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RULES AND REGULATIONS

Title 49--PROFESSIONAL AND VOCATIONAL STANDARDS

STATE REAL ESTATE COMMISSION

[49 PA. CODE CH. 35]

Agency

[32 Pa.B. 1644]

   The State Real Estate Commission (Commission) hereby amends Chapter 35 to read as set forth in Annex A. These regulations incorporate the changes necessitated by the act of November 24, 1998 (P. L. 908, No. 112) and the act of June 22, 2000 (P. L. 371, No. 47) (Act 47).

Statutory Authority

   The final-form amendments are authorized under sections 404, 606--606.6 and 608--608.3 of the Real Estate Licensing and Registration Act (RELRA) (63 P. S. §§ 455.404, 455.606--455.606f and 455.608--455.608c).

Response to Public Comments and Regulatory Review

   Notice of the proposed rulemaking was published at 30 Pa.B. 641 (February 5, 2000). Publication was followed by a 30-day public comment period during which the Commission received comments from three public commentators, including the Pennsylvania Association of Realtors (PAR). Following the close of the public comment period, the Commission received comments from the House Professional Licensure Committee (HPLC) and the Independent Regulatory Review Commission (IRRC). The Senate Consumer Protection and Professional Licensure Committee (SCP/PLC) did not comment.

   The final-form rulemaking contains changes to the proposed rulemaking.1 Part A will address the comments to the proposed rulemaking. Part B will address amendments to the proposed rulemaking necessitated by Act 47.

   A.  Response to comments to proposed rulemaking.

Section 35.201. Definitions.

   The HPLC and IRRC questioned why the definitions of ''agency relationship,'' ''buyer agent,'' ''designated agent,'' ''dual agent,'' ''listing broker,'' ''principal,'' ''salesperson,'' ''seller agent'' and ''transaction licensee'' differ from the definitions in section 201 of the RELRA (63 P. S. § 455.201). In formulating this rulemaking, the Commission shortens the definitions of the RELRA without changing their meaning.

   An ''agency relationship,'' as defined under section 201 of the RELRA requires brokers and licensees in their employ to ''act as fiduciaries for a consumer of real estate services by the express authority of the consumer of real estate services.'' Thus, for the licensee to have a fiduciary relationship with a consumer, the consumer shall enter into a written agreement thereby becoming a principal under the definition.

   The definition for ''buyer agent'' in the regulation includes ''tenant,'' ''seller agent'' includes ''landlord'' and ''dual agent'' includes ''landlord and tenant.'' Although ''landlord'' and ''landlord and tenant'' are not used in sections 201, 606.2, 606.3 or 606.4 of the RELRA, these definitions incorporate the language in section 606 of the RELRA which characterizes the ''buyer agent'' relationship as ''buyer/tenant'' and the ''seller agent'' relationship as ''seller/landlord.'' To provide meaning to each section of the RELRA and read the provisions in pari materia, the definitions in the regulation includes ''landlords'' and ''tenants'' along with ''sellers'' and ''buyers.'' Similarly, although sections 201 and 606 of the RELRA do not use the terms ''buyer's agent'' and ''seller's agent,'' these terms are used in sections 606.2 and 606.3 of the RELRA.

   As proposed, the definition of ''designated agent'' referred to the ''licensees employed by the broker of record.'' The Commission concurs with IRRC and a public commentator that the proposed definition should be modified. Accordingly, the Commission has replaced ''broker of record'' with ''broker'' and ''employed by the broker'' with ''within the broker's employ'' throughout the final-form rulemaking.

   IRRC suggested that the definition of ''principal'' be amended since the RELRA defines it as ''a consumer who enters into an agency relationship with a broker.'' The definition of ''agency relationship'' in the RELRA includes both brokers and licensees. Reading these definitions in pari materia, the Commission has defined ''principal'' to include agency relationships with brokers and licensees in the brokers' employ.

   IRRC opined that subparagraph (vii) in the definition of ''salesperson'' is inconsistent with section 201 of the RELRA because it does not include the phrase ''managing of property.'' The proposed amendments to this subparagraph were included in the Commission's general revisions final-form rulemaking at 30 Pa.B. 5954 (November 18, 2000) and are therefore not reflected in Annex A. The Commission has retained the phrase ''managing of property'' since the definition of ''salesperson'' in section 201 of the RELRA contains authorization for a salesperson to negotiate, lease, rent and collect rent, all of which relate to property management.

   The proposed definition of ''subagent'' stated that the subagent acts or cooperates in selling the property as the seller's/landlord's agent. Upon further review, the Commission agrees with IRRC that the definition should be amended to specify that in addition to acting or cooperating as a seller's agent, by law, the subagent is deemed to have an agency relationship with the seller. Therefore, the definition was amended accordingly.

