1.1                          A bill for an act 
  1.2             relating to commerce; regulating conduct of real 
  1.3             estate industry licensees; modifying disclosures; 
  1.4             regulating investigations by the commissioner of 
  1.5             commerce; amending Minnesota Statutes 2000, sections 
  1.6             82.19, subdivision 9; 82.197, subdivision 3; 82.23, 
  1.7             subdivision 1; 82.27, by adding subdivisions; 
  1.8             Minnesota Statutes 2001 Supplement, sections 82.197, 
  1.9             subdivisions 1, 4, 6; 82.22, subdivision 13. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2000, section 82.19, 
  1.12  subdivision 9, is amended to read: 
  1.13     Subd. 9.  [EXCLUSIVE AGENCY AGREEMENTS.] (a) Except as 
  1.14  provided in paragraph (b) (c), a licensee shall not negotiate 
  1.15  the sale, exchange, lease, or listing of any real property 
  1.16  directly with the owner or lessor knowing that the owner or 
  1.17  lessor has executed a written contract granting exclusive 
  1.18  listing contract or exclusive contract for nonagency 
  1.19  services representation or assistance in connection with the 
  1.20  property with to another real estate broker, buyer, or lessee, 
  1.21  nor shall a licensee negotiate the purchase, lease, or exchange 
  1.22  of real property knowing that the buyer or lessee has executed a 
  1.23  written contract granting exclusive buyer representation 
  1.24  contract or exclusive contract for nonagency 
  1.25  services representation or assistance for the purchase, lease, 
  1.26  or exchange of the real property with another real estate broker.
  1.27     (b) Licensees shall not induce any party to a contract of 
  2.1   sale, purchase, lease, or option, or to an exclusive listing 
  2.2   agreement or buyer's agreement, or facilitator services 
  2.3   agreement, to breach the contract, option, or agreement. 
  2.4      (c) A licensee may discuss the terms upon which a listing 
  2.5   or buyer representation contract or a contract for nonagency 
  2.6   facilitator services may be entered into after expiration of any 
  2.7   existing exclusive contract when the inquiry or discussion is 
  2.8   initiated by the owner, lessor, buyer, or lessee.  The licensee 
  2.9   must inquire of the owner, lessor, buyer, or lessee whether such 
  2.10  an exclusive contract exists. 
  2.11     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  2.12  82.197, subdivision 1, is amended to read: 
  2.13     Subdivision 1.  [AGENCY DISCLOSURE.] A real estate broker 
  2.14  or salesperson shall provide to a consumer in the sale and 
  2.15  purchase of a residential real property transaction at the first 
  2.16  substantive contact with the consumer an agency disclosure form 
  2.17  in substantially the form set forth in subdivision 4.  The 
  2.18  agency disclosure form shall be intended to provide a 
  2.19  description of available options for agency and nonagency 
  2.20  facilitator relationships, and a description of the role of a 
  2.21  licensee under each option.  The agency disclosure form shall 
  2.22  provide a signature line for acknowledgment of receipt by the 
  2.23  consumer. 
  2.24     Sec. 3.  Minnesota Statutes 2000, section 82.197, 
  2.25  subdivision 3, is amended to read: 
  2.26     Subd. 3.  [SCOPE AND EFFECT.] Disclosures made in 
  2.27  accordance with the requirements for disclosure of agency 
  2.28  relationships and material facts set forth in this chapter are 
  2.29  sufficient to satisfy common law disclosure requirements.  In 
  2.30  addition, when a principal in the transaction is a licensee or a 
  2.31  relative or business associate of the licensee, that fact must 
  2.32  be disclosed in writing in addition to any other required 
  2.33  disclosures.  
  2.34     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  2.35  82.197, subdivision 4, is amended to read: 
  2.36     Subd. 4.  [AGENCY DISCLOSURE FORM.] The agency disclosure 
  3.1   form shall be in substantially the form set forth below: 
  3.2         <b> AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS </b>
  3.3   <b>Minnesota law requires</b> that early in any relationship, real 
  3.4   estate brokers or salespersons discuss with consumers what type 
  3.5   of agency representation or relationship they desire.(1)  The 
  3.6   available options are listed below.  This is <b>not</b> a contract.  
