Chapter 337
AN ACT
SB 482
Relating to real estate broker compensation; amending ORS 696.026,
696.241, 696.290, 696.301, 696.505, 696.520, 696.582 and 696.840.
Be It Enacted by the People of
the State of
SECTION 1. ORS 696.582 is amended to read:
696.582. (1) An escrow
agent shall hold, as provided in subsection (3) of this section, the amount of
money or other property agreed to as [a
commission] compensation in a written real estate broker’s or
principal real estate broker’s [commission]
compensation agreement, if the escrow agent has at the office at which
the escrow is being closed, before the date of closing:
(a) A written notice of
[demand] compensation, signed
by the real estate broker or principal real estate broker who is authorized
under rules adopted by the Real Estate Commissioner to enter into the [commission] compensation
agreement and sign the written notice of [demand]
compensation, in substantially the form set out in subsection (2) of this
section; and
(b) The written closing
instructions of the principals which do not honor the amount and terms of
payment in the notice of [demand]
compensation.
(2) The notice of [demand] compensation required by
subsection (1) of this section may not be incorporated into any document of
agreement between the principals or between the broker and a principal, and
shall be in substantially the following form:
______________________________________________________________________________
Notice of [Demand for]
Real Estate [Commission] Compensation
To: ____________
(Name of Escrow Company)
Re: ____________
(Names of Principals to
Transaction)
Your
Escrow Number: ______
The undersigned real
estate broker or principal real estate broker states that such broker has a
valid written [commission] compensation
agreement with ______ (Name of Principal), one of the principals to the
transaction referred to above, and that such principal is obligated to pay the
broker the [commission] compensation
on account of that transaction. The [commission]
compensation amount is $____ and is to be paid on the following terms: _________.
[Demand] Request is hereby
made that the [commission] compensation
be paid in that amount and on those terms, out of escrow and as a part of your
closing of that transaction.
________________
(Name and Signature of Real Estate Broker
or Principal Real Estate Broker)
______________________________________________________________________________
(3) An escrow agent in a
transaction described in subsection (1) of this section may only disburse the
moneys or other property to:
(a) The broker and principal, based upon a written agreement between those
parties and directed to the escrow agent as disbursement instructions;
(b) Any persons, as
directed by order of a court of competent jurisdiction; or
(c) The court, upon
filing by the escrow agent of an interpleader action for the moneys or
property.
(4) [At the time of filing a notice of demand]
If the filing of a notice of compensation with an escrow agent under subsection
(1) of this section is made more than 10 days prior to the scheduled closing
date, the real estate broker or principal real estate broker filing the
notice shall deliver a copy of the notice to the principal identified in the
notice. If the notice is filed within 10 days of the scheduled closing date,
a copy of the notice shall be provided by the escrow agent to the principal
identified in the notice at the time of closing.
SECTION 2. ORS 696.505 is amended to read:
696.505. As used in ORS
696.505 to 696.590, unless the context requires otherwise:
(1) “Collection escrow”
means an escrow in which the escrow agent:
(a) Receives:
(A) Installment
payments;
(B) Instruments
evidencing or securing an obligation; or
(C) Instruments
discharging the security interest; and
(b) Disburses the
payments or delivers the instruments upon specified conditions pursuant to the
written instructions of an obligor and obligee.
(2) “Commissioner” means
the Real Estate Commissioner.
(3) “Compensation”
means any fee, commission, salary, money or valuable consideration for services
rendered or to be rendered as well as the promise thereof and whether
contingent or otherwise.
[(3)] (4) “Escrow” means any transaction wherein any written
instrument, money, evidence of title to real or personal property or other
thing of value is delivered, for the purpose of paying an obligation or
effecting the sale, transfer, encumbrance or lease of real or personal
property, to a person not otherwise having any right, title or interest
therein, to be held by that person as a neutral third party until the happening
of a specified event or the performance of a prescribed condition, when it is
then to be delivered by the neutral third party to a grantee, grantor,
promisee, promisor, obligee, obligor, bailee, bailor or any agent or employee
of any of them pursuant to the written instructions of the principals to the
transaction.
[(4)] (5) “Escrow agent” means any person who engages in the
business of receiving escrows for deposit or delivery and who receives or is
promised any fee, commission, salary or other valuable consideration, whether
contingent or otherwise, for or in anticipation of performance.
[(5)] (6) “Principal” means:
(a) The buyer and
seller, lessor and lessee and the exchanging parties in an escrow transaction
involving the sale, lease, lease-option or exchange of real property or
personal property; and
(b) The borrower in an
escrow transaction involving the refinancing of real or personal property,
including but not limited to the refinancing of an obligation secured by a land
sale contract requiring a deed to be delivered as part of such refinancing.
