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; 82.23, subdivision 1; 82.27, by 
  1.7             adding subdivisions; Minnesota Statutes 2001 
  1.8             Supplement, section 82.197, subdivisions 1, 4, 6. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 82.19, 
  1.11  subdivision 9, is amended to read: 
  1.12     Subd. 9.  [EXCLUSIVE AGENCY AGREEMENTS.] (a) Except as 
  1.13  provided in paragraph (b) (c), a licensee shall not negotiate 
  1.14  the sale, exchange, lease, or listing of any real property 
  1.15  directly with the owner or lessor knowing that the owner or 
  1.16  lessor has executed a written contract granting exclusive 
  1.17  listing contract or exclusive contract for nonagency 
  1.18  services representation or assistance in connection with the 
  1.19  property with to another real estate broker, buyer, or lessee, 
  1.20  nor shall a licensee negotiate the purchase, lease, or exchange 
  1.21  of real property knowing that the buyer or lessee has executed a 
  1.22  written contract granting exclusive buyer representation 
  1.23  contract or exclusive contract for nonagency 
  1.24  services representation or assistance for the purchase, lease, 
  1.25  or exchange of the real property with another real estate broker.
  1.26     (b) Licensees shall not induce any party to a contract of 
  1.27  sale, purchase, lease, or option, or to an exclusive listing 
  2.1   agreement or buyer's agreement, or facilitator services 
  2.2   agreement, to breach the contract, option, or agreement. 
  2.3      (c) A licensee may discuss the terms upon which a listing 
  2.4   or buyer representation contract or a contract for nonagency 
  2.5   facilitator services may be entered into after expiration of any 
  2.6   existing exclusive contract when the inquiry or discussion is 
  2.7   initiated by the owner, lessor, buyer, or lessee.  The licensee 
  2.8   must inquire of the owner, lessor, buyer, or lessee whether such 
  2.9   an exclusive contract exists. 
  2.10     Sec. 2.  Minnesota Statutes 2001 Supplement, section 
  2.11  82.197, subdivision 1, is amended to read: 
  2.12     Subdivision 1.  [AGENCY DISCLOSURE.] A real estate broker 
  2.13  or salesperson shall provide to a consumer in the sale and 
  2.14  purchase of a residential real property transaction at the first 
  2.15  substantive contact with the consumer an agency disclosure form 
  2.16  in substantially the form set forth in subdivision 4.  The 
  2.17  agency disclosure form shall be intended to provide a 
  2.18  description of available options for agency and nonagency 
  2.19  facilitator relationships, and a description of the role of a 
  2.20  licensee under each option.  The agency disclosure form shall 
  2.21  provide a signature line for acknowledgment of receipt by the 
  2.22  consumer. 
  2.23     Sec. 3.  Minnesota Statutes 2001 Supplement, section 
  2.24  82.197, subdivision 4, is amended to read: 
  2.25     Subd. 4.  [AGENCY DISCLOSURE FORM.] The agency disclosure 
  2.26  form shall be in substantially the form set forth below: 
  2.27        <b> AGENCY RELATIONSHIPS IN REAL ESTATE TRANSACTIONS </b>
  2.28  <b>Minnesota law requires</b> that early in any relationship, real 
  2.29  estate brokers or salespersons discuss with consumers what type 
  2.30  of agency representation or relationship they desire.(1)  The 
  2.31  available options are listed below.  This is <b>not</b> a contract.  
  2.32  <b>This is an agency disclosure form only.  If you desire</b> 
  2.33  <b>representation, you must enter into a written contract according</b> 
  2.34  <b>to state law</b> (a listing contract or a buyer representation 
  2.35  contract).  Until such time as you choose to enter into a 
  2.36  written contract for representation, you will be treated as a 
  3.1   customer and will not receive any representation from the broker 
  3.2   or salesperson.  The broker or salesperson will be acting as a 
  3.3   Facilitator (see paragraph V below), unless the broker or 
  3.4   salesperson is representing another party as described below. 
  3.5      ACKNOWLEDGMENT:  I/We acknowledge that I/We have been 
  3.6   presented with the below-described options.  I/We understand 
  3.7   that until I/We have signed a representation contract, I/We are 
  3.8   not represented by the broker/salesperson and information given 
  3.9   to the broker/salesperson may be disclosed.  I/We understand 
  3.10  that written consent is required for a dual agency 
  3.11  relationship.  THIS IS A DISCLOSURE ONLY, NOT A CONTRACT FOR 
  3.12  REPRESENTATION. 
  3.13  ...............     .......... 