  3.7   <b>This is an agency disclosure form only.  If you desire</b> 
  3.8   <b>representation, you must enter into a written contract according</b> 
  3.9   <b>to state law</b> (a listing contract or a buyer representation 
  3.10  contract).  Until such time as you choose to enter into a 
  3.11  written contract for representation, you will be treated as a 
  3.12  customer and will not receive any representation from the broker 
  3.13  or salesperson.  The broker or salesperson will be acting as a 
  3.14  Facilitator (see paragraph V below), unless the broker or 
  3.15  salesperson is representing another party as described below. 
  3.16     ACKNOWLEDGMENT:  I/We acknowledge that I/We have been 
  3.17  presented with the below-described options.  I/We understand 
  3.18  that until I/We have signed a representation contract, I/We are 
  3.19  not represented by the broker/salesperson and information given 
  3.20  to the broker/salesperson may be disclosed, unless otherwise 
  3.21  prohibited by law.  I/We understand that written consent is 
  3.22  required for a dual agency relationship.  THIS IS A DISCLOSURE 
  3.23  ONLY, NOT A CONTRACT FOR REPRESENTATION. 
  3.24  ...............     .......... 
  3.25  Signature           Date
  3.26  ...............     .......... 
  3.27  Signature           Date
  3.28  I.
  3.29     <b>Seller's Broker:</b>  A broker who lists a property, or a 
  3.30     salesperson who is licensed to the listing broker, 
  3.31     represents the Seller and acts on behalf of the Seller.  A 
  3.32     Seller's broker owes to the Seller the fiduciary duties 
  3.33     described below.(2)  The broker must also disclose to the 
  3.34     Buyer material facts as defined in Minnesota Statutes, 
  3.35     section 82.197, subdivision 6, of which the broker is aware 
  3.36     that could adversely and significantly affect the Buyer's 
  4.1      use or enjoyment of the property.  If a broker or 
  4.2      salesperson working with a Buyer as a customer is 
  4.3      representing the Seller, he or she must act in the Seller's 
  4.4      best interest and must tell the Seller any information 
  4.5      disclosed to him or her, except confidential information 
  4.6      acquired in a facilitator relationship (see paragraph V 
  4.7      below).  In that case, the Buyer will not be represented 
  4.8      and will not receive advice and counsel from the broker or 
  4.9      salesperson. 
  4.10  II. 
  4.11     <b>Subagent:</b>  A broker or salesperson who is working with a 
  4.12     Buyer but represents the Seller.  In this case, the Buyer 
  4.13     is the broker's customer and is not represented by that 
  4.14     broker.  If a broker or salesperson working with a Buyer as 
  4.15     a customer is representing the Seller, he or she must act 
  4.16     in the Seller's best interest and must tell the Seller any 
  4.17     information that is disclosed to him or her.  In that case, 
  4.18     the Buyer will not be represented and will not receive 
  4.19     advice and counsel from the broker or salesperson. 
  4.20  III.
  4.21     <b>Buyer's Broker:</b>  A Buyer may enter into an agreement for 
  4.22     the broker or salesperson to represent and act on behalf of 
  4.23     the Buyer.  The broker may represent the Buyer only, and 
  4.24     not the Seller, even if he or she is being paid in whole or 
  4.25     in part by the Seller.  A Buyer's broker owes to the Buyer 
  4.26     the fiduciary duties described below.(2)  The broker must 
  4.27     disclose to the Buyer material facts as defined in 
  4.28     Minnesota Statutes, section 82.197, subdivision 6, of which 
  4.29     the broker is aware that could adversely and significantly 
  4.30     affect the Buyer's use or enjoyment of the property.  If a 
  4.31     broker or salesperson working with a Seller as a customer 
  4.32     is representing the Buyer, he or she must act in the 
  4.33     Buyer's best interest and must tell the Buyer any 
  4.34     information disclosed to him or her, except confidential 
  4.35     information acquired in a facilitator relationship (see 
  4.36     paragraph V below).  In that case, the Seller will not be 
  5.1      represented and will not receive advice and counsel from 
  5.2      the broker or salesperson. 
