Reissuing a Suspended License
There are some new rules in OAR 863-014 and OAR 863–024 for reissuing a suspended license. Division 14 deals with broker and principal broker licenses, and Division 24 deals with a property manager license. The rules for both types of licenses mirror each other.
A suspended license cannot be renewed if the license remains suspended and is not reissued and renewed within one year of its expiration. The license then lapses. The requirements to renew a reissued license include paying the required fee and meeting the required continuing education requirements for license renewal.
In this case of a lapsed license, to become licensed again, the former licensee must reapply and meet all of the licensing qualifications required to obtain a license.
Trust Account Reconciliation Mail-in Reviews
Section 0081 continues to deal with the topic of compliance reviews. OAR 863-015-0092 was created to deal exclusively with reconciliation mail-in reviews. The old law referred to these reconciliation mail-in reviews as a mail-in audits. The language changes were considered necessary to clarify that the actual review process is a review and should NOT be confused with a forensic audit. Similar changes were made to OAR 863-025-0090, which deals with mail-in property management trust account reconciliation mail-in reviews.
The purpose of mail-in reviews is to determine if the record keeping procedures for clients' trust accounts are in compliance with all Agency rules and acceptable accounting practices. If the procedures don't meet these tests, the Agency will issue a notice listing the compliance issues to be corrected. If they are not corrected and cured, further action by the Agency can occur and include the issuance of an educational letter or sanctions.
Addenda to Purchase Agreement or Counter Offer Must be in Writing
This next new rule addition to the Offers to Purchase section of the administrative rules states that any amendment or addendum to the purchase agreement or counter offer must be in writing and include the date of the amendment and the signatures of the sellers and buyers.
Disclosure of Real Estate License Status
Okay, I hope you all know that you have to disclose your license status, active or inactive, to all parties to the real estate transaction when you are involved directly or indirectly in offering or negotiating for the sale, exchange, lease option, or purchase of real estate when you are a principal to the transaction.
OAR 863-015-0145 added language that this disclosure requirement only relates to transactions for properties within the State of Oregon.
Closing a Real Estate Transaction by a Broker
The vast majority of real estate transactions are closed by an escrow agent or lawyer. However, an Oregon principal broker can also close transactions, but only for their listings.
A real estate broker associated with a principal broker can also close a real estate transaction so long as that licensee is authorized by their principal broker and the closing is supervised by the principal broker. This rule that allows for a closing by a broker associated with a principal broker is amended to require the principal broker's written authorization giving the associated broker permission to close the transaction. The authorization must be in writing, signed by the principal broker, and then kept in the transaction file.
Clients' Trust Accounts and Disbursal of Disputed Funds
OAR-015-0186 is the authority for the procedures to disburse disputed trust funds. The paragraph 8 text was removed from this rule because it did not address the management of rental real estate and the Residential Landlord and Tenant Laws in ORS 90 as well as contract law. The paragraph was deemed to be outside the authority of the Real Estate Agency.
This is the paragraph that was removed:
"Real estate licensees with property management clients' trust accounts must review and follow the requirements for handling client funds under the Residential Landlord and Tenant statutes in ORS Chapter 90. For any other non-real estate sales transactions disputes, the principal real estate broker must review the terms of the written contract for handling disputed funds."
ORS 696.582 says that a written notice of compensation can be signed by a real estate broker or principal real estate broker who is authorized under rules adopted by the Real Estate Commissioner, but OAR 863-015-0188 said that only a principal broker could enter into a compensation agreement with a principal to a real estate transaction. Because of this conflict between OAR and ORS, the OAR was removed and is not replaced.
Clarification of Licensee Parties on Final Agency Acknowledgement
Oregon Real Estate Forms LLC, or OREF, publishes the standardized Residential Real Estate Sale Agreement form used in most residential real estate transactions throughout Oregon. In the Final Agency Acknowledgement section of their 2017 revised form, OREF changed Selling Licensee to Buyer’s Agent and Listing Licensee to Seller’s Agent. The terms Buyer’s Agent and Seller’s Agent are the terms that are used in current real estate practice and are better understood by the consumer.
Accordingly, OAR 863-015-0200 has updated to this terminology in the rule for the final agency acknowledgment so that it matches the terminology used in the OREF forms.
Splicing OAR 863-015-0255 into Four Rules
OAR 863-015-0255 combined the rules about clients' trust account records and document transmittal requirements into one rule. For clarity, ease of reading, and reference purposes, the Agency found it would be better to parse the single rule into four rules. These rules are found in Sections 0250, 0255, 0257, and 0259. These are some of the main features that they would like you to know about each rule.