  3.14  Signature           Date
  3.15  ...............     .......... 
  3.16  Signature           Date
  3.17  I.
  3.18     <b>Seller's Broker:</b>  A broker who lists a property, or a 
  3.19     salesperson who is licensed to the listing broker, 
  3.20     represents the Seller and acts on behalf of the Seller.  A 
  3.21     Seller's broker owes to the Seller the fiduciary duties 
  3.22     described below.(2)  The broker must also disclose to the 
  3.23     Buyer material facts as defined in Minnesota Statutes, 
  3.24     section 82.197, subdivision 6, of which the broker is aware 
  3.25     that could adversely and significantly affect the Buyer's 
  3.26     use or enjoyment of rights and interests in the property.  
  3.27     If a broker or salesperson working with a Buyer as a 
  3.28     customer is representing the Seller, he or she must act in 
  3.29     the Seller's best interest and must tell the Seller any 
  3.30     information disclosed to him or her, except confidential 
  3.31     information acquired in a facilitator relationship (see 
  3.32     paragraph V below).  In that case, the Buyer will not be 
  3.33     represented and will not receive advice and counsel from 
  3.34     the broker or salesperson. 
  3.35  II. 
  3.36     <b>Subagent:</b>  A broker or salesperson who is working with a 
  4.1      Buyer but represents the Seller.  In this case, the Buyer 
  4.2      is the broker's customer and is not represented by that 
  4.3      broker.  If a broker or salesperson working with a Buyer as 
  4.4      a customer is representing the Seller, he or she must act 
  4.5      in the Seller's best interest and must tell the Seller any 
  4.6      information that is disclosed to him or her.  In that case, 
  4.7      the Buyer will not be represented and will not receive 
  4.8      advice and counsel from the broker or salesperson. 
  4.9   III.
  4.10     <b>Buyer's Broker:</b>  A Buyer may enter into an agreement for 
  4.11     the broker or salesperson to represent and act on behalf of 
  4.12     the Buyer.  The broker may represent the Buyer only, and 
  4.13     not the Seller, even if he or she is being paid in whole or 
  4.14     in part by the Seller.  A Buyer's broker owes to the Buyer 
  4.15     the fiduciary duties described below.(2)  The broker must 
  4.16     disclose to the Buyer material facts as defined in 
  4.17     Minnesota Statutes, section 82.197, subdivision 6, of which 
  4.18     the broker is aware that could adversely and significantly 
  4.19     affect the Buyer's use or enjoyment of rights and interests 
  4.20     in the property.  If a broker or salesperson working with a 
  4.21     Seller as a customer is representing the Buyer, he or she 
  4.22     must act in the Buyer's best interest and must tell the 
  4.23     Buyer any information disclosed to him or her, except 
  4.24     confidential information acquired in a facilitator 
  4.25     relationship (see paragraph V below).  In that case, the 
  4.26     Seller will not be represented and will not receive advice 
  4.27     and counsel from the broker or salesperson. 
  4.28  IV.
  4.29     <b>Dual Agency-Broker Representing both Seller and Buyer:</b>  
  4.30     Dual agency occurs when one broker or salesperson 
  4.31     represents both parties to a transaction, or when two 
  4.32     salespersons licensed to the same broker each represent a 
  4.33     party to the transaction.  Dual agency requires the 
  4.34     informed consent of all parties, and means that the broker 
  4.35     and salesperson owe the same duties to the Seller and the 
  4.36     Buyer.  This role limits the level of representation the 
  5.1      broker and salespersons can provide, and prohibits them 
  5.2      from acting exclusively for either party.  In a dual 
  5.3      agency, confidential information about price, terms, and 
  5.4      motivation for pursuing a transaction will be kept 
  5.5      confidential unless one party instructs the broker or 
  5.6      salesperson in writing to disclose specific information 
  5.7      about him or her.  Other information will be shared.  Dual 
  5.8      agents may not advocate for one party to the detriment of 
  5.9      the other.(3) 
  5.10     Within the limitations described above, dual agents owe to 
  5.11     both Seller and Buyer the fiduciary duties described 
  5.12     below.(2)  Dual agents must disclose to Buyers material 
  5.13     facts as defined in Minnesota Statutes, section 82.197, 
  5.14     subdivision 6, of which the broker is aware that could 
  5.15     adversely and significantly affect the Buyer's use or 
  5.16     enjoyment of rights and interests in the property. 
