2007 Legislation
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HOUSE BILL NO. 135 – Real estate brokerage, represntatn

HOUSE BILL NO. 135

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Bill Status



H0135...........................................................by BUSINESS
REAL ESTATE BROKERAGE REPRESENTATION ACT - Amends existing law relating to
the Idaho Real Estate Brokerage Representation Act to revise definitions;
to revise duties to customers and clients; to provide that broker
compensation or an agreement for broker compensation shall not constitute
an agreement for agency representation or otherwise create an agency
relationship; and to revise provisions relating to the duration of an
agency relationship.
                                                                        
02/08    House intro - 1st rdg - to printing
02/09    Rpt prt - to Bus
02/20    Rpt out - rec d/p - to 2nd rdg
02/21    2nd rdg - to 3rd rdg
02/23    3rd rdg - PASSED - 64-0-6
      AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
      Block, Bock, Boe, Bolz, Brackett, Bradford, Chadderdon, Chavez, Chew,
      Clark, Crane, Edmunson, Eskridge, Hagedorn, Hart, Harwood, Henbest,
      Henderson, Jaquet, Killen, King, Kren, Labrador, Lake, LeFavour,
      Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle, Nielsen,
      Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ringo, Roberts,
      Ruchti, Rusche, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
      Shively, Smith(30), Snodgrass, Stevenson, Thayn, Trail, Vander Woude,
      Wills, Wood(27), Wood(35)
      NAYS -- None
      Absent and excused -- Collins, Durst, Loertscher, Ring, Smith(24),
      Mr. Speaker
    Floor Sponsor - Patrick
    Title apvd - to Senate
02/26    Senate intro - 1st rdg - to Com/HuRes
03/07    Rpt out - rec d/p - to 2nd rdg
03/08    2nd rdg - to 3rd rdg
03/13    3rd rdg - PASSED - 31-3-1
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Cameron,
      Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes, Goedde,
      Hammond, Heinrich, Hill, Jorgenson, Keough, Lodge, Malepeai, McGee,
      McKague, McKenzie, Pearce, Richardson, Schroeder, Siddoway, Stegner,
      Stennett, Werk
      NAYS -- Burkett, Kelly, Langhorst
      Absent and excused -- Little
    Floor Sponsor - Goedde
    Title apvd - to House
03/14    To enrol
03/15    Rpt enrol - Sp signed - Pres signed
03/16    To Governor
03/22    Governor signed
         Session Law Chapter 150
         Effective: 07/01/07

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 135
                                                                        
                                   BY BUSINESS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO REAL ESTATE BROKERAGE REPRESENTATION ACT; AMENDING  SEC-
  3        TION 54-2083, IDAHO CODE, TO REVISE DEFINITIONS; AMENDING SECTION 54-2086,
  4        IDAHO  CODE, TO REVISE DUTIES TO CUSTOMERS AND TO MAKE A TECHNICAL CORREC-
  5        TION; AMENDING SECTION 54-2087, IDAHO CODE, TO REVISE DUTIES  TO  CLIENTS;
  6        AMENDING  SECTION 54-2089, IDAHO CODE, TO PROVIDE THAT BROKER COMPENSATION
  7        OR AN AGREEMENT FOR BROKER COMPENSATION SHALL NOT CONSTITUTE AN  AGREEMENT
  8        FOR  AGENCY REPRESENTATION OR OTHERWISE CREATE AN AGENCY RELATIONSHIP; AND
  9        AMENDING SECTION 54-2091, IDAHO CODE, TO REVISE DESCRIPTIVE  LANGUAGE  AND
 10        TO REVISE PROVISIONS RELATING TO THE DURATION OF AN AGENCY RELATIONSHIP.
                                                                        