When a real estate broker receives
Although the requirement to deliver the documents within three banking days was always the rule, it was often lost in the larger rule, so Section 0250 was created to focus attention on the document delivery time frame requirement.
Okay, in Rule 0255, a principal broker must notify the Agency within 10 business days from the date a clients' trust account is opened. This notification is accomplished through the Agency’s eLicensing system and must include the Notification of Clients' Trust Account form.
Likewise, if a principal broker closes a clients' trust account, a notice must be given to the Agency within 10 business days of the closure.
Then there is Rule 0257. Rule 0257 deals with receiving and disbursing funds from a clients' trust account. As a reminder, a real estate broker must deliver to the principal broker within three banking days any instrument representing earnest money. If the form of the earnest money is a check, it can be held undeposited until the offer is accepted or rejected. Upon offer acceptance the check has to be deposited within three days into either the principal broker's clients' trust account or into a neutral escrow, whichever is stipulated in the real estate sale agreement. Or if made payable to the seller, it must be delivered directly to the seller within the three banking days, which brings us to the final for the four rules:
Rule 0259 allows for the transmittal of a check made payable to the seller directly to the seller without depositing into a clients' trust account. House Bill 67 added the following language to ORS 696.241:
"A real estate licensee who, for the purpose of transmitting a check, receives the check from a buyer or tenant that is payable to a property owner or seller is exempt from the deposit requirements. The Agency may determine by rule the records that must be maintained for checks received as described in this subsection and the manner in which the checks must be transmitted."
So, the Agency rule relating to checks made payable to the seller or property owner is, as follows, under Rule 0259. For checks received made payable to the seller, the principal broker must keep the following information:
Continuing Education Courses Now Timed
This next rule to know about is OAR 863-020-0007. This rule requires that the minimum time for a continuing education course is one credit hour. A provider can offer a course that is longer than one hour in additional half hour increments. Also, under OAR 863-020-0035, continuing education courses can be completed online or in a classroom, but any credit given for any continuing education course must be based on the time it takes the licensee to complete the course. Under the rule, 50 minutes spent on the course is considered one credit hour and the provider must notify the licensee of the length of time required to complete the course before the licensee begins the course of instruction.
Finally, online courses are required by agency law to be time monitored. If you complete a course that isn't time monitored, it isn’t eligible for your license renewal so you will want to be sure to let the Agency know if you find a provider that is not time monitoring or disabling their timers.
Property Management Rule Changes
Okay, let’s discuss a few rule changes for property management law.
The first rule change is found in OAR 863-025-0025. The prior rule required that the delegation of a property manager's authority to negotiate and sign property management agreements, review and approve trust account reconciliations, receive and disburse funds, and review, approve, and accept tenant rental agreements must be in writing and signed and dated by the property manager. This rule is amended also to require that a delegation of authority agreement be signed by the individual who is receiving the authorization.
The second set of rule changes is similar to those we discussed earlier relating to the reorganization of the clients' trust account rules and OAR 863-025-0025 was broken up into three rules for ease of reading and reference. So let's briefly take a look at these three rules.
Under the prior rule, the trust accounts were to be called Clients' Trust Account and Clients' Trust Account - Security Deposits, and these names had to be printed on checks for each account. Shorter options are now available and include the designations are Client Trust Account and Client Trust Account SD. These options make it easier to fit the account name on the preprinted number in sequence checks.
Included in this section are also rules relating to the required 10-day notification to the Agency for the opening and/or closing of a trust account. The rules and procedures we already discussed for principal brokers also apply to property management trust accounts.
Rule 0027 came from the old 0025 rule section and is about handling trust fund disbursements.
Rule 0028 is an old section 0025 rule that is moved to its own section. This rule is also about clients' trust account records and reconciliation.
The next rule change we must take note of is found in Rule 0045 dealing with Tenant Agreements. The significant modifications to this rule include:
Rule 0065 is the final rule we need to discuss. This rule says that if the property management agreement and the tenant agreement say that the security deposit will be transferred to be held by the owner, the security deposit must first be deposited into the clients' trust account, then disbursed to the owner in the month in which it was received if the tenant's check is made out to the property manager as payee. However, if the tenant's check is made out to the owner, the check has to get delivered the owner within five days of receipt.
When a check is made payable to the owner, the property manager must note
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