HB 1661-FN- AS INTRODUCED
2006 SESSION
10/01
HOUSE BILL 1661-FN
AN ACT relative to the practice of real estate sales and eliminating the real estate commission.
SPONSORS: Rep. Mirski, Graf 10
COMMITTEE: Executive Departments and Administration
This bill eliminates the real estate commission, removes the requirement that persons be licensed to engage in real estate sales, and adds statutory requirements concerning real estate sales.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06-2068
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT relative to the practice of real estate sales and eliminating the real estate commission.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Real Estate Practice Act. RSA 331-A is repealed and reenacted to read as follows:
CHAPTER 331-A
REAL ESTATE PRACTICE ACT
331-A:1 Purpose. It is the policy of this state to regulate the practice of real estate brokers and salespersons in order to ensure that they meet and maintain minimum standards which promote public understanding and confidence in the business of real estate brokerage.
331-A:2 Definitions. In this chapter:
I. “Advance fees” mean any fees charged for services including, without any limitation, any fees charged for listing, advertising, or offering for sale or lease any real property. Advance fees shall not include fees paid solely for advertisement in a newspaper or other publication of general circulation.
II. “Associate broker” means any person who is employed by a principal broker or under contract, expressed or implied, to a principal broker and in addition operates under the supervision of a principal broker.
III. “Broker” means any person acting for another on commission or for other compensation, for the promise of such commission or other compensation, 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, lease, or exchange.
(e) Buys, sells, offers to buy or sell, or otherwise deals in options on real estate or improvements on real estate.
(f) Collects, offers, attempts or agrees to collect rent for the use of real estate.
(g) Advertises or holds oneself out as being engaged in the business of buying, selling, exchanging, renting, or leasing real estate.
(h) Assists or directs in the procuring of prospects, calculated to result in the sale, exchange, lease, or rental of real estate.
(i) Assists or directs in the negotiation of any transaction calculated or intended to result in the sale, exchange, leasing, or rental of real estate.
(j) Engages in the business of charging an advance fee in connection with any contract whereby the person undertakes to promote the sale or lease of real estate, through its listing in a publication or data base issued for such purpose, through referral of information concerning such real estate to brokers, or both.
IV. “Brokerage agreement” means a written contract between a principal and a real estate brokerage firm intended to bring parties together for the sale, purchase, exchange, rent, or lease of real estate.
V. “Buyer” means a party in the transaction involved in the purchase or exchange of real estate.
VI. “Buyer agent” means a person acting on the behalf of a buyer or tenant in the purchase, exchange, rent, or lease of real estate.
VII. “Disclosed dual agent” means a person acting for more than one party whose interests may differ in a transaction with the knowledge and written consent of all parties for whom the person acts.
VIII. “Landlord” means a party in a transaction who owns real estate intended for rental or leasing purposes. For the purposes of this chapter, “landlord” shall also mean “lessor.”
IX. “Managing broker” means a broker who manages a branch office.
X. “Ministerial acts” means acts of an administrative nature which persons perform including showing property, preparing offers or agreements to sell, purchase, exchange, rent, or lease, and conveying those offers or agreements to the parties and providing information and assistance concerning professional services not related to the provisions of RSA 331-A.
XI. “Non-agent” means an individual under this chapter who assists one or more parties throughout a real estate transaction without being an agent or advocate for the interests of any party to such transaction.
XII. “Person” means an individual, corporation, partnership, or association, both foreign and domestic.
XIII. “Principal” means the party or parties to a real estate transaction who contract the services of a real estate brokerage firm to act on their behalf in a fiduciary relationship.
XIV. “Principal broker” means the individual broker, including the broker designated by a corporation, partnership, or association, responsible for the actions of salespersons who are assigned to such individual broker.
XV. “Real estate” means and includes leaseholds or any other interest or estate in land and business opportunities which involve any interest in real estate. It also includes the sale and resale of time share units and manufactured housing units, affixed to real estate.
XVI. “Salesperson” means an individual working under a broker to participate in any activity described in paragraph III of this section.
