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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
]]]] 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
2
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:
3
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
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