   IRRC recommended that ''licensee'' be changed to ''broker'' in the definitions of ''buyer agent,'' ''seller agent,'' ''dual agent,'' ''subagent'' and ''transaction licensee.'' While the Commission understands that a salesperson may work only through a broker, salespersons have repeatedly informed the Commission that they do not understand when they are obligated under the RELRA and regulations when the reference is made solely to a broker. Therefore, the Commission has not replaced ''licensee'' with ''broker'' when the provision applies to both brokers and salespersons as in § 35.281 (relating to putting contracts, commitments and agreements in writing).

   The definition of ''transaction licensee'' in the proposed rulemaking includes the clause ''without entering into an agency relationship with the consumer'' rather than ''without being an agent or advocate of the consumer'' as described in the RELRA. The Commission believes that these definitions are synonymous. To have an agency relationship with a consumer, applying the definition of ''agency relationship,'' the broker shall be an agent or advocate for that consumer.

   On final-form rulemaking, the Commission has also added the definition of ''comparative market analysis'' from section 201 of the RELRA since it is used in § 35.340 (relating to comparative market analysis).

Section 35.281. Putting contracts, commitments and agreements in writing.

   IRRC suggested that the Commission should define ''valuable consideration'' and ''open listing agreement.'' The term ''valuable consideration'' is commonly used in regulations in this Commonwealth. Black's Law Dictionary defines the term as ''consideration that is valid under law; consideration that either confers a pecuniary measurable benefit on one party or imposes a pecuniary measurable detriment on the other.'' The term is commonly employed and used in real estate transactions. Therefore, the Commission has not included a definition in this section. Conversely, ''open listing agreement'' is a term of art in the real estate industry. The definition taught to real estate students in the Fundamentals of Practice course has been added to § 35.201.

   IRRC also suggested that subsection (b)(3) should be amended to cross-reference the materials required in § 35.331 (relating to written agreements generally). Subsection (b)(3) conforms to section 606.1(b)(4) of the RELRA, which requires that the written disclosure statement contain a description of the services to be performed by the subagent or transaction licensee and the information required by section 608 of the RELRA. Since section 608.1 of the RELRA, and not section 608 of the RELRA, conforms to § 35.331, the Commission has not cross-referenced these sections, but has added a cross-reference to section 608 of the RELRA.

Section 35.283. Disclosure of interest.

   In the proposed rulemaking, this section was titled ''conflict of interest.'' One commentator recommended that since this provision includes more than just conflicts, it should be renamed ''disclosure of interest.'' The Commission agrees with this suggestion and has renamed the provision accordingly.

   Proposed subsections (d) and (e) required licensees to provide a written disclosure of financial interests to consumers for deed or document preparation services. PAR suggested that this requirement was too broad. Owing to this concern, the Commission amended subsection (d) to better conform with section 606.1(a)(13) of the RELRA.

   The Commission has also corrected the typographical error in subsection (d) by changing the term ''service'' to ''services,'' as recommended by PAR.

Section 35.284. Disclosures of business relationships.

   PAR sought clarification of the requirement in current subsection (a) that the Consumer Notice be provided to ''all'' consumers. It questioned whether the Consumer Notice must be provided to consumers of commercial property, both spouses and numerous representatives of a corporation. With regard to commercial transactions, section 608 of the RELRA, like all other provisions in the RELRA, does not differentiate between commercial and residential transactions. The Consumer Notice requirement applies equally to both. To insure that licensees are aware of its applicability, the Commission has expressly included residential and commercial property in the titles of §§ 35.336 and 35.337 (relating to disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate where the licensee is working on behalf of the tenant; and disclosure summary for the lease of residential or commercial real estate when the licensee is working on behalf of the owner).

   With regard to groups of individuals, the Commission notes that the purpose of the Consumer Notice is to inform parties seeking to purchase, lease or sell property of the various business relationships they may have with a licensee. While the Commission believes that it is advisable for each spouse to understand the Consumer Notice, it does not believe that it is practicable to require both spouses to participate in the initial interview or sign the Consumer Notice. Similarly, the Commission believes that it is not practicable to require each member of the Board of Directors of a corporation to attend the initial interview and sign the Consumer Notice. Rather, the Commission believes that it is sufficient for one spouse or one representative of a company to sign the Consumer Notice.

   PAR also questioned whether a designated buyer's agent who takes a buyer to a property to meet the seller must provide a Consumer Notice to the seller. The Commission does not believe that this is required under the regulation since the seller, by listing the property, has received the Consumer Notice and entered into a business relationship with a licensee. However, in light of PAR's questions, the Commission has deleted ''all'' from subsection (a).

   Additionally, the HPLC pointed out that in proposed form, subsection (a) contained a typographical error and incorrectly cross-referenced the Disclosure Summary to § 33.336. The reference has been corrected to § 35.336.