  5.17  V.
  5.18     <b>Facilitator:</b>  A broker or salesperson who performs services 
  5.19     for a Buyer, a Seller, or both but does not represent 
  5.20     either in a fiduciary capacity as a Buyer's Broker, 
  5.21     Seller's Broker, or Dual Agent.  <b>THE FACILITATOR BROKER OR</b> 
  5.22     <b>SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY</b> 
  5.23     <b>DUTIES LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE</b> 
  5.24     <b>DUTIES ARE INCLUDED IN THE WRITTEN FACILITATOR SERVICES</b> 
  5.25     <b>AGREEMENT.</b>  The facilitator broker or salesperson owes the 
  5.26     duty of confidentiality to the party but owes no other duty 
  5.27     to the party except those duties required by law or 
  5.28     contained in a written facilitator services agreement, if 
  5.29     any.  In the event a facilitator broker or salesperson, 
  5.30     working with a Buyer, shows a property listed by the 
  5.31     facilitator broker or salesperson, then the facilitator 
  5.32     broker or salesperson must act as a Seller's Broker (see 
  5.33     paragraph I above).  In the event a facilitator broker or 
  5.34     salesperson, working with a Seller, accepts a showing of 
  5.35     the property by a Buyer being represented by the 
  5.36     facilitator broker or salesperson, then the facilitator 
  6.1      broker or salesperson must act as a Buyer's Broker (see 
  6.2      paragraph III above). 
  6.3      
  6.4      
  6.5      
  6.6   ****************************************************************
  6.7      (1) This disclosure is required by law in any transaction 
  6.8   involving property occupied or intended to be occupied by one to 
  6.9   four families as their residence. 
  6.10     (2) The fiduciary duties mentioned above are listed below 
  6.11  and have the following meanings: 
  6.12     Loyalty-broker/salesperson will act only in client(s)' best 
  6.13  interest. 
  6.14     Obedience-broker/salesperson will carry out all client(s)' 
  6.15  lawful instructions. 
  6.16     Disclosure-broker/salesperson will disclose to client(s) 
  6.17  all material facts of which broker/salesperson has knowledge 
  6.18  which might reasonably affect the client's rights and 
  6.19  interests as defined in Minnesota Statutes, section 82.197, 
  6.20  subdivision 6, of which the broker/salesperson is aware that 
  6.21  could adversely and significantly affect the client's rights and 
  6.22  interests in the property. 
  6.23     Confidentiality-broker/salesperson will keep client(s)' 
  6.24  confidences unless required by law to disclose specific 
  6.25  information (such as disclosure of material facts to Buyers). 
  6.26     Reasonable Care-broker/salesperson will use reasonable care 
  6.27  in performing duties as an agent. 
  6.28     Accounting-broker/salesperson will account to client(s) for 
  6.29  all client(s)' money and property received as agent. 
  6.30     (3) If Seller(s) decides not to agree to a dual agency 
  6.31  relationship, Seller(s) may give up the opportunity to sell the 
  6.32  property to Buyers represented by the broker/salesperson.  If 
  6.33  Buyer(s) decides not to agree to a dual agency relationship, 
  6.34  Buyer(s) may give up the opportunity to purchase properties 
  6.35  listed by the broker. 
  6.36     Sec. 4.  Minnesota Statutes 2001 Supplement, section 
  7.1   82.197, subdivision 6, is amended to read: 
  7.2      Subd. 6.  [MATERIAL FACTS.] (a) Licensees shall disclose to 
  7.3   any prospective purchaser all material facts pertaining to 
  7.4   adverse physical conditions in the property of which the 
  7.5   licensees are aware, which could adversely and significantly 
  7.6   affect an ordinary purchaser's use or enjoyment of rights and 
  7.7   interests in the property, or any intended use of the property 
  7.8   of which the licensees are aware. 
  7.9      (b) It is not a material fact relating to real property 
  7.10  offered for sale and no regulatory action shall be brought 
  7.11  against a licensee for failure to disclose in any real estate 
  7.12  transaction the fact or suspicion that the property: 
  7.13     (1) is or was occupied by an owner or occupant who is or 
  7.14  was suspected to be infected with human immunodeficiency virus 
  7.15  or diagnosed with acquired immunodeficiency syndrome; or 
  7.16     (2) was the site of an a homicide, suicide, felony, 
  7.17  accidental death, natural death, or perceived paranormal 
  7.18  activity; or 
  7.19     (3) is located in a neighborhood containing any adult 
  7.20  family home, community-based residential facility, or nursing 
  7.21  home.  
