provisions of
subsections { - (4) and (5) - } { + (4) to (6) + } of this
section are in addition to and not in lieu of the criminal
penalties for unlicensed professional real estate activity in
subsections (1) and (2) of this section.
{ - (8) - } { + (9) + } For the purposes of subsection (4)
of this section, any violation of ORS 696.020 (2) that results
from a failure of a real estate licensee to renew a license
within the time allowed by law constitutes a single offense of
unlicensed professional real estate activity for each 30-day
period after expiration of the license during which the
individual engages in professional real estate activity. A civil
penalty imposed for a violation of ORS 696.020 (2) that results
from a failure of a real estate licensee to renew a license
within the time allowed by law is not subject to the minimum
dollar amounts specified in subsection (4) of this section.
{ - (9) - } { + (10) + } Subsection (5) of this section
does not apply to a violation of ORS 696.020 (2) that results
from a failure of a real estate licensee to renew a license
within the time allowed by law.
SECTION 8. ORS 696.010 is amended to read:
696.010. As used in ORS 696.010 to 696.495, 696.600 to 696.785,
696.800 to 696.870, 696.990 and 696.995, unless the context
requires otherwise:
(1) 'Agency' means the Real Estate Agency.
(2) 'Associated with' means to be employed, engaged or
otherwise supervised by, with respect to the relationship between
a real estate broker and a principal real estate broker.
(3) 'Bank' includes any bank or trust company, savings bank,
mutual savings bank, savings and loan association or credit union
that maintains a head office or a branch in this state in the
capacity of a bank or trust company, savings bank, mutual savings
bank, savings and loan association or credit union.
(4)(a) 'Branch office' means a business location, other than
the main office designated under ORS 696.200 { - (1) - } { +
(2) + }, where professional real estate activity is regularly
conducted or that is advertised to the public as a place where
such business may be regularly conducted.
(b) Model units or temporary structures used solely for the
dissemination of information and distribution of lawfully
required public reports shall not be considered branch offices. A
model unit means a permanent residential structure located in a
subdivision or development used for such dissemination and
distribution, so long as the unit is at all times available for
sale, lease, lease option or exchange.
(5) 'Commissioner' means the Real Estate Commissioner.
(6) '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.
(7) 'Competitive market analysis' means a method or process
used by a real estate licensee in pursuing a listing agreement or
in formulating an offer to acquire real estate in a transaction
for the sale, lease, lease-option or exchange of real estate. The
objective of competitive market analysis is a recommended
listing, selling or purchase price or a lease or rental
consideration. A competitive market analysis may be expressed as
an opinion of the value of the real estate in a contemplated
transaction. Competitive market analysis may include but is not
limited to an analysis of market conditions, public records, past
transactions and current listings of real estate.
(8) 'Expired' means, in the context of a real estate licensee,
that the license has not been renewed in a timely manner, but may
still be renewed.
(9) 'Inactive' means, in the context of a real estate licensee,
that the license has been returned to the agency to be held until
the licensee reactivates the license or the license expires or
lapses.
(10) 'Lapsed' means, in the context of a real estate licensee,
that the license has not been renewed in a timely manner and is
not eligible for renewal.
(11) 'Letter opinion' has the meaning given that term in ORS
696.294.
