Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 13: Pennsylvania Real Estate Licensing…

Modern Real Estate Practice in Pennsylvania 12th Edition

Chapter 13: Pennsylvania Real Estate Licensing Law

Learning Objectives

• Define activities that require licensure and the parties who are exempt from the license law

• List the different licenses and the requirements for obtaining them

• Identify major ethical issues of licensees, and conduct specifically prohibited by law or regulation

• Summarize disciplinary procedures and remedies available for violations of the law or rules, including civil and criminal penalties

• Define key terms2©2012 Kaplan, Inc.

PA Real Estate Licensing And Registration Act (RELRA)

• States and provinces have regulations• Enacted to protect the public by ensuring

– Competence– Professionalism

3©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Regulatory goals

– Establish basic requirements for licensure– Define continuing education requirements– Define activities that require licensure– Define acceptable standards of conduct– Enforce standards through a disciplinary system


13 Pennsylvania Real Estate Licensing Law• Purpose of regulations

– Protect the public from unscrupulous or sloppy practitioners of real estate

– Establish minimum levels of competency– Current law — 1980– Real Estate Licensing and Registration Act (RELRA)– Statutory law:

• Created by state legislature• PA Real Estate Commission (REC) cannot change it, only

legislature can


13 Pennsylvania Real Estate Licensing Law• State real estate commission

– Section 202 of RELRA established the “REC” to administer the Act and supervise licensees

– Section 404 authorizes REC to promulgate rules and regulations to define the statutes

– Rules and Regulations have same force and effect as law

– Enforced through fines and license restrictions (denial, suspension, revocation); civil and criminal actions available for serious cases


13 Pennsylvania Real Estate Licensing Law• Commissioner of the Bureau of Professional and

Occupational Affairs• Director of the Bureau of Consumer Protection,

or designee• Three members representing the public at large• Five brokers• One other person who shall have been licensed

as a real estate broker, or cemetery broker


13 Pennsylvania Real Estate Licensing Law• Five brokers: engaged in the real estate

business for a period of at least ten years immediately prior to appointment

• Cemetery business: licensed as real estate broker, or cemetery broker, for a period of at least five years and shall have been engaged in selling cemetery lots for at least ten years immediately prior to appointment

• Appointed by governor for five-year terms


13 Pennsylvania Real Estate Licensing Law• Commission meetings

– Regularly scheduled meetings subject to “sunshine laws”

– Holds formal and informal hearings related to complaints against licensees

– Must hold public meetings each year in Pittsburgh, Philadelphia, and Harrisburg: to solicit, suggestions, comments, and objections about real estate practice


13 Pennsylvania Real Estate Licensing Law• Licensed activities

– Must have appropriate license for activity– Otherwise, subject to disciplinary action– Unlicensed activity is frequent violation of the

Act


13 Pennsylvania Real Estate Licensing Law• Public records• Establish ownership, priority of liens, give

notice of encumbrances• Protect interests of owners and public• Deeds, mortgages, taxes, marriages, etc.• County recorder of deeds


13 Pennsylvania Real Estate Licensing Law• RELRA defines activities that require licenses

and procedures for obtaining licenses• PA definition of real estate: any interest or

estate in land, whether corporeal, incorporeal, freehold or non-freehold . . . Including leasehold interests, time-share and similarly designated interests

• Mobile homes: assignment of lease or sale of land creates an interest in real estate


13 Pennsylvania Real Estate Licensing Law• Qualifications for licensure

– Ten licenses are issued– Licensee must have reputation for the following:

• Honesty• Trustworthiness• Integrity• Competence

– Must report all criminal convictions and attach criminal record check (90 days)

– Appraisal activities regulated by appraisers13©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Broker: individual or entity (corporation,

partnership, or association) that, for another and for a fee, commission, or other valuable consideration, does the following: – Negotiates with or aids a person in locating or

obtaining for purchase, lease, or acquisition of interest in real estate

– Negotiates the listing, sale, purchase, exchange, lease, time-share, financing, or option for real estate

– Manages real estate


13 Pennsylvania Real Estate Licensing Law• Actions of broker

– Represents self to be real estate consultant, counselor, agent, or house finder

– Undertakes to promote the sale, exchange, purchase, or rental of real estate (does not apply to an individual or entity whose main business is advertising, promotion or public relations)