Section 35.287. Supervised property management assistance by salespersons.

   Current § 35.2872 permits a salesperson to assist in real estate management provided that the salesperson's work is directly supervised and controlled by the employing broker. PAR recommended that that the terms ''employing broker'' be replaced with ''controlled by the broker or associate broker charged with the responsibility of directing and supervising the office,'' to better reflect the realities of a real estate office. The Commission agrees with PAR that an associate broker may be responsible for a particular office, however, the broker retains the ultimate responsibility under the RELRA for supervising the licensees in the broker's employ. The Commission has removed the term ''directly'' from the provision.

Section 35.292. Duties of licensees generally.

   The HPLC questioned why ''in a timely manner'' was used in § 35.292(a)(7), but ''in a reasonably practicable period of time'' was used in § 35.283. IRRC recommended that the Commission provide a ''definitive standard'' for what would be considered timely. To satisfy both concerns, the Commission has used the phrase ''in a reasonably practicable period of time,'' which is commonly used throughout the regulations, including §§ 35.283, 35.292(a)(7) and 35.336.

   Another commentator suggested that § 35.292(a) should be amended to advise licensees how to satisfy the duties of licensees generally when the consumer or principal hires an attorney or another licensee to perform some of the duties in a transaction. The commentator provides the example of an attorney who is hired by the consumer or principal to prepare the documents and represent the consumer or principal at settlement. The RELRA does not impose any responsibility on a licensee for the actions of an attorney hired by the consumer or principal to perform document or deed preparation services. Subsection (a)(11) merely requires the licensee to provide assistance with document preparation when requested.

Section 35.311. Generally.

   IRRC recommended that the Commission amend subsection (d) to state that a licensee may not reveal or use confidential information during or following ''the termination of the agency relationship.'' The Commission finds this recommendation reasonable and has amended the provision accordingly.

Section 35.312. Duties of seller's agent.

Section 35.313. Duties of buyer's agent.

   IRRC recommended that the title for the various agency relationships track the statutory language. To be consistent with the statutory definitions, the Commission has changed the titles of §§ 35.312--35.316.

   Additionally, PAR recommended that §§ 35.312(e) and 35.313(d) be amended to replace ''become'' with ''will act as.'' The Commission finds this suggestion reasonable and has replaced ''become'' in both subsections.

Section 35.314. Duties of dual agent.

   Proposed subsection (b)(2) required that of the duties owed by a dual agent, the licensee make a continuous and good faith effort to find a buyer/tenant for the property and a property for the buyer/tenant unless otherwise agreed. IRRC recommended that the Commission incorporate the exception in section 606.4(b)(2) of the RELRA that a dual agent is not obligated to seek additional offers to purchase the property while it is subject to an existing contract of sale. The Commission has amended the regulation accordingly.

Section 35.315. Duties of designated agent.

   Subsection (b) embodies the Commission's understanding that section 606 of the RELRA would permit designation to take place at any time in the transaction--at the time of initial designation or after the parties have entered into a written agreement. In the proposed rulemaking, subsection (b)(1) stated the Commission's preference that designation would take place at the time the parties enter into a written agreement, as well as the Commission's acknowledgement that designation may take place after the agreement is executed. IRRC expressed concern that the proposed regulation used the ''nonregulatory'' term ''should.'' It recommended that the Commission replace ''should'' with ''shall'' or delete the paragraph. Owing to IRRC's concern, the Commission replaced the term ''should'' with ''may.'' Because the statute allows designation at any time, the Commission believes that, despite its preference for up-front designation, it cannot use the term ''shall'' or delete the provision as recommended.

   Subsection (b)(1) specifies that if the designation takes place after the initial designation or after a written agreement has been entered into, the principal must consent in writing to the newly designated licensee. The HPLC, IRRC and a public commentator suggested that the Commission amend the paragraph to require specific consent to the broker's designation of the agent, the identity of the agent and the date on which the designation occurs.

   The Commission believes that further modification is not necessary. When designation takes place at the time the parties enter into the original contract, the designated licensee is named. The designation date is the date of the contract signed by the licensee and the consumer/principal. When designation occurs after the contract has been executed, subsection (b)(1) requires that consent be given to the newly designated licensee. The principal is informed of, and must give written consent to, the designation and the licensees being designated.

   In the proposed rulemaking, subsection (b)(2) required the principal to renounce any previous agency relationship with the other licensees employed by the broker ''to the exclusion of the other designated agents.'' The Commission agrees with the HPLC and IRRC that this last clause is unnecessary because the renunciation would cover all licensees. Accordingly, it has been removed in final-form rulemaking.