[(6)] (7) “Real estate closing escrow” means an escrow where
the escrow fee is paid in whole or in part by the principals to a real estate
transaction and wherein the unpaid purchase price is delivered to an escrow
agent for disbursal pursuant to the written instructions of the principals to
the transaction simultaneously on the transfer of specified title to the real
property.
[(7)] (8) “Subservicer” means an escrow agent, a financial
institution or a trust company, as those terms are defined in ORS 706.008, or a
collection agency registered under ORS 697.015 when providing, pursuant to
written instructions, a portion of the escrow services for an escrow to an
escrow agent, or a person in the business of receiving escrows under the laws
of another state, that would otherwise provide the escrow services directly to
the principals.
SECTION 3. ORS 696.026 is amended to read:
696.026. (1) A real
estate broker or principal real estate broker may conduct professional real
estate activity under the broker’s name, a registered business name or a name
prescribed by agency rule. The business name under which a broker conducts
professional real estate activity has no license standing independent of the
broker.
(2) The agency by rule
shall adopt a registration system for business names. The system shall allow
the registration of any branch office of either a sole practitioner or a principal
real estate broker.
(3) A real estate broker
or principal real estate broker operating under a business name registered by
the broker need not be an owner or officer of any organization otherwise
lawfully entitled to use the registered business name or have an ownership
interest in the registered name. However, all professional real estate activity
conducted by or on behalf of the broker must be conducted under the business
name registered by the broker.
(4) A real estate broker
or principal real estate broker may register two or more business names if the
business names are for affiliated or subsidiary business organizations. If a
real estate broker or principal real estate broker registers the business names
for two or more affiliated or subsidiary business organizations, the broker may
conduct professional real estate activity separately under each business name.
A real estate broker or principal real estate broker must supervise and control
the professional real estate activity conducted under the broker’s name or
registered business name.
(5) A real estate broker
employed, engaged or supervised by a principal real estate broker for required
training and supervision by the principal real estate broker may have an
ownership interest in any business through which the principal broker conducts
professional real estate activity, but may not control or supervise the
professional real estate activity of the principal broker and may not interfere
with or be responsible for the training and supervision of any other broker.
(6) A nonlicensed person
may have an ownership interest in any business through which a real estate
broker or principal real estate broker engages in professional real estate
activity, but may not control or supervise the professional real estate
activity of any real estate broker or principal real estate broker licensed to
control or supervise the professional real estate activity of such business.
(7) Two or more real
estate brokers operating under the same registered business name who do not
exercise any administrative or supervisory control over one another are solely
responsible for their own professional real estate activity.
(8) Notwithstanding any
other provision of ORS 696.010 to 696.495, 696.600 to 696.785, 696.800 to
696.870, 696.990 and 696.995, a broker associated with a principal broker may
create a corporation, limited liability company,
limited liability partnership or any other lawfully constituted business
organization for the purpose of receiving [commission
payments] compensation from the principal broker. A business
organization created under this subsection may not be licensed under ORS
696.022 or conduct in its own name professional real estate activity requiring
a real estate license.
SECTION 4. ORS 696.241 is amended to read:
696.241. (1) Each sole
practitioner and each principal real estate broker shall maintain in this state
one or more separate bank accounts that shall be designated a Clients’ Trust
Account in which all trust funds received or handled by the sole practitioner
or broker and the real estate licensees subject to the supervision of the
broker on behalf of any other person shall be deposited unless, pursuant to
written agreement of all parties having an interest in the trust funds, the
trust funds are immediately placed in a neutral escrow depository in this
state.
(2) Each sole
practitioner or principal real estate broker shall file with the Real Estate
Agency, on forms approved by the Real Estate Commissioner, a statement
identifying the name of the bank or banks, account number or account numbers,
and name of account or accounts for each Clients’
Trust Account maintained.
(3) Each sole
practitioner or principal real estate broker shall authorize the agency, by a
form approved by the commissioner, to examine any Clients’ Trust Account, by a
duly authorized representative of the agency. The examination shall be made at
such times as the commissioner may direct.
(4) If a sole
practitioner or principal real estate broker maintains a separate Clients’
Trust Account in a branch office, a separate bookkeeping system shall be
maintained in the branch office, provided a copy of the records required by the
provisions of ORS 696.280 are maintained in the main office of the sole
practitioner or broker.
(5) Trust funds received
by a sole practitioner or principal real estate broker may be placed by the
sole practitioner or broker in a federally insured interest-bearing bank
account, designated a Clients’ Trust Account, but only with the prior written
approval of all parties having an interest in the trust funds. The earnings of
such interest-bearing account shall not inure to the benefit of the sole
practitioner or principal real estate broker unless expressly approved in
writing before deposit of the trust funds by all parties having an interest in
the trust funds.