  5.3   IV.
  5.4      <b>Dual Agency-Broker Representing both Seller and Buyer:</b>  
  5.5      Dual agency occurs when one broker or salesperson 
  5.6      represents both parties to a transaction, or when two 
  5.7      salespersons licensed to the same broker each represent a 
  5.8      party to the transaction.  Dual agency requires the 
  5.9      informed consent of all parties, and means that the broker 
  5.10     and salesperson owe the same duties to the Seller and the 
  5.11     Buyer.  This role limits the level of representation the 
  5.12     broker and salespersons can provide, and prohibits them 
  5.13     from acting exclusively for either party.  In a dual 
  5.14     agency, confidential information about price, terms, and 
  5.15     motivation for pursuing a transaction will be kept 
  5.16     confidential unless one party instructs the broker or 
  5.17     salesperson in writing to disclose specific information 
  5.18     about him or her.  Other information will be shared.  Dual 
  5.19     agents may not advocate for one party to the detriment of 
  5.20     the other.(3) 
  5.21     Within the limitations described above, dual agents owe to 
  5.22     both Seller and Buyer the fiduciary duties described 
  5.23     below.(2)  Dual agents must disclose to Buyers material 
  5.24     facts as defined in Minnesota Statutes, section 82.197, 
  5.25     subdivision 6, of which the broker is aware that could 
  5.26     adversely and significantly affect the Buyer's use or 
  5.27     enjoyment of the property. 
  5.28  V.
  5.29     <b>Facilitator:</b>  A broker or salesperson who performs services 
  5.30     for a Buyer, a Seller, or both but does not represent 
  5.31     either in a fiduciary capacity as a Buyer's Broker, 
  5.32     Seller's Broker, or Dual Agent.  <b>THE FACILITATOR BROKER OR</b> 
  5.33     <b>SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY</b> 
  5.34     <b>DUTIES LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE</b> 
  5.35     <b>DUTIES ARE INCLUDED IN THE WRITTEN FACILITATOR SERVICES</b> 
  5.36     <b>AGREEMENT.</b>  The facilitator broker or salesperson owes the 
  6.1      duty of confidentiality to the party but owes no other duty 
  6.2      to the party except those duties required by law or 
  6.3      contained in a written facilitator services agreement, if 
  6.4      any.  In the event a facilitator broker or salesperson, 
  6.5      working with a Buyer, shows a property listed by the 
  6.6      facilitator broker or salesperson, then the facilitator 
  6.7      broker or salesperson must act as a Seller's Broker (see 
  6.8      paragraph I above).  In the event a facilitator broker or 
  6.9      salesperson, working with a Seller, accepts a showing of 
  6.10     the property by a Buyer being represented by the 
  6.11     facilitator broker or salesperson, then the facilitator 
  6.12     broker or salesperson must act as a Buyer's Broker (see 
  6.13     paragraph III above). 
  6.14     
  6.15     
  6.16     
  6.17  ****************************************************************
  6.18     (1) This disclosure is required by law in any transaction 
  6.19  involving property occupied or intended to be occupied by one to 
  6.20  four families as their residence. 
  6.21     (2) The fiduciary duties mentioned above are listed below 
  6.22  and have the following meanings: 
  6.23     Loyalty-broker/salesperson will act only in client(s)' best 
  6.24  interest. 
  6.25     Obedience-broker/salesperson will carry out all client(s)' 
  6.26  lawful instructions. 
  6.27     Disclosure-broker/salesperson will disclose to client(s) 
  6.28  all material facts of which broker/salesperson has knowledge 
  6.29  which might reasonably affect the client's rights and 
  6.30  interests as defined in Minnesota Statutes, section 82.197, 
  6.31  subdivision 6, of which the broker/salesperson is aware that 
  6.32  could adversely and significantly affect the client's rights and 
  6.33  interests in the property. 
  6.34     Confidentiality-broker/salesperson will keep client(s)' 
  6.35  confidences unless required by law to disclose specific 
  6.36  information (such as disclosure of material facts to Buyers). 
  7.1      Reasonable Care-broker/salesperson will use reasonable care 
  7.2   in performing duties as an agent. 
  7.3      Accounting-broker/salesperson will account to client(s) for 
  7.4   all client(s)' money and property received as agent. 
  7.5      (3) If Seller(s) decides not to agree to a dual agency 
  7.6   relationship, Seller(s) may give up the opportunity to sell the 
  7.7   property to Buyers represented by the broker/salesperson.  If 
  7.8   Buyer(s) decides not to agree to a dual agency relationship, 
  7.9   Buyer(s) may give up the opportunity to purchase properties 
  7.10  listed by the broker. 
  7.11     Sec. 5.  Minnesota Statutes 2001 Supplement, section 
  7.12  82.197, subdivision 6, is amended to read: 
  7.13     Subd. 6.  [MATERIAL FACTS.] (a) Licensees shall disclose to 
  7.14  any prospective purchaser all material facts pertaining to 
  7.15  adverse physical conditions in the property of which the 
  7.16  licensees are aware, which could adversely and significantly 
  7.17  affect an ordinary purchaser's use or enjoyment of rights and 
  7.18  interests in the property, or any intended use of the property 
  7.19  of which the licensees are aware. 