   Subsection (d) provides that all licensees employed by the broker who have not been designated have no agency relationship with either party in the transaction. Both the HPLC and IRRC questioned whether the proposed subsection conflicts with section 606 of the RELRA. The HPLC reasoned that while section 606 of the RELRA permits the broker to designate agents to act exclusively for either party, it ''does not expressly negate any duties on the part of the other employees of the broker to consumers who have entered into an agency relationship with the employing broker.''

   The Commission relies upon the express language in the definition of ''designated agent'' in section 201 of the RELRA which specifies that the real estate services are to be provided by the designated licensees ''to the exclusion of all other licensees within the broker's employ.'' In the Commission's view, unlike dual agency where all of the licensees employed by the broker represent both parties to the transaction, in designated agency only those licensees who have been designated have an agency relationship with a principal and are parties to the transaction. The Commission's construction is consistent with the purpose of designated agency-to insulate the transaction from the licensees in the real estate company who are not involved in the transaction. It ensures that the confidential information that the designated licensees have with the respective principals remains confidential with those licensees. Because of the broker's supervisory role over the designated licensees, only the broker becomes a dual agent in the transaction.

   Also, in the Commission's view, characterizing members of the real estate company who have had no involvement in the real estate transaction as dual agents, simply because the broker is bound into a dual agency relationship, would reduce the benefit of designated agency to the consumer. In a typical transaction, one or more licensees in a real estate company are designated to act as the buyer's agent. Others are designated to act as seller's agents. At that point, the broker is a dual agent. If for some reason, one principal would withdraw from the transaction, and, as suggested, all of the remaining members of the real estate company would be considered dual agents, the consumer would not be able to receive real estate services from the company except in a dual agency relationship. Under that scenario, the licensee representing the new party would not have a duty to be loyal and act on behalf of that party, but rather, would only have the duty to take no action that is adverse or detrimental to either party's interest in the transaction. Conversely, if the remaining licensees in the real estate company did not assume any agency status until they became involved in the transaction by becoming designated, they would be available to find another buyer for the seller and can, once designated, act as a buyer agent since the licensee would not possess any confidential information about the seller.

   PAR questioned whether subsection (d) permanently bars a licensee who was not designated from representing a party in the transaction. The Commission does not believe that this subsection acts as a permanent bar to nondesignated licensees. Rather, the Commission agrees with the PAR that nondesignated licensees may play a role in the transaction after the initial designation, once the licensee is designated by the broker and receives written approval from the principal.

   One commentator also questioned whether a licensee who is not designated may serve in the capacity of a transaction licensee in an in-house transaction. Since the licensee has not been designated in the transaction, and as previously indicated, does not possess any confidential information about the transaction, the licensee is available to represent or provide services to other parties in other capacities.

   In the proposed rulemaking, subsection (e) permitted employees of the broker to designate themselves or affiliated licensees who are employed by the broker as designated agents. The HPLC maintained that the RELRA does not authorize licensees, other than brokers, to designate themselves, regardless of written company policy. The Commission agrees with the HPLC that only the broker may designate licensees and has removed the provision.

   In the final-form rulemaking, the Commission also renumbered the paragraphs in subsection (e) and replaced the word ''renunciate'' with ''renounce'' in subsection (b)(2).

   One commentator questioned the status of the employing broker where the real estate company does not represent both parties in the transaction. Designated agency permits one real estate company to represent both parties in a transaction without being in a dual relationship so long as the employing broker designates one or more licensees to act as an agent on behalf of the seller and one or more licensees to act as an agent on behalf of the buyer.

   At the time the seller enters into a listing agreement with the broker, the broker does not know whether the broker's company will also represent the buyer. However, to ensure that the seller's information remains confidential, the broker, with the seller's consent, designates one or more licensees in the office to act as seller's agent. The same is true where the broker enters into an agency relationship with the buyer. Again, the broker, with the buyer's consent, designates one or more licensees to work on the buyer's behalf. Only when the broker represents both parties (having given their consent previously) is the broker a dual agent. Other licensees who have not been designated in the transaction continue, as provided in subsection (d), to have no agency relationship in the transaction.

Section 35.316. Duties of transaction licensee.

   The definition of ''transaction licensee'' in §§ 35.201 and 35.316(a) emphasizes that a consumer should not provide a licensee working as a transaction licensee with any confidential information because that licensee is not acting as an agent or advocate of the consumer and is not duty bound to keep the information confidential. Section 35.316(b) tracks the few areas in the statute when the transaction licensee has a limited duty of confidentiality.

   One commentator suggested that the duty of limited confidentiality for transaction licensees should continue, like the confidentiality provisions in § 35.311(d), beyond the termination of the transaction licensee relationship. This suggestion is counter to the express language of section 606.1(g) of the RELRA, which continues the confidentiality provisions only when there is an agency relationship. Since a licensee serving in the capacity of a transaction licensee does not have an agency relationship with the consumer, the RELRA does not authorize an extension of the confidentiality provision.