– Undertakes to perform a comparative market analysis

– Attempts to perform any of these acts15©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Broker applicants

– Be 21 years of age or older– Be a high school graduate (or GED)– Acquire 16 credits, or 240 hours of instruction

(salesperson hours do not qualify)– Work three years as a licensed salesperson, or

possess experience and/or education that the Commission considers the equivalent of three years’ experience as a licensed salesperson (point system)


13 Pennsylvania Real Estate Licensing Law• Licensure as broker

– Pass the broker’s examination within three years of application

– Submit an application with the following:• Name and address of business• Recommendations attesting to applicant’s reputation

for honesty, trustworthiness, integrity, and competence


13 Pennsylvania Real Estate Licensing Law• Broker of record

– Individual broker responsible for real estate transactions of a partnership, association, or corporation that holds a broker’s license

– Assumes responsibility for all business of firm– One broker of record per firm (regardless of number of

offices)– Crucial to the operation of business– In event of death, authorized party must

• notify Commission, and• name replacement within 15 days


13 Pennsylvania Real Estate Licensing Law• Associate broker

– Individual broker employed by another broker– May perform all activities of licensed brokers– May not do the following:

• Employ other licensees• Engage in business using own name• Operate from own place of business

– Same licensing requirements as broker– Required license to manage branch office


13 Pennsylvania Real Estate Licensing Law• Salesperson

– An individual who is employed by a licensed broker to do one or more of the following:

• Sell or offer to sell real estate, or list real estate for sale• Buy or offer to buy real estate• Negotiate the purchase, sale, or exchange of real estate• Negotiate a loan on real estate• Lease or rent real estate, or offer to lease or rent real estate

or to place real estate for rent • Collect, offer, or attempt to collect rent for use of real estate• Assist a broker in managing a property• Perform a comparative market analysis


13 Pennsylvania Real Estate Licensing Law• Salesperson and broker

– All salesperson’s activities are under ultimate supervision and responsibility of employing broker

– Independent contractors and employees accountable to broker

– Activities that involve public must be performed by licensees


13 Pennsylvania Real Estate Licensing Law• Salesperson activities

– Show properties– Prepare and present offers– Prepare listing information– Solicit listings– Host open houses for public– Disseminate real estate information to public


13 Pennsylvania Real Estate Licensing Law• Unlicensed activities

– Personal assistants may not do the following:• Perform any of the previous activities• Perform telemarketing tasks• Discuss information with public• Interpret or explain property information to licensees

• Personal assistants”may host a broker’s open for other licensees


13 Pennsylvania Real Estate Licensing Law• Licensing examinations

– 18 years of age or older– Successfully complete 60 hours of instruction, in

basic real estate courses as determined by Commission

– Pass both portions of examinations (national and state)


13 Pennsylvania Real Estate Licensing Law• Supervised property management

– Any assistance provided by salesperson with property manager (PM) must be supervised and controlled by employing broker

– Salesperson may not independently negotiate terms of lease or execute lease on behalf of lessor


13 Pennsylvania Real Estate Licensing Law• Cemetery broker

– Works exclusively in cemetery lots, plots, mausoleum spaces, and openings

– Responsible for business activities and maintenance of office like a broker

– Successfully complete 60 hours of instruction– Work at least three years as a licensed salesperson or

cemetery salesperson, or have experience and qualifications that the Commission considers adequate

– Pass the written examination26©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Cemetery associate broker

– Individual employed by a cemetery broker or broker

– Met regulations to be cemetery broker– Same relationship as an associate broker has to

broker


13 Pennsylvania Real Estate Licensing Law• Cemetery salesperson

– Individual employed by broker or cemetery broker exclusively to perform duties of cemetery lot salesperson

– Must be 18 or older– Submit an application with a sworn affidavit from the

broker or cemetery broker with whom the applicant desires to be affiliated that does the following:

• Attests to applicant’s good reputation• Certifies that broker will actively supervise and train the

applicant– No education or examination required


13 Pennsylvania Real Estate Licensing Law• Builder-owner salesperson

– Individual who is a full-time employee of a builder-owner of single- and multifamily dwellings and who performs one or more of following:

• Lists for sale, sells, or offers for sale real estate of builder-owner

• Negotiates sale or exchange of real estate of builder-owner • Leases or rents, or offers to lease, rent, or place for rent, real

estate of builder-owner.• Collects or offers, or attempts to collect, rent for real estate of

builder-owner


Builder-owner does not need a license

13 Pennsylvania Real Estate Licensing Law• Builder-owner salesperson

– Must be 18 or older– Must be employed by unlicensed builder-owner– Must pass examination


Does not need to take 60-hour classes

13 Pennsylvania Real Estate Licensing Law• Rental listing referral agent

– Individual or entity that owns or manages business that collects rental information to refer prospective tenants to rental units or locations of rental units

– Does not lease or show property: prepares and distributes lists of available properties

– Must complete 60 hours of classes and pass salesperson’s examination

– Does not need a broker– Must have an office


13 Pennsylvania Real Estate Licensing Law• Campground membership salesperson

– Individual who, either as an employee or an independent contractor, sells or offers to sell campground memberships under the active supervision of a broker

– Campground memberships are interests to use property on a periodic basis

– A licensed broker, salesperson or time-share salesperson does not need to possess a campground membership salesperson’s license to sell campground memberships


13 Pennsylvania Real Estate Licensing Law• Campground membership salesperson

– Must be 18 or older– Successfully complete 15-hour Campground

Membership Sales course, provided– Complete 30 days of onsite training– Trainee is actively supervised and trained by a broker– A licensed broker, salesperson, or time-share

salesperson does not need to possess a campground membership salesperson’s license to sell campground memberships


Does not need to take 60-hour classes Does not need to pass examination

13 Pennsylvania Real Estate Licensing Law• Individual who sells or offers to sell time-shares• Time-share: right to occupy on periodic basis• Work under active supervision of broker:

– Must be 18 or older– Complete 30-hour Time-Share Sales course– Complete 30 days of onsite training

• Licensed salespersons and brokers do not need time-share license


Does not need to pass examinationDoes not need to take 60-hour classes

13 Pennsylvania Real Estate Licensing Law• Unlicensed activity

– Section 301 of RELRA: unlawful for unlicensed person to engage in licensed activities

– May not advertise or suggest they are engaged– Must be licensed at time service is offered and

rendered– Not entitled to compensation, may not sue to

recover payment for illegal services rendered


13 Pennsylvania Real Estate Licensing Law• Criminal penalties

– Section 303 of RELRA– Unlicensed activities include situations where

license was suspended or revoked– First offense: fine up to $500, up to three months

in jail– Subsequent offenses:

• Third-degree felony• Fine between $2,000 and $5,000

» and/or• Imprisonment for one to two years


13 Pennsylvania Real Estate Licensing Law• Individuals and entities excluded from the act

– Owner of real estate . . .– Employee of public utility acting in related business– Officer or employee of partnership or corporation

whose principal business is discovery, extraction, distribution, or transmission of energy or mineral resources

– Attorney-in-fact who renders services under executed and recorded power of attorney from an owner or lessor of real estate, if power of attorney is not used to circumvent intent of the act


13 Pennsylvania Real Estate Licensing Law• Exclusions (cont’d)

– Attorney-at-law who receives a fee from a client for rendering services within the scope of the attorney-client relationship and does not hold self out as a real estate broker

– Trustee in bankruptcy, administrator, executor, trustee, or guardian, acting under authority of a court order, will or trust instrument

– Elected officer or director of banking institution, savings institution, savings bank, credit union, or trust company



– Officer or employee of a cemetery company who, as an incidental part of the principal duties (and without remuneration), shows lots in company’s cemetery

– Cemetery company or cemetery owned or controlled by a bona fide church or religious congregation or fraternal organization

– Auctioneer licensed under The Auctioneers’ License Act . . . while performing authorized duties at a bona fide auction



– Individual employed by owner of multifamily residential dwellings to manage dwellings:

• Not authorized to– enter into leases,– negotiate terms and conditions of occupancy, and– hold money belonging to tenants other than on owner’s behalf

• So long as owner retains authority to make decisions, may show apartments and provide information on rental amounts, building rules, regulations, and leasing qualifications