(6) With prior written
notice to all parties who have an interest in the trust funds, a sole
practitioner or principal real estate broker may place trust funds received by
the sole practitioner or principal real estate broker in a federally insured
interest-bearing bank account that is designated a Clients’ Trust Account and
the earnings of which inure to the benefit of a public benefit corporation, as
defined in ORS 65.001, for distribution to organizations and individuals for
first-time homebuying assistance and for development of affordable housing. The
sole practitioner or principal real estate broker shall select a qualified
public benefit corporation to receive the interest earnings.
(7) A sole practitioner
or principal real estate broker is not entitled to any part of any interest
earnings on trust funds deposited under subsection (5) of this section or to
any part of the earnest money or other money paid to the sole practitioner or
broker in connection with any real estate transaction as part or all of the
sole practitioner’s or broker’s [commission
or fee] compensation until the transaction has been completed or
terminated. The question of the disposition of forfeited earnest money shall be
negotiated between the sole practitioner or principal real estate broker and
the seller at the time of executing any listing agreement or earnest money
agreement. The result of such negotiation shall be filled in on the agreement
form at the time of signing by the seller and either separately initialed by
the seller or placed immediately above the signature of the seller.
(8) Clients’ Trust
Account funds are not subject to execution or attachment on any claim against a
sole practitioner or principal real estate broker.
(9) No person shall
knowingly keep or cause to be kept any funds or money in any bank under the
heading of Clients’ Trust Account or any other name designating such funds or
money as belonging to the clients of any sole practitioner or principal real
estate broker, except actual trust funds deposited with the sole practitioner
or broker.
(10) The agency by rule
shall establish a procedure for disbursal of disputed funds from a Clients’
Trust Account to the person who delivered the funds to the sole practitioner or
principal real estate broker. The procedure shall allow disbursal not more than
20 days after a request is made for the disbursal. Any disbursal pursuant to
the procedure does not affect the claim of any other person to the funds.
(11) The agency may
provide by rules for other records to be maintained and for the manner in which
trust funds are deposited, held and disbursed.
SECTION 5. ORS 696.290 is amended to read:
696.290. (1) A real
estate licensee shall not offer, promise, allow, give, pay or rebate, directly
or indirectly, any part or share of the licensee’s [commission or] compensation arising or accruing from any real
estate transaction or pay a finder’s fee to any person who is not a real estate
licensee licensed under ORS 696.022. However, a real estate broker or principal
real estate broker may pay a finder’s fee or a share of the [commission] licensee’s compensation
on a cooperative sale [where such] when
the payment is made to a licensed real estate broker in another state or
country, provided that the state or country in which that broker is
licensed has a law permitting real estate brokers to cooperate with real estate
brokers or principal real estate brokers in this state and that such
nonresident real estate broker does not conduct in this state any acts
constituting professional real estate activity and for which compensation is
paid. If a country does not license real estate brokers, the payee must be a
citizen or resident of the country and represent that the payee is in the
business of real estate brokerage in the other country. A real estate broker
associated with a principal real estate broker shall not accept compensation
from any person other than the principal real estate broker with whom the real
estate broker is associated at the time. A principal real estate broker shall
not make payment to the real estate broker of another principal real estate
broker except through the principal real estate broker with whom the real
estate broker is associated. Nothing in this section prevents payment of [a commission or fee] compensation
earned by a real estate broker or principal real estate broker while licensed,
because of change of affiliation or inactivation of the broker’s license.
(2) Nothing in
subsection (1) of this section is intended to prohibit a real estate licensee
who has a written property management agreement with the owner of a residential
building or facility from authorizing the payment of a referral fee, rent
credit or other compensation to an existing tenant of the owner or licensee, or
a former tenant if the former tenant resided in the building or facility within
the previous six months, as compensation for referring new tenants to the
licensee.
(3) Nothing in
subsection (1) of this section is intended to prevent an Oregon real estate
broker or principal real estate broker from sharing [a commission] compensation on a cooperative nonresidential
real estate transaction with a person who holds an active real estate license
in another state or country, provided:
(a) Before the
out-of-state real estate licensee performs any act in this state that
constitutes professional real estate activity, the licensee and the cooperating
Oregon real estate broker or principal real estate broker agree in writing that
the acts constituting professional real estate activity conducted in this state
will be under the supervision and control of the cooperating Oregon broker and
will comply with all applicable Oregon laws;
(b) The cooperating
Oregon real estate broker or principal real estate broker accompanies the
out-of-state real estate licensee and the client during any property showings
or negotiations conducted in this state; and
(c) All property
showings and negotiations regarding nonresidential real estate located in this
state are conducted under the supervision and control of the cooperating
(4) Nothing in
subsection (1) of this section is intended to prohibit a real estate licensee
from directly compensating a licensed personal assistant if permitted by the
terms, conditions and requirements of a licensed personal assistant agreement
under ORS 696.028.