Section 35.331.  Written agreements generally.

   IRRC recommended that the term ''may'' be replaced with ''shall'' in subsection (a). The Commission concurs with IRRC's suggestion and has amended the provision accordingly.

   Subsection (a) lists the provisions which must be included in a written agreement. IRRC and PAR suggested that this subsection be amended to track the notification requirement in section 608.1 of the RELRA rather than merely requiring that the agreement contain statements about each required provision. Owing to this concern, the Commission has modified subsection (a) throughout.

   IRRC requested that the Commission renumber the paragraphs in subsection (a). In the proposed rulemaking, paragraph (4) was inadvertently omitted. In that it tracks the requirement in section 608.1(2) of the RELRA, it has been reinserted in final-form rulemaking.

Section 35.332.  Exclusive listing agreements.

   In the preamble to the proposed rulemaking, the Commission stated that the sample exclusive listing agreement in subsection (d) would be deleted. However, that deletion was omitted from proposed Annex A. The Commission has corrected the typographical error in the final-form Annex A and deleted the agreement as indicated.

Section 35.333.  Agreements of sale.

   Section 35.333 addresses agreements of sale. IRRC requested the Commission explain ''conspicuously.'' Owing to IRRC's concerns, the Commission has removed ''conspicuously'' from §§ 35.331(a) and 35.333(a).

   IRRC asked the Commission to explain the difference between subsections (a) and (d). Subsection (a) contains the required provisions for all types of agreements of sale other than cemetery lots, mausoleum, cremation space or opening. Conversely, subsection (d) contains the required provisions for agreements of sale involving cemetery lots, mausoleum, cremation space or opening.

Section 35.336. Disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant.

   One commentator questioned whether ''implied agency'' exists when the consumer does not enter into a business relationship with the licensee, but provides the licensee with confidential information. Section 608(a)(2) of the RELRA specifically rejects the application of the common law rule of ''implied agency.'' It states ''an agency relationship is not to be presumed and that it will exist only as set forth in a written agreement between the broker and the consumer of real estate services acknowledged by the consumer.'' To insure that consumers are aware that an agency relationship will not be presumed, the last sentence in the second paragraph of the Disclosure Summary advises that:

''A business relationship of any kind will not be presumed but must be established between the consumer and the licensee.''

Section 35.340. Comparative market analysis.

   Section 35.340 addresses comparative market analyses. In the proposed rulemaking, subsection (a) tracked the disclosure in section 608.3 of the RELRA and subsection (b) contained an exception for licensees who also hold a license under the Real Estate Appraisers Certification Act (63 P. S. §§ 457.1--457.199)

   IRRC disagreed with the Commission's interpretation in subsection (b). According to IRRC, a comparative market analysis is not an appraisal, and therefore, regardless of who prepared it, a consumer must be notified that this is not an appraisal. The Commission agrees with IRRC that the comparative market analysis which the RELRA describes is not an appraisal because it is not performed in accordance with the Uniform Standards of Professional Appraisal Practice and is being performed for a limited purpose. The Commission has deleted this provision to avoid any possible confusion.

B.  Act 47 amendments.

   Five months after the proposed rulemaking was published, the RELRA was further amended by Act 47. In the final-form rulemaking, the Commission has amended sections in accordance with the changes in Act 47. The modifications to the proposed text do not enlarge the original purpose of the rulemaking. In each instance, the Commission has simply tracked the statutory language.

Section 35.201.  Definitions.

   Section 606.1(b) of the RELRA was amended to include nonexclusive buyer agency agreements in the type of agreements that are not required to be in writing. IRRC recommended that the Commission define ''open listing agreements,'' found in the same section, and the Commission has added a parallel definition for ''nonexclusive buyer agency agreement.''

Section 35.281.  Putting contracts, commitments and agreements in writing.

   Subsection (b)(1) tracks the language in section 606.1(b)(2) of the RELRA, which added nonexclusive agreements for a licensee to act as a buyer/tenant agent to the written agreement exceptions.

   Subsection (c) tracks the language in section 606.1(b)(1) of the RELRA regarding the performance of services before an agreement is signed. It permits a licensee to perform real estate services before a written agreement is signed but not collect a fee in the absence of an agreement.

Section 35.284. Disclosures of business relationships.

   In the proposed rulemaking, § 35.284 addressed the requirement of providing the Consumer Notice in § 35.336, obtaining a signature on the acknowledgement and retaining a copy of the acknowledgement as a record. Act 47 created additional disclosure summaries and different retention requirements depending upon the type of transaction. In the final-form rulemaking, this section has been amended to create a separate subsection for each type of disclosure. Subsection (a) addresses the Disclosure Summary requirements when the consumer is seeking to sell or purchase real estate; subsection (b) addresses the Disclosure Summary requirements where the consumer is seeking to lease and subsection (c) addresses the Disclosure Summary when the consumer is seeking to sell time-shares.

