CHAPTER 102
HOUSE BILL No. 2687
An Act concerning the real estate brokers' and salespersons'
license act; relating to certain
prohibited acts; relating to compensation for services; amending
K.S.A. 58-3038 and
K.S.A. 1999 Supp. 58-3034, 58-3035 and 58-3062 and
repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 1999 Supp.
58-3034 is hereby amended to read as
follows: 58-3034. This act K.S.A. 58-3034
through 58-3075 and section 5,
and amendments thereto, shall be known and may be cited as
the real
estate brokers' and salespersons' license act.
Sec. 2. K.S.A. 1999 Supp. 58-3035
is hereby amended to read as
follows: 58-3035. As used in this act, unless the context otherwise
re-
quires:
(a) ``Act'' means the real estate
brokers' and salespersons' license act.
(a) (b) ``Advance
listing fee'' means any fee charged for services re-
lated to promoting the sale or lease of real estate and paid in
advance of
the rendering of such services, including any fees charged for
listing,
advertising or offering for sale or lease any real estate, but
excluding any
fees paid solely for advertisement or for listing in a publication
issued for
the sole purpose of promoting the sale or lease of real estate
wherein
inquiries are directed to the owner of the real estate or to real
estate
brokers and not to unlicensed persons who publish the listing.
(b)
(c) ``Associate broker'' means an individual who has a
broker's
license and who is employed by another broker or is associated with
an-
other broker as an independent contractor and participates in any
activity
described in subsection (e) (f).
(c) (d) ``Branch
broker'' means an individual who has a broker's li-
cense and who has been designated to supervise a branch office and
the
activities of salespersons and associate brokers assigned to the
branch
office.
(d) (e) ``Branch
office'' means a place of business other than the prin-
cipal place of business of a broker.
(e)
(f) ``Broker'' means an individual, other than a
salesperson, who
advertises or represents that such individual engages in the
business of
buying, selling, exchanging or leasing real estate or who, for
compensa-
tion, engages in any of the following activities as an employee of,
or on
behalf of, the owner, purchaser, lessor or lessee of real
estate:
(1) Sells, exchanges, purchases or leases
real estate.
(2) Offers to sell, exchange, purchase or
lease real estate.
(3) Negotiates or offers, attempts or
agrees to negotiate the sale,
exchange, purchase or leasing of real estate.
(4) Lists or offers, attempts or agrees
to list real estate for sale, lease
or exchange.
(5) Auctions or offers, attempts or
agrees to auction real estate or
assists an auctioneer by procuring bids at a real estate
auction.
(6) Buys, sells, offers to buy or sell or
otherwise deals in options on
real estate.
(7) Assists or directs in the procuring
of prospects calculated to result
in the sale, exchange or lease of real estate.
(8) Assists in or directs the negotiation
of any transaction calculated
or intended to result in the sale, exchange or lease of real
estate.
(9) Engages in the business of charging
an advance listing fee.
(10) Provides lists of real estate as
being available for sale or lease,
other than lists provided for the sole purpose of promoting the
sale or
lease of real estate wherein inquiries are directed to the owner of
the real
estate or to real estate brokers and not to unlicensed persons who
publish
the list.
(f)
(g) ``Commission'' means the Kansas real estate
commission.
(g) (h) ``Lease''
means rent or lease for nonresidential use.
(h)
(i) ``Licensee'' means any person licensed under this
act as a bro-
ker or salesperson.
(i)
(j) ``Office'' means a broker's place of business,
where records may
be maintained and licenses displayed, whether or not it is the
broker's
principal place of business.
(j)
(k) ``Person'' means any individual or any foreign or
domestic cor-
poration, partnership or association.
(k) (l) ``Real
estate'' means any interest or estate in land, including
any leasehold or condominium, whether corporeal, incorporeal,
freehold
or nonfreehold and whether the real estate is situated in this
state or
elsewhere, but does not include oil and gas leases, royalties and
other
mineral interests, and rights of way and easements acquired for the
pur-
pose of constructing roadways, pipelines, conduits, wires and
facilities
related to these types of improvement projects for private and
public
utilities, municipalities, federal and state governments, or any
political
subdivision. For purpose of this act, any rights of redemption are
consid-
ered to be an interest in real estate.
(l)
(m) ``Salesperson'' means an individual, other than an
associate
broker, who is employed by a broker or is associated with a broker
as an
independent contractor and participates in any activity described
in sub-
section (e) (f).