(12) 'Management of rental real estate' means:
(a) Representing the owner of real estate in the rental or
lease of the real estate and includes but is not limited to:
(A) Advertising the real estate for rent or lease;
(B) Procuring prospective tenants to rent or lease the real
estate;
(C) Negotiating with prospective tenants;
(D) Accepting deposits from prospective tenants;
(E) Checking the qualifications and creditworthiness of
prospective tenants;
(F) Charging and collecting rent or lease payments;
(G) Representing the owner in inspection or repair of the real
estate;
(H) Contracting for repair or remodeling of the real estate;
(I) Holding trust funds or property received in managing the
real estate and accounting to the owner for the funds or
property;
(J) Advising the owner regarding renting or leasing the real
estate;
(K) Providing staff and services to accommodate the tax
reporting and other financial or accounting needs of the real
estate;
(L) Providing copies of records of acts performed on behalf of
the owner of the real estate; and
(M) Offering or attempting to do any of the acts described in
this paragraph for the owner of the real estate; or
(b) Representing a tenant or prospective tenant when renting or
leasing real estate and includes but is not limited to:
(A) Consulting with tenants or prospective tenants about
renting or leasing real estate;
(B) Assisting prospective tenants in renting or leasing real
estate;
(C) Assisting prospective tenants in qualifying for renting or
leasing real estate;
(D) Accepting deposits or other funds from prospective tenants
for renting or leasing real estate and holding the funds in trust
for the prospective tenants;
(E) Representing tenants or prospective tenants renting or
leasing real estate; and
(F) Offering or attempting to do any of the acts described in
this paragraph for a tenant or prospective tenant.
(13) 'Nonlicensed individual' means an individual:
(a) Who has not obtained a real estate license; or
(b) Whose real estate license is lapsed, expired, inactive,
suspended, surrendered or revoked.
(14) 'Principal real estate broker' means an individual who
holds an active license as a principal real estate broker and who
employs, engages or supervises the professional real estate
activity of another real estate licensee.
(15) 'Professional real estate activity' means any of the
following actions, when engaged in for another and for
compensation or with the intention or in the expectation or upon
the promise of receiving or collecting compensation, by any
person who:
(a) Sells, exchanges, purchases, rents or leases real estate;
(b) Offers to sell, exchange, purchase, rent or lease real
estate;
(c) Negotiates, offers, attempts or agrees to negotiate the
sale, exchange, purchase, rental or leasing of real estate;
(d) Lists, offers, attempts or agrees to list real estate for
sale;
(e) Offers, attempts or agrees to perform or provide a
competitive market analysis or letter opinion, to represent a
taxpayer under ORS 305.230 or 309.100 or to give an opinion in
any administrative or judicial proceeding regarding the value of
real estate for taxation, except when the activity is performed
by a state certified appraiser or state licensed appraiser;
(f) Auctions, offers, attempts or agrees to auction real
estate;
(g) Buys, sells, offers to buy or sell or otherwise deals in
options on real estate;
(h) Engages in management of rental real estate;
(i) Purports to be engaged in the business of buying, selling,
exchanging, renting or leasing real estate;
(j) Assists or directs in the procuring of prospects,
calculated to result in the sale, exchange, leasing or rental of
real estate;
(k) Assists or directs in the negotiation or closing of any
transaction calculated or intended to result in the sale,
exchange, leasing or rental of real estate;
(L) Except as otherwise provided in ORS 696.030 (1)(L),
advises, counsels, consults or analyzes in connection with real
estate values, sales or dispositions, including dispositions
through eminent domain procedures;
(m) Advises, counsels, consults or analyzes in connection with
the acquisition or sale of real estate by an entity if the
purpose of the entity is investment in real estate; or
(n) Performs real estate marketing activity as described in ORS
696.600.
(16) 'Real estate' includes leaseholds and licenses to use
including, but not limited to, timeshare estates and timeshare
licenses as defined in ORS 94.803, as well as any and every
interest or estate in real property, whether corporeal or
incorporeal, whether freehold or nonfreehold, whether held
separately or in common with others and whether the real property
is situated in this state or elsewhere.
(17) 'Real estate broker' means an individual who engages in
professional real estate activity and who holds an active license
as a real estate broker.
(18) 'Real estate licensee' means an individual who holds an
active license as a real estate broker, principal real estate
broker or real estate property manager.
(19) 'Real estate property manager' means a real estate
licensee who is authorized to engage in management of rental real
estate.
(20) 'Registered business name' means a name registered with
the Real Estate Agency under which the individual registering the
name engages in professional real estate activity.
(21) 'Sole practitioner' means a real estate broker conducting
professional real estate activity not in conjunction with other
real estate brokers or principal real estate brokers.
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