 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 associated licensees.
 33        (5)  "Client"  means  a buyer or seller, or a prospective buyer or seller,
 34    or both who have entered into an express written contract or agreement with  a
 35    brokerage for agency representation in a regulated real estate transaction.
 36        (6)  "Confidential  client  information"  means information gained from or
 37    about a client that:
 38        (a)  Is not a matter of public record;
 39        (b)  The client has not disclosed or authorized to be disclosed  to  third
 40        parties;
 41        (c)  If disclosed, would be detrimental to the client; and
 42        (d)  The  client  would not be personally obligated to disclose to another
 43        party to the transaction. Information which is required to be disclosed by
                                                                        
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  1        statute or rule or where the failure to disclose would constitute  fraudu-
  2        lent  misrepresentation  is not confidential client information within the
  3        provisions of this act  sections  54-2082  through  54-2097,  Idaho  Code.
  4        Information  generally  disseminated  in the marketplace, including "sold"
  5        prices of property, is also not confidential client information within the
  6        provisions of this act such sections.
  7        (7)  "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)  "Customer services agreement" or "compensation  agreement"  means  an
 11    agreement  between a real estate brokerage and a customer for the provision of
 12    any real estate services for which the brokerage has the right to  be  compen-
 13    sated by the customer.
 14        (9)  "Designated  broker"  means  an  individual who is licensed as a real
 15    estate broker in Idaho and who is designated by the brokerage  company  to  be
 16    responsible for the supervision of the brokerage company and the activities of
 17    any associated licensees in accordance with this chapter.
 18        (9)  "Express  agreement"  or "express contract" means a written agreement
 19    by the parties to undertake brokerage  representation.  An  express  agreement
 20    under  this  statute can only be made in writing, and cannot be made orally or
 21    by assumption or implication.
 22        (10) "Idaho real estate license law and rules" means chapter 20, title 54,
 23    Idaho Code, and all administrative rules promulgated thereunder.
 24        (11) "Limited dual agent" means a brokerage that is  representing  both  a
 25    buyer  and a seller as clients in a regulated real estate transaction, as pro-
 26    vided in section 54-2088, Idaho Code.
 27        (12) "Ministerial acts" means reasonably necessary and customary acts typ-
 28    ically performed by real estate licensees in assisting a  transaction  to  its
 29    closing or conclusion.
 30        (13) "Nonagent"  means  a  brokerage  and  its  licensees  working with or
 31    assisting a buyer or seller as a customer to which the duties provided in sec-
 32    tion 54-2086, Idaho Code, are applicable.
 33        (14) "Regulated real estate transaction" means those real estate  transac-
 34    tions  for which a real estate license is required under chapter 20, title 54,
 35    Idaho Code.
 36        (15) "Representation" or "brokerage representation" or "represented" means
 37    the statutory agency relationship between a client and a brokerage in a  regu-
 38    lated  real  estate  transaction  with respect to which the duties provided in
 39    section 54-2087, Idaho Code, are applicable.
 40        (16) "Representation agreement" or "contract for representation"  means  a
 41    written  agreement between a buyer, seller, or both, and a real estate broker-
 42    age for agency representation in a regulated real estate transaction. A repre-
 43    sentation agreement under this chapter can only be made in writing, and cannot
 44    be made orally or by assumption or implication.
 45        (17) "Sales associate" means a salesperson or an associate broker licensed
 46    under and associated with a designated broker.
                                                                        
 47        SECTION 2.  That Section 54-2086, Idaho Code, be, and the same  is  hereby
 48    amended to read as follows:
                                                                        
 49        54-2086.  DUTIES  TO  A  CUSTOMER.  (1)  If a buyer, prospective buyer, or
 50    seller is not represented by a brokerage in a regulated real  estate  transac-
 51    tion,  that buyer or seller remains a customer, and as such, the brokerage and
 52    its licensees are nonagents and owe the following  legal  duties  and  obliga-
 53    tions:
                                                                        