(m)
(n) ``Supervising broker'' means an individual, other
than a
branch broker, who has a broker's license and who has been
designated
as the broker who is responsible for the supervision of the primary
office
of a broker and the activities of salespersons and associate
brokers who
are assigned to such office and all of whom are licensed pursuant
to
subsection (b) of K.S.A. 58-3042 and amendments thereto.
``Supervising
broker'' also means a broker who operates a sole proprietorship and
with
whom associate brokers or salespersons are affiliated as employees
or
independent contractors.
Sec. 3. K.S.A. 58-3038 is hereby
amended to read as follows: 58-
3038. (a) Except as provided by subsection (b), no action shall be
insti-
tuted or recovery be had in any court of this state by any person
for
compensation for any act or service, the performance of which
requires
a license under this act, unless such person was duly licensed
under this
act at the time of offering to perform any such act or service or
procuring
any promise to contract for the payment of compensation for any
such
contemplated act or service.
(b) Subsection (a) shall not apply to
partnerships, associations or cor-
porations whose partners, members, officers and employees are
licensed
as provided by subsection (b) of K.S.A. 58-3042, and
amendments
thereto.
(c) Except as provided by section 5,
and amendments thereto, nothing
herein shall preclude a person who is properly licensed as a broker
or
salesperson in another jurisdiction from collecting a referral
fee.
Sec. 4. K.S.A. 1999 Supp. 58-3062
is hereby amended to read as
follows: 58-3062. (a) No licensee, whether acting as an agent or a
prin-
cipal, shall:
(1) Intentionally use advertising that is
misleading or inaccurate in
any material particular or that in any way misrepresents any
property,
terms, values, policies or services of the business conducted, or
uses the
trade name, collective membership mark, service mark or logo of
any
organization owning such name, mark or logo without being
authorized
to do so.
(2) Fail to account for and remit any
money which comes into the
licensee's possession and which belongs to others.
(3) Misappropriate moneys required to be
deposited in a trust ac-
count pursuant to K.S.A. 58-3061, and amendments thereto,
convert such
moneys to the licensee's personal use or commingle the money or
other
property of the licensee's principals with the licensee's own money
or
property, except that nothing herein shall prohibit a broker from
having
funds in an amount not to exceed $100 in the broker's trust account
to
pay expenses for the use and maintenance of such account.
(4) Accept, give or charge any rebate or
undisclosed commission.
(5) Pay a referral fee to a person who is
properly licensed as a broker
or salesperson in another jurisdiction or who holds a corporate
real estate
license in another jurisdiction if the licensee knows that the
payment of
the referral fee will result in the payment of a rebate by the
out-of-state
licensee.
(6) Represent or attempt to represent a
broker without the broker's
express knowledge and consent.
(7) Guarantee or authorize any person to
guarantee future profits that
may result from the resale of real property.
(8) Place a sign on any property offering
it for sale or lease without
the written consent of the owner or the owner's authorized
agent.
(9) Offer real estate for sale or lease
without the knowledge and con-
sent of the owner or the owner's authorized agent or on terms other
than
those authorized by the owner or the owner's authorized agent.
(10) Induce any party to break any
contract of sale or lease.
(11) Offer or give prizes, gifts or
gratuities which are contingent upon
an agency agreement or the sale, purchase or lease of real estate.
Products
or services which are offered or given pursuant to a licensee
carrying out
the duties of a seller's agent pursuant to K.S.A. 58-30,106, and
amend-
ments thereto, a buyer's agent pursuant to K.S.A. 58-30,107, and
amend-
ments thereto, or a transaction broker pursuant to K.S.A.
58-30,113, and
amendments thereto, shall not be considered to be a prize, gift
or gratuity.
(12) Fail to see that financial
obligations and commitments between
the parties to an agreement to sell, exchange or lease real estate
are in
writing, expressing the exact agreement of the parties or to
provide, within
a reasonable time, copies thereof to all parties involved.
(13) Procure a signature to a purchase
contract which has no definite
purchase price, method of payment, description of property or
method
of determining the closing date.
(14) Engage in fraud or make any
substantial misrepresentation.
(15) Represent to any lender,
guaranteeing agency or any other in-
terested party, either verbally or through the preparation of false
docu-
ments, an amount in excess of the true and actual sale price of the
real
estate or terms differing from those actually agreed upon.
(16) Fail to make known to any purchaser
or lessee any interest the
licensee has in the real estate the licensee is selling or leasing
or to make
known to any seller or lessor any interest the licensee will have
in the real
estate the licensee is purchasing or leasing.
(17) Fail to inform both the buyer, at
the time an offer is made, and
the seller, at the time an offer is presented, that certain closing
costs must
be paid and the approximate amount of such costs.