  7.22     (c) A licensee or employee of the licensee has no duty to 
  7.23  disclose information regarding an offender who is required to 
  7.24  register under section 243.166, or about whom notification is 
  7.25  made under that section, if the broker or salesperson, in a 
  7.26  timely manner, provides a written notice that information about 
  7.27  the predatory offender registry and persons registered with the 
  7.28  registry may be obtained by contacting local law enforcement 
  7.29  where the property is located or the department of corrections. 
  7.30     (d) A licensee is not required to disclose, except as 
  7.31  otherwise provided in paragraph (e), information relating to the 
  7.32  physical condition of the property or any other information 
  7.33  relating to the real estate transaction, if a written report 
  7.34  that discloses the information has been prepared by a qualified 
  7.35  third party and provided to the person.  For the purposes of 
  7.36  this paragraph, "qualified third party" means a federal, state, 
  8.1   or local governmental agency, or any person whom the broker, 
  8.2   salesperson, or a party to the real estate transaction 
  8.3   reasonably believes has the expertise necessary to meet the 
  8.4   industry standards of practice for the type of inspection or 
  8.5   investigation that has been conducted by the third party in 
  8.6   order to prepare the written report and who is acceptable to the 
  8.7   person to whom the disclosure is being made. 
  8.8      (e) A licensee shall disclose to the parties to a real 
  8.9   estate transaction any facts known by the broker or salesperson 
  8.10  that contradict any information included in a written report, if 
  8.11  a copy of the report is provided to the licensee, described in 
  8.12  paragraph (d). 
  8.13     Sec. 5.  Minnesota Statutes 2000, section 82.23, 
  8.14  subdivision 1, is amended to read: 
  8.15     Subdivision 1.  [RETENTION.] A licensed real estate broker 
  8.16  shall retain for three years copies of all listings, buyer 
  8.17  representation and facilitator services contracts, deposit 
  8.18  receipts, purchase money contracts, canceled checks, trust 
  8.19  account records, and such other documents as may reasonably be 
  8.20  related to carrying on a real estate brokerage business.  The 
  8.21  retention period shall run from the date of the closing of the 
  8.22  transaction, or from the date of the listing an offer to 
  8.23  purchase is made if the transaction is not consummated.  
  8.24     Sec. 6.  Minnesota Statutes 2000, section 82.27, is amended 
  8.25  by adding a subdivision to read: 
  8.26     Subd. 2a.  [REQUEST FOR INFORMATION; INVESTIGATIONS AND 
  8.27  SUBPOENAS.] When an investigation is being conducted by the 
  8.28  commissioner upon the filing of a complaint against a licensee, 
  8.29  as allowed under section 45.027, the commissioner shall inquire 
  8.30  and cite the specific statute or rule that the complainant 
  8.31  believes has been violated and the commissioner is 
  8.32  investigating, and shall inform the licensee and licensee's 
  8.33  broker, prior to any department request for the licensee to 
  8.34  provide information, documents, or other requests.  A licensee 
  8.35  must provide the information, documents, or other requests made 
  8.36  by the commissioner within 15 business days from the date the 
  9.1   request is made by the commissioner. 
  9.2      Sec. 7.  Minnesota Statutes 2000, section 82.27, is amended 
  9.3   by adding a subdivision to read: 
  9.4      Subd. 2b.  [CLOSURE OF INVESTIGATION.] In an investigation 
  9.5   process, the commissioner shall determine whether the statute or 
  9.6   rule specified, as required in subdivision 2a, has been 
  9.7   violated, and must notify the licensee and licensee's broker, 
  9.8   within 180 days from the date the investigation was commenced. 
  9.9      Sec. 8.  Minnesota Statutes 2000, section 82.27, is amended 
  9.10  by adding a subdivision to read: 
  9.11     Subd. 2c.  [MONETARY SETTLEMENTS.] The commissioner shall 
  9.12  not facilitate monetary settlements between consumers and 
  9.13  licensees when a licensee has been named in a complaint and the 
  9.14  commissioner shall not propose a monetary settlement, recommend 
  9.15  a specific dollar settlement, or negotiate with the licensee on 
  9.16  behalf of a consumer for a monetary settlement.