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  1        (a)  To perform ministerial acts to assist the buyer or seller in the sale
  2        or purchase of real estate;
  3        (b)  To  perform these acts with honesty, good faith, reasonable skill and
  4        care;
  5        (c)  To properly account for moneys or property placed  in  the  care  and
  6        responsibility of the brokerage;
  7        (d)  To disclose to the buyer/customer all adverse material facts actually
  8        known or which reasonably should have been known by the licensee;
  9        (e)  To  disclose  to the seller/customer all adverse material facts actu-
 10        ally known or which reasonably should have been known by the licensee;.
 11        (2)  If a customer has entered into a compensation agreement  or  customer
 12    services agreement with the brokerage, the brokerage shall have the obligation
 13    to  be  available  to  the  customer to receive and timely present all written
 14    offers and counteroffers.
 15        (3)  The duties set forth in this section are mandatory  and  may  not  be
 16    waived or abrogated, either unilaterally or by agreement.
 17        (4)  Nothing  in  this section prohibits a brokerage from charging a sepa-
 18    rate fee or commission for each service provided to the customer in the trans-
 19    action.
 20        (5)  A  nonagent  brokerage  and  its  licensees  owe   no   duty   to   a
 21    buyer/customer  to  conduct  an independent inspection of the property for the
 22    benefit of that buyer/customer and owe no duty  to  independently  verify  the
 23    accuracy or completeness of any statement or representation made by the seller
 24    or any source reasonably believed by the licensee to be reliable.
 25        (36)  A   nonagent   brokerage   and  its  licensees  owe  no  duty  to  a
 26    seller/customer to conduct an independent investigation of the buyer's  finan-
 27    cial  condition  for  the  benefit  of that seller/customer and owe no duty to
 28    independently verify the accuracy or completeness of statements  made  by  the
 29    buyer or any source reasonably believed by the licensee to be reliable.
                                                                        
 30        SECTION  3.  That  Section 54-2087, Idaho Code, be, and the same is hereby
 31    amended to read as follows:
                                                                        
 32        54-2087.  DUTIES TO A CLIENT. If a buyer or seller enters into  a  written
 33    contract for representation in a regulated real estate transaction, that buyer
 34    or  seller  becomes  a  client to whom the brokerage and its licensees owe the
 35    following agency duties and obligations:
 36        (1)  To perform the terms of the written agreement with the client;
 37        (2)  To exercise reasonable skill and care;
 38        (3)  To be available to the client to receive and timely present all writ-
 39    ten offers and counteroffers;
 40        (4)  To promote the best interests of the client in  good  faith,  honesty
 41    and fair dealing including, but not limited to:
 42        (a)  Disclosing to the client all adverse material facts actually known or
 43        which reasonably should have been known by the licensee;
 44        (b)  Seeking  a  buyer  to  purchase the seller's property at a price, and
 45        under terms and conditions acceptable to the seller and assisting  in  the
 46        negotiation therefor; or
 47        (c)  Seeking a property for purchase at a price and under terms and condi-
 48        tions acceptable to the buyer and assisting in the negotiation therefor;
 49        (d)  For  the  benefit  of  a client/buyer: when appropriate, advising the
 50        client to obtain professional inspections  of  the  property  or  to  seek
 51        appropriate tax, legal and other professional advice or counsel;
 52        (e)  For  the  benefit  of  a  client/seller:  upon  written  request by a
 53        client/seller, requesting reasonable proof of a prospective buyer's finan-
                                                                        
