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S1240.......................................by COMMERCE AND HUMAN RESOURCES
REAL ESTATE BROKERAGES - Amends existing law relating to real estate
brokerages to define types of brokerage relationships specifically relating
to dual representation relationships; to specify terms of disclosure
required in specific brokerage relationships; and to specify terms of
express written consent to dual representation.
01/28 Senate intro - 1st rdg - to printing
01/29 Rpt prt - to Com/HuRes
02/16 Rpt out - rec d/p - to 2nd rdg
02/17 2nd rdg - to 3rd rdg
02/24 3rd rdg - PASSED - 25-7-3
AYES -- Andreason, Bailey, Bunderson, Burkett, Burtenshaw,
Calabretta, Cameron, Compton, Darrington, Gannon, Geddes, Goedde,
Ingram, Keough, Little, Lodge, Malepeai, Marley, McKenzie,
McWilliams, Noble, Sorensen, Stegner, Stennett, Werk
NAYS -- Davis, Kennedy, Noh, Pearce, Schroeder, Sweet, Williams
Absent and excused -- Brandt, Hill, Richardson
Floor Sponsor - Compton
Title apvd - Held at Desk
02/25 Motion to Reconsider Failed
Transmitted to the House
02/26 House intro - 1st rdg - to Bus
03/04 Rpt out - rec d/p - to 2nd rdg
03/05 2nd rdg - to 3rd rdg
03/09 3rd rdg - PASSED - 59-6-5
AYES -- Andersen, Barraclough, Bayer, Bedke, Bell, Black, Block, Boe,
Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy, Deal,
Denney, Douglas, Eberle, Ellsworth, Eskridge, Field(18), Field(23),
Gagner, Garrett, Harwood, Jaquet, Jones, Kellogg, Langhorst,
Martinez, McGeachin, McKague, Meyer, Miller, Mitchell, Naccarato,
Nielsen, Pasley-Stuart, Raybould, Ridinger, Ring, Roberts, Robison,
Rydalch, Sali, Sayler, Schaefer, Shepherd, Shirley, Skippen,
Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail, Mr.
Speaker
NAYS -- Bauer, Henbest, Kulczyk, Langford, Moyle, Ringo
Absent and excused -- Barrett, Edmunson, Lake, Wills, Wood
Floor Sponsor - Snodgrass
Title apvd - to Senate
03/10 To enrol
03/11 Rpt enrol - Pres signed
03/12 Sp signed
03/15 To Governor
03/19 Governor signed
Session Law Chapter 119
Effective: 07/01/04
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-seventh Legislature Second Regular Session - 2004
IN THE SENATE
SENATE BILL NO. 1240
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO REAL ESTATE BROKERS AND SALESPERSONS; AMENDING SECTION 54-2083,
3 IDAHO CODE, TO DEFINE ADDITIONAL TERMS; AMENDING SECTION 54-2084, IDAHO
4 CODE, TO DEFINE TYPES OF BROKERAGE RELATIONSHIPS; AMENDING SECTION
5 54-2085, IDAHO CODE, TO SPECIFY TERMS OF DISCLOSURE REQUIRED IN SPECIFIC
6 BROKERAGE RELATIONSHIPS; AMENDING SECTION 54-2087, IDAHO CODE, TO ADOPT
7 CONSISTENT TERMINOLOGY; AMENDING SECTION 54-2088, IDAHO CODE, TO SPECIFY
8 TERMS OF EXPRESS WRITTEN CONSENT TO DUAL REPRESENTATION AND TO MAKE TECH-
9 NICAL CORRECTIONS; AND AMENDING SECTION 54-2090, IDAHO CODE, TO ADOPT CON-
10 SISTENT TERMINOLOGY.
11 Be It Enacted by the Legislature of the State of Idaho:
12 SECTION 1. That Section 54-2083, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 54-2083. DEFINITIONS. As used in sections 54-2082 through 54-2097, Idaho
15 Code:
16 (1) "Adverse material fact" means a fact that would significantly affect
17 the desirability or value of the property to a reasonable person or which
18 establishes a reasonable belief that a party to the transaction is not able to
19 or does not intend to complete that party's obligations under a real estate
20 contract.
21 (2) "Agency representation" or "representation" means the statutory
22 agency relationship between a client and a brokerage in a regulated real
23 estate transaction with respect to which the duties defined in section
24 54-2087, Idaho Code, are applicable. See also "representation."