13 Pennsylvania Real Estate Licensing Law

– Exclusions (cont’d)• Elected officer, director or employee of banking

institution, savings institution, savings bank, credit union, or trust company acting on behalf of institution performing appraisals or other evaluations of real estate in connection with loan transaction


13 Pennsylvania Real Estate Licensing Law• Licensing procedures

– Department of State issues licenses– Real Estate Commission

• Approves proprietary schools• Sets fees subject to review under PA laws• Prescribes subject matter for examinations

– Department of State contracts with independent agency to conduct testing


13 Pennsylvania Real Estate Licensing Law• Real Estate Commission

– Prescribes form for license applications– Investigates accuracy of license applications– Denies licenses or institutes disciplinary action

• License period– Even-numbered years– Begins June 1 and ends May 31– First issuance: expires May 31 of current license period

• License active when issued and properly renewed


13 Pennsylvania Real Estate Licensing Law• License renewal

– Commission establishes procedures to renew licenses

– On-line renewal available as of 2006– Code forwarded to licensee through

communication– If not electronic, renewal form available for

download


13 Pennsylvania Real Estate Licensing Law• Continuing education

– 14-hour continuing education (CE) requirement for brokers and salespersons

– “To maintain and increase competency”– Commission approves work and topics– 14-hour follow-up course for new salespersons

being developed– Can be instructor-led or distance education– Licensee required to keep documentation of

completed coursework45©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Inactive licenses

– Voluntary relinquishment (escrow)– Failure to properly renew– May not perform activities while inactive– May reactivate by submitting proper forms within

five years of inactive status– Must complete 14 hours of continuing education

before reactivation• After five years, must retake examination


13 Pennsylvania Real Estate Licensing Law• Out-of-state licenses

– Nonresident licensee may be licensed by following Commission rules and regulations

– Some states encourage streamlining license procedures (ARELLO)

– PA authorizes reciprocity with states that have similar requirements


13 Pennsylvania Real Estate Licensing Law• Intent of reciprocity

– Allow licensees to practice in more than one state

– Not intended to circumvent licensing requirements for principal place of business:

• Must seek standard license• Pass examination or fulfill other requirements


13 Pennsylvania Real Estate Licensing Law• Operation of real estate business

– Resident, licensed broker (CB, RLRA) must maintain a fixed office

– Current licenses of all licensees must be prominently displayed in the office

– Office must be:• Devoted to transaction of real estate business• Must permit business to be conducted in privacy

– If in private residence, must have separate entrance


13 Pennsylvania Real Estate Licensing Law• Business name

– Name used by business entity– Must be used in all business activity and

communications– Business name from license must be displayed

prominently and in a permanent fashion outside all offices

– Must appear exactly as on license


ABC Realty, Inc.

13 Pennsylvania Real Estate Licensing Law• Branch office

– Additional license required for every branch– Licensed issued under main office name– Supervised by BOR– May not be opened for one person’s benefit– Associate broker must supervise– Licenses must be displayed at main office– List of licensees kept at branch

• Home office/mobile office (any off-site work space) is not recognized branch office


13 Pennsylvania Real Estate Licensing Law• Change of address

– Licensee may not receive compensation from anyone except employing broker

– If broker’s office moves, all licensees must make application to Commission for new license at new location

– Must be filed before move or within ten days of move

– New license must be issued for new location


13 Pennsylvania Real Estate Licensing Law• Change of employment

– Licensee must notify Commission within ten days after date of change

– Pay required fee– New broker acknowledges change; new license

issued– Copy of change notification serves as temporary

license– Applicant must notify Commission if license not

received within 30 days53©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Disciplinary actions

– RELRA authorizes Commission to enforce Act– Bureau of Professional and Occupational Affairs

investigates complaints– Commission authorized to do the following:

• Suspend license• Revoke license• Levy fines (to $1,000)

– Nature and severity of violation considered– Accused party may request hearing


13 Pennsylvania Real Estate Licensing Law• Broker liability

– Employing broker liable for licensee’s actions, if• broker had actual knowledge or• broker permitted “course of dealing that violates law”

(prima facie evidence of wrongdoing)– May suspend, revoke, or fine broker– If broker failed to supervise, subject to lesser

action– Broker may be charged during investigation or

inspection; may pay fine or request hearing55©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Prohibited acts