   Tracking the language in section 608(a) of the RELRA, subsection (a)(1) requires that the Disclosure Summary in § 35.336 be provided to a consumer who is seeking to sell or purchase real estate at the initial interview if the interview occurs in person. If the initial interview does not occur in person, subsection (a)(2), tracking the language of section 608(c) of the RELRA, requires that the licensee provide the oral disclosure in § 35.339 (relating to oral disclosure) at the initial interview and the written disclosure in § 35.336 no later than the earlier of the first meeting after the initial interview or at the time the property is first shown to the consumer.

   Subsection (b)(1) requires licensees who are working on behalf of the tenant to provide the Disclosure Summary in § 35.336, as required in subsection (a). Subsection (b)(2), tracking the language of section 608(b) of the RELRA, requires that a licensee provide the Disclosure Summary in § 35.337 to all tenants seeking to lease residential or commercial property where the licensee is working on behalf of the owner.

   Subsection (c), tracking the language of section 608(e) of the RELRA, requires that a licensee provide the Disclosure Summary in § 35.338 (relating to disclosure summary for time-share estates) to all consumers seeking to sell timeshares.

   Subsection (d) was also amended to track the additional requirements in sections 608(b)(3), (d) and (e)(3) of the RELRA.

Section 35.286. Retention and production of records.

   This section was not amended in the proposed rulemaking, but was cross-referenced in proposed § 35.284(b). Act 47 subsequently amended the retention requirement mentioned in proposed § 35.284(b) in the final-form rulemaking, this section has been amended to track the requirements of section 608 of the RELRA. Subsection (a) delineates which records shall be retained for 3 years and which records shall be retained for 6 months.

   Subsection (a)(1) tracks the requirement in existing § 35.336(c) that the acknowledgement portion of the Disclosure Summary in § 35.336 be retained for 6 months when the consumer and the broker have not entered into a business relationship. Subsection (a)(2) tracks the requirement in section 608(b) of the RELRA that the acknowledgement portion of the Disclosure Summary in § 35.337 be retained for 6 months when the consumer is seeking to lease residential or commercial real estate. Subsection (a)(3) tracks the requirement in section 608(e) of the RELRA that the acknowledgement portion of the Disclosure Summary in § 35.338 be retained for 6 months where the consumer is seeking to sell time-shares. Subsection (a)(4) tracks the requirement in section 606.1(b)(4) of the RELRA, that the written disclosure statement establishing a subagent or transaction licensee relationship be retained for 6 months.

   New subsection (b) contains the current requirements for the production of documents.

Section 35.336. Disclosure summary for the purchase or sale of residential or commercial real estate or for the lease of residential or commercial real estate when the licensee is working on behalf of the tenant.

   Current § 35.336 is divided into four parts: the Consumer Notice is in subsection (a); the requirement to provide the Consumer Notice is in subsection (b); the retention requirement is in subsection (c); and the refusal note is in subsection (d). Given that Act 47 created additional Disclosure Summaries, the information in current subsection (b) has been moved to § 35.284(a)(1), the retention requirement in current subsection (c) has been moved to §§ 35.284(d) and 35.286(a) and the refusal note in current subsection (d) has been moved to § 35.284(d).

   In the final-form rulemaking, current subsection (a) has been made into a stand-alone provision similar to §§ 35.337--35.339. This section has also been amended to track the language and requirements in section 608(b)(1) and (d) of the RELRA.

Sections 35.337--35.339.

   Sections 35.337--35.339 contain the verbatim language of the three additional disclosure summaries added by Act 47 in section 608(b), (c) and (e) of the RELRA.

Compliance with Executive Order 1996-1

   The Commission reviewed this final-form rulemaking and considered its purpose and likely impact on the public and the regulated population under the directives of Executive Order 1996-1, ''Regulatory Review and Promulgation.''

Fiscal Impact and Paperwork Requirements

   The final-form rulemaking will have no adverse fiscal impact or paperwork requirements on the Commonwealth, its political subdivisions or the public sector. In that, changes to the RELRA require licensees to provide up to three Consumer Notices depending upon the status of property, licensees will be subject to a modest fiscal impact and additional paperwork requirements in producing, distributing and retaining the Consumer Notices.

Sunset Date

   The Commission continually monitors the effectiveness of its regulations through communication with the regulated population; accordingly, no sunset date has been set.

Regulatory Review

   Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 5, 2000, the Commission submitted a copy of the notice of proposed rulemaking, published at 30 Pa.B. 641, to IRRC and to the Chairpersons of the SCP/PLC and the HPLC for review and comment.