XVII. “Seller” means a party in the transaction who owns the real estate intended for the sale, exchange, rent, or lease of real estate.
XVIII. “Seller agent” means a person acting on the behalf of a seller or landlord in the sale, exchange, rent, or lease of real estate.
XIX. “Subagent” means any person engaged by the principal broker, under authority granted by the seller, landlord, buyer, or tenant, to perform agency functions on behalf of the seller, landlord, buyer, or tenant.
XX. “Tenant” means a party who has entered, or is intending to enter, into a rental or lease arrangement with a landlord. For purposes of this chapter, “tenant” shall also mean “lessee.”
XXI. “Unprofessional conduct” means any action by a person under this which is unlawful, dishonorable, unethical, or immoral.
331-A:3 Prohibition; Penalty. It shall be unlawful for any person, directly or indirectly, to act as a real estate broker or real estate salesperson without complying with the provisions of this chapter. Any person violating any requirement of this chapter shall be guilty of a violation.
331-A:4 Exempted Classes. The provisions of this chapter shall not apply to:
I. An owner, builder or tenant of real estate or to regular employees with respect to property owned or leased by the owner, builder, or tenant, or to a prospective purchaser or tenant of real estate or to regular employees with respect to property sought to be acquired or leased by the purchaser or tenant;
II. An attorney in fact;
III. An attorney at law in the performance of duties as an attorney;
IV. An auctioneer selling at public auction;
V. A public official in the conduct of official duties;
VI. A person or the person’s regular employees while such person is acting as a receiver, trustee, administrator, executor, conservator, guardian, or fiduciary, or while acting under court order, or while acting under the authority of a will, trust instrument, or other recorded instrument containing a power of sale;
VII. Any person owning or operating a park, including the person’s regular employees, in which manufactured housing to be sold or leased is located, who may, for a fee or commission or other valuable consideration, list, sell, purchase, exchange, or lease such manufactured housing;
VIII. A corporate consultant who receives a fee from a client based on site searching services rendered in accordance with a written contract, rather than on the completion of any particular transaction and who does not hold himself or herself out as a real estate broker; or
IX. A unit owners’ association that rents condominium and townhouse units for periods of 30 days or less for the exclusive benefit of the unit owners and the unit owners’ association provided such rentals are managed through an on-site rental office that is operated and controlled exclusively by the unit owners’ association.
331-A:5 Escrow Accounts of Broker; Interest; Audit.
I. The principal broker shall maintain an escrow account or accounts, separate and apart from the individual or office account, in which all deposits on fully executed contracts shall be promptly deposited. The escrow account or accounts shall be maintained in an insured financial institution within the state of New Hampshire.
II. The principal broker may place the deposit in an interest-bearing escrow or trust account or instrument. The interest earned shall accrue to the party making the deposit as a sum to be used toward the purchase price unless otherwise agreed in writing.
III. No checks shall be drawn against uncollected contract deposits in the escrow account.
IV. Withdrawal of contract deposits shall be allowed to be forwarded to the closing agent, title company, or attorney, prior to performance of a contract for the purpose of performance. Otherwise, none of the contract deposits shall be withdrawn until the contract has been terminated by performance, by contemporaneous agreement in writing between all parties, or by order of a court of competent jurisdiction, except as provided by paragraph VI of this section.
V. The principal broker shall sign a permit giving appropriate law enforcement permission to audit the escrow account or accounts.
VI. If a principal broker retains a contract deposit for a period exceeding 90 days from the contract closing date, without securing performance, a written agreement, or a court order as required in paragraph IV of this section, the principal broker may release the contract deposit to one or more parties to the contract by initiating a release process. The release process requires the principal broker to notify all parties by certified mail that the deposit will be distributed to the parties specified in the letter if the parties fail to perform, enter into a written mutual release, or initiate litigation within 60 days of the mailing date of the certified letter. If neither buyer nor seller initiates litigation or enters into a written release within 60 days of the mailing date of the certified letter, the principal broker may release the deposit without penalty under this section. The principal broker’s release of this deposit under this paragraph releases the principal broker solely from liability under this chapter, as opposed to civil liability.
