Other HB 1907 Changes

VREB Disciplinary Authority

Every real estate Licensee, whether active or inactive, must fully comply with all Virginia Code and Standards of Conduct, which are enforced by the Virginia Real Estate Board (VREB).  Failure to comply will result in disciplinary action.

VREB has broad authority to discipline Licensees who violate the License Law, Rules, and Regulations.  This authority includes the power to impose monetary penalties (fines), and to suspend or revoke a Licensees license.  Additionally, Licensees have a professional duty to report violations.  In fact, VREB’s authority to enforce and impose disciplinary action, extends not only against licensees who violate the law, rules, or regulations, but also to those who “cooperated with others” in violating the law, rules, or regulations.

VREB Grounds for Disciplinary Action

The following frequently violated regulations regarding Agency, Duties, Disclosure and general conduct, which can result in VREB disciplinary action if violated:

Disclosure of Licensee’s Interest

Whether active or inactive a Licensee must disclose, in writing, that they are a licensed real estate person to all parties when acquiring or disposing of any interest in real property for:

  • Himself or herself;
  • Members of his or her immediate family;
  • Members of his or her firm; or
  • Any entity in which he or she has an ownership interest.

Financial Records

Licensees may be disciplined for failing to maintain, or timely produce, records to VREB.  Licensees must maintain records of all real estate transactions they participated in for a three year period.  HB 1907 permits these records to be maintained by a Licensee as an electronic record in accordance with the Uniform Electronic Transaction Act ((§ 59.1-479 et seq).  And unless the Board or Virginia law specifies otherwise, Licensees must produce their records to the Board within 10 days of request.

Conflict of Interest

Acting for more than one Client in a transaction (Dual/Designated Agency) without obtaining the written consent of all parties is undisclosed Dual Agency and is an illegal conflict of interest.  It is also an illegal conflict of interests for a salesperson or associate broker to enter into a Brokerage agreement directly with a seller, buyer, landlord or tenant.  Only the Principle Broker may enter into an agreement for Licensed services directly with a Client.

Referral Fees

The Licensee cannot accept a referral fee for surveys, termite inspections, appraisals, or other services unless the fee is Disclosed to the principals in writing.  The written Disclosure must be made prior to the time of ordering or contracting for the services.

Another violation frequently forgotten; a Licensee cannot incur charges on behalf of the Client.  For example, if the Licensee pays to have repairs made to a property in order to make a sale, the Licensee would be paying “valuable consideration”.  This is permissible only if the information is Disclosed and consented to in writing by the Client.  Otherwise incurring charges or other “valuable consideration” or to accept or receive money or valuable consideration from any person or entity for expenditures made on behalf of the Client without their written consent is grounds for disciplinary action.

Improper Dealing

Licensees must always deal with Clients and Customers honestly and fairly.  Not only is it required by law, but doing so protects the public and promotes the integrity of the profession.  Failure to comply may lead to disciplinary action for improperly dealing.

Disclosing Clients Confidential Information

Licensees must not Disclose a Client’s confidential information if it relates to a transaction, and if it was obtained while representing that Client.  Remember, this becomes more difficult when acting as a Dual Agent because then the Licensee must maintain the confidentiality of both parties to the transaction.

Delivery of Instruments

As soon as practical, Licensees are required to timely deliver an exact and legible copy of the document (instruments) to all signing parties.  If multiple parties are signing separately, the Licensee must provide another copy, containing both signatures, to all signing parties.  This applies to listings, leases, offers to purchase, counteroffers, addenda, ratified agreements, and other documentation required by the agreement.  Licensee must also notify all parties to an agreement, in writing, of any material change that occurred after the original signing.  Even changes you may consider to be minor, such as a change in the closing date or location, must be communicated in writing.

At the time the transaction is consummated, all parties must receive a complete, accurate, and legible copy of all documents pertaining to the transaction, including a complete and accurate statement of receipts and disbursements of monies received by the licensee.  If a settlement agent is conducting the closing, this responsibility shifts to the settlement agent.