(5) As used in
subsection (3) of this section, “nonresidential real estate” means any real
property that is improved or available for improvement by commercial structures
or five or more residential dwelling units.
SECTION 6. ORS 696.301 is amended to read:
696.301. Subject to ORS
696.396, the Real Estate Commissioner may suspend or revoke the real estate
license of any real estate licensee, reprimand any licensee or deny the
issuance or renewal of a license to an applicant who has done any of the
following:
(1) Created a reasonable
probability of damage or injury to a person by making one or more material
misrepresentations or false promises in a matter related to professional real
estate activity.
(2) Represented,
attempted to represent or accepted [a
commission or other] compensation from a principal real estate broker other
than the principal real estate broker with whom the real estate broker is
associated.
(3) Disregarded or
violated any provision of ORS 659A.421, 696.010 to 696.495, 696.600 to 696.785
and 696.800 to 696.870 or any rule of the Real Estate Agency.
(4) Knowingly or
recklessly published materially misleading or untruthful advertising.
(5) Acted as an agent
and an undisclosed principal in any transaction.
(6) Intentionally
interfered with the contractual relations of others concerning real estate or
professional real estate activity.
(7) Intentionally
interfered with the exclusive representation or exclusive brokerage
relationship of another licensee.
(8) Accepted employment
or compensation for the preparation of a competitive market analysis or letter
opinion that is contingent upon reporting a predetermined value or for real
estate in which the licensee had an undisclosed interest.
(9) Represented a
taxpayer as described in ORS 305.230 or 309.100, contingent upon reporting a
predetermined value or for real estate in which the licensee had an undisclosed
interest.
(10) Failed to ensure,
in any real estate transaction in which the licensee performed the closing,
that the buyer and seller received a complete detailed closing statement
showing the amount and purpose of all receipts, adjustments and disbursements.
(11) Has been convicted
of a felony or misdemeanor substantially related to the licensee’s
trustworthiness or competence to engage in professional real estate activity.
(12) Demonstrated
incompetence or untrustworthiness in performing any act for which the licensee
is required to hold a license.
(13) Violated a term,
condition, restriction or limitation contained in an order issued by the
commissioner.
(14) Committed an act of
fraud or engaged in dishonest conduct substantially related to the fitness of
the applicant or licensee to conduct professional real estate activity, without
regard to whether the act or conduct occurred in the course of professional
real estate activity.
(15) Engaged in any
conduct that is below the standard of care for the practice of professional
real estate activity in
SECTION 7. ORS 696.520 is amended to read:
696.520. The provisions
of ORS 696.505 to 696.590 do not apply to and the term “escrow agent” does not
include:
(1) Any person doing
business under the laws of this state or the United States relating to banks,
mutual savings banks, trust companies, savings and loan associations, consumer
finance companies, or insurance companies except to the extent that the person
provides real estate closing escrow services other than those permitted under
subsection (3) of this section.
(2) An attorney at law
rendering services in the performance of duties as attorney at law.
(3) Any firm or
corporation lending money on real or personal property and which firm or
corporation is subject to licensing, supervision or auditing by a federal or
state agency but only to the extent of closing a loan transaction between such
firm or corporation and a borrower, and seller, if a fee for escrow services is
not charged to the seller.
(4) Any person doing any
of the acts specified in ORS 696.505 [(3)]
(4) under order of any court.
(5) Any real estate
broker or principal real estate broker licensed under ORS 696.022 who performs
the closing for the principals in a real estate transaction handled by the
broker, if the principals are not charged a separate fee for escrow services.
(6) Any collection
agency registered under ORS 697.015 that is engaged in any collection or
billing activity without holding documents relating to the debt.
SECTION 8. ORS 696.840 is amended to read:
696.840. The payment of
compensation or the obligation to pay compensation to a real estate licensee by
the seller or the buyer is not necessarily determinative of a particular agency
relationship between a real estate licensee and the seller or the buyer. After
full disclosure of agency relationships, a listing agent, a selling agent or a
real estate licensee or any combination of the three may agree to share any
compensation [or commission] paid, or
any right to any compensation [or
commission] for which an obligation arises as the result of a real property
transaction, and the terms of the agreement shall not necessarily be
determinative of a particular relationship. Nothing in this section shall
prevent the parties from selecting a relationship not specifically prohibited
by ORS 696.301, 696.392, 696.600 to 696.785, 696.800 to 696.870 and 696.995.
Approved by the Governor June 11, 2007
Filed in the office of Secretary of State June 13, 2007
Effective date January 1, 2008
__________