VII. A principal broker may deposit business or personal funds into an escrow account to cover service charges only, assessed to the account by the bank or depository where the account is located, or to maintain a minimum balance in the account as required by the regulations of the bank or depository.
331-A:6 Bonds. No principal or managing broker shall practice under this chapter without a surety bond in any form approved by the secretary of state in a sum of not less than $25,000, executed by the applicant and by a surety company authorized to do business in this state. The bond shall be payable to the state of New Hampshire, for the benefit of any person aggrieved, and shall be conditioned upon the faithful accounting by the broker for all funds entrusted to the broker in the broker’s capacity as a principal or managing real estate broker. Any person so aggrieved may bring suit on the bond in the aggrieved person’s own name; provided, however, that the aggregate liability of the surety to all persons shall, in no event, exceed the sum of such bond.
331-A:7 Supervision of Real Estate Office; Branch Offices.
I Every real estate office or real estate branch office, whether operated as a corporation, partnership, or sole proprietorship, shall be directed, supervised, and managed by a real estate broker. The principal broker shall designate a managing broker for each branch office the principal broker opens.
II. All employees associated with a real estate office shall be supervised on site by the principal broker or managing broker.
III.(a) All advertisements by an associate broker or salesperson shall include the associate broker’s or salesperson’s legal name or reasonable derivative thereof and the regular business name of the firm or the principal broker’s name. The firm or principal broker’s name, within the advertisement, shall be clearly identifiable. This requirement shall apply to all categories of advertising including all publications, radio or television broadcasts, all electronic media including electronic mail and the Internet, business stationery, business and legal forms and documents, and signs and billboards.
(b) Any advertising which contains a home telephone number, cell-phone number, beeper or pager number, home fax number, or electronic mail address of an individual salesperson or associate broker, shall also include the name and telephone number of the employing broker or brokerage firm through which the advertising persons operate. All such advertising shall contain language identifying each number included in the advertising.
331-A:8 Nonresidents.
I. A nonresident of this state may practice as a broker or salesperson in this state by conforming to all of the conditions of this chapter applicable to residents of this state.
II. Such nonresidents shall file an irrevocable consent and power providing that legal actions may be commenced against them in the proper court of any county of this state in which a cause of action may arise or in which the plaintiff may reside by service of process or pleading authorized by the laws of this state, the consent or power stipulating that such service of process or pleading shall be taken in all courts to be valid and binding as if personal service had been made upon the nonresident in this state.
331-A:9 Scope of Agency; Interpretation.
I. A person who provides services through a brokerage agreement for a seller, landlord, buyer, or tenant is bound by the duties of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting.
II. A person may be a seller agent, a buyer agent, a disclosed dual agent, or a subagent. If another relationship between the person who performs the services and the seller, landlord, buyer, or tenant is intended, it must be described in writing and signed by all parties to the relationship prior to services being rendered.
331-A:10 Seller Agent; Duties.
I. A person engaged by a seller or landlord shall:
(a) Perform the terms of the written brokerage agreement made with the seller or landlord.
(b) Promote the interests of the seller or landlord including:
(1) Seeking a sale, lease, rent, or exchange at the price and terms stated in the brokerage agreement or a price and terms acceptable to the seller or landlord except that the person is not obligated to seek additional offers to purchase the real estate while the real estate is subject to a contract of sale unless the brokerage agreement so provides.
(2) Presenting in a timely manner all offers and agreements to and from the seller or landlord, even if the real estate is subject to a contract of sale.
(3) Accounting in a timely manner, during and upon termination, expiration, completion, or performance of the brokerage agreement for all money and property received in which the seller or landlord has or may have an interest.
(4) Informing the seller or landlord that such seller or landlord may be liable for the acts of the principal broker and subagents who are acting on behalf of the seller or landlord when the person is acting within the scope of the agency relationship.
(5) Informing the seller or landlord of the laws regarding real estate condition disclosures.