25 (3) "Assigned agent" means, where a brokerage is representing more than
26 one (1) party to the transaction as a limited dual agent as provided in sec-
27 tion 54-2088, Idaho Code, the sales associate assigned by the brokerage to act
28 on behalf of one (1) client and to represent solely that client consistent
29 with the applicable duties set forth in section 54-2087, Idaho Code. The des-
30 ignated broker shall not act as an assigned agent of the brokerage.
31 (4) "Brokerage" means a licensed designated broker, the licensed real
32 estate business represented by that broker and its affiliated associated
33 licensees.
34 (45) "Client" means a buyer or seller, or a prospective buyer or seller,
35 or both who have entered into an express written contract or agreement with a
36 brokerage for agency representation in a regulated real estate transaction.
37 (56) "Confidential client information" means information gained from or
38 about a client that:
39 (a) Is not a matter of public record;
40 (b) The client has not disclosed or authorized to be disclosed to third
41 parties;
42 (c) If disclosed, would be detrimental to the client; and
43 (d) The client would not be personally obligated to disclose to another
2
1 party to the transaction. Information which is required to be disclosed by
2 statute or rule or where the failure to disclose would constitute fraudu-
3 lent misrepresentation is not confidential client information within the
4 provisions of this act. Information generally disseminated in the
5 marketplace, including "sold" prices of property, is also not confidential
6 client information within the provisions of this act.
7 (67) "Customer" means a buyer or seller, or prospective buyer or seller,
8 who is not represented in an agency relationship in a regulated real estate
9 transaction.
10 (8) "Designated broker" means an individual who is licensed as a real
11 estate broker in Idaho and who is designated by the brokerage company to be
12 responsible for the supervision of the brokerage company and the activities of
13 any associated licensees in accordance with this chapter.
14 (79) "Express agreement" or "express contract" means a written agreement
15 by the parties to undertake brokerage representation. An express agreement
16 under this statute can only be made in writing, and cannot be made orally or
17 by assumption or implication.
18 (810) "Idaho real estate license law and rules" means chapter 20, title
19 54, Idaho Code, and all administrative rules promulgated thereunder.
20 (911) "Limited disclosed dual agent" means only that limited a brokerage
21 representation in which that is representing both a buyer and a seller are as
22 clients for the purposes of in a regulated real estate transaction, and as
23 specifically allowed in this act provided in section 54-2088, Idaho Code.
24 (102) "Ministerial acts" means reasonably necessary and customary acts
25 typically performed by real estate licensees in assisting a transaction to its
26 closing or conclusion.
27 (113) "Nonagent" means a brokerage and its licensees working with or
28 assisting a buyer or seller as a customer to which the duties provided in sec-
29 tion 54-2086, Idaho Code, are applicable.
30 (124) "Regulated real estate transaction" means those real estate transac-
31 tions for which a real estate license is required under chapter 20, title 54,
32 Idaho Code.
33 (135) "Representation" or "brokerage representation" or "represented"
34 means the statutory agency relationship between a client and a brokerage in a
35 regulated real estate transaction with respect to which the duties provided in
36 section 54-2087, Idaho Code, are applicable.
37 (16) "Sales associate" means a salesperson or an associate broker licensed
38 under and associated with a designated broker.
39 SECTION 2. That Section 54-2084, Idaho Code, be, and the same is hereby
40 amended to read as follows:
41 54-2084. BROKERAGE AGENCY RELATIONSHIPS -- CREATION. (1) A buyer or
42 seller is not represented by a brokerage in a regulated real estate transac-
43 tion unless the buyer or seller and the brokerage agree, in a separate written
44 document, to such representation. No type of agency representation may be
45 assumed by a brokerage, buyer or seller or created orally or by implication.
46 (2) Types of brokerage relationships. The following types of brokerage
47 relationships are recognized:
48 (a) Nonagency;
49 (b) Agency representation;
50 (c) Limited dual agency representation;
51 (d) Limited dual agency with assigned agents.
52 SECTION 3. That Section 54-2085, Idaho Code, be, and the same is hereby
3
1 amended to read as follows:
2 54-2085. DISCLOSURE AND WRITING REQUIREMENTS -- AGENCY DISCLOSURE BRO-
3 CHURE AND REPRESENTATION CONFIRMATION. (1) A licensee shall give to a prospec-
4 tive buyer or seller at the first substantial business contact the agency
5 disclosure brochure adopted or approved by the Idaho real estate commission.
6 The commission by motion shall establish the form and contents of the brochure
7 in accordance with the provisions of this chapter. Each brokerage shall keep a
8 signed and dated record of a buyer or seller's receipt of the agency disclo-
9 sure brochure.