Finally, upon request, Licensees must return any documentation in your possession to its rightful owner unless there is a legitimate reason not to do so.

Other HB 1907 Changes:

Required disclosures (§ 55-519.)

With regard to transfers described in § 55-517, the owner of the residential real property shall furnish to a purchaser a residential property disclosure statement in a form provided by the Real Estate Board stating that the owner makes the following representations as to the real property:

  • The owner makes no representations with respect to the matters set forth and described at a website maintained by the Real Estate Board and that the purchaser is advised to consult this website for important information about the real property; and
  • The owner represents that there are no pending enforcement actions pursuant to the Uniform Statewide Building Code (§ 36-97 et seq.) that affect the safe, decent, sanitary living conditions of the property of which the owner has been notified in writing by the locality, except as disclosed on the disclosure statement, nor any pending violation of the local zoning ordinance that the violator has not abated or remedied under the zoning ordinance, within a time period set out in the written notice of violation from the locality or established by a court of competent jurisdiction, except as disclosed on the disclosure statement.

At the VREB website shall include language providing notice to the purchaser that by delivering the residential property disclosure statement:

  • The owner makes no representations or warranties as to the condition of the real property or any improvements thereon, and purchasers are advised to exercise whatever due diligence a particular purchaser deems necessary including obtaining a certified home inspection, as defined in § 54.1-500, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement on a parcel of residential real property;
  • The owner makes no representations with respect to any matters that may pertain to parcels adjacent to the subject parcel and that purchasers are advised to exercise whatever due diligence a particular purchaser deems necessary with respect to adjacent parcels in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement on a parcel of residential real property;
  • The owner makes no representations to any matters that pertain to whether the provisions of any historic district ordinance affect the property and purchasers are advised to exercise whatever due diligence a particular purchaser deems necessary with respect to any historic district designated by the locality pursuant to § 15.2-2306, including review of any local ordinance creating such district or any official map adopted by the locality depicting historic districts, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement on a parcel of residential real property;
  • The owner makes no representations with respect to whether the property contains any resource protection areas established in an ordinance implementing the Chesapeake Bay Preservation Act (§ 10.1-2100 et seq.) adopted by the locality where the property is located pursuant to § 10.1-2109 and that purchasers are advised to exercise whatever due diligence a particular purchaser deems necessary to determine whether the provisions of any such ordinance affect the property, including review of any official map adopted by the locality depicting resource protection areas, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement on a parcel of residential real property;
  • The owner makes no representations with respect to information on any sexual offenders registered under Chapter 23 (§ 19.2-387et seq.) of Title 19.2 and that purchasers are advised to exercise whatever due diligence they deem necessary with respect to such information, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement pursuant to that contract;
  • The owner makes no representations with respect to whether the property is within a dam break inundation zone. Such disclosure statement shall advise purchasers to exercise whatever due diligence they deem necessary with respect to whether the property resides within a dam break inundation zone, including a review of any map adopted by the locality depicting dam break inundation zones;
  • The owner makes no representations with respect to the presence of any stormwater detention facilities located on the property and purchasers are advised to exercise whatever due diligence they deem necessary to determine the presence of any stormwater detention facilities on the property, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement pursuant to that contract; and
  • The owner makes no representations with respect to the presence of any wastewater system, including the type or size thereof or associated maintenance responsibilities related thereto, located on the property and purchasers are advised to exercise whatever due diligence they deem necessary to determine the presence of any wastewater system on the property, in accordance with terms and conditions as may be contained in the real estate purchase contract, but in any event, prior to settlement pursuant to that contract.

Any buyer who is a party to a real estate purchase contract subject to this section may provide in such contract that the disclosures provided on the VREB website be printed off and provided to such buyer.

That the provisions of §§ 54.1-2135, 54.1-2137, 54.1-2139, and 54.1-2139.1 of this act shall become effective on July 1, 2012.

 

Author: Lee Gosselin, Associate Broker & Owner

 

 

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