   Under section 5(c) of the Regulatory Review Act, IRRC, the SCP/PLC and the HPLC were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing this final-form rulemaking, the Commission has considered the comments received from IRRC, the SCP/PLC, the HPLC and the public.

   Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), on February 11, 2002, this final-form rulemaking was deemed approved by the SCP/PLC and the HPLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on February 21, 2002, and approved the final-form rulemaking.

Contact Person

   Further information may be obtained by contacting Deborah Sopko, Administrative Assistant, State Real Estate Commission, P. O. Box 2649, Harrisburg, PA 17105-2649, www.state.pa.us/bpoa/recomm/mainpage.htm.

Findings

   The Commission finds that:

   (1)  Public notice of proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P.L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.

   (2)  A public comment period was provided as required by law and all comments were considered.

   (3)  This final-form rulemaking does not enlarge the purpose of proposed rulemaking published at 30 Pa.B. 641.

   (4)  This final-form rulemaking is necessary and appropriate for administering and enforcing the authorizing acts identified in this preamble.

Order

   The Commission, acting under its authorizing statutes, orders that:

   (a)  The regulations of the Commission, 49 Pa. Code Chapter 35, are amended by amending §§ 35.201, 35.281, 35.283, 35.284, 34.286, 34.287, 35.331--35.333 and 35.336 and by adding §§ 35.292, 35.311--35.316 and 35.337--35.340 to read as set forth in Annex A.

   (b)  The Commission shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General as required by law.

   (c)  The Commission shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.

   (d)  This order shall take effect on final-form publication in the Pennsylvania Bulletin.

   (Editor's Note: The amendment of § 35.286 and the addition of §§ 35.337--35.340 were not included in the proposed rulemaking at 30 Pa.B. 641.)

COLEEN CHRISTY,   
Chairperson

   (Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 32 Pa.B. 1362 (March 9, 2002).)

   Fiscal Note: Fiscal Note 16A-568 remains valid for the final adoption of the subject regulations.

Annex A

TITLE 49.  PROFESSIONAL AND VOCATIONAL STANDARDS

PART I.  DEPARTMENT OF STATE

Subpart A.  PROFESSIONAL AND OCCUPATIONAL AFFAIRS

CHAPTER 35.  STATE REAL ESTATE COMMISSION

Subchapter B.  GENERAL PROVISIONS

§ 35.201.  Definitions.

   The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

   Act--The Real Estate Licensing and Registration Act (63 P. S. §§ 455.101--455.902).

   Agency relationship--A fiduciary relationship between a broker or licensees employed by a broker and a consumer who becomes a principal.

   Associate broker--An individual broker who is employed by another broker.

   Broker--An individual or entity that, for another and for a fee, commission or other valuable consideration, does one or more of the following:

   (i)  Negotiates with or aids a person in locating or obtaining for purchase, lease or acquisition of interest in real estate.

   (ii)  Negotiates the listing, sale, purchase, exchange, lease, time share and similarly designated interests, financing or option for real estate.

   (iii)  Manages real estate.

   (iv)  Represents himself or itself as a real estate consultant, counsellor or house finder.

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

   (vi)  Undertakes to perform a comparative market analysis.

   (vii)  Attempts to perform one of the actions listed in subparagraphs (i)--(vi).

   Broker of record--The individual broker responsible for the real estate transactions of a partnership, association or corporation that holds a broker's license, or the individual broker or limited broker responsible for the real estate transactions of a partnership, association or corporation that holds a limited broker's license.

   Builder-owner salesperson--An individual who is a full-time employee of a builder-owner of single-and multi-family dwellings located in this Commonwealth and who is authorized, for and on behalf of, the builder-owner, to do one or more of the following:

   (i)  List for sale, sell or offer for sale real estate of the builder-owner.

   (ii)  Negotiate the sale or exchange of real estate of the builder-owner.

   (iii)  Lease or rent, or offer to lease, rent or place for rent, real estate of the builder-owner.

   (iv)  Collect or offer, or attempt to collect, rent for real estate of the builder-owner.

   Bureau--The Bureau of Professional and Occupational Affairs of the Department.

   Buyer agent--A licensee who enters into an agency relationship with a buyer/tenant.

   Campground membership--An interest, other than in fee simple or by lease, which gives the purchaser the right to use a unit of real property for the purpose of locating a recreational vehicle, trailer, tent, tent trailer, pickup camper or other similar device on a periodic basis under a membership contract allocating use and occupancy rights between other similar users.

   Campground membership salesperson--An individual who, either as an employee or an independent contractor, sells or offers to sell campground memberships. The individual shall sell campground memberships under the active supervision of 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.