10 (2) The agency disclosure brochure shall list the types of representation
11 available to a buyer or seller in a regulated real estate transaction, the
12 legal duties and obligations owed to the buyer or seller in each type of rep-
13 resentation and a conspicuous notice that no representation will exist absent
14 a written agreement between the buyer or seller and the brokerage.
15 (3) A brokerage's relationship with a buyer and or seller as an agent,
16 nonagent, or limited dual agent, or limited dual agent with assigned agents,
17 must be determined and all necessary agreements executed no later than the
18 preparation of a purchase and sale agreement. A brokerage must disclose its
19 relationship to both buyer and seller in any transaction no later than the
20 preparation or presentation of a purchase and sale agreement.
21 (4) In addition, a purchase and sale agreement, an attachment thereto, or
22 other document drafted in connection with a regulated real estate transaction
23 shall contain the following confirmation of the relationship, whether it
24 involved representation or not, between the buyer, seller and licensees
25 involved:
26 REPRESENTATION CONFIRMATION AND ACKNOWLEDGMENT OF DISCLOSURE
27 Check one (1) box in Section 1 below and one (1) box in Section
28 2 below to confirm that in this transaction, the brokerage(s)
29 involved had the following relationship(s) with the BUYER(S) and
30 SELLER(S).
31 Section 1:
32 A. The brokerage working with the BUYER(S) is acting as an
33 AGENT for the BUYER(S).
34 B. The brokerage working with the BUYER(S) is acting as a
35 LIMITED DUAL AGENT for the BUYER(S), without an ASSIGNED AGENT.
36 C. The brokerage working with the BUYER(S) is acting as a
37 LIMITED DUAL AGENT for the BUYER(S), and has an ASSIGNED AGENT
38 acting solely on behalf of the BUYER(S).
39 D. The brokerage working with the BUYER(S) is acting as a
40 NONAGENT for the BUYER(S).
41 Section 2:
42 A. The brokerage working with the SELLER(S) is acting as an
43 AGENT for the SELLER(S).
44 B. The brokerage working with the SELLER(S) is acting as a
45 LIMITED DUAL AGENT for the SELLER(S), without an ASSIGNED AGENT.
46 C. The brokerage working with the SELLER(S) is acting as a
47 LIMITED DUAL AGENT for the SELLER(S), and has an ASSIGNED AGENT
48 acting solely on behalf of the SELLER(S).
49 D. The brokerage working with the SELLER(S) is acting as a
50 NONAGENT for the SELLER(S).
51 Each party signing this document confirms that he or she has
52 received, read and understood the Agency Disclosure Brochure adopted
53 or approved by the Idaho real estate commission and has elected con-
54 sented to the relationship confirmed above. In addition, each party
4
1 confirms that the brokerage's agency office policy was made available
2 for inspection and review. EACH PARTY UNDERSTANDS THAT HE OR SHE IS A
3 "CUSTOMER" AND IS NOT REPRESENTED BY A BROKERAGE UNLESS THERE IS A
4 SIGNED WRITTEN AGREEMENT FOR AGENCY REPRESENTATION.
5 (5) The failure of a licensee to timely give a buyer or seller the agency
6 disclosure brochure or the failure of a licensee to properly and timely obtain
7 any written agreement or confirmation required by this chapter shall be a
8 violation of the Idaho real estate license law and may subject the licensee to
9 disciplinary action according to the provisions of sections 54-2058 through
10 54-2078, Idaho Code.
11 (6) Neither the commission brochure nor the representation confirmation
12 shall create a brokerage relationship. A separate, signed, written agreement
13 is required for that purpose.
14 SECTION 4. That Section 54-2087, Idaho Code, be, and the same is hereby
15 amended to read as follows:
16 54-2087. DUTIES TO A CLIENT. If a buyer or seller enters into a written
17 contract for representation in a regulated real estate transaction, that buyer
18 or seller becomes a client to whom the brokerage and its licensees owe the
19 following agency duties and obligations:
20 (1) To perform the terms of the written agreement with the client;
21 (2) To exercise reasonable skill and care;
22 (3) To promote the best interests of the client in good faith, honesty
23 and fair dealing including, but not limited to:
24 (a) Disclosing to the client all adverse material facts actually known or
25 which reasonably should have been known by the licensee;
26 (b) Seeking a buyer to purchase the seller's property at a price, and
27 under terms and conditions acceptable to the seller and assisting in the
28 negotiation therefor; or
29 (c) Seeking a property for purchase at a price and under terms and condi-
30 tions acceptable to the buyer and assisting in the negotiation therefor;
31 (d) For the benefit of a client/buyer: when appropriate, advising the
32 client to obtain professional inspections of the property or to seek
33 appropriate tax, legal and other professional advice or counsel;
34 (e) For the benefit of a client/seller: upon written request by a
35 client/seller, requesting reasonable proof of a prospective buyer's finan-
36 cial ability to purchase the real property which is the subject matter of
37 the transaction. This duty may be satisfied by any appropriate method
38 suitable to the transaction or, when deemed necessary by the real estate
39 licensee, by advising the client to consult with an accountant, lawyer, or
40 other professional as dictated by the transaction.