  7.20     (b) It is not a material fact relating to real property 
  7.21  offered for sale and no regulatory action shall be brought 
  7.22  against a licensee for failure to disclose in any real estate 
  7.23  transaction the fact or suspicion that the property: 
  7.24     (1) is or was occupied by an owner or occupant who is or 
  7.25  was suspected to be infected with human immunodeficiency virus 
  7.26  or diagnosed with acquired immunodeficiency syndrome; or 
  7.27     (2) was the site of an a homicide, suicide, felony, 
  7.28  accidental death, natural death, or perceived paranormal 
  7.29  activity; or 
  7.30     (3) is located in a neighborhood containing any adult 
  7.31  family home, community-based residential facility, or nursing 
  7.32  home.  
  7.33     (c) A licensee or employee of the licensee has no duty to 
  7.34  disclose information regarding an offender who is required to 
  7.35  register under section 243.166, or about whom notification is 
  7.36  made under that section, if the broker or salesperson, in a 
  8.1   timely manner, provides a written notice that information about 
  8.2   the predatory offender registry and persons registered with the 
  8.3   registry may be obtained by contacting local law enforcement 
  8.4   where the property is located or the department of corrections. 
  8.5      (d) A licensee is not required to disclose, except as 
  8.6   otherwise provided in paragraph (e), information relating to the 
  8.7   physical condition of the property or any other information 
  8.8   relating to the real estate transaction, if a written report 
  8.9   that discloses the information has been prepared by a qualified 
  8.10  third party and provided to the person.  For the purposes of 
  8.11  this paragraph, "qualified third party" means a federal, state, 
  8.12  or local governmental agency, or any person whom the broker, 
  8.13  salesperson, or a party to the real estate transaction 
  8.14  reasonably believes has the expertise necessary to meet the 
  8.15  industry standards of practice for the type of inspection or 
  8.16  investigation that has been conducted by the third party in 
  8.17  order to prepare the written report and who is acceptable to the 
  8.18  person to whom the disclosure is being made. 
  8.19     (e) A licensee shall disclose to the parties to a real 
  8.20  estate transaction any facts known by the broker or salesperson 
  8.21  that contradict any information included in a written report, if 
  8.22  a copy of the report is provided to the licensee, described in 
  8.23  paragraph (d). 
  8.24     Sec. 6.  Minnesota Statutes 2001 Supplement, section 82.22, 
  8.25  subdivision 13, is amended to read: 
  8.26     Subd. 13.  [CONTINUING EDUCATION.] (a) After their first 
  8.27  renewal date, all real estate salespersons and all real estate 
  8.28  brokers shall be required to successfully complete 30 hours of 
  8.29  real estate continuing education, either as a student or a 
  8.30  lecturer, in courses of study approved by the commissioner, 
  8.31  during each 24-month license period.  At least 15 of the 30 
  8.32  credit hours must be completed during the first 12 months of the 
  8.33  24-month licensing period.  Salespersons and brokers whose 
  8.34  initial license period extends more than 12 months are required 
  8.35  to complete 15 hours of real estate continuing education during 
  8.36  the initial license period.  Those licensees who will receive a 
  9.1   12-month license on July 1, 1995, because of the staggered 
  9.2   implementation schedule must complete 15 hours of real estate 
  9.3   continuing education as a requirement for renewal on July 1, 
  9.4   1996.  Licensees may not claim credit for continuing education 
  9.5   not actually completed as of the date their report of continuing 
  9.6   education compliance is filed. 
  9.7      (b) The commissioner shall adopt rules defining the 
  9.8   standards for course and instructor approval, and may adopt 
  9.9   rules for the proper administration of this subdivision.  The 
  9.10  commissioner may not approve a course which can be completed by 
  9.11  the student at home or outside the classroom without the 
  9.12  supervision of an instructor except accredited courses using new 
  9.13  delivery technology, including interactive technology, and the 
  9.14  Internet.  Courses in motivation, salesmanship, psychology, or 
  9.15  time management shall not be approved by the commissioner for 
  9.16  continuing education credit. 
  9.17     (c) Any program approved by Minnesota continuing legal 
  9.18  education shall be approved by the commissioner of commerce for 
  9.19  continuing education for real estate brokers and salespeople if 
  9.20  the program or any part thereof relates to real estate.  