– Misrepresentation– False promises– Misleading advertising– Escrow issues– Record preservation– Undisclosed dual agency– Signs without permission– Failure to provide copies at execution– Inducing party to break contract– Accepting compensation from anyone but broker


13 Pennsylvania Real Estate Licensing Law• Prohibited acts

– Paying commission to anyone but employee– Conviction of money crime– Violating regulation of the Commission– Failure to provide adequate disclosure– Failure to supervise– Failure to cooperate with the Commission– Influencing a purchase by deceptive conduct– Accepting or charging undisclosed fees– Unlicensed activities– Violating PA Human Relations Act


13 Pennsylvania Real Estate Licensing Law• Posting suspension notices

– Suspended broker must return license to Commission

– Must prominently post Commission-approved notice of suspension at public entrance of main and branch offices

– Failure to post is grounds for further action


13 Pennsylvania Real Estate Licensing Law• Relicensure after revocation

– Revocation lasts five years– After the five-year period, former licensee may

petition the Commission for relicensure– Former licensee must comply with current

licensing requirements before new license is issued


13 Pennsylvania Real Estate Licensing Law• Civil Penalties — in addition to other remedies

or criminal penalties, Commission may levy fine up to $1,000 against licensee or unlicensed individual who practices real estate

• Licensee must notify Commission within 30 days of conviction on felony or misdemeanor

• If another licensing authority takes action against licensee, Commission must be notified within 30 days


13 Pennsylvania Real Estate Licensing Law• Real Estate Recovery Fund

– Established to collect judgments awarded in civil court

– Must be from suits against licensees for• fraud,• deceit, or• misrepresentations in a transaction

– Not for campground license issues– Aggrieved party must exhaust all other means of

collecting moneys due61©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Recovery from Fund

– Aggrieved persons required to show the following:

• That they are not a spouse of debtor, or personal representative of said spouse

• That final judgment was awarded• That all reasonable remedies have been exhausted to

collect the judgment• That application is no more than one year after

termination of proceedings, including appeals


13 Pennsylvania Real Estate Licensing Law• Liabilities of the fund

– Liability shall not exceed $20,000 for any one claim and shall not exceed $100,000 per licensee

– If $100,000 does not satisfy claim, it will be distributed in proportion to claims

– Fund will reimburse unfulfilled claims plus 6 percent interest when funds are available


13 Pennsylvania Real Estate Licensing Law• Funding the Fund

– Established in 1980, licensees paid $10 at renewal

– Now, upon licensure, licensees pay $10– If fund is less than $300,000, Commission may

assess additional fee, not to exceed $10, to bring balance to $500,000

– Fees paid into state treasury and credited to Real Estate Recovery Fund


13 Pennsylvania Real Estate Licensing Law• Recovery Fund

– License of person involved is automatically suspended on date of payment

– No licensee shall be granted reinstatement until repayment in full plus interest at rate of 10 percent a year

– Commission can take action to recover funds from licensee


13 Pennsylvania Real Estate Licensing Law• Real estate documents

– Consumer Notice is approved by legislature and must appear as specified

– Mandatory language must appear in certain documents


13 Pennsylvania Real Estate Licensing Law• Legally required language documents

– Written documents describing services rendered for fees to be paid

– Agreement of sale has mandatory mortgage contingency language

– Disclosure required in CMA– AOS disclosures required by cemetery brokers– Pre-agreement disclosures required at initial interview– Estimates of cost and return for buyers and sellers

• Specific language noted in contracts section67©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Rental listing referral services

– ‘‘We are a referral service only. We are not acting as real estate salespersons or brokers. We do not guarantee that the purchaser will find a satisfactory rental unit through our service. Our only purpose is to furnish the purchaser with lists of available rental units.’’


13 Pennsylvania Real Estate Licensing Law• Time-share and campground contracts

– RELRA allows purchasers to cancel until midnight of fifth day (following the day of execution)

– Applies to PA memberships and memberships contracted for in PA

– Notice must be printed in boldface type and must be initialed

– Cannot be waived– Moneys must be returned within ten days after receipt

of notice of cancellation and contract voided– Purchaser may keep promotional materials


13 Pennsylvania Real Estate Licensing Law• Document procedures

– Licensee must ensure that all contracts, commitments and agreements concerning transactions are in writing

– All parties must receive copy of executed documents

– Broker must maintain copies for three years– Broker must produce copies for Commission

upon written request


13 Pennsylvania Real Estate Licensing Law• Licensees and consumers

– Act permits licensees to form different relationships with consumers

– Encourages agency relationships: “act as fiduciaries for a consumer of real estate services by the express authority of the consumer . . .”