41 (4) To properly account for moneys or property placed in the care and
42 responsibility of the brokerage; and
43 (5) To maintain the confidentiality of specific client information as
44 defined by and to the extent required in this chapter, and as follows:
45 (a) The duty to a client continues beyond the termination of representa-
46 tion only so long as the information continues to be confidential client
47 information as defined in this chapter, and only so long as the informa-
48 tion does not become generally known in the marketing community from a
49 source other than the brokerage or its affiliated associated licensees;
50 (b) A licensee who personally has gained confidential client information
51 about a buyer or seller while associated with one (1) broker and who later
52 affiliates associates with a different broker remains obligated to main-
53 tain the client confidentiality as required by this chapter;
5
1 (c) If a brokerage represents a buyer or seller whose interests conflict
2 with those of a former client, the brokerage shall inform the second cli-
3 ent of the brokerage's prior representation of the former client and that
4 confidential client information obtained during the first representation
5 cannot be given to the second client. Nothing in this section shall pre-
6 vent the brokerage from asking the former client for permission to release
7 such information;
8 (d) Nothing in this section is intended to create a privileged communica-
9 tion between any client and any brokerage or licensee for purposes of
10 civil, criminal or administrative legal proceedings.
11 (6) Unless otherwise agreed to in writing, a brokerage and its licensees
12 owe no duty to a client to conduct an independent inspection of the property
13 and owe no duty to independently verify the accuracy or completeness of any
14 statement or representation made regarding a property. Unless otherwise agreed
15 to in writing, a brokerage and its licensees owe no duty to conduct an inde-
16 pendent investigation of either party's financial ability to complete a real
17 estate transaction.
18 SECTION 5. That Section 54-2088, Idaho Code, be, and the same is hereby
19 amended to read as follows:
20 54-2088. LIMITED DISCLOSED DUAL AGENCY AND ASSIGNED AGENCY PERMITTED. (1)
21 A brokerage may act represent both the buyer and the seller in the same trans-
22 action only as a limited disclosed dual agent and only with the express writ-
23 ten consent of all parties to other clients involved in the transaction. Such
24 (2) A brokerage acting as a limited dual agent may, at the option of the
25 brokerage and with the express written consent of the other clients involved
26 in the transaction, assign separate sales associates to each client to act on
27 behalf of and represent that client solely. The designated broker shall not
28 act as an assigned agent of the brokerage.
29 (3) The express written consent to limited dual agency shall contain sep-
30 arate signatures of all parties to clients involved in the transaction and
31 shall contain the following language:
32 CONSENT TO LIMITED DUAL REPRESENTATION AND ASSIGNED AGENCY
33 The undersigned have received, read and understand the Agency
34 Disclosure Brochure. The undersigned understand that the brokerage
35 involved in this transaction will be or may be providing agency rep-
36 resentation to both the buyer(s) and the seller(s). The undersigned
37 each understands that, as an agents for both buyer/client and
38 seller/client, the a brokerage(s) will be a limited dual agents of
39 each client and cannot advocate on behalf of one client over another,
40 and cannot legally disclose to either party client certain confiden-
41 tial client information concerning price negotiations, terms or fac-
42 tors motivating the buyer/client to buy or the seller/client to sell
43 without specific written permission of the disclosing party client to
44 whom the information pertains. The specific duties, obligations and
45 limitations of a limited dual agent are contained in the Agency Dis-
46 closure Brochure as required by Section 54-2085, Idaho Code. The
47 undersigned each understands that a limited dual agent does not have
48 a duty of undivided loyalty to either client.