  9.21     (d) As part of the continuing education requirements of 
  9.22  this section, the commissioner shall require that all real 
  9.23  estate brokers and salespersons receive: 
  9.24     (1) at least one hour of training during each license 
  9.25  period in courses in laws or regulations on agency 
  9.26  representation and disclosure; and 
  9.27     (2) at least one hour of training during each license 
  9.28  period in courses in state and federal fair housing laws, 
  9.29  regulations, and rules, other antidiscrimination laws, or 
  9.30  courses designed to help licensees to meet the housing needs of 
  9.31  immigrant and other underserved populations. 
  9.32     Clauses (1) and (2) do not apply to real estate 
  9.33  salespersons and real estate brokers engaged solely in the 
  9.34  commercial real estate business who file with the commissioner a 
  9.35  verification of this status along with the continuing education 
  9.36  report required under paragraph (a). 
 10.1      (e) The commissioner is authorized to establish a procedure 
 10.2   for renewal of course accreditation. 
 10.3      (f) Approved courses may be sponsored or offered by a 
 10.4   broker of a real estate company and may be held on the premises 
 10.5   of a company licensed under this chapter.  All course offerings 
 10.6   must be open to any interested individuals.  Access may be 
 10.7   restricted by the sponsor based on class size only.  Courses 
 10.8   must not be approved if attendance is restricted to any 
 10.9   particular group of people.  A broker must comply with all 
 10.10  continuing education rules prescribed by the commissioner. 
 10.11     (g) No more than one-half of the credit hours per licensing 
 10.12  period, including continuing education required under 
 10.13  subdivision 6, may be credited to a person for attending any 
 10.14  combination of courses either:  
 10.15     (1) sponsored by, offered by, or affiliated with a real 
 10.16  estate company or its agents; or 
 10.17     (2) offered using new delivery technology, including 
 10.18  interactive technology, and the Internet. 
 10.19     Sec. 7.  Minnesota Statutes 2000, section 82.23, 
 10.20  subdivision 1, is amended to read: 
 10.21     Subdivision 1.  [RETENTION.] A licensed real estate broker 
 10.22  shall retain for three years copies of all listings, buyer 
 10.23  representation and facilitator services contracts, deposit 
 10.24  receipts, purchase money contracts, canceled checks, trust 
 10.25  account records, and such other documents as may reasonably be 
 10.26  related to carrying on a real estate brokerage business.  The 
 10.27  retention period shall run from the date of the closing of the 
 10.28  transaction, or from the date of the listing an offer to 
 10.29  purchase is made if the transaction is not consummated.  
 10.30     Sec. 8.  Minnesota Statutes 2000, section 82.27, is amended 
 10.31  by adding a subdivision to read: 
 10.32     Subd. 2a.  [REQUEST FOR INFORMATION; INVESTIGATIONS AND 
 10.33  SUBPOENAS.] When an investigation is being conducted by the 
 10.34  commissioner upon the filing of a complaint against a licensee, 
 10.35  as allowed under section 45.027, the commissioner shall inquire 
 10.36  and cite the specific statute or rule that the complainant 
 11.1   believes has been violated and the commissioner is 
 11.2   investigating, and shall inform the licensee and licensee's 
 11.3   broker, prior to any department request for the licensee to 
 11.4   provide information, documents, or other requests.  A licensee 
 11.5   must provide the information, documents, or other requests made 
 11.6   by the commissioner within 15 business days from the date the 
 11.7   request is made by the commissioner. 
 11.8      Sec. 9.  Minnesota Statutes 2000, section 82.27, is amended 
 11.9   by adding a subdivision to read: 
 11.10     Subd. 2b.  [CLOSURE OF INVESTIGATION.] In an investigation 
 11.11  process, the commissioner shall determine whether the statute or 
 11.12  rule specified, as required in subdivision 2a, has been 
 11.13  violated, and must notify the licensee and licensee's broker, 
 11.14  within 180 days from the date the investigation was commenced. 
 11.15     Sec. 10.  Minnesota Statutes 2000, section 82.27, is 
 11.16  amended by adding a subdivision to read: 
 11.17     Subd. 2c.  [MONETARY SETTLEMENTS.] The commissioner shall 
 11.18  not facilitate monetary settlements between consumers and 
 11.19  licensees when a licensee has been named in a complaint and the 
 11.20  commissioner shall not propose a monetary settlement, recommend 
 11.21  a specific dollar settlement, or negotiate with the licensee on 
 11.22  behalf of a consumer for a monetary settlement.