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S1097......................................................by STATE AFFAIRS
REAL ESTATE BROKERS - Amends existing law to delete language requiring that
brokerages and their licensees conduct certain investigations; to provide
that brokerages and their licensees owe no duty to conduct independent
inspections of property, to independently verify certain statements or
representations or to conduct independent investigations relating to a
party's financial ability; and to revise provisions relating to the
vicarious liability of clients, licensees and brokerages.
02/10 Senate intro - 1st rdg - to printing
02/11 Rpt prt - to Com/HuRes
02/28 Rpt out - rec d/p - to 2nd rdg
03/03 2nd rdg - to 3rd rdg
03/06 3rd rdg - PASSED - 29-6-0
AYES -- Andreason, Bailey, Brandt, Bunderson, Burtenshaw, Cameron,
Compton, Darrington, Davis, Gannon, Geddes, Goedde, Hill, Ingram,
Keough, Little, Lodge, Malepeai, McKenzie, McWilliams,
Noble(Anderson), Pearce, Schroeder, Sorensen, Stegner, Stennett,
Sweet, Werk, Williams
NAYS -- Burkett, Calabretta, Kennedy, Marley, Noh, Richardson
Absent and excused -- None
Floor Sponsor - Goedde
Title apvd - to House
03/07 House intro - 1st rdg - to Bus
03/20 Rpt out - rec d/p - to 2nd rdg
03/21 2nd rdg - to 3rd rdg
03/27 3rd rdg - PASSED - 67-2-1
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
Black, Block, Boe, Bolz, Bradford, Campbell, Collins, Crow, Cuddy,
Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Gagner, Garrett, Harwood, Henbest(Bray),
Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez,
McGeachin, McKague, Meyer, Miller, Mitchell, Moyle, Nacarrato,
Nielsen, Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch,
Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen, Smith(30),
Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood, Mr. Speaker
NAYS -- Cannon, Smith(24)