49 The undersigned further acknowledge that, to the extent the bro-
50 kerage firm offers assigned agency as a type of agency representa-
51 tion, individual sales associates may be assigned to represent each
52 client to act solely on behalf of the client consistent with applica-
53 ble duties set forth in Section 54-2087, Idaho Code. In an assigned
6
1 agency situation, the designated broker (the broker who supervises
2 the sales associates) will remain a limited dual agent of the client
3 and shall have the duty to supervise the assigned agents in the ful-
4 fillment of their duties to their respective clients, to refrain from
5 advocating on behalf of any one client over another, and to refrain
6 from disclosing or using, without permission, confidential informa-
7 tion of any other client with whom the brokerage has an agency rela-
8 tionship.
9 (24) All duties and obligations owed to a buyer/client or a seller/client
10 under section 54-2087, Idaho Code, apply to limited disclosed dual agency
11 relationships to the extent they do not unreasonably conflict with duties and
12 obligations owed to the other client, except that:
13 (a) A limited disclosed dual agent shall not disclose any of the follow-
14 ing without express written consent of the client to whom the information
15 pertains:
16 (i) That a buyer is willing to pay more than the listing price of
17 the property;
18 (ii) That a seller is willing to accept less than the listing price
19 for the property;
20 (iii) The factors motivating the buyer to buy or the seller to sell;
21 (iv) That a buyer or seller will agree to a price or financing terms
22 other than those offered.
23 (b) A limited disclosed dual agent does not have a duty of undivided loy-
24 alty to either buyer/client or seller/client, and by consenting to limited
25 dual agency, the buyer and seller agree to those limitations.
26 (5) The following apply whenever a brokerage acting as a limited dual
27 agent assigns separate sales associates to act on behalf of the separate cli-
28 ents:
29 (a) Designated broker. The designated broker continues to act as limited
30 dual agent of each client with the duty to:
31 (i) Supervise the assigned agents in the fulfillment of their
32 duties to their respective clients;
33 (ii) Refrain from advocating on behalf of any one client over
34 another; and
35 (iii) Refrain from disclosing or using, without permission, confiden-
36 tial information of any other client with whom the brokerage has an
37 agency relationship.
38 (b) Imputed knowledge. Knowledge of any fact known to the brokerage, its
39 designated broker, or any other licensee associated with the brokerage,
40 shall not be imputed to an assigned agent of the brokerage so as to create
41 an impermissible conflict of interest. Nothing in this subsection shall
42 diminish a licensee's duty with respect to facts actually known or that
43 reasonably should have been known to the licensee.
44 (6) If a designated broker determines that confidential information of a
45 client has been disclosed to another client in the transaction in violation of
46 this section, the designated broker shall promptly provide written notice of
47 the disclosure to the affected client.
48 (37) No cause of action for any buyer or seller shall arise against a
49 limited disclosed dual agent for making any required or permitted disclosure
50 under this act, nor does making such disclosure terminate the limited dis-
51 closed dual agency.
52 (48) Receipt of the agency disclosure brochure required by section
53 54-2085, Idaho Code, and the signed consent to dual representation by buyer
54 and seller agreeing to limited disclosed dual agency representation shall be
55 sufficient informed legal consent to dual representation under this act. A
7
1 consent by the buyer and seller to possible dual representation in the future,
2 such as may be contained in a written marketing or representation agreement
3 between a brokerage and client, shall also be considered effective and
4 informed legal consent to dual representation.
5 SECTION 6. That Section 54-2090, Idaho Code, be, and the same is hereby
6 amended to read as follows:
7 54-2090. WRITTEN OFFICE POLICY REQUIRED. Each designated broker shall be
8 responsible to adopt and maintain in each office, including branch offices, a
9 written policy which identifies and describes the types of representation in
10 which that brokerage and its affiliated associated licensees may engage with
11 any buyer or seller, or both, as a part of that office's real estate brokerage
12 services.
STATEMENT OF PURPOSE
RS 13469C1
This Bill responds to consumer and industry demand by allowing a
real estate brokerage to provide full services when representing
both the buyer and the seller in the same real estate transaction.
Currently, the statute allows a single brokerage to represent both
the buyer and the seller (with the written consent of the parties),
but requires that such representation be "limited." This bill
creates a new option for brokerages: it authorizes a brokerage to
assign a different sales associate to represent each party,
provided the brokerage obtains the written consent of both parties
and has developed an office policy to ensure that client
confidences are not compromised. The designated broker would not
be able to act as an assigned agent, but must remain a limited dual
agent.
FISCAL IMPACT
None to the General Fund, as no general fund dollars are used by
IREC. None to any political subdivisions, as IREC is funded
primarily from license fees. None to the Agency.
CONTACT
Name: Donna Jones
Agency: Real Estate Commission
Phone: 334-3425 ext. 232
Statement of Purpose/Fiscal Impact S 1240