(18) Fail without just cause to surrender
any document or instrument
to the rightful owner.
(19) Accept anything other than cash as
earnest money unless that
fact is communicated to the owner prior to the owner's acceptance
of the
offer to purchase, and such fact is shown in the purchase
agreement.
(20) Fail to deposit any check or cash
received as an earnest money
deposit or as a deposit on the purchase of a lot within five
business days
after the purchase agreement or lot reservation agreement is signed
by
all parties, unless otherwise specifically provided by written
agreement of
all parties to the purchase agreement or lot reservation agreement,
in
which case the licensee shall deposit the check or cash received on
the
date provided by such written agreement.
(21) Fail in response to a request by the
commission or the director
to produce any document, book or record in the licensee's
possession or
under the licensee's control that concerns, directly or indirectly,
any real
estate transaction or the licensee's real estate business.
(22) Refuse to appear or testify under
oath at any hearing held by
the commission.
(23) Demonstrate incompetency to act as a
broker, associate broker
or salesperson.
(24) Knowingly receive or accept,
directly or indirectly, any rebate,
reduction or abatement of any charge, or any special favor or
advantage
or any monetary consideration or inducement, involving the issuance
of
a title insurance policy or contract concerning which the licensee
is di-
rectly or indirectly connected, from a title insurance company or
title
insurance agent, or any officer, employee, attorney, agent or
solicitor
thereof.
(25) Engage in the purchase of one-,
two-, three- or four-family
dwellings, including condominiums and cooperatives, or the
acquisition
of any right, title or interest therein, including any equity or
redemption
interests, if:
(A) (i) At the time of such
purchase, the dwellings are subject to a
right of redemption pursuant to foreclosure of a mortgage on such
dwell-
ings; (ii) the licensee fails to give written notice of the
purchase, within
20 days thereafter, to the mortgage holder or judgment creditor who
held
such mortgage; and (iii) the licensee, unless otherwise required by
law or
court order, fails to apply any rent proceeds from the dwellings to
the
judgment lien arising from the foreclosure of such mortgage, as
payments
become due under the loan, regardless of whether the licensee is
obli-
gated to do so;
(B) (i) the dwellings are subject
to a loan which is secured by a mort-
gage and which is in default at the time of such purchase or in
default
within one year after such purchase; (ii) the licensee fails to
give written
notice of the purchase, within 20 days thereafter, to the mortgage
holder;
and (iii) the licensee, unless otherwise required by law or court
order,
fails to apply any rent proceeds from the dwellings to the mortgage
as the
payments come due, regardless of whether the licensee is obligated
on
the loan; or
(C) the licensee fails to notify, at the
time of rental, any person rent-
ing any such dwelling of the extent and nature of the licensee's
interest
in such dwelling and the probable time until possession will be
taken by
the mortgage holder or judgment creditor.
(26) Commit forgery or, unless authorized
to do so by a duly executed
power of attorney, sign or initial any contractual agreement on
behalf of
another person in a real estate transaction.
(b) No salesperson or associate broker
shall:
(1) Except as provided in paragraph (A)
or (B), accept a commission
or other valuable consideration from anyone other than the broker
by
whom the licensee is employed or with whom the licensee is
associated
as an independent contractor.
(A) A salesperson or associate broker may
accept a commission or
other valuable consideration from a licensee who employs the
salesperson
or associate broker as a personal assistant provided that: (i) the
licensee
and the salesperson or associate broker who is employed as a
personal
assistant are licensed under the supervision of the same broker,
and (ii)
the supervising broker agrees in writing that the personal
assistant may
be paid by the licensee.
(B) If a salesperson or associate broker
has (i) organized as a profes-
sional corporation pursuant to K.S.A. 17-2706 et seq., and
amendments
thereto, (ii) incorporated under the Kansas general corporation
code con-
tained in K.S.A. 17-6001 et seq., and amendments thereto,
(iii) organized
under the Kansas limited liability company act contained in K.S.A.
1999
Supp. 17-7662 et seq., and amendments thereto, or (iv) has
organized as
a limited liability partnership as defined in K.S.A. 1999 Supp.
56a-101,
and amendments thereto, the commission or other valuable
consideration
may be paid by the licensee's broker to such professional
corporation,
corporation, limited liability company or limited liability
partnership. This
provision shall not alter any other provisions of this act.
(2) Fail to place, as soon after receipt
as practicable, any deposit
money or other funds entrusted to the salesperson or associate
broker in
the custody of the broker whom the salesperson or associate broker
rep-
resents.