(c) Preserve confidential information received from the seller or landlord that is acquired during a brokerage agreement. This obligation continues beyond the termination, expiration, completion, or performance of the fiduciary relationship. Confidentiality shall be maintained unless:
(1) The seller or landlord to whom the information pertains grants written consent to disclose the information;
(2) The information is made public from a source other than the person;
(3) Disclosure is necessary to defend against an accusation of wrongful conduct in a judicial proceeding before a court of competent jurisdiction or before a professional committee; or
(4) If otherwise required by law.
(d) Be able to promote alternative real estate not owned by the seller or landlord to prospective buyers or tenants as well as list competing properties for sale or lease without breaching any duty to the seller or landlord.
II. The duties of a person acting on behalf of a seller or landlord to a buyer or tenant include:
(a) Treating all prospective buyers or tenants honestly and insuring that all required real estate condition disclosures are complied with.
(b) The ability to provide assistance to the buyer or tenant by performing ministerial acts such as showing property, preparing offers or agreements, and conveying those offers or agreements to the seller or landlord and providing information and assistance concerning professional services not related to the real estate brokerage services. Performing ministerial acts for the buyer or tenant shall not be construed as violating the brokerage agreement with the seller or landlord, provided that agency disclosure has been given in writing to the buyer or tenant. Performing ministerial acts for the buyer or tenant shall not be construed as forming an agency relationship with the buyer or tenant.
331-A:11 Buyer Agent; Duties.
I. A person engaged by a buyer or tenant shall:
(a) Perform the terms of the written brokerage agreement made with the buyer or tenant.
(b) Promote the interests of the buyer or tenant including:
(1) Seeking real estate at a price and terms specified by the buyer or tenant except that the person is not obligated to seek other real estate for the buyer or tenant while the buyer or tenant is a party to a contract to purchase, exchange, rent, or lease that real estate unless the brokerage agreement so provides.
(2) Presenting in a timely manner all offers to and from the buyer or tenant on real estate of interest.
(3) Accounting in a timely manner, during and upon termination, expiration, completion, or performance of the brokerage agreement for all money and property received in which the buyer or tenant has or may have an interest.
(4) Informing the buyer or tenant of the laws regarding real estate condition disclosures.
(c) Preserve confidential information received from the buyer or tenant that is acquired during a brokerage agreement. This obligation continues beyond the termination, expiration, completion, or performance of the fiduciary relationship. Confidentiality shall be maintained unless:
(1) The buyer or tenant to whom the information pertains grants written consent to disclose the information;
(2) The information is made public from a source other than the salesperson;
(3) Disclosure is necessary to defend the person against an accusation of wrongful conduct in a judicial proceeding before a court of competent jurisdiction, or before a professional committee; or
(4) If otherwise required by law.
(d) Be able to introduce the same real estate to other prospective buyers or tenants without breaching any fiduciary duty to the buyer or tenant.
II. The duties of a buyer agent acting on behalf of a buyer or tenant to a seller or landlord include:
(a) Treating all prospective sellers or landlords honestly.
(b) The ability to provide assistance to the seller or landlord by performing ministerial acts such as showing property, preparing offers or agreements, and conveying those offers or agreements to the buyer or tenant and providing information and assistance concerning professional services not related to the real estate brokerage services. Performing ministerial acts for the seller or landlord shall not be construed as violating the brokerage agreement with the buyer or tenant, provided that agency disclosure has been given in writing to the seller or landlord. Performing ministerial acts for the seller or landlord shall not be construed as forming an agency relationship with the seller or landlord.
331-A:12 Disclosed Dual Agent; Duties.
I. A person may act as a disclosed dual agent only with the written consent of all parties to the anticipated transaction at the time in which a dual agency relationship occurs, but no later than the preparation of a written offer for sale or lease.
II. The duties of a dual agent acting as a disclosed dual agent include:
(a) Performing the terms of the written disclosed dual agency agreement made with the parties.
(b) Presenting in a timely manner all offers or agreements to and from the parties on real estate of interest.