– Consumer: person who is recipient of any real estate service


13 Pennsylvania Real Estate Licensing Law• Permissible roles

– Principal: consumer who entered into agency relationship with broker

– Seller agent: licensee who entered into agency relationship with seller

– Subagent: licensee, not in employ of listing broker, who acts or cooperates with listing broker in selling property as seller’s/landlord’s agent and has agency relationship with the seller

– Listing broker: broker engaged to market property



– Dual agent: licensee who acts as agent for buyer/tenant and seller/landlord

– Designated agent: one or more licensees designated by employing broker, with consent of principal, to act exclusively as agent or agents for principal to the exclusion of all other licensees within broker’s employ

– Transaction licensee: licensee who provides communication or document preparation services or performs other acts listed in the definition of broker or salesperson, without being an agent for the consumer


13 Pennsylvania Real Estate Licensing Law• Consumer Notice

– Broker determines roles that licensees may assume

– Licensees must provide Consumer Notice, at first substantive discussion

– Notice advises consumers of business relationships allowed in PA

– Helps consumers make informed decisions when hiring an agent


13 Pennsylvania Real Estate Licensing Law• The following duties are owed to all consumers of

real estate services and may not be waived:– Reasonable professional skill and care– Honest dealings in good faith– Present, in a reasonably practicable period of time, all

offers, counteroffers, notices and communications to and from the parties in writing, except when waived

– Comply with the Real Estate Seller Disclosure Act– Accounting for all money received– Proper information at initial interview



– Timely disclosure of conflicts of interest– Guidance regarding use of expert advice (use of

attorneys)– Information regarding status of transaction– Information regarding tasks to be completed for

settlement (document preparation and legal compliance)

– Timely presentation of all offers and counteroffers– Disclosure of financial interest at time service is

offered (financing, title, insurance, construction, etc.)


13 Pennsylvania Real Estate Licensing Law• Agent roles

– Seller agent– Buyer agent– Dual agent– Designated agent– Transaction licensee


13 Pennsylvania Real Estate Licensing Law• Escrow requirements

– Others’ moneys must be deposited into federally or state insured institution pending consummation or termination of transaction

– Broker may not commingle money required to in escrow with business, personal or other funds

– Broker may deposit business or personal funds into an escrow account to cover service charges

– If moneys are held for six months or more, should be placed in interest-bearing account

– Interest belongs to original bearer of funds78©2012 Kaplan, Inc.


– Escrow duty cannot be waived by agreement– Account established in license name of broker as

trustee– Written authority required for employee to make

deposits– Licensed employee (only) may make withdrawals– Broker must maintain records– The Commission may inspect records



– Listing broker or selling broker may assume responsibility for escrow

– In co-broke situations:• Money tendered to selling (buyer’s) broker and turned

over to listing broker• Must have written notice to buyer that funds will be

held by other party• Buyer must acknowledge this in writing prior to signing

agreement of sale



– Broker shall deposit money into an escrow account by end of next business day following receipt

– Multiple-office firms: receipt by office out of which account is administered

– If money is tendered check with offer to purchase (or lease), broker may do the following:

• With written permission of both buyer and seller, refrain from depositing money into account pending acceptance

• Must deposit check into escrow account within one business day of acceptance of offer



– Withdrawal of funds• Funds remain in account until transaction is consummated

or terminated– If dispute arises between parties over money,

• broker must retain money in escrow until dispute is resolved and

• if resolution appears remote without legal action, broker may, following 30 days’ notice to the parties, petition county court having jurisdiction in matter to interplead rival claimants

– Broker may not appropriate any escrow money for commissions or fees


13 Pennsylvania Real Estate Licensing Law• Rental management account

– Rents received as property manager must be placed in rental management account

– Account separate from the following:• Escrow account• Operating account


13 Pennsylvania Real Estate Licensing Law• General ethical responsibilities: misleading

advice, assurances, representations– Licensees may not give assurances or advice . . .

that they know, or reasonably should be expected to know, is incorrect, inaccurate, or improbable

– Licensee may not knowingly be party to materially false or inaccurate representation in writing regarding real estate transaction in which they are acting in representative capacity


13 Pennsylvania Real Estate Licensing Law• Licensees must disclose ownership interest in

writing to all parties concerned.• Brokers who manage rental property may not

accept commission, rebate, or profit on expenditures made for lessor without lessor’s written consent.