(c) No broker shall:
(1) Pay a commission or compensation to
any person for performing
the services of an associate broker or salesperson unless such
person is
licensed under this act and employed by or associated with the
broker.
(2) Fail to deliver to the seller in
every real estate transaction, at the
time the transaction is closed, a complete, detailed closing
statement
showing all of the receipts and disbursements handled by the broker
for
the seller, or fail to deliver to the buyer a complete statement
showing
all money received in the transaction from such buyer and how and
for
what the same was disbursed, or fail to retain true copies of such
state-
ments in the broker's files, except that the furnishing of such
statements
to the seller and buyer by an escrow agent shall relieve the
broker's re-
sponsibility to the seller and the buyer.
(3) Fail to properly supervise the
activities of an associated or em-
ployed salesperson or associate broker.
(4) Lend the broker's license to a
salesperson, or permit a salesperson
to operate as a broker.
(5) Fail to provide to the principal a
written report every 30 days,
along with a final report, itemizing disbursements made by the
broker
from advance listing fees.
(d) (1) If a purchase agreement
provides that the earnest money be
held by an escrow agent other than a real estate broker, no listing
broker
shall:
(A) Fail to deliver the purchase
agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within
five
business days after the purchase agreement is signed by all parties
unless
otherwise specifically provided by written agreement of all parties
to the
purchase agreement, in which case the broker shall deliver the
purchase
agreement and earnest money deposit to the escrow agent named in
the
purchase agreement on the date provided by such written agreement;
or
(B) fail to obtain and keep in the
transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement
and
earnest money deposit.
(2) If a purchase agreement provides that
the earnest money be held
by an escrow agent other than a real estate broker and the property
was
not listed with a broker, no broker for the buyer shall:
(A) Fail to deliver the purchase
agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within
five
business days after the purchase agreement is signed by all parties
unless
otherwise specifically provided by written agreement of all parties
to the
purchase agreement, in which case the broker shall deliver the
purchase
agreement and earnest money deposit to the escrow agent named in
the
purchase agreement on the date provided by such written agreement;
or
(B) fail to obtain and keep in the
transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement
and
earnest money deposit.
(3) If a purchase agreement provides that
the earnest money be held
by an escrow agent other than a real estate broker and neither the
seller
nor buyer is represented by a broker, no transaction broker
shall:
(A) Fail to deliver the purchase
agreement and earnest money de-
posit to the escrow agent named in the purchase agreement within
five
business days after the purchase agreement is signed by all parties
unless
otherwise specifically provided by written agreement of all parties
to the
purchase agreement, in which case the broker shall deliver the
purchase
agreement and earnest money deposit to the escrow agent named in
the
purchase agreement on the date provided by such written agreement;
or
(B) fail to obtain and keep in the
transaction file a receipt from the
escrow agent showing date of delivery of the purchase agreement
and
earnest money deposit.
The commission may adopt rules and regulations
to require that such
purchase agreement which provides that the earnest money be held
by
an escrow agent other than a real estate broker include: (1)
notification
of whether or not the escrow agent named in the purchase
agreement
maintains a surety bond, and (2) notification that statutes
governing the
disbursement of earnest money held in trust accounts of real estate
bro-
kers do not apply to earnest money deposited with the escrow
agent
named in the purchase agreement.
(e) Nothing in this section shall be
construed to grant any person a
private right of action for damages or to eliminate any right of
action
pursuant to other statutes or common law.
New Sec. 5. (a) A licensee or
anyone on behalf of any such licensee
or firm, whether licensed in this state or in another state shall
not solicit
a referral fee without reasonable cause. Reasonable cause shall not
exist
unless one of the following conditions exists:
(1) An actual introduction of business
has been made;
(2) a contractual referral fee
relationship exists; or
(3) a contractual cooperative brokerage
relationship exists.
(b) A licensee or anyone on behalf of any
such licensee or firm,
whether licensed in this state or in another shall not:
(1) Threaten to reduce or withhold
employee relocation benefits or
take other action adverse to the interest of a client or customer
of a real
estate licensee; or
(2) counsel a client or customer of
another real estate licensee on
how to terminate or amend an existing agency agreement or sales
con-
tract. Communicating corporate relocation policy or benefits to a
trans-
ferring employee shall not be considered a violation of this
paragraph, as
long as the communication does not involve advice or encouragement
on
how to terminate or amend an existing agency contract.
Sec. 6. K.S.A. 58-3038 and K.S.A. 1999 Supp.
58-3034, 58-3035 and
58-3062 are hereby repealed.
Sec. 7. This act shall take effect and be in force
from and after its
publication in the statute book.
Approved April 16, 2000.
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