(c) Accounting in a timely manner, during and upon termination, expiration, completion, or performance of the brokerage agreement for all money and property received in which the parties have or may have an interest.
(d) Informing the parties of the laws regarding real estate condition disclosures.
(e) Preserving confidential information received from the parties that is acquired during the written disclosed dual agency relationship, or from any prior brokerage agreement. This obligation continues beyond the termination, expiration, completion, or performance of the fiduciary relationship. Confidentiality shall be maintained unless:
(1) The party to whom the information pertains grants written consent to disclose the information;
(2) The information is made public from a source other than the person;
(3) Disclosure is necessary to defend the person against an accusation of wrongful conduct in a judicial proceeding before a court of competent jurisdiction, or before a professional committee; or
(4) If otherwise required by law.
331-A:13 Prohibited Conduct. The following acts, conduct, or practices are prohibited:
I. Violating any of the provisions of this chapter.
II. Making, printing, publishing, distributing, or causing, authorizing, or knowingly permitting the making, printing, publication, or distribution of false statements, descriptions, or promises of such character as to reasonably induce any person to act, if the statements, descriptions or promises purport to be made or to be performed by either the person or person’s principal, and the person then knew or, by the exercise of reasonable care and inquiry, could have known of the falsity of the statements, descriptions or promises.
III. Knowingly committing, or being a party to any material fraud, misrepresentation, concealment, conspiracy, collusion, trick, scheme, or device, whereby any other person relies upon the word, representation, or conduct of the person.
IV. Conversion of any money, contract, deed, note, mortgage, abstract, or other evidence of title, to the person’s own use or of any other person, when delivered to the salesperson in trust or on condition, in violation of the trust or before the happening of the condition. Failure to return any money or contract, deed, note, mortgage, abstract, or other evidence of title within 30 days after the owner is entitled to and makes demand for such evidence, shall be prima facie evidence of such conversion.
V. Failing to promptly place trust funds in a proper trust account, or failing to reconcile records monthly.
VI. Failing, upon demand, to disclose any information within the person’s knowledge, or to produce any document, book, or record in possession for inspection of and copying by persons acting under authority of law.
VII. Advertising in any manner without stating the broker’s legal name or reasonable derivative thereof, and in the case of a salesperson or associate broker, without stating the name of the principal broker or business name for whom or under whom the salesperson or associate broker operates.
VIII. Accepting other than cash or its equivalent as earnest money, unless that fact is communicated in writing to the owner prior to the owner’s acceptance of the offer to purchase, and such fact is shown in the earnest money receipt and acknowledged in writing by the owner.
IX. Acting for more than one party in a transaction without making full disclosure and obtaining written consent of all parties to the anticipated transaction at the time in which a dual agency relationship occurs, but no later than the preparation of a written offer for sale or lease.
X. Accepting, taking, or charging any undisclosed commission, rebate, or direct profit on expenditures made for the principal.
XI. Accepting employment or compensation for comparative market analysis of real property contingent upon reporting a predetermined value.
XII. Issuing a comparative market analysis on any real property in which the broker or salesperson has an interest, unless such interest is clearly stated in the competitive market analysis report.
XIII. Misrepresentation of membership in any state or national real estate association.
XIV. Discrimination against any person in hiring or in sales activity, on the basis of race, color, creed, or national origin, or violating any of the provisions of any state or federal antidiscrimination law. A certified copy of the final holding of any court of competent jurisdiction in such matter, or a certified copy of the order issued by any state or federal administrative agency having jurisdiction in such matter, shall be conclusive evidence in any hearing conducted under this chapter.
XV. Failing to keep for a period of 3 years, records of escrow and trust accounts pertaining to funds entrusted with the principal broker relating to a real estate transaction showing date deposited, date of withdrawal, to whom paid, and other pertinent information. Such records shall be available on demand.
XVI. In the case of a principal broker, failing to preserve for 3 years following its consummation, records relating to any real estate transaction.
XVII. Acceptance by a salesperson or broker of a commission or any valuable consideration for the performance of any acts specified in this chapter, from any person, except the real estate principal broker.