• Licensees may not represent more than one party (dual agency) to real estate transaction without written consent of all parties.


13 Pennsylvania Real Estate Licensing Law• Disclosure of real estate affiliations: if parent

real estate company is not part of license name, Commission must be notified of the affiliation

• Duties when selling, leasing personal real estate, as follows:– Disclose license status before consumer enters

into any agreement– Disclose license when advertising personal

properties for sale or rent86©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Advertising and solicitation

– Licensee may not advertise sale or lease of real estate, solicit prospective buyers or tenants for real estate, without written consent of owner

– Rental listing referral agent may not publish information about rental property if lessor or property manager expressly states property is not to be included in lists

©2012 Kaplan, Inc. 87

13 Pennsylvania Real Estate Licensing Law• Brokerage companies shall advertise only

under business name designated on license• “Blind ads” are prohibited • Advertisements by licensees must

contain business name of employing broker

• Business names and phone numbers shall be of equal size

• Nicknames must be filed with Commission©2012 Kaplan, Inc. 88

13 Pennsylvania Real Estate Licensing LawLicensees or firms advertising or marketing on Web

sites, bulletin boards, discussion groups, etc., must list:

a. Firm’s (or the firm’s and licensee’s) name as registered with Commission

b. City, state/province, and *country in which firm’s (licensee’s) office is located

c. Regulatory jurisdiction(s) in which firm (licensee) holds license(s) (*including the license number).

*Although not required, strongly recommendedInformation must appear on EACH PAGE(for e-mails, first and last pages)

©2012 Kaplan, Inc. 89

13 Pennsylvania Real Estate Licensing Law• Lotteries or contests (offers of prizes,

certificates, gifts or free lots) shall contain the following: – Description of each prize, certificate, gift, or lot

offered – Prerequisites for receiving awards– Limitation on number of awards– Fair market value (not suggested retail price) of

awards– Odds of winning or receiving awards


13 Pennsylvania Real Estate Licensing Law• Award disclosures

– Licensee shall maintain records that contain • number and description of each prize, certificate, gift, or

lot distributed or awarded; and• name and address of each person who received (or did not

receive) prize– Disclosure must be made if there may not be an

award available– Odds of winning must be printed in clear manner– If fees (shipping, etc.) are required of winner, must

be disclosed91©2012 Kaplan, Inc.

13 Pennsylvania Real Estate Licensing Law• Advertising sales volume

– Advertisement about sales volume must refer to closed transactions.

– Advertisement about production must identify municipality.

– Advertisement about the number of offices that broker operates must refer to offices that have been issued branch office licenses.


13 Pennsylvania Real Estate Licensing Law• Harassment

– A licensee, whether acting on behalf of a prospective buyer or not, may not solicit—by personal contact, telephone, mail, or advertising — the sale or other disposition of real estate with such frequency as to amount to clear harassment of the owner or other person who controls the sale or disposition of the real estate


13 Pennsylvania Real Estate Licensing Law• Panic selling

– Frequent efforts to sell residential real estate in particular neighborhoods because of fear of declining real estate values when fear is not based on facts relating to intrinsic value

– Federal law calls this blockbusting – Proof of systematic solicitation of sales listings

may be considered sufficient, but not conclusive, evidence of attempt to bring about panic selling


13 Pennsylvania Real Estate Licensing Law• Promotional land sales

– Person who plans to engage in promotional sales must register with Commission (regardless of property’s location)

– Commission must grant approval prior to marketing

– Promotions can offered by radio, mail, TV, etc.• Registration not required if property is

registered with HUD under Interstate Land Sales Full Disclosure Act


Documents

Modern Real Estate Practice in Pennsylvania 12th Edition Chapter 13: Pennsylvania Real Estate Licensing…