Absent and excused -- Clark
Floor Sponsors - Snodgrass & Tilman
Title apvd - to Senate
03/28 To enrol
03/31 Rpt enrol - Pres signed
04/01 Sp signed
04/02 To Governor
04/08 Governor signed
Session Law Chapter 243
Effective: 07/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE SENATE
SENATE BILL NO. 1097
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE IDAHO REAL ESTATE BROKERAGE REPRESENTATION ACT; AMENDING SEC-
3 TION 54-2087, IDAHO CODE, TO DELETE LANGUAGE REQUIRING THAT BROKERAGES AND
4 THEIR LICENSEES CONDUCT CERTAIN INVESTIGATIONS, TO PROVIDE THAT UPON WRIT-
5 TEN REQUEST BY A CLIENT OR SELLER BROKERAGES AND THEIR LICENSEES SHALL
6 REQUEST CERTAIN PROOF RELATING TO A PROSPECTIVE BUYER'S FINANCIAL ABILITY
7 TO PURCHASE REAL PROPERTY AND TO PROVIDE THAT UNLESS OTHERWISE AGREED TO
8 IN WRITING BROKERAGES AND THEIR LICENSEES OWE NO DUTY TO CONDUCT INDEPEN-
9 DENT INSPECTIONS OF PROPERTY, TO INDEPENDENTLY VERIFY CERTAIN STATEMENTS
10 OR REPRESENTATIONS OR TO CONDUCT INDEPENDENT INVESTIGATIONS RELATING TO A
11 PARTY'S FINANCIAL ABILITY; AND AMENDING SECTION 54-2093, IDAHO CODE, TO
12 REVISE PROVISIONS RELATING TO THE VICARIOUS LIABILITY OF CLIENTS, LICEN-
13 SEES AND BROKERAGES.
14 Be It Enacted by the Legislature of the State of Idaho:
15 SECTION 1. That Section 54-2087, Idaho Code, be, and the same is hereby
16 amended to read as follows:
17 54-2087. DUTIES TO A CLIENT. If a buyer or seller enters into a written
18 contract for representation in a regulated real estate transaction, that buyer
19 or seller becomes a client to whom the brokerage and its licensees owe the
20 following agency duties and obligations:
21 (1) To perform the terms of the written agreement with the client;
22 (2) To exercise reasonable skill and care;
23 (3) To promote the best interests of the client in good faith, honesty
24 and fair dealing including, but not limited to:
25 (a) Disclosing to the client all adverse material facts actually known or
26 which reasonably should have been known by the licensee;
27 (b) Seeking a buyer to purchase the seller's property at a price, and
28 under terms and conditions acceptable to the seller and assisting in the
29 negotiation therefor; or
30 (c) Seeking a property for purchase at a price and under terms and condi-
31 tions acceptable to the buyer and assisting in the negotiation therefor;
32 (d) For the benefit of a client/buyer: conducting a reasonable investiga-
33 tion of the property and material representations about the property made
34 by the seller or seller's agent, or when appropriate, advising the client
35 to obtain professional inspections of the property or to seek appropriate
36 tax, legal and other professional advice or counsel;
37 (e) For the benefit of a client/seller: upon written request by a
38 client/seller, requesting reasonable proof of a prospective buyer's finan-
39 cial ability to purchase the real property which is the subject matter of
40 the transaction. This duty may be satisfied by any appropriate method
41 suitable to the transaction or, when deemed necessary by the real estate
42 licensee, by advising the client to consult with an accountant, lawyer, or
43 other professional as dictated by the transaction.
2
1 (4) To properly account for moneys or property placed in the care and
2 responsibility of the brokerage; and
3 (5) To maintain the confidentiality of specific client information as
4 defined by and to the extent required in this chapter, and as follows:
5 (a) The duty to a client continues beyond the termination of representa-
6 tion only so long as the information continues to be confidential client
7 information as defined in this chapter, and only so long as the informa-
8 tion does not become generally known in the marketing community from a
9 source other than the brokerage or its affiliated licensees;
10 (b) A licensee who personally has gained confidential client information
11 about a buyer or seller while associated with one (1) broker and who later
12 affiliates with a different broker remains obligated to maintain the cli-
13 ent confidentiality as required by this chapter;
14 (c) If a brokerage represents a buyer or seller whose interests conflict
15 with those of a former client, the brokerage shall inform the second cli-
16 ent of the broker's prior representation of the former client and that
17 confidential client information obtained during the first representation
18 cannot be given to the second client. Nothing in this section shall pre-
19 vent the brokerage from asking the former client for permission to release
20 such information;
21 (d) Nothing in this section is intended to create a privileged communica-
22 tion between any client and any brokerage or licensee for purposes of
23 civil, criminal or administrative legal proceedings.
24 (6) Unless otherwise agreed to in writing, a brokerage and its licensees
25 owe no duty to a client to conduct an independent inspection of the property
26 and owe no duty to independently verify the accuracy or completeness of any
27 statement or representation made regarding a property. Unless otherwise agreed
28 to in writing, a brokerage and its licensees owe no duty to conduct an inde-
29 pendent investigation of either party's financial ability to complete a real
30 estate transaction.
31 SECTION 2. That Section 54-2093, Idaho Code, be, and the same is hereby
32 amended to read as follows:
33 54-2093. VICARIOUS LIABILITY ABOLISHED. (1) A client, as defined in this
34 act, whether buyer or seller, shall not be liable for a wrongful act, error,
35 omission or misrepresentation of his broker/representative, his broker's
36 licensees, or subagent unless the client had actual knowledge of or reasonably
37 should have known of the wrongful act, error, omission or misrepresentation.
38 (2) A licensee or brokerage engaged in representation of a client shall
39 be entitled to rely upon representations made by a client and shall not be
40 liable for a wrongful act, error, omission or misrepresentation of made by the
41 client or of made by any subagent unless the licensee or brokerage had actual
42 knowledge or reasonably should have known of the wrongful act, error, omission
43 or misrepresentation.
44 (3) Nothing in this section shall be construed to diminish or limit any
45 of the broker's or licensee's responsibilities under chapter 20, title 54,
46 Idaho Code, or the rules promulgated thereunder.
STATEMENT OF PURPOSE
RS 12966
The purpose of this legislation is to clarify the role of a
real estate broker/salesperson in a real estate transaction.
The legislation removes code language relating to the duty to
inspect real property and investigate the financial ability of
parties to the transaction (unless otherwise agreed to in
writing), and affirms that a real estate salesperson may rely
on statements made by the client unless the salesperson
actually knows or reasonably should have known that the
statement is false.
FISCAL IMPACT
There is no fiscal impact.
Contact Person:
Name: Alex LaBeau
Idaho Association of REALTORS
342-3585 or 867-5409 S 1097