   Cemetery--A place for the disposal or burial of deceased human beings, by cremation or in a grave, mausoleum, vault, columbarium or other receptacle. The term does not include a private family cemetery.

   Cemetery associate broker--An individual cemetery broker employed by another cemetery broker or by a broker.

   Cemetery broker--An individual or entity that is engaged as, or carrying on the business or acting in the capacity of, a broker exclusively within the limited field or branch of business that applies to cemetery lots, plots and mausoleum spaces or openings.

   Cemetery company--An individual or entity that offers or sells to the public the ownership, or the right to use, a cemetery lot.

   Cemetery salesperson--An individual employed by a broker or cemetery broker exclusively to perform the duties of a cemetery broker.

   Commission--The State Real Estate Commission.

   Comparative market analysis--A written analysis, opinion or conclusion by a contracted buyer's agent, transactional licensee or an actual or potential seller's agent relating to the probable sale price of a specified piece of real estate in an identified real estate market at a specified time, offered either for the purpose of determining the asking/offering price for the property by a specific actual or potential consumer or for the purpose of securing a listing agreement with a seller.

   Consumer--An individual or entity who is the recipient of any real estate service.

   Credit--A period of 15 hours of instruction.

   Department--The Department of State of the Commonwealth.

   Designated agent--One or more licensees designated by the employing broker, with the consent of the principal, to act exclusively as the agent or agents for the principal to the exclusion of all other licensees within the broker's employ.

   Dual agent--A licensee who acts as an agent for the buyer/tenant and seller/landlord in the same transaction.

   Hour of instruction--A period of at least 50 minutes.

   Initial interview--The first communication between a broker or salesperson and a consumer involving the personal/business or financial needs and motivations of the consumer. A discussion of the objective facts about the property, including dimensions, zoning classification, age, description or list price/lease amount, is not by itself a substantive discussion.

   Licensee--An individual or entity licensed under the act. For purposes of the consumer notice in § 35.336(a) (relating to disclosure summary), the term means a broker or salesperson.

   Listing broker--A broker who has entered into a written agreement with a seller/landlord to market property as a seller's agent, dual agent or transaction licensee.

   Manager of record--The individual rental listing referral agent responsible for the rental listing transactions of a partnership, association or corporation that holds a rental listing referral agent's license.

   Open listing agreement--A nonexclusive listing agreement governed by a memorandum or contract wherein the seller retains the right to employ multiple brokers to sell or lease a property.

   Nonexclusive buyer agency agreement--A nonexclusive agreement governed by a memorandum or contract wherein the buyer retains the right to employ multiple brokers to purchase or lease a property.

   Principal--A consumer who has entered into an agency relationship with a broker or another licensee employed by the broker.

   Real estate--An interest or estate in land--whether corporeal or incorporeal, whether freehold or nonfreehold, whether the land is situated in this Commonwealth or elsewhere--including leasehold interests and time share and similarly designated interests.

   Real estate school--An individual or entity that conducts classes in real estate subjects. The term does not include a college, university or institute of higher learning accredited by the Middle States Association of Colleges and Secondary Schools or equivalent accreditation.

   Rental listing referral agent--An individual or entity that owns or manages a business which collects rental information for the purpose of referring prospective tenants to rental units or locations of rental units. The term does not include an official or employee of a public housing authority that is created under State or Federal law.

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

   (i)  Sell or offer to sell real estate, or list real estate for sale.

   (ii)  Buy or offer to buy real estate.

   (iii)  Negotiate the purchase, sale or exchange of real estate.

   (iv)  Negotiate a loan on real estate.

   (v)  Lease or rent real estate, or offer to lease or rent real estate or to place real estate for rent.

   (vi)  Collect rent for the use of real estate, or offer or attempt to collect rent for the use of real estate.

   (vii)  Assist a broker in managing property.

   (viii)  Perform a comparative market analysis.

   Seller agent--A licensee who enters into an agency relationship with a seller/landlord.

   Subagent--A licensee, not in the employ of the listing broker, who acts or cooperates with the listing broker in selling property as a seller's/landlord's agent and is deemed to have an agency relationship with the seller.

   Time share--The right, however evidenced or documented, to use or occupy one or more units on a periodic basis according to an arrangement allocating use and occupancy rights of that unit or those units between other similar users. As used in this definition, the term ''unit'' is a building or portion thereof permanently affixed to real property and designed for separate occupancy or a campground membership or portion thereof designed for separate occupancy. The term does not include a campground membership.

   Time-share salesperson--An individual who, either as an employee or an independent contractor, sells or offers to sell time shares.

   Transaction licensee--A licensee who, without entering into an agency relationship with the consumer, provides communication or document preparation services or performs other acts listed in the definition of ''broker'' or ''salesperson.''

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