XVIII. Directing any transaction involving the person’s principal to any mortgage broker, or directly or indirectly to any lending institution for financing or to any escrow company, in expectation of receiving a kickback or rebate.
XIX. Failing to disclose in writing to an owner, the person’s intention or true position if the person directly, or indirectly through a third party, purchases or leases, or acquires any interest in or any option to purchase or lease the property. Such disclosure shall be made prior to an offer to purchase or lease, and acknowledged in writing by all parties to the transaction.
XX. Failing to voluntarily furnish copies of all documents to all parties executing the documents.
XXI. Advertising the availability of real estate or services in a false, misleading, or deceptive manner.
XXII. In the case of a principal broker who is a branch manager, failing to exercise reasonable supervision over the activities of salespersons and any staff.
XXIII. Breaching a fiduciary duty to the principal in a real estate transaction.
XXIV. Unprofessional conduct.
XXV. Guaranteeing or authorizing any person to guarantee future profits or income which may result from the purchase or resale of the real property.
XXVI. Offering real estate for sale or lease without the knowledge and written consent of the owner or owner’s authorized agent, or on terms other than those authorized by the owner or owner’s authorized agent.
XXVII. Inducing any party to a contract of sale or lease to break such contract for the purpose of substituting a new contract with another principal.
XXVIII. Representing to any lender, guaranteeing agency, or any other interested party, either verbally or through the preparation of false documents, an amount in excess of the true and actual sale price of the real estate or terms differing from those actually agreed upon.
XXIX. Failure to produce any document, book, or record concerning any real estate transaction under investigation for inspection and copying.
XXX. Demonstrating untrustworthiness or incompetency to act as a broker or salesperson.
XXXI. Submitting a property owner’s name to any electronic database or multiple listing service that may be accessed by any other person other than the property owner’s broker without the express written permission of the property owner.
331-A:14 Sign on Office. A broker’s business sign to identify his or her business office shall be displayed outside his or her real estate office, providing that such a sign is permitted by local zoning ordinances, and shall be of a reasonably visible size.
331-A:15 Copies of Written Instruments. A broker shall, after execution by all parties, deliver the original of any instruments to any party or parties executing the same without delay when:
I. Such instrument has been prepared by such broker or under his or her supervision;
II. Such instrument relates to the employment of the broker;
III. Such instrument pertains to the consummation of a lease, purchase, sale, or exchange of real property; or
IV. Such instrument pertains to any other type of real estate transaction in which a broker participates.
331-A:16 Brokerage Contracts.
I. No broker or salesperson shall negotiate the sale, purchase, exchange, or lease of any real estate or of the improvements thereon, or collect rents or attempt to collect rents, without a written contract, signed by all parties to the contract providing for the listing of the real estate for sale, purchase, exchange, or rent.
II. The contract in paragraph I shall contain the following provisions:
(a) The date of execution;
(b) The address, location, description, and asking price of the real estate to sell, exchange, purchase, or lease;
(c) The names and addresses of all parties to the contract;
(d) The professional fee stated as a dollar amount, percentage, or other specific consideration; and
(e) The date the contract expires.
III. Any provisions to extend the contract for a specific period of time shall be agreed upon in writing by all parties to the contract.
IV. Net listings shall be prohibited. “Net listings” means a listing wherein the commission to be received is the difference between the selling price and a minimum selling price acceptable to the seller.
V. No broker or salesperson shall act on behalf of a buyer or lessee with regard to the purchase, exchange, or lease of any real estate or of the improvements thereon without a written contract, signed by all parties to the contract, establishing the buyer-agent relationship.
VI. The contract shall contain the following provisions:
(a) The date of execution;
(b) General description, location, and price range of real estate sought;
(c) The names and addresses of all parties to the contract;
(d) The professional fee stated as a dollar amount, percentage, or other specific consideration, including the method of payment and who is responsible for the fee; and
(e) The date the contract expires.
VII. Any provisions to extend the contract for a specific period of time shall be agreed upon in writing by all parties to the contract.
331-A:17 Advertisements.