                                       4
                                                                        
  1        cial ability to purchase the real property which is the subject matter  of
  2        the  transaction.  This  duty  may  be satisfied by any appropriate method
  3        suitable to the transaction or, when deemed necessary by the  real  estate
  4        licensee, by advising the client to consult with an accountant, lawyer, or
  5        other professional as dictated by the transaction.
  6        (45)  To  properly  account  for moneys or property placed in the care and
  7    responsibility of the brokerage; and
  8        (56)  To maintain the confidentiality of specific  client  information  as
  9    defined by and to the extent required in this chapter, and as follows:
 10        (a)  The  duty to a client continues beyond the termination of representa-
 11        tion only so long as the information continues to be  confidential  client
 12        information  as  defined in this chapter, and only so long as the informa-
 13        tion does not become generally known in the  marketing  community  from  a
 14        source other than the brokerage or its associated licensees;
 15        (b)  A  licensee who personally has gained confidential client information
 16        about a buyer or seller while associated with one (1) broker and who later
 17        associates with a different broker remains obligated to maintain the  cli-
 18        ent confidentiality as required by this chapter;
 19        (c)  If  a brokerage represents a buyer or seller whose interests conflict
 20        with those of a former client, the brokerage shall inform the second  cli-
 21        ent  of the brokerage's prior representation of the former client and that
 22        confidential client information obtained during the  first  representation
 23        cannot  be  given to the second client. Nothing in this section shall pre-
 24        vent the brokerage from asking the former client for permission to release
 25        such information;
 26        (d)  Nothing in this section is intended to create a privileged communica-
 27        tion between any client and any brokerage  or  licensee  for  purposes  of
 28        civil, criminal or administrative legal proceedings.
 29        (67)  Unless otherwise agreed to in writing, a brokerage and its licensees
 30    owe  no  duty to a client to conduct an independent inspection of the property
 31    and owe no duty to independently verify the accuracy or  completeness  of  any
 32    statement or representation made regarding a property. Unless otherwise agreed
 33    to  in  writing, a brokerage and its licensees owe no duty to conduct an inde-
 34    pendent investigation of either party's financial ability to complete  a  real
 35    estate transaction.
 36        (8)  The  duties  set  forth  in this section are mandatory and may not be
 37    waived or abrogated, either unilaterally or by agreement.
 38        (9)  Nothing in this section prohibits a brokerage from charging  a  sepa-
 39    rate fee or commission for each service provided to the client in the transac-
 40    tion.
                                                                        
 41        SECTION  4.  That  Section 54-2089, Idaho Code, be, and the same is hereby
 42    amended to read as follows:
                                                                        
 43        54-2089.  BROKER COMPENSATION. Payment of compensation or a written agree-
 44    ment only for payment of compensation to a brokerage shall not  constitute  an
 45    express  agreement  creating  for agency representation or otherwise create an
 46    agency relationship.
                                                                        
 47        SECTION 5.  That Section 54-2091, Idaho Code, be, and the same  is  hereby
 48    amended to read as follows:
                                                                        
 49        54-2091.  DURATION  OF  EXPRESS  REPRESENTATION AGENCY RELATIONSHIP. (1) A
 50    brokerage's agency relationship and corresponding representation duties  under
 51    this  act  sections 54-2082 through 54-2097, Idaho Code, shall commence on the
                                                                        
                                       5
                                                                        
  1    date  indicated  on  the  written  agreement  between  the  brokerage  and   a
  2    buyer/client or seller/client and shall end at the earliest of:
  3        (a)  Performance or completion of the representation;
  4        (b)  Agreement by the parties;
  5        (c)  Expiration of the agency relationship agreement.
  6        (2)  Nothing  in  this  act  sections 54-2082 through 54-2097, Idaho Code,
  7    shall prohibit the brokerage and the buyer or seller from changing  the  legal
  8    nature  of  their  relationship  or representation in accordance with this act
  9    such sections during the course of the real estate transaction.  However,  the
 10    brokerage is not relieved thereby from meeting the disclosure requirements and
 11    obtaining  the  written agreements, consents or confirmations required by this
 12    act sections 54-2082 through 54-2097, Idaho Code.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE

                             RS 16852

By law, licensed real estate agents owe their customers and clients
certain duties.  This legislation clarifies that an agent be
available to receive and timely present offers and counter offers.

The legislation also clarifies the difference between a customer
services agreement and a representation agreement.


                           FISCAL NOTE

There is no impact to the General Fund.




Contact
Name:  John Eaton, Idaho Association of Realtors 
Phone: 342-3585


STATEMENT OF PURPOSE/FISCAL NOTE                         H 135