I. A broker shall not advertise the sale, purchase, exchange, or lease of real property, other than the sale, exchange, or lease of his or her own real property, in a manner indicating the offer to sell, purchase, exchange, or lease is being made by a principal. Every such advertisement shall clearly indicate that it is an advertisement of a principal broker.
II. A salesperson or broker shall not advertise the sale, purchase, exchange, or lease of real property for another or others without including in the advertisement the name of the real estate brokerage firm with which he or she is associated, or the name of that person’s principal broker.
331-A:18 Duty to a Prospective Buyer. A person shall disclose to a prospective buyer/tenant any material physical, regulatory, mechanical, or on-site environmental condition affecting the subject property of which the person has actual knowledge. Such disclosure shall occur any time prior to the time the buyer/tenant makes a written offer to purchase or lease the subject property. This shall not create an affirmative obligation on the part of the person to investigate material defects.
331-A:19 Private Water Supply Disclosure.
I. A person, when listing property for sale, purchase, or exchange which is served by a private water supply and is used or proposed to be used for a one to 4 family dwelling, shall ask the seller for at least the following information:
(a) Type of system;
(b) Location;
(c) Malfunctions;
(d) Date of installation;
(e) Date of most recent water test; and
(f) Whether the seller has experienced a problem such as an unsatisfactory water test or a water test with notations.
II. Such information and any other information pertinent to the private water supply shall be conveyed, in writing, to a buyer prior to or during the preparation of an offer. The fact that information regarding the private water supply is not available shall also be conveyed, in writing, when such is the case.
331-A:20 Insulation Disclosure.
I. A person, when listing property for sale, purchase, or exchange which is used or proposed to be used for a one to 4 family dwelling, shall ask the seller for at least the following information:
(a) Type of insulation; and
(b) Location of insulation.
II. Such information and any other information pertinent to the insulation shall be conveyed, in writing, to a buyer prior to or during the preparation of an offer. The fact that information pertinent to the insulation is not available shall be conveyed, in writing, when such is the case.
331-A:21 Sewage Disposal System Disclosure.
I. A person, when listing property for sale, purchase, or exchange which is served by a private sewage disposal system and is used or proposed to be used for a one to 4 family dwelling, shall ask the seller for at least the following information:
(a) Location of system;
(b) Malfunctions;
(c) Date of most recent servicing; and
(d) Name of contractor or person who services the system.
II. Such information and any other information pertinent to the sewage disposal system shall be conveyed, in writing, to a buyer prior to or during preparation of an offer. The fact that information regarding the sewage disposal system is not available shall also be conveyed, in writing, when such is the case.
331-A:22 Trust Accounts.
I. Every resident and non-resident broker who in the course of his or her real estate business in the state of New Hampshire receives, accepts, and holds any monies on behalf of any principal, client, or other person shall at all times maintain a separate escrow or real estate trust account, distinct from his or her own account, in a financial institution of his or her choice located in this state, for the deposit of all such moneys so received by the person.
II. Upon acceptance and execution of a contract, all earnest money deposited and down payments received by a broker as agent for his or her principal in a real estate transaction shall be promptly deposited in his or her separate escrow or real estate trust account until either the consummation or termination of the transaction, when at that time the broker shall make full accounting thereof to the signatories to the contract.
2 Reference Change. Amend RSA 356-A:1, VII to read as follows:
VII. “Broker” means a real estate broker [duly licensed] in this state pursuant to RSA 331-A;
3 Rental Referrals. Amend RSA 358-A:1, IV to read as follows:
IV. “Rental referral agency” means any person who collects rental information for the purpose of assisting prospective tenants in locating specific rental properties in exchange for a fee or other consideration. It shall include, but not be limited to, businesses referred to by such terms as rental information service, apartment locator service, or apartment listing service. It shall not include businesses in which all agency employees and representatives who assist prospective tenants are [licensed] real estate salesmen or brokers, or are under the direct supervision of such salesmen or brokers, to the extent that such salesmen or brokers are actually engaging in or conducting the business, or acting in the capacity, of a real estate broker or salesman as defined and regulated by RSA 331-A.
4 Credit Services Organization. Amend RSA 359-D:2, II(b)(3) to read as follows:
(3) A real estate broker [licensed by this state and] acting within the course and scope of his [license] or her position.
5 Real Estate Broker’s Lien. Amend RSA 447-A:1, II to read as follows:
II. “Principal broker” means the individual broker, including the broker designated by a corporation, partnership, or association[, whom the New Hampshire real estate commission holds] responsible for the action of [licensees] persons who are assigned to such individual broker.
6 Real Estate Broker’s Lien; Notice. Amend RSA 447-A:4, X to read as follows:
X. The notice of lien shall state the name of the claimant, the name of the owner, a legal description of the property upon which the lien is being claimed, the amount for which the lien is claimed, and the real estate broker’s [license] number [of the broker]. The notice of lien shall recite that the information contained in the notice is true and accurate to the knowledge of the signator. The notice of lien shall be signed by the broker or by a person authorized to sign on behalf of the principal broker and shall be verified under oath.
7 Salary of Executive Director. Amend RSA 94:1-a, I(b) by deleting from grade CC the following:
CC real estate commission executive director
8 Repeal. The following are repealed:
I. RSA 5:13-a, relative to administrative attachment.
II. RSA 228:31-b, I and III, relative to turnpike funded sales.
III. RSA 310-B:3, IV, relative to an exception for appraisers.
IV. RSA 356-A:16, IV, relative to the land sales full disclosure act.
V. RSA 356-B:65, IX, relative to condominium sales.
9 Effective Date. This act shall take effect January 1, 2007.
LBAO
06-2068
Revised 12/20/05
HB 1661 FISCAL NOTE
AN ACT relative to the practice of real estate sales and eliminating the real estate commission.
FISCAL IMPACT:
The Real Estate Commission and Judicial Branch indicate this bill will decrease state revenue by an indeterminable amount, and have an indeterminable fiscal impact on state expenditures in FY 2007 and each year thereafter. This bill will have no fiscal impact on county and local revenue or expenditures.
METHODOLOGY:
The Real Estate Commission states the proposed changes to RSA 331-A and other statutes relating to salespersons and brokers would eliminate the Real Estate Commission and eliminate the licensing of real estate brokers and salespersons. These changes would require all violations of RSA 331-A and other statues pertaining to unlicensed individuals who practice real estate to be filed with the New Hampshire Court System. The Commission receives hundreds of complaints yearly by telephone or in person, and staff screens all complaints received to ensure that the allegations fall under RSA 331-A and Commission administrative rules prior to supplying a formal complaint package. The Commission distributed 130 complaint packages in FY 2003, 121 complaint packages in FY 2004, and 186 complaint packages in FY 2005. Of the packages distributed, 38 formal complaints were filed in FY 2003, 41 formal complaints were filed in FY 2004, and 36 formal complaints were filed in FY 2005. The Commission’s operating budget is $779,044 in FY 2006 ($277,927 agency income and $501,117 in general funds), and $774,535 in FY 2007 ($277,997 agency income, $496,538 in general funds). The Commission is unable to determine the fiscal impact on state expenditures at this time since any savings resulting from its elimination could be offset by additional costs to the Judicial Branch or the agency who will assume any of the responsibilities of the Commission. The Commission is required to generate revenues equal to 125% of its direct operating costs, which will result in a decrease in state general fund revenue of approximately $500,000 annually.
The Judicial Branch states current law contains a comprehensive regulatory and enforcement procedure centered in the Real Estate Commission, while this bill states any person violating any requirement of RSA 331-A shall be guilty of a violation. The Branch assumes it would be up to local law enforcement to bring violation actions and has no information on which to estimate how many actions would be brought. Another potential impact to the Branch is on actions for brokerage commissions, and with an unregulated profession there could be more such actions which are brought in Superior Court. The Branch is unable to determine the exact fiscal impact at this time.
The Department of State indicates this bill will have